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<SEC-DOCUMENT>0000950129-05-004174.txt : 20050427
<SEC-HEADER>0000950129-05-004174.hdr.sgml : 20050427
<ACCEPTANCE-DATETIME>20050427171548
ACCESSION NUMBER:		0000950129-05-004174
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		27
CONFORMED PERIOD OF REPORT:	20041231
FILED AS OF DATE:		20050427
DATE AS OF CHANGE:		20050427

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SAVE THE WORLD AIR INC
		CENTRAL INDEX KEY:			0001103795
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-HARDWARE & PLUMBING & HEATING EQUIPMENT & SUPPLIES [5070]
		IRS NUMBER:				522088326
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-29185
		FILM NUMBER:		05777312

	BUSINESS ADDRESS:	
		STREET 1:		29229 CANWOOD STREET
		STREET 2:		SUITE 206
		CITY:			AGOURA HILLS
		STATE:			CA
		ZIP:			91301
		BUSINESS PHONE:		818.865.3500

	MAIL ADDRESS:	
		STREET 1:		29229 CANWOOD STREET
		STREET 2:		SUITE 206
		CITY:			AGOURA HILLS
		STATE:			CA
		ZIP:			91301
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>v07538e10ksb.htm
<DESCRIPTION>SAVE THE WORLD AIR, INC. - DECEMBER 31, 2004
<TEXT>
<HTML>
<HEAD>
<TITLE>e10ksb</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<P align="center" style="font-size: 14pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<P align="center" style="font-size: 18pt"><B>Form&nbsp;10-KSB</B>


<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%" style="font-size: 12pt">
<TR>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>




<P align="left" style="margin-left:10%; font-size: 10pt"><B>For the fiscal year ended December&nbsp;31, 2004.</B>


<P align="center" style="font-size: 10pt"><B>or</B>


<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%" style="font-size: 12pt">
<TR>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>




<P align="left" style="margin-left:10%; font-size: 10pt"><B>For the transition period from&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to</B>


<P align="center" style="font-size: 10pt"><B>Commission File Number 0-29185</B>


<P align="center" style="font-size: 24pt"><B>Save the World Air, Inc.</B>


<DIV align="center" style="font-size: 10pt"><I>(Exact name of registrant as specified in its charter)</I></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Nevada</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>52-2088326</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><I>(State or other jurisdiction of</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><I>(I.R.S. Employer</I></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><I>incorporation or organization)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><I>Identification No.)</I></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><B>5125 Lankershim Boulevard<BR>
North Hollywood, California 91601</B><BR>
<I>(Address, including zip code, of principal executive offices)</I>



<P align="center" style="font-size: 10pt"><B>(818)&nbsp;487-8000</B><BR>
<I>(Registrant&#146;s telephone number, including area code)</I>



<P align="center" style="font-size: 10pt"><B>Securities registered pursuant to Section&nbsp;12(b) of the Exchange Act: None.</B>



<P align="center" style="font-size: 10pt"><B>Securities registered pursuant to Section&nbsp;12(g) of the Exchange Act: Common Stock, $0.001 par value.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check whether the Registrant (1)&nbsp;filed all reports required to be filed by Section&nbsp;13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for such shorter period
that the registrant was required to file such reports), and (2)&nbsp;has been subject to such filing
requirements for the past 90&nbsp;days. Yes <FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check if disclosure of delinquent filers in response to Item&nbsp;405 of Regulation&nbsp;S-B is not
contained in this form, and no disclosure will be contained, to the best of Registrant&#146;s knowledge,
in definitive proxy or information statements incorporated by reference in Part&nbsp;III of this Form
10-KSB or any amendment to this Form 10-KSB. <FONT face="Wingdings">&#111;</FONT>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registrant&#146;s revenues for its most recent fiscal year: None.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate market value of voting and non-voting common equity held by non-affiliates of
the Registrant was approximately $ 33,155,221 as of March&nbsp;31,
2005, based upon the average of the high and low prices
on the Pink Sheets reported for such date. This calculation does not reflect a determination that
certain persons are affiliates of the Registrant for any other purpose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares of the Registrant&#146;s Common Stock outstanding as of March&nbsp;31, 2005 was
38,450,321 shares.


<P align="center" style="font-size: 10pt"><B>DOCUMENTS INCORPORATED BY REFERENCE</B>


<P align="left" style="font-size: 10pt">Portions of the Registrant&#146;s Proxy Statement for its 2004 Annual Meeting of Stockholders (the
&#147;Proxy Statement&#148;), to be filed with the Securities and Exchange Commission, are incorporated by
reference into Part&nbsp;III of this Form 10-KSB.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transitional Small Business Disclosure Format (Check one): Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#254;</FONT>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
FORM 10-KSB</B>



<P align="center" style="font-size: 10pt"><B>INDEX</B>


<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><A href="#101"><B>PART I</B></A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#102">Item&nbsp;1
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#102">Business
</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#103">Item&nbsp;2
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#103">Properties</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">11</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#104">Item&nbsp;3
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#104">Legal Proceedings</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#105">Item&nbsp;4
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#105">Submission of Matters to a Vote of Security Holders</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><A href="#106"><B>PART II</B></A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#107">Item&nbsp;5
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#107">Market for Common Equity and Related Stockholder Matters</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">14</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#108">Item&nbsp;6
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#108">Management&#146;s Discussion and Analysis or Plan of Operation</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">15</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#109">Item&nbsp;7
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#109">Financial Statements</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">19</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#110">Item&nbsp;8
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#110">Changes in and Disagreements With Accountants on Accounting and Financial Disclosure</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#111">Item&nbsp;8A
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#111">Controls and Procedures</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#112">Item&nbsp;8B
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#112">Other Information </A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><A href="#113"><B>PART III</B></A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#114">Item&nbsp;9
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#114">Directors and Executive Officers of Registrant</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#115">Item&nbsp;10
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#115">Executive Compensation</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#116">Item&nbsp;11
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#116">Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#117">Item&nbsp;12
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#117">Certain Relationships and Related Transactions</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#118">Item&nbsp;13
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#118">Exhibits</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#119">Item&nbsp;14
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#119">Principal Accountant Fees and Services</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">51</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><A href="#120">SIGNATURES</A></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">52</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w2.htm">Exhibit 10.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w14.htm">Exhibit 10.14</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w16.htm">Exhibit 10.16</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w18.htm">Exhibit 10.18</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w19.htm">Exhibit 10.19</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w20.htm">Exhibit 10.20</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w21.htm">Exhibit 10.21</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w22.htm">Exhibit 10.22</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w23.htm">Exhibit 10.23</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w24.htm">Exhibit 10.24</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w25.htm">Exhibit 10.25</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w27.htm">Exhibit 10.27</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w28.htm">Exhibit 10.28</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w29.htm">Exhibit 10.29</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w30.htm">Exhibit 10.30</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w31.htm">Exhibit 10.31</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w32.htm">Exhibit 10.32</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w33.htm">Exhibit 10.33</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w34.htm">Exhibit 10.34</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv10w35.htm">Exhibit 10.35</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv14w1.htm">Exhibit 14.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv14w2.htm">Exhibit 14.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv23w1.htm">Exhibit 23.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv31w1.htm">Exhibit 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv31w2.htm">Exhibit 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v07538exv32w1.htm">Exhibit 32.1</A></FONT></TD></TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">i
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<!-- /TOC -->
</DIV>
<DIV align="left">
<A name="101"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>PART I</B>


<DIV align="left">
<A name="102"></A>
</DIV>


<P align="center" style="font-size: 10pt"><B>Forward-Looking Statements</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Annual Report on Form 10-KSB contains forward-looking statements. These forward-looking
statements include predictions regarding our future:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>revenues and profits;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>customers;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>research and development expenses and efforts;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>scientific test results;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>sales and marketing expenses and efforts;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>liquidity and sufficiency of existing cash;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>technology and products;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the outcome of pending or threatened litigation; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the effect of recent accounting pronouncements on our financial condition and results of operations.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You can identify these and other forward-looking statements by the use of words such as &#147;may,&#148;
&#147;will,&#148; &#147;expects,&#148; &#147;anticipates,&#148; &#147;believes,&#148; &#147;estimates,&#148;, &#147;continues,&#148; or the negative of such
terms, or other comparable terminology. Forward-looking statements also include the assumptions
underlying or relating to any of the foregoing statements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our actual results could differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth below under the heading &#147;Risk
Factors.&#148; All forward-looking statements included in this document are based on information
available to us on the date hereof. We assume no obligation to update any forward-looking
statements.

<P align="left" style="font-size: 10pt"><B>Item&nbsp;1. </B><B><I>Business</I></B>

<P align="left" style="font-size: 10pt"><B>General</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Overview</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a development stage company that has not yet generated revenues. The company&#146;s focus
is on research and development of proprietary devices that are designed to reduce harmful
emissions, and improve fuel efficiency and engine performance on equipment and vehicles driven by
internal combustion engines. Our prototype devices are called &#147;ZEFS&#148; (Zero Emission Fuel-Savings
Device) and &#147;CAT-MATE.&#148; We have devoted the bulk of our efforts to the completion of the design,
the development of our production models and the promotion of our products in the market place
worldwide. Expenses have been funded through the sale of company stock. We have taken actions to
secure our intellectual property rights to the ZEFS and CAT-MATE devices. In addition, we have
initiated marketing efforts to international governmental entities in cooperation with the United
Nations Environmental Programme (UNEP)&nbsp;and various original equipment manufacturers (OEMs), to
eventually sell or license our ZEFS and CAT-MATE products and technology.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate that these efforts will continue during 2005 and that we will begin selling our
devices by late 2005. We do not envision generating significant revenue in 2005. We will need to
raise additional capital during 2005 to fund our research and development efforts and other
expenses.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our company was incorporated on February&nbsp;18, 1998, as a Nevada corporation under the name
Mandalay Capital Corporation. We changed our name to Save the World Air, Inc. on February&nbsp;11, 1999
following the acquisition of marketing and manufacturing rights of the ZEFS device. We acquired the
worldwide manufacturing and marketing rights to the ZEFS device from its inventors. During the past
three years, we have been acquiring new technologies, developing products using our technologies
and conducting scientific tests regarding our technologies and prototype products. In late 2003,
the Company acquired worldwide intellectual property and patent rights to technologies which reduce
carbon monoxide, hydrocarbon and nitrous oxide emissions in two- and
four-stroke motorcycles, fuel-injection engines, generators and small
engines. The Company has developed
prototype products and named them &#147;CAT-MATE.&#148;



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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our mailing address and executive offices are located at 5125 Lankershim Boulevard, North
Hollywood, California, 91601. Our telephone number is (818)&nbsp;487-8000. Our corporate website is
www.savetheworldair.com. Information contained on the website is not deemed part of this Annual
Report.


<P align="left" style="font-size: 10pt"><B>Background</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal business focus currently rests with development and planned distribution of
devices designed to solve the complex problems caused by pollution from automobile and other
equipment driven by internal combustion engines and to improve the performance of those engines.
We have designed and tested multiple versions of the ZEFS and CAT-MATE devices for use on
carbureted and fuel injection gasoline engines and are currently in the process of adapting this
technology to work on engines that use diesel fuels.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The incomplete and inefficient burning of fossil fuel in an automobile engine and other
equipment driven by internal combustion engines results in unburned gases, such as hydrocarbons and
carbon monoxide being expelled as harmful emission as a by-product from the engine&#146;s exhaust. These
emissions from automobile engines have contributed to significant air pollution and depletion of
the ozone layer that protects the world&#146;s atmosphere from harmful ultraviolet radiation. As a
result, the world has experienced significant deterioration to its air quality since the beginning
of the 20th century and, because of the added use of internal combustion engines, the problem has
gotten progressively worse with each passing year. Forecasts published by the World Resources
Institute indicate that this trend will continue to accelerate. By the year 2010, the number of
automobiles in operation worldwide are expected to exceed 800&nbsp;million.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>ZEFS </B>devices work to enhance the atomization of the fuel by affecting the viscosity of that
fuel. The effect is achieved by the use of specific and complex magnetic flux orientations that
have the ability to influence fuel at the molecular level.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These devices alter the fuel atomization process by changing the size of the molecular
structure of the fuel. The devices create a more efficient burn rate, thus lowering the production
of carbon monoxide, hydrocarbons and nitrous oxide. ZEFS devices are easily fitted to the base
plates of carburetors and fuel injection systems; the devices are compact, there are no moving
parts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>CAT-MATE </B>devices function together with a catalytic converter and are configured in the
exhaust system. The Cat-Mate is fundamentally a device that greatly enhances the efficiency of
catalytic converters in particular applications where use of other emission control devices is not
feasible.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specifically, CAT-MATE is designed for use on two- and four-stroke motorcycles, off-road and
marine vehicles, generators, lawn mowers, on stationary implements and on &#147;carbureted&#148; and fuel
injection motor vehicles.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Testing by the Company&#146;s R&#038;D as well as by independent sources has demonstrated the use of
ZEFS and CAT-MATE products generate significant reductions in hydrocarbon, nitrous oxide and carbon
monoxide emissions and, in most cases, improves gas consumption and mileage performance.


<P align="left" style="font-size: 10pt"><B>Our Business Strategy</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Governmental Mandates to Reduce Air Pollution</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Governments internationally recognize the serious effects caused by air pollution and have
enacted legislation to mandate that automobile manufacturers be required to reduce exhaust
emissions caused by their products. The approach used by auto makers to address this mandate has
thus far generally taken the form of installing catalytic converters, which work on the principle
of super heating gases within the exhaust manifold after the damaging gases have been created
through internal combustion. We anticipate that further government mandates may pressure automobile
manufacturers to adopt better solutions to reducing emissions.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Technology Transfer</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are actively continuing our research on the ZEFS and CAT-MATE devices for use on
gasoline-powered engines and have taken steps to finalize the development of versions of the device
to fit on carbureted, center point, and multi-port fuel injection systems. We have used these
prototype devices as demonstration units, during presentations, before manufacturers. It is our
long-term objective to facilitate the adoption of this technology by engine, carburetor, muffler
and exhaust manufacturers.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We adopted this strategy of technology transfer because automobile and engine manufacturers
will require time to fully inspect, test and integrate the ZEFS and CAT-MATE devices into their new
designs, as well as to adapt them to their legacy vehicles. Since the ZEFS technology is presently
protected by international patent, and we have patent applications on file for the CAT-MATE
technology, we view technology transfer strategy as the most viable option to gain widespread
adoption of the technology by manufacturers, without compromising our ownership of the technology.
We intend to assist these manufacturers with the full integration of our technology, by not only
supporting the required engineering and system integration efforts, but also by reducing costs
associated with such process so that they may not pose an unnecessary time constraint to the
endeavor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have successfully developed multiple ZEFS and CAT-MATE devices for use on one-, two- and
four-barrel carbureted engines and created production CAD drawings for these devices and produced
multiple samples using cast aluminum housings. We have also created several prototype devices for
use on fuel injection engines. Extensive R&#038;D testing of our carbureted and fuel injection ZEFS and
CAT-MATE devices has been positive.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because of the complexity and enormity of the task of designing variants of ZEFS and CAT-MATE
devices to fit every make and model, we intend to rely on the cooperation of manufacturers to
support this function, including engineering, marketing, and installation of the devices.
Additionally, we are cognizant that in order to preserve the integrity of the warranties provided
by manufacturers, they must be involved in the process of designing and installing the ZEFS and
CAT-MATE devices on legacy vehicles. We envision that a cooperative venture between manufacturers
and us will result in the most optimal mechanism for the installation of ZEFS and CAT-MATE devices
on the greatest percentage of vehicles possible, through agreements between the company,
manufacturers and their dealerships.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also engaged in the development of ZEFS and CAT-MATE devices for use on diesel engines,
such as those used on trucks, buses, heavy equipment and generators. Because these types of
vehicles use engines provided from Cummins, Caterpillar, or Detroit Diesel almost exclusively, the
number of ZEFS and CAT-MATE variants needed to service these fleets is considerably less than the
number required to satisfy the automobile market. This fact alone makes entry into the diesel
engine market extremely attractive for our business, offering a large number of potential customers
with a minimum of expense for research and development of product variants.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Research and Development</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a research and development facility in Queensland, Australia. We have expanded
research and development to include applications of the ZEFS and CAT-MATE technology to diesel
engines, motorbikes, boats, generators, lawnmowers and other small engines. We have purchased test
vehicles, test engines and testing equipment. We have completed testing on ZEFS and CAT-MATE
devices for multiple automobiles, trucks, motorcycles, off-road vehicles and stationary engines,
the results of which have been provided to RAND Corporation (RAND)&nbsp;for evaluation. During 2004,
RAND expanded its role with us and now oversees our research and development facility in Australia.
We also use third party research and development facilities in Los Angeles and San Jose,
California for the development of our ZEFS and CAT-MATE devices. We spent approximately $629,000
in fiscal year 2003 and $1,873,000 in fiscal 2004 on research and development. Please see Item&nbsp;6,
&#147;Management&#146;s Discussion and Analysis of Financial Condition and Results of Operation &#150; Results of
Operations&#148; and Note 8 to Notes to Financial Statements for a more complete understanding of our
research and development expense in 2004.




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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Independent Laboratory and Scientific Testing</I></B>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have performed independent laboratory testing of the ZEFS and CAT-MATE devices in order to
gain better market acceptance by manufacturers and governmental regulatory officials. Research and
testing using government standard test equipment in the United States has demonstrated that the
ZEFS and CAT-MATE devices may lead to reduced engine emissions, such as carbon monoxide, mitrous
oxide and hydrocarbons, and improve gas consumption and mileage performance.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2002, we retained RAND to study the validity and market potential of our
technology. RAND determined then that sufficient theoretical basis exists to warrant entry into a
comprehensive product-testing program. As a result, in May&nbsp;2003, we entered into an arrangement in
which RAND would coordinate and supervise both a theoretical scientific study of the concepts
underlying the ZEFS device as well as an empirical study.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In tests conducted at the Northern California Diagnostics Laboratory in Napa, California,
the ZEFS device reduced carbon monoxide, hydrocarbons, and nitrous oxide fume levels and increased
gas mileage for the test vehicle. In tests conducted at Automotive Testing and Development
Services, Inc. in Ontario, California, the ZEFS and CAT-MATE devices reduced carbon monoxide,
hydrocarbons, and nitrous oxide fume levels and increased mileage performance for the test
vehicles.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Motorcycle and Generator tests of our CAT-MATE conducted by Hong Kong Exhaust Emissions
Laboratory (HKEEL)&nbsp;showed that CAT-MATE devices reduce emissions of carbon monoxide, nitrous oxide
and hydrocarbons. The test results were certified by United Kingdom&#146;s Vehicle Certification Agency
(VCA)&nbsp;on January&nbsp;20, 2005.


<P align="left" style="font-size: 10pt"><B>Marketing</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2004, we commenced marketing efforts for our emission control and
performance-enhancing ZEFS and CAT-MATE technologies. We are focused on selling or licensing our
technologies and devices domestically and internationally to automobile, carburetor,
fuel-injection, diesel, exhaust and muffler original equipment manufacturers (OEMs) and the
after-market. We have presented our ZEFS and CAT-MATE technologies to OEMs in the United States
and Asia. We intend to pursue this market sector and create strategic alliances and partnerships
during 2005.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Harmful exhaust emissions from automobiles and motorcycles in developing countries is at the
highest levels because of the continued widespread use of older model automobiles and motorcycles
with either no or malfunctioning catalytic converters.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We work with governments worldwide at all levels, together with industry, to capitalize on our
technology to achieve what we know to be common global environmental objectives. In November&nbsp;2004,
management met with UNEP in New York to enlist its aid with this objective. By UNEP invitation,
we participated in a UNEP-sponsored meeting in Bali , Indonesia in December&nbsp;2004, which resulted in
the initiation of informal negotiations with United Nations and government officials to explore the
possibility of pilot programs using our technology in Indonesia, Kenya , Mexico, Thailand, Brazil
and Sri Lanka.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have also since participated in a United Nations sponsored Summit in Lake Toba, North
Sumatra, Indonesia in March&nbsp;2005. This resulted in an announcement by the Lake Toba Summit Chair,
Nico Barito, endorsed by HRH Sri Sultan Hamengkubowono X of Yogyakarta and the Governor of North
Sumatra, Razil Nurdin, of two pilot programs intended to minimize carbon monoxide emissions,
hydrocarbons and nitrous oxide, by installing our devices on 10,000 student motorcycles at
universities in Yogyakarta and Medan in Indonesia.


<P align="left" style="font-size: 10pt"><B>Competition</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The automotive and motor engine industry is highly competitive. We have many competitors in
the United States and throughout the world developing technologies to make engines more
environmentally friendly and fuel efficient. Many of our competitors have greater financial,
research, marketing and staff resources than we do. For instance, automobile manufacturers have
already developed catalytic converters on automobiles, in order to reduce emissions. While we
believe that our technology has greater benefits, it may be unable to gain market acceptance.
Further, research and development throughout the world is constantly uncovering new technologies.
Although we are


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<P align="left" style="font-size: 10pt">unaware of any, there can be no assurance that no existing or future technology is currently
or will be superior to the ZEFS and CAT-MATE devices.


<P align="left" style="font-size: 10pt"><B>Government Regulation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our research and development activities are not subject to any governmental regulations that
would have a significant impact on our business to date and we believe that we are in compliance
with all applicable regulations that apply to our business as it is presently conducted. Depending
upon whether we manufacture or license our devices in the future and in which countries such
devices are manufactured or sold, we may be subject to regulations, including environmental
regulations at such time.


<P align="left" style="font-size: 10pt"><B>Intellectual Property</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;1998, the Company acquired all of the marketing and manufacturing rights to the
ZEFS technology from the purported inventor of the technology in exchange for 5,000,000 shares of
our common stock, $500,000 and $10 royalty for each unit sold. In November&nbsp;2002, under our
settlement with the bankruptcy trustee for the estate of the inventor and his wife, the trustee
transferred all ownership and legal rights to the international patent application for the ZEFS
device to us. In exchange for these rights, we gave the bankruptcy trustee an option to purchase
500,000 shares of our common stock at $1.00 share and $0.20 royalty on each device we sell. See
&#147;Part&nbsp;I, Item&nbsp;3. Legal Proceedings&#148; and Note 1 to Notes to Financial Statements&#148; below.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2002, we settled a dispute with Kevin &#147;Pro&#148; Hart, who claimed proprietary rights to the
ZEFS technology. He assigned to us all his rights to the ZEFS technology in exchange for an option
to purchase 500,000 shares of our common stock at $1.00 share and a $0.20 royalty on each device we
sell. Mr.&nbsp;Hart currently serves as a member of our Advisory Board. See &#147;Advisory Board&#148; below.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The CAT-MATE technology was created by Adrian Menzell, a member of our research team in
Australia. On August&nbsp;20, 2003, Mr.&nbsp;Menzell filed preliminary Australian patent application
#2004900192 for the CAT-FLAP. This technology was enhanced and on June&nbsp;4, 2004, Mr.&nbsp;Menzell filed
preliminary Australian patent application #2004903000 for the CAT-MATE. On September&nbsp;1, 2003, we
had entered into an Assignment Agreement with Mr.&nbsp;Menzell, pursuant to which this technology was
assigned to us in exchange for 20,000 shares of our common stock and a royalty of $.25 for each
CAT-MATE device sold. On June&nbsp;26, 2004, we received a deed of assignment from Mr.&nbsp;Menzell and each
pending patent application was transferred to our name.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>ZEFS Patent Applications</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We obtained the patent application for the ZEFS MK1 device &#091;PCT/AU1/00585&#093; originally filed in
Australia on May&nbsp;19, 2000. The International Filing Application for our ZEFS MK1 technology was
filed on May&nbsp;21, 2001 (Official No.&nbsp;10/275946) &#091;PCT/AU1/00585&#093; and modified as ZEFS MK2 on July&nbsp;9,
2003. On November&nbsp;4, 2003 we filed for our ZEFS MK3 (#2003906094). The United States Patent and
Trademark Office issued a Notice of Allowance of Patent dated January&nbsp;24, 2005.
The
duration of the patent is 20&nbsp;years from the date the original application was filed. Prior to the
issuance of such patent, we relied solely on trade secrets, proprietary know-how and technological
innovation to develop our technology and the designs and specifications for the ZEFS technology.
Overall, we have applied for a patent on an international basis in approximately 64 countries
worldwide.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>ZEFS MK1&#151;Device For Saving Fuel and Reducing Emissions</I></B><B>. </B>Thi<B>s </B>fuel saving device has a disk
like nonmagnetic body provided with a central opening and a number of permanent magnets having
opposed polarities positioned about the central opening to provide multidirectional magnetic
fields. The device is positioned in a fuel air mixture to reduce emissions.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the status of the ZEFS MK1 patent application in the following
countries:





<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Country</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Filing Date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Status</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Australia
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" valign="top" nowrap colspan="2">2001 258057</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under examination Deadline 14 June&nbsp;2005</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bosnia &#038; Heregovina
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">BAP 021290A
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Short Term Patent Grant Requested</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Brazil
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">0.111.365-8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Examination requested 5 September&nbsp;2003</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bulgaria
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">107391</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Canada
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">2409195</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Examination to be requested by 21 May&nbsp;2006</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">China
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">01809802.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under examination Deadline 27 Feb 2005</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Columbia
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">02.115.018</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Examination requested 23 July&nbsp;2004</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Croatia
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">P20020982A</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Czech Republic
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">PV 2002-4092
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Examination requested 23 July&nbsp;2004</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Eurasian(1)
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">200201237</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Europe(2)
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">019331222.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Georgia (3)
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="left" colspan="2" valign="top">4098/01-2002</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hong Kong
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">04100327.0</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Automatic grant upon grant by China</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hungary
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">P 03 01796</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">India (3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">IN/PCT/2002/01523
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Indonesia
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">WO0200202844
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Examination requested November&nbsp;2003</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Israel
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">152902</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Japan
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">586731/2001</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Must request Examination by May&nbsp;21, 2008</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mexico
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">PA/A/2002/11365
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Morocco
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">PV/26.964
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Granted</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">New Zealand
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">523113</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Granted</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Norway
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">20025531</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Poland
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">P 358837</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Serbia/Montenegro
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">P-870/02</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Examination requested December&nbsp;2002</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sri Lanka (3)
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">12918</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Singapore
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">200206064.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Grant fees paid-awaiting grant</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">South Africa
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">2002/10013</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Granted</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">South Korea
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="left" colspan="2" valign="top">2002 7015531</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Must request Examination by May&nbsp;21, 2006</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Trinidad &#038; Tobago
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">TT/A2002/00213
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under examination</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ukraine (3)
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">20021210144</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Examination requested October&nbsp;2003</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">United States (3)
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">10/275946</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Notice of Allowance issued January&nbsp;24, 2005</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Vietnam
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="left" colspan="2" valign="top">1-2002-01168</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;21, 2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under examination</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<HR size="1" width="18%" align="left" noshade color="#000000">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Eurasian patent application covers the countries of Azerbaijan, Armenia, Belarus, Georgia,
Kazakhstan, the Kyrgyz Republic, Moldova, the Russian Federation, Tajikistan, Ukraine and
Turkmenistan.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Europe patent application covers the countries of Austria, Belgium, Switzerland,
Lichtenstein, Cyprus, Germany, Denmark, Spain, Finland, France, Great Britain, Greece,
Ireland, Italy, Luxembourg, Netherlands, Portugal, Sweden, Turkey, Lithuania, Latvia,
Slovenia, Romania and Macedonia.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">In the process of being assigned to the Company.</TD>
</TR>

</TABLE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>ZEFS MK2&#151;Device for Saving Fuel and Reducing Emissions</I></B><B>. </B>This fuel saving device similar to
that of the MK1 except that a central magnet can be provided in the opening and the peripheral
magnets extend only partially through the depth of the body and stop short of the top wall to
provide the option of moving the magnetic field further away from the base of the carburetor to
increase the area of magnetic influence between the point of fuel atomization and the point of
cessation of magnetic influence.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The priority date is July&nbsp;19, 2003 from Australian patent application 2003903626.



<P align="center" style="font-size: 10pt">6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the status of the ZEFS MK2 patent application in the following
countries:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Country</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Filing Date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Status</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Taiwan
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">92134811</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;19, 2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under examination</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">International
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">PCT/AU2004/000950
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;15, 2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Clear International Search
Report Issued. Request for
International Preliminary
Examination due Feb 15, 2005</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One hundred twenty five countries are covered by the PCT. National Patent Applications are
due by January&nbsp;15, 2006.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>ZEFS MK3&#151;Emission Control Devices. </I></B>This emission control device is particularly suited for
fuel injection systems which has an elongate body formed with one or more channels and a number of
permanent magnets is positioned in the channels. The device sits on a fuel rail.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The priority date is November&nbsp;4, 2003 from Australia patent application 2003906094.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the status of the ZEFS MK3 patent application in the following
countries:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Country</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Filing Date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Status</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thailand
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" colspan="2" valign="top">095155</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;3, 2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting Examination</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">International
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="top">PCT/AU2004/001518
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;4, 2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Awaiting International Search Report</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately 125 countries are covered by the PCT. National Patent Applications are due by
May&nbsp;4, 2006


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>CAT-MATE Patent Applications</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>CAT-FLAP (Afterburner) &#150;Improvements in or Relating to Emission Control Systems</I></B><B>. </B>A catalytic
converter is provided in an engine exhaust flow to reduce emissions. A valve is provided
downstream from the catalytic converter. The valve is in a closed position when the exhaust flow
volume is low to keep the hot exhaust gas around the catalytic converter to keep the catalytic
converter within its operational temperatures. When the exhaust flow volume is high (e.g. the
engine is revving) the catalyst is kept at its operational temperature by normal gas flow and valve
is opened to not impede exhaust flow. A simple hinge flap is one method by which this can be
achieved.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The priority date is January&nbsp;6, 2004 from Australian patent application 2004900192.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately 125 countries are covered by the PCT. National Patent Applications are due by
July&nbsp;8, 2006.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>CAT-MATE&#151;Inline Exhaust Device to Improve Efficiency of a Catalytic Converter</I></B><B>. </B>A set of rings
is placed downstream from the catalytic converter to re-radiate heat to the catalytic converter to
keep the converter working at a warmer temperature and therefore greater efficiency.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The priority date is June&nbsp;4, 2004 from Australian patent application 2004903000.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This invention was incorporated into the specifications filed pursuant to the CAT-FLAP
invention.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into agreements with certain employees and consultants, which limit access to,
and disclosure or use of, our technology. There can be no assurance, however, that the steps we
have taken to deter misappropriation of our intellectual property or third party development of our
technology and/or processes will be adequate, that others will not independently develop similar
technologies and/or processes or that secrecy will not be breached. In addition, although
management believes that our technology has been independently developed and does not infringe on
the proprietary rights of others, there can be no assurance that our technology does not and will
not so infringe or that third parties will not assert infringement claims against us in the future.
Management believes that the steps they have taken to date will provide some degree of protection,
however, no assurance can be given that this will be the case.


<P align="left" style="font-size: 10pt"><B>Employees</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of December&nbsp;31, 2004, we had four full-time employees, including
two members of senior
management, and five part-time employees. As of such date, we also
utilized the services of three full-time
consultants in our R&#038;D facility in Australia and three additional part-time consultants to assist
us with various matters, including marketing. In order to maintain salaries at a minimum without


<P align="center" style="font-size: 10pt">7
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">compromise to the company&#146;s functional capacity, we
adopted the practice of engaging consultants for services needed not on a &#147;full-time&#148; basis. We
intend to hire additional personnel to provide services when they are needed on a full-time basis.
We recognize that our efficiency largely depends, in part, on our ability to hire and retain
additional qualified personnel as and when needed and we have adopted procedures to assure our
ability to do so.


<P align="left" style="font-size: 10pt"><B>Executive Officers</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information regarding our executive officers as of
December&nbsp;31, 2004:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Edward
L. Masry, Esq.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">72</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board and Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Eugene E. Eichler, CPA
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">78</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President, Chief Financial Officer and Treasurer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bruce H. McKinnon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">63</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Operating Officer and Executive Vice
President of Business Development</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nathan Shelton
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">55</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President of Marketing and Distribution</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Erin
Brockovich
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President of Environmental Affairs</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Janice Holder
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">59</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Secretary</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Edward L. Masry, Esq. </I></B>has served as our Chairman of the Board and Chief Executive Officer
since October&nbsp;2001 and served as our President from October&nbsp;2001 until March&nbsp;2004. Mr.&nbsp;Masry has
been a member of the law firm of Masry &#038; Vititoe since 1986 and was Mayor of Thousand Oaks City and
currently a member of the City Council. From 1960 to 1986, he was a partner of various law firms.
Mr.&nbsp;Masry was corporate director of Merlin Olsen Porsche Audi from 1970 to 1988 and corporate
director of Gabriel Olsen Volkswagen from 1969 to 1973. Mr.&nbsp;Masry received a J.D. from Loyola Law
School, Los Angeles.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Eugene E. Eichler, CPA</I></B><I>, </I>has served as our President since March&nbsp;2004, our Chief Operating
Officer and Chief Financial Officer and Treasurer since October&nbsp;2001 and as a director since May
2002. Mr.&nbsp;Eichler was the Chief Financial Officer and Firm Administrator of the law firm Masry &#038;
Vititoe from 1982 to October&nbsp;2001. From 1974 to 1982, Mr.&nbsp;Eichler provided financial consulting
services to Foundation for HMO&#146;s, Acne Care Medical Clinics and Earth Foods, Inc. From 1960 to
1974, Mr.&nbsp;Eichler headed financial consulting services for Milburn Industries and Brown, Eichler &#038;
Company. From 1953 to 1960, he held the position of Chief Budgets and Forecasts at North American
Aviation. From 1951 to 1953, Mr.&nbsp;Eichler held various audit positions at the Atomic Energy
Commission. Mr.&nbsp;Eichler received a B.A. from University of Montana.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Bruce H. McKinnon </I></B>has served as a director since May&nbsp;2002, our Executive Vice-President of
Business Development since December&nbsp;2003 and our Chief Operating Officer since March&nbsp;2004. Mr.
McKinnon served as Chief Executive Officer and President of KZ Golf, Inc., an international golf
equipment company, from 1994 to 2004. From 1990 to 1994, he was President and Chief Executive
Officer of TTL Corporation and Novaterra, Inc., environmental remediation and technology
corporations. Prior to 1990, Mr.&nbsp;McKinnon was an owner, Chairman and Chief Executive Officer of
several international trading and manufacturing corporations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Nathan Shelton </I></B>has served as our Vice President of Marketing and Distribution since 2003. From
2002 until present, he operates his own consulting firm. He was the Chief Executive Officer and
Chief Marketing Officer at K&#038;N Engineering from 1984 to 2002 and was also Chairman of the Specialty
Equipment Market Association, a trade association of automotive after market manufacturers and
distributors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Erin Brockovich </I></B>served on our Board of Advisors from 2002 until August&nbsp;2004, when she was
appointed Vice President, Environmental Affairs. Since 1992, Ms.&nbsp;Brockovich has also served as
Director of Environmental Research with the law firm of Masry and Vititoe and her exploits were the
basis of the movie, &#147;Erin Brockovich&#148;.
Ms.&nbsp;Brockovich is an environmental activist and a research expert with respect to complex
environmental matters and has received multiple awards and honors for her work with the
environment. She has written a book with Marc Eliot entitled, &#147;Take It From Me, Life&#146;s a Struggle
But You Can Win&#148; and lectures around the world on environmental matters.


<P align="center" style="font-size: 10pt">8
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Janice Holder </I></B>has
served as our Corporate Secretary since October&nbsp;2001. From 1964 through
1984, Ms.&nbsp;Holder managed various medical facilities in Orange County. Since 1984, she has been the
Office Manager for the Law Offices of Masry &#038; Vititoe.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September 1, 2004,
the Company entered into an employment agreement with Erin Brockovich, pursuant to which she serves as our Vice President
of Environmental Affairs. The initial term of the agreement expires on September 30, 2005 and renews automatically for additional
one-year terms unless either party has given notice of non-extension prior to the end of a term. The agreement provides for a base
 compensation of $60,000, which amount is reviewable by the Board of Directors in subsequent years of the term. Ms. Brockovich is
eligible to participate in the Company&#146;s incentive and benefit plans, including eligibility to receive grants of stock options under
the 2004 Plan.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Ms. Brockovich&#146;s employment
 is terminated by us without cause or as a result of her disability or death, she, or her estate as the case may be, will be entitled
to receive an amount equal to the base compensation paid to her for the remainder of the term, except that in the case of a change of
control of the Company, the payment shall be the base compensation in effect immediately prior to the date of termination, for a period
 of one year beginning on the date of termination. If Ms. Brockovich&#146;s employment is terminated by us for cause or by her for any reason,
she will be entitled to receive all accrued and unpaid base salary and vacation compensation earned through the date of termination. The
agreement also contains standard confidentiality and non-solicitation provisions.


<P align="left" style="font-size: 10pt"><B>Advisory Board</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Advisory Board provides specific
expertise in areas of research and development relevant
to our business and meets with our management personnel from time to time to discuss our present
and long-term research and development activities. Advisory Board members include:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Sir Jack Brabham</B>, Triple
 Formula One World Champion and Twice Formula One World Constructors
Champion, is an expert in the areas of racing car design.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Kevin &#147;Pro&#148; Hart</B>,
is a famous Australian artist and inventor of the &#147;ZEFS&#148; device.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Jack Reader, Ph.D</B>., Director,
 BIFS Technologies Corporation. Mr.&nbsp;Reader is a systems engineer
and an expert in business management and energy conservation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Bobby Unser, Jr</B>., Founder,
 Unser Driving, Inc. Mr.&nbsp;Unser is an expert in motor racing and
stunt driving.


<P align="left" style="font-size: 10pt"><B>Risk Factors</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We expect to incur future losses and may not be able to
 achieve profitability.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not yet generated any
revenue from operations and, accordingly, we have incurred net
losses every year since our inception in 1998. Although we expect to generate revenue eventually
from sales of our ZEFS and CAT-MATE devices, we anticipate net losses and negative cash flow to
continue for the foreseeable future until such time as our products are brought to market. As
planned, we have significantly expanded our research and development efforts during the past year.
Consequently, we will need to generate significant additional revenue to fund our operations. This
has put a proportionate corresponding demand on capital. Our ability to achieve profitability is
entirely dependent upon our research and development efforts to deliver a viable product and the
company&#146;s ability to successfully bring it to market. Although our management is optimistic that
we will succeed with marketing the ZEFS and CAT-MATE devices we cannot be certain as to timing or
whether we will generate sufficient revenue to be able to operate profitably. If we cannot achieve
or sustain profitability, we may not be able to fund our expected cash needs or continue our
operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We will need additional capital to meet our operating
needs, and we cannot be sure that additional
financing will be available.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31,
2004 and thereafter, our expenses ran, and are expected to continue to run,
at a &#147;burn rate&#148; of approximately $200,000 per month. Our capital resources, as of April&nbsp;2005, will
be sufficient to fund operations only through the second quarter of 2005, and we will require
additional capital in order to operate beyond this date. In order to fund our capital needs for
the foreseeable future, we began a private offering in July&nbsp;2004 for the sale of our common stock
for a maximum of $10,000,000. This offering is ongoing as of the date of the filing of this Annual
Report. Management cannot predict with certainty that the offering will be sufficiently successful
to provide adequate funds to complete the research and development process or to profitably bring
our devices to market. Moreover, additional capital may not be available on favorable terms to us,
or at all. If we cannot obtain needed capital, our research and development, and marketing plans,
business and financial condition and our ability to reduce losses and generate profits are likely
to be materially and adversely affected.


