##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005.
 or
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-29185
 SAVE THE WORLD AIR, INC.
 (Exact name of registrant as specified in its charter)
 Nevada
    
    52-2088326(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 5125 Lankershim Boulevard
North Hollywood, California 91601  (Address, including zip code, of principal executive offices)  (818) 487-8000  (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Exchange Act: None.
Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $0.001 par
value.
 þ o
  o þ




---



SAVE
THE WORLD AIR, INC.
 FORM 10-QSB
INDEX
 PagePART IITEM 1. Financial Statements
    
    
    1Condensed balance sheets
    
    
    1Condensed statements of operations (unaudited)
    
    
    3Condensed statements of changes in stockholders deficiency (unaudited)
    
    
    4Condensed statements of cash flows (unaudited)
    
    
    9Notes to condensed financial statements (unaudited)
    
    
    11ITEM 2. Managements Discussion and Analysis or Plan of Operations
    
    
    23ITEM 3. Controls and Procedures
    
    
    27PART IIITEM 1. Legal Proceedings
    
    
    27ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29ITEM 3. Defaults Upon Senior Securities
    
    
    29ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    29ITEM 5. Other Information
    
    
    30ITEM 6. Exhibits
    
    
    30SIGNATURES
    
    
    31EXHIBIT INDEX
    
    
    32EXHIBIT 10.1EXHIBIT 10.2EXHIBIT 10.3EXHIBIT 10.4EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32




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##### Table of Contents



Part I
 
 Item 1. Financial Statements
 SAVE THE WORLD AIR, INC.  (A DEVELOPMENT STAGE ENTERPRISE)
 
 CONDENSED BALANCE SHEETS
 
 June 30, 2005
    
    December 31,(unaudited)
    
    2004ASSETSCurrent assetsCash
    
    $
    211,985
    
    
    $
    84,826Other current assets
    
    
    3,152
    
    
    
    2,602Total current assets
    
    
    215,137
    
    
    
    87,428Property and equipment, net of accumulated depreciation
    
    
    31,060
    
    
    
    35,596$
    246,197
    
    
    $
    123,024
  1




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##### Table of Contents



SAVE
THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 CONDENSED BALANCE SHEETS  Continued
 June 30, 2005
    
    December 31,(unaudited)
    
    2004LIABILITIES AND STOCKHOLDERS DEFICIENCYCurrent liabilitiesAccounts payable
    
    $
    112,952
    
    
    $
    64,089Accrued expenses
    
    
    104,739
    
    
    
    84,420Accrued research and development fees
    
    
    405,722
    
    
    
    50,000Accrued professional fees
    
    
    894,809
    
    
    
    876,452Payables to related parties
    
    
    158,733
    
    
    
    36,478Finders fees payable
    
    
    16,800
    
    
    
    1,521Total current liabilities
    
    
    1,693,755
    
    
    
    1,112,960Advances from founding executive officer
    
    
    1,017,208
    
    
    
    1,017,208Commitments and contingenciesStockholders deficiencyCommon stock, $.001 par value: 200,000,000 shares
authorized, 38,755,321 and 37,784,821 shares
issued and outstanding at June 30, 2005 and
December 31, 2004, respectively
    
    
    38,755
    
    
    
    37,784Common stock to be issued
    
    
    500,000
    
    
    
    119,000Additional paid-in capital
    
    
    15,966,939
    
    
    
    15,043,028Deferred compensation
    
    
    
    
    
    
    (76,068
    )Deficit accumulated during the development stage
    
    
    (18,970,460
    )
    
    
    (17,130,888
    )Total stockholders deficiency
    
    
    (2,464,766
    )
    
    
    (2,007,144
    )$
    246,197
    
    
    $
    123,024
  2




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##### Table of Contents



SAVE
THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 
 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
 THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004 AND FOR THE PERIOD FROM INCEPTION  (FEBRUARY 18, 1998) TO JUNE 30, 2005
 
 Three months ended
    
    Six months endedJune 30,
    
    June 30,
    
    Cumulative2004
    
    
    
    
    
    2004
    
    since2005
    
    (as restated)
    
    2005
    
    (as restated)
    
    inceptionNet sales
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses
    
    
    583,880
    
    
    
    871,933
    
    
    
    1,245,475
    
    
    
    1,497,552
    
    
    
    14,110,843Research and development expenses
    
    
    190,637
    
    
    
    1,292,912
    
    
    
    592,122
    
    
    
    1,402,719
    
    
    
    3,245,348Non-cash patent settlement costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,610,066Loss before other income
    
    
    (774,517
    )
    
    
    (2,164,845
    )
    
    
    (1,837,597
    )
    
    
    (2,900,271
    )
    
    
    (18,966,257
    )Other incomeInterest income
    
    
    
    
    
    
    114
    
    
    
    
    
    
    
    514
    
    
    
    954Loss before provision for income taxes
    
    
    (774,517
    )
    
    
    (2,164,731
    )
    
    
    (1,837,597
    )
    
    
    (2,899,757
    )
    
    
    (18,965,303
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    1,976
    
    
    
    1,000
    
    
    
    5,157Net loss
    
    $
    (774,517
    )
    
    $
    (2,164,731
    )
    
    $
    (1,839,573
    )
    
    $
    (2,900,757
    )
    
    $
    (18,970,460
    )Net loss per share, basic and diluted
    
    $
    (0.02
    )
    
    $
    (0.06
    )
    
    $
    (0.05
    )
    
    $
    (0.08
    )Weighted average shares outstanding,
basic and diluted
    
    
    38,528,563
    
    
    
    35,230,557
    
    
    
    38,283,771
    
    
    
