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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 September 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 333-110680
 VIASPACE Inc.
 (Exact name of small business issuer as specified in its charter)
 Nevada
    
    76-0742386(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 2400 Lincoln Ave., Altadena, California 91001
 (626) 296-6310
 þ o
 o þ
 284,381,430 Shares of $0.001 par value Common Stock issued and outstanding
as of November 14, 2005.
 o þ




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VIASPACE INC.
 INDEX
 PagePart I. Financial Information:Item 1. Financial Statements:Consolidated Balance Sheet (Unaudited) as of September 30, 2005
    
    
    3Consolidated Statements of Operations (Unaudited) For the
Three Months Ended September 30, 2005 and 2004 and the Nine
Months Ended September 30, 2005 and 2004
    
    
    4Consolidated Statements of Cash Flows (Unaudited) For the Nine
Months Ended September 30, 2005 and 2004
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis
    
    
    14Item 3. Controls and Procedures
    
    
    25Part II. Other Information:Item 4. Submission of Matters to a Vote of Security Holders
    
    
    25Item 6. Exhibits.
    
    
    25Signatures
    
    
    26Exhibit 3.1Exhibit 3.2Exhibit 3.3Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1
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ITEM 1. FINANCIAL STATEMENTS
 VIASPACE INC.
 
 CONSOLIDATED BALANCE SHEET
(Unaudited)
 September 30,2005ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    2,899,146Accounts receivable
    
    
    208,444Prepaid expenses
    
    
    39,568Total Current Assets
    
    
    3,147,158Fixed Assets, net of accumulated depreciation of $110,421
    
    
    13,548Other Assets:Marketable Securities
    
    
    20,374Security Deposit
    
    
    1,502Total Other Assets
    
    
    21,876TOTAL ASSETS
    
    $
    3,182,582LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts Payable
    
    $
    383,285Accrued Expenses
    
    
    239,675Unearned Revenue
    
    
    93,000Current Portion of Long-term Debt
    
    
    27,074Total Current Liabilities
    
    
    743,034Long-Term Debt
    
    
    106,669Minority Interest in Consolidated Subsidiaries
    
    
    406,292Stockholders Equity:Common Stock, $0.001 par value, 400,000,000 shares authorized, 284,371,430 issued and outstanding
    
    
    284,371Additional Paid In Capital
    
    
    2,142,300Treasury Stock
    
    
    (24,000
    )Accumulated Deficit
    
    
    (476,084
    )Total Stockholders Equity
    
    
    1,926,587TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,182,582
 The accompanying notes are an integral part of the consolidated financial statements.
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VIASPACE INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three months ended September 30,

    
    Nine months ended September 30,2005

    
    2004

    
    2005

    
    2004REVENUES:Government Contracts
    $
    93,271
    
    
    $
    50,000
    
    
    $
    317,021
    
    
    $
    150,000Other Contracts
    
    
    
    
    
    
    
    
    
    11,667
    
    
    
    Total Revenue
    
    93,271
    
    
    
    50,000
    
    
    
    328,688
    
    
    
    150,000COST OF SALES:Government Contract Costs
    
    109,816
    
    
    
    56,050
    
    
    
    257,911
    
    
    
    66,161Total Cost of Sales
    
    109,816
    
    
    
    56,050
    
    
    
    257,911
    
    
    
    66,161GROSS PROFIT
    
    (16,545
    )
    
    
    (6,050
    )
    
    
    70,777
    
    
    
    83,839OPERATING EXPENSES:Research and Development
    
    132,785
    
    
    
    
    
    
    
    445,529
    
    
    
    23,683Selling, General and Administrative
    
    516,793
    
    
    
    30,896
    
    
    
    1,028,497
    
    
    
    137,014Total Operating Expenses
    
    649,578
    
    
    
    30,896
    
    
    
    1,474,026
    
    
    
    160,697INCOME (LOSS) FROM OPERATIONS
    
    (666,123
    )
    
    
    (36,946
    )
    