<P align="left" style="font-size: 10pt; margin-left:1%"><B><I>As a company in the development stage and with an unproven business
 strategy, our limited history
of operations makes evaluation of our business and prospects difficult.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business prospects are
 difficult to predict because of our limited operating history,
early stage of development and unproven business strategy. Since our incorporation in 1998, we have
been and continue to be involved in development of products using our technology, establishing
manufacturing and marketing of these products to consumers and industry partners.


<P align="center" style="font-size: 10pt">9
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">Although we believe our technology and products
in development have significant profit potential, we may not attain profitable operations and our
management may not succeed in realizing our business objectives.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If we are not able to devote adequate resources to product development and commercialization, we
may not be able to develop our products.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business strategy is to develop, manufacture and market ZEFS and CAT-MATE products using
our technology. We believe that our revenue growth and profitability, if any, will substantially
depend upon our ability to:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>raise additional needed capital for research and development;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>complete development of our products in development; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>successfully introduce and commercialize our new products.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain of our products are still under various stages of development. Because we have limited
resources to devote to product development and commercialization, any delay in the development of
one product or reallocation of resources to product development efforts that prove unsuccessful may
delay or jeopardize the development of other product candidates. Although our management believes
that it can finance our product development through private placements and other capital sources,
if we do not develop new products and bring them to market, our ability to generate revenues will
be adversely affected.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The commercial viability of the ZEFS and CAT-MATE devices are unproven and we may not be able to
attract customers.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the best of our knowledge, no consumer or automobile manufacturer has used the ZEFS or
CAT-MATE devices to reduce motor vehicle emissions to date. Accordingly, the commercial viability
of our devices are not known at this time. If commercial opportunities are not realized from the
use of the ZEFS and CAT-MATE devices, our ability to generate revenue would be adversely affected.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If our products and services do not gain market acceptance, it is unlikely that we will become
profitable.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for products that reduce harmful motor vehicle emissions is evolving and we have
many successful competitors. Automobile manufacturers have historically used various technologies,
including catalytic converters, to reduce exhaust emissions caused by their products. At this time,
our technology is unproven, and the use of our technology by others is limited. The commercial
success of our products will depend upon the adoption of our technology by auto manufacturers and
consumers as an approach to reduce motor vehicle emissions. Market acceptance will depend on many
factors, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the willingness and ability of consumers and industry partners to adopt new technologies;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the willingness of governments to mandate reduction of motor vehicle emissions;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our ability to convince potential industry partners and consumers that our technology
is an attractive alternative to other technologies for reduction of motor vehicle
emissions;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our ability to manufacture products and provide services in sufficient quantities with
acceptable quality and at an acceptable cost; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our ability to place and service sufficient quantities of our products.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If our products do not achieve a significant level of market acceptance, demand for our
products will not develop as expected and it is unlikely that we will become profitable.


<P align="center" style="font-size: 10pt">10
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<DIV style="font-family: 'Times New Roman',Times,serif">


<P>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Any revenues that we may earn in the future are unpredictable, and our operating results are
likely to fluctuate from quarter to quarter.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our future operating results will fluctuate due to a variety of factors,
including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>delays in product development;</TD>
</TR>



<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>market acceptance of our new products;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>changes in the demand for, and pricing, of our products;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>competition and pricing pressure from competitive products;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>manufacturing delays; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>expenses related to, and the results of, proceedings relating to our intellectual property.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A large portion of our expenses, including expenses for our facilities, equipment and
personnel, is relatively fixed and not subject to significant reduction. In addition, we expect our
operating expenses will continue to increase significantly in 2005 as we further increase our
research and development, production and marketing activities. Although we expect to generate
revenues from sales of our products in the future, revenues may decline or not grow as anticipated
and our operating results could be substantially harmed for a particular fiscal period. Moreover,
our operating results in some quarters may not meet the expectations of stock market analysts and
investors. In that case, our stock price most likely would decline.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If we lose our key personnel or are unable to attract and retain additional personnel, we may be
unable to achieve profitability.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future success is substantially dependent on the efforts of our senior management,
particularly Edward L. Masry, Eugene Eichler and Bruce McKinnon. The loss of the services of
members of our senior management may significantly delay or prevent the achievement of product
development and other business objectives. Because of the scientific nature of our business, we
depend substantially on our ability to attract and retain qualified marketing, scientific and
technical personnel. There is intense competition among specialized automotive companies for
qualified personnel in the areas of our activities. If we lose the services of, or do not
successfully recruit key marketing, scientific and technical personnel, the growth of our business
could be substantially impaired. We do not maintain key man insurance for any of these individuals.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We may face costly intellectual property disputes.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to compete effectively will depend in part on our ability to develop and maintain
proprietary aspects of our technology and either to operate without infringing the proprietary
rights of others or to obtain rights to technology owned by third parties. Our pending patent
applications, specifically patent rights of the ZEFS and CAT-MATE devices, may not result in the
issuance of any patents or any issued patents that will offer protection against competitors with
similar technology. Patents we receive may be challenged, invalidated or circumvented in the future
or the rights created by those patents may not provide a competitive advantage. We also rely on
trade secrets, technical know-how and continuing invention to develop and maintain our competitive
position. Others may independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to our trade secrets.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our common stock is subject to penny stock regulation, which may make it more difficult for us to
raise capital.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is considered penny stock under SEC regulations. It is subject to rules that
impose additional sales practice requirements on broker-dealers who sell our securities. For
example, broker-dealers must make a suitability determination for the purchaser, receive the
purchaser&#146;s written consent to the transaction prior to sale, and make special disclosures
regarding sales commissions, current stock price quotations, recent price information and
information on the limited market in penny stock. Because of these additional obligations, some
broker-dealers may not effect transactions in penny stocks, which may adversely affect the
liquidity of our common stock and shareholders&#146; ability to sell our common stock in the secondary
market. This lack of liquidity may make it difficult for us to raise capital in the future.

<DIV align="left">
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</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;2. </B><B><I>Properties</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal facility consists of leased office space in North Hollywood, California. We
sublease this space from KZ Golf, Inc., pursuant to a lease we entered into on October&nbsp;16, 2003 and
which expires on October&nbsp;16, 2005. Through May&nbsp;31, 2004, the rent was $2,000 per month for
approximately 1,000 square feet. Effective June&nbsp;1, 2004, we amended the lease to add approximately
225 square feet of office space and to have provided expanded comprehensive services, including
reception, parking and conference facilities, for a total rent of $3,400 per month.


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">The lease, as amended, is renewable, at our option, for an additional two-year term at $3,760
per month. One of our directors, Bruce H. McKinnon, is an owner of KZ Golf, Inc. Management
believes that the terms of the lease with KZ Golf, Inc. are no less favorable than what we would
have had to pay for equivalent space and comparable services with an unaffiliated party. We
believe that our North Hollywood facility is adequate for our current and planned administrative
activities.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our research and development facility located in Queensland, Australia is leased. We entered
into the lease for this facility on November&nbsp;15, 2003 and the lease is for a term of two years. The
rent is AUD $1,292 (approximately US $1,000) per month and is renewable, at our option, for an
additional two-year term at an increase of the greater of 5% or the increase in the then-current
Australian consumer price index. We believe that our present research and development facility is
adequate for our current and planned activities and that suitable additional or replacement
facilities in the Queensland area are readily available on commercially reasonable terms should
such facilities be needed in the future.

<DIV align="left">
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</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;3. </B><B><I>Legal Proceedings</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;19, 2001, the SEC filed civil charges in the United States Federal District Court,
Southern District of New York, against us, our former President and then sole director Jeffrey A.
Muller, and others, alleging that we and the other defendants were engaged in a fraudulent scheme
to promote our stock. The SEC complaint alleged the existence of a promotional campaign using
press releases, Internet postings, an elaborate website, and televised media events to disseminate
false and materially misleading information as part of a fraudulent scheme to manipulate the market
for stock in our corporation, which was then controlled by Mr.&nbsp;Muller. On March&nbsp;22, 2002, we
signed a Consent to Final Judgment of Permanent Injunction and Other Relief in settlement of this
action as against the corporation only, which the court approved on July&nbsp;2, 2002. Under this
settlement, we were not required to admit fault and did not pay any fines or restitution. The
SEC&#146;s charges of fraud and stock manipulation continue against Mr.&nbsp;Muller and others.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;2, 2002, after an investigation by our newly constituted board of directors, we filed
a cross-complaint in the SEC action against Mr.&nbsp;Muller and others seeking injunctive relief,
disgorgement of monies and stock and financial restitution for a variety of acts and omissions in
connection with sales of our stock and other transactions occurring between 1998 and 2002. Among
other things, we alleged that Mr.&nbsp;Muller and certain others sold
Company stock without providing
adequate consideration to us; sold insider shares without making proper disclosures and failed to
make necessary filing required under federal securities laws; engaged in self-dealing and entered
into various undisclosed related-party transactions; misappropriated for their own use proceeds
from sales of our stock; and entered into various undisclosed arrangement regarding the control,
voting and disposition of their stock. We contend that we are entitled to a judgment canceling all
of the approximately 8,716,710 shares of our common stock that was previously obtained and
controlled, directly or indirectly, by Mr.&nbsp;Muller; divesting and preventing any subsequent holders
of the right to exercise options previously held by Mr.&nbsp;Muller for 10,000,000 shares of our common
stock, conversion of an existing preliminary injunction to a permanent injunction to prevent Mr.
Muller from any involvement with the Company and a monetary judgment against Mr.&nbsp;Muller and others
in the amount of several million dollars.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;30, 2002, the U.S. Federal District Court, Southern District of New York, granted our
application for a preliminary injunction against Mr.&nbsp;Muller and others, which prevented Mr.&nbsp;Muller
and other cross-defendants from selling, transferring, or encumbering any assets and property
previously acquired from us, from selling or transferring any of our stock that they may own or
control, or from taking any action to injure us or our business and from having any direct contact
with our shareholders. The injunctive order also prevents Mr.&nbsp;Muller from engaging in any effort
to exercise control over our corporation and from serving as an officer or director of our company.
While we believe that we have valid claims, there can be no assurance that an adverse result or
settlement would not have a material adverse effect on our financial position or cash flow.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the course of the litigation, we have obtained ownership control over Mr.&nbsp;Muller&#146;s claimed
patent rights to the ZEFS device. Under a Buy-Sell Agreement between Mr.&nbsp;Muller and dated
December&nbsp;29, 1998, Mr.&nbsp;Muller, who was listed on the ZEFS devise patent application as the inventor
of the ZEFS device, purported to grant us all international marketing, manufacturing and
distribution rights to the ZEFS device. Those rights were disputed because an original inventor of
the ZEFS device contested Mr.&nbsp;Muller&#146;s legal ability to have conveyed those rights.


<P align="center" style="font-size: 10pt">12
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<P align="left" style="font-size: 10pt">In Australia, Mr.&nbsp;Muller entered into a bankruptcy action seeking to overcome our claims for
ownership of the ZEFS device. In conjunction with these litigation proceedings, a settlement
agreement was reached whereby the $10 per unit royalty previously due to Mr.&nbsp;Muller under his
contested Buy-Sell Agreement was terminated and replaced with a $.20 per unit royalty payable to
the bankruptcy trustee. On November&nbsp;7, 2002, under a settlement agreement executed with Mr.
Muller&#146;s bankruptcy trustee, the trustee transferred to us all ownership and legal rights to this
international patent application for the ZEFS device.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both the SEC and we have filed Motions for Summary Judgment contending that there are no
material issues of fact in contention and as a matter of law, the Court should grant a judgment
against Mr.&nbsp;Muller and the cross-defendants. Mr.&nbsp;Muller has filed a response contending the
motions are without merit or substance. A final decision on these motions, which potentially would
terminate the ongoing litigation, is still pending. Should the Court not grant summary judgment in
our favor, the case will be scheduled for final disposition in a trial.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Muller and several of the defendants filed a Motion to Dismiss the complaint filed by us
and moved for summary judgment in their favor. On December&nbsp;21, 2004, Judge George B. Daniels,
denied the cross-defendants&#146; motion to dismiss our cross-complaint, denied the request to vacate
the July&nbsp;2, 2002 preliminary injunction and denied the request for damages against us. The court
also refused to grant a summary judgment in favor of the cross-defendants and dismissed Mr.
Muller&#146;s claims against us for indemnification for his legal costs and for damages resulting from
the litigation. Neither Mr.&nbsp;Muller nor any of the cross-defendants have filed any cross-claims
against us and we are not exposed to any liability as a result of the litigation, except for
possibly incurring legal fees and expenses should we lose the litigation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the outcome of this litigation cannot be predicted with any degree of certainty, we
are optimistic that the Court&#146;s ruling will either significantly narrow the issues for any later
trial or will result in a final disposition of the case in a manner favorable to us.. While we
believe that we have valid claims, there can be no assurance that an adverse result or outcome on
the pending motions or a trial of this case would not have a material adverse effect on our
financial position or cash flow.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were named as a defendant in a complaint filed before the Los
Angeles Superior Court, Civ.&nbsp;No.&nbsp;BC&nbsp;312401, by
Terracourt Pty Ltd, an Australian corporation, claiming breach of
contract and related remedies from promises allegedly made by the
former president of the Company in 1999. The plaintiff is seeking
specific performance of the former president&#146;s alleged promises
to transfer to the plaintiff an aggregate 480,000&nbsp;shares of our common stock for office consultant and multimedia
services. The complaint was filed on March&nbsp;18, 2004. Due to a
late date of service of the complaint upon us and other
preliminary legal procedures, our answer was not filed
until October&nbsp;20, 2004. We are opposing the
plaintiff&#146;s causes of action and have asserted that we have no liability for the claims asserted. The matter has been
scheduled for further motion and trial proceedings in late April 2005
and is expected to be concluded by early June&nbsp;2005.

<DIV align="left">
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<P align="left" style="font-size: 10pt"><B>Item&nbsp;4. </B><B><I>Submission of Matters to a Vote of Security Holders.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No matters were submitted to a vote of security holders during the fourth quarter of fiscal
2004.


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<P align="center" style="font-size: 10pt"><B>PART II</B>


<DIV align="left">
<A name="107"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;5. </B><B><I>Market for Common Equity and Related Stockholder Matters</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is traded on the Pink Sheets under the symbol &#147;ZERO.&#148; The following table
sets forth the high and low closing prices of the common stock for the quarters indicated as quoted
on the Pink Sheets.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.95</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.16</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to the records of our transfer agent, we had 1,009 stockholders of record of our
common stock at December&nbsp;31, 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not pay a dividend on our common stock and we currently intend to retain future cash
flows to finance our operations and fund the growth of our business. Any payment of future
dividends will be at the discretion of our Board of Directors and will depend upon, among other
things, our earnings, financial condition, capital requirements, level of indebtedness, contractual
restrictions in respect to the payment of dividends and other factors that our Board of Directors
deems relevant.


<P align="left" style="font-size: 10pt"><B>Issuances of Unregistered Securities in Last Fiscal Year</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From July&nbsp;2004 through the date of filing this report, we have engaged in a private offering
of units, comprised of shares of our common stock and one-year warrants to purchase an equal number
of shares of our common stock at an exercise price of $1.50 per share. This effort is ongoing.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2004, we sold an aggregate of 1,272,500 of such units, amounting to 1,272,500 shares of
common stock and one-year warrants to purchase 1,272,500 shares of common stock exercisable at
$1.50 per share. For the sale of such units, we received aggregate gross proceeds of $1,272,500
and net proceeds of $ 1,192,180. In addition, during 2004 we sold 119,000 of such units and received
$119,000 of gross and net proceeds for those units, but did not issue the stock and warrant certificates until 2005.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also during 2004, we issued ten-year warrants to purchase 1,000,000 shares of common stock in
connection with patent acquisition agreements with two individuals. These warrants are exercisable
at $1.00 per share. In addition, we issued one-year warrants to purchase 50,000 shares of common
stock pursuant to a distribution agreement with Gurminder Singh, which warrants are exercisable at
$1.00 per share.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, we issued 960,500 shares of common stock to 12 persons in connection with
the exercise, at various exercise prices, of previously-issued warrants. We received aggregate
gross and net proceeds of $194,200 in connection with such exercises.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2004, we issued an aggregate of 850,000 shares of common stock to six individuals who
are advisors or consultants to the Company and certain of their designees in exchange for advisory
and consulting services rendered to the Company. Of such shares, 250,000 shares vested upon
issuance thereof, 300,000 of such shares vested on April&nbsp;1, 2004 and the remainder vested on April
1, 2005.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2004, we issued 488,560 shares of common stock to five individuals who provided
services to the Company in connection with a private offering of our common stock, which offering
was conducted between November&nbsp;2002 and October&nbsp;2003.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2004, we issued 60,000 shares of common stock in consideration of the cancellation of
a loan in the amount of $15,000 made to us by Joette Masry, the wife
of our Chief Executive Officer,
Edward L. Masry.


<P align="center" style="font-size: 10pt">14
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2004, the Company issued options to purchase 1,172,652 shares of common stock to
certain of our directors, officers and employees. These options have an aggregate intrinsic value
of $304,272.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our Quarterly Report on Form 10-Q-SB for the quarter ended March&nbsp;31, 2004, we also
disclosed that we had sold 25,000 shares of common stock to one individual on October&nbsp;14, 2003, but
that a certificate for such shares was not issued until February&nbsp;3, 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The issuances of shares and warrants described above were made in reliance on the exemptions
from registration set forth in Section&nbsp;4(2) of the Securities Act of 1933 (the &#147;Act&#148;), as amended,
or Regulations D or S promulgated thereunder.

<DIV align="left">
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<P align="left" style="font-size: 10pt"><B>Item&nbsp;6. </B><B><I>Management&#146;s Discussion and Analysis or Plan of Operation</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with the Financial Statements and supplementary data referred to in
Item&nbsp;7 of this Form 10-KSB.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This discussion contains forward-looking statements that involve risks and uncertainties. Such
statements, which include statements concerning future revenue sources and concentration, selling,
general and administrative expenses, research and development expenses, capital resources,
additional financings and additional losses, are subject to risks and uncertainties, including, but
not limited to, those discussed above in Item&nbsp;1 and elsewhere in this Form 10-KSB, particularly in
&#147;Risk Factors,&#148; that could cause actual results to differ materially from those projected. Unless
otherwise expressly indicated, the information set forth in this Form 10-KSB is as of December&nbsp;31,
2004, and we undertake no duty to update this information.


<P align="left" style="font-size: 10pt"><B>Overview</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a development stage company that has not yet generated revenues. The company&#146;s focus
is on research and development of proprietary devices that are designed to reduce harmful
emissions, improve fuel efficiency and engine performance for installation on equipment and
vehicles driven by internal combustion engines. Our prototype devices are called &#147;ZEFS&#148; and
&#147;CAT-MATE.&#148; We have devoted the bulk of our efforts to the completion of the design, the
development of our production models and the promotion of our products in the market place
worldwide. Expenses have been funded through the sale of company stock. We have devoted the bulk
of our efforts to the completion of the design, the development of our production models.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate that these efforts will continue during 2005 and that we will begin selling our
devices by late 2005. We do not envision generating significant revenue in 2005. We will need to
raise additional capital during 2005 to fund our research and development and marketing efforts and
other expenses.


<P align="left" style="font-size: 10pt"><B>Results of Operation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To date, we have not generated any revenues and our business continues in the development
stage. We have focused our efforts on verifying and developing our technologies and devices and
commencing marketing efforts for their license or sale. We expect to begin selling our devices in
late 2005.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General
and administrative expenses were $3,323,030 for the fiscal year ended December&nbsp;31,
2004, compared to $6,046,651 for the fiscal year ended December&nbsp;31, 2003, an increase of
$1,476,379. This increase is attributable to payroll expense which increased by $460,826,
primarily as a result of additional personnel; consulting expense which increased by $228,314,
primarily as a result of additional consulting services; corporate expense which increased by
$239,161, primarily as a result of costs associated with financial printing, public relations,
transfer agent and website design; professional expense which increased by $144,094, primarily as a
result of legal and accounting fees associated with SEC reporting, our private offering that
commenced in July&nbsp;2004 and general corporate functions; and travel and other expense which
increased in the aggregate by $335,324, primarily as a result of the expansion of our R&#038;D
activities worldwide. A significant portion of the total increase in general and administrative
expense is the result of non-cash items in the aggregate amount of $1,195,210 in the fiscal year
ended December&nbsp;31, 2004 compared to $899,668 in the fiscal year ended December&nbsp;31, 2003, an
increase of $295,542.


<P align="center" style="font-size: 10pt">15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses were $1,873,464 for the fiscal year ended December&nbsp;31, 2004,
compared to $628,832 for the fiscal year ended December&nbsp;31, 2003, an increase of $1,244,632. Our
research and development expenses include contractual payments to RAND, consultants&#146; fees, capital
expenditures, cost of services and supplies. The increase in research and development expenses is
primarily attributable to the valuation of $1,210,450 placed on the common stock that we issued as
compensation in lieu of cash to our R&#038;D consultants in Australia and the United States under
two-year agreements with those individuals; and increases in actual R&#038;D expenses.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Patent
settlement costs were $1,610,066 in the fiscal year ended December&nbsp;31, 2004, attributable to Black-Scholes valuation placed on
1,000,000 warrants that we issued in connection with our acquisition of certain of our intellectual
property.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-cash items were $4,015,726 for the fiscal year ended December&nbsp;31, 2004, compared to
$899,668 for the fiscal year ended December&nbsp;31, 2003. This increase is attributable to increases
in general and administrative expense in the amount of $295,542, research and development expense
in the amount of $1,210,450 and patent settlement costs in the amount of $$1,610,066.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had a net loss of $6,803,280, or $.19 per share, for the year ended December&nbsp;31, 2004,
compared to a net loss of $2,476,063, or $.09 per share, for the year ended December&nbsp;31, 2003. We
expect an increase in net loss in the fiscal year ending December&nbsp;31, 2005, primarily attributable
to increased general and administrative expenses and marketing-related expenditures, without the
benefit of any revenue for most of the year.


<P align="left" style="font-size: 10pt"><B>Liquidity and Capital Resources</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have incurred negative cash flow from operations in the developmental stage since our
inception in 1998. As of December&nbsp;31, 2004 we had cash of $84,826 and an accumulated deficit of
$17,130,888. Our negative operating cash flows in 2004 were funded primarily through the sale of
common stock and, to a lesser degree, by proceeds we received from the exercise of options and
warrants.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements accompanying this Annual Report have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of our business. As reflected in the accompanying financial
statements, the we had a net loss of $6,803,280 and a negative cash flow from operations of
$2,411,464 for the year ending December&nbsp;31, 2004, and a stockholders&#146; deficiency of $2,007,144 as
of December&nbsp;31, 2004. These factors raise substantial doubt about our ability to continue as a
going concern. Our ability to continue as a going concern is dependent on our ability to raise
additional funds and implement our business plan. The financial statements do not include any
adjustments that might be necessary if we are unable to continue as a going concern.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From July&nbsp;2004 through the date of filing this report, we have engaged in a private offering
of units comprised of shares of our common stock and one-year warrants to purchase an equal number
of shares of common stock at an exercise price of $1.50 per share. From July&nbsp;2004 through December
31, 2004, we received aggregate gross proceeds of $1,272,500 and aggregate net proceeds of
$1,167,180 in connection with the sale of 1,272,500 shares of our common stock to 27 purchasers.
The offering is ongoing. See Note&nbsp;6 to Notes to Financial
Statements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we have sufficient cash to fund our operations through the second quarter of
2005 based on current cash on hand. For all of 2005, we will need to raise additional capital or
incur new debt to fund our operations. We believe that exercises of in-the-money options and
warrants, with various expiration dates during 2005, will provide some of the proceeds needed to
meet our capital requirements during 2005, together with additional sales of our common stock in
the private offering.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we are actively exploring additional sources of financing, including borrowings
from one or more of our directors and officers However, there can be no assurance that additional
equity or debt financing will be available or available on terms favorable to us. If we are unable
to obtain additional capital, we may be required to delay, reduce the scope of, or eliminate, our
research and development programs, reduce any marketing activities or relinquish rights to
technologies that we might otherwise seek to develop or commercialize.


<P align="center" style="font-size: 10pt">16
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<P align="left" style="font-size: 10pt"><B>Critical Accounting Policies and Estimates</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our discussion and analysis of financial condition and results of operations is based upon our
Financial Statements, which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these Financial Statements and related
disclosures requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, expenses, and related disclosure of contingent assets and liabilities. We evaluate, on
an on-going basis, our estimates and judgments, including those related to the useful life of the
assets. We base our estimates on historical experience and assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The methods, estimates and judgments we use in applying our most critical accounting policies
have a significant impact on the results that we report in our Financial Statements. The SEC
considers an entity&#146;s most critical accounting policies to be those policies that are both most
important to the portrayal of a company&#146;s financial condition and results of operations and those
that require management&#146;s most difficult, subjective or complex judgments, often as a result of the
need to make estimates about matters that are inherently uncertain at the time of estimation. We
believe the following critical accounting policies, among others, require significant judgments and
estimates used in the preparation of our Financial Statements:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period.
Certain significant estimates were made in connection with preparing our financial statements as
described in Note 1 to Notes to Financial Statements. See Item&nbsp;7, &#147;Financial Statements&#148;. Actual
results could differ from those estimates.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Stock-Based Compensation</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for stock-based compensation to employees as defined by using the intrinsic-value
method prescribed in Accounting Principles Board Opinion (APB)&nbsp;No.&nbsp;25, &#147;Accounting for Stock Issued
to Employees.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for stock option and warrant grants issued to non-employees using the guidance of
SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation&#148; and EITF No.&nbsp;96-18: &#147;Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services,&#148; whereby the fair value of such option and warrant grants is determined using
the Black-Scholes option pricing model at the earlier of the date at which the non-employee&#146;s
performance is completed or a performance commitment is reached.


<P align="left" style="font-size: 10pt"><B>New Accounting Pronouncements</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2004, the Financial Accounting Standards Board &#147;(FASB&#148;) issued Statement of
Financial Accounting Standards No.&nbsp;151, &#147;Inventory Costs&#148;. This Statement amends the guidance in
ARB No.&nbsp;43 Chapter&nbsp;4 Inventory Pricing, to require items such as idle facility costs, excessive
spoilage, double freight and rehandling costs to be expensed in the current period, regardless if
they are abnormal amounts or not. This Statement will become effective for us in the first quarter
of 2006. The adoption of SFAS No.&nbsp;151 is not expected to have a material impact on our financial
condition, results of operations, or cash flows.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148; (SFAS
123R), which revises SFAS No.&nbsp;123. SFAS 123R also supersedes APB No.&nbsp;25 and amends SFAS No.&nbsp;95,
&#147;Statement of Cash Flows&#148;. In general, the accounting required by SFAS 123R is similar to that of
SFAS No.&nbsp;123. However, SFAS No.&nbsp;123 gave companies a choice to either recognize the fair value of
stock options in their income statements or disclose the pro forma income statement effect of the
fair value of stock options in the notes to the financial statements. SFAS 123R eliminates that
choice and requires the fair value of all share-based payments to employees, including the fair
value of grants of employee stock options, be recognized in the income statement, generally over
the option vesting period. SFAS 123R must be adopted no later than
July&nbsp;1, 2005 (December&nbsp;15, 2005 for small business filers). Early adoption is
permitted.


<P align="center" style="font-size: 10pt">17
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is currently evaluating the timing and manner in which it will adopt SFAS 123R.
As permitted by SFAS 123, the Company currently accounts for share-based payments to employees
using APB 25&#146;s intrinsic value method. Accordingly, adoption of SFAS 123R&#146;s fair value method
will have an effect on results of operations, although it will have no impact on overall financial
position. The impact of adoption of SFAS 123R cannot be predicted at this time because it will
depend on levels of share-based payments granted in the future. However, had SFAS 123R been
adopted in prior periods, the effect would have approximated the SFAS 123 pro forma net loss and
loss per share disclosures as shown above. SFAS 123R also requires the benefits of tax deductions
in excess of recognized compensation cost to be reported as a financing cash flow, rather than as
an operating cash flow as currently required, thereby reducing net operating cash flows and
increasing net financing cash flows in periods after adoption.


<P align="center" style="font-size: 10pt">18
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<DIV align="left">
<A name="109"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;7. </B><B><I>Financial Statements</I></B>



<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)</B>


<P align="left" style="font-size: 10pt"><B>YEARS ENDED DECEMBER 31, 2004 AND 2003</B>


<P align="center" style="font-size: 10pt"><B>CONTENTS</B>




<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B><u>Page</u></B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#201">Report of Independent Registered Public Accounting Firm
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">20</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#202">Balance sheets
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">21</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#203">Statements of operations
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">22</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#204">Statements of stockholders&#146; deficiency
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#205">Statements of cash flows
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">27</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#206">Notes to financial statements
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">29</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD colspan="4" align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom">

<TD colspan="4" align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom">
    <TD colspan="4" align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">19</DIV></TD>
</TR>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="201"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>


<P align="left" style="font-size: 10pt">To the Board of Directors<BR>
Save the World Air, Inc.


<P align="left" style="font-size: 10pt">We have audited the accompanying balance sheets of Save the World Air, Inc. (a development stage
enterprise) as of December&nbsp;31, 2004 and 2003 and the related statements of operations, changes in
stockholders&#146; deficiency and cash flows for the years then ended and for the period from inception
(February&nbsp;18, 1998) to December&nbsp;31, 2004. These financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an opinion on these financial statements
based on our audits.


<P align="left" style="font-size: 10pt">We conducted our audits in accordance with standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.


<P align="left" style="font-size: 10pt">In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Save the World Air, Inc. (a development stage enterprise) as of
December&nbsp;31, 2004 and 2003 and the results of its operations and its cash flows for the years then
ended and for the period from inception (February&nbsp;18, 1998) to December&nbsp;31, 2004, in conformity
with accounting principles generally accepted in the United States of America.


<P align="left" style="font-size: 10pt">The accompanying financial statements have been prepared assuming that the Company will continue as
a going concern. As discussed in Note&nbsp;2 to the financial statements, the Company has a net loss of
$6,803,280 and negative cash flow from operations of $2,411,464 for
the year ended December&nbsp;31,
2004, and had a working capital deficiency of $1,025,532 and a stockholders&#146; deficiency of
$2,007,144 as of December&nbsp;31, 2004. These factors raise substantial doubt about its ability to
continue as a going concern. Management&#146;s plans concerning this
matter are also described in Note&nbsp;2. The accompanying financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


<P align="left" style="font-size: 10pt">WEINBERG &#038; COMPANY, P.A.


<P align="left" style="font-size: 10pt">April&nbsp;11, 2005<BR>
Boca Raton, Florida




<P align="center" style="font-size: 10pt">20
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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="202"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)</B>


<P align="left" style="font-size: 10pt"><B>BALANCE SHEETS<BR>
DECEMBER 31, 2004 AND 2003</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">

<TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS<BR>
Current assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">84,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">926,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">926,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Property and equipment</B>, net of accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,244</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>TOTAL ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">123,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">961,296</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES
AND STOCKHOLDERS&#146; DEFICIENCY<BR>
Current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,082</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued professional fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">876,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">551,582</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,991</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans from
related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,903</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Finders fees payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,916</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,112,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">777,474</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Advances from founding executive officer</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,017,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,017,208</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Commitments and contingencies</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Stockholders&#146; deficiency</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock, $.001 par value: 200,000,000 shares
authorized, 37,784,821 and 34,128,261 shares
issued and outstanding at December&nbsp;31, 2004
and 2003, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,128</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock to be issued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,043,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,162,177</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(76,068</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(708,333</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deficit accumulated during the development stage </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,130,888</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,327,608</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total stockholders&#146; deficiency </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,007,144</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(833,386</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>TOTAL LIABILITIES AND STOCKHOLDERS&#146; DEFICIENCY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">123,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">961,296</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">See notes to financial statements.



<P align="center" style="font-size: 10pt">21
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="203"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)</B>


<P align="left" style="font-size: 10pt"><B>STATEMENTS OF OPERATIONS<BR>
YEARS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD FROM INCEPTION (FEBRUARY<BR>
18, 1998) TO DECEMBER 31, 2004</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cumulative</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>since</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>inception</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net sales</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,323,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,846,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,865,369</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Research and development expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,873,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">628,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,653,226</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Non-cash patent settlement cost</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,610,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,610,066</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Loss before other income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,806,560</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,475,483</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,128,661</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other
Income</B><BR>
Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">954</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Loss before provision for income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,806,046</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,475,043</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,127,707</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Provision (benefit)&nbsp;for income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,766</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net loss</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,803,280</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,476,063</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(17,130,888</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net loss per common share, basic and diluted</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.19</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.09</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Weighted average common shares outstanding,</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;&nbsp;&nbsp;<B>basic and diluted</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,841,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,768,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">See notes to financial statements.




<P align="center" style="font-size: 10pt">22
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="204"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)</B>


<P align="left" style="font-size: 10pt"><B>STATEMENTS OF STOCKHOLDERS&#146; DEFICIENCY<BR>
FROM INCEPTION (FEBRUARY 18, 1998) TO DECEMBER 31, 2004</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deficit accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total stockholders&#146;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Common stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>during the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>development</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>to be issued</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>development stage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>stage deficiency</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, February&nbsp;18, 1998 </B>(date of inception)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
       <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of common stock on April&nbsp;18, 1998</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">.0015 &#150; .01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,030,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,307</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,307</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, December&nbsp;31, 1998</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,030,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,030</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14,270</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(21,307</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,993</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of common stock on May&nbsp;18, 1999</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00 &#150; 6.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516,936</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of common stock for ZEFS on September&nbsp;14, 1999</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">.001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for professional services on May&nbsp;18, 1999</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,513</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,075,264</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,075,264</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, December&nbsp;31, 1999</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,297,125</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,297</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>580,452</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,096,571</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(500,822</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for employee compensation on February&nbsp;8, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on February&nbsp;8, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for professional services on April&nbsp;18, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for directors fees on April&nbsp;18, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">169,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for professional services on May&nbsp;19, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for directors fees on June&nbsp;20, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,640</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for professional services on June&nbsp;20, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,251</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for professional services on June&nbsp;26, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,675</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for employee compensation on June&nbsp;26, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,820</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on June&nbsp;26, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,203</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,213</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for promotional services on July&nbsp;28, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,214</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on July&nbsp;28, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,985</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on August&nbsp;4, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,620</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for promotional services on August&nbsp;16, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on September&nbsp;5, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,874</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on September&nbsp;10, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on November&nbsp;2, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on November&nbsp;4, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on December&nbsp;20, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,541</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">23
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)</B>


<P align="left" style="font-size: 10pt"><B>STATEMENTS OF STOCKHOLDERS&#146; DEFICIENCY &#151; Continued<BR>
FROM INCEPTION (FEBRUARY 18, 1998) TO DECEMBER 31, 2004</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deficit accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total stockholders&#146;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Common stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>during the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>development</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>to be issued</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>development stage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>stage deficiency</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for filing services on December&nbsp;20, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,586</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for professional services on December&nbsp;26, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,925</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other stock issuance on August&nbsp;24, 2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common shares cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(64,245</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(64,300</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,270,762</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,270,762</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, December&nbsp;31, 2000</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,645,935</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>15,646</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,437,873</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,367,333</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(913,814</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on January&nbsp;8, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,048</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on February&nbsp;1, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,245</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on March&nbsp;1, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,753</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for legal services on March&nbsp;13, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on April&nbsp;3, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,458</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for legal services on April&nbsp;4, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,730</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for professional services on April&nbsp;4, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,760</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on April&nbsp;5, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for filing fees on April&nbsp;30, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for filing fees on September&nbsp;19, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,276</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for professional services on September&nbsp;28, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for directors services on October&nbsp;5, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for legal services on October&nbsp;17, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,666</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on October&nbsp;18, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">380,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on October&nbsp;19, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for exhibit fees on October&nbsp;22, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,751</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for directors services on November&nbsp;2, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">949,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">950,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on November&nbsp;7, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on November&nbsp;20, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,140</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on November&nbsp;27, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for consulting services on November&nbsp;28, 2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Intrinsic value of options issued to employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,600,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fair value of options issued to non-employees for services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,318</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)<BR>
<BR>
STATEMENTS OF STOCKHOLDERS&#146; DEFICIENCY &#151; Continued<BR>
FROM INCEPTION (FEBRUARY 18, 1998) TO DECEMBER 31, 2004</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deficit accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total stockholders&#146;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Common stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>during the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>development</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>to be issued</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>development stage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>stage deficiency</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of deferred compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191,667</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,735,013</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,735,013</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, December&nbsp;31, 2001</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>18,085,847</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>18,086</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,220,322</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(2,408,333</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(5,102,346</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,272,271</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for directors services on December&nbsp;10, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">857,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">860,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock paid for, but not issued (2,305,000 shares)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">0.15-0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fair value of options issued to non-employees for services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,909</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of deferred compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">891,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">891,182</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,749,199</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,749,199</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, December&nbsp;31, 2002</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20,235,847</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>20,236</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>389,875</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,133,081</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,572,060</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(7,851,545</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(1,880,413</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued, previously paid for</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,425,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(213,750</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued, previously paid for</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">880,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(220,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on March&nbsp;20, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">670,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">167,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on April&nbsp;4, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224,062</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224,962</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on April&nbsp;8, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on May&nbsp;8, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287,480</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on June&nbsp;16, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">475,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issued for legal services on June&nbsp;27, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,794</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,877</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Debt converted to stock and warrants on June&nbsp;27, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">498,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on July&nbsp;11, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">519,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on September&nbsp;29, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,775,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">441,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443,751</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on October&nbsp;21, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,845,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">461,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on October&nbsp;28, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,570,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">390,930</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">392,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock and warrants issued for cash on November&nbsp;19, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Finders&#146; fees related to stock issuances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(312,582</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(268,707</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock paid for, but not issued (25,000 shares)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of deferred compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">863,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">863,727</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss for year ended December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,476,063</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,476,063</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance, December&nbsp;31, 2003</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>34,128,261</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>34,128</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>6,250</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>10,162,177</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(708,333</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(10,327,608</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(833,386</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)<BR>
<BR>
STATEMENTS OF STOCKHOLDERS&#146; DEFICIENCY &#151; Continued<BR>
FROM INCEPTION (FEBRUARY 18, 1998) TO DECEMBER 31, 2004</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deficit accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total stockholders&#146;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Common stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>during the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>development</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>to be issued</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>development stage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>stage deficiency</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock issued, previously paid for</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,250</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for director services on March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for finders fees on March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for finders fees on March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">406,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101,606</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for services on April&nbsp;2, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,450</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Debt converted to stock on April&nbsp;2, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued upon exercise of warrants on May&nbsp;21, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">950,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for directors services on June&nbsp;8, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,019,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,020,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for cash on August&nbsp;25, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">550,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">549,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">550,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued
upon exercise of warrants on August&nbsp;30, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for cash on September&nbsp;8, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for consulting services on September&nbsp;15, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for patent settlement on September&nbsp;22, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for research and development on October&nbsp;6, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for cash on October&nbsp;6, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for cash on October&nbsp;15, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued
upon exercise of warrants on October&nbsp;21, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,594</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for cash on November&nbsp;3, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for cash on November&nbsp;18, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">172,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">172,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">172,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for cash on December&nbsp;9, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued for cash on December&nbsp;23, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">249,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Finders fees related to stock issuances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,384</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,384</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock paid for, but not issued (119,000 shares)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Intrinsic value of options issued to employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">248,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(248,891</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fair value of options issued to non-employees for services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,381</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fair value of warrants issued for settlement costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,585,266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,585,266</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fair value of warrants issued to non-employees for services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,872</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of deferred compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">936,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">936,537</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss for year ended December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,803,280</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,803,280</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>37,784,821</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>37,784</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>119,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>15,043,028</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">76,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(17,130,888</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(2,007,144</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">See notes to financial statements.