    34,687,239
  3




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##### Table of Contents



SAVE THE WORLD AIR, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
 CONDENSED STATEMENTS OF STOCKHOLDERS DEFICIENCY
FROM INCEPTION (FEBRUARY 18, 1998) TO JUNE 30, 2005
 Additional
    
    
    
    
    
    
    Deficit accumulated
    
    
    Total stockholdersPrice per
    
    
    Common Stock
    
    
    Common stock
    
    
    paid-in
    
    
    Deferred
    
    
    during the
    
    
    developmentshare
    
    
    Shares
    
    
    Amount
    
    
    to be issued
    
    
    capital
    
    
    compensation
    
    
    development stage
    
    
    stage deficiencyBalance, February 18, 1998(date of inception)
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Issuance of common stock on April 18, 1998
    
    
    .0015-.01
    
    
    
    10,030,000
    
    
    
    10,030
    
    
    
    
    
    
    
    14,270
    
    
    
    
    
    
    
    
    
    
    
    24,300Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,307
    )
    
    
    (21,307
    )Balance, December 31, 1998
    
    
    
    
    
    
    10,030,000
    
    
    
    10,030
    
    
    
    
    
    
    
    14,270
    
    
    
    
    
    
    
    (21,307
    )
    
    
    2,993Issuance of common stock on May 18, 1999
    
    
    1.00-6.40
    
    
    
    198,003
    
    
    
    198
    
    
    
    
    
    
    
    516,738
    
    
    
    
    
    
    
    
    
    
    
    516,936Issuance of common stock for ZEFS on September 14, 1999
    
    
    .001
    
    
    
    5,000,000
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000Stock issued for professional services on May 18, 1999
    
    
    0.88
    
    
    
    69,122
    
    
    
    69
    
    
    
    
    
    
    
    49,444
    
    
    
    
    
    
    
    
    
    
    
    49,513Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,075,264
    )
    
    
    (1,075,264
    )Balance, December 31, 1999
    
    
    
    
    
    
    15,297,125
    
    
    
    15,297
    
    
    
    
    
    
    
    580,452
    
    
    
    
    
    
    
    (1,096,571
    )
    
    
    (500,822
    )Stock issued for employee compensation on February 8, 2000
    
    
    1.03
    
    
    
    20,000
    
    
    
    20
    
    
    
    
    
    
    
    20,580
    
    
    
    
    
    
    
    
    
    
    
    20,600Stock issued for consulting services on February 8, 2000
    
    
    1.03
    
    
    
    100,000
    
    
    
    100
    
    
    
    
    
    
    
    102,900
    
    
    
    
    
    
    
    
    
    
    
    103,000Stock issued for professional services on April 18, 2000
    
    
    3.38
    
    
    
    27,000
    
    
    
    27
    
    
    
    
    
    
    
    91,233
    
    
    
    
    
    
    
    
    
    
    
    91,260Stock issued for directors fees on April 18, 2000
    
    
    3.38
    
    
    
    50,000
    
    
    
    50
    
    
    
    
    
    
    
    168,950
    
    
    
    
    
    
    
    
    
    
    
    169,000Stock issued for professional services on May 19, 2000
    
    
    4.06
    
    
    
    5,000
    
    
    
    5
    
    
    
    
    
    
    
    20,295
    
    
    
    
    
    
    
    
    
    
    
    20,300Stock issued for directors fees on June 20, 2000
    
    
    4.44
    
    
    
    6,000
    
    
    
    6
    
    
    
    
    
    
    
    26,634
    
    
    
    
    
    
    
    
    
    
    
    26,640Stock issued for professional services on June 20, 2000
    
    
    4.44
    
    
    
    1,633
    
    
    
    2
    
    
    
    
    
    
    
    7,249
    
    
    
    
    
    
    
    
    
    
    
    7,251Stock issued for professional services on June 26, 2000
    
    
    5.31
    
    
    
    1,257
    
    
    
    1
    
    
    
    
    
    
    
    6,674
    
    
    
    
    
    
    
    
    
    
    
    6,675Stock issued for employee compensation on June 26, 2000
    
    
    5.31
    
    
    
    22,000
    
    
    
    22
    
    
    
    
    
    
    
    116,798
    
    
    
    
    
    
    
    
    
    
    
    116,820Stock issued for consulting services on June 26, 2000
    
    
    5.31
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    52,203
    
    
    
    
    
    
    
    
    
    
    
    52,213Stock issued for promotional services on July 28, 2000
    
    
    4.88
    
    
    
    9,675
    
    
    
    9
    
    
    
    
    
    
    
    47,205
    
    
    
    
    
    
    
    
    
    
    
    47,214Stock issued for consulting services on July 28, 2000
    
    
    4.88
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    47,975
    
    
    
    
    
    
    
    
    
    
    
    47,985Stock issued for consulting services on August 4, 2000
    
    
    2.13
    
    
    
    35,033
    
    
    
    35
    
    
    
    
    
    
    
    74,585
    
    
    
    
    
    
    
    
    
    
    
    74,620Stock issued for promotional services on August 16, 2000
    
    
    2.25
    
    
    
    25,000
    
    
    
    25
    
    
    
    
    
    
    
    56,225
    
    
    
    
    
    
    
    
    
    
    
    56,250Stock issued for consulting services on September 5, 2000
    
    
    2.25
    
    
    
    12,833
    
    
    
    13
    
    
    
    
    
    
    
    28,861
    
    
    
    
    
    
    
    
    
    
    
    28,874Stock issued for consulting services on September 10, 2000
    
    
    1.50
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    14,740
    
    
    
    
    
    
    
    
    
    
    
    14,750Stock issued for consulting services on November 2, 2000
    
    
    0.88
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    8,643
    
    
    
    
    