    
    (1,403,249
    )
    
    
    (76,858
    )Other Income/Expense, net
    
    36,535
    
    
    
    (33,682
    )
    
    
    56,979
    
    
    
    (41,229
    )NET INCOME (LOSS) BEFORE MINORITY INTEREST
AND DISCONTINUED OPERATIONS
    
    (629,588
    )
    
    
    (70,628
    )
    
    
    (1,346,270
    )
    
    
    (118,087
    )Minority Interest in Consolidated Subsidiaries
    
    52,186
    
    
    
    6,085
    
    
    
    83,352
    
    
    
    (38,559
    )NET LOSS BEFORE INCOME (LOSS) FROM
DISCONTINUED OPERATIONS
    
    (577,402
    )
    
    
    (64,543
    )
    
    
    (1,262,918
    )
    
    
    (156,646
    )Income (Loss) from Discontinued Operations
    
    
    
    
    
    (15,918
    )
    
    
    3,874
    
    
    
    (29,494
    )NET LOSS
    $
    (577,402
    )
    
    $
    (80,461
    )
    
    $
    (1,259,044
    )
    
    $
    (186,140
    )NET LOSS PER SHARE, BASIC AND DILUTED
    $
    *
    
    
    $
    *
    
    
    $
    *
    
    
    $
    *WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
    
    282,935,094
    
    
    
    280,800,000
    
    
    
    281,519,518
    
    
    
    280,800,000
 
 *
    
    Less than $.01 The accompanying notes are an integral part of the consolidated financial statements.
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VIASPACE INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months EndedSeptember 30,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net Loss
    
    $
    (1,259,044
    )
    
    $
    (186,140
    )Depreciation
    
    
    6,723
    
    
    
    5,745Stock compensation expense
    
    
    101,208
    
    
    
    Adjustments to reconcile net loss to net cash provided (used in) operating activities:(Increase) decrease in accounts receivable
    
    
    188,392
    
    
    
    (38,544
    )(Increase) decrease in prepaid expenses
    
    
    (39,568
    )
    
    
    11,150Decrease in other assets
    
    
    2,573
    
    
    
    Increase (decrease) in accounts payable
    
    
    (28,614
    )
    
    
    60,294Increase in deferred revenue
    
    
    73,333
    
    
    
    11,667Increase in accrued expenses and other
    
    
    33,467
    
    
    
    11,068Increase (decrease) in related party payable
    
    
    (41,924
    )
    
    
    7,148Write-off of goodwill
    
    
    
    
    
    
    23,447Minority interest
    
    
    (85,837
    )
    
    
    38,559Net cash used in operating activities
    
    
    (1,049,291
    )
    
    
    (55,606
    )CASH FLOWS FROM INVESTING ACTIVITIES:Additions to fixed assets
    
    
    (10,779
    )
    
    
    (659
    )Net cash used in investing activities
    
    
    (10,779
    )
    
    
    (659
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from members investment
    
    
    1,000,000
    
    
    
    Proceeds from exercise of stock option
    
    
    1,000,000
    
    
    
    Payment on bank notes payable
    
    
    (10,772
    )
    
    
    7,037Loan assumed from acquisition of subsidiary
    
    
    50,000
    
    
    
    Payments on long-term debt
    
    
    (12,649
    )
    
    
    (701
    )Net cash provided by financing activities
    
    
    2,026,579
    
    
    
    6,336NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    966,509
    
    
    
    (49,929
    )CASH AND CASH EQUIVALENTS, Beginning of period
    
    
    1,932,637
    
    
    
    115,574CASH AND CASH EQUIVALENTS, End of period
    
    $
    2,899,146
    
    
    $
    65,645SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest
    
    $
    7,489
    
    
    $
    19,855Income taxes
    
    $
    
    
    
    $
    
 The accompanying notes are an integral part of the consolidated financial statements.
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VIASPACE INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Company Background and Merger
     
    
    GW, as the surviving entity, changed its name to VIASPACE Inc.;
    