<P align="center" style="font-size: 10pt">26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="205"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)</B>


<P align="left" style="font-size: 10pt"><B>STATEMENTS OF CASH FLOWS<BR>
YEARS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD FROM INCEPTION<BR>
(FEBRUARY 18, 1998) TO DECEMBER 31, 2004</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cumulative</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>since</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>inception</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from operating activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,803,280</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,476,063</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(17,130,888</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net loss to net cash
used in operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Write off of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">505,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Fair value of options issued for services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,190</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Issuance of common stock for services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,427,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,280,623</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Amortization of deferred compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">936,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">863,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,883,113</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,417</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-cash patent settlement cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,610,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,610,066</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in operating assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,602</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,602</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,991</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">388,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,671</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">789,497</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,411,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,595,861</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,879,584</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from investing activities</B>
<br>Purchase of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,037</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,525</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46,463</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,037</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,525</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46,463</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from financing activities</B>
<br>Increase (decrease)&nbsp;in loans from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,425</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">547,928</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advances from founding executive officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">517,208</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of common stock for cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,466,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,419,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,820,487</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash received for common stock to be issued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,579,275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,430,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,010,873</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net (decrease)&nbsp;increase in cash</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(841,226</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">818,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,826</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash</B>, beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">926,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash</B>, end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">84,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">926,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">84,826</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:75px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">See notes to financial statements



<P align="center" style="font-size: 10pt">27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)</B>


<P align="left" style="font-size: 10pt"><B>STATEMENTS OF CASH FLOWS &#151; Continued<BR>
YEARS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD FROM INCEPTION<BR>
(FEBRUARY 18, 1998) TO DECEMBER 31, 2004</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cumulative</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>since</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>inception</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental disclosures of cash flow
information</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash paid
during the year for<br>
Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Non-cash investing and financing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of intangible asset through
advance from related party and issuance
of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">505,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred compensation from stock options issued
for services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,959,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of property and equipment financed by
advance from related party</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,550</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Conversion of related party debt to equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">515,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of common stock in settlement of payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,492</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock issued, previously paid for</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fees accrued for issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">312,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">400,966</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">See notes to financial statements.



<P align="center" style="font-size: 10pt">28
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="206"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>SAVE THE WORLD AIR, INC.<BR>
(A DEVELOPMENT STAGE ENTERPRISE)</B>


<P align="left" style="font-size: 10pt"><B>NOTES TO FINANCIAL
STATEMENTS</B>

<P align="left" style="font-size: 10pt"><B>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of business, significant matters and prior period corrections</B>




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Description of business


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Save the World Air, Inc. (the &#147;Company&#148;) was incorporated in Nevada on February&nbsp;18, 1998
under the name Mandalay Capital Corp. The Company changed its name to Save the World Air,
Inc. on February&nbsp;11, 1999 following the purchase of the Zero Emission Fuel-Saving Device
(the &#147;Agreement&#148;). The Company acquired the worldwide exclusive manufacturing, marketing
and distribution rights for the Zero Emission Fuel-Saving Device (&#147;ZEFS&#148;) by entering into
the Agreement. The ZEFS is a product, which is fitted to an internal combustion engine
and is expected to reduce carbon monoxide hydrocarbons and toxic exhaust emissions.
During the past three years, the Company has been acquiring new technologies, developing
products using the Company&#146;s technologies and conducting scientific tests regarding the
technologies and prototype products. In 2003, the Company acquired worldwide intellectual
property and patent rights to technologies which reduce carbon monoxide, hydrocarbon and
nitrous oxide emissions in two- and four-stroke motorcycles, fuel-injection engines,
generators and small engines. The Company has developed prototype products and named them
&#147;CAT-MATE&#148;.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary of significant accounting policies</B>




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Development stage enterprise


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company is a development stage enterprise as defined by Statement of Financial
Accounting Standards (SFAS)&nbsp;No.&nbsp;7, &#147;Accounting and Reporting by Development Stage
Enterprises.&#148; All losses accumulated since the inception of the Company have been
considered as part of the Company&#146;s development stage activities.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company&#146;s focus is on research and development of proprietary devices that are
designed to reduce harmful emissions, and improve fuel efficiency and engine performance
on equipment and vehicles driven by internal combustion engines and has not yet generated
any revenues. The prototype devices are called &#147;ZEFS&#148; (Zero Emission Fuel-Savings Device)
and &#147;CAT-MATE.&#148; The Company has put forth efforts to complete the design, the development
of production models and the promotion of products in the market place worldwide.
Expenses have been funded through the sale of company stock. The Company has taken
actions to secure the intellectual property rights to the ZEFS and CAT-MATE devices. In
addition, the Company has initiated marketing efforts to international governmental
entities in cooperation with the United Nations Environmental Programme (UNEP)&nbsp;and various
original equipment manufacturers (OEMs), to eventually sell or license the ZEFS and
CAT-MATE products and technology.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">29
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary of significant accounting policies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liquidity


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company is subject to the usual risks associated with a development stage enterprise.
These risks include, among others, those associated with product development, acceptance
of the product by users and the ability to raise the capital necessary to sustain
operations. Since its inception, the Company has incurred significant losses. The
Company anticipates increasing expenditures over at least the next year as the Company
continues its product development and evaluation efforts, and begins its marketing
activities. Without significant revenue increases, these expenditures will likely result
in additional losses. The Company is in the process of raising additional funds and raised
$1,378,316 (net of finders fees of $88,384) in 2004 through the sale
of 1,212,500 shares of its common stock in private
placement transactions and the exercise of 960,500 warrants and
options. (See Note&nbsp;6.)</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Going concern


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The accompanying financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and commitments
in the normal course of business. As reflected in the accompanying financial statements,
the Company had a net loss of $6,803,280 and a negative cash flow from operations of
$2,411,464 for the year ended December&nbsp;31, 2004, and had a
working capital deficiency of $1,025,532 and a stockholders&#146; deficiency of
$2,007,144 as of December&nbsp;31, 2004. These factors raise substantial doubt about its
ability to continue as a going concern. The ability of the Company to continue as a going
concern is dependent on the Company&#146;s ability to raise additional funds and implement its
business plan. The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment and depreciation


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Property and equipment are stated at cost. Depreciation is computed using the
straight-line method based on the estimated useful lives of the assets, generally ranging
from three to ten years. Expenditures for major renewals and improvements that extend the
useful lives of property and equipment are capitalized. Expenditures for repairs and
maintenance are charged to expense as incurred. Leasehold improvements are amortized
using the straight-line method over the shorter of the estimated useful life of the asset
or the lease term.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">30
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary of significant accounting policies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-lived assets


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company accounts for the impairment and disposition of long-lived assets in accordance
with SFAS No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of Long-Lived Assets.&#148; In
accordance with SFAS No.&nbsp;144, long-lived assets to be held are reviewed for events or
changes in circumstances that indicate that their carrying value may not be recoverable.
The Company periodically reviews the carrying value of long-lived assets to determine
whether or not an impairment to such value has occurred. No impairments were recorded
during the period from inception (February&nbsp;18, 1998) through December&nbsp;31, 2004.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earnings (loss)&nbsp;per share


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Basic earnings (loss)&nbsp;per share is computed by dividing net income (loss)&nbsp;available to
common stockholders by the weighted average number of common shares outstanding during the
period. Diluted earnings per share reflects the potential dilution, using the treasury
stock method, that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the Company. In computing diluted earnings per share, the
treasury stock method assumes that outstanding options and warrants are exercised and the
proceeds are used to purchase common stock at the average market price during the period.
Options and warrants will have a dilutive effect under the treasury stock method only when
the average market price of the common stock during the period exceeds the exercise price
of the options and warrants. For the years ended December&nbsp;31, 2004 and 2003, the dilutive
impact of outstanding stock options of 14,422,652 and 13,250,000, respectively, and
15,529,414 and 14,117,414 warrants have been excluded because their impact on the loss per
share is antidilutive.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company accounts for income taxes in accordance with Statement of Financial Accounting
Standards (SFAS)&nbsp;No.&nbsp;109, &#147;Accounting for Income Taxes.&#148; Under SFAS No.&nbsp;109, income taxes
are recognized for the amount of taxes payable or refundable for the current year and
deferred tax liabilities and assets are recognized for the future tax consequences of
transactions that have been recognized in the Company&#146;s financial statements or tax
returns. A valuation allowance is provided when it is more likely than not that some
portion or all of the deferred tax asset will not be realized.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">31
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary of significant accounting policies </B>- Continued



<P align="left" style="font-size: 10pt">



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company accounts for stock-based compensation issued to employees using the
intrinsic-value method prescribed in Accounting Principles Board Opinion (APB)&nbsp;No.&nbsp;25,
&#147;Accounting for Stock Issued to Employees.&#148;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company accounts for stock option and warrant grants issued to non-employees using the
guidance of SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation&#148; and EITF No.&nbsp;96-18:
&#147;Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring,
or in Conjunction with Selling, Goods or Services,&#148; whereby the fair value of such option
and warrant grants is determined using the Black-Scholes option pricing model at the
earlier of the date at which the non-employee&#146;s performance is completed or a performance
commitment is reached.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company has elected to account for stock-based compensation using the intrinsic value
method prescribed in APB No.&nbsp;25 and related interpretations, and follow the pro forma
disclosure requirements of SFAS No.&nbsp;123. Accordingly, no compensation expense has been
recognized related to the granting of stock options, except as noted above. The following
table illustrates the effect on net income as if the Company had applied the fair value
recognition provisions of SFAS No.&nbsp;123 to stock-based employee compensation.</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cumulative</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>since</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>inception</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,803,280</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,476,063</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(17,130,888</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: total fair value method
stock-based employee
compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,721,222</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(949,977</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,929,504</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: deferred compensation
amortization for below market
employee options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">895,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">850,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,786,668</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7,629,501</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,576,040</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(18,273,724</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma loss per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.21</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">32
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary of significant accounting policies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair market value of the stock options at the grant date was estimated using the
Black-Scholes pricing model with the following weighted average assumptions:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

   <TD nowrap valign="top">&nbsp;</TD>
    <TD align="left" valign="top">Expected life (years)
</TD>
    <TD align="right" valign="top">7.32</TD>
    <TD nowrap valign="top">&nbsp;</TD>

</TR>
<TR valign="bottom">

    <TD nowrap valign="top">&nbsp;</TD>
    <TD align="left" valign="top">Risk free interest rate
</TD>


    <TD align="right" valign="top">5.42</TD>
    <TD align="left" nowrap valign="top">%</TD>

</TR>
<TR valign="bottom">

    <TD nowrap valign="top">&nbsp;</TD>
    <TD align="left" valign="top">Volatility
</TD>


    <TD align="right" valign="top">238.46</TD>
    <TD align="left" nowrap valign="top">%</TD>

</TR>
<TR valign="bottom">

    <TD nowrap valign="top">&nbsp;</TD>
    <TD align="left" valign="top">Expected dividend yield
</TD>


    <TD align="right" valign="top">0.00</TD>
    <TD align="left" nowrap valign="top">%</TD>

</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business and credit concentrations


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company&#146;s cash balances in financial institutions at times may exceed federally
insured limits. As of December&nbsp;31, 2004, before adjustments for outstanding checks and
deposits in transit, the Company had $67,718 on deposit with two banks. The deposits are
federally insured up to $100,000 on each bank.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Estimates


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Certain significant estimates were made in connection with
preparing the Company&#146;s financial statements. Actual results could
differ from those estimates.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value of financial instruments


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The carrying amounts of financial instruments, including cash, accounts payable and
accrued expenses, professional fees, and payables to related parties and founding officer approximate fair
value because of their short maturity as of December&nbsp;31, 2004.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">33
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary of significant accounting policies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recent accounting pronouncements


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In November&nbsp;2004, the FASB issued Statement of Financial Accounting Standards No.&nbsp;151,
&#147;Inventory Costs&#148;. This Statement amends the guidance in ARB No.&nbsp;43 Chapter&nbsp;4 Inventory
Pricing, to require items such as idle facility costs, excessive spoilage, double freight
and rehandling costs to be expensed in the current period, regardless if they are abnormal
amounts or not. This Statement will become effective for us in the first quarter of 2006.
The adoption of SFAS No.&nbsp;151 is not expected to have a material impact on our financial
condition, results of operations, or cash flows.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148; (SFAS
123R), which revises SFAS No.&nbsp;123. SFAS 123R also supersedes APB No.&nbsp;25 and amends SFAS
No.&nbsp;95, &#147;Statement of Cash Flows&#148;. In general, the accounting required by SFAS 123R is
similar to that of SFAS No.&nbsp;123. However, SFAS No.&nbsp;123 gave companies a choice to either
recognize the fair value of stock options in their income statements or disclose the pro
forma income statement effect of the fair value of stock options in the notes to the
financial statements. SFAS 123R eliminates that choice and requires the fair value of all
share-based payments to employees, including the fair value of grants of employee stock
options, be recognized in the income statement, generally over the option vesting period.
SFAS 123R must be adopted no later than July&nbsp;1, 2005
(December&nbsp;15, 2005 for small business filers). Early adoption is permitted.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company is currently evaluating the timing and manner in which it will adopt SFAS
123R. As permitted by SFAS 123, the Company currently accounts for share-based payments
to employees using APB 25&#146;s intrinsic value method. Accordingly, adoption of SFAS 123R&#146;s
fair value method will have an effect on results of operations, although it will have no
impact on overall financial position. The impact of adoption of SFAS 123R cannot be
predicted at this time because it will depend on levels of share-based payments granted in
the future. However, had SFAS 123R been adopted in prior periods, the effect would have
approximated the SFAS 123 pro forma net loss and loss per share disclosures as shown
above. SFAS 123R also requires the benefits of tax deductions in excess of recognized
compensation cost to be reported as a financing cash flow, rather than as an operating
cash flow as currently required, thereby reducing net operating cash flows and increasing
net financing cash flows in periods after adoption.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">34
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain relationships and related transactions</B>




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advances from founding executive officer


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>All of the marketing and manufacturing rights for the ZEFS were acquired from Mr.&nbsp;Muller,
for 5,000,000 shares of common stock, $500,000 and a $10 royalty for each unit sold (see
discussion below), pursuant to the Agreement entered into in December&nbsp;1998, by and between
the Company and Mr.&nbsp;Muller. Working capital advances in the amount of $517,208 and
payment in the amount of $500,000 for marketing and distribution rights of the ZEFS are
due to Mr.&nbsp;Muller. Such amounts are interest free and do not have any due dates for
payment (see Note 9).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In January&nbsp;2000, the Company entered into an agreement offering Mr.&nbsp;Muller and Lynne
Muller, Mr.&nbsp;Muller&#146;s wife, the option to purchase 5,000,000 shares each at $0.10 per share
as consideration for work performed for the Company. Mrs.&nbsp;Muller subsequently transferred
her option to Mr.&nbsp;Muller.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In connection with the Company&#146;s legal proceedings against Mr.&nbsp;Muller, the Company is
attempting to obtain a judgment that will relieve the Company of $1,017,208, which
represents all amounts due Mr.&nbsp;Muller. These amounts include the $500,000 due for the
marketing and distribution rights of the ZEFS and the working capital advances of
$517,208. As described in Note 9, the Company has been relieved of the $10 royalty
interest that Mr.&nbsp;Muller held for each unit sold. In addition, the Company is also
attempting to obtain a judgment that will cancel the options to purchase 10,000,000 shares
granted to Mr. and Mrs.&nbsp;Muller, collectively. Based on the status of current legal
proceedings, the Company does not believe that it will have to pay Mr.&nbsp;Muller the $500,000
for the rights to the ZEFS device and the $517,208 of advances. The Company also believes
that the option Mr.&nbsp;Muller holds to purchase 10,000,000 shares of the Company&#146;s stock will
be cancelled and no longer valid. The Company has not made any adjustments for the above
in its financial statements as the matters have not yet been finalized and may change.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">35
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
</TABLE>
<P align="left" style="font-size: 10pt"><B>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain relationships and related transactions </B>- Continued

<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans
from related parties

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Masry &#038; Vititoe, a law firm in which Edward&nbsp;L. Masry, the Company&#146;s Chief Executive Officer,
is a partner, has loaned $36,478 and $57,903 as of December&nbsp;31, 2004 and 2003,
respectively, to the Company for working capital purposes. The loans payable to Masry &#038;
Vititoe were allocations to the Company for shared expenses,
primarily payroll. Loans
by Masry &#038; Vititoe were unsecured, non-interest bearing, and were due on demand. In June
2003, Masry &#038; Vititoe converted $500,000 of its loans due from the Company into
2,000,000 shares of common stock and 2,000,000 warrants (see Note 6). In April&nbsp;2004,
accounts payable due this firm totaling $15,000 was converted to 60,000 shares of common
stock. The shares issued were valued at the current market price of the date of issuance
of $91,800 resulting in additional charge to expense $76,800, which has been reflected in
the accompanying financial statements ended December&nbsp;31, 2004.</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In March&nbsp;2005, Masry &amp; Vititoe loaned an additional
$100,000 to the Company for working capital purposes. This loan is
unsecured, non-interest bearing and is due on demand.</TD>
</TR>



</TABLE>
<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease agreement

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In October&nbsp;2003, the Company entered into a lease agreement with an entity to lease office
space for its primary administrative facility. A director of the Company owns the entity
(see Note 9).</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2004 and 2003, property and equipment consist of the following:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Office equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">50,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,417</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,732</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,244</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation expense for the year ended December&nbsp;31, 2004 and 2003 was $8,685 and $5,205,
respectively.


<P align="center" style="font-size: 10pt">36
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company has net operating loss (NOL)&nbsp;carryforwards in the amount of approximately $11.1
million, which begin to expire in 2018. The deferred tax asset related to these NOL
carryforwards has been fully reserved. The provision for income taxes represents the
minimum state income taxes payable plus estimated penalties and interest.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company&#146;s ability to utilize its NOL is dependent upon current filing status with the
Internal Revenue Service (IRS)&nbsp;and is subject to the IRS&#146;s statute of limitations.
Currently, the Company has not filed any returns with the IRS.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>A reconciliation of the Company&#146;s tax provision to income taxes at the applicable statutory
rates is shown below.</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes at statutory federal rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,316,681</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(841,861</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">State income taxes, net of federal benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(408,197</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(148,564</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,721,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">990,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minimum state income taxes, plus penalties and interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,020</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,766</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,020</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders&#146; deficiency</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>As of December&nbsp;31, 2003, the Company has authorized 200,000,000 shares of its common stock,
of which 37,784,821 shares were issued and outstanding, and 119,000 shares are to be issued.
As described in Note 1, estimates and judgments were used by management to determine the
fair value for certain issuances of the outstanding shares.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company&#146;s significant stockholders are as follows:</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Percentage</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">of shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">ownership</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mr.Edward Skoda</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mr.&nbsp;Edward Masry</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,060,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Remaining stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,724,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">81.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,784,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">37
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt"><B>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders&#146; deficiency</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In connection with the cross complaint the Company has filed against Mr.&nbsp;Muller, the Company
is seeking various legal remedies relating to 8,716,710 shares previously obtained and
controlled, directly or indirectly, by Mr.&nbsp;Muller (see Note 9). The Company is also seeking
the rescission of options to purchase 10,000,000 shares of the Company&#146;s stock held by Mr.
Muller (see Notes 3 and 9). Management cannot predict the outcome of any of the pending
matters related to the shares controlled by Mr.&nbsp;Muller, or if the 10,000,000 option shares
will be rescinded.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In June&nbsp;2003, the Company issued 2,000,000 shares of common stock and 2,000,000 warrants to
convert $500,000 of related party debt into equity (see Note 7).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In October&nbsp;2003, the Company sold 25,000 shares of its common stock in a series of private
placement transactions. The Company received proceeds, net of offering costs, in the amount
of $6,250 for the shares prior to December&nbsp;31, 2003, but did not issue the stock
certificates until February&nbsp;2, 2004. These shares are shown as common stock to be issued in
the accompanying financial statements.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In April&nbsp;2004, the Company issued 60,000 shares of common stock to convert $15,000 of
an outstanding loan made to us by Joette Masry, the wife of our Chief
Executive Officer, Edward&nbsp;L. Masry (see Note 3). The shares issued were valued at the current
market price of the date of issuance of $91,800 resulting in additional charge to expense
$76,800, which has been reflected in the accompanying financial statements ended December
31, 2004.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>During 2004, the Company sold 1,272,500 units, consisting of one share of
common stock and one warrant to acquire a share of common stock at $1.50 for $1,272,500.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>During 2004, the Company issued 960,500&nbsp;shares of common
stock for $194,200 from the exercise of 960,500 warrants.</TD>
</TR>


<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In November and December&nbsp;2004, the Company sold 119,000 shares of its common stock in a
series of private placement transactions. The Company received proceeds, net of offering
costs, in the amount of $119,000 for the shares prior to December&nbsp;31, 2004, but did not
issue the stock certificates until 2005. These shares are shown as common stock to be
issued in the accompanying financial statements.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">38
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options and warrants</B>




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Option agreements


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company issues stock options to employees, directors and consultants under no formal
plan. Employee options vest according to the terms of the specific grant and expire from 5
to 10&nbsp;years from date of grant. Non-employee option grants to date are vested upon
issuance. The weighted average remaining contractual life of employee options outstanding
at December&nbsp;31, 2004 was 7.32&nbsp;years. Stock option activity for the years ended December&nbsp;31,
2004 and 2003, was as follows:</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted Avg.</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted Avg.</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Exercise Price</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options outstanding, January&nbsp;1, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options, December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,172,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.03</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options, December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,422,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">39
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options and warrants </B>- Continued



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options outstanding at December&nbsp;31, 2004 and the related weighted average exercise price and
remaining life information is as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Range of exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>remaining life in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>average exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Weighted average</B></TD>
    <TD>&nbsp;</TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>prices</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><b>Options
     exercisable</b></td>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>exercise price</B></TD>
    <TD>&nbsp;</TD>

</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:55px; text-indent:-15px">&nbsp;$0.10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$0.10</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000,000</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$0.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;0.10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.10</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,000,000</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;0.40</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.40</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,000 </TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;0.98</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.98</TD>
    <TD>&nbsp;</TD>
    <TD align="right">-  </TD>
    <TD>&nbsp;</TD>
    <TD align="right">-   </TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;1.15</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.15</TD>
    <TD>&nbsp;</TD>
    <TD align="right">-</TD>
    <TD>&nbsp;</TD>
    <TD align="right">-</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;1.27</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185,696</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.27</TD>
    <TD>&nbsp;</TD>
    <TD align="right">-</TD>
    <TD>&nbsp;</TD>
    <TD align="right">-</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="1" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:23px; text-indent:-15px">$0.10-$1.27</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,422,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$0.18</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,250,000</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$0.16</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD nowrap align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The 10,000,000 options exercisable at $0.10 per share in the table above are held by Mr.
Muller. The options have been accounted for as employee stock options under the provisions
of APB No.&nbsp;25. Accordingly, no compensation expense has been recorded in the statements of
operations. However, the $1,000,000 fair value of the options has been reflected in the pro
forma net loss below. The 10,000,000 options do not have an expiration date and vested in
1999. For purposes of computing fair value method stock-based employee compensation expense
for the 10,000,000 employee options above, a ten-year life was used in the Black-Scholes
option-pricing model, as ten years is the longest term for other option grants.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intrinsic value of employee options


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Certain employee options were granted with exercise prices less the than fair market value
of the Company&#146;s stock at the date of grant. As the grants were to employees, the intrinsic
value method, as allowed under APB No.&nbsp;25, was used to calculate the related compensation
expense. For the years ended December&nbsp;31, 2004, $248,891 of deferred compensation was
recorded and $936,537 and $863,727 of deferred compensation costs was amortized and
recognized as expense in the years ending December&nbsp;31, 2004 and 2003 respectively.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">40
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options and Warrants </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The following table summarizes certain information about the company&#146;s stock purchase
warrants.</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted Avg.</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Warrants</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Exercise Price</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants outstanding, January&nbsp;1, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,517,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants outstanding, December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,117,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,372,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(960,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">.20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants outstanding, December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,529,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In 2003, 11,517,414 warrants were issued to investors and non-employees. In 2003,
$8,933,483 of the total fair value of $10,173,653 was related to 9,434,000 warrants issued
to private placement investors and $1,240,171 was related to the 2,083,414 warrants issued
in connection with the related party debt settlement and legal services.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>During the year ended December&nbsp;31, 2004, the Company issued 1,000,000 10&nbsp;year warrants to
acquire 1,000,000 shares of the Company&#146;s common stock. The warrants require a payment of
$1 for each share purchased. The warrants were issued to finalize a settlement with the
bankruptcy trustee and others who had claims to ZEFS technology in exchange for the full
release of their claims. The Company valued the warrants at $1,585,265 and reflected the
amount as patent settlement costs during the year ended December&nbsp;31, 2004. The warrants
were issued in July&nbsp;2004 when the Company became current in its SEC filings. The warrants
were valued by the Company using the Black Scholes pricing model using a ten year term
(statutory term), 46.2% volatility, no annual dividends, and a discount rate of 4.57%. The
trustee and the other individuals will also receive royalties when the product is sold.
There are no required royalties payable under this agreement for the year ending December
31, 2004.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>During 2004, the Company issued 100,000 warrants to two consultants and using the Black
Scholes pricing model, the fair value of these warrants was valued at $53,300 and included
as compensation expense. The remaining 1,272,500 warrants issued during 2004 were issued
to investors as part of equity agreement and were not ascribed any valued in the
accompanying financial statements.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">41
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company has established a research and development facility in Queensland, Australia
where test vehicles, test engines and testing equipment were purchased. The Company has
expanded research and development to include applications of the ZEFS and CAT-MATE
technology to diesel engines, motorbikes, boats, generators, lawnmowers and other small
engines. The Company has also purchased test vehicles, test engines and testing equipment.
The Company completed testing on ZEFS and CAT-MATE devices for multiple automobiles,
trucks, motorcycles, off-road vehicles and stationary engines, the results of which have
been provided to RAND Corporation (RAND)&nbsp;for evaluation. During 2004, RAND expanded its
role with the Company and now oversees the Company&#146;s research and development facility in
Australia. The Company also uses third party research and development facilities in Los
Angeles and San Jose, California for the development of our ZEFS and CAT-MATE devices.
For the years ended December&nbsp;31, 2004 and 2003, the Company has spent $1,873,464 and
$628,832, respectively, on research and development.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies</B>




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal matters


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>On December&nbsp;19, 2001, the SEC filed civil charges in the United States Federal District
Court, Southern District of New York, against its former President and then sole director
Jeffrey A. Muller, and others, alleging that the Company and the other defendants were
engaged in a fraudulent scheme to promote the Company&#146;s stock. The SEC complaint alleged
the existence of a promotional campaign using press releases, Internet postings, an
elaborate website, and televised media events to disseminate false and materially
misleading information as part of a fraudulent scheme to manipulate the market for stock
for the Company, which was then controlled by Mr.&nbsp;Muller. On March&nbsp;22, 2002, the Company
signed a Consent to Final Judgment of Permanent Injunction and Other Relief in settlement
of this action as against the corporation only, which the court approved on July&nbsp;2, 2002.
Under this settlement, the Company was not required to admit fault and did not pay any
fines or restitution. The SEC&#146;s charges of fraud and stock manipulation continue against
Mr.&nbsp;Muller and others.</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>On July 2,2002, after an investigation by the Company&#146;s
newly constituted board of directors, the Company filed a cross-complaint in the SEC action against Mr. Muller and
others seeking injunctive relief, disgorgement of monies and stock and financial restitution for a variety of acts and
omissions in connection with sales of the Company&#146;s stock and other transactions occurring between 1998
and 2002. Among other things, the Company alleged that Mr.&nbsp;Muller and certain others sold company stock without providing adequate consideration to the Company; sold insider shares
without making proper disclosures and failed to make necessary filings required under federal securities laws; engaged in self-dealing
and entered into various undisclosed related-party transactions; misappropriated for their own use proceeds from sales of the Company&#146;s
stock; and entered into various undisclosed arrangement regarding the control, voting and disposition of their stock. The Company contends
that it is entitled to a judgment canceling all of the approximately 8,716,710 shares of the Company&#146;s common stock that were previously
obtained and controlled, directly or indirectly, by Mr, Muller; divesting and preventing any subsequent holders of the right to exercise
options previously held by Mr.&nbsp;Muller for 10,000,000 shares of the Company&#146;s common stock, conversion of an existing preliminary injunction
to a permanent injunction to prevent Mr.&nbsp;Muller from any involvement
with the Company and a monetary judgment against Mr.&nbsp;Muller and others
in the amount of several million dollars.</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">42
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal matters &#151; Continued


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>On July&nbsp;30, 2002, the U.S. Federal District Court, Southern District of New York, granted
the Company&#146;s application for a preliminary injunction against Mr.&nbsp;Muller and others,
which prevented Mr.&nbsp;Muller and other cross-defendants from selling, transferring, or
encumbering any assets and property previously acquired from the Company, from selling or
transferring any of the Company&#146;s stock that they may own or control, or from taking any
action to injure the business and from having any direct contact with the Company&#146;s
shareholders. The injunctive order also prevents Mr.&nbsp;Muller from engaging in any effort
to exercise control over the Company and from serving as an officer or director of the
Company. The Company believes that they have valid claims, there can be no assurance that
an adverse result or settlement would not have a material adverse effect on the Company&#146;s
financial position or cash flow.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In the course of the litigation, the Company has obtained ownership control over Mr.
Muller&#146;s claimed patent rights to the ZEFS device. Under a Buy-Sell Agreement between Mr.
Muller and dated December&nbsp;29, 1998, Mr.&nbsp;Muller, who was listed on the ZEFS devise patent
application as the inventor of the ZEFS device, purported to grant us all international
marketing, manufacturing and distribution rights to the ZEFS device. Those rights were
disputed because an original inventor of the ZEFS device contested Mr.&nbsp;Muller&#146;s legal
ability to have conveyed those rights. In Australia, Mr.&nbsp;Muller entered into a bankruptcy
action seeking to overcome the Company&#146;s claims for ownership of the ZEFS device. In
conjunction with these litigation proceedings, a settlement agreement was reached whereby
the $10 per unit royalty previously due to Mr.&nbsp;Muller under his contested Buy-Sell
Agreement was terminated and replaced with a $.20 per unit royalty payable to the
bankruptcy trustee. On November&nbsp;7, 2002, under a settlement agreement executed with Mr.&nbsp;Muller&#146;s bankruptcy trustee, the trustee transferred to the Company all ownership and
legal rights to this international patent application for the ZEFS device.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Both the SEC and the Company have filed Motions for Summary Judgment contending that there
are no material issues of fact in contention and as a matter of law, the Court should
grant a judgment against Mr.&nbsp;Muller and the cross-defendants. Mr.&nbsp;Muller has filed a
response contending the motions are without merit or substance. A final decision on these
motions, which potentially would terminate the ongoing litigation, is still pending.
Should the Court not grant summary judgment in favor of the Company, the case will be
scheduled for final disposition in a trial.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">43
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal matters &#151; Continued


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Mr.&nbsp;Muller and several of the defendants filed a Motion to Dismiss the complaint filed by
the Company and moved for summary judgment in their favor. On December&nbsp;21, 2004, Judge
George B. Daniels, denied the cross-defendants&#146; motion to dismiss the Company&#146;s
cross-complaint, denied the request to vacate the July&nbsp;2, 2002 preliminary injunction and
denied the request for damages against the Company. The court also refused to grant a
summary judgment in favor of the cross-defendants and dismissed Mr.&nbsp;Muller&#146;s claims
against the Company for indemnification for his legal costs and for damages resulting from
the litigation. Neither Mr.&nbsp;Muller nor any of the cross-defendants have filed any
cross-claims against the Company and the Company is not exposed to any liability as a
result of the litigation, except for possibly incurring legal fees and expenses should the
Company lose the litigation.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Although the outcome of this litigation cannot be predicted with any degree of certainty,
the Company is optimistic that the Court&#146;s ruling will either significantly narrow the
issues for any later trial or will result in a final disposition of the case in a manner
favorable to the Company. The Company believes that they have valid claims, however,
there can be no assurance that an adverse result or outcome on the pending motions or a
trial of this case would not have a material adverse effect on the Company&#146;s financial
position or cash flow.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company was named as a defendant in a complaint filed
before the Los Angeles Superior Court, Civ. No.&nbsp;BC&nbsp;312401,
by Terracourt Pty Ltd, an Australian corporation, claiming breach of
contract and related remedies from promises allegedly made by the
former president of the Company in 1999. The plaintiff is seeking
specific performance of the former president&#146;s alleged promises
to transfer to the plaintiff an aggregate 480,000&nbsp;shares of the
Company&#146;s common stock for office consultant and multimedia
services. The complaint was filed on March&nbsp;18, 2004. Due to a
late date of service of the complaint upon the Company and other
preliminary legal procedures, the Company&#146;s answer was not filed
until October&nbsp;20, 2004. The Company is opposing the
plaintiff&#146;s causes of action and has asserted that the Company
has no liability for the claims asserted. The matter has been
scheduled for further motion and trial proceedings in late April 2005
and is expected to be concluded by early June 2005.</TD>
</TR>

</TABLE>





<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Royalty agreements


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company has entered into various royalty agreements whereby it has agreed to provide
an aggregate of $0.80 per unit for each ZEFS device sold. Certain of these royalty
agreements were reached in exchange for the royalty recipients&#146; release of their claims to
the intellectual property rights to the ZEFS.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In connection with these royalty agreements, the Company has committed to issue options to
purchase an aggregate of 1,000,000 shares of common stock at $1.00 per share. The options
expire 10&nbsp;years from the date of grant. These options were granted by the Company on July
1, 2004 when the company became in full compliance with the SEC reporting requirements.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Also, in connection with the royalty agreements, the Company has issued an aggregate of
128,000 shares of common stock upon completion of successful ZEFS testing, as defined. On
April&nbsp;1, 2004, the company issued 600,000 shares at $1.70 per share, to fulfill the terms
of the two-year research and development consulting agreements.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">44
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Royalty agreements &#151; Continued


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In July&nbsp;2004, the Company executed a License Agreement with Temple University in
Philadelphia, Pennsylvania. In consideration of the license granted to Licensee under the
terms of this Agreement, Licensee shall pay to Temple a royalty of two percent (2%) of net
sales for each calendar quarter during the term of this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In further consideration of the license granted to Licensee under the terms of this
Agreement, Licensee shall pay to Temple, on the first anniversary of the expiration of the
option period, a non-refundable license fee of fifty thousand dollars ($50,000). In
further consideration of the license granted to licensee under the terms of this
Agreement, licensee shall pay to Temple, on the second anniversary of the expiration of
the option period and annually thereafter, a non-refundable license maintenance fee
regardless of or irrespective of actual net sales. The amount of each license maintenance
fee payment shall be as follows: (i)&nbsp;twenty five thousand dollars ($25,000) for the first
through fourth payment, and (ii)&nbsp;fifty thousand dollars ($50,000) for all subsequent
payments.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>This undertaking relates to commercialization of myriads of products that the Company
hopes will be widely accepted by the petroleum industry. The Company has applied for
patent protection for this new technology. Use of these new SWA products may extend the
life of world oil reserves and be beneficial in reducing future damage to the world&#146;s
ecology, threatened by oil exploration.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The Company expects that by mid-2005 the feasibility study, including market assessment
and the theoretical and engineering evaluations, will have been completed. If at that time
the Company determines the products are both practical to engineer and will be accepted by
the petroleum industry, the Company may then proceed with the design of prototypes, a
demonstration program and the commercialization of these products.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In October&nbsp;2004, the Company entered into a representation agreement with an individual
who will represent and introduce the Company to key personnel in India. The
representative was granted 50,000 warrants at $1.00 upon signing of the agreement. Once
all duties have been performed, the representative will receive an additional 50,000
warrants at the medium price of stock traded on March&nbsp;31, 2005 at a discount of 30%, plus
2% royalty on gross receipts from contracts that are signed from his contract. The fair
value of the 50,000 warrants issued upon signing was $24,428 using the Black-Scholes
pricing model and was reflected as compensation costs in the accompanying financial
statement.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">45
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Royalty agreements


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In November&nbsp;2004, the Company entered into an agreement with an outside consultant to
provide various consulting and management services. In exchange for these services the
Company has agreed to pay a royalty of 1.25% of gross receipts for sales originating in
certain geographic locations paid over a 10&nbsp;years period. In addition, the company issued
50,000 warrants at $1.00 to the consultant. The fair value of the 50,000 warrants issued
is $28,872 using the Black-Scholes pricing model and was reflected as compensation costs
in the accompanying financial statement. Furthermore, the Company agreed to issue warrants
to purchase 450,000 shares of common stock of the Company, issuable upon the Company
making a formal public announcement that it has entered into a binding joint venture,
strategic alliance or similar agreement with the Strategic Partner. Such warrants shall
have a term of five years and an exercise price of $1.00 per share.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employment agreements


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In March&nbsp;2004, the Company entered into an amendment to the employment agreement dated
December&nbsp;1, 2003 with an individual to serve as the Company&#146;s President. The agreement
expires December&nbsp;2007, with an automatic extension for one additional year and calls for
annual base compensation of not less than $240,000 for the period ending December&nbsp;31,
2004. During the employment term, the individual is eligible to participate in certain
incentive plans, stock option plans, and similar arrangements in accordance with the
Company&#146;s recommendation at award levels consistent and commensurate with the position and
duties hereunder.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In March&nbsp;2004, the Company entered into an amendment to the employment agreement dated
December&nbsp;1, 2003 with an individual to serve as the Company&#146;s Chief Operating Officer.
The agreement expires December&nbsp;2007, with an automatic extension for one additional year
and calls for annual base compensation of not less than $192,000 for the period ending
December&nbsp;31, 2004. During the employment term, the individual is eligible to participate
in certain incentive plans, stock option plans, and similar arrangements in accordance
with the Company&#146;s recommendation at award levels consistent and commensurate with the
position and duties hereunder.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">46
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commitments and contingencies </B>- Continued




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employment agreements


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In September&nbsp;2004, the Company entered into an employment agreement with an individual to
serve as the Company&#146;s Vice President of Environmental Affairs. The agreement expires
September&nbsp;2005, with an automatic extension for one additional year and calls for annual
base compensation of not less than $60,000 per year. During the employment term, the
individual is eligible to participate in certain incentive plans, stock option plans, and
similar arrangements in accordance with the Company&#146;s recommendation at award levels
consistent and commensurate with the position and duties hereunder.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leases


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In June&nbsp;2004, the Company amended its sublease of a portion of a building in North
Hollywood, California from an entity that is owned by a director of the Company. The
lease term is from November&nbsp;1, 2003 through October&nbsp;31, 2005 and carries an option to
renew for two additional years with a 10&nbsp;percent increase in the rental rate. Monthly
rent is $3,400 per month under this lease with the remaining commitment of $34,000 through
October&nbsp;31, 2005.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In November&nbsp;2003, the Company entered into a lease for a research and development facility
located in Queensland, Australia. The term of the lease is from November&nbsp;15, 2003 through
November&nbsp;15, 2005 and carries an option to renew for two additional years with an increase
of the greater of 5% or the increase in the then-current Australian Consumer Price Index.
Monthly rent is AUD $1,292 (approximately US $1,000) per month under this lease with the
remaining commitment of AUD $14,212 through November&nbsp;15, 2005.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsequent events</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>In 2005, the Company sold 709,500 units, consisting of one
share of common stock and one warrant to acquire common
stock at $1.50 per share for $664,200 in a series of private placements.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt">47
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<A name="110"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;8. </B><B><I>Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2003, the SEC promulgated rules that no annual or quarterly report submitted to the
SEC may include financial reports audited by independent public accountants unregistered with the
Public Company Accounting Oversight Board (PCAOB). Our prior accountants, Good Swartz Brown &#038;
Berns, LLP, indicated that they would not be registered with the PCAOB, and as such, they resigned
as our independent public accountants. On November&nbsp;21, 2003, our Board of Directors approved the
dismissal of Good Swartz Brown &#038; Berns, LLP as our independent public accountant and retained
Weinberg &#038; Company, P.A.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the last fiscal year prior to and preceding the resignation of Good Swartz Brown &#038;
Berns, LLP and any subsequent interim period preceding such resignation, there were no
disagreements with Good Swartz Brown &#038; Berns, LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which disagreements, if
not resolved to Good Swartz Brown &#038; Berns, LLP&#146;s satisfaction, would have caused it to make
reference to the subject matter of the disagreement in connection with its reports; and there were
no reportable events described under Item&nbsp;304(a)(1)(iv) of Regulation&nbsp;S-B. During the last two
fiscal years, Good Swartz Brown &#038; Berns did not issue any audit reports containing a disclaimer or
adverse or qualified opinion.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not consult with Weinberg &#038; Company, P.A. for the year ended December&nbsp;31, 2002 and
through November&nbsp;21, 2003, with respect to (i)&nbsp;the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit opinion that might be
rendered on our financial statements or (ii)&nbsp;any matter that was the subject of any prior
disagreement between us and our previous independent accountant.