    
    
    
    
    
    
    8,653
  4




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##### Table of Contents



SAVE THE WORLD AIR, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
 CONDENSED STATEMENTS OF STOCKHOLDERS DEFICIENCY
FROM INCEPTION (FEBRUARY 18, 1998) TO JUNE 30, 2005
 Additional
    
    
    
    
    
    
    Deficit accumulated
    
    
    Total stockholdersPrice per
    
    
    Common Stock
    
    
    Common stock
    
    
    paid-in
    
    
    Deferred
    
    
    during the
    
    
    developmentshare
    
    
    Shares
    
    
    Amount
    
    
    to be issued
    
    
    capital
    
    
    compensation
    
    
    development stage
    
    
    stage deficiencyStock issued for consulting services on November 4, 2000
    
    
    0.88
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    8,643
    
    
    
    
    
    
    
    
    
    
    
    8,653Stock issued for consulting services on December 20, 2000
    
    
    0.50
    
    
    
    19,082
    
    
    
    19
    
    
    
    
    
    
    
    9,522
    
    
    
    
    
    
    
    
    
    
    
    9,541Stock issued for filing services on December 20, 2000
    
    
    0.50
    
    
    
    5,172
    
    
    
    5
    
    
    
    
    
    
    
    2,581
    
    
    
    
    
    
    
    
    
    
    
    2,586Stock issued for professional services on December 26, 2000
    
    
    0.38
    
    
    
    12,960
    
    
    
    13
    
    
    
    
    
    
    
    4,912
    
    
    
    
    
    
    
    
    
    
    
    4,925Other stock issuance on August 24, 2000
    
    
    2.13
    
    
    
    2,000
    
    
    
    2
    
    
    
    
    
    
    
    4,258
    
    
    
    
    
    
    
    
    
    
    
    4,260Common shares cancelled
    
    
    
    
    
    
    (55,000
    )
    
    
    (55
    )
    
    
    
    
    
    
    (64,245
    )
    
    
    
    
    
    
    
    
    
    
    (64,300
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,270,762
    )
    
    
    (1,270,762
    )Balance, December 31, 2000
    
    
    
    
    
    
    15,645,935
    
    
    
    15,646
    
    
    
    
    
    
    
    1,437,873
    
    
    
    
    
    
    
    (2,367,333
    )
    
    
    (913,814
    )Stock issued for consulting services on January 8, 2001
    
    
    0.31
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    3,038
    
    
    
    
    
    
    
    
    
    
    
    3,048Stock issued for consulting services on February 1, 2001
    
    
    0.33
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    3,235
    
    
    
    
    
    
    
    
    
    
    
    3,245Stock issued for consulting services on March 1, 2001
    
    
    0.28
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    2,743
    
    
    
    
    
    
    
    
    
    
    
    2,753Stock issued for legal services on March 13, 2001
    
    
    0.32
    
    
    
    150,000
    
    
    
    150
    
    
    
    
    
    
    
    47,850
    
    
    
    
    
    
    
    
    
    
    
    48,000Stock issued for consulting services on April 3, 2001
    
    
    0.25
    
    
    
    9,833
    
    
    
    10
    
    
    
    
    
    
    
    2,448
    
    
    
    
    
    
    
    
    
    
    
    2,458Stock issued for legal services on April 4, 2001
    
    
    0.25
    
    
    
    30,918
    
    
    
    31
    
    
    
    
    
    
    
    7,699
    
    
    
    
    
    
    
    
    
    
    
    7,730Stock issued for professional services on April 4, 2001
    
    
    0.25
    
    
    
    7,040
    
    
    
    7
    
    
    
    
    
    
    
    1,753
    
    
    
    
    
    
    
    
    
    
    
    1,760Stock issued for consulting services on April 5, 2001
    
    
    0.25
    
    
    
    132,600
    
    
    
    132
    
    
    
    
    
    
    
    33,018
    
    
    
    
    
    
    
    
    
    
    
    33,150Stock issued for filing fees on April 30, 2001
    
    
    1.65
    
    
    
    1,233
    
    
    
    1
    
    
    
    
    
    
    
    2,033
    
    
    
    
    
    
    
    
    
    
    
    2,034Stock issued for filing fees on September 19, 2001
    
    
    0.85
    
    
    
    2,678
    
    
    
    2
    
    
    
    
    
    
    
    2,274
    
    
    
    
    
    
    
    
    
    
    
    2,276Stock issued for professional services on September 28, 2001
    
    
    0.62
    
    
    
    150,000
    
    
    
    150
    
    
    
    
    
    
    
    92,850
    
    
    
    
    
    
    
    
    
    
    
    93,000Stock issued for directors services on October 5, 2001
    
    
    0.60
    
    
    
    100,000
    
    
    
    100
    
    
    
    
    
    
    
    59,900
    
    
    
    
    
    
    
    
    
    
    
    60,000Stock issued for legal services on October 17, 2001
    
    
    0.60
    
    
    
    11,111
    
    
    
    11
    
    
    
    
    
    
    
    6,655
    
    
    
    
    
    
    
    
    
    
    
    6,666Stock issued for consulting services on October 18, 2001
    
    
    0.95
    
    
    
    400,000
    
    
    
    400
    
    
    
    
    
    
    
    379,600
    
    
    
    
    
    
    
    
    
    
    
    380,000Stock issued for consulting services on October 19, 2001
    
    
    1.25
    
    
    
    150,000
    
    
    
    150
    
    
    
    
    
    
    
    187,350
    
    
    
    
    
    
    
    
    
    
    
    187,500Stock issued for exhibit fees on October 22, 2001
    
    
    1.35
    
    
    
    5,000
    
    
    
    6
    
    
    
