THE COHEN REPORT

VIASPACE was founded in 1998 as a spin-off of the Caltech/NASA Jet propulsion Laboratory (JPL) to transform technologies originally developed for space and defense markets into profitable commercial enterprises. VIASPACE seeks opportunities in high growth markets delivering on problems with growing global relevance by leveraging unique expertise not available elsewhere in the commercial world. VIASPACE sees a compelling business opportunity in the homeland security & public safety and fuel cell markets. VIASPACE target markets are in excess of $100 B/yr and growing with a CAGR of over 20%. In the past six years VIASPACE has created three companies, SpectraSensors, QWIP Technologies and ViaLogy Corp. Their websites provide a background on the commercialization of NASA technology, (spectrasensors.com, qwip.com, vialogy.com). The Company's current focus is on three subsidiaries, Direct Methanol Fuel Cell, Arroyo Sciences and Ionfinity.

Direct Liquid Methanol Fuel Cell

Direct Methanol Fuel Cell Corporation (DMFCC) will provide disposable methanol fuel cell cartridges for tomorrow's fuel cell-powered portable electronic devices such as laptop computers and cell phones. Methanol fuel cells (DFMC) are expected to replace lithium ion batteries in portable electronic devices. A DFMC can power a laptop for up to 10 hours on a disposable cartridge that costs $2 to $3. A smaller cartridge can power a cell phone for up to 3 weeks. We believe consumers will spend a few extra dollars for the convenience of keeping their cell phones and other electronic devices operating. As a disposable product, it generates recurring revenue for DMFCC.

The technology is protected by over 70 issued and pending patents. Toshiba, NEC, Sanyo, and Samsung have unveiled prototype fuel cell powered products that more than double the operating time over existing battery technology. DMFCC has opened a Tokyo office to work closely with Japanese manufacturers.

Arroyo Sciences, Inc .

Arroyo focuses on the fusion of radio frequency, nuclear and electromagnetic imaging to deliver information products in transportation, supply chain, security, logistics assurance and first responder safety markets. The Micro Tracker product enables a wireless tracking for first responders in hazardous environments. This product combines Radio Frequency Identification (RFID) tags, wireless digital communications, Ground Positioning Satellite (GPS), data for 2-D and 3-D geolocation determination, Geographic Information System (GIS) and sensor technologies. Real-time processing of many high data content inputs is required for the instantaneous assessment of danger. Applications include improved safety for Fire Department personnel in emergency situations, improved coordination of multi-agency deployments and extended operations in hazardous environments.

The COBRA product uses the imaging and sensing technology to provide early threat indicators for coastal surveillance and public infrastructure protection such as ports, power plants, airports, and telecommunication facilities. Real time sensory and image data is processed and software is customized to discriminate between friend and foe.

DeepScan is a software system that provides automatic analysis of air and seaport cargo containers based on X-ray and gamma ray imaging. Arroyo is currently using DeepScan for bomb and hazardous material detection in cargo.

Ionfinity

Ionfinity has developed the next generation mass spectrometry (MS) technology that is 10 times more sensitive than existing MS, with a 10 times increase in mass range. Higher sensitivity enables the comprehensive monitoring and detection of biological, chemical and nuclear contaminants. The current market for MS is estimated at $1.2 billion annually. The compact size and rugged portability will expand the market. New applications include enabling port inspection personnel to detect traces of contraband, EPA air quality monitoring and assisting in hazardous material clean up.

Additional Projects Under Review

Projects not included in our forecast are (1) a water purification technology and (2) interactive radio. The water purification system displays impressive statistics in that it can convert brackish, sewage or industrial wastewater into ultra-pure water. The water system is scalable from house to municipal usage and will last 25 years while requiring minimal maintenance. The interactive radio enables a listener to receive emails or web sites delivered in response to what is broadcast. The radio station essentially receives input from listeners that could enhance advertising and improve vertical market focus.