<DIV align="left">
<A name="111"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;8A. </B><B><I>Controls and Procedures</I></B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left"><I>(a)</I>&nbsp;&nbsp;</TD>
    <TD><I>Evaluation of disclosure controls and procedures: </I>Our management evaluated, with the
participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness
of our disclosure controls and procedures as of the end of the period covered by this
Annual Report on Form 10-KSB. Based on this evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that our disclosure controls and procedures (as
defined in Rules&nbsp;13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the
Exchange Act)) are inadequate to ensure that information required to be disclosed by us in
reports that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in SEC rules and forms. We are developing a
plan to ensure that all information will be recorded, processed, summarized and reported on
a timely basis. This plan is dependent, in part, upon reallocation of responsibilities
among various personnel, possibly hiring additional personnel and additional funding. It
should also be noted that the design of any system of controls is based in part upon
certain assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left"><I>(b)</I>&nbsp;&nbsp;</TD>
    <TD><I>Changes in internal control over financial reporting: </I>There was no change in our
internal control over financial reporting that occurred during the period covered by this
Annual Report on Form 10-KSB that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.</TD>
</TR>

</TABLE>

<DIV align="left">
<A name="112"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B><I>Item&nbsp;8B. Other Information</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.


<P align="center" style="font-size: 10pt">48
</DIV>

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<DIV align="left">
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</DIV>

<P align="center" style="font-size: 10pt"><B>PART III</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain information required by Part&nbsp;III is incorporated by reference from our Proxy Statement
to be filed with the Securities and Exchange Commission in connection with the solicitation of
proxies for our 2005 Annual Meeting of Stockholders to be held on May&nbsp;24, 2005 (the &#147;Proxy
Statement&#148;).

<DIV align="left">
<A name="114"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;9. </B><B><I>Directors and Executive Officers of Registrant</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this section is incorporated by reference from the section
entitled &#147;Proposal 1 &#151; Election of Directors&#148; in the Proxy Statement. Item&nbsp;405 of Regulation&nbsp;S-B
calls for disclosure of any known late filing or failure by an insider to file a report required by
Section&nbsp;16 of the Exchange Act. This disclosure is incorporated by reference to the section
entitled &#147;Section&nbsp;16(a) Beneficial Ownership Reporting Compliance&#148; in the Proxy Statement. The
information required by this Item with respect to our executive officers is contained in Item&nbsp;1 of
Part&nbsp;I of this Annual Report under the heading &#147;Business &#151; Executive Officers&#148;.

<DIV align="left">
<A name="115"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;10. </B><B><I>Executive Compensation</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this section is incorporated by reference from the information in
the section entitled &#147;Executive Compensation&#148; in the Proxy Statement.

<DIV align="left">
<A name="116"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;11. </B><B><I>Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this section is incorporated by reference from the information in
the section entitled &#147;Security Ownership of Certain Beneficial Owners and Management&#148; in the Proxy
Statement.

<DIV align="left">
<A name="117"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;12. </B><B><I>Certain Relationships and Related Transactions</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this section is incorporated by reference from the information in
the section entitled &#147;Certain Relationships and Related Transactions&#148; in the Proxy Statement.

<DIV align="left">
<A name="118"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;13. </B><B><I>Exhibits and Reports on Form&nbsp;8-K</I></B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>The following documents are filed as part of this Form 10-KSB.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements:



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;Reference is made to the contents to Financial Statements of Save the World Air, Inc. under
Item&nbsp;7 of this Form 10-KSB.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>Exhibits:</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exhibits listed below are required by Item&nbsp;601 of Regulation&nbsp;S-B.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit No.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
<TR><TD>&nbsp;</TD></TR>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.1(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Articles of Incorporation, as amended, of the Registrant.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.2(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bylaws of the Registrant.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Commercial Sublease dated October&nbsp;16, 2003 between the Registrant and KZ Golf, Inc.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment dated June 15, 2004 to Exhibit&nbsp;10.1</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Tenancy Agreement dated November&nbsp;15, 2003 between the Registrant and Autumlee Pty
Ltd.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.4(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement dated December&nbsp;13, 2002 between the Registrant and RAND.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.5(2)**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement dated May&nbsp;7, 2003 between the Registrant and RAND.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.6(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Modification No.&nbsp;1 dated as of August&nbsp;21, 2003 to Exhibit&nbsp;10.5</TD>
<TD></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">49
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit No.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.7(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Modification No.&nbsp;2 dated as of October&nbsp;17, 2003 to Exhibit&nbsp;10.5</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.8(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Modification No.&nbsp;3 dated as of January&nbsp;20, 2004 to Exhibit&nbsp;10.5</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.9(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed and Document Conveyance between the Trustee of the Property of Jeffrey Ann Muller and
Lynette Anne Muller (Bankrupts).</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.10(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assignment and Bill of Sale dated May&nbsp;28, 2002 between the Registrant and Kevin Charles Hart.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.11(6)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated December&nbsp;1, 2003 between the Registrant and Joseph Helleis.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.12(6)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated December&nbsp;1, 2003 between the Registrant and Edward L. Masry.</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.13(6)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated December&nbsp;1, 2003 between the Registrant and Eugene E. Eichler.</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.14*&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment dated as of March 2, 2004
to Exhibit&nbsp;10.13</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.15(6)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated December&nbsp;1, 2003 between the Registrant and Bruce H. McKinnon.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.16*&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment dated as of March 2, 2004
to Exhibit&nbsp;10.15</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.17(7)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Save the World Air, Inc. 2004 Stock
Option Plan</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.18*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Incentive Stock Option Agreement under 2004 Stock Option Plan</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.19*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Non-Qualified Stock Option Agreement under 2004 Stock Option Plan</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.20*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of April&nbsp;1, 2003 between the Registrant and Adrian Menzell</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.21*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of April&nbsp;1, 2003 between the Registrant and Pat Baker</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.22*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of April&nbsp;1, 2003 between the Registrant and John Kostic</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.23*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of
October&nbsp;1, 2004 between the Registrant and John Fawcett</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.24*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated as of February&nbsp;26, 2003 between the Registrant and Kevin
Charles Hart</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.25*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated as of July&nbsp;7, 2003 between the Registrant and Sir Jack
Brabham</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.26(8)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License Agreement dated as of July&nbsp;1, 2004 between the Registrant and Temple University &#150;
The Commonwealth System of Higher Education</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.27*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Exclusive Capital Raising Agreement dated as of July&nbsp;29, 2004 between the Registrant and
London Aussie Marketing, Ltd.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.28*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of November 19, 2004 between the Registrant and London Aussie Marketing, Ltd.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.29*&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated September 1, 2004 with Erin Brockovich</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.30*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representation Agreement dated as of October&nbsp;1, 2004 between the Registrant and Gurminder
Singh</TD>
<TD></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.31*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated
as of August&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2002 between the Registrant and Bobby Unser, Jr.</TD>
<TD></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.32*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated
as of August&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2002 between the Registrant and Jack Reader</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.33*&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated
as of August&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2002 between the Registrant and Nate Sheldon</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.34*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assignment of Patent Rights dated
as of September&nbsp;1, 2003 between the Registrant and Adrian Menzell</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.35*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Global Deed of Assignment dated
June&nbsp;26, 2004 between the Registrant and Adrian Menzell</TD>
<TD></TD>
</TR>




<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Code of Business Conduct and Ethics</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Code of Ethics for Senior
Executives and Financial Officers</TD>
<TD></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Weinberg &#038; Co.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">24*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Power of Attorney (included on Signature Page)</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Executive Officer of Annual Report Pursuant to Rule&nbsp;13(a)&#151;15(e) or
Rule&nbsp;15(d)&#151;15(e).</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Financial Officer of Annual Report Pursuant to 18 U.S.C. Section&nbsp;1350.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Executive Officer and Chief Financial Officer of Annual Report
pursuant to Rule&nbsp;13(a)&#151;15(e) or Rule&nbsp;15(d)&#151;15(e).</TD>
<TD></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<TR style="font-size: 8pt" valign="bottom">
<TD width="18%" nowrap align="left" style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>
</TABLE>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="left">*</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Filed herewith.</TD>
</TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">**</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Confidential treatment previously requested.</TD>
</TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">&#134;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Management contract or compensatory plan or arrangement.</TD>
</TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Registration Statement on Form 10-SB
(Registration Number 000-29185), as amended, filed on March&nbsp;2, 2000.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">50
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 10-KSB for the fiscal year ended December
31, 2002.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 8-K filed on December&nbsp;30, 2002.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(4)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 10-QSB for the quarter ended March&nbsp;31,
2004.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(5)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 8-K filed on November&nbsp;12, 2002.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(6)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 10-KSB for the fiscal year ended December
31, 2003.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(7)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Appendix&nbsp;C of Registrant&#146;s Schedule&nbsp;14A filed on April&nbsp;30,
2004, in connection with its Annual Meeting of Stockholders held on May&nbsp;24, 2004.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(8)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant Form 8-K filed on July&nbsp;12, 2004.</TD>
</TR>

</TABLE>


<DIV align="left">
<A name="119"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;14. </B><B><I>Principal Accountant Fees and Services</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this section is incorporated by reference from the information in
the section entitled &#147;Proposal 3 &#151; Ratification of Appointment of Independent Auditors&#148; in the
Proxy Statement.


<P align="center" style="font-size: 10pt">51
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="120"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with Section&nbsp;13 or 15(d) of the Exchange Act, the Registrant has caused this
report to be signed on its behalf by the undersigned, hereunto duly authorized.


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><FONT style="font-variant: SMALL-CAPS">Save The World Air, Inc.</FONT><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>

<TD colspan="2" style="border-bottom: 1px solid #000000" align="center">/s/ EDWARD L. MASRY
</TD>
   <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center">Edward L. Masry&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: April 25, 2005&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center"><I>Chief Executive Officer</I>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt"><B>POWER OF ATTORNEY</B>




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints, jointly and severally, Eugene E. Eichler and Bruce H. McKinnon, and each
of them, as his or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her name, place and stead, in any and
all capacities, to sign any and all amendments to this Annual Report on Form 10-KSB, and to file
the same, with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Title</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
<TR><TD>&nbsp;</TD></TR>

    <TD align="left" valign="bottom">/s/ EDWARD L. MASRY
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Chief Executive Officer and Chairman of
the Board
</TD>
    <TD>&nbsp;</TD>

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">April 25, 2005</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="bottom">Edward L. Masry
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">/s/ EUGENE E. EICHLER
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">President, Chief Financial Officer,
Treasurer and Director
</TD>
    <TD>&nbsp;</TD>

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">April 25, 2005</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="bottom">Eugene E. Eichler
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">/s/ BRUCE H. McKINNON
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Chief Operating Officer and Director
</TD>
    <TD>&nbsp;</TD>

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">April 25, 2005</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="bottom">Bruce H. McKinnon
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">/s/ ROBERT F. SYLK
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">April 25, 2005</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="bottom">Robert F. Sylk
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">/s/ J. JOSEPH BROWN
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">April 25, 2005</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="bottom">J. Joseph Brown
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">/s/ JOHN F. PRICE
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">April 25, 2005</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="bottom">John F. Price
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="bottom">/s/ JOSEPH HELLEIS
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">April 25, 2005</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="left" valign="bottom" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="bottom">Joseph Helleis
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">52
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>EXHIBIT INDEX</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="71%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exhibit No.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
<TR><TD>&nbsp;</TD></TR>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.1(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Articles of Incorporation, as amended, of the Registrant.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.2(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bylaws of the Registrant.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Commercial Sublease dated October&nbsp;16, 2003 between the Registrant and KZ Golf, Inc.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment dated June 15, 2004 to Exhibit&nbsp;10.1</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Tenancy Agreement dated November&nbsp;15, 2003 between the Registrant and Autumlee Pty
Ltd.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.4(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement dated December&nbsp;13, 2002 between the Registrant and RAND.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.5(2)**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement dated May&nbsp;7, 2003 between the Registrant and RAND.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.6(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Modification No.&nbsp;1 dated as of August&nbsp;21, 2003 to Exhibit&nbsp;10.5</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.7(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Modification No.&nbsp;2 dated as of October&nbsp;17, 2003 to Exhibit&nbsp;10.5</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.8(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Modification No.&nbsp;3 dated as of January&nbsp;20, 2004 to Exhibit&nbsp;10.5</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.9(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deed and Document Conveyance between the Trustee of the Property of Jeffrey Ann Muller and
Lynette Anne Muller (Bankrupts).</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.10(5)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assignment and Bill of Sale dated May&nbsp;28, 2002 between the Registrant and Kevin Charles Hart.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.11(6)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated December&nbsp;1, 2003 between the Registrant and Joseph Helleis.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.12(6)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated December&nbsp;1, 2003 between the Registrant and Edward L. Masry.</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.13(6)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated December&nbsp;1, 2003 between the Registrant and Eugene E. Eichler.</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD nowrap valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.14*&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment dated as of March 2, 2004
to Exhibit&nbsp;10.13</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.15(6)&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated December&nbsp;1, 2003 between the Registrant and Bruce H. McKinnon.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.16*&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment dated as of March 2, 2004
to Exhibit&nbsp;10.15</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.17(7)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Save the World Air, Inc. 2004 Stock
Option Plan</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.18*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Incentive Stock Option Agreement under 2004 Stock Option Plan</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.19*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Non-Qualified Stock Option Agreement under 2004 Stock Option Plan</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.20*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of April&nbsp;1, 2003 between the Registrant and Adrian Menzell</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.21*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of April&nbsp;1, 2003 between the Registrant and Pat Baker</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.22*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of April&nbsp;1, 2003 between the Registrant and John Kostic</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.23*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of
October&nbsp;1, 2004 between the Registrant and John Fawcett</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.24*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated as of February&nbsp;26, 2003 between the Registrant and Kevin
Charles Hart</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.25*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated as of July&nbsp;7, 2003 between the Registrant and Sir Jack
Brabham</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.26(8)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License Agreement dated as of July&nbsp;1, 2004 between the Registrant and Temple University &#150;
The Commonwealth System of Higher Education</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.27*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Exclusive Capital Raising Agreement dated as of July&nbsp;29, 2004 between the Registrant and
London Aussie Marketing, Ltd.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.28*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consulting Agreement dated as of November 19, 2004 between the Registrant and London Aussie Marketing, Ltd.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.29*&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement dated September 1, 2004 with Erin Brockovich</TD>
<TD></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.30*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representation Agreement dated as of October&nbsp;1, 2004 between the Registrant and Gurminder
Singh</TD>
<TD></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.31*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated
as of August&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2002 between the Registrant and Bobby Unser, Jr.</TD>
<TD></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.32*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated
as of August&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2002 between the Registrant and Jack Reader</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.33*&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advisory Services Agreement dated
as of August&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2002 between the Registrant and Nate Sheldon</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.34*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assignment of Patent Rights dated
as of September&nbsp;1, 2003 between the Registrant and Adrian Menzell</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.35*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Global Deed of Assignment dated
June&nbsp;26, 2004 between the Registrant and Adrian Menzell</TD>
<TD></TD>
</TR>







<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Code of Business Conduct and Ethics</TD>
<TD></TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Code of Ethics for Senior
Executives and Financial Officers</TD>
<TD></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Weinberg &#038; Co.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">24*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Power of Attorney (included on Signature Page)</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Executive Officer of Annual Report Pursuant to Rule&nbsp;13(a)&#151;15(e) or
Rule&nbsp;15(d)&#151;15(e).</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Financial Officer of Annual Report Pursuant to 18 U.S.C. Section&nbsp;1350.</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Chief Executive Officer and Chief Financial Officer of Annual Report
pursuant to Rule&nbsp;13(a)&#151;15(e) or Rule&nbsp;15(d)&#151;15(e).</TD>
<TD></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<TR style="font-size: 8pt" valign="bottom">
<TD width="18%" nowrap align="left" style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>
</TABLE>
</DIV>

<div>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="left">*</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Filed herewith.</TD>
</TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">**</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Confidential treatment previously requested.</TD>
</TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">&#134;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Management contract or compensatory plan or arrangement.</TD>
</TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Registration Statement on Form 10-SB
(Registration Number 000-29185), as amended, filed on March&nbsp;2, 2000.</TD>
</TR>





<TR valign="top">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 10-KSB for the fiscal year ended December
31, 2002.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 8-K filed on December&nbsp;30, 2002.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(4)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 10-QSB for the quarter ended March&nbsp;31,
2004.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(5)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 8-K filed on November&nbsp;12, 2002.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(6)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant&#146;s Form 10-KSB for the fiscal year ended December
31, 2003.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(7)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Appendix&nbsp;C of Registrant&#146;s Schedule&nbsp;14A filed on April&nbsp;30,
2004, in connection with its Annual Meeting of Stockholders held on May&nbsp;24, 2004.</TD>
</TR>


<TR valign="top">
    <TD width="1%" nowrap align="left">(8)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Incorporated by reference from Registrant Form 8-K filed on July&nbsp;12, 2004.</TD>
</TR>



</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>2
<FILENAME>v07538exv10w2.htm
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w2</TITLE>
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<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.2


<P align="left" style="font-size: 10pt">ADDENDUM TO COMMERCIAL SUBLEASE


<P align="left" style="font-size: 10pt">This is an Addendum to that Commercial Sublease (Master Lease) dated October&nbsp;16<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>, 2003
and is made between KZG (hereinafter &#147;Sublessor&#148;) and Save the World Air, Inc. (hereinafter
&#147;Sublessee&#148;).


<P align="left" style="font-size: 10pt">Sublessee hereby leases from Sublessor the additional premises described herein on the following
terms and conditions.


<P align="left" style="font-size: 10pt"><B>1. Description of Additional Sublet Property</B>.


<P align="left" style="font-size: 10pt">Sublessor sublets one additional office on the South side of the building located at 5125
Lankershim Blvd., North Hollywood, CA 91601.


<P align="left" style="font-size: 10pt"><B>2. Term and Rent</B>.


<P align="left" style="font-size: 10pt">Sublessor demises the additional premises for a term to run concurrent with the Master Lease and
shall commence June&nbsp;1, 2004 and terminating on October&nbsp;31, 2005, or sooner as provided herein at an
additional rental of $1,400 per month payable in equal installments in advance on the first day of
each month in the sum of $1,400 per month during the term of the Master Lease.


<P align="left" style="font-size: 10pt"><B>3.</B> Option to Renew.


<P align="left" style="font-size: 10pt">Provided that Sublessee is not in default in the performance of this lease and the Master lease,
Sublessee shall have the option to renew the Sublease for an additional term of two years
commencing at the expiration of the initial lease term. All of the terms and conditions of the
Sublease shall apply during the renewal term except that the Sublease payment shall be 10% greater
for this additional space, which will bring the total due for the initial space in the master lease
($2,000) and this additional space ($1,400) a total of $3,400 shall be 10% greater or $3,740 per
month. The option shall be exercised by a written notice given to Sublessor not less than sixty
(60)&nbsp;days prior to the expiration of the initial Sublease term. If notice is not timely given,
this option will expire.


<P align="left" style="font-size: 10pt">4. All other Terms and Conditions from the Commercial Sublease (Master Lease) shall remain in full
force and effect.


<P align="left" style="font-size: 10pt">Signed this 15<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day of June, 2004 in North Hollywood, California:


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SAVE THE WORLD AIR, INC.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">KZG</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ EUGENE EICHLER<HR size="1" noshade color="#000000">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ JENNIFER KING<HR size="1" noshade color="#000000"></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By: Gene Eichler
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By: Jennifer King</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title: CFO
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: President</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">
</DIV>


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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>3
<FILENAME>v07538exv10w14.htm
<DESCRIPTION>EXHIBIT 10.14
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w14</TITLE>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.14



<P align="center" style="font-size: 10pt"><U><B>AMENDMENT TO EMPLOYMENT AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This <B>AMENDMENT (</B><B><I>&#147;Amendment</I></B>&#148;<B><I>) </I></B>is entered into for the purpose of amending certain
provisions of that certain <B>EMPLOYMENT AGREEMENT </B>(<I>&#147;Agreement&#148;) </I>entered into as of
December&nbsp;1, 2003 by and between <B>Save the World Air, Inc., </B>a Nevada corporation (the
<B><I>&#147;Company&#148;) </I></B>and Eugene E. Eichler <B><I>(&#147;Executive&#148;) </I></B>and this Amendment is
incorporated into the Agreement by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;Paragraph&nbsp;4. Position and Duties </B>is amended by deleting the following:

<P align="left" style="font-size: 10pt">&#147;The Executive shall serve as Chief Operating Officer of STWA and he shall
have such responsibilities, duties and authority as may, from time to time, be
generally associated with such position and or as specifically detailed in the
company&#146;s official &#147;Position Description.&#148;&#148;


<P align="left" style="font-size: 10pt">and replacing it with the following:


<P align="left" style="font-size: 10pt">&#147;The Executive shall serve as President of the Company and he shall have such
responsibilities, duties and authority as may, from time to time, be generally
associated with such position and or as specifically detailed in the company&#146;s official
&#147;Position Description.&#148;&#148;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.&nbsp;Paragraph&nbsp;5. Compensation and Related Matters </B>is amended by deleting the
following:

<P align="left" style="font-size: 10pt">&#147;<U><B>Base Compensation</B></U>. During the period of the Executive&#146;s employment
hereunder, STWA shall pay to him annual base compensation as follows:


<P align="left" style="font-size: 10pt">For the period from March&nbsp;2, 2004 to December&nbsp;31, 2004 at an annual rate not less than
$192,000.00;&#148;


<P align="left" style="font-size: 10pt">and replacing it with the following:


<P align="left" style="font-size: 10pt">&#147;<U><B>Base Compensation</B></U>. During the period of the Executive&#146;s employment
hereunder, the Company shall pay to him annual base compensation as follows:


<P align="left" style="font-size: 10pt">For the period from March&nbsp;2, 2004 to December&nbsp;31, 2005 at an annual rate of $240,000
and from January&nbsp;1, 2005 to December&nbsp;31, 2007 at an annual rate not less than
$240,000;&#148;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All other terms and conditions of the Agreement not expressly amended hereby
shall remain in full force and effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the parties have executed this Amendment as of March&nbsp;2, 2004.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><B>&#147;EXECUTIVE&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top">/s/ EUGENE E. EICHLER<DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EDWARD L. MASRY&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Name: Eugene E. Eichler</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Name:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Edward L. Masry&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Title:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
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</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">
</DIV>


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<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>4
<FILENAME>v07538exv10w16.htm
<DESCRIPTION>EXHIBIT 10.16
<TEXT>
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.16



<P align="center" style="font-size: 10pt"><U><B>AMENDMENT TO EMPLOYMENT AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This <B>AMENDMENT (</B><B><I>&#147;Amendment</I></B>&#148;<B><I>) </I></B>is entered into for the purpose of amending certain provisions of
that certain <B>EMPLOYMENT AGREEMENT </B>(<I>&#147;Agreement&#148;) </I>entered into as of December&nbsp;1, 2003 by and between
<B>Save the World Air, Inc., </B>a Nevada corporation (the <B><I>&#147;Company&#148;) </I></B>and Bruce H. McKinnon
<B><I>(&#147;Executive&#148;) </I></B>and this Amendment is incorporated into the Agreement by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;Paragraph&nbsp;4. Position and Duties </B>is amended by deleting the following:

<P align="left" style="font-size: 10pt">&#147;The Executive shall serve as Executive Vice President/Business Development of STWA and he
shall have such responsibilities, duties and authority as may, from time to time, be generally
associated with such position and or as specifically detailed in the company&#146;s official &#147;Position
Description.&#148;&#148;


<P align="left" style="font-size: 10pt">and replacing it with the following:


<P align="left" style="font-size: 10pt">&#147;The Executive shall serve as Chief Operating Officer of the Company and he shall have such
responsibilities, duties and authority as may, from time to time, be generally associated with such
position and or as specifically detailed in the company&#146;s official &#147;Position Description.&#148;&#148;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.&nbsp;Paragraph&nbsp;5. Compensation and Related Matters </B>is amended by deleting the following:

<P align="left" style="font-size: 10pt">&#147;<U><B>Base Compensation</B></U>. During the period of the Executive&#146;s employment
hereunder, STWA shall pay to him annual base compensation as follows:


<P align="left" style="font-size: 10pt">For the period from March&nbsp;2, 2004 to December&nbsp;31, 2004 at an annual rate not less than $153,600.00


<P align="left" style="font-size: 10pt">and replacing it with the following:


<P align="left" style="font-size: 10pt">&#147;<U><B>Base Compensation</B></U>. During the period of the Executive&#146;s employment hereunder, the
Company shall pay to him annual base compensation as follows:


<P align="left" style="font-size: 10pt">For the period from March&nbsp;2, 2004 to December&nbsp;31, 2005 at an annual rate of $192,000 and from
January&nbsp;1, 2005 to December&nbsp;31, 2007 at an annual rate not less than $192,000;&#148;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All other terms and conditions of the Agreement not expressly amended hereby shall remain
in full force and effect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the parties have executed this Amendment as of March&nbsp;2, 2004.



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><B>&#147;EXECUTIVE&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ BRUCE H. McKINNON
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EDWARD L. MASRY&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Name: Bruce H. McKinnon</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Name:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Edward L. Masry&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Title:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">
</DIV>


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<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>5
<FILENAME>v07538exv10w18.htm
<DESCRIPTION>EXHIBIT 10.18
<TEXT>
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<TITLE>exv10w18</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.18


<P align="left" style="font-size: 10pt"><B>NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT, NO SHARES OF THE COMPANY&#146;S STOCK SHALL
BE ISSUED PURSUANT HERETO UNLESS THE SAVE THE WORLD AIR, INC. 2004 STOCK OPTION PLAN SHALL HAVE
FIRST BEEN APPROVED BY SHAREHOLDERS OF THE COMPANY HOLDING NOT LESS THAN A MAJORITY OF THE VOTING
POWER OF THE COMPANY.</B>



<P align="center" style="font-size: 10pt"><B>INCENTIVE STOCK OPTION AGREEMENT</B>


<P align="left" style="font-size: 10pt"><B>THIS INCENTIVE STOCK OPTION AGREEMENT </B>(this <B>&#147;Agreement&#148;) </B>is made and
entered into as of &#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;, 20&#95;&#95;&#95;(the
<B>&#147;Grant Date&#148;</B>) by and between <B>SAVE THE WORLD AIR, INC</B>., a
Nevada corporation (the <B>&#147;Company&#148;), </B>whose address is 5125 Lankershim Boulevard, North Hollywood,
California 91601, and &#95;&#95;&#95;an individual (&#147;Executive&#148;), with reference to the following facts
(capitalized terms used and not otherwise defined in this Agreement shall have the meanings set
forth in the &#147;Glossary of Terms&#148; attached as <B><I>Appendix </I></B><B>&#147;A&#148; </B>hereto, which Appendix is hereby
incorporated by this reference):



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;</B>The Board of Directors of the Company (the &#147;Board&#148;) has heretofore adopted the Save The
World Air, Inc. 2004 Stock Option Plan (the &#147;Plan&#148;, a copy of which is attached hereto and
incorporated by this reference) under which the Company may grant Stock Options to certain
personnel of the Company such as Executive.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;</B>Pursuant to the Plan, the Board has authorized granting to Executive, effective as of the
date of this Agreement, an Incentive Stock Option under such terms and conditions as are
hereinafter set forth.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;</B>Executive is an employee of the Company and is not a Ten Percent Shareholder of the
Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW, THEREFORE, </B>in consideration of the mutual covenants, agreements, representations and
warranties herein set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;Grant of Stock Option. </B>Pursuant to the action of the Board described above, the Company
hereby grants to Executive an Incentive Stock Option to purchase, upon and subject to the
terms and conditions of the Plan, all or any part of&#95;&#95;&#95;(&#95;&#95;&#95;) shares of Stock at an Exercise
Price of Dollars &#95;&#95;&#95;($&#95;&#95;&#95;) per share (which Exercise Price equals one hundred percent
(100%) of the Fair Market Value of a share of Stock as of the Grant Date).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.&nbsp;Vesting</B>. The Stock Option granted under Section&nbsp;I hereof shall become exercisable with
respect to the following percentages of the number of shares subject to such Stock Option upon the
following dates and at any time thereafter unless and until such Stock Option shall terminate under
Sections&nbsp;4, 6 or 7 hereof, and subject to acceleration upon a Corporate Transaction only if and as
provided under the Plan <I>(provided, </I>that no installment of the Stock Option hereunder shall be


<P align="center" style="font-size: 10pt">Page 1 of 7
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">exercisable except with respect to a whole share, and fractional shares shall be disregarded except
that they may be accumulated):


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Vesting Date</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Fair Market Value*</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Percent (</I>&#95;&#95;&#95;%)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First (181)&nbsp;anniversary of
Grant Date</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Percent (</I>&#95;&#95;&#95;%)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second (2nd) anniversary
of Grant Date</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Percent (</I>&#95;&#95;&#95;%)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Third (3rd) anniversary
of Grant Date</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Percent (</I>&#95;&#95;&#95;%)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fourth (4th) anniversary of Grant
Date</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt">* Determined as of Grant Date; may not exceed One Hundred Thousand Dollars ($100,000) for vesting
date(s) during any calendar year (taking into account any other ISOs granted to Executive under any
other plan of the Company or a Parent or Subsidiary)<BR>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.&nbsp;Manner of Exercise and Payment</B>. Executive shall exercise the Stock Option
granted under Section&nbsp;1 hereof: if at all, by giving (a)&nbsp;written notice .of such exercise to the
Committee specifying the number of shares of Stock with respect to which such Stock Option is being
exercised, together with (b)&nbsp;payment of the full purchase price for such shares, by wire transfer
to a Company account designated by the Committee or by unendorsed certified or cashier&#146;s check,
equal to the number of shares to be purchased times the Exercise Price per share.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.1 Effective Date of Exercise. </B>The date upon which such written notice is given and payment
of the full purchase price is received by the Committee shall be the exercise date for such Stock
Option. From such exercise date, Executive shall be entitled to the issuance of a stock certificate
evidencing Executive&#146;s ownership of the shares of Stock acquired pursuant to such exercise (but
subject to Section&nbsp;8 hereof). Executive shall not have any of the rights or privileges of a
shareholder of the Company (including, without limitation, rights to distributions, voting rights,
inspection rights, dissenter&#146;s rights, rights to bring a derivative action, or other rights of a
shareholder under applicable corporate law) in respect of any shares of Stock issuable upon
exercise of such Stock Option until and only to the extent such Stock Option is exercised and
certificates representing such shares shall have been issued and delivered.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.2 Minimum Number of Shares Purchased; </B>Fractional Shares. No fewer than five (5)&nbsp;share (or,
if less, the maximum number of shares that may be purchased pursuant to the Stock Option to the
extent vested but unexercised) may be purchased pursuant to the exercise under anyone notice given
under Section&nbsp;3 hereof. No installment of such Stock Option shall be exercisable except with
respect to whole shares.


<P align="center" style="font-size: 10pt">Page 2 of 7
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.&nbsp;Termination</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.1 In General. </B>The Stock Option granted under Section&nbsp;1 hereof, to the extent unexercised,
shall terminate at the close of business of the day before the tenth (10th) anniversary of the
Grant Date, but subject to Section&nbsp;6 or Section&nbsp;7 hereof ( as applicable).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.2 Corporate Transaction. </B>The Committee shall notify Executive of the pendency of a Corporate
Transaction a reasonable time before such Corporate Transaction is to occur, and Executive (or such
other person entitled to exercise such Stock Option under Section&nbsp;7 hereof) shall have the right,
at any time prior to such Corporate Transaction, to exercise such Stock Option of such person to
the extent that such Stock Option is otherwise exercisable under Section&nbsp;2 hereof. Except and to
the extent provided in the Plan and as set forth in the notice under this Section&nbsp;4.2, the Stock
Option granted under Sect. on 1 hereof to the extent unexercised shall terminate as of the
Effective Date of the Corporate Transaction.

<P align="left" style="font-size: 10pt"><B>5. Non-Transferability. </B>Neither Executive nor any successor or assignee thereof shall have any
power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part
or all of the Stock Option granted under Section&nbsp;1 hereof, other than. by Will or by the laws of
descent and distribution, and such Stock Option shall be exercisable during Executive&#146;s lifetime
only by Executive; nor shall all or any part of such Stock Option be subject to seizure by any
creditor of any such person, by a proceeding at law or in equity, and no such benefit shall be
transferable by operation of law in the event of the bankruptcy or insolvency of Executive or any
successor or assignee thereof. Any such attempted assignment or transfer shall be void and shall
terminate this Agreement, and the Company shall thereupon have no further liability hereunder.


<P align="left" style="font-size: 10pt"><B>6. Cessation of Employment</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.1 In General. </B>Subject to Sections&nbsp;6.2 and 7 hereof, if Executive ceases to be
employed by the Company or any of Subsidiary or Parent thereof~ Executive may, subject to the time
limitations of Section&nbsp;4 hereof, exercise the Stock Option granted under Section&nbsp;1 hereof to the
extent that Executive was entitled to exercise it under Section&nbsp;2 hereof on the date of such
cessation at any time (a)&nbsp;within one (1)&nbsp;year after such cessation if such cessation results from
the Disability of Executive, or (b)&nbsp;otherwise within ninety (90)&nbsp;days after such cessation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.2 Termination for Cause. </B>If Executive is terminated as an employee of the Company or any
Subsidiary or Parent thereof for Cause, the Stock Option granted under Section&nbsp;1 hereof shall
terminate immediately.

<P align="left" style="font-size: 10pt"><B>7. Death of Executive. </B>If Executive dies while employed by the Company or any Parent
or Subsidiary thereof, or during the period described in <I>clause (a) </I>or <I>clause (b) </I>of Section&nbsp;6.1
hereof as applicable, then, subject to the time limitations of Section&nbsp;4 hereof, the Stock Option
granted under Section&nbsp;1 hereof shall expire within one (1)&nbsp;year after the date of death; and the
executor or administrator of Executive's estate, or the person or persons to whom Executive&#146;s
rights under such




<P align="center" style="font-size: 10pt">Page 3 of 7
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">Stock Option shall have passed by Will or by the applicable laws of descent and distribution, shall
have the right to exercise such Stock Option to the extent ~at Executive was entitled to exercise
such Stock Option under Section&nbsp;2 hereof on the date of death.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.&nbsp;Compliance With Securities and Tax Laws. </B>No shares of Stock shall be issued
pursuant to the exercise of the Stock Option hereunder except in compliance with all applicable
federal and state securities and tax laws and regulations and in compliance with rules of stock
exchanges on which the Stock may be listed. In furtherance of the foregoing and not in order to
limit the generality of the foregoing in any way:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.1 Representation. </B>The Company, as a condition to the issuance of such shares, may require
the person exercising such Stock Option to represent and warrant at the time of such exercise that
any shares of Stock acquired upon exercise are being acquired only for investment and without any
present intention to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required under any applicable law, regulation or rule of any governmental
agency.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.2 Notice of Sale. </B>The person acquiring such shares shall give the Company notice of any sale
or other disposition of any such shares not less than ten (10)&nbsp;days after such sale or other
disposition.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.3 Withholding. </B>Executive acknowledges and agrees that the Company, in order to fulfill its
withholding obligations under any federal, state or local tax law (including, without limitation,
upon the disposition by Executive of shares of Stock acquired pursuant to the exercise of the Stock
Option hereunder within two (2)&nbsp;years after the Grant Date or within one (1)&nbsp;year after exercise of
the Stock Option, or upon Executive&#146;s exercising an ISO more than three (3)&nbsp;months after Executive
has ceased to be an employee of the Company or a Parent or Subsidiary) may (a)&nbsp;withhold such sums
from other compensation due Executive, (b)&nbsp;require Executive to pay to the Company such amounts as
a condition to the delivery of shares pursuant to such exercise, or (c) sell shares that would
otherwise be delivered to Executive upon exercise of the Stock Option in order to raise cash in the
necessary amount.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.&nbsp;Miscellaneous</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.1 Complete Agreement. </B>This Agreement, and any appendices, schedules, exhibits or documents
referred to herein or executed contemporaneously herewith, constitute the entire agreement among
the parties hereto with respect to the subject matter hereof, and supersede all prior written, and
all prior and contemporaneous oral, agreements, representations, warranties, statements, promises
and understandings with respect to the subject matter hereof; whether express or implied. All
schedules, appendices and exhibits attached hereto are hereby incorporated in and
made a part of this Agreement as if fully set forth herein. .