    
    
    
    
    6,745
    
    
    
    
    
    
    
    
    
    
    
    6,751Stock issued for directors services on November 2, 2001
    
    
    0.95
    
    
    
    1,000,000
    
    
    
    1,000
    
    
    
    
    
    
    
    949,000
    
    
    
    
    
    
    
    
    
    
    
    950,000Stock issued for consulting services on November 7, 2001
    
    
    0.85
    
    
    
    20,000
    
    
    
    20
    
    
    
    
    
    
    
    16,980
    
    
    
    
    
    
    
    
    
    
    
    17,000
  5




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##### Table of Contents



SAVE THE WORLD AIR, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
 CONDENSED STATEMENTS OF STOCKHOLDERS DEFICIENCY
FROM INCEPTION (FEBRUARY 18, 1998) TO JUNE 30, 2005
 Additional
    
    
    
    
    
    
    Deficit accumulated
    
    
    Total stockholdersPrice per
    
    
    Common Stock
    
    
    Common stock
    
    
    paid-in
    
    
    Deferred
    
    
    during the
    
    
    developmentshare
    
    
    Shares
    
    
    Amount
    
    
    to be issued
    
    
    capital
    
    
    compensation
    
    
    development stage
    
    
    stage deficiencyStock issued for consulting services on November 20, 2001
    
    
    0.98
    
    
    
    43,000
    
    
    
    43
    
    
    
    
    
    
    
    42,097
    
    
    
    
    
    
    
    
    
    
    
    42,140Stock issued for consulting services on November 27, 2001
    
    
    0.98
    
    
    
    10,000
    
    
    
    10
    
    
    
    
    
    
    
    9,790
    
    
    
    
    
    
    
    
    
    
    
    9,800Stock issued for consulting services on November 28, 2001
    
    
    0.98
    
    
    
    187,000
    
    
    
    187
    
    
    
    
    
    
    
    183,073
    
    
    
    
    
    
    
    
    
    
    
    183,260Intrinsic value of options issued to employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,600,000
    
    
    
    (2,600,000
    )
    
    
    
    
    
    
    Fair value of options issued to non-employees for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    142,318
    
    
    
    
    
    
    
    
    
    
    
    142,318Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    191,667
    
    
    
    
    
    
    
    191,667Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,735,013
    )
    
    
    (2,735,013
    )Balance, December 31, 2001
    
    
    
    
    
    
    18,085,847
    
    
    
    18,086
    
    
    
    
    
    
    
    6,220,322
    
    
    
    (2,408,333
    )
    
    
    (5,102,346
    )
    
    
    (1,272,271
    )Stock issued for directors services on December 10, 2002
    
    
    0.40
    
    
    
    2,150,000
    
    
    
    2,150
    
    
    
    
    
    
    
    857,850
    
    
    
    
    
    
    
    
    
    
    
    860,000Common stock paid for, but not issued (2,305,000 shares)
    
    
    0.15-0.25
    
    
    
    
    
    
    
    
    
    
    
    389,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    389,875Fair value of options issued to non-employees for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,909
    
    
    
    (54,909
    )
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    891,182
    
    
    
    
    
    
    
    891,182Net loss for the year ended December 31, 2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,749,198
    )
    
    
    (2,749,198
    )Balance, December 31, 2002
    
    
    
    
    
    
    20,235,847
    
    
    
    20,236
    
    
    
    389,875
    
    
    
    7,133,081
    
    
    
    (1,572,060
    )
    
    
    (7,851,544
    )
    
    
    (1,880,412
    )Common stock issued, previously paid for
    
    
    0.15
    
    
    
    1,425,000
    
    
    
    1,425
    
    
    
    (213,750
    )
    
    
    212,325
    
    
    
    
    
    
    
    
    
    
    
    Common stock issued, previously paid for
    
    
    0.25
    
    
    
    880,000
    
    
    
    880
    
    
    
    (220,000
    )
    
    
    219,120
    
    
    
    
    
    
    
    
    
    
    
    Stock issued for cash on March 20, 2003
    
    
    0.25
    
    
    
    670,000
    
    
    
    670
    
    
    
    
    
    
    
    166,830
    
    
    
    
    
    
    
    
    
    
    
    167,500Stock issued for cash on April 4, 2003
    
    
    0.25
    
    
    
    900,000
    
    
    
    900
    
    
    
    
    
    
    
    224,062
    
    
    
    
    
    
    
    
    
    
    
    224,962Stock issued for cash on April 8, 2003
    
    
    0.25
    
    
    
    100,000
    
    
    
    100
    
    
    
    
    
    
    
    24,900
    
    
    
    
    
    
    
    
    
    
    
    25,000Stock issued for cash on May 8, 2003
    
    
    0.25
    
    
    
    1,150,000
    
    
    
    1,150
    
    
    
    
    
    
    
    286,330
    
    
    
    
    
    
    
    
    
    
    
    287,480Stock issued for cash on June 16, 2003
    
    
    0.25
    
    
    
    475,000
    
    
    
    475
    
    
    
    
    
    
    
    118,275
    
    
    
    
    
    
    
    
    
    
    
    118,750Stock issued for legal services on June 27, 2003
    
    
    0.55
    
    
    
    83,414
    
    
    
    83
    
    
    
    
    
    
    
    45,794
    
    
    
    
    
    
    
    
    
    
    
    45,877Debt converted to stock on June 27, 2003
    
    
    0.25
    
    
    
    2,000,000
    
    
    
    2,000
    
    
    
    
    
    
    
    498,000
    
    
    
    
    
    
    
    
    
    
    
    500,000Stock and warrants issued for cash on July 11, 2003
    
    
    0.25
    
    
    
    519,000
    
    
    