Forecasts and Valuation

We expect revenues for DMFCC will be driven by (1) increasing wireless usage of computing devices and (2) the existing need to extend cell phone battery life. We expect revenues for DMFCC will commence in 2007 and grow to $195 million by 2009. Homeland Security expenditures on airport and seaport security will be a primary revenue driver for Arroyo Sciences, which will begin to generate revenues in 2005, and will grow to $90 million in 2009. We expect commercial revenues for Ionfinity will commence in late 2007, and will be $10 million in 2009. Beyond 2009, total revenues will grow at a 60% to 80% rate for several years from existing and new products. Contracting with existing manufacturers, we expect operating margins will be in the low 40% range by 2009. Our initial forecasts indicate a fair value range from $8.40 to $11.10 based on the projected growth for the 2009 to 2012 timeframe. The graph below outlines our valuation analysis.

Directors and Management

Dr. Carl Kukkonen , is the CEO and founding partner. Dr Kukkonen was Director for Space Microelectronics and Manager of Supercomputing at Caltech/JPL, where he worked for 14 years. Prior to JPL, Dr. Kukkonen was the leading expert on hydrogen as alternative fuel at Ford Motor Company.

AJ Abdallat , COO, and VP of Business Development has been with VIASPACE since inception, after working in business development at Hewlett-Packard and Control Data Corporation.

Dr. Sandeep Gulati has been with VIASPACE since 2000. During the prior 12 years, Dr Gulati was Head of the Ultracomputing Technologies at NASAs JPL. Dr. Gulati is the developer of the revolutionary signal processing technology, QRI.

VIASPACE OVERVIEW

VIASPACE was formed in July 1998 with an objective of transforming technologies from Caltech/NASA's Jet Propulsion Laboratory and other advanced technology centers into profitable commercial enterprises through its strong connections with the advanced technology community. Through its three subsidiaries--Arroyo Sciences, Ionfinity, and Direct Methanol Fuel Cell Corporation (DMFCC)--VIASPACE has a diversified high tech portfolio that includes microelectronics, sensors, homeland security & public safety, energy/- fuel cells, information & computational technology, RFID, e-finance, and mobile e-commerce.

VIASPACE develops proven space and defense technologies into hardware and software products that fulfill high-growth market needs and solve today's complex problems.

VIASPACE benefits from important licenses and strategic relationships with Caltech/NASA's Jet Propulsion Laboratory and other Universities & Research Laboratories. The VIASPACE team has a proven expertise for the successful commercialization of innovations in information technology, physical science and life sciences developed at academic research institutions and national laboratories.

The company currently focuses on technologies originally developed for NASA and the US Department of Defense that have already reached a certain stage of maturity. Initial investments in these technologies amount to millions of dollars and many years of R&D, enabling VIASPACE to manage the commercialization process with only a modest additional investment and greatly reduced technical risk.

VIASPACE couples exceptional technology sourcing and validation capability with a demand-driven process of market validation. Decisions about technology transfer and product development are based, first and foremost, on market needs. In addition to our internal expertise, VIASPACE benefits from the domain expertise of leading experts that serve on our Scientific and Business advisory boards and from an informal global network of researchers, technology analysts, and technology professionals and investors that would be hard to replicate.

In the last six years, VIASPACE and its subsidiaries have secured more than $30 million in venture financing and strategic investment. Initial investors include Hewlett Packard, Divine Interventures, Los Angeles County Community Development Commission, Blueprint Ventures, The United Company, BioProjects International, Forrest Binkley & Brown, American River Ventures, and Nth Power.

VIASPACE has spawned 3 companies: SpectraSensors
( www.spectrasensors.com ), QWIP Technologies
( www.qwip.com ), and ViaLogy Corp ( www.vialogy.com ). These companies, currently at various stages of maturity, are positioned within high growth markets and poised for profitability. Today, VIASPACE focuses its effort on its three subsidiaries--Arroyo Sciences, Ionfinity, and Direct Methanol Fuel Cell Corporation (DMFCC)--and on new high technology opportunities.

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