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.2 Payments </B>Subject to Creditors. Payments to Executive hereunder shall be made from assets
which shall continue, for all purposes, to be a part of the general assets of the Company; and no
person, other than the Company, shall have, by virtue of the provisions of the Plan or the grant of
the Stock Option hereunder, any interest in such assets. To the extent that any person acquires a
right to receive payments from the Company under the provisions hereof; such right shall be no
greater than the right of any unsecured general creditor of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.3 No Trust or Contract of Employment. </B>It is expressly understood by the parties hereto that
this Agreement and the Plan relate exclusively to additional compensation for Executive&#146;s services,
and are not intended to be an employment contract. Nothing contained in this Agreement or the Plan,
and no action taken pursuant to their provisions by either party hereto shall create, or be
construed to create, (a)&nbsp;a trust of any kind, or a fiduciary relationship between the Company and
Executive; or (b)&nbsp;a contract of employment for any term of years, or a right of Executive to
continue in the employ of the Company in any capacity.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.4 Binding Effect. </B>This Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns, and Executive and Executive&#146;s successors, assigns, heirs,
executors, administrators and beneficiaries. Nothing in this Section&nbsp;9.4 shall be deemed to modify
or waive in any manner whatsoever such prohibitions on transfer or assignment of Executive&#146;s rights
hereunder as are contained elsewhere in this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.5 Amendment</B>. Except as provided herein, this Agreement may not be amended, altered, modified
or terminated except by a written instrument signed by the parties hereto, or their respective
successors or assigns.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.6 Notice. </B>Whenever this Agreement or the Plan requires that notice be given by or to the
Company or Executive, such notice shall be given to the Company at the address first set forth
above (or to such other address as the Company may communicate to Executive under this Section&nbsp;9.6)
and to Executive at such address as is set forth on the books and records of the Company for the
mailing of any Form W-2 with respect to Executive as follows: (a)&nbsp;by personal delivery, in which
case notice shall be deemed to have been given on the date of delivery; (b)&nbsp;by certified United
States mail, in which case notice shall be deemed to have been given two (2)&nbsp;days after deposit of
such notice with the United States Postal Service; or (c)&nbsp;by DHL, Federal Express,



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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">United Parcel Service, or similar internationally-recognized overnight delivery service, in which
case notice shall be deemed to have been given one (1)&nbsp;day after deposit of such notice or
instrument with such service



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.7 Governing Law; Jurisdiction. </B>This Agreement shall be governed by the laws of the State of
California, regardless of the choice of law provisions of California or any other jurisdiction and
regardless of where the parties hereto may now or hereafter be formed, do business, or reside. Any
and all disputes between the parties which may arise pursuant to this Agreement will be heard and
determined before an appropriate federal or state court located in Los Angeles, California. The
parties hereto acknowledge that such court has the jurisdiction to interpret and enforce the
provisions of this Agreement and the parties waive any and all objections that they may have as to
personal jurisdiction or venue in any of the above courts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.8 Headings. </B>The headings in this Agreement are inserted only as a matter of convenience, and
in no way define, limit, or interpret the scope of this Agreement or of any particular section
hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.9 Waivers </B>Strictly Construed. With regard to any power, remedy or right provided herein or
otherwise available to any party hereunder, (a)&nbsp;no waiver or extension of time shall be effective
unless expressly contained in a writing signed by the waiving party, and (b)&nbsp;no alteration,
modification or impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or by any other indulgence.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.10 Severability</B>. The validity, legality or enforceability of the remainder of this Agreement
shall not be affected even if one or more of the provisions of this Agreement shall be held to be
invalid, illegal or unenforceable in any respect.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.11 Counterparts. </B>This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.



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<P align="left" style="font-size: 10pt"><B>IN WITNESS WHEREOF, </B>the parties hereto have executed this Agreement as of the date first set forth
above.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>&#147;Company&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Executive&#148;</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC., a Nevada<br>
corporation</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>By</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade color="#000000">
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade color="#000000"></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Name:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade color="#000000"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Title:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade color="#000000"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>By</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade color="#000000"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Name:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade color="#000000"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Title:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade color="#000000"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">Page 7 of 7
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>SPOUSAL CONSENT</B>



<P align="left" style="font-size: 10pt"><B>I certify that</B>:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1</B>.&nbsp;I
am the spouse of
&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;who
signed the foregoing Incentive Stock Option
Agreement dated as of
&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;,
20&#95;&#95;&#95;(the <B>&#147;Agreement&#148;) </B>by and between-as the
&#147;Executive&#148; thereunder and Save The World Air, Inc. as the <B>&#147;Company&#148; </B>thereunder.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.&nbsp;</B>I have read and approve the provisions of the Agreement, including, but not limited
to, those relating to the exercise, transfer and disposition of the Stock Option described therein.<BR>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.&nbsp;</B>I agree to be bound by and accept those provisions of that Agreement in lieu of all
other interests I may have in the Stock Options thereby granted, whether that interest may be
community property or otherwise.<BR>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.&nbsp;</B>Executive shall have full power of management of Executive&#146;s interests in the Stock
Options, including any portion of those interests that may be community property, and Executive has
the full right, without my further approval, to exercise Executive&#146;s rights with respect to such
Stock Options, to execute any amendments to the Agreement, and to exercise and otherwise deal in
any manner with such Stock Options, including any portion of such interests that may be community
property.<BR>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Date:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade width="20%" align="left" color="#000000"></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade color="#000000"></TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>Name of Spouse:</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade color="#000000"></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>APPENDIX A<BR>
GLOSSARY OF TERMS</B>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>1.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Agreement&#148; </B>means the Incentive Stock
Option Agreement dated &#95;&#95;&#95;&#95;&#95;&#95;&#95; &#95;&#95;&#95;
20&#95;&#95;&#95;by and between <B>Save The World Air, Inc., </B>an Nevada corporation, as the <B>&#147;Company&#148; </B>thereunder,
and &#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;, an individual, as
the &#147;Executive&#148; thereunder.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>2.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Board&#148; </B>is as defined in <I>Recital &#147;A&#148; </I>of the Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>3.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Cause&#148; </B>is as defined in the Plan<B>.</B></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>4.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Committee&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>5.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Company&#148; </B>means Save The World Air, Inc., a Nevada corporation.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>6.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Corporate Transaction&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>7.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Disability&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>8.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Effective Date&#148; of a Corporate Transaction is as defined in the Plan.</B></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>9.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Executive&#148; </B>means&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, an individual.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>10.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Exercise Price&#148; </B>is as defined in Section&nbsp;1 of the Agreement<B>.</B></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>11.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Grant Date&#148; </B>is as set forth in the first paragraph of the Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>12.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Incentive Stock Option</B>&#148; is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>13.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Parent&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>14.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Plan&#148; </B>is as defined in <B><I>Recital &#147;A&#148; </I></B>of the Agreement.<BR></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>15.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Stock&#148; </B>is as defined in the Plan.<BR></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>16.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Stock Option&#148; </B>is as defined in the Plan.<BR></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>17.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Subsidiary&#148; </B>is as defined in the Plan.<BR></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>18.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Ten Percent Shareholder&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>19.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Will&#148; </B>is as defined in the Plan.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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<DOCUMENT>
<TYPE>EX-10.19
<SEQUENCE>6
<FILENAME>v07538exv10w19.htm
<DESCRIPTION>EXHIBIT 10.19
<TEXT>
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.19



<P align="left" style="font-size: 10pt"><B>NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT, NO SHARES OF THE COMPANY&#146;S STOCK SHALL
BE ISSUED PURSUANT HERETO UNLESS THE SAVE THE WORLD AIR, INC. 2004 STOCK OPTION PLAN SHALL HAVE
FIRST BEEN APPROVED BY SHAREHOLDERS OF THE COMPANY HOLDING NOT LESS THAN A MAJORITY OF THE VOTING
POWER OF THE COMPANY.</B>



<P align="center" style="font-size: 10pt"><B>NON-QUALIFIED STOCK OPTION AGREEMENT</B>



<P align="left" style="font-size: 10pt"><B>This NON-QUALIFIED STOCK OPTION AGREEMENT (</B>this &#147;<B>Agreement&#148;) </B>is made and
entered into as of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>,20 <B>(the &#147;Grant Date&#148;) </B>by and between <B>SAVE THE WORLD AIR,
INC.</B>, a Nevada corporation <B>(</B>the <B>&#147;Company&#148;), </B>whose address is 5125 Lankershim Boulevard, North
Hollywood, California 91601, and <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, an individual <B>(&#147;Executive&#148;), </B>with reference to the
following facts (capitalized terms used and not otherwise defined in this Agreement shall have the
meanings set forth in the &#147;Glossary of Terms&#148; attached as <B><I>Appendix&#148; A&#148; </I></B>hereto, which Appendix
is hereby incorporated by this reference): .



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;</B>The Board of Directors of the Company <B>(the &#147;Board&#148;) </B>has heretofore adopted the Save The
World Air, Inc. 2004 Stock Option Plan (the <B>&#147;Plan&#148;, </B>a copy of which is attached hereto and
incorporated by this reference) under which the Company may grant Stock Options to certain
personnel of the Company such as Executive.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;</B>Pursuant to the Plan, the Board has authorized granting to Executive, effective as of
the date of this Agreement, a Non-Qualified Stock Option under such terms and conditions as are
hereinafter set forth.


<P align="left" style="font-size: 10pt"><B>NOW, THEREFORE, </B>in consideration of the mutual covenants, agreements, representations and
warranties herein set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;Grant of Stock Option. </B>Pursuant to the action of the Board described above, the
Company hereby grants to Executive a Non-Qualified Stock Option to purchase, upon and subject
to the terms and conditions of the Plan, all or any part of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>) shares of Stock at an
Exercise Price of<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>Dollars ($ <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>) per share.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.&nbsp;Vesting. </B>The Stock Option granted under Section&nbsp;1 hereof shall become exercisable with
respect to the following percentages of the number of shares subject to such Stock Option upon the
following dates and at any time thereafter unless and until such Stock Option shall terminate under
Sections&nbsp;4, 6 or 7 hereof, and subject to acceleration upon a Corporate Transaction only if and as
provided under the Plan <I>(provided, however, </I>that no installment of the Stock Option shall be
exercisable except with respect to a whole share, and fractional shares shall be disregarded except
that they may be accumulated):


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<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>percent (<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>%)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First (1st) anniversary of Grant Date</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>percent (<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>%)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second (2nd) anniversary of Grant Date</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>percent (<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>%)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Third (3rd) anniversary of Grant Date</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>percent (<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>%)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fourth (4th) anniversary of Grant Date</TD>
</TR>
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</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.&nbsp;Manner of Exercise and Payment. </B>Executive shall exercise the Stock Option
granted under Section&nbsp;1 hereof, if ata1l, by giving (a)&nbsp;written notice of such exercise to the
Committee specifying the number of shares of Stock with respect to which such Stock Option is being
exercised, together with (b)&nbsp;payment of the full purchase price for such shares, by wire transfer
to a Company account designated by the Committee or by unendorsed certified or cashier&#146;s check,
equal to the number of shares to be purchased times the Exercise Price per share.


<P align="left" style="font-size: 10pt"><B>3.1 Effective Date of Exercise. </B>The date upon which such written notice is given and payment of
the full purchase price is received by the Committee shall be the exercise date for such Stock
Option. From such exercise date, Executive shall be entitled to the issuance of a stock certificate
evidencing Executive&#146;s ownership of the shares of Stock acquired pursuant to such exercise (but
subject to Section&nbsp;8 hereof). Executive shall not have any of the rights or privi1~ges of a
shareholder of the Company (including, without limitation, rights to distributions, voting rights,
inspection rights, dissenter&#146;s rights, rights to bring a derivative action, or other rights of a
shareholder under applicable corporate law) in respect of any shares of Stock issuable upon
exercise of such Stock Option until and only to the extent such Stock Option is exercised and
certificates representing such shares shall have been issued and delivered.



<P align="left" style="font-size: 10pt"><B>3.2 Minimum Number of Shares Purchased. </B>Fractional Shares. No fewer than five (5)&nbsp;share (or, if
less, the maximum number of shares that may be purchased pursuant to the Stock Option to the extent
vested but unexercised) may be purchased pursuant to the exercise under anyone notice given under
Section&nbsp;3 hereof. No installment of such Stock Option shall be exercisable except with respect to
whole shares.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4. Termination</B>


<P align="left" style="font-size: 10pt">4.1 In General. The Stock Option granted under Section&nbsp;1 hereof, to the extent unexercised, shall
terminate at the close of business of the day before the tenth (10th) anniversary of the Grant
Date, but subject to Section&nbsp;6 or Section&nbsp;7 hereof (as applicable).



<P align="left" style="font-size: 10pt"><B>4.2 Corporate Transaction. </B>The Committee shall notify Executive of the pendency of a Corporate
Transaction a reasonable time before such Corporate Transaction is to occur, and Executive (or such
other person entitled to exercise such Stock Option under Section&nbsp;7 hereof) shall have the right,
at any time prior to such Corporate Transaction, to exercise such Stock Option of such person to
the extent that such Stock Option is otherwise exercisable under Section&nbsp;2 hereof. Except and to
the extent provided in the Plan and as set forth in the notice under this Section&nbsp;4.2, the Stock
Option granted under Section&nbsp;1 hereof to the extent unexercised shall terminate as of the Effective
Date of the Corporate Transaction.



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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5. Transferability</B>


<P align="left" style="font-size: 10pt"><B>5.1 In General</B>. Except as provided in Section&nbsp;5.2 hereof, neither Executive nor any successor or
assignee thereof shall have any power or right to transfer, assign, anticipate, hypothecate or
otherwise encumber any part or all of the Stock Option granted under Section&nbsp;1 hereof, other than
by Will or by the laws of descent and distribution, and such Stock Option shall be exercisable
during Executive&#146;s lifetime only by Executive; nor shall all or any part of such Stock Option be
subject to seizure by any creditor of any such person, by a proceeding at law or in equity, and no
such benefit shall be transferable by operation of law in the event of the bankruptcy or insolvency
of Executive or any successor or assignee thereof Any such attempted assignment or transfer shall
be void and shall terminate this Agreement, and the Company shall thereupon have no further
liability hereunder.



<P align="left" style="font-size: 10pt"><B>5.2 Certain Family Transfers</B>. Executive may transfer the Stock Option granted hereunder only under
the following terms and conditions:



<P align="left" style="font-size: 10pt"><B>5.2.1 </B>Such transfer may only be to (a)&nbsp;a trust of which Executive is a grantor, <I>provided </I>that the
named beneficiaries of such trust shall include only Executive and/or members of Executive&#146; s
Family (and such a trust shall be unrestricted as to the identity of the trustee or trustees); (b)
a corporation, partnership or limited liability company; <I>provided, </I>that the owners of equity
interests in the foregoing shall consist solely of one or a combination of Executive, member(s) of
Executive&#146; s Family, or one or more trusts described in the foregoing <I>clause (a); </I>or (c)&nbsp;as an
outright gift one or more members of Executive&#146; s Family.



<P align="left" style="font-size: 10pt"><B>5.2.2 </B>Executive and the transferee shall execute and acknowledge such assignments or other
instruments as the Committee may reasonably request, in form and substance reasonably satisfactory
to the Committee, to confirm or memorialize such transfer.



<P align="left" style="font-size: 10pt"><B>5.2.3 </B>Executive or the transferee shall provide the Committee with the name, address, and taxpayer
identification number of the transferee and such other information as the Committee shall request
to prepare tax returns and other filings reflecting such transfer as are required by applicable tax
laws.



<P align="left" style="font-size: 10pt"><B>5.2.4 </B>Executive or the transferee shall, at their expense, furnish the Committee with an opinion of
counsel in form and substance satisfactory to the Committee to the effect that such transfer, and
the issuance of shares of Stock to the transferee upon exercise of the Stock Option transferred,
will comply with federal or state securities laws (including, without limitation, any exemption
there under pursuant to which the Company has caused such Stock Option or share to be issued).



<P align="left" style="font-size: 10pt"><B>5.2.5 </B>The transferee shall have executed and acknowledged this Agreement and shall have assumed all
obligations and liabilities of Executive hereunder.



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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.
Cessation of Employment</B>


<P align="left" style="font-size: 10pt"><B>6.1 </B>In General. Subject to Sections&nbsp;6.2 and 7 hereof, if Executive ceases to be employed by the
Company or any of Subsidiary or Parent thereof, Executive may, subject to the time limitations of
Section&nbsp;4 hereof, exercise the Stock Option granted under Section&nbsp;1 hereof to the extent that
Executive was entitled to exercise it under Section&nbsp;2 hereof on the date of such cessation at any
time (a)&nbsp;within one (I)&nbsp;year after such cessation if such cessation results from the Disability of
Executive, or (b)&nbsp;otherwise within ninety (90)&nbsp;days after such cessation.



<P align="left" style="font-size: 10pt"><B>6.2 Termination for Cause</B>. If Executive is terminated as an employee of the Company or any
Subsidiary or Parent thereof for Cause, the Stock Option granted
under Section&nbsp;1 hereof shall
terminate immediately. .



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.&nbsp;Death of Executive. </B>If Executive dies while employed by the Company or any Parent or
Subsidiary thereof, or during the period described in <I>clause (a) </I>or <I>clause (b) </I>of Section&nbsp;6.1
hereof as applicable, then, subject to the time limitations of Section&nbsp;4 hereof, the Stock Option
granted under Section&nbsp;1 hereof shall expire within one (1)&nbsp;year after the date of death; and the
executor or administrator of Executive &#145; s estate, or the person or persons to whom Executive&#146;s
rights under such Stock Option shall have passed by Will or by the applicable laws of descent and
distribution, shall have the right to exercise such Stock Option to the extent that Executive was
entitled to exercise such Stock Option under Section&nbsp;2 hereof on the date of death.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.&nbsp;Compliance With Securities and Tax Laws</B>. No shares of Stock shall be issued
pursuant to the exercise of the Stock Option hereunder except in compliance with all applicable
federal and state securities and tax laws and regulations and in compliance with rules of stock
exchanges on which the Stock may be listed. In furtherance of the foregoing and not in order to
limit the generality of the foregoing in any way:


<P align="left" style="font-size: 10pt"><B>8.1 Representation. </B>The Company, as a condition to the issuance of such shares, may require the
person exercising such Stock Option to represent and warrant at the time of such exercise that any
shares of Stock acquired upon exercise are being acquired only fur investment and without any
present intention to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required under any applicable law, regulation or rule of any governmental
agency.



<P align="left" style="font-size: 10pt"><B>8.2 Notice of Sale. </B>The person acquiring such shares shall give the Company notice of any sale or
other disposition of any such shares not less than ten (10)&nbsp;days after such sale or other
disposition.



<P align="left" style="font-size: 10pt"><B>8.3 Withholding</B>. Executive acknowledges and agrees that the Company, in order to fulfill its
withholding obligations under any federal, state or local tax law upon exercise of the Stock
Option, may (a)&nbsp;withhold such sums from other compensation due Executive, (b)&nbsp;require Executive to
pay to the Company such amounts as a condition to the delivery of shares pursuant to



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<P align="left" style="font-size: 10pt">such exercise, or ( c) sell shares that would otherwise be delivered to Executive upon exercise of
the Stock Option in order to raise cash in the necessary amount.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.
Miscellaneous</B>


<P align="left" style="font-size: 10pt"><B>9.1 Complete Agreement. </B>This Agreement, and any appendices, schedules, exhibits or documents
referred to herein or executed contemporaneously herewith, constitute the entire agreement among
the parties hereto with respect to the subject matter hereof, and supersede all prior written, and
all prior and contemporaneous oral, agreements, representations, warranties, statements, promises
and understandings with respect to the subject matter hereof, whether express or implied. All
schedules, appendices and exhibits attached hereto are hereby incorporated in and made a part of
this Agreement as if fully set forth herein.



<P align="left" style="font-size: 10pt"><B>9.2 Payments Subject to Creditors. </B>Payments to Executive hereunder shall be made from assets which
shall continue, for all purposes, to, be a part of the general assets of the Company; and no
person, other than the Company, shall have, by virtue of the provisions of the Plan or the grant of
the Stock Option hereunder, any interest in such assets. To the extent that any person acquires a
right to receive payments from the Company under the provisions hereof, such right shall be no
greater than the right of any unsecured general creditor of the Company.



<P align="left" style="font-size: 10pt"><B>9.3 No Trust or Contract of Employment. </B>It is expressly understood by the parties hereto that this
Agreement and the Plan relate exclusively to additional compensation for Executive&#146;s services, and
are not intended to be an employment contract. Nothing contained in this Agreement or the Plan, and
no action taken pursuant to their provisions by either party hereto shall create, or be construed
to create, (a)&nbsp;a trust of any kind, or a fiduciary relationship between the Company and Executive;
or (b)&nbsp;a contract of employment for any term of years, or a right of Executive to continue in the
employ of the Company in any capacity.



<P align="left" style="font-size: 10pt"><B>9.4 Binding Effect. </B>This Agreement shall be binding upon and inure to the benefit of the Company
and its succeSSOI5 and assigns, and Executive and Executive&#146;s successors, assigns, heirs,
executors, administrators and beneficiaries. Nothing in this Section&nbsp;9.4 shall be deemed to modify
or waive in any manner whatsoever such prohibitions on transfer or assignment of Executive&#146;s rights
hereunder as are contained elsewhere in this Agreement.



<P align="left" style="font-size: 10pt"><B>9.5 Amendment. </B>Except as provided herein, this Agreement may not be amended, altered, modified or
terminated except by a written instrument signed by the parties hereto, or their respective
successors or assigns.



<P align="left" style="font-size: 10pt"><B>9.6 Notice. </B>Whenever this Agreement or the Plan requires that notice be given by or to the Company
or Executive, such notice shall be given to the Company at the address first set forth above (or to
such other address as the Company may communicate to Executive under this Section&nbsp;9.6) and to
Executive at such address as is set forth on the books and records of the Company for the mailing
of any Form&nbsp;W-2 with respect to Executive as follows: (a)&nbsp;by personal



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<P align="left" style="font-size: 10pt">delivery, in which case notice shall be deemed to have been given on the date of delivery; (b)&nbsp;by
certified United States mail, in which case notice shall be deemed to have been given two (2)&nbsp;days
after deposit of such notice with the United States Postal Service; or (c)&nbsp;by DHL, Federal Express,
United Parcel Service, or similar internationally-recognized overnight delivery service, in which
case notice shall be deemed to have been given one (I)&nbsp;day after deposit of such notice or
instrument with such service



<P align="left" style="font-size: 10pt"><B>9.7 Governing Law</B>. Jurisdiction. This Agreement shall be governed by the laws of the State of
California, regardless of the choice of law provisions of California or any other jurisdiction and
regardless of where the parties hereto may now or hereafter be formed, do business, or reside. Any
and all disputes between the parties which may arise pursuant to this Agreement will be heard and
determined before an appropriate federal or state court located in Los Angeles, California. The
parties hereto ackn0&#146;Yledge that such court has the jurisdiction to interpret and enforce the
provisions of this Agreement and the parties waive any and all objections that they may have as to
personal jurisdiction or venue in any of the above courts.



<P align="left" style="font-size: 10pt"><B>9.8 Headings. </B>The headings in this Agreement are inserted only as a matter of convenience, and in
no way define, limit, or interpret the scope of this Agreement or of any particular section hereof.



<P align="left" style="font-size: 10pt"><B>9.9 Waivers Strictly Construed. </B>With regard to any power, remedy or right provided herein or
otherwise available to any party hereunder, (a)&nbsp;no waiver or extension of time shall be effective
unless expressly contained in a writing signed by the waiving party, and (b)&nbsp;no alteration,
modification or impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or by any other indulgence.



<P align="left" style="font-size: 10pt"><B>9.10 Severability. </B>The validity, legality or enforceability of the remainder of this Agreement
shall not be affected even if one or more of the provisions of this Agreement shall be held to be
invalid, illegal or unenforceable in any respect.



<P align="left" style="font-size: 10pt"><B>9.11 Counterparts. </B>This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.



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<P align="left" style="font-size: 10pt"><B>IN WITNESS WHEREOF, </B>the parties hereto have executed this Agreement as of the date first set forth
above.<BR>


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<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
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    <TD colspan="3" valign="top" align="left"><B>&#147;Company&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>&#147;Executive&#148;</B> &nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.,</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>a Nevada corporation</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>By</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Name:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Title:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>By</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Name:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Title:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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</DIV>


<P align="center" style="font-size: 10pt">Page 7 of 7 Pages




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>SPOUSAL CONSENT</B>



<P align="left" style="font-size: 10pt">I certify that:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;I
am the spouse of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;who signed the foregoing Non-Qualified Stock Option
Agreement dated as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>.</U>20- ( the &#147;Agreement&#148;) by and between &#151;  as the
&#147;Executive&#148; thereunder and Save The World Air, Inc. as the &#147;Company&#148; thereunder.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;I have read and approve the provisions of the Agreement, including, but not limited
to, those relating to the exercise, transfer and disposition of the Stock Option described therein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;I agree to be bound by and accept those provisions of that Agreement in lieu of all
other interests I may have in the Stock Options thereby granted, whether that interest may be
community property or otherwise.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;Executive shall have full power of management of Executive . s interests in the Stock
Options, including any portion of those interests that may be community property, and Executive has
the full right, without my further approval, to exercise Executive&#146;s rights with respect to such
Stock Options, to execute any amendments to the Agreement, and to exercise and otherwise deal in
any manner with such Stock Options, including any portion of such interests that may be community
property.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Name of spouse:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
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</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>APPENDIX A<BR>
GLOSSARY OF TERMS</B>



<P align="left" style="font-size: 10pt"><B>1.&nbsp;&#147;Agreement&#148; </B>means the Non-Qualified Stock Option Agreement dated <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
20- by and between Save The Wodd Air, Inc., a Nevada corporation, as the &#147;Company&#148; thereunder,
and <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, an individual, as the &#147;Executive&#148; thereunder.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>2.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Board&#148; </B>is as defined in <B><I>Recital &#147;A&#148; </I></B>of the Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>3</B>.&nbsp;&nbsp;</TD>
    <TD> <B>&#147;Cause&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>4.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Committee&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>5.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Company&#148; </B>means Save The World Air, Inc., a Nevada corporation.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>6.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Corporate Transaction&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>7.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Disability&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>8.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Effective Date&#148; </B>of a Corporate Transaction is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>9.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Executive&#148; </B>means <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, an individual.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>10.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Exercise Price&#148; </B>is as defined in Section&nbsp;1 of the Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>11.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Family&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>12.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Grant Date&#148; </B>is as set forth in the first paragraph of the Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>13.</B>&nbsp;&nbsp;</TD>
    <TD>&#147;Non-Qualified Stock Option&#148; <B>is as defined in the Plan.</B></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>14.</B>&nbsp;&nbsp;</TD>
    <TD>&#147;Parent&#148; <B>is as defined in the Plan.</B></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>15.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Plan&#148; </B>is as defined in <B><I>Recital&#148; A&#148; </I></B>of the Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>16.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Stock&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>17.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Stock Option&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>18.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Subsidiary&#148; </B>is as defined in the Plan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left"><B>19.</B>&nbsp;&nbsp;</TD>
    <TD><B>&#147;Will&#148; </B>is as defined in the Plan.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><B>(1)</B>




<P align="center" style="font-size: 10pt">&nbsp;
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<DOCUMENT>
<TYPE>EX-10.20
<SEQUENCE>7
<FILENAME>v07538exv10w20.htm
<DESCRIPTION>EXHIBIT 10.20
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="right" style="font-size: 10pt">Exhibit 10.20

<P align="center" style="font-size: 10pt"><U><B>CONSULTING AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Consulting Agreement <I>(&#147;Agreement&#148;), </I>is made effective and entered into as of April
1,2003 by and between <B>Save the World Air, Inc., </B>a Nevada corporation (the <I>&#147;Company&#148;), </I>and <B>Adrian
Menzell </B><I>(&#147;Consultant&#146;).</I>


<P align="center" style="font-size: 10pt"><B>RECITALS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;The Company has developed proprietary technologies for reducing harmful emissions
from fuel combustion engines and improving fuel efficiency, among other benefits. The development
of these proprietary technologies and enhancements to them, as well as the anticipated
manufacturing, distribution and sale of products derived from them, are sometimes referred to
below as the Company&#146;s &#147;Business.&#148; The Company&#146;s current products are known as the <I>ZEFS </I>device, as
described in the Company&#146;s patent applications which are pending in various countries (the <I>&#147;ZEFS
Product&#146;). </I>The Company is currently engaged in research and development for next-generation
products and enhancements for use with diesel engines <I>(&#147;Diesel Product&#146;), </I>multiport or multipoint
electronic fuel injection <I>(&#147;EFI Product&#148;), </I>each of which may consist of a device that is attached
to an engine or to a component that is attached to the engine or a technology that is incorporated
into an engine or a component attached to an engine. The ZEFS Products, Diesel Products and EFI
Products are sometimes referred to collectively in this Agreement as the <I>&#147;Products.&#148;</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;The parties hereto anticipate that the Products will be based on the ZEFS Product or new
technologies developed pursuant to this Agreement and certain related consulting agreements being
entered into between the Company and certain others who are part of the Company&#146;s R&#038;D team.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;The Company desires to engage the services of Consultant to assist the Company in
research and development and to provide other services and assistance to the Company in matters
relating to the Company&#146;s business, as they may arise from time to time, upon the terms and
conditions contained herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Consultant desires to provide services to the Company upon the terms and
conditions contained herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, the Company and Consultant hereby mutually agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;I. <I>Scope of Services to Be Provided. </I>Consultant shall provide to the Company,
on an as needed basis, assistance, advice and support relating to the Company&#146;s business,
including project management and supporting the project lead and development team, as the Company
may request from time to time. Without limiting the generality of the foregoing, Consultant
shall:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<I>R&#038;D. </I>Consultant shall undertake and perform the tasks outlined on <I>Annex A </I>hereto and
such additional or other responsibilities as may be reasonably assigned to Consultant from time to
time by the Company&#146;s Chief Executive Officer, Chief Operating Officer, or Director of Research
and Development.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<I>Reports. </I>Consultant shall assist in the preparation of regular monthly reports to
the Company on the efforts expended and undertaken on each project assigned to or undertaken by
Consultant. Consultant shall maintain and make available to the Company upon request complete
records for purchases, products, prices, analyses, testing and test results, contacts, drawings
and such other matters as the Company may request from time to time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<I>Procedures for Maintaining Proprietary Information. </I>Consultant shall keep and maintain
such procedures as may be customary and appropriate and as may be specified by the Company to
protect, maintain and keep confidential any proprietary or confidential information of the
Company, including without limitation all know how and information that may constitute a trade
secret or otherwise confer strategic or competitive advantages to the Company, by use of
passwords, locked cabinets, identification of such information and materials as <I>&#147;Confidential&#146;</I>
and other limits on access as may be customary or appropriate or set forth in Company policies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<I>Travel. </I>The Company may require Consultant to travel at Company expense to its U.S.
offices and facilities at least twice per year and internationally from time to time as may be
reasonably required to fulfill Consultant&#146;s assigned duties and responsibilities, provided that
each such trip shall not exceed two weeks without Consultant&#146;s consent.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2. <I>Non-Disclosure Obligations. </I>Concurrently with the parties&#146; execution of this
Agreement, Consultant shall execute and deliver to the Company the Confidentiality Agreement
attached hereto as <I>Annex B </I>(the <I>&#147;Confidentiality Agreement&#148;), </I>the provisions of which are
incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3. <I>Consultant&#146;s Representations and Covenants. </I>Consultant represents, warrants
and covenants to the Company that:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Consultant shall devote such time, energy, interest, ability, and skill as may
be fairly and reasonably necessary to provide to the Company the services described in Section
1 above;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company may require Consultant to travel to its U.S. offices and facilities at
the Company&#146;s expense at least twice per year and internationally from time to time as may be
reasonably required to fulfill Consultant&#146;s assigned duties and responsibilities, provided that
each such trip shall not exceed two weeks without Consultant&#146;s consent.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Consultant shall not, during the term of this Agreement, directly or indirectly, promote,
participate, or engage in any business activity that would materially interfere with the
performance of Consultant&#146;s duties under this Agreement or which is competitive with the Company&#146;s
or any Company Affiliate&#146;s business, including, without limitation, any involvement as a
shareholder, director, officer, employee, partner, joint venturer, consultant, advisor, individual
proprietor, lender, or agent of any business, without the prior written consent of the Company.
The term <I>&#147;Affiliate&#148; </I>shall mean, with respect to any person or entity, any other person or entity
which, directly or indirectly through one or more intermediaries, is in control of, is controlled
by or is under common control with, such person or entity. <I>&#147;Control of,&#148; &#147;controlled by&#148; </I>and
<I>&#147;under common control with&#148; </I>mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management policies of a person or entity, by



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<P align="left" style="font-size: 10pt">contract or credit arrangement, as trustee or executor, or otherwise. The term
&#147;Affiliate&#148; includes, but is not limited to, each and every subsidiary of the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;During the term of this Agreement and for a period of one year after the termination of
this Agreement, Consultant shall not solicit, attempt to solicit, or cause to be solicited any
customers of the Company for purposes of promoting or selling products or services which are
competitive with those of the Company, nor shall Consultant solicit, attempt to solicit, or cause
to be solicited any employees, agents, or other independent contractors of the Company to cease
their relationship with the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Consultant does not have any agreements with or commitments to any other person or entity
which conflict with any of Consultant&#146;s obligations to the Company arising under this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Consultant shall maintain any and all licenses and permits as may be required for
Consultant to provide the consulting services contemplated hereby. In the event Consultant shall
utilize the services or shall acquire any products in order to render the consulting services
contemplated hereby, Consultant shall be solely responsible for the payment for such services and
products, except to the extent reimbursable by the Company in accordance with Section&nbsp;7 below.
Consultant shall be solely responsible for any and all income and other taxes that may be due to
any state, local or federal governmental authorities in respect of the compensation to Consultant
pursuant to this Agreement. Consultant acknowledges that the Company shall not make any
withholdings from payments to Consultant hereunder.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Except upon the express written consent of the Company, Consultant shall have no
authority, and shall not represent, suggest or imply that Consultant has the authority, express or
implied: (1)&nbsp;to bind the Company to any agreements or arrangements, written or oral; (2)&nbsp;to make
an offer or accept an offer on behalf of the Company; or (3)&nbsp;to make representations, warranties,
guaranties, commitments or covenants on behalf of Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4. <I>Ownership</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The compensation payments set forth herein shall be full and complete compensation
both for all obligations assumed by Consultant hereunder and for any and all Creations (as
defined in the Confidentiality Agreement) assigned under this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company shall retain the exclusive right to use or distribute, at its sole
discretion, any and all Creations. Consultant shall make no claim on any consideration received by
the Company for the sale, lease or use of the Creations.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Company shall include Consultant&#146;s profile on its Company website with other members
of the R&#038;D team and may include such information as it deems appropriate in the Company&#146;s Product
and marketing materials.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5. <I>Term. </I>This Agreement shall terminate on March&nbsp;31,2005, unless earlier terminated
in accordance with this Section&nbsp;5. In addition, this Agreement shall terminate automatically upon
the death of Consultant, or the mental or physical incapacity of Consultant for a period of 60
consecutive days. Either party hereto may terminate this Agreement upon a


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<P align="left" style="font-size: 10pt">material breach of this Agreement by the other party; and the Company may terminate
this Agreement upon a material breach of the Confidentiality Agreement by Consultant.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6. <I>Compensation. </I>Consultant&#146;s compensation for his consulting services hereunder
shall be as set forth on <I>Annex </I>C hereto.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7. <I>Reimbursement of Business Expenses. </I>To the extent Consultant is
authorized by the Company to order equipment and supplies or make other expenditures to carry
out Consultant&#146;s duties hereunder, the Company shall reimburse Consultant for the actual costs
thereof, subject to receipt of such documentation and other information as the Company may
reasonably request or require in accordance with its policies, and subject further to any
limitations on the amount that Consultant may be authorized to incur in ordering such equipment
and supplies or making other expenditures on the Company&#146;s behalf. Reimbursement for each
qualifying expense shall be made on the last day of the calendar month following the month in
which a receipt for payment by Consultant of such expense item and any and all other documentation
which the Company may reasonably require regarding the expense item was submitted to. Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8. <I>Independent Contractor. </I>Consultant shall be retained by the Company only for
the purposes and to the extent set forth in this Agreement, and his relation to the Company,
during the term of this Agreement, shall be that of an independent contractor. Consultant
shall not be considered as having an employee status.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;9. <I>Injunctive Relief </I>Remedies at law shall be deemed to be inadequate for any
breach of any of the covenants of this Agreement, and the Company shall be entitled to
injunctive relief in addition to any other remedies it may have in the event of such breach.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10. <I>Indemnification. </I>If Consultant becomes a defendant in, or is threatened to be
made a party to, a Claim by reason of (or arising in part out of) an Identifiable Event, the
Company shall indemnify, defend and hold harmless Consultant against any and all Expenses,
judgments, fines, penalties and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect of such Expenses, judgments,
fines, penalties or amounts paid in settlement) of any Claim, subject to any limitations set forth
herein below. For purposes of this section, the following terms shall have the meanings set forth
below:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&#147;Claim&#148; shall mean any threatened, pending or completed action, suit or proceeding
against Consultant, whether civil, criminal, administrative, investigative or other.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&#147;Expenses&#148; shall mean attorneys&#146; fees and all other costs, expenses and obligations paid
or incurred by Consultant arising from defense of a Claim.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&#147;Identifiable Event&#148; shall mean any act or omission of Consultant in carrying out
Consultant&#146;s duties under this Agreement that is (i)&nbsp;other than a criminal act and (ii)&nbsp;within the
scope of Consultant&#146;s services to the Company under this Agreement, including without limitation
Claims alleging facts based on theories of negligence; violation of securities laws in connection
with the offer and sale of the Company&#146;s securities; that the Consultant is or was an agent,
employee or fiduciary of the Company; or that Consultant is or was serving at the request