    519
    
    
    
    
    
    
    
    129,231
    
    
    
    
    
    
    
    
    
    
    
    129,750Stock and warrants issued for cash on September 29, 2003
    
    
    0.25
    
    
    
    1,775,000
    
    
    
    1,775
    
    
    
    
    
    
    
    441,976
    
    
    
    
    
    
    
    
    
    
    
    443,751Stock and warrants issued for cash on October 21, 2003
    
    
    0.25
    
    
    
    1,845,000
    
    
    
    1,845
    
    
    
    
    
    
    
    459,405
    
    
    
    
    
    
    
    
    
    
    
    461,250Stock and warrants issued for cash on October 28, 2003
    
    
    0.25
    
    
    
    1,570,000
    
    
    
    1,570
    
    
    
    
    
    
    
    390,930
    
    
    
    
    
    
    
    
    
    
    
    392,500
  6




---



##### Table of Contents



SAVE THE WORLD AIR, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
 CONDENSED STATEMENTS OF STOCKHOLDERS DEFICIENCY
FROM INCEPTION (FEBRUARY 18, 1998) TO JUNE 30, 2005
 Additional
    
    
    
    
    
    
    Deficit accumulated
    
    
    Total stockholdersPrice per
    
    
    Common Stock
    
    
    Common stock
    
    
    paid-in
    
    
    Deferred
    
    
    during the
    
    
    developmentshare
    
    
    Shares
    
    
    Amount
    
    
    to be issued
    
    
    capital
    
    
    compensation
    
    
    development stage
    
    
    stage deficiencyStock and warrants issued for cash on November 19, 2003
    
    
    0.25
    
    
    
    500,000
    
    
    
    500
    
    
    
    
    
    
    
    124,500
    
    
    
    
    
    
    
    
    
    
    
    125,000Finders fees related to stock issuances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,875
    
    
    
    (312,582
    )
    
    
    
    
    
    
    
    
    
    
    (268,707
    )Common stock paid for, but not issued (25,000 shares)
    
    
    0.25
    
    
    
    
    
    
    
    
    
    
    
    6,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,250Amortization of deferred comp
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    863,727
    
    
    
    
    
    
    
    863,727Net loss for year ended December 31, 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,476,063
    )
    
    
    (2,476,063
    )Balance, December 31, 2003
    
    
    
    
    
    
    34,128,261
    
    
    
    34,128
    
    
    
    6,250
    
    
    
    10,162,177
    
    
    
    (708,333
    )
    
    
    (10,327,607
    )
    
    
    (833,385
    )Common stock issued, previously paid for
    
    
    0.25
    
    
    
    25,000
    
    
    
    25
    
    
    
    (6,250
    )
    
    
    6,225
    
    
    
    
    
    
    
    
    
    
    
    Stock issued for director services on March 31, 2004
    
    
    1.50
    
    
    
    50,000
    
    
    
    50
    
    
    
    
    
    
    
    74,950
    
    
    
    
    
    
    
    
    
    
    
    75,000Stock issued for finders fees on March 31, 2004
    
    
    0.15
    
    
    
    82,500
    
    
    
    82
    
    
    
    
    
    
    
    12,293
    
    
    
    
    
    
    
    
    
    
    
    12,375Stock issued for finders fees on March 31, 2004
    
    
    0.25
    
    
    
    406,060
    
    
    
    407
    
    
    
    
    
    
    
    101,199
    
    
    
    
    
    
    
    
    
    
    
    101,606Stock issued for services on April 2, 2004
    
    
    1.53
    
    
    
    65,000
    
    
    
    65
    
    
    
    
    
    
    
    99,385
    
    
    
    
    
    
    
    
    
    
    
    99,450Debt converted to stock on April 2, 2004
    
    
    1.53
    
    
    
    60,000
    
    
    
    60
    
    
    
    
    
    
    
    91,740
    
    
    
    
    
    
    
    
    
    
    
    91,800Stock issued upon exercise of warrants on May 21, 2004
    
    
    0.20
    
    
    
    950,000
    
    
    
    950
    
    
    
    
    
    
    
    189,050
    
    
    
    
    
    
    
    
    
    
    
    190,000Stock issued for directors services on June 8, 2004
    
    
    1.70
    
    
    
    600,000
    
    
    
    600
    
    
    
    
    
    
    
    1,019,400
    
    
    
    
    
    
    
    
    
    
    
    1,020,000Stock issued for cash on August 25, 2004
    
    
    1.00
    
    
    
    550,000
    
    
    
    550
    
    
    
    
    
    
    
    549,450
    
    
    
    
    
    
    
    
    
    
    
    550,000Stock issued upon exercise of options on August 30, 2004
    
    
    0.40
    
    
    
    4,000
    
    
    
    4
    
    
    
    
    
    
    
    1,596
    
    
    
    
    
    
    
    
    
    
    
    1,600Stock issued for cash on September 8, 2004
    
    
    1.00
    
    
    
    25,000
    
    
    
    25
    
    
    
    
    
    
    
    24,975
    
    
    
    
    
    
    
    
    
    
    
    25,000Stock issued for consulting services on September 15, 2004
    
    
    1.31
    
    
    
    50,000
    
    
    
    49
    
    
    
    
    
    
    
    65,451
    
    
    
    
    
    
    
    
    
    
    
    65,500Stock issued for patent settlement on September 22, 2004
    
    
    1.24
    
    
    
    20,000
    
    
    
    20
    
    
    
    
    
    
    
    24,780
    
    
    
    
    
    
    
    
    
    
    
    24,800Stock issued for research and development on October 6, 2004
    
    
    1.40
    
    
    
    65,000
    
    
    
    65
    
    
    
