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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 SECURITIESEXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 or
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
  333-110680
 VIASPACE Inc.
 (Exact name of small business issuer as specified in its charter)
 Nevada
(State or other jurisdiction of incorporation or
organization)
    
    76-0742386
(I.R.S. Employer Identification No.)
 2400 Lincoln Ave., Altadena, California 91001
 (626) 296-6310
 Global-Wide Publication Ltd., 422 Larkfield Center, Suite 310, Santa Rosa, CA 95403
 þ o
 282,585,715 Shares of $0.001 par value Common Stock issued and
outstanding as of August 12, 2005.
 o þ
   1




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VIASPACE INC.
 INDEX
 Part I.
    
    Financial Information:Item 1.
    
    Financial Statements:Report of
Independent Registered Public Accounting FirmConsolidated Balance Sheet (Unaudited) June 30, 2005Consolidated Statements of Operations (Unaudited) - Three Months Ended June 30, 2005 and Six Months Ended June 30, 2005Consolidated Statements of Cash Flows (Unaudited)  Six Months Ended June 30, 2005 and 2004Notes to Consolidated Financial Statements (Unaudited)Item 2.
    
    Managements Discussion and Analysis or Plan of Operation.Item 3.
    
    Controls and Procedures.Part II.
    
    Other Information:Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.Item 4.
    
    Submission of Matters to a Vote of Security Holders.Item 6.
    
    Exhibits.SignaturesEx-10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




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VIASPACE INC.
 
 CONSOLIDATED BALANCE SHEET
(Unaudited)
 June 30, 2005ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    2,898,840Accounts receivable
    
    
    326,750Prepaid expenses
    
    
    2,000Total Current Assets
    
    
    3,227,590Fixed Assets, net of accumulated depreciation of $107,672
    
    
    10,382Other Assets:Marketable Securities
    
    
    24,449Security Deposit
    
    
    1,502Total Other Assets
    
    
    25,951TOTAL ASSETS
    
    $
    3,263,923
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VIASPACE INC.
 CONSOLIDATED BALANCE SHEET (Continued)
(Unaudited)
 June 30, 2005LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts Payable
    
    $
    435,606Accrued Expenses
    
    
    210,794Unearned Revenue
    
    
    93,000Current Portion of Long-Term Debt
    
    
    25,810Due to Related Party
    
    
    24,000Deposit for
Stock Option Exercise
    
    
    500,000Total Current Liabilities
    
    
    1,289,210Long-Term Debt
    
    
    113,498Minority Interest in Consolidated Subsidiaries
    
    
    458,433Stockholders Equity:Common Stock, $0.001 par value, 400,000,000 shares authorized,
280,800,000 issued and outstanding
    
    
    280,800Additional Paid In Capital
    
    
    1,044,664Treasury Stock
    
    
    (24,000
    )Retained Earnings
    
    
    101,318Total Stockholders Equity
    
    
    1,402,782TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,263,923
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VIASPACE INC.
 
 PRO
FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES:Government Contracts
    
    $
    188,750
    
    
    $
    100,000
    
    
    $
    223,750
    
    
    $
    100,000Other Contracts
    
    
    
    
    
    
    
    
    
    
    11,667
    
    
    
    Total Revenue
    
    
    188,750
    
    
    
    100,000
    
    
    
    235,417
    
    
    
    100,000COST OF SALES:Government Contract Costs
    
    
    102,971
    
    
    
    10,111
    
    
    
    148,095
    
    
    
    10,111Total Cost of Sales
    
    
    102,971
    
    
    
    10,111
    
    
    
    148,095
    
    
    
    10,111GROSS PROFIT
    
    
    85,779
    
    
    
    89,889
    
    
    
    87,322
    
    
    
    89,889OPERATING EXPENSES:Research and Development
    
    
    267,311
    
    
    
    13,544
    
    
    
    312,744
    
    
    
    23,683Selling, General and Administrative
    
    
    276,913
    
    
    
    36,648
    
    
    
    511,704
    
    
    
    106,118Total Operating Expenses
    
    
    544,224
    
    
    
    50,192
    
    
    
    824,448
    
    
    
    129,801INCOME (LOSS) FROM OPERATIONS
    
    
    (458,445
    )
    
    
    39,697
    
    
    
    (737,126
    )
    
    
    (39,912
    )Other Income/Expense, net
    
    
    2,682
    
    
    
    (811
    )
    
    
    20,444
    
    
    
    (7,547
    )NET INCOME (LOSS) BEFORE MINORITY
INTEREST AND DISCONTINUED OPERATIONS
    
    
    (455,763
    )
    