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<P align="left" style="font-size: 10pt">of the Company as a director, officer, employee, trustee, agent or fiduciary of
another corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or relating to anything done or not done by the Consultant in any such
capacity.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11. <I>Amendments; Consents. </I>No amendment, modification, supplement, termination, or
waiver of any provision in this Agreement, and no consent to any departure there from, shall be
effective unless in writing and signed by both Consultant and the Company and then only in the
specific instance and for the specific purpose given.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;12. <I>Notices. </I>Any notices required or permitted to be given in writing will be deemed
received when personally delivered or, if earlier, ten (10)&nbsp;days after mailing by registered or
certified United States mail, postage prepaid, and return receipt requested. Notice to the Company
is valid if sent to the Company&#146;s principal place of business and notice to Consultant is valid if
sent to Consultant at Consultant&#146;s address as it appears in the Company&#146;s records. The Company or
Consultant may change their address only by notice given to the other in the manner set forth
herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;13. <I>Counterparts; Facsimile Signatures. </I>This Agreement may be executed in two or
more counterparts, and the counterparts, taken together, shall constitute one original. Executed
copies of this Agreement and any amendments or modifications thereto may be delivered by
facsimile transmission in lieu of an original.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;14. <I>Binding Effect; Assignment. </I>This Agreement shall be binding upon and inure to the
benefit of Consultant and the Company and their respective permitted successors and assigns. This
Agreement, including the rights and obligations hereunder, shall not be assigned, delegated or
transferred by Consultant without the prior written consent of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;15. <I>Integration; Construction. </I>This Agreement (together with the appendices thereof)
shall comprise the complete and integrated agreement of the Company and Consultant and shall
supersede all prior agreements, written or oral, on the subject matter hereof. Neither party
hereto shall have a provision construed against it by reason of such party having drafted the
same.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16. <I>Survival. </I>The rights and obligations provided in Section&nbsp;3(c), Section&nbsp;4,
Section&nbsp;9, Section&nbsp;10, Section&nbsp;14, Section&nbsp;20 and paragraph (c)&nbsp;of Annex C hereto shall survive
termination of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;17. <I>Governing Law. </I>This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;18. <I>Severability of Provisions. </I>Any provision in this Agreement that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall be, as to that jurisdiction only,
inoperative, unenforceable, or invalid without affecting the remaining provisions in that<br>
jurisdiction or the operation, enforceability, or validity of those provisions in any other
jurisdiction, and to this end the provisions of this Agreement shall be severable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;19. <I>Headings. </I>Headings of this Agreement are included for convenience only and shall
not be considered a part of this Agreement for any other purpose.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;20. <I>Attorneys&#146; Fees. </I>In the event of any litigation or other dispute arising as
a result of or by reason of this Agreement, the prevailing party in any such litigation or other
dispute shall be entitled to, in addition to any other damages assessed, its reasonable
attorneys&#146; fees, and all other costs and expenses incurred in connection with settling or
resolving such dispute. The attorneys&#146; fees which the prevailing party is entitled to recover
shall include fees for prosecuting or defending any appeal and shall be awarded for any
supplemental proceedings until the final judgment is satisfied in full. In addition to the
foregoing award of attorneys&#146; fees to the prevailing party, the prevailing party in any lawsuit
on this Agreement shall be entitled to its reasonable attorneys&#146; fees incurred in any post
judgment proceedings to collect or enforce the judgment. This attorneys&#146; fees provision is
separate and several and shall survive the merger of this Agreement into any judgment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;21. <I>Waiver; Rights and Remedies. </I>Neither Consultant&#146;s nor the Company&#146;s failure to
exercise any right under this Agreement shall constitute a waiver of any other term or condition
of this Agreement with respect to any other preceding, concurrent, or subsequent breach, nor
shall it constitute a waiver by the Company or Consultant of its rights at any time thereafter
to require exact and strict compliance with any of the terms of this Agreement. The rights and
remedies set forth in this Agreement shall be in addition to any other rights or remedies which
may be granted by law.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>CONSULTANT</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ A. MENZELL&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Name:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Adrian Menzell&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EUGENE E. EICHLER&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><I>Name:</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><I>Title:</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Operating Officer&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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<P align="center" style="font-size: 10pt">&nbsp;
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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>ANNEX A<BR>
CONSUL TANT&#146;S DUTIES AND RESPONSIBILITIES</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR style="font-size: 1px" valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>The design, development of new configurations and testing of all
units.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>All mechanical repairs that need to be performed to have the vehicles running correctly
and diagnose and rectify problems before and during testing.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Assisting with the ordering, organizing and purchase of products and plant and
equipment, etc.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Decision making in relation to such issues as leasing of workshops and insurance
needs, etc.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Assist in preparatory reports to the Company in relation to the ZEFS devices.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Development of new ways of dealing with the issue of multi-port fuel injection along
with Pat Baker.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Control the ordering, organizing and purchase of products and plant and equipment
relating to the development and supply of the devices.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Show and explain the basic principles of the operation and functions of an engine
e.g. multi-point fuel injection and engine management systems and all associated items.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Look at all new possible sites and to determine the conditions of vehicles and
fitting
stations, talk to transport authorities and to talk and set up standards with other
engineering and technical personnel.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Look at all working relations and access the progress and development of all new and
upcoming devices including the assessment of all the multi-fuel injection systems.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U><B>ANNEX &#147;B&#148;</B></U>


<P align="center" style="font-size: 10pt"><U><B>CONFIDENTIALITY AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Confidentiality Agreement (&#147;Agreement&#148;) dated as of
April&nbsp;1, 2003, is entered into by and
between the individual whose name appears on the signature page of the related Consulting Agreement
(&#147;Consultant&#148;), on the one hand, and Save the World Air, Inc., a Nevada corporation (the
&#147;Company&#148;), on the other, with reference to the following facts:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RECITALS</B>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>This Agreement is being entered into pursuant to that certain Consulting
Agreement of even date herewith, between the Company and Consultant (&#147;Consulting
Agreement&#148;).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>The Company has retained the services of Consultant to provide Policies and
Procedures and other services as called upon from time to time.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">C.&nbsp;&nbsp;</TD>
    <TD>The Company desires to protect various proprietary and confidential information
that it uses in its business.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Therefore, the parties hereto do hereby agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Definition of Confidential Information</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;For the purposes of this Agreement, the term &#147;Confidential Information&#148; shall mean
information, material and trade secrets (i)&nbsp;proprietary to the Company or to any Affiliate (as
defined below) of the Company or (ii)&nbsp;designated as confidential by the Company, whether or not
owned or developed by the Company, which Consultant may obtain knowledge of or access to, through
or as a result of, Consultant&#146;s relationship with the Company or with any Affiliate of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Without limiting the generality of the foregoing, Confidential Information shall include,
but is not limited to, the following types of information and other information of a similar nature
(whether or not reduced to writing or still in development):



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The &#147;Technology,&#148; which means:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(1)&nbsp;&nbsp;</TD>
    <TD>Any and all &#147;Creations&#148; as defined below; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(2)&nbsp;&nbsp;</TD>
    <TD>any and all enhancements thereto.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Economic and financial analyses, marketing techniques and materials, marketing and
development plans, customer names and other information related to customers, price lists,
pricing policies, financial information and Consultant files.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Information constituting a &#147;trade secret&#148; as defined in California Civil Code
Section&nbsp;3426.1.




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Save the World Air, Inc.




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any information described above which Company obtains from another party and which
Company treats as proprietary or designates as Confidential Information, whether or not
owned or developed by the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The term &#147;Creations&#148; shall mean any and all discoveries, ideas, inventions, concepts,
software in various states of development, designs, drawings, specifications, techniques, models,
data, source code, object code, documentation, diagrams, flow charts, research, developments,
processes, procedures, &#147;know-how,&#148; any enhancements to the foregoing and Consultant&#146;s files that
may be conceived or developed by Consultant, either alone or with others, during the term of this
Agreement, whether or not conceived or developed during Consultant&#146;s working hours, that relate to
the Products or the Company&#146;s Business (each as defined in the Consulting Agreement) or to the
Company&#146;s actual or demonstrably anticipated research and development, <I>or </I>that result from any
services rendered by Consultant for the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;The term &#147;Affiliate&#148; shall mean, with respect to any person or entity, any other person or
entity which, directly or indirectly through one or more intermediaries, is in control of, is
controlled by or is under common control with such person or entity. &#147;Control of,&#148; &#147;controlled by&#148;
and &#147;under common control with&#148; mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a person or entity, by contract or credit
arrangement, as trustee or executor or otherwise. The term &#147;Affiliate&#148; includes, but is not
limited to, each and every subsidiary of the Company, if any.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;INFORMATION PUBLICLY KNOWN THAT IS GENERALLY EMPLOYED BY THE TRADE AT OR AFTER THE TIME
CONSULTANT FIRST LEARNS OF SUCH INFORMATION, OR GENERIC INFORMATION OR KNOWLEDGE WHICH CONSULTANT
WOULD HAVE LEARNED IN THE COURSE OF SIMILAR SERVICES OR EMPLOYMENT ELSEWHERE IN THE TRADE, SHALL
NOT BE DEEMED PART OF THE CONFIDENTIAL INFORMATION.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Any capitalized terms used and not otherwise defined herein shall have the meanings, if
any, ascribed to them in the Consulting Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Confidential Treatment</U>. Consultant hereby agrees, during the term of his
consulting arrangement with Company and at all times thereafter, to hold in confidence and not to
directly or indirectly reveal, report, publish, disclose or transfer any of the Confidential
Information to any person or entity, or utilize any of the Confidential Information for any
purpose, except in the course of Consultant&#146;s services for Company, without the prior written
consent of the chief executive officer of Company. Consultant agrees that, as between Consultant
and Company, Company owns all of the Confidential Information, and Consultant hereby agrees to
regard and preserve as confidential all Confidential Information. Consultant hereby agrees not to
take, retain or copy, without the prior written consent of the chief executive officer of Company,
any or all of the Confidential Information. Without limiting the generality of the foregoing,
during the term hereof and after termination of Consultant&#146;s employment with the Company,
Consultant shall not use, build, reverse-engineer, decompile, modify for use or disassemble any of
the Technology.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Ownership</U>. The Technology including without limitations any and all Creations
shall be the sole and exclusive property of the Company. At any time upon the request of the
Company, Consultant shall: (i)&nbsp;assign, without charge to the Company, all his rights, title, and
interests in any of the Creations to the Company; (ii)&nbsp;execute, acknowledge, and deliver any and


<P align="right" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Save the World Air, Inc.


<P align="left" style="font-size: 10pt">all instruments necessary to confirm the Company&#146;s complete ownership of the Creations; and
(iii)&nbsp;perform all other reasonable acts which may be necessary to perfect and to protect the
Company&#146;s ownership rights in the Creations. Consultant hereby assigns to the Company all of his
right, title and inters in and to the Creations. Consultant shall disclose promptly and only to the
Company, and shall make an adequate record of, any and all Creations conceived or developed by
Consultant (either alone or jointly with others) during the term of this Agreement and within one
year thereafter, whether or not the property of the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Return of Materials and Copies</U>. All notes, data, reference materials, sketches,
drawings, memoranda, documentation and records in any way incorporating or reflecting any of the
Confidential Information and all proprietary rights therein, including copyrights, shall belong
exclusively to Company, and Consultant hereby agrees to turn over promptly all copies of such
materials in Consultant&#146;s control to Company upon Company&#146;s request or upon termination of
Consultant&#146;s employment by Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Non-Competition and Non-Solicitation</U>. During the Company&#146;s employment of
Consultant and for a period of two (2)&nbsp;years following the term of the Consulting Agreement,
Consultant shall not assist, become employed by or engage in any consulting or other services for
any person or entity that is engaged in any business or other activity in competition with the
Company, nor solicit or entice any of the Company&#146;s employees to do any of the foregoing. During
the Company&#146;s employment of Consultant and for a period of two (2)&nbsp;years following the term of the
Consulting Agreement, Consultant shall not set up or take preliminary steps to set up or engage in
any business enterprise that would be in competition with the Company and Consultant shall disclose
to the Company, any and all competitive plans that Consultant may have, without regard to
Consultant&#146;s intent to act or not act on such plans.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Fiduciary Obligations</U>. Nothing in this Agreement is intended to limit Consultant&#146;s
obligations to Company in any capacity, and Consultant shall be bound by all fiduciary and other
obligations to Company which may arise by reason of Consultant&#146;s employment, capacity or other
duties to the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Injunctive Relief</U>. Due to the unique nature of the Confidential Information,
Consultant understands and hereby agrees that Company will suffer irreparable harm in the event
that Consultant fails to comply with any of Consultant&#146;s obligations under Section&nbsp;2 or 3 above and
that monetary damages will be inadequate to compensate Company for such breach. Accordingly,
Consultant hereby agrees that Company will be entitled, in addition to any other remedies available
to it at law or in equity, to injunctive relief to enforce the terms of Sections&nbsp;2 and 3 above.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Amendments; Consents</U>. No amendment, modification, supplement, termination or
waiver of any provision in this Agreement, and no consent to any departure therefrom, shall be
effective unless in writing and signed by both Consultant and Company and then only in the specific
instance and for the specific purpose given.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Notice</U>. Any notices required or permitted to be given in writing and will be
deemed received when personally delivered or, if earlier, ten (10)&nbsp;days after mailing by registered
or certified United States mail, postage prepaid, and with return receipt requested. Notice to the
Company is valid if sent to the Company&#146;s principal place of business and notice to Consultant is
valid if sent to Consultant at Consultant&#146;s address as it appears in the Company&#146;s records.


<P align="right" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">Save the World Air, Inc.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be but one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Binding Effect; Assignment</U>. This Agreement shall be binding upon and inure to the
benefit of Consultant and Company and their respective permitted successors and assigns. This
Agreement, including the rights and obligations hereunder, shall not be assigned or transferred by
Consultant without the prior written consent of Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Integration; Construction</U>. This Agreement (together with the Consulting
Agreement) shall comprise the complete and integrated agreement of the Company and Consultant and
shall supersede all prior agreements, written or oral, on the subject matter hereof. Neither party
hereto shall have a provision construed against it by reason of such party having drafted the same.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Governing Law</U>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Severability of Provisions</U>. Any provision in this Agreement that is held to be
inoperative, unenforceable or invalid in any jurisdiction shall be, as to that jurisdiction only,
inoperative, unenforceable or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability or validity of those provisions in any other
jurisdiction, and to this end the provisions of this Agreement shall be severable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Headings</U>. Headings of this Agreement are included for convenience only and shall
not be considered a part of this Agreement for any other purpose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Attorneys&#146; Fees</U>. In the event of any litigation or other dispute arising as a
result of or by reason of this Agreement, the prevailing party in any such litigation or other
dispute shall be entitled to, in addition to any other damages assessed, its reasonable attorneys&#146;
fees, and all other costs and expenses incurred in connection with settling or resolving such
dispute. The attorneys&#146; fees which the prevailing party is entitled to recover shall include fees
for prosecuting or defending any appeal and shall be awarded for any supplemental proceedings until
the final judgment is satisfied in full. In addition to the foregoing award of attorneys&#146; fees to
the prevailing party, the prevailing party in any lawsuit on this Agreement shall be entitled to
its reasonable attorneys&#146; fees incurred in any post judgment proceedings to collect or enforce the
judgment. This attorneys&#146; fees provision is separate and several and shall survive the merger of
this Agreement into any judgment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Waiver; Rights and Remedies</U>. Neither Consultant&#146;s nor Company&#146;s failure to
exercise any right under this Agreement shall constitute a waiver of any other term or condition of
this Agreement with respect to any other preceding, concurrent or subsequent breach, nor shall it
constitute a waiver by the Company or Consultant of its rights at any time thereafter to require
exact and strict compliance with any of the terms of this Agreement. The rights and remedies set
forth in this Agreement shall be in addition to any other rights or remedies which may be granted
by law.


<P align="center" style="font-size: 10pt"><B>(Signature page follows)</B>



<P align="right" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">Save the World Air, Inc.


<P align="left" style="font-size: 10pt">IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/
EUGENE E. EICHLER</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler<BR>
Its Chief Financial Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>CONSULTANT</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ ADRIAN MENZELL</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Name</I> Adrian Menzell</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Address:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="right" style="font-size: 10pt">5
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>ANNEX C<BR>
CONSULTANT&#146;S COMPENSATION</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR style="font-size: 1pt"  valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt">Pursuant to Section&nbsp;6 of the Agreement to which this Annex is attached, and into which the
provisions of this Annex are incorporated, and subject to the terms and conditions contained in
the Agreement, the Company shall pay and deliver to Consultant the following:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<I>Consulting Fees. </I>The Company shall pay Consultant compensation equal to AU$7,000 per
month, payable semi-monthly in accordance with the Company&#146;s usual payroll practices. Such
consulting fees shall be payable to Consultant by no later than the twenty-fifth (25th) day of
each calendar month, provided the Company shall have received from Consultant (i)&nbsp;a reasonably
detailed accounting of consulting services rendered by Consultant during the immediately preceding
month by no later than the fifth day of the calendar month, together with (ii)&nbsp;any supporting
documentation for such accounting as the Company may reasonably request from Consultant by no
later than five Business Days following the date of such request. The term <I>&#147;Business Day&#148; </I>as used
herein shall mean any day other than a Saturday, Sunday or a day on which banks in Los Angeles,
California are authorized or required to be closed.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<I>Equity Incentives. </I>Subject to compliance with applicable securities laws, the
Company shall grant and/or issue to Consultant Common stock awards for an aggregate of
200,000 shares of Company common stock, as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><I>Type of shares:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Common Stock.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><I>Number of shares:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Grant 1:</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Grant 2:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><I>Award vesting:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Grant 1:</I></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">On the first anniversary of this Agreement.</TD>
</TR>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Grant 2:</I></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">On the second anniversary of this Agreement.</TD>
</TR>
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</DIV>


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<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Other:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Upon vesting of Grant 1 or Grant 2, the Company shall promptly deliver stock certificates to
Consultant evidencing the number of shares having then vested. Consultant must be engaged or
employed by the Company at the time of the award; <I>provided </I>that the award shall vest automatically
if Consultant is terminated without cause prior to expiration of the term of the Agreement. The
Company shall provide Consultant with a separate ''Notice of Stock Grant.&#148;</TD>
</TR>
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</DIV>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>(c). <I>Other Incentives. </I>The Company shall pay and/or provide to Consultant the following:</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A royalty of {US$0.25 per unit or ZEFS device sold by the Company
(after allowance for any returns and return reserves). The royalty
shall be payable 30&nbsp;days after the close of each quarter in arrears.
<BR><BR>Royalties shall be payable 30&nbsp;days after the close of each quarter in
arrears.</TD>
</TR>
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</TABLE>
</DIV>


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<TYPE>EX-10.21
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<FILENAME>v07538exv10w21.htm
<DESCRIPTION>EXHIBIT 10.21
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<P align="right" style="font-size: 10pt">Exhibit 10.21

<P align="center" style="font-size: 10pt"><B>CONSULTING AGREEMENT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Consulting Agreement <I>(&#147;Agreement&#148;) </I>is made effective and entered into as of April
1, 2003, by and between Save <B>the World Air, Inc., </B>a Nevada corporation (the <I>&#147;Company&#148;), </I>and <B>Pat
Baker </B><I>(&#147;Consultant&#146;), </I>with reference to the following facts:


<P align="center" style="font-size: 10pt"><B>RECITALS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;The Company has developed proprietary technologies for reducing harmful emissions
from fuel combustion engines and improving fuel efficiency, among other benefits. The development
of these proprietary technologies and enhancements to them, as well as the anticipated
manufacturing, distribution and sale of products derived from them, are sometimes referred to
below as the Company&#146;s &#147;Business.&#148; The Company&#146;s current products are known as the <I>ZEFS </I>device, as
described in the Company&#146;s patent applications which are pending in various countries (the <I>&#147;ZEFS
Product&#146;). </I>The Company is currently engaged in research and development for next-generation
products and enhancements for use with diesel engines <I>(&#147;Diesel Product&#148;), </I>multiport or multipoint
electronic fuel injection <I>(&#147;EFI Product&#146;), </I>each of which may consist of a device that is attached
to an engine or to a component that is attached to the engine or a technology that is incorporated
into an engine or a component attached to an engine. The ZEFS Products, Diesel Products and EFI
Products are sometimes referred to collectively in this Agreement as the <I>&#147;Products.&#148;</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;The parties hereto anticipate that the Products will be based on the ZEFS Product or new
technologies developed pursuant to this Agreement and certain related consulting agreements being
entered into between the Company and certain others who are part of the Company&#146;s R&#038;D team.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;The Company desires to engage the services of Consultant to assist the Company in
research and development and to provide other services and assistance to the Company in matters
relating to the Company&#146;s business, as they may arise from time to time, upon the terms and
conditions contained herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Consultant desires to provide services to the Company upon the terms and
conditions contained herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, the Company and Consultant hereby mutually agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1. <I>Scope of Services to Be Provided. </I>Consultant shall provide to the Company, on an
as needed basis, assistance, advice and support relating to the Company&#146;s business, including
technical support of the project lead and development team, as the Company may request from time
to time. Without limiting the generality of the foregoing, Consultant shall:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<I>R&#038;D. </I>Consultant shall undertake and perform the tasks outlined on <I>Annex A </I>hereto and such
additional or other responsibilities as may be reasonably assigned to Consultant from time to time
by the Company&#146;s Chief Executive Officer, President, Chief Operating Officer, Consultant&#146;s project
supervisors or Director of R&#038;D.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<I>Reports. </I>Consultant shall assist in the preparation of regular monthly reports to the
Company or Consultant&#146;s project supervisor on the efforts expended and undertaken on each project
assigned to or undertaken by Consultant. Consultant shall maintain and make available to the
Company upon request complete records for purchases, products, prices, analyses, testing and test
results, contacts, drawings and such other matters as the Company may request from time to time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<I>Procedures for Maintaining Proprietary Information. </I>Consultant shall keep and maintain
such procedures as may be customary and appropriate and as may be specified by the Company to
protect, maintain and keep confidential any proprietary or confidential information of the
Company, including without limitation all know how and information that may constitute a trade
secret or otherwise confer strategic or competitive advantages to the Company, by use of
passwords, locked cabinets, identification of such information and materials as <I>&#147;Confidential&#146; </I>and
other limits on access as may be customary or appropriate or set forth in Company policies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2. <I>Non-Disclosure Obligations. </I>Concurrently with the parties&#146; execution of this
Agreement, Consultant shall execute and deliver to the Company the Confidentiality Agreement
attached hereto as <I>Annex B </I>(the <I>&#147;Confidentiality Agreement&#148;), </I>the provisions of which are
incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3. <I>Consultant&#146;s Representations and Covenants. </I>Consultant represents, warrants
and covenants to the Company that:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Consultant shall devote such time, energy, interest, ability, and skill as may be
fairly and reasonably necessary to provide to the Company the services described in Section&nbsp;1
above.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company may require Consultant to travel to its U.S. offices and facilities at the
Company&#146;s expense at least twice per year and internationally from time to time as may be
reasonably required to fulfill Consultant&#146;s assigned duties and responsibilities, provided that
each such trip shall not exceed two weeks without Consultant&#146;s consent.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Consultant shall not, during the term of this Agreement, directly or indirectly, promote,
participate, or engage in any business activity that would materially interfere with the
performance of Consultant&#146;s duties under this Agreement or which is competitive with the Company&#146;s
or any Company Affiliate&#146;s business, including, without limitation, any involvement as a
shareholder, director, officer, employee, partner, joint venturer, consultant, advisor, individual
proprietor, lender, or agent of any business, without the prior written consent of the Company.
The term <I>&#147;Affiliate&#148; </I>shall mean, with respect to any person or entity, any other person or entity
which, directly or indirectly through one or more intermediaries, is in control of, is controlled
by or is under common control with, such person or entity. <I>&#147;Control of,&#148; &#147;controlled by&#148; </I>and
<I>&#147;under common control with&#148; </I>mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management policies of a person or entity, by contract or credit
arrangement, as trustee or executor, or otherwise. The term &#147;Affiliate&#148; includes, but is not
limited to, each and every subsidiary of the Company.








<P align="left" style="font-size: 10pt">Consulting Agreement &#151; P Baker v7



<P align="center" style="font-size: 10pt">- 2
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;During the term of this Agreement and for a period of one year after the termination
of this Agreement, Consultant shall not solicit, attempt to solicit, or cause to be solicited any
customers of the Company for purposes of promoting or selling products or services which are
competitive with those of the Company, nor shall Consultant solicit, attempt to solicit, or cause
to be solicited any employees, agents, or other independent contractors of the Company to cease
their relationship with the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Consultant does not have any agreements with or commitments to any other person or entity
which conflict with any of Consultant&#146;s obligations to the Company arising under this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Consultant shall maintain any and all licenses and permits as may be required for
Consultant to provide the consulting services contemplated hereby. In the event Consultant shall
utilize the services or shall acquire any products in order to render the consulting services
contemplated hereby, Consultant shall be solely responsible for the payment for such services and
products, except to the extent reimbursable by the Company in accordance with Section&nbsp;7 below.
Consultant shall be solely responsible for any and all income and other taxes that may be due to
any state, local or federal governmental authorities in respect of the compensation to Consultant
pursuant to this Agreement. Consultant acknowledges that the Company shall not make any
withholdings from payments to Consultant hereunder.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Except upon. the express written consent of the Company, Consultant shall have no
authority, and shall not represent, suggest or imply that Consultant has the authority, express or
implied: (1)&nbsp;to bind the Company to any agreements or arrangements, written or oral; (2)&nbsp;to make
an offer or accept an offer on behalf of the Company; or (3)&nbsp;to make representations, warranties,
guaranties, commitments or covenants on behalf of Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4. <I>Ownership.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The compensation payments set forth herein shall be full and complete compensation both
for all obligations assumed by Consultant hereunder and for any and all Creations (as defined in
the Confidentiality Agreement) assigned under this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company shall retain the exclusive right to use or distribute, at its sole
discretion, any and all Creations. Consultant shall make no claim on any consideration received
by the Company for the sale, lease or use of the Creations.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Company shall include Consultant&#146;s profile on its Company website with other members
of the R&#038;D team and may include such information as it deems appropriate in the Company&#146;s Product
and marketing materials.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5. <I>Term. </I>This Agreement shall terminate on March&nbsp;31,2005, unless earlier terminated
in accordance with this Section&nbsp;5. In addition, this Agreement shall terminate automatically
upon the death of Consultant, or the mental or physical incapacity of Consultant for a period of
60 consecutive days. Either party hereto may terminate this Agreement upon a material breach of
this Agreement by the other party; and the Company may terminate this Agreement upon a material
breach of the Confidentiality Agreement by Consultant.


<P align="left" style="font-size: 10pt">Consulting Agreement &#151; P Baker v7



<P align="center" style="font-size: 10pt">- 3
</DIV>

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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6. <I>Compensation. </I>Consultant&#146;s compensation for his consulting services
hereunder shall be as set forth on <I>Annex </I>C hereto.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7. <I>Reimbursement of Business Expenses. </I>To the extent Consultant is authorized by the
Company to order equipment and supplies or make other expenditures to carry out Consultant&#146;s
duties hereunder, the Company shall reimburse Consultant for the actual costs thereof, subject to
receipt of such documentation and other information as the Company may reasonably request or
require in accordance with its policies, and subject further to any limitations on the amount that
Consultant may be authorized to incur in ordering such equipment and supplies or making other
expenditures on the Company&#146;s behalf. Reimbursement for each qualifying expense shall be made on
the last day of the calendar month following the month in which a receipt for payment by
Consultant of such expense item and any and all other documentation which the Company may
reasonably require regarding the expense item was submitted to Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8. <I>Independent Contractor. </I>Consultant shall be retained by the Company only for the
purposes and to the extent set forth in this Agreement, and his relation to the Company, during
the term of this Agreement, shall be that of an independent contractor. Consultant shall not be
considered as having an employee status.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;9. <I>Injunctive Relief. </I>Remedies at law shall be deemed to be inadequate for any breach
of any of the covenants of this Agreement, and the Company shall be entitled to injunctive relief
in addition to any other remedies it may have in the event of such breach.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10. <I>Indemnification. </I>If Consultant becomes a defendant in, or is threatened to be
made a party to, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify, defend and hold harmless Consultant against any and all Expenses,
judgments, fines, penalties and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect of such Expenses, judgments,
fines, penalties or amounts paid in settlement) of any Claim, subject to any limitations set forth
herein below. For purposes of this section, the following terms shall have the meanings set forth
below:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&#147;Claim&#148; shall mean any threatened, pending or completed action, suit or proceeding
against Consultant, whether civil, criminal, administrative, investigative or other.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&#147;Expenses&#148; shall mean attorneys&#146; fees and all other costs, expenses and obligations paid
or incurred by Consultant arising from defense of a Claim.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&#147;Indemnifiable Event&#148; shall mean any act or omission of Consultant in carrying out
Consultant&#146;s duties under this Agreement that is (i)&nbsp;other than a criminal act and (ii)&nbsp;within the
scope of Consultant&#146;s services to the Company under this Agreement, including without limitation
Claims alleging facts based on theories of negligence; violation of securities laws in connection
with the offer and sale of the Company&#146;s securities; that the Consultant is or was an agent,
employee or fiduciary of the Company; or that Consultant is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary of another


<P align="left" style="font-size: 10pt">Consulting Agreement &#151; P Baker v7<BR>


<P align="center" style="font-size: 10pt">- 4
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or relating to anything done or not done by the Consultant in any such
capacity.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11. <I>Amendments; Consents. </I>No amendment, modification, supplement, termination, or
waiver of any provision in this Agreement, and no consent to any departure therefrom, shall be
effective unless in writing and signed by both Consultant and the Company and then only in the
specific instance and for the specific purpose given.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;12. <I>Notices. </I>Any notices required or permitted to be given in writing
will be deemed received when personally delivered or, if earlier, ten (10)&nbsp;days after mailing by
registered or certified United States mail, postage prepaid, and return receipt requested. Notice
to the Company is valid if sent to the Company&#146;s principal place of business and notice to
Consultant is valid if sent to Consultant at Consultant&#146;s address as it appears in the Company&#146;s
records. The Company or Consultant may change their address only by notice given to the other in
the manner set forth herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;13. <I>Counterparts; Facsimile Signatures. </I>This Agreement may be executed in two or
more counterparts, and the counterparts, taken together, shall constitute one original. Executed
copies of this Agreement and any amendments or modifications thereto may be delivered by
facsimile transmission in lieu of an original.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;14. <I>Binding Effect; Assignment. </I>This Agreement shall be binding upon and inure to the
benefit of Consultant and the Company and their respective permitted successors and assigns. This
Agreement, including the rights and obligations hereunder, shall not be assigned, delegated or
transferred by Consultant without the prior written consent of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;15. <I>Integration; Construction. </I>This Agreement (together with the appendices thereof)
shall comprise the complete and integrated agreement of the Company and Consultant and shall
supersede all prior agreements, written or oral, on the subject matter hereof. Neither party
hereto shall have a provision construed against it by reason of such party having drafted the
same.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16. <I>Survival. </I>The rights and obligations provided in Section&nbsp;3(c), Section&nbsp;4,
Section&nbsp;9, Section&nbsp;10, Section&nbsp;14, Section&nbsp;20 and paragraph (c)&nbsp;of Annex C hereto shall survive
termination of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;17. <I>Governing Law. </I>This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;18. <I>Severability of Provisions. </I>Any provision in this Agreement that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall be, as to that jurisdiction only,
inoperative, unenforceable, or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of those provisions in any other
jurisdiction, and to this end the provisions of this Agreement shall be severable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;19. <I>Headings. </I>Headings of this Agreement are included for convenience only and shall
not be considered a part of this Agreement for any other purpose.



<P align="left" style="font-size: 10pt">Consulting Agreement &#151; P Baker v7



<P align="center" style="font-size: 10pt">- 5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;20. <I>Attorneys&#146; Fees. </I>In the event of any litigation or other dispute arising as
a result of or by reason of this Agreement, the prevailing party in any such litigation or other
dispute shall be entitled to, in addition to any other damages assessed, its reasonable attorneys&#146;
fees, and all other costs and expenses incurred in connection with settling or resolving such
dispute. The attorneys&#146; fees which the prevailing party is entitled to recover shall include fees
for prosecuting or defending any appeal and shall be awarded for any supplemental proceedings
until the final judgment is satisfied in full. In addition to the foregoing award of attorneys&#146;
fees to the prevailing party, the prevailing party in any lawsuit on this Agreement shall be
entitled to its reasonable attorneys&#146; fees incurred in any post judgment proceedings to collect or
enforce the judgment This attorneys&#146; fees provision is separate and several and shall survive the
merger of
this Agreement into any judgment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;21. <I>Waiver; Rights and Remedies. </I>Neither Consultant&#146;s nor the Company&#146;s failure
to exercise any right under this Agreement shall constitute a waiver of any other term or
condition of this Agreement with respect to any other preceding, concurrent, or subsequent
breach, nor shall it constitute a waiver by the Company or Consultant of its rights at any time
thereafter to require exact and strict compliance with any of the terms of this Agreement. The
rights and remedies set forth in this Agreement shall be in addition to any other rights or
remedies which may be granted by law.


<P align="left" style="font-size: 10pt">Consulting Agreement &#151; P Baker v7



<P align="center" style="font-size: 10pt">- 6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>CONSULTANT</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ PATRICK DENNIS BAKER&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><I>Name:</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patrick Dennis Baker&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By:</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EUGENE E. EICHLER&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><I>Name:</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><I>Title:</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Operating Officer&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">- 7
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt">ANNEX A<BR>
Consultant&#146;s Duties and Responsibilities

<P align="left" style="font-size: 10pt">&#149;&nbsp;&nbsp;&nbsp;The design, development of new configuration and testing of all units.

<P align="left" style="font-size: 10pt">&#149;&nbsp;&nbsp;&nbsp;Assist in preparatory to reports to the Company in relation to the ZEFS devices.

<P align="left" style="font-size: 10pt">&#149;&nbsp;&nbsp;&nbsp;Development of new ways of dealing with the issue of multi-port fuel injection.



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U><B>ANNEX &#147;B&#148;</B></U>


<P align="center" style="font-size: 10pt"><U><B>CONFIDENTIALITY AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Confidentiality Agreement (&#147;Agreement&#148;) dated as of
April&nbsp;1, 2003, is entered into by and
between the individual whose name appears on the signature page of the related Consulting Agreement
(&#147;Consultant&#148;), on the one hand, and Save the World Air, Inc., a Nevada corporation (the
&#147;Company&#148;), on the other, with reference to the following facts:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RECITALS</B>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>This Agreement is being entered into pursuant to that certain Consulting
Agreement of even date herewith, between the Company and Consultant (&#147;Consulting
Agreement&#148;).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>The Company has retained the services of Consultant to provide Policies and
Procedures and other services as called upon from time to time.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">C.&nbsp;&nbsp;</TD>
    <TD>The Company desires to protect various proprietary and confidential information
that it uses in its business.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Therefore, the parties hereto do hereby agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Definition of Confidential Information</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;For the purposes of this Agreement, the term &#147;Confidential Information&#148; shall mean
information, material and trade secrets (i)&nbsp;proprietary to the Company or to any Affiliate (as
defined below) of the Company or (ii)&nbsp;designated as confidential by the Company, whether or not
owned or developed by the Company, which Consultant may obtain knowledge of or access to, through
or as a result of, Consultant&#146;s relationship with the Company or with any Affiliate of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Without limiting the generality of the foregoing, Confidential Information shall include,
but is not limited to, the following types of information and other information of a similar nature
(whether or not reduced to writing or still in development):



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The &#147;Technology,&#148; which means:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(1)&nbsp;&nbsp;</TD>
    <TD>Any and all &#147;Creations&#148; as defined below; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(2)&nbsp;&nbsp;</TD>
    <TD>any and all enhancements thereto.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Economic and financial analyses, marketing techniques and materials, marketing and
development plans, customer names and other information related to customers, price lists,
pricing policies, financial information and Consultant files.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Information constituting a &#147;trade secret&#148; as defined in California Civil Code
Section&nbsp;3426.1.





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Save the World Air, Inc.




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any information described above which Company obtains from another party and which
Company treats as proprietary or designates as Confidential Information, whether or not
owned or developed by the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The term &#147;Creations&#148; shall mean any and all discoveries, ideas, inventions, concepts,
software in various states of development, designs, drawings, specifications, techniques, models,
data, source code, object code, documentation, diagrams, flow charts, research, developments,
processes, procedures, &#147;know-how,&#148; any enhancements to the foregoing and Consultant&#146;s files that
may be conceived or developed by Consultant, either alone or with others, during the term of this
Agreement, whether or not conceived or developed during Consultant&#146;s working hours, that relate to
the Products or the Company&#146;s Business (each as defined in the Consulting Agreement) or to the
Company&#146;s actual or demonstrably anticipated research and development, <I>or </I>that result from any
services rendered by Consultant for the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;The term &#147;Affiliate&#148; shall mean, with respect to any person or entity, any other person or
entity which, directly or indirectly through one or more intermediaries, is in control of, is
controlled by or is under common control with such person or entity. &#147;Control of,&#148; &#147;controlled by&#148;
and &#147;under common control with&#148; mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a person or entity, by contract or credit
arrangement, as trustee or executor or otherwise. The term &#147;Affiliate&#148; includes, but is not
limited to, each and every subsidiary of the Company, if any.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;INFORMATION PUBLICLY KNOWN THAT IS GENERALLY EMPLOYED BY THE TRADE AT OR AFTER THE TIME
CONSULTANT FIRST LEARNS OF SUCH INFORMATION, OR GENERIC INFORMATION OR KNOWLEDGE WHICH CONSULTANT
WOULD HAVE LEARNED IN THE COURSE OF SIMILAR SERVICES OR EMPLOYMENT ELSEWHERE IN THE TRADE, SHALL
NOT BE DEEMED PART OF THE CONFIDENTIAL INFORMATION.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Any capitalized terms used and not otherwise defined herein shall have the meanings, if
any, ascribed to them in the Consulting Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Confidential Treatment</U>. Consultant hereby agrees, during the term of his
consulting arrangement with Company and at all times thereafter, to hold in confidence and not to
directly or indirectly reveal, report, publish, disclose or transfer any of the Confidential
Information to any person or entity, or utilize any of the Confidential Information for any
purpose, except in the course of Consultant&#146;s services for Company, without the prior written
consent of the chief executive officer of Company. Consultant agrees that, as between Consultant
and Company, Company owns all of the Confidential Information, and Consultant hereby agrees to
regard and preserve as confidential all Confidential Information. Consultant hereby agrees not to
take, retain or copy, without the prior written consent of the chief executive officer of Company,
any or all of the Confidential Information. Without limiting the generality of the foregoing,
during the term hereof and after termination of Consultant&#146;s employment with the Company,
Consultant shall not use, build, reverse-engineer, decompile, modify for use or disassemble any of
the Technology.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Ownership</U>. The Technology including without limitations any and all Creations
shall be the sole and exclusive property of the Company. At any time upon the request of the
Company, Consultant shall: (i)&nbsp;assign, without charge to the Company, all his rights, title, and
interests in any of the Creations to the Company; (ii)&nbsp;execute, acknowledge, and deliver any and


<P align="right" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Save the World Air, Inc.