    
    
    
    
    90,935
    
    
    
    
    
    
    
    
    
    
    
    91,000Stock issued for cash on October 6, 2004
    
    
    1.00
    
    
    
    25,000
    
    
    
    25
    
    
    
    
    
    
    
    24,975
    
    
    
    
    
    
    
    
    
    
    
    25,000Stock issued for cash on October 15, 2004
    
    
    1.00
    
    
    
    150,000
    
    
    
    150
    
    
    
    
    
    
    
    149,850
    
    
    
    
    
    
    
    
    
    
    
    150,000Stock issued upon exercise of stock options on October 21, 2004
    
    
    0.40
    
    
    
    6,500
    
    
    
    6
    
    
    
    
    
    
    
    2,594
    
    
    
    
    
    
    
    
    
    
    
    2,600Stock issued for cash on November 3, 2004
    
    
    1.00
    
    
    
    25,000
    
    
    
    25
    
    
    
    
    
    
    
    24,975
    
    
    
    
    
    
    
    
    
    
    
    25,000Stock issued for cash on November 18, 2004
    
    
    1.00
    
    
    
    172,500
    
    
    
    173
    
    
    
    
    
    
    
    172,327
    
    
    
    
    
    
    
    
    
    
    
    172,500Stock issued for cash on December 9, 2004
    
    
    1.00
    
    
    
    75,000
    
    
    
    75
    
    
    
    
    
    
    
    74,925
    
    
    
    
    
    
    
    
    
    
    
    75,000Stock issued for cash on December 23, 2004
    
    
    1.00
    
    
    
    250,000
    
    
    
    250
    
    
    
    
    
    
    
    249,750
    
    
    
    
    
    
    
    
    
    
    
    250,000Finders fees related to stock issuances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,384
    )
    
    
    
    
    
    
    
    
    
    
    (88,384
    )
  7




---



##### Table of Contents



SAVE THE WORLD AIR, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
 CONDENSED STATEMENTS OF STOCKHOLDERS DEFICIENCY
FROM INCEPTION (FEBRUARY 18, 1998) TO JUNE 30, 2005
 Additional
    
    
    
    
    
    
    Deficit accumulated
    
    
    Total stockholdersPrice per
    
    
    Common Stock
    
    
    Common stock
    
    
    paid-in
    
    
    Deferred
    
    
    during the
    
    
    developmentshare
    
    
    Shares
    
    
    Amount
    
    
    to be issued
    
    
    capital
    
    
    compensation
    
    
    development stage
    
    
    stage deficiencyCommon stock paid for, but not issued (119,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,000Intrinsic value of options issued to employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248,891
    
    
    
    (248,891
    )
    
    
    
    
    
    
    Fair value of options issued to non-employees for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,381
    
    
    
    (55,381
    )
    
    
    
    
    
    
    Fair value of warrants issued for settlement costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,585,266
    
    
    
    
    
    
    
    
    
    
    
    1,585,266Fair value of warrants issued to non-employees for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,872
    
    
    
    
    
    
    
    
    
    
    
    28,872Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    936,537
    
    
    
    
    
    
    
    936,537Net loss for year ended December 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,803,280
    )
    
    
    (6,803,280
    )Balance, December 31, 2004
    
    
    
    
    
    
    37,784,821
    
    
    
    37,784
    
    
    
    119,000
    
    
    
    15,043,028
    
    
    
    (76,068
    )
    
    
    (17,130,887
    )
    
    
    (2,007,143
    )Common stock issued, previously paid for
    
    
    1.00
    
    
    
    50,000
    
    
    
    50
    
    
    
    (50,000
    )
    
    
    49,950
    
    
    
    
    
    
    
    
    
    
    
    Stock issued upon exercise of warrants, previously paid for
    
    
    1.00
    
    
    
    50,000
    
    
    
    50
    
    
    
    (50,000
    )
    
    
    49,950
    
    
    
    
    
    
    
    
    
    
    
    Stock issued for cash on January 20, 2005
    
    
    1.00
    
    
    
    25,000
    
    
    
    25
    
    
    
    
    
    
    
    24,975
    
    
    
    
    
    
    
    
    
    
    
    25,000Stock issued upon exercise of warrants on January 31, 2005
    
    
    0.40
    
    
    
    500
    
    
    
    1
    
    
    
    
    
    
    
    199
    
    
    
    
    
    
    
    
    
    
    
    200Stock issued for cash on February 17, 2005
    
    
    1.00
    
    
    
    325,000
    
    
    
    325
    
    
    
    
    
    
    
    324,675
    
    
    
    
    
    
    
    
    
    
    
    325,000Stock issued for cash on March 31, 2005
    
    
    1.00
    
    
    
    215,000
    
    
    
    215
    
    
    
    
    
    
    
    214,785
    
    
    
    
    
    
    
    
    
    
    
    215,000Stock issued for cash on May 17, 2005
    
    
    1.00
    
    
    
    5,000
    
    
    
    5
    
    
    
    
    
    
    
    4,995
    
    
    
    
    
    
    
    
    
    
    
    5,000Stock issued for cash on June 7, 2005
    
    
    1.00
    
    
    
    300,000
    
    
    
    300
    
    
    
    
    
    
    
    299,700
    
    
    
    
    
    
    
    
    
    
    
    300,000Common stock paid for, but not issued (481,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    481,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    481,000Finders fees related to stock issuances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95,280
    )
    
    
    
    
    
    
    
    
    
    
    (95,280
    )Fair value of options issued for settlement costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,500
    
    
    
    
    
    
    
    
    
    
    
    31,500Fair value of warrants issued for settlement costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,957
    
    
    
    
    
    
    
    
    
    
    