    The Company effected a 5 for 1 forward stock split (a 6 for 1 forward stock split was
previously effected May 23, 2005);
    
    The members of ViaSpace LLC were issued an aggregate of 226,800,000 post-split shares
of GW common stock in exchange for their membership interests in ViaSpace LLC. A total
of 54,000,000 post-split shares of the Companys common stock were held by the
pre-existing GW shareholders as of the date of the Merger;
    
    The authorized capital of the Company became 400,000,000 shares of common stock
($0.001 par value) and 5,000,000 shares of preferred stock ($0.001 par value).
   Basis
of Presentation
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Fiscal Year End 
 Principles of Consolidation
 Minority Interest in Subsidiaries 
 Cash
and Cash Equivalents
 Use of Estimates in the Preparation of the Financial Statements
 Impairment of Long-lived Assets
 Fair Value of Financial Instruments
 Property and Equipment 
 Marketable Securities 
 Income Taxes
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Revenue
Recognition 
 Stock
Based Compensation 
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss applicable to common shares, as reported
    
    $
    (577,402
    )
    
    $
    (80,461
    )
    
    $
    (1,259,044
    )
    
    $
    (186,140
    )Add: Stock-based employee compensation included in
reported net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Less: Total stock-based employee compensation expense
determined under Black-Scholes option pricing model,
net of tax effects
    
    
    (8,160
    )
    
    
    
    
    
    
    (8,160
    )
    
    
    Pro forma net loss
    
    $
    (585,562
    )
    
    $
    (80,461
    )
    
    $
    (1,267,204
    )
    
    $
    (186,140
    )Net loss per share  as reported: basic and diluted
    
    $
    *
    
    
    $
    *
    
    
    $
    *
    
    
    $
    *Net loss per share  pro forma: basic and diluted
    
    $
    *
    
    
    $
    *
    
    
    $
    *
    
    
    $
    *
 
 *
    
    Less than $.01 Net
Income (Loss) Per Share 
 Concentration
of Credit Risk 
 Research
and Development
 NOTE 2
 ACCOUNTS RECEIVABLE
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NOTE 3
 PROPERTY AND EQUIPMENT
  September 30,
    
    
    Useful2005
    
    
    LifeFurniture and Fixtures
    
    $
    21,149
    
    
    7 yearsComputer Equipment and Computer Software
    
    
    52,373
    
    
    3 yearsLeasehold Improvements
    
    
    50,447
    
    
    5 yearsTotal Property and Equipment
    
    
    123,969Less: Accumulated Depreciation
    
    
    110,421Net Property and Equipment
    
    $
    13,548
  NOTE 4
 MARKETABLE SECURITIES
  NOTE 5
 OWNERSHIP INTEREST IN AFFILIATED COMPANIES
      NOTE 6 LONG-TERM DEBT
  September 30,2005Community Development Commission of the County of Los Angeles, non-secured, with interest at 5% due 7/1/2009
    
    $
    48,167Community Development Commission of the County of Los Angeles, non-secured, with interest at 5% due 9/1/2009
    
    
    85,576Total Long-term Debt
    
    
    133,743Less Current Portion
    
    
    27,074Net Long-term Debt
    
    $
    106,669
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NOTE 7
 RELATED PARTY
    NOTE 8
 STOCK OPTIONS AND WARRANTS
 SNK Capital Trust Option
      Direct Methanol Fuel Cell Corporation 2002 Stock Option / Stock Issuance Plan
  10




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VIASPACE Inc. 2005 Stock Incentive Plan
  Stock Warrants
      DMFCC
Option Shares for License Agreements
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NOTE 9
 DISCONTINUED BUSINESS OPERATIONS
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues
    
    $
    
    
    
    $
    17,298
    
    
    $
    70,366
    
    
    $
    84,168Cost of Sales
    
    
    
    
    
    
    28,116
    
    
    
    43,018
    
    
    
    48,303Gross Profit
    
    
    
    
    