<P align="left" style="font-size: 10pt">all instruments necessary to confirm the Company&#146;s complete ownership of the Creations; and
(iii)&nbsp;perform all other reasonable acts which may be necessary to perfect and to protect the
Company&#146;s ownership rights in the Creations. Consultant hereby assigns to the Company all of his
right, title and inters in and to the Creations. Consultant shall disclose promptly and only to the
Company, and shall make an adequate record of, any and all Creations conceived or developed by
Consultant (either alone or jointly with others) during the term of this Agreement and within one
year thereafter, whether or not the property of the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Return of Materials and Copies</U>. All notes, data, reference materials, sketches,
drawings, memoranda, documentation and records in any way incorporating or reflecting any of the
Confidential Information and all proprietary rights therein, including copyrights, shall belong
exclusively to Company, and Consultant hereby agrees to turn over promptly all copies of such
materials in Consultant&#146;s control to Company upon Company&#146;s request or upon termination of
Consultant&#146;s employment by Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Non-Competition and Non-Solicitation</U>. During the Company&#146;s employment of
Consultant and for a period of two (2)&nbsp;years following the term of the Consulting Agreement,
Consultant shall not assist, become employed by or engage in any consulting or other services for
any person or entity that is engaged in any business or other activity in competition with the
Company, nor solicit or entice any of the Company&#146;s employees to do any of the foregoing. During
the Company&#146;s employment of Consultant and for a period of two (2)&nbsp;years following the term of the
Consulting Agreement, Consultant shall not set up or take preliminary steps to set up or engage in
any business enterprise that would be in competition with the Company and Consultant shall disclose
to the Company, any and all competitive plans that Consultant may have, without regard to
Consultant&#146;s intent to act or not act on such plans.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Fiduciary Obligations</U>. Nothing in this Agreement is intended to limit Consultant&#146;s
obligations to Company in any capacity, and Consultant shall be bound by all fiduciary and other
obligations to Company which may arise by reason of Consultant&#146;s employment, capacity or other
duties to the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Injunctive Relief</U>. Due to the unique nature of the Confidential Information,
Consultant understands and hereby agrees that Company will suffer irreparable harm in the event
that Consultant fails to comply with any of Consultant&#146;s obligations under Section&nbsp;2 or 3 above and
that monetary damages will be inadequate to compensate Company for such breach. Accordingly,
Consultant hereby agrees that Company will be entitled, in addition to any other remedies available
to it at law or in equity, to injunctive relief to enforce the terms of Sections&nbsp;2 and 3 above.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Amendments; Consents</U>. No amendment, modification, supplement, termination or
waiver of any provision in this Agreement, and no consent to any departure therefrom, shall be
effective unless in writing and signed by both Consultant and Company and then only in the specific
instance and for the specific purpose given.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Notice</U>. Any notices required or permitted to be given in writing and will be
deemed received when personally delivered or, if earlier, ten (10)&nbsp;days after mailing by registered
or certified United States mail, postage prepaid, and with return receipt requested. Notice to the
Company is valid if sent to the Company&#146;s principal place of business and notice to Consultant is
valid if sent to Consultant at Consultant&#146;s address as it appears in the Company&#146;s records.


<P align="right" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">Save the World Air, Inc.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be but one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Binding Effect; Assignment</U>. This Agreement shall be binding upon and inure to the
benefit of Consultant and Company and their respective permitted successors and assigns. This
Agreement, including the rights and obligations hereunder, shall not be assigned or transferred by
Consultant without the prior written consent of Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Integration; Construction</U>. This Agreement (together with the Consulting
Agreement) shall comprise the complete and integrated agreement of the Company and Consultant and
shall supersede all prior agreements, written or oral, on the subject matter hereof. Neither party
hereto shall have a provision construed against it by reason of such party having drafted the same.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Governing Law</U>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Severability of Provisions</U>. Any provision in this Agreement that is held to be
inoperative, unenforceable or invalid in any jurisdiction shall be, as to that jurisdiction only,
inoperative, unenforceable or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability or validity of those provisions in any other
jurisdiction, and to this end the provisions of this Agreement shall be severable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Headings</U>. Headings of this Agreement are included for convenience only and shall
not be considered a part of this Agreement for any other purpose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Attorneys&#146; Fees</U>. In the event of any litigation or other dispute arising as a
result of or by reason of this Agreement, the prevailing party in any such litigation or other
dispute shall be entitled to, in addition to any other damages assessed, its reasonable attorneys&#146;
fees, and all other costs and expenses incurred in connection with settling or resolving such
dispute. The attorneys&#146; fees which the prevailing party is entitled to recover shall include fees
for prosecuting or defending any appeal and shall be awarded for any supplemental proceedings until
the final judgment is satisfied in full. In addition to the foregoing award of attorneys&#146; fees to
the prevailing party, the prevailing party in any lawsuit on this Agreement shall be entitled to
its reasonable attorneys&#146; fees incurred in any post judgment proceedings to collect or enforce the
judgment. This attorneys&#146; fees provision is separate and several and shall survive the merger of
this Agreement into any judgment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Waiver; Rights and Remedies</U>. Neither Consultant&#146;s nor Company&#146;s failure to
exercise any right under this Agreement shall constitute a waiver of any other term or condition of
this Agreement with respect to any other preceding, concurrent or subsequent breach, nor shall it
constitute a waiver by the Company or Consultant of its rights at any time thereafter to require
exact and strict compliance with any of the terms of this Agreement. The rights and remedies set
forth in this Agreement shall be in addition to any other rights or remedies which may be granted
by law.


<P align="center" style="font-size: 10pt"><B>(Signature page follows)</B>



<P align="right" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">Save the World Air, Inc.


<P align="left" style="font-size: 10pt">IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/
EUGENE E. EICHLER</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler<BR>
Its Chief Operating Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>CONSULTANT</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ PATRICK DENNIS BAKER</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Name</I> Patrick Dennis Baker</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Address:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="right" style="font-size: 10pt">5
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt">ANNEX C <BR>CONSULTANT&#146;S COMPENSATION


<P align="left" style="font-size: 10pt">Pursuant to Section&nbsp;6 of the Agreement to which this Annex is attached, and into which the
provisions of this Annex are incorporated, and subject to the terms and conditions contained in
the Agreement, the Company shall pay and deliver to Consultant the following:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<I>Consulting Fees. </I>The Company shall pay Consultant compensation equal to AU$5,000 per
month, payable semi-monthly in accordance with the Company usual payroll practices. Such
consulting fees shall be payable to Consultant by no later than the twenty-fifth (25th) day of
each calendar month, provided the Company shall have received from Consultant (i)&nbsp;a reasonably
detailed accounting of consulting services rendered by Consultant during the immediately preceding
month by no later than the fifth day of the calendar month, together with (ii)&nbsp;any supporting
documentation for such accounting as the Company may reasonably request from Consultant by no
later than five Business Days following the date of such request. The term <I>&#147;Business Day&#148; </I>as used
herein shall mean any day other than a Saturday, Sunday or a day on which banks in Los Angeles,
California are authorized or required to be closed.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<I>Equity Incentives. </I>Subject to compliance with applicable securities laws, the
Company shall grant and/or issue to Consultant Common stock awards for an aggregate of
200,000 shares of Company common stock, as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;<I>Type of shares:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Common Stock.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;<I>Number of shares:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Grant 1:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Grant 2:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><I>Award vesting:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Grant </I>1:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">On the first anniversary of the effective date of this Agreement</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Grant 2:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">On the second anniversary of this Agreement.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Other:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Upon vesting of Grant 1 or Grant 2, the Company
shall promptly deliver stock certificates to
Consultant evidencing the number of shares having
then vested. Consultant must be engaged or
employed by the Company at the time of the award;
<I>provided </I>that the award shall vest automatically
if Consultant is terminated without cause prior to
expiration of the term of the Agreement. The
Company shall provide Consultant with a separate
&#147;Notice of Stock Grant.&#148;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<I>Other
Incentives. </I>The Company shall pay and/or provide to Consultant
the following: the

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A royalty of US$0.05 per unit or ZEFS Product
sold by the Company (after allowance for any
returns and return reserves).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Royalties shall be payable 30&nbsp;days after the
close of each quarter in arrears.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Consulting Agreement. P Baker v7




<P align="center" style="font-size: 10pt">-11
</DIV>


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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>9
<FILENAME>v07538exv10w22.htm
<DESCRIPTION>EXHIBIT 10.22
<TEXT>
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<HEAD>
<TITLE>exv10w22</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="right" style="font-size: 10pt">Exhibit 10.22

<P align="center" style="font-size: 10pt"><B>CONSULTING AGREEMENT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Consulting Agreement <I>(&#147;Agreement&#148;), </I>is made effective and entered into as of April
1,2003, by and between Save the World Air, Inc., a Nevada corporation (the <I>&#147;Company&#148;), </I>and John
Kostic <I>(&#147;Consultant&#146;) </I>with reference to the following facts:


<P align="center" style="font-size: 10pt"><B>RECITALS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;The Company has developed proprietary technologies for reducing harmful emissions from
fuel combustion engines and improving fuel efficiency, among other benefits. The development of
these proprietary technologies and enhancements to them, as well as the anticipated manufacturing,
distribution and sale of products derived from them, are sometimes referred to below as the
Company&#146;s ~~Business.&#148; The Company&#146;s current products are known as the <I>ZEFS </I>device, as described
in the Company&#146;s patent applications which are pending in various countries (the <I>&#147;ZEFS Product&#146;).</I>
The Company is currently engaged in research and development for next-generation products and
enhancements for use with diesel engines <I>(&#147;Diesel Product&#148;), </I>multiport or multipoint electronic
fuel injection <I>(&#147;EFI Product&#148;), </I>each of which may consist of a device that is attached to an
engine or to a component that is attached to the engine or a technology that is incorporated into
an engine or a component attached to an engine. The ZEFS Products, Diesel Products and EFI
Products are sometimes referred to collectively in this Agreement as the <I>&#147;Products.&#148;</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;The parties hereto anticipate that the Products will be based on the ZEFS Product or new
technologies developed pursuant to this Agreement and certain related consulting agreements being
entered into between the Company and certain others who are part of the Company&#146;s R&#038;D team.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;The Company desires to engage the services of Consultant to assist the Company in
research and development and to provide other services and assistance to the Company in matters
relating to the Company&#146;s business, as they may arise from time to time, upon the terms and
conditions contained herein. .


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Consultant desires to provide services to the Company upon the terms and
conditions contained herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, the Company and Consultant hereby mutually agree as


<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1. <I>Scope of Services to Be Provided. </I>Consultant shall provide to the
Company, on an as needed basis, assistance, advice and support relating to the Company&#146;s business,
including project management and supporting the project lead and development team, as the Company
may request from time to time. Without limiting the generality of the foregoing, Consultant shall:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<I>R&#038;D. </I>Consultant shall undertake and perform the tasks outlined on <I>Annex A </I>hereto and such
additional or other responsibilities as may be reasonably assigned to Consultant from time to time
by the Company&#146;s Chief Executive Officer, President, Chief Operating Officer or Director of R&#038;D.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<I>Reports. </I>Consultant shall provide regular monthly reports to the Company on the efforts
expended and undertaken on each project assigned to or undertaken by Consultant. Consultant shall
maintain and make available to the Company upon request complete records for purchases, products,
prices, analyses, testing and test results, contacts, drawings and such other matters as the
Company may request from time to time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<I>Potential Customers. </I>Consultant shall use its best efforts to actively and diligently
identify and provide to the Company potential customers and, when requested by the Company,
demonstrate the Company&#146;s products for potential customers and others to demonstrate the
products&#146; operation and capabilities.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<I>Procedures for Maintaining Proprietary Information. </I>Consultant shall keep and maintain
such procedures as may be customary and appropriate and as may be specified by the Company to
protect, maintain and keep confidential any proprietary or confidential information of the
Company, including without limitation all know how and information that may constitute a trade
secret or otherwise confer strategic or competitive advantages to the Company, by use of
passwords, locked cabinets, identification of such information and materials as <I>&#147;Confidential&#148;</I>
and other limits on access as may be customary or appropriate or set forth in Company policies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;<I>Travel. </I>The Company may require Consultant to travel at Company expense to its U.S.
offices and facilities at least twice per year and internationally from time to time as may be
reasonably required to fulfill Consultant&#146;s assigned duties and responsibilities, provided that
each such trip shall not exceed two weeks without Consultant&#146;s consent.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2. <I>Non-Disclosure Obligations. </I>Concurrently with the parties&#146; execution of this
Agreement, Consultant shall execute and deliver to the Company the Confidentiality Agreement
attached hereto as <I>Annex B </I>(the <I>&#147;Confidentiality Agreement&#148;), </I>the provisions of which are
incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3. <I>Consultant&#146;s Representations and Covenants. </I>Consultant represents, warrants
and covenants to the Company that:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Consultant shall devote such time, energy, interest, ability, and skill as may be
fairly and reasonably necessary to provide to the Company the services described in Section&nbsp;1
above.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company may require Consultant to travel to its U.S. offices and facilities at the
Company&#146;s expense at least twice per year and internationally from time to time as may be
reasonably required to fulfill Consultant&#146;s assigned duties and responsibilities, provided that
each such trip shall not exceed two weeks without Consultant&#146;s consent.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Consultant shall not, during the term of this Agreement, directly or indirectly, promote,
participate, or engage in any business activity that would materially interfere with the
performance of Consultant&#146;s duties under this Agreement or which is competitive with the Company&#146;s
or any Company Affiliate&#146;s business, including, without limitation, any involvement as a
shareholder, director, officer, employee, partner, joint venturer, consultant, advisor, individual
proprietor, lender, or agent of any business, without the prior written consent of the Company.
The term <I>&#147;Affiliate&#148; </I>shall mean, with respect to any person or entity, any other



<P align="left" style="font-size: 10pt">Consulting Agreement &#151; J Kostic v7



<P align="center" style="font-size: 10pt">- 2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">person or entity which, directly or indirectly through one or more intermediaries, is in
control of, is controlled by or is under common control with, such person or entity. <I>&#147;Control of,&#148;
&#147;controlled by&#148; </I>and <I>&#147;under common control with&#148; </I>mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a person or entity, by
contract or credit arrangement, as trustee or executor, or otherwise. The term &#147;Affiliate&#148;
includes, but is not limited to, each and every subsidiary of the Company.<BR>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;During the term of this Agreement and for a period of one year after the termination of
this Agreement, Consultant shall not solicit, attempt to solicit, or cause to be solicited any
customers of the Company for purposes of promoting or selling products or services which are
competitive with those of the Company, nor shall Consultant solicit, attempt to solicit, or cause
to be solicited any employees, agents, or other independent contractors of the Company to cease
their relationship with the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Consultant does not have any agreements with or commitments to any other person or entity
which conflict with any of Consultant&#146;s obligations to the Company arising under this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Consultant shall maintain any and all licenses and permits as may be required for
Consultant to provide the consulting services contemplated hereby. In the event Consultant shall
utilize the services or shall acquire any products in order to render the consulting services
contemplated hereby, Consultant shall be solely responsible for the payment for such services and
products, except to the extent reimbursable by the Company in accordance with Section&nbsp;7 below.
Consultant shall be solely responsible for any and all income and other taxes that may be due to
any state, local or federal governmental authorities in respect of the compensation to Consultant
pursuant to this Agreement. Consultant acknowledges that the Company shall not make any
withholdings from payments to Consultant hereunder.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Except upon the express written consent of the Company, Consultant shall have no
authority, and shall not represent, suggest or imply that Consultant has the authority,
express or implied: (1)&nbsp;to bind the Company to any agreements or arrangements, written or
oral; (2)&nbsp;to make an offer or accept an offer on behalf of the Company; or (3)&nbsp;to make
representations, warranties, guaranties, commitments or covenants on behalf of
Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.
<I>Ownership.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The compensation payments set forth herein shall be full and complete compensation
both for all obligations assumed by Consultant hereunder and for any and all Creations (as
defined in the Confidentiality Agreement) assigned under this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company shall retain the exclusive right to use or distribute, at its sole
discretion, any and all Creations. Consultant shall make no claim on any consideration received
by the Company for the sale, lease or use of the Creations.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Company shall include Consultant&#146;s profile on its Company website with other members
of the R&#038;D team and may include such information as it deems appropriate in the Company&#146;s Product
and marketing materials.



<P align="left" style="font-size: 10pt">Consulting Agreement &#151; J Kostic v7



<P align="center" style="font-size: 10pt">- 3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5. <I>Term. </I>This Agreement shall terminate on March&nbsp;31, 2005, unless earlier
terminated in accordance with this Section&nbsp;5. In addition, this Agreement shall terminate
automatically upon the death of Consultant, or the mental or physical incapacity of Consultant
for a period of 60 consecutive days. Either party hereto may terminate this Agreement upon a
material breach of this Agreement by the other party; and the Company may terminate this
Agreement upon a material breach of the Confidentiality Agreement by Consultant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6. <I>Compensation. </I>Consultant&#146;s compensation for his consulting services. hereunder
shall be as set forth on <I>Annex </I>C <I>hereto.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7. <I>Reimbursement of Business Expenses. </I>To the extent Consultant is authorized by the
Company to order equipment and supplies or make other expenditures to carry
out Consultant&#146;s duties hereunder, the Company shall reimburse Consultant for the actual costs
thereof, subject to receipt of such documentation and other information as the Company may
reasonably request or require in accordance with its policies, and subject further to any
limitations on the amount that Consultant may be authorized to incur in ordering such equipment
and supplies or making other expenditures on the Company&#146;s behalf. Reimbursement for each
qualifying expense shall be made on the last day of the calendar month following the month in
which a receipt for payment by Consultant of such expense item and any and all other documentation
which the Company may reasonably require regarding the expense item was submitted to Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8. <I>Independent Contractor. </I>Consultant shall be retained by the Company only for the
purposes and to the extent set forth in this Agreement, and his relation to the Company, during
the term of this Agreement, shall be that of an independent contractor. Consultant shall not be
considered as having an employee status.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;9. <I>Injunctive Relief. </I>Remedies at law shall be deemed to be inadequate for any breach
of any of the covenants of this Agreement, and the Company shall be entitled to injunctive relief
in addition to any other remedies it may have in the even! of such breach.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10. <I>Indemnification. </I>If Consultant becomes a defendant in, or is threatened to be
made a party to, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify, defend and hold harmless Consultant against any and all Expenses,
judgments, fines, penalties and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of any Claim, subject to any
limitations set forth herein below. For purposes of this section, the following terms shall
have the meanings set forth below:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&#147;Claim&#148; shall mean any threatened, pending or completed action, suit or proceeding
against Consultant, whether civil, criminal, administrative, investigative or other.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&#147;Expenses&#148; shall mean attorneys&#146; fees and all other costs, expenses and obligations
paid or incurred by Consultant arising from defense of a Claim.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&#147;Indemnifiable Event&#148; shall mean any act or omission of Consultant in carrying out
Consultant&#146;s duties under this Agreement that is (i)&nbsp;other than a criminal act and (ii)&nbsp;within the



<P align="left" style="font-size: 10pt">Consulting Agreement &#151; J Kostic v7



<P align="center" style="font-size: 10pt">- 4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">scope of Consultant&#146;s services to the Company under this Agreement, including without
limitation Claims alleging facts based on theories of negligence; violation of securities laws in
connection with the offer and sale of the Company&#146;s securities; that the Consultant is or was an
agent, employee or fiduciary of the Company; or that Consultant is or was serving at the request
of the Company as a director, officer,. employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or
relating to anything done or not done by the Consultant in any such capacity.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11. <I>Amendments; Consents. </I>No amendment, modification, supplement, termination, or
waiver of any provision in this Agreement, and no consent to any departure therefrom, shall be
effective unless in writing and signed by both Consultant and the Company and then only in the
specific instance and for the specific purpose given.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;12. <I>Notices. </I>Any notices required or permitted to be given in writing will be deemed
received when personally delivered or, if earlier, ten (10)&nbsp;days after mailing by registered or
certified United States mail, postage prepaid, and return receipt requested. Notice to the Company
is valid if sent to the Company&#146;s principal place of business and notice to Consultant is valid if
sent to Consultant at Consultant&#146;s address as it appears in the Company&#146;s records. The Company or
Consultant may change their address only by notice given to the other in the manner set forth
herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;13. <I>Counterparts; Facsimile ,Signatures. </I>This Agreement may be executed in two or
more counterparts, and the counterparts, taken together, shall constitute one original. Executed
copies of this Agreement and any amendments or modifications thereto may be delivered by
facsimile transmission in lieu of an original.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;14. <I>Binding Effect; Assignment. </I>This Agreement shall be binding upon and inure to the
benefit of Consultant and the Company and their respective permitted successors and assigns. This
Agreement, including the rights and obligations hereunder, shall not be assigned, delegated or
transferred by Consultant without the prior written consent of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;15. <I>Integration; Construction. </I>This Agreement (together with the appendices thereof)
shall comprise the complete and integrated agreement of the Company and Consultant and shall
supersede all prior agreements, written or oral, on the subject matter hereof. Neither party
hereto shall have a provision construed against it by reason of such party having drafted the
same.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16. <I>Survival. </I>The rights and obligations provided in Section&nbsp;3( c), Section&nbsp;4,
Section&nbsp;9, Section&nbsp;10, Section&nbsp;14, Section&nbsp;20 and paragraph (c)&nbsp;of Annex C hereto shall survive
termination of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;17. <I>Governing Law. </I>This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;18. <I>Severability of Provisions. </I>Any provision in this Agreement that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall be, as to that jurisdiction only,
inoperative, unenforceable, or invalid without affecting the remaining provisions in that


<P align="left" style="font-size: 10pt">Consulting Agreement &#151; J Kostic v7



<P align="center" style="font-size: 10pt">- 5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">jurisdiction or the operation, enforceability, or validity of those provisions in
any other jurisdiction, and to this end the provisions of this Agreement shall be
severable.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;19. <I>Headings. </I>Headings of this Agreement are included for convenience only and shall
not be considered a part of this Agreement for any other purpose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;20. <I>Attorneys&#146; Fees. </I>In the event of any litigation or other dispute arising as a
result of or by reason of this Agreement, the prevailing party in any such litigation or other
dispute shall be entitled to, in addition to any other damages assessed, its reasonable attorneys&#146;
fees, and all other costs and expenses incurred in connection with settling or resolving such
dispute. The attorneys&#146; fees which the prevailing party is entitled to recover shall include fees
for prosecuting or defending any appeal and shall be awarded for any supplemental proceedings
until the final judgment is satisfied in full. In addition to the foregoing award of attorneys&#146;
fees to the prevailing party, the prevailing party in any lawsuit on this Agreement shall be
entitled to its reasonable attorneys&#146; fees incurred in any post judgment proceedings to collect or
enforce the judgment. This attorneys&#146; fees provision is separate and several and shall survive the
merger of this Agreement into any judgment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;21. <I>Waiver; Rights and Remedies. </I>Neither Consultant&#146;s nor the Company&#146;s failure to
exercise any right under this Agreement shall constitute a waiver of any other term or condition
of this Agreement with respect to any other preceding, concurrent, or subsequent breach, nor
shall it constitute a waiver by the Company or Consultant of its rights at any time thereafter to
require exact and strict compliance with any of the terms of this Agreement. The rights and
remedies set forth in this Agreement shall be in addition to any other rights or remedies which
may be granted by law.


<P align="left" style="font-size: 10pt">Consulting Agreement &#151; J Kostic v7



<P align="center" style="font-size: 10pt">- 6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>CONSULTANT</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ JOHN KOSTIC&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><I>Name:</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">John Kostic&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EUGENE E. EICHLER&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><I>Name:</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B><I>Title:</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Operating Officer&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>ANNEX A</B>


<DIV align="center" style="font-size: 10pt"><B>CONSULTANT&#146;S DUTIES AND RESPONSIBILITIES</B></DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&#149;</TD>
    <TD>Manage operations and business development.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&#149;</TD>
    <TD>All Australian administrative work and Australian public relations work.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&#149;</TD>
    <TD>Communication with Australian shareholders.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&#149;</TD>
    <TD>Arranging meetings and overseeing general operations of Company in Australia.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">Coordinate product testing and demonstrations.



<P align="left" style="font-size: 10pt">Consulting Agreement &#151; J Kostic v7



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U><B>ANNEX &#147;B&#148;</B></U>


<P align="center" style="font-size: 10pt"><U><B>CONFIDENTIALITY AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Confidentiality Agreement (&#147;Agreement&#148;) dated as of
April&nbsp;1, 2003, is entered into by and
between the individual whose name appears on the signature page of the related Consulting Agreement
(&#147;Consultant&#148;), on the one hand, and Save the World Air, Inc., a Nevada corporation (the
&#147;Company&#148;), on the other, with reference to the following facts:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RECITALS</B>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>This Agreement is being entered into pursuant to that certain Consulting
Agreement of even date herewith, between the Company and Consultant (&#147;Consulting
Agreement&#148;).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>The Company has retained the services of Consultant to provide Policies and
Procedures and other services as called upon from time to time.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">C.&nbsp;&nbsp;</TD>
    <TD>The Company desires to protect various proprietary and confidential information
that it uses in its business.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Therefore, the parties hereto do hereby agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Definition of Confidential Information</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;For the purposes of this Agreement, the term &#147;Confidential Information&#148; shall mean
information, material and trade secrets (i)&nbsp;proprietary to the Company or to any Affiliate (as
defined below) of the Company or (ii)&nbsp;designated as confidential by the Company, whether or not
owned or developed by the Company, which Consultant may obtain knowledge of or access to, through
or as a result of, Consultant&#146;s relationship with the Company or with any Affiliate of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Without limiting the generality of the foregoing, Confidential Information shall include,
but is not limited to, the following types of information and other information of a similar nature
(whether or not reduced to writing or still in development):



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The &#147;Technology,&#148; which means:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(1)&nbsp;&nbsp;</TD>
    <TD>Any and all &#147;Creations&#148; as defined below; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(2)&nbsp;&nbsp;</TD>
    <TD>any and all enhancements thereto.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Economic and financial analyses, marketing techniques and materials, marketing and
development plans, customer names and other information related to customers, price lists,
pricing policies, financial information and Consultant files.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Information constituting a &#147;trade secret&#148; as defined in California Civil Code
Section&nbsp;3426.1.





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Save the World Air, Inc.




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any information described above which Company obtains from another party and which
Company treats as proprietary or designates as Confidential Information, whether or not
owned or developed by the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The term &#147;Creations&#148; shall mean any and all discoveries, ideas, inventions, concepts,
software in various states of development, designs, drawings, specifications, techniques, models,
data, source code, object code, documentation, diagrams, flow charts, research, developments,
processes, procedures, &#147;know-how,&#148; any enhancements to the foregoing and Consultant&#146;s files that
may be conceived or developed by Consultant, either alone or with others, during the term of this
Agreement, whether or not conceived or developed during Consultant&#146;s working hours, that relate to
the Products or the Company&#146;s Business (each as defined in the Consulting Agreement) or to the
Company&#146;s actual or demonstrably anticipated research and development, <I>or </I>that result from any
services rendered by Consultant for the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;The term &#147;Affiliate&#148; shall mean, with respect to any person or entity, any other person or
entity which, directly or indirectly through one or more intermediaries, is in control of, is
controlled by or is under common control with such person or entity. &#147;Control of,&#148; &#147;controlled by&#148;
and &#147;under common control with&#148; mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a person or entity, by contract or credit
arrangement, as trustee or executor or otherwise. The term &#147;Affiliate&#148; includes, but is not
limited to, each and every subsidiary of the Company, if any.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;INFORMATION PUBLICLY KNOWN THAT IS GENERALLY EMPLOYED BY THE TRADE AT OR AFTER THE TIME
CONSULTANT FIRST LEARNS OF SUCH INFORMATION, OR GENERIC INFORMATION OR KNOWLEDGE WHICH CONSULTANT
WOULD HAVE LEARNED IN THE COURSE OF SIMILAR SERVICES OR EMPLOYMENT ELSEWHERE IN THE TRADE, SHALL
NOT BE DEEMED PART OF THE CONFIDENTIAL INFORMATION.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Any capitalized terms used and not otherwise defined herein shall have the meanings, if
any, ascribed to them in the Consulting Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Confidential Treatment</U>. Consultant hereby agrees, during the term of his
consulting arrangement with Company and at all times thereafter, to hold in confidence and not to
directly or indirectly reveal, report, publish, disclose or transfer any of the Confidential
Information to any person or entity, or utilize any of the Confidential Information for any
purpose, except in the course of Consultant&#146;s services for Company, without the prior written
consent of the chief executive officer of Company. Consultant agrees that, as between Consultant
and Company, Company owns all of the Confidential Information, and Consultant hereby agrees to
regard and preserve as confidential all Confidential Information. Consultant hereby agrees not to
take, retain or copy, without the prior written consent of the chief executive officer of Company,
any or all of the Confidential Information. Without limiting the generality of the foregoing,
during the term hereof and after termination of Consultant&#146;s employment with the Company,
Consultant shall not use, build, reverse-engineer, decompile, modify for use or disassemble any of
the Technology.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Ownership</U>. The Technology including without limitations any and all Creations
shall be the sole and exclusive property of the Company. At any time upon the request of the
Company, Consultant shall: (i)&nbsp;assign, without charge to the Company, all his rights, title, and
interests in any of the Creations to the Company; (ii)&nbsp;execute, acknowledge, and deliver any and


<P align="right" style="font-size: 10pt">2
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Save the World Air, Inc.


<P align="left" style="font-size: 10pt">all instruments necessary to confirm the Company&#146;s complete ownership of the Creations; and
(iii)&nbsp;perform all other reasonable acts which may be necessary to perfect and to protect the
Company&#146;s ownership rights in the Creations. Consultant hereby assigns to the Company all of his
right, title and inters in and to the Creations. Consultant shall disclose promptly and only to the
Company, and shall make an adequate record of, any and all Creations conceived or developed by
Consultant (either alone or jointly with others) during the term of this Agreement and within one
year thereafter, whether or not the property of the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Return of Materials and Copies</U>. All notes, data, reference materials, sketches,
drawings, memoranda, documentation and records in any way incorporating or reflecting any of the
Confidential Information and all proprietary rights therein, including copyrights, shall belong
exclusively to Company, and Consultant hereby agrees to turn over promptly all copies of such
materials in Consultant&#146;s control to Company upon Company&#146;s request or upon termination of
Consultant&#146;s employment by Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Non-Competition and Non-Solicitation</U>. During the Company&#146;s employment of
Consultant and for a period of two (2)&nbsp;years following the term of the Consulting Agreement,
Consultant shall not assist, become employed by or engage in any consulting or other services for
any person or entity that is engaged in any business or other activity in competition with the
Company, nor solicit or entice any of the Company&#146;s employees to do any of the foregoing. During
the Company&#146;s employment of Consultant and for a period of two (2)&nbsp;years following the term of the
Consulting Agreement, Consultant shall not set up or take preliminary steps to set up or engage in
any business enterprise that would be in competition with the Company and Consultant shall disclose
to the Company, any and all competitive plans that Consultant may have, without regard to
Consultant&#146;s intent to act or not act on such plans.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Fiduciary Obligations</U>. Nothing in this Agreement is intended to limit Consultant&#146;s
obligations to Company in any capacity, and Consultant shall be bound by all fiduciary and other
obligations to Company which may arise by reason of Consultant&#146;s employment, capacity or other
duties to the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Injunctive Relief</U>. Due to the unique nature of the Confidential Information,
Consultant understands and hereby agrees that Company will suffer irreparable harm in the event
that Consultant fails to comply with any of Consultant&#146;s obligations under Section&nbsp;2 or 3 above and
that monetary damages will be inadequate to compensate Company for such breach. Accordingly,
Consultant hereby agrees that Company will be entitled, in addition to any other remedies available
to it at law or in equity, to injunctive relief to enforce the terms of Sections&nbsp;2 and 3 above.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Amendments; Consents</U>. No amendment, modification, supplement, termination or
waiver of any provision in this Agreement, and no consent to any departure therefrom, shall be
effective unless in writing and signed by both Consultant and Company and then only in the specific
instance and for the specific purpose given.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Notice</U>. Any notices required or permitted to be given in writing and will be
deemed received when personally delivered or, if earlier, ten (10)&nbsp;days after mailing by registered
or certified United States mail, postage prepaid, and with return receipt requested. Notice to the
Company is valid if sent to the Company&#146;s principal place of business and notice to Consultant is
valid if sent to Consultant at Consultant&#146;s address as it appears in the Company&#146;s records.


<P align="right" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">Save the World Air, Inc.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be but one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Binding Effect; Assignment</U>. This Agreement shall be binding upon and inure to the
benefit of Consultant and Company and their respective permitted successors and assigns. This
Agreement, including the rights and obligations hereunder, shall not be assigned or transferred by
Consultant without the prior written consent of Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Integration; Construction</U>. This Agreement (together with the Consulting
Agreement) shall comprise the complete and integrated agreement of the Company and Consultant and
shall supersede all prior agreements, written or oral, on the subject matter hereof. Neither party
hereto shall have a provision construed against it by reason of such party having drafted the same.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Governing Law</U>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Severability of Provisions</U>. Any provision in this Agreement that is held to be
inoperative, unenforceable or invalid in any jurisdiction shall be, as to that jurisdiction only,
inoperative, unenforceable or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability or validity of those provisions in any other
jurisdiction, and to this end the provisions of this Agreement shall be severable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Headings</U>. Headings of this Agreement are included for convenience only and shall
not be considered a part of this Agreement for any other purpose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Attorneys&#146; Fees</U>. In the event of any litigation or other dispute arising as a
result of or by reason of this Agreement, the prevailing party in any such litigation or other
dispute shall be entitled to, in addition to any other damages assessed, its reasonable attorneys&#146;
fees, and all other costs and expenses incurred in connection with settling or resolving such
dispute. The attorneys&#146; fees which the prevailing party is entitled to recover shall include fees
for prosecuting or defending any appeal and shall be awarded for any supplemental proceedings until
the final judgment is satisfied in full. In addition to the foregoing award of attorneys&#146; fees to
the prevailing party, the prevailing party in any lawsuit on this Agreement shall be entitled to
its reasonable attorneys&#146; fees incurred in any post judgment proceedings to collect or enforce the
judgment. This attorneys&#146; fees provision is separate and several and shall survive the merger of
this Agreement into any judgment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Waiver; Rights and Remedies</U>. Neither Consultant&#146;s nor Company&#146;s failure to
exercise any right under this Agreement shall constitute a waiver of any other term or condition of
this Agreement with respect to any other preceding, concurrent or subsequent breach, nor shall it
constitute a waiver by the Company or Consultant of its rights at any time thereafter to require
exact and strict compliance with any of the terms of this Agreement. The rights and remedies set
forth in this Agreement shall be in addition to any other rights or remedies which may be granted
by law.


<P align="center" style="font-size: 10pt"><B>(Signature page follows)</B>



<P align="right" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">Save the World Air, Inc.