    4,957Fair value of warrants issued to non-employees for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,505
    
    
    
    
    
    
    
    
    
    
    
    13,505Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,068
    
    
    
    
    
    
    
    76,068Net loss for six months ended June 30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,839,573
    )
    
    
    (1,839,573
    )Balance, June 30, 2005 (unaudited)
    
    
    
    
    
    
    38,755,321
    
    
    $
    38,755
    
    
    $
    500,000
    
    
    $
    15,966,939
    
    
    $
    
    
    
    $
    (18,970,460
    )
    
    $
    (2,464,766
    )
  8




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##### Table of Contents



SAVE
THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 
 CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 SIX MONTHS ENDED JUNE 30, 2005 AND 2004 AND FOR THE  PERIOD FROM INCEPTION (FEBRUARY 18, 1998) TO  JUNE 30, 2005
 
 June 30,
    
    CumulativeJune 30,
    
    2004
    
    since2005
    
    (as restated)
    
    inceptionCash flows from operating activitiesNet loss
    
    $
    (1,839,573
    )
    
    $
    (2,900,757
    )
    
    $
    (18,970,460
    )Adjustments to reconcile net loss to net
cash used in operating activities:Write off of intangible assets
    
    
    
    
    
    
    
    
    
    
    505,000Fair value of options issued for services
    
    
    
    
    
    
    
    
    
    
    171,190Issuance of common stock for services
    
    
    
    
    
    
    1,271,250
    
    
    
    5,280,623Issuance of options for legal settlement
    
    
    31,500
    
    
    
    
    
    
    
    31,500Issuance of warrants for legal settlement
    
    
    4,957
    
    
    
    
    
    
    
    4,957Issuance of warrants for services
    
    
    13,505
    
    
    
    
    
    
    
    13,505Patent acquisition cost
    
    
    
    
    
    
    
    
    
    
    1,610,066Amortization of deferred compensation
    
    
    76,068
    
    
    
    501,067
    
    
    
    2,959,181Depreciation
    
    
    4,536
    
    
    
    4,066
    
    
    
    18,953Changes in operating assets and
liabilities:Prepaid expenses and other
    
    
    (550
    )
    
    
    
    
    
    
    (3,152
    )Income taxes payable
    
    
    
    
    
    
    1,000
    
    
    
    Accounts payable and accrued expenses
    
    
    363,261
    
    
    
    172,241
    
    
    
    1,152,757Net cash used in operating activities
    
    
    (1,346,296
    )
    
    
    (951,132
    )
    
    
    (7,225,880
    )Cash flows from investing activitiesPurchase of property and equipment
    
    
    
    
    
    
    (4,680
    )
    
    
    (46,463
    )Net cash used in investing activities
    
    
    
    
    
    
    (4,680
    )
    
    
    (46,463
    )Cash flows from financing activitiesIncrease (decrease) in payables to related parties
    
    
    122,255
    
    
    
    (21,425
    )
    
    
    670,183Advances from founding executive officer
    
    
    
    
    
    
    
    
    
    
    517,208Issuance of common stock for cash
    
    
    870,200
    
    
    
    190,000
    
    
    
    5,796,937Common stock issuable
    
    
    481,000
    
    
    
    
    
    
    
    500,000Net cash provided by financing activities
    
    
    1,473,455
    
    
    
    168,575
    
    
    
    7,484,328Net increase (decrease) in cash
    
    
    127,159
    
    
    
    (787,237
    )
    
    
    211,985Cash, beginning of period
    
    
    84,826
    
    
    
    926,052
    
    
    
    Cash, end of period
    
    $
    211,985
    
    
    $
    138,815
    
    
    $
    211,985
  9




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##### Table of Contents



SAVE
THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 CONDENSED STATEMENTS OF CASH FLOWS  Continued (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2005 AND 2004 AND FOR THE
PERIOD FROM INCEPTION (FEBRUARY 18, 1998) TO
JUNE 30, 2005
 
 CumulativeJune 30,
    
    June 30,
    
    since2005
    
    2004
    
    inceptionSupplemental disclosures of cash flow informationCash paid during the year forInterest
    
    $
    
    
    
    $
    908
    
    
    $
    5,701Income taxes
    
    $
    1,976
    
    
    $
    
    
    
    $
    5,157Non-cash investing and financing activitiesAcquisition of intangible asset through
advance from related party and issuance
of common stock
    
    $
    
    
    
    $
    
    
    
    $
    505,000Deferred compensation for stock options issued for services
    
    
    
    
    
    
    304,272
    
    
    
    2,959,181Purchase of property and equipment financed by advance from related party
    
    
    
    
    
    
    
    
    
    
    3,550Conversion of related party debt to equity
    
    
    
    
    
    
    15,000
    
    
    
    515,000Issuance of common stock in settlement of payable
    
    
    
    
    
    
    113,981
    
    
    
    113,981Common stock, previously paid for
    
    
    100,000
    
    
    
    6,250
    
    
    
    100,000Finders fees accrued for issuance of common stock
    
    
    95,280
    
    
    
    
    
    
    
    496,246
  10




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##### Table of Contents



SAVE
THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 SIX MONTHS ENDED JUNE 30, 3005 (UNAUDITED)
 1. Organization and basis of presentation
     11




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##### Table of Contents



SAVE
THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 3005 (UNAUDITED)
 1. Organization and basis of presentation  continued
      12




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 2. Net loss per share
  3.
    
    Recent accounting pronouncements
   13




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 3. Recent accounting pronouncements  continued
  4.
    
    Certain relationships and related transactions
    14




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 4.
    
    Certain relationships and related transactions  continued
     15




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 5. Capital stock
         16




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 5.
    