    
    (10,818
    )
    
    
    27,348
    
    
    
    35,865Selling, General and Administrative Expenses
    
    
    
    
    
    
    5,100
    
    
    
    23,474
    
    
    
    49,441Income (Loss) from Discontinued Operations
    
    $
    
    
    
    $
    (15,918
    )
    
    $
    3,874
    
    
    $
    (13,576
    )
 Note
10  OPERATING SEGMENTS
   (i) DMFCC:
 (ii) Ionfinity:
 (iii) ASI:
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Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues:DMFCC
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Ionfinity
    
    
    93,271
    
    
    
    50,000
    
    
    
    328,688
    
    
    
    150,000ASI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Revenue
    
    $
    93,271
    
    
    $
    50,000
    
    
    $
    328,688
    
    
    $
    150,000Income (Loss) From Operations:DMFCC
    
    $
    (266,475
    )
    
    $
    (2,790
    )
    
    $
    (634,517
    )
    
    $
    (29,119
    )Ionfinity
    
    
    (18,387
    )
    
    
    (22,858
    )
    
    
    46,378
    
    
    
    60,278ASI
    
    
    (140,641
    )
    
    
    
    
    
    
    (462,597
    )
    
    
    Income (Loss) From Operations by Reportable Segments
    
    
    (425,503
    )
    
    
    (25,648
    )
    
    
    (1,050,736
    )
    
    
    31,159Corporate Administrative Costs
    
    
    (240,620
    )
    
    
    (11,298
    )
    
    
    (352,513
    )
    
    
    (108,017
    )Income (Loss) From Operations
    
    $
    (666,123
    )
    
    $
    (36,946
    )
    
    $
    (1,403,249
    )
    
    $
    (76,858
    )
 Note
11  COMMITMENTS
   Note 12  FINANCIAL ACCOUNTING DEVELOPMENTS
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 The following discussion contains certain statements that constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements appear in a number of places in this Report, including, without limitation,
Managements Discussion and Analysis of Financial Condition or Plan of Operation. These
statements are not guarantees of future performance and involve risks, uncertainties and
requirements that are difficult to predict or are beyond our control. Our future results may differ
materially from those currently anticipated depending on a variety of factors, including those
described below under Risks Related to Our Future Operations and our filings with the Securities
and Exchange Commission. The following should be read in conjunction with the unaudited
Consolidated Financial Statements and notes thereto that appear elsewhere in this report.
 Overview
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Direct Methanol Fuel Cell Corporation
        Ionfinity LLC
  15




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Arroyo Sciences, Inc.
      
    
    Commercial security applications such as energy utility, manufacturing and IT infrastructure protection.
    
    Homeland security applications such as first responder safety and improvised explosive detection;
supply chain, maritime and port security.
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
    
    Military security applications including landmine detection, personnel tracking, navigation, target
tracking, aircraft attitude estimation, and multi-sensor battlefield decision support.
      Concentric Water Technology LLC
  Critical accounting policies and estimates
 Financial Statements
   17




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RESULTS OF OPERATIONS
 For the Three Months September 30, 2005 and 2004
 Revenues
   Cost of Sales
  Research and Development
  Selling, General and Administrative Expenses
 .
 Other Income (Expense), Net
  For the Nine Months September 30, 2005 and 2004
 Revenues
  18




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Cost of Sales
  Research and Development
  Selling, General and Administrative Expenses
 .
 Other Income (Expense), Net
  LIQUIDITY AND CAPITAL RESOURCES
    19




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Inflation and Seasonality
  RISKS RELATED TO OUR FUTURE OPERATIONS
 An investment in our common stock involves a high degree of
 risk. In addition to the other
information in this Form 10-QSB, you should carefully consider the following risk factors before
deciding to invest in shares of our common stock. If any of the following risks actually occurs, it
is likely that our business, financial condition and operating results would be harmed. As a
result, the trading price of our common stock could decline, and you could lose part or all of your
investment.
 Risks Related To Our Business
 We have incurred losses and anticipate continued losses.
  We operate in a changing and unpredictable regulatory
environment.
  Our success depends upon market acceptance of our technologies and product development.
   Due to uncertainties in our business, the capital on hand may not be sufficient to fund our
operations until we achieve positive cash flow.
   