    
    38,886
    
    
    
    (716,682
    )
    
    
    (47,459
    )Minority Interest in Consolidated
Subsidiaries
    
    
    (7,552
    )
    
    
    (45,580
    )
    
    
    31,166
    
    
    
    (44,644
    )NET LOSS
BEFORE INCOME (LOSS) FROM DISCONTINUED OPERATIONS
    
    
    (463,315
    )
    
    
    (6,694
    )
    
    
    (685,516
    )
    
    
    (92,103
    )Income (Loss) from Discontinued
Operations
    
    
    3,416
    
    
    
    (12,066
    )
    
    
    3,874
    
    
    
    (13,576
    )NET LOSS
    
    $
    (459,899
    )
    
    $
    (18,760
    )
    
    $
    (681,642
    )
    
    $
    (105,679
    )NET LOSS PER SHARE, BASIC AND DILUTED
    
    $
    *
    
    
    $
    *
    
    
    $
    *
    
    
    $
    *WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
    
    
    280,800,000
    
    
    
    280,800,000
    
    
    
    280,800,000
    
    
    
    280,800,000
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VIASPACE INC.
 
 PRO
FORMA CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months EndedJune 30,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net Loss
    
    $
    (681,642
    )
    
    $
    (105,679
    )Depreciation
    
    
    3,974
    
    
    
    4,000Adjustments to reconcile net loss to net cash provided (used in)
operating activities:Decrease in accounts receivable
    
    
    70,086
    
    
    
    10,504Decrease in prepaid expenses
    
    
    
    
    
    
    9,258(Increase) in other assets
    
    
    (1,502
    )
    
    
    Increase in accounts payable
    
    
    23,707
    
    
    
    47,097Increase in deferred revenue
    
    
    73,333
    
    
    
    Increase (decrease) in accrued expenses and other
    
    
    (7,701
    )
    
    
    2,095Increase in related party payable
    
    
    6,076
    
    
    
    164Minority interest
    
    
    (31,166
    )
    
    
    44,644Net cash provided by (used in) operating activities
    
    
    (544,835
    )
    
    
    12,083CASH FLOWS FROM INVESTING ACTIVITIES:Additions to fixed assets
    
    
    (4,864
    )
    
    
    Acquisition
of subsidiary, net of cash acquired
    
    
    33,758
    
    
    
    Net cash used in investing activities
    
    
    28,894
    
    
    
    CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from members investment
    
    
    1,000,000
    
    
    
    Deposit from shareholder for exercise of stock option
    
    
    500,000
    
    
    
    Payment on bank notes payable
    
    
    (10,772
    )
    
    
    Payments on long-term debt
    
    
    (7,084
    )
    
    
    Net cash provided by financing activities
    
    
    1,482,144
    
    
    
    NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    966,203
    
    
    
    12,083CASH AND CASH EQUIVALENTS, Beginning of period
    
    
    1,932,637
    
    
    
    115,574CASH AND CASH EQUIVALENTS, End of period
    
    $
    2,898,840
    
    
    $
    127,657SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest
    
    $
    4,711
    
    
    $
    11,518Income taxes
    
    $
    
    
    
    $
    
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VIASPACE INC.
 
 
 Note 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Company Background and Merger
      a)
    
    GW, as the surviving entity, changed its name to VIASPACE Inc.;b)
    
    The Company authorized a 5 for 1 split; a 6 for 1 split was previously authorized
effective May 23, 2005;c)
    
    The Members of ViaSpace LLC were issued an aggregate of 226,800,000 post-split
shares of GW common stock in consideration for their membership interests of ViaSpace
LLC. A total of 54,000,000 post-split shares of GW common stock will continue to be held
by the pre-existing GW shareholders;d)
    
    The authorized capital of VIASPACE will be 400,000,000 shares of common stock
($0.001 par value) and 5,000,000 shares of preferred stock ($0.001 par value).
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Basis of Presentation
  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 
 Net Income (Loss) Per Share -
 Concentration of Credit Risk 
 Research and Development
 NOTE 2  PROPERTY AND EQUIPMENT
  June 30,
    
    
    Useful2005
    
    
    LifeFurniture and Fixtures
    
    $
    21,148
    
    
    7 yearsComputer Equipment
    
    
    46,459
    
    
    3 yearsLeasehold Improvements
    
    
    50,447
    
    
    5 yearsTotal Property and Equipment
    
    
    118,054Less: Accumulated Depreciation
    
    
    107,672Net Property and Equipment
    
    $
    10,382
  NOTE 3  OWNERSHIP INTEREST IN AFFILIATED COMPANIES
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NOTE 4 LONG-TERM DEBT
  June 30,2005Community Development Commission of the County of Los
Angeles, non-secured, with interest at 5% due 7/1/2009
    