    Capital stock  continued
   6.
    
    Research and development
  7.
    
    Going concern
  17




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 8.
    
    Commitments and contingencies
    18




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 8.
    
    Commitments and contingencies  continued
      19




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 8.
    
    Commitments and contingencies  continued
     20




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 8.
    
    Commitments and contingencies  continued
     21




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##### Table of Contents



SAVE THE WORLD AIR, INC.
 (A DEVELOPMENT STAGE ENTERPRISE)
 NOTES TO CONDENSED FINANCIAL STATEMENTS  Continued  SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
 9.
    
    Restatement
   As previously
    
    
    
    
    
    As previouslyreported
    
    
    
    
    
    reportedThree months ended
    
    
    
    
    
    Six months endedJune 30, 2004
    
    Restated
    

June 30, 2004
    
    RestatedNet loss
    
    $
    1,163,588
    
    
    $
    2,164,731
    
    
    $
    1,940,158
    
    
    $
    2,900,757Paid in capital
    
    $
    11,083,621
    
    
    $
    12,060,691
    
    
    $
    11,083,621
    
    
    $
    12,060,691Loss per share
    
    $
    0.03
    
    
    $
    0.06
    
    
    $
    0.06
    
    
    $
    0.08
 10.
    
    Subsequent events
   22




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##### Table of Contents



Item 2. Managements Discussion and Analysis or Plan of Operations
  
    
    revenues and profits;
    
    customers;
    
    research and development expenses and efforts;
    
    scientific test results;
    
    sales and marketing expenses and efforts;
    
    liquidity and sufficiency of existing cash;.
    
    pending and future financings;
    
    technology and products;
    
    the outcome of pending or threatened litigation; and
    
    the effect of recent accounting pronouncements on our financial
condition and results of operations.
   Overview
     Results of Operations
 23




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##### Table of Contents



Liquidity and Capital Resources
   24




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##### Table of Contents



$
     Critical Accounting Policies and Estimates
  25
    Table of Contents     Stock-Based Compensation
   New Accounting Pronouncements
   26
    Table of Contents    
 Item 3. Controls and Procedures
 Evaluation of disclosure controls and procedures:
 Changes in internal control over financial reporting:
 
 PART II
 
 Item 1. Legal Proceedings
   27




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##### Table of Contents



28




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  29




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##### Table of Contents



Name
    
    For
    
    
    WithheldEdward L. Masry
    
    
    23,818,797
    
    
    
    33,702Eugene E. Eichler
    
    
    23,815,297
    
    
    
    37,202Bruce H. McKinnon
    
    
    23,815,697
    
    
    
    36,802Robert F. Sylk
    
    
    23,819,197
    
    
    
    33,302John Brown
    
    
    23,818,997
    
    
    
    33,502John F. Price
    
    
    23,819,197
    
    
    
    33,302Joseph Helleis
    
    
    23,818,997
    
    
    
    33,502
  Votes For
    
    
    16,281,367Votes Against
    
    
    210,657Abstentions
    
    
    12,442Broker Non-Votes
    
    
    29,968
  Votes For
    
    
    23,671,355Votes Against
    
    
    80,750Abstentions
    
    
    100,394Broker Non-Votes
    
    
    0
 
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibit No.
    
    Description10.1
    
    
    Consulting Agreement dated as of April 1, 2005 between the Company and John Bautista10.2
    
    

Amendment dated as of April 1, 2005 to Consulting Agreement between the Company and Adrian Menzell (originally filed as Exhibit 10.20 to the Companys Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2004)10.3
    
    
    Amendment dated as of April 1, 2005 to Consulting Agreement between the Company and Pat Baker
(originally filed as Exhibit 10.21 to the Companys Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2004)10.4
    
    
    Amendment dated as of April 1, 2005 to Consulting Agreement between the Company and John Kostic
(originally filed as Exhibit 10.21 to the Companys Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2004)31.1
    
    
    Certification of Chief Executive Officer of Quarterly Report Pursuant to Rule 13(a)-15(e) or
Rule 15(d)-15(e)31.2
    
    
    Certification of Chief Financial Officer of Quarterly Report Pursuant to 18 U.S.C. Section 1350
 30




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##### Table of Contents



Exhibit No.
    
    Description32
    
    
    Certification of Chief Executive Officer and Chief Financial Officer of Quarterly Report
pursuant to Rule 13(a)-15(e) or Rule 15(d)-15(e)
 
 SIGNATURES
  SAVE THE WORLD AIR, INC.Date:
August 18, 2005
    
    By:
    
    /s/ EDWARD L. MASRYEdward L. Masry
Chief Executive Officer
 31




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1
    
    
    Consulting Agreement dated as of April 1, 2005 between the Company and John Bautista10.2
    
    
    Amendment dated as of April 1, 2005 to Consulting Agreement between the Company and Adrian
Menzell (originally filed as Exhibit 10.20 to the Companys Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2004)10.3
    
    
    Amendment dated as of April 1, 2005 to Consulting Agreement between the Company and Pat Baker
(originally filed as Exhibit 10.21 to the Companys Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2004)10.4
    
    
    Amendment dated as of April 1, 2005 to Consulting Agreement between the Company and John Kostic
(originally filed as Exhibit 10.21 to the Companys Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2004)31.1
    
    
    Certification of Chief Executive Officer of Quarterly Report Pursuant to Rule 13(a)-15(e) or
Rule 15(d)-15(e)31.2
    
    
    Certification of Chief Financial Officer of Quarterly Report Pursuant to 18 U.S.C. Section 135032
    
    
    Certification of Chief Executive Officer and Chief Financial Officer of Quarterly Report
pursuant to Rule 13(a)-15(e) or Rule 15(d)-15(e)
 32