    
    progress of our research and development efforts;
    
    competing technological and market developments;
    
    commercialization of products currently under development by us and our competitors; and
    
    market acceptance and demand for our products and services.
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If we lose key personnel or are unable to hire additional qualified personnel, it could impact our
ability to grow our business.
   Our products and services could infringe on the intellectual property rights of others, which may
lead to costly litigation, lead to payment of substantial damages or royalties and/or prevent us
from manufacturing and selling our current and future products and services.
   Risks Related To the Industry
 If we fail to successfully introduce new products and services, our future growth may suffer. Our
areas of future growth are certain products and services at an early stage of development.
  If we do not update and enhance our technologies, they will become obsolete or noncompetitive. Our
competitors may succeed in developing products and services faster than us.
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Our success depends, in part, on attracting customers who will embrace the new technologies offered
by our products and services.
  If we fail to comply with our obligations in our intellectual property licenses with Caltech, we
could lose license rights that are important to our business.
  Our success depends, in part, on our ability to protect our intellectual property rights.
    Risks Related To An Investment In Our Stock
 Any future sale of a substantial number of shares of our common stock could depress the trading
price of our common stock, lower our value and make it more difficult for us to raise capital.
    22




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Our stock price is likely to be highly volatile because of several factors, including a limited
public float.
   
    
    actual or anticipated fluctuations in our operating results;
    
    announcements concerning our business or those of our competitors or customers;
    
    changes in financial estimates by securities analysts or our failure to perform as
anticipated by the analysts;
    
    announcements of technological innovations;
    
    conditions or trends in the industry;
    
    introduction or withdrawal of products and services;
    
    variation in quarterly results due to the fact our revenues are generated by sales to a
limited number of customers which may vary from period to period;
    
    litigation;
    
    patents or proprietary rights;
    
    departure of key personnel;
    
    failure to hire key personnel; and
    
    general market conditions.
 Our executive officers, directors and principal shareholders own 69.96% of our voting stock, which
may allow them to control substantially all matters requiring shareholder approval, and their
interests may not align with the interests of our other stockholders.
  Because our common stock is considered a penny stock any investment in our common stock is
considered to be a high-risk investment and is subject to restrictions on marketability.
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We have additional securities available for issuance, including preferred stock, which if issued
could adversely affect the rights of the holders of our common stock.
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ITEM 3
 CONTROLS AND PROCEDURES
    
 PART II  OTHER INFORMATION
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  a.
    
    The 2005 Stock Incentive Plan (the Plan) including the 2005 Non-Employee Director
Option Plan was approved. The Plan provides for the reservation for issuance of
28,000,000 shares of the Companys common stock, par value $0.001 per share.b.
    
    The number of directors on the Board was increased from three to five.c.
    
    The following directors were elected to fill the two vacancies created by the increase
in the number of directors on the Board: Dr. Joel Balbien and Mr. Aaron Levy. Dr. Carl
Kukkonen, Mr. Amjad Abdallat and Dr. Sandeep Gulati composed the other three members of the
Board.
 
 ITEM 6. EXHIBITS
 (a) Exhibits
 3.1
    
    Amendment to Articles of Incorporation dated May 9, 20053.2
    
    Amendment to Articles of Incorporation dated June 1, 20053.3
    
    Articles of Merger dated June 17, 200510.1
    
    DMFCC 2002 Stock Option/Stock Issuance Plan31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
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SIGNATURES
  VIASPACE Inc.(Registrant)Date: November 14, 2005
    
    /s/ CARL KUKKONEN

Carl KukkonenChief Executive OfficerDate: November 14, 2005
    
    /s/ STEPHEN J. MUZI

Stephen J. MuziChief Financial Officer
 26