    $
    50,000Community Development Commission of the County of Los
Angeles, non-secured, with interest at 5% due 9/1/2009
    
    
    89,308Total Long-Term Debt
    
    
    139,308Less Current Portion
    
    
    25,810Net Long-Term Debt
    
    $
    113,498
  NOTE 5  NOTE PAYABLE  RELATED PARTY
  NOTE 6  STOCK OPTIONS
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NOTE 7  DISCONTINUED BUSINESS OPERATIONS
  Three months ended June 30,
    
    
    Six months ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues
    
    $
    32,287
    
    
    $
    49,110
    
    
    $
    70,366
    
    
    $
    84,168Cost of Sales
    
    
    17,561
    
    
    
    23,553
    
    
    
    43,018
    
    
    
    48,303Gross Profit
    
    
    14,726
    
    
    
    25,557
    
    
    
    27,348
    
    
    
    35,865Selling, General and Administrative Expenses
    
    
    11,310
    
    
    
    37,623
    
    
    
    23,474
    
    
    
    49,441Income (Loss) from Discontinued Operations
    
    $
    3,416
    
    
    $
    (12.066
    )
    
    $
    3,874
    
    
    $
    (13,576
    )
 Note 8  FINANCIAL ACCOUNTING DEVELOPMENTS
 Consolidation of Variable Interest Entities
  Inventory Costs, an amendment of ARB No. 43,
Chapter 4 Inventory Pricing
 Exchanges of Nonmonetary Assets, an amendment of
APB Opinion No. 29. Accounting for Nonmonetary Transactions
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 The following discussion contains certain statements that may be deemed 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
   Direct Methanol Fuel Cell Corporation
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Ionfinity LLC
       Arroyo Sciences, Inc.
  14




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
    
    COBRA: a maritime transportation risk assessment and decision
support system;
 
    
    DeepScan: automated analysis of air and seaport cargo containers and luggage; and
 
    
    Immersive radio-frequency identification: deployment in supply chain applications.
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Concentric
Water Technology LLC
  Critical accounting policies and estimates
 Financial Statements
    RESULTS OF OPERATIONS
 For the Three Months June 30, 2005 and 2004
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Revenues
  Cost of Sales
  Research and Development
  Selling, General and Administrative Expenses
 .
 For the Six Months June 30, 2005 and 2004
 Revenues
  Cost of Sales
  Research and Development
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Selling, General and Administrative Expenses
 .
 LIQUIDITY AND CAPITAL RESOURCES
    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 prospectus, 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
 Uncertainty of Market Acceptance and Product Development.
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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.
  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.
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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.
   Our success depends, in part, on attracting customers who will embrace the new technologies offered
by our products and services.
  Our success depends, in part, on our ability to protect our intellectual property rights.
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Risks Related To Registration of 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.
  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.
 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.
  
 ITEM 3  CONTROLS AND PROCEDURES
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PART II  OTHER INFORMATION
 
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  a.
    
    On May 23, 2005, a forward split of its capital stock such as every one share
of common stock issued and outstanding prior to the split be exchanged for six
post-split shares of common stock.
  a.
    
    On June 22, 2005, a forward split of its capital stock such as every one share
of common stock issued and outstanding prior to the split be exchange for five
post-split share of common stock.b.
    
    On June 15, 2005, the shareholders and directors of the Company entered into an
Agreement and Plan of Merger with ViaSpace Technologies LLC (VST). Pursuant to the
closing of the Merger Agreement on June 22, 2005, the Company issued 226,800,000 shares
of Common Stock to the members of VST in exchange for 100% of the membership units of
VST.c.
    
    Subsequent to effective date of the merger with VST, the resulting number of
the authorized capital stock of the company will be fixed at 400,000,000 common shares
with a par value of $0.001 per share. The authorized preferred capital stock of the
company will remain unchanged at 5,000,000 shares with a par value of $0.001 per share.
 
 Item 6. Exhibits.
 (a) Exhibits
 10.1
    
    Employment Agreement dated October 14, 2004 between
DMFCC and Dr. Carl Kukkonen.31.1
    
    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:  August 15, 2005
    /s/ CARL KUKKONENCarl KukkonenChief Executive OfficerDate:  August 15, 2005
    /s/ STEPHEN J. MUZIStephen J. MuziChief Financial Officer 24