<P align="left" style="font-size: 10pt">IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/
EUGENE E. EICHLER</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler<BR>
Its Chief Operating Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>CONSULTANT</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ JOHN KOSTIC</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Name</I> John Kostic</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Address:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="right" style="font-size: 10pt">5
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>ANNEX C CONSULTANT&#146;S COMPENSATION</B>


<P align="left" style="font-size: 10pt">Pursuant to Section&nbsp;6 of the Agreement to which this Annex is attached, and into which the
provisions of this Annex are incorporated, and subject to the terms and conditions contained in
the Agreement, the Company shall pay and deliver to Consultant the following:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<I>Consulting Fees. </I>The Company shall pay Consultant compensation equal to AU$6,000 per
month, payable semi-monthly in accordance with the Company usual payroll practices. Such
consulting fees shall be payable to Consultant by no later than the twenty-fifth (25th) day of
each calendar month, provided the Company shall have received from Consultant (i)&nbsp;a reasonably
detailed accounting of consulting services rendered by Consultant during the immediately preceding
month by no later than the fifth day of the calendar month, together with (ii)&nbsp;any supporting
documentation for such accounting as the Company may reasonably request from Consultant by no
later than five Business Days following the date of such request. The term <I>&#147;Business Day&#148; </I>as used
herein shall mean any day other than a Saturday, Sunday or a day on which banks in Los Angeles,
California are authorized or required to be closed.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<I>Equity Incentives. </I>Subject to compliance with applicable securities laws, the Company
shall grant and/or issue to Consultant Common stock awards for 200,000 shares of Company common
stock, as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;<I>Type of shares:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Common Stock.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>&nbsp;&nbsp;Number of shares:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Grant 1:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Grant 2:
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><I>Award
vesting:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Grant </I>1:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">On the first anniversary of this Agreement</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Grant 2:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">On the second anniversary of this Agreement.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Other:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Upon vesting of Grant 1 or Grant 2, the Company
shall promptly deliver stock certificates to
Consultant evidencing the number of shares having
then vested. Consultant must be engaged or
employed by the Company at the time of the award;
<I>provided </I>that the award shall vest automatically
if Consultant is terminated without cause prior to
expiration of the term of the Agreement. The
Company shall provide Consultant with a separate
&#147;Notice of Stock Grant.&#148;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Consulting Agreement &#151; J Kostic v7



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<I>Other Incentives. </I>The Company shall pay and/or provide to Consultant the following:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A royalty of US$0.10 per unit or ZEFS device sold by
the Company (after allowance for any returns and
return reserves). The royalty shall be payable 30&nbsp;days
after the close of each quarter in arrears.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Royalties shall be payable 30&nbsp;days after the close
of each quarter in arrears.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Consulting Agreement &#151; J Kostic v7




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<TYPE>EX-10.23
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<FILENAME>v07538exv10w23.htm
<DESCRIPTION>EXHIBIT 10.23
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<P align="right" style="font-size: 10pt"><B>EXHIBIT 10.23</B>



<P align="center" style="font-size: 10pt"><U>CONSULTING AGREEMENT</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Consulting Agreement <I>{&#147;Agreement&#148;) </I>is made effective and entered into as of October
1, 2004; by and between Save the World Air, Inc., a Nevada corporation (the <I>&#147;Company&#148;), </I>and
John Fawcett <I>(&#147;Consultant&#148;), </I>with reference to the following facts:


<P align="center" style="font-size: 10pt">RECITALS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;The Company has developed proprietary technologies for reducing harmful emissions from fuel
combustion engines and improving fuel efficiency, among other benefits. The development of these
proprietary technologies and enhancements to them, as well as the anticipated manufacturing,
distribution and sale of products derived from them, are sometimes referred to below as the
Company&#146;s &#147;Business.&#148; The Company&#146;s current products are known as the <I>ZEFS </I>device, as described in
the Company&#146;s patent applications which are pending in various countries (the <I>&#147;ZEFS Product&#148;). </I>The
Company is currently engaged in research and development for next-generation products
and enhancements for use with diesel engines <I>(&#147;Diesel Product&#148;), </I>multiport or muitipoint electronic
fuel injection <I>(&#147;EFI Product&#148;), </I>each of which may consist of a device that is attached to an engine
or to a component that is attached to the engine or a technology that is incorporated into an
engine or a component attached to an engine. The ZEFS Products, Diesel Products and EFI Products
are sometimes referred to collectively in this Agreement as the <I>&#147;Products.&#148;</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;The parties hereto anticipate that the Products will be based on the ZEFS Product or new
technologies developed pursuant to this Agreement and certain related consulting agreements being
entered into between the Company and certain others who are part of the Company&#146;s R&#038;D team.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;The Company desires to engage the services of Consultant to assist the Company in research
and development, including without limitation, prototype testing and making available certain
Consultant facilities and Consultant employees, and to provide other services and assistance to
the Company in matters relating to the Company&#146;s business, as they may arise from time to time,
upon the terms and conditions contained herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Consultant desires to provide services to the Company upon the terms and conditions
contained herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;This Agreement renews and supersedes the Consulting Agreement, dated as of December&nbsp;1,
2001, between the Company and the Consultant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW THERFORE, the Company and Consultant hereby mutually agree as follows:



<P align="left" style="margin-left:2%; font-size: 10pt">(a) <I>Scope of Services to Be Provided. </I>Consultant shall provide to the Company, on an as
needed basis, assistance, advice and support relating to the Company&#146;s business, including
prototype testing and making available certain Consultant facilities and Consultant
employees, as the Company may request from time to time, including no less than thirty
prototype tests. Without limiting the generality of the foregoing, Consultant shall keep and
maintain such procedures as may be customary and appropriate and as may be specified by the
Company to


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<P align="left" style="margin-left:2%; font-size: 10pt">protect, maintain and keep confidential any proprietary or confidential information of the Company,
including without limitation all know how and information that may constitute a trade secret or
otherwise confer strategic or competitive advantages to the Company, by use of passwords, locked
cabinets, identification of such information and materials as <I>&#147;Confidential&#148; </I>and other limits on
access as may be customary or appropriate or set forth in Company policies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2. <I>Non-Disclosure Obligations. </I>Concurrently with the parties&#146; execution of this
Agreement, Consultant shall execute and deliver to the Company the Confidentiality Agreement
attached hereto as <I>Annex B </I>(the <I>&#147;Confidentiality Agreement&#148;), </I>the provisions of which are
incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3. <I>Consultant&#146;s Representations and Covenants. </I>Consultant represents, warrants and
covenants to the Company that:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Consultant shall devote such time, energy, interest; ability, and skill as may be fairly
and reasonably necessary &#177;o provide to the Company the services described in Section&nbsp;1 above.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Consultant shall not, during the term of this Agreement, directly or indirectly, promote,
participate, or engage in any business activity that would materially interfere with the
performance of Consultant&#146;s duties under this Agreement or which is competitive with the Company&#146;s
or any Company Affiliate&#146;s business; including, without limitation, any involvement as a
shareholder, director, officer, employee, partner, joint venturer, consultant, advisor, individual
proprietor, lender, or agent of any business, without the prior written consent of the Company. The
term <I>&#147;Affiliate&#148; </I>shall mean, with respect to any person or entity, any other person or entity
which, directly or indirectly through one or more intermediaries, is in control of, is controlled
by or is under common control with, such person or entity. <I>&#147;Control of &#147; &#147;controlled by&#148; </I>and <I>&#147;under
common control with&#148; </I>mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of a person or entity, by contract or credit arrangement,
as trustee or executor; or otherwise. The term &#147;Affiliate&#148; includes, but is not limited to, each
and every subsidiary of the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;During the term of this Agreement and for a period of one year after the termination of
this Agreement, Consultant shall not solicit. attempt to solicit, or cause to be solicited any
customers of the Company for purposes of promoting or selling products or services which are
competitive with those of the Company, nor shall Consultant solicit, attempt to solicit. or cause
to be solicited any employees, agents, or other independent contractors of the Company to cease
their relationship with the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Consultant does not nave any agreements with or other person or entity which
conflict with any of Consultant&#146;s obligations to the Company arising under this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Consultant shall maintain any and a11 licenses and permits as may be required for
Consultant to provide the consulting services contemplated hereby. In the event Consultant shall
utilize the services or shall require any products in order to render the consulting services or
shall acquire any products in order to render the consulting services contemplated hereby,
Consultant shall solely be responsible for the payment



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<P align="left" style="font-size: 10pt">for such services and products, except to the extent reimbursable by the Company in accordance with
Section&nbsp;7 below. Consultant shall be solely responsible for any and a11 income and other taxes that
may be due to any state, local or federal governmental authorities in respect of the compensation
to Consultant pursuant to this Agreement. Consultant acknowledges that the Company shall not make
any withholdings from payments to Consultant hereunder.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Except upon the express written consent of the Company, Consultant shall have no
authority, and shall not represent, suggest or imply that Consultant has the authority, express or
implied: (1)&nbsp;to bind the Company to any agreements or arrangements, written or oral; (2)&nbsp;to make an
offer or accept an offer on behalf of the Company; or (3)&nbsp;to make representations, warranties,
guaranties, commitments or covenants on behalf of Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4. <I>Ownership.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The compensation payments set forth herein shall be full and complete compensation both
for all obligations assumed by Consultant hereunder and for any and ail Creations (as defined in
the Confidentiality Agreement) assigned under this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company shall retain the exclusive right to use or distribute, at its sole discretion,
any and all Creations. Consultant shall make no claim on any consideration received by the Company
for the sale, lease or use of the Creations.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Company shall include Consultant&#146;s profile on its Company website with other members
of the R&#038;D team and may include such information as it deems appropriate in the Company&#146;s Product
and marketing materials.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5. <I>Term. </I>This Agreement shall terminate on October&nbsp;31, 2006, unless earlier terminated
in accordance with this Section&nbsp;5. In addition, this Agreement shall terminate automatically upon
the death of Consultant, or the mental or physical incapacity of Consultant
for a period of 60 consecutive days. Either party hereto may terminate this Agreement upon a
material breach of this Agreement by the other party; and the Company may terminate this
Agreement upon a material breach of the Confidentiality Agreement by Consultant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6. <I>Compensation. </I>Consultant&#146;s compensation for his consulting services hereunder shall
be as set forth on <I>Annex C </I>hereto.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7. <I>Reimbursement of Business Expenses. To </I>the extent Consultant is authorized by the
Company to order equipment and supplies or mane other expenditures, to carry out
Consultant&#146;s duties hereunder, the Company shall reimburse Consultant far the actual costs thereof,
subject to receipt of such documentation and other information as the Company may reasonably
request or require in accordance with its policies, and subject further to any limitations on the
amount that Consultant may be authorized to incur in ordering such equipment supplies or making
other expenditures on the Company&#146;s behalf. Reimbursement for each qualifying expense shall be made
on the last day of the calendar month following the month in which a receipt for payment by
Consultant of such expense item and any and all other documentation which the company may
reasonably require regarding the expense item was submitted to the company.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8. <I>Independent Contractor. </I>Consultant shall be retained by the Company only for
the purposes and to the extent set forth in this Agreement, and his relation to the Company, during
the term of this Agreement; shall be that of an independent contractor. Consultant shall not be
considered as having an employee status.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;9. <I>Injunctive Relief. </I>Remedies at law shall be deemed to be inadequate for any breach
of any of the covenants of this Agreement, and the Company shall be entitled to injunctive relief
in addition to any other remedies it may have in the event of such breach.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10. <I>Amendments; Consents. No </I>amendment, modification; supplement, termination, or
waiver of any provision in this Agreement, and no consent to any departure therefrom, shall be
effective unless in writing and signed by both Consultant and the Company and then only in the
specific instance and for the specific purpose given.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11. <I>Notices. </I>Any notices required or permitted to be given in writing will be deemed
received when personally delivered or, if earlier, ten (10)&nbsp;days after mail
registered or certified United States mail, postage prepaid, and return receipt requested. Notice
to the Company is valid if sent to the Company&#146;s principal place of business and notice to
Consultant is valid if sent to Consultant at Consultant&#146;s address as it appears in the Company&#146;s
records. The Company or Consultant may change their address only by notice given to the other in
the manner set forth herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;12. <I>Counterparts; Facsimile Signatures. This </I>Agreement may be executed in two or more
counterparts, and the counterparts, taken together, shall constitute one original. Executed copies
of this Agreement and any amendments or modifications thereto may be delivered by facsimile
transmission in lieu of an original.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;13. <I>Binding Effect; Assignment. </I>This Agreement shall be binding upon and inure to the
benefit of Consultant and the Company and their respective permitted successors and assigns. This
Agreement, including the rights and obligations hereunder, shall not be assigned, delegated or


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;14. <I>Integration; Construction. </I>This Agreement (together with the appendices thereof
shall comprise the complete and integrated agreement of the Company and Consultant and shall
supersede all prior agreements; written or oral, on the subject matter hereof, Neither party hereto
shall have a provision construed against it by reason of such party having drafted the same.
Transferred by Consultant without the prior written consent of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;15. <I>Survival</I>. The rights and obligations provided in Section&nbsp;3(b), Section4, Section
9, Section&nbsp;13, Section&nbsp;19 and paragraph (a)&nbsp;of Annex C hereto shall survive termination of this
Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16. <I>Governing Law</I>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;17. <I>Severability of Provisions</I>. Any provisions in this Agreement that is held to be
operative, enforceable, or invalid in any jurisdiction shall be, as that jurisdiction only,
inoperative, unenforceable, or invalid without affecting the remaining provisions that


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<P align="left" style="font-size: 10pt">jurisdiction or the operation, enforceability, or validity of those provisions in any other
jurisdiction, and to this end the provisions of this Agreement shall be severable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;18. <I>Headings. </I>Headings of this Agreement are included for convenience only and shall
not be considered a part of this Agreement for any other purpose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;19. <I>Attorneys&#146; Fees. </I>In the event of any litigation or other dispute arising as a
result of or by reason of this Agreement, the prevailing party in any such litigation or other
dispute shall be entitled to, in addition to any other damages assessed, its reasonable attorneys&#146;
fees, and all other costs and expenses incurred in connection with settling or resolving such
dispute. The attorneys&#146; fees which the prevailing party is entitled to recover shall include fees
for prosecuting or defending any appeal and shall be awarded for any supplemental proceedings until
the final judgment is satisfied in full. In addition to the foregoing award of attorneys&#146; fees to
the prevailing party, the prevailing party in any lawsuit on this Agreement shall be entitled to
its reasonable attorneys&#146; fees incurred in any post judgment proceedings to collect or enforce the
judgment. This attorneys&#146; fees provision is separate and several and shall survive the merger of
this Agreement into any judgment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;20. <I>Waiver; Rights and Remedies. </I>Neither Consultant&#146;s nor the Company&#146;s
failure to exercise any right under this Agreement shall constitute a waiver of any other term or
condition of this Agreement with respect to any other preceding, concurrent, or subsequent breach,
nor shall it constitute a waiver by the Company or Consultant of its rights at any time thereafter
to require exact and strict compliance with any of the terms of this Agreement. The rights and
remedies set forth in this Agreement shall be in addition to any other rights or remedies which may
be granted by law.


<P align="center" style="font-size: 10pt">(signature page follows)



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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly authorized
officer to execute this Agreement as of the date first set forth above.



<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">CONSULTANT<BR>
&nbsp;<BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By&nbsp;&nbsp;</TD>

<TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ John B. Fawcett
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top"><I>Name:</I>&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">John B. Fawcett&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>SAVE THE WORLD AIR, INC.</B><BR>
&nbsp;<BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top"><B>By</B>&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left"><B>/s/ </B>Eugene E. Eichler
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top"><I>Name:</I>&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">Eugene E. Eichler&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top"><I>Title:</I>&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">President&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

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<P align="center" style="font-size: 10pt">ANNEX A<BR>
CONSULTANT&#146;S DUTIES AND RESPONSIBILITIES



<DIV align="center" style="font-size: 10pt"><HR size="1" noshade color="#000000"></DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Making available facilities and personnel in order to design, develop and test new
configurations and units.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Assist in preparatory reports to the Company in relation to the ZEFS and other devices.</TD>
</TR>

</TABLE>

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<P align="center" style="font-size: 10pt"><B>ANNEX B</B>



<P align="center" style="font-size: 10pt"><B>CONFIDENTIALITY AGREEMENT</B>



<P align="center" style="font-size: 10pt"><HR size="1" noshade color="#000000">


<DIV align="center" style="font-size: 10pt">(To be attached)</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
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<P align="center" style="font-size: 10pt"><U><B>CONFIDENTIALITY AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Confidentiality Agreement {&#147;Agreement"} which constitutes Annex B, is entered
into by and between the individual whose name appears on the signature page of the related
Consulting Agreement (&#147;Consultant&#148;), on the one hand, and Save the World, Air, Inc., a
Nevada corporation (the &#147;Company&#148;), on the other, with reference to the following facts:


<P align="center" style="font-size: 10pt">RECITALS


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>This Agreement is being entered into pursuant to that certain
Consulting Agreement of even date herewith, between the Company and
Consultant (&#147;Consulting Agreement&#148;).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>The Company has retained the services of Consultant to conduct
further research and development on a work-for-hire basis.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">C.&nbsp;&nbsp;</TD>
    <TD>The Company desires to protect various proprietary and
confidential information that it uses in its business.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Therefore, the parties hereto do hereby agree as follows:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="4%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD><U>Definition of Confidential Information</U>.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;For the purposes of this Agreement, the term &#147;Confidential Information&#148; shall mean
information, material and trade secrets (i)&nbsp;proprietary to the Company or to any Affiliate (as
defined below) of the Company or {ii} designated as confidential by the Company, whether or not
owned or developed by the Company, which Consultant may obtain knowledge of or access to, through
or as a result of, Consultant&#146;s relationship with the Company or with any Affiliate of the Company:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Without limiting the generality of the foregoing, Confidential Information shall include,
but is not limited to, the following types of information and other information of a similar nature
{whether or not reduced to writing or still in development}:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="4%" nowrap align="left">(i)&nbsp;&nbsp;</TD>
    <TD>The &#147;Technology,&#148; which means:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(1)&nbsp;&nbsp;</TD>
    <TD>Any and all &#147;Creations&#148; as defined below; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(2)&nbsp;&nbsp;</TD>
    <TD>any and all enhancements thereto,</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(ii)&nbsp;&nbsp;</TD>
    <TD>Economic and financial analyses, marketing technique and materials,
marketing and development plans, customer names and other information related to
customers, price lists, pricing policies, financial information and consultant
files.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(iii)&nbsp;&nbsp;</TD>
    <TD>Information constituting a &#147;trade secret&#148; as defined in
California Civil Code Section&nbsp;3426.1</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(iv)&nbsp;&nbsp;</TD>
    <TD>Any information described above which the company obtains
from another party and which the Company treats as proprietary and
designates as</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Confidential Information, whether or not owned or developed by the
Company.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The term &#147;Creations&#148; shall mean any and all discoveries, ideas, inventions, concepts;
software in various states of development, designs, drawings, specifications, techniques, models,
data, source code; object code, documentation, diagrams, flow charts, research, developments,
processes, procedures, &#147;know-how,&#148; any enhancements to the foregoing and Consultant&#146;s files that may be conceived or developed by Consultant, either alone or with others, during the term of this
Agreement, whether or not conceived or developed during Consultant&#146;s working hours; that relate to
the Products or the Company&#146;s Business (each as defined in the Consulting Agreement) or to the
Company&#146;s actual or demonstrably anticipated research and development, or that result from any
services rendered by Consultant for the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;The term &#147;Affiliate&#148; shall mean, with respect to any person or entity, any other person or
entity which, directly or indirectly through one or more intermediaries, is in control of, is
controlled by or is under common control with such person or entity. &#147;Control of, &#147;controlled by&#148;
and &#147;under common control with&#148; mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a person or entity, by contract or credit
arrangement; as trustee or executor or otherwise. The term &#147;Affiliate&#148; includes, but is not limited
to, each and every subsidiary of the Company, if any.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;INFORMATION PUBLICLY KNOWN THAT IS GENERALLY EMPLOYED BY THE TRADE AT OR AFTER THE TIME
CONSULTANT FIRST LEARNS OF SUCH INFORMATION, OR GENERIC INFORMATION OR KNOWLEDGE WHICH CONSULTANT
WOULD HAVE LEARNED IN THE COURSE OF SIMILAR SERVICES OR EMPLOYMENT ELSEWHERE N THE TRADE, SHALL NOT
BE DEEMED PART OF THE CONFIDENTIAL INFORMATION.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Any capitalized terms used and not otherwise defined herein shall have the meanings, if
any, ascribed to them in the Consulting Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Confidential Treatment</U>. Consultant hereby agrees, during the term of his consulting
arrangement with Company and at all times thereafter, to hold in confidence and not to directly or
indirectly reveal, report, publish, disclose or transfer any of the Confidential Information to any
person or entity, or utilize any of the Confidential Information for any purpose, except in the
course of Consultant&#146;s services for Company, without the prior written consent of the chief
executive officer of Company. Consultant agrees that, as between Consultant and Company, Company
owns all of the Confidential Information, and Consultant hereby agrees to regard and preserve as
confidential all Confidential Information. Consultant hereby agrees not to take, retain or copy,
without the prior written consent of the chief executive officer of Company; any or all of the
Confidential information. Without limiting the foregoing, during the term hereof and after
termination of Consultant&#146;s employment wit Company, Consultant shall riot use, build,
reverse-engineer, decompile, modify for use or disassemble of the Technology.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Ownership</U>. The Technology including without limitations any and all Creations shall
be the sole and exclusive property of the Company. At any time upon the request of the Company,
Consultant shall: (i)&nbsp;assign, without charge to the Company, all his rights, title, and interests
in any of the Creations of the Company; (ii)&nbsp;execute, acknowledge, and deliver any and all
instruments


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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">necessary to confirm the Company&#146;s complete ownership and creations; and (iii)&nbsp;perform all other
reasonable acts which may be necessary to perfect and to protect the Company&#146;s ownership rights in
the Creations. Consultant hereby assigns to the Company a11 of his right, title and interest in and
to the Creations. Consultant shall disclose promptly and only to the Company, and shall make an
adequate record of, any and all Creations conceived or developed by Consultant (either alone or
jointly with others) during the term of this Agreement and within one year thereafter, whether or
not the property of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Return of Materials and Copies</U>. All notes, data, reference materials,
sketches, drawings, memoranda, documentation and records in any way incorporating or reflecting any
of the Confidential Information and all proprietary rights therein, including copyrights, shall
belong exclusively to Company, and Consultant hereby agrees to turn over promptly a11 copies of
such materials in Consultant&#146;s control to Company upon Company&#146;s request or upon termination of
Consultant&#146;s employment by Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Non-Competition and Non-Solicitation</U>. During the Company&#146;s employment of
Consultant and for a period of two (2)&nbsp;years following the term of the Consulting Agreement,
Consultant shall not assist, become employed by or engage in any consulting or other services for
any person or entity that is engaged in any business or other activity in competition with the
Company, nor solicit or entice any of the Company&#146;s employees to do any of the foregoing. During
the Company&#146;s employment of Consultant and for a period of two (2)&nbsp;years following the term of the
Consulting Agreement, Consultant shall not set up or take preliminary steps to set up or engage in
any business enterprise that would be in competition with the Company and Consultant shall
disclose to the Company, any and all competitive plans that Consultant may have, without regard to
Consultant&#146;s intent to act or not act on such plans.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Fiduciary Obligations</U>. Nothing in this Agreement is intended to limit
Consultant&#146;s obligations to Company in any capacity, and Consultant shall be bound by all fiduciary
and other obligations to Company which may arise by reason of Consultant&#146;s employment, capacity or
other duties to the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Injunctive Relief</U>. Due to the unique nature of the Confidential
Information; Consultant understands and hereby agrees that Company will suffer irreparable harm in
the event that Consultant fails to comply with any of Consultant&#146;s obligations under Section&nbsp;2 or 3
above and that monetary damages will be inadequate to compensate Company for such breach.
Accordingly, Consultant hereby agrees that Company will be entitled, in addition to any other
remedies available to it at law or in equity, to injunctive relief to enforce the terms of Sections
2 and 3 above.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Amendments; Consents</U>. No amendment, modification, supplement, termination
or waiver of any provision in this Agreement, and no consent to any departure therefrom, shall be
effective unless in writing and signed by both Consultant and Company and then only in the specific
instance and for the specific purpose given.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Notice</U>. Any notices required or permit deemed received when personally
delivered or, if earlier, ten (10)&nbsp;days after mailing by registered or certified United States
mail; postage prepaid, and with return receipt requested. Notice to the Company is valid if sent to
the Company&#146;s principal place of business and notice to Consultant is valid if sent to Consultant
at Consultant&#146;s address as it appears in the Company&#146;s records.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be one and the same instrument.


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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Binding Effect; Assignment</U>. This Agreement shall be binding upon and inure
to the benefit of Consultant and Company and their respective permitted successors and assigns.
This Agreement, including the rights and obligations hereunder, shall not be assigned or
transferred by Consultant without the prior written consent of Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Integration; Construction</U>. This Agreement (together with the Consulting
Agreement) shall comprise the complete and integrated agreement of the Company and Consultant and
shall supersede all prior agreements, written or oral, on the subject matter hereof. Neither party
hereto shall have a provision construed against it by reason of such party having drafted the
same.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Governing Law</U>. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Severability of Provisions</U>. Any provision in this Agreement that is held to be
inoperative, unenforceable or invalid in any jurisdiction shall be, as to that jurisdiction only,
inoperative, unenforceable or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability or validity of those provisions in any other
jurisdiction, and to this end the provisions of this Agreement shall be severable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Headings</U>. Headings of this Agreement are included for convenience only and shall
not be considered a part of this Agreement for any other purpose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Attorneys&#146; Fees</U>. In the event of any litigation or other dispute arising
as a result of or by reason of this Agreement, the prevailing party in any such litigation or other
dispute shall be entitled to, in addition to any other damages assessed, its reasonable attorneys&#146;
fees, and all other costs and expenses incurred in connection with settling or resolving such
dispute. The attorneys&#146; fees which the prevailing party is entitled to recover shall include fees
for prosecuting or defending any appeal and shall be awarded for any supplemental proceedings until
the final judgment is satisfied in full. In addition to the foregoing award of attorneys&#146; fees to
the prevailing party, the prevailing party in any lawsuit on this Agreement shall be entitled to
its reasonable attorneys&#146; fees incurred in any past judgment proceedings to collect or enforce the
judgment. This attorneys&#146; fees provision is separate and several and shall survive the merger of
this Agreement into any judgment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Waiver; Rights and Remedies</U>. Neither Consultant&#146;s nor Company&#146;s failure to
exercise any right under this Agreement shall constitute a waiver of any other term or condition of
this Agreement with respect to any other preceding, concurrent or subsequent breach, nor shall it
constitute a waiver by the Company or Consultant or its rights at any time thereafter to require
exact and strict compliance with any oil the terms of this Agreement. The rights and remedies set
forth in&#146; his Agreement shall be in addition to any other rights or remedies which may be granted
by law.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>SAVE THE WORLD AIR, INC.</B><BR>
&nbsp;<BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ EUGENE E. EICHLER
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Its&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">President&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>CONSULTANT</B><BR>
&nbsp;<BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By&nbsp;&nbsp;</TD>

<TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/
JOHN B. FAWCETT&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top"><I>Name</I>&nbsp;&nbsp;</TD>

<TD colspan="2" style="border-bottom: 1px solid #000000" align="left"><I>John
B. Fawcett</I>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top"><I>Address</I>&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">22146 Placeritos Bl
</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">Newhall, CA 91521
</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">&nbsp;
</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><B>ANNEX C</B>



<P align="center" style="font-size: 10pt"><B>CONSULTANT&#146;S COMPENSATION</B>



<P align="center" style="font-size: 10pt"><HR size="1" noshade color="#000000">


<P align="left" style="font-size: 10pt">Pursuant to Section&nbsp;6 of the Agreement to which this Annex is attached, and into which the
provisions of this Annex are incorporated, and subject to the terms and conditions contained in the
Agreement, <B>the Company shall </B>pay and deliver to Consultant the following:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <I>Equity Incentives. </I>Subject to compliance with applicable securities laws, the
Company shall issue to Consultant Common stock awards for an aggregate of 65,000 shares of Company
common stock, as follows:


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top"><I>Type </I>of <I>shares:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Common Stock.</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD align="left" valign="top"><I>Number </I>of <I>shares:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>65,000</I></TD>
</TR>
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</TABLE>
</DIV>



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<TYPE>EX-10.24
<SEQUENCE>11
<FILENAME>v07538exv10w24.htm
<DESCRIPTION>EXHIBIT 10.24
<TEXT>
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.24



<P align="center" style="font-size: 10pt"><U><B>ADVISORY SERVICES AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Advisory Services Agreement (this &#147;<B>Agreement</B>&#148;) is made and entered into as of this
7<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day of July, 2003 by and between <B>Save the World Air, Inc.</B>, a Nevada corporation (the
&#147;<B>Company</B>&#148;) and <B>Kevin Charles Hart , also known as &#147;Pro Hart&#148; </B>(&#147;<B>Advisor</B>&#148;), with reference to the
following facts.


<P align="center" style="font-size: 10pt"><U>RECITALS</U>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>The Company has certain rights to a proprietary technology (the <B>&#147;Technology</B>&#148;)
for a product known as the Zero Emissions Fuel Saving device (&#147;<B>ZEFS Device</B>&#148;) that is
intended to be used on motor vehicles to reduce pollution and improve fuel efficiency.
The Company desires to further develop the Technology and market and sell the ZEFS
Device.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>Advisor is a famed Australian artist and inventor of the ZEFS Device. The
Company desires to engage Advisor, and Advisor desires to serve the Company, in an
advisory capacity on and subject to the terms of this Agreement.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THEREFORE, the Company and Advisor hereby agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;1</U>. <U>Scope of Services Provided</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 Advisor shall provide advice, counsel and support to the Company&#146;s Board of Directors and
management on an as-needed basis, by telephone or in person, in matters relating to the Company&#146;s
business, including product development, marketing and promotion, and other matters concerning the
ZEFS Device as the Company may reasonably request from time to time during the term of this
Agreement. Advisor also agrees to serve on the &#147;Advisory Board&#148; which shall report to the Company&#146;s
Board of Directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 Advisor agrees to appear at not less than two events per year during the term of this
Agreement subject to Advisor&#146;s prior commitments, schedule and availability, and at such other
times as may be mutually agreed, to assist and support the Company in promoting the ZEFS Device.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;2</U>. <U>Compensation;</U> <U>Expenses.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 As soon as practicable following the parties execution of this Agreement, the Company
shall issue to Advisor 50,000 shares of the Company&#146;s common stock, par value $.001 per share (the
&#147;Stock&#148;). The Stock shall be deemed to have a value of $.001 per share. Advisor shall execute and
deliver to the Company a subscription agreement substantially in the form attached hereto in
<U>Annex A</U>, the provisions of which are incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 The Company shall reimburse Advisor for all reasonable and necessary out-of-pocket
expenses incurred by Advisor in performing the services requested by the Company hereunder,
including without limitation travel, meals, accommodations and phone charges, subject to Advisor&#146;s
presentation to the Company of receipts for such charges, in accordance with the Company&#146;s
practices and policies as adopted or approved from time to time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;3</U>. <U>Non-Disclosure Obligations</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advisor acknowledges that the Technology is proprietary and agrees to execute a standard
confidentiality agreement substantially in the form attached hereto in <U>Annex B</U>, the
provisions of which are incorporated herein by this reference.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;4</U>. <U>Use of Advisor&#146;s Name and Likeness</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 The Company will not use Advisor&#146;s name or likeness in any advertising or
marketing/promotional material without Advisor&#146;s prior written approval or consent, to be given or
refused in the Adviser&#146;s absolute discretion.. Except as may be expressly agreed to by the parties
hereto in writing, the Company shall acquire no ownership or rights in or to Advisor&#146;s name or
likeness that by its use or incorporation in any company advertising or promotional materials other
than the right to use, duplicate and distribute such name or likeness as and to the extent to which
Advisor may have previously consented.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 The Company may identify Advisor as member of the Company&#146;s Advisory Board and may make
such disclosures as may be necessary or advisable to comply with federal securities laws, including
without limitation disclosures in filings with the Securities and Exchange Commission or press
releases as to: (1)&nbsp;the terms of this Agreement; (2)&nbsp;the appointment of Advisor to the Company&#146;s
Advisory Board; and (3)&nbsp;Advisor&#146;s Stock ownership.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;5</U>. <U>Miscellaneous Provisions.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <U>Term</U>. The initial term of this Agreement is one year from the effective date of
this Agreement. This Agreement shall renew automatically from year to year unless terminated by
either party by giving the other not less than thirty (30)&nbsp;days&#146; prior written notice of its
election to terminate this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be but one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <U>Governing Law</U>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="57%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>ADVISOR</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ K.C. HART</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kevin Charles Hart</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EUGENE E. EICHLER</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="left" valign="top">Name: Eugene E. Eichler</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="left" valign="top">Title: Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">2
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt"><B>ANNEX A</B>



<P align="center" style="font-size: 10pt"><B>SUBSCRIPTION AGREEMENT<BR><BR>
<U>SAVE THE WORLD AIR, INC.</U></B>



<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">The undersigned hereby proposes to acquire Common Stock of Save the World Air, Inc., a Nevada
corporation (the<BR>
&#147;Company&#148;). .


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">The undersigned understands that the shares of Common Stock are being offered and sold
without registration under the Securities Act of 1933, as amended (the &#147;Act&#148;), in reliance upon
the private placement exemption contained in Sections&nbsp;4(2) and 4(6) of the Act, and Regulation. D
promulgated thereunder, and that such reliance ~s based on the undersigned&#146;s representations set
forth below.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">To induce the Company to accept this subscription and issue and deliver the Common Stock, the
undersigned agrees, warrants, and represents as follows:


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">1. This offer is irrevocable and subject to acceptance or rejection by the Company
in its sole discretion.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">2. The undersigned is acquiring the Common Stock for investment for his or her own
account, and not with a view toward distribution thereof, and with no present
intention of dividing his or her interest with others or reselling or otherwise
disposing of all or any portion of the Common Stock. The undersigned has not
offered or sold a participation in this purchase of Common Stock, and will not
offer or sell the Common Stock or interest therein or otherwise, in violation of
the Act. The undersigned further acknowledges that he or she does not have in mind
any sale of the Common Stock currently or after the passage of a fixed or
determinable period of time or upon the occurrence or non-occurrence of any
predetermined events or consequence; and that he or she has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for or which is likely to compel a disposition of the Common
Stock and is not aware of any circumstances presently in existence that are likely
in the future to prompt a disposition of the Common Stock.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">3. The undersigned acknowledges that the shares of Common Stock have been offered
to him or her in direct communication between himself or herself and the Company or
through registered broker-dealers and not through any advertisement of any kind.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">4. The undersigned acknowledges that he or she has read all the materials included
in the Executive Summary and Exhibits thereto and has had access to all of the
Company&#146;s filings with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, that the Company has not timely filed its annual
report of Form 10-KSB nor does it have current audited financial statements, that
the offer and sale of Common Stock to the undersigned were based on the
representations and warranties of the undersigned in this Subscription Agreement,
and acknowledges that he or she has been encouraged to seek his or her own legal
and financial counsel to assist him or her in evaluating this investment. The
undersigned acknowledges that the Company has given him or her and all of his or
her counselors access to all information relating to the Company&#146;s business that
they or anyone of them has&#146; requested. The undersigned acknowledges that he or she
has sufficient knowledge, financial and business experience concerning the affairs
and conditions of the Company so that he or she can make a reasoned decision as to
this investment in the Company and is capable of evaluating the merits and risks of
this investment. Based on the foregoing, the undersigned hereby agrees to indemnify
the Company thereof and to hold each of such persons and entities, and the
officers, directors and employees thereof harmless against all liability, costs or
expenses (including reasonable attorneys&#146; fees) arising by reason of or in
connection with any misrepresentation or any breach of such warranties of the
undersigned, or arising as a result of the sale or distribution of the Common Stock
by the undersigned in violation of the Act, the Securities Exchange Act of 1934, as
amended, or any


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">other applicable law, either federal or state. This subscription and the representations and
warranties contained herein shall be binding upon the heirs, legal representatives, successors and
assigns of the undersigned.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">5. The undersigned acknowledges that he or she is able to bear, and understands, the economic risks
of the proposed investment and all other risks of the Company&#146;s business.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned represents that he or she is:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(a) An Accredited Investor, as that term is defined by Regulation&nbsp;D of the Securities and Exchange
Commission, which means any investor meeting at least one of the following conditions:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(i)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Any natural person whose individual net worth (or joint net worth with that person&#146;s spouse, if
applicable) at the time of purchase exceeds $1,000,000; or</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(ii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Any natural person who had an individual income in excess of $200,000 or joint income with that
person&#146;s spouse in excess of 5300,000 in each of the two most recent years and who reasonably
expects an income in excess of 5200,000 or joint income with that person&#146;s spouse in excess
of $300,000 in the current year; or</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(iii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Any other Accredited Investor as that term is defined in Regulation&nbsp;D as adopted by the Securities
and Exchange Commission.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">6.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(a) The undersigned is aware of the restrictions of transferability of the Common
Stock and further understands and acknowledges that any certificates evidencing the
Common Stock will bear the following legends, to which such interests will be
subject:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>THE SHARES EVIDE:\CED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AMENDED, OR QUALIFIED FOR SALE UNDDER ANY STATE SECURITIES LAWS (COLLECTIVELY,
&#147;SECURITIES LA W5&#148;) A:\D MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR
QUALIFIED FOR SALE UNDER ALL APPLICABLE SECVRITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER. ANY SUCH OFFER.
SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH
SECURITIES LAWS.</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(b) The undersigned understands that following the purchase of the Common Stock, the Common Stock
may only be disposed of pursuant to either (i)&nbsp;an effective registration statement under the Act,
or (ii)&nbsp;an exemption from the registration requirements of the Securities Act of 1933.</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(c) The Company has neither filed such a registration statement with the SEC or any state
authorities nor agreed to do so, nor contemplates doing so in the future for this offering of
Common Stock, and in the absence of such a registration statement or exemption, the undersigned may
have to hold the Common Stock indefinitely and may be unable to liquidate them in case of an
emergency.</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(d) The undersigned acknowledges that the Company is not obligated and does not propose to furnish
the undersigned with information necessary to enable it to be able to make sales under Rule
144 of the Securities Act of 1933.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">7.
The undersigned represents that he or she is a resident of
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> and makes the following representation:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">I, THE UNDERSIGNED, REPRESENT THAT I HAVE A PRE-EXISTING PERSONAL OR BUSINESS RELATIONSHIP
WITH THE CONIPANY, ANY OFFICER, DIRECTOR OR CONTROLLING PERSON THEREOF OR HAVE, THROUGH
MYSELF OR THROUGH MY UNAFFILIATED PROFESSIONAL ADVISER, THE BUSINESS OR FINANCIAL EXPERIENCE
TO PROTECT MY INTERESTS IN CONNECTION WITH MY SUBSCRIPTION HERETO.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt"><B>FURTHER, I AM PURCHASING THE COMMON STOCK OFFERED HEREBY FOR INVESTMENT AND NOT WITH A VIEW TOWARD
DISTRIBUTION THEREOF.</B>


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">8. This Subscription Agreement has been delivered in, and shall be construed in accordance with the
laws of the State of California. Subject to the provisions of the paragraph immediately following,
any action in connection with this Subscription Agreement shall be brought in the appropriate state
or federal court in and for the County of Los Angeles, State of California, which shall have
exclusive jurisdiction over such action.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom">
<TD>&nbsp;</TD>
    <TD align="center" valign="top">Executed as of this <U>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </U><BR>
<BR>day of <U>&nbsp;&nbsp;&nbsp;&nbsp;July&nbsp;&nbsp;&nbsp;&nbsp;</U> 2003<BR>
S</TD>
<TR><TD>&nbsp;</TD></TR>

<TR><TD>&nbsp;</TD></TR>
</TR>

<TR>
<TD>&nbsp;</TD>
<TD align="center" valign="top">/s/&nbsp;&nbsp;K.C. Hart</TD>
</TR>


<TR style="font-size: 1px">
<TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
<TD>&nbsp;</TD>
    <TD align="center" valign="top">Signature of Subscriber</TD>
</TR>

<TR><TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
<TD>&nbsp;</TD>
</TR>

<TR>
<TD>&nbsp;</TD>
<TD align="center" valign="top">Kevin Hart</TD>
</TR>

<TR style="font-size: 1px">
<TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
<TD>&nbsp;</TD>
    <TD align="center" valign="top">Print Name</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">*******************************************<BR>
* * * * ** * * * * * * *



<P align="center" style="font-size: 10pt">The above and foregoing Subscription accepted this 7th day of <U> &nbsp;&nbsp;&nbsp;&nbsp;July &nbsp;&nbsp;&nbsp;&nbsp;</U> 2003



<P align="center" style="font-size: 10pt"><B>Save the World Air, Inc. <BR></B>
a Nevada corporation


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="90%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:</DIV></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="left" valign="top">/s/&nbsp;&nbsp;&nbsp;Eugene E. Eichler</TD>
</TR>

<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Its:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt"><B>ANNEX B</B>



<P align="center" style="font-size: 10pt"><B>Confidentiality Agreement</B>



<P align="center" style="font-size: 10pt">July&nbsp;7, 2003



<P align="center" style="font-size: 10pt"><B>STRICTLY PRIVATE AND CONFIDENTIAL</B>



<P align="left" style="font-size: 10pt"><B><I>BY FACSIMILE</I></B><BR>
Save the World Air, Inc.<BR>
29229 Canwood Street, Suite&nbsp;206<BR>
Agoura Hills, California 91301


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">Attention: Eugene E. Eichler, Chief Financial Officer


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">Gentlemen:


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">In connection with the advisory services that you have asked me to provide to Save
the World Air, Inc. (the &#147;Company&#148;) as a member of its Advisory Board, I may be
provided and/or have access to technical and other information concerning the Company and
its proprietary technology (the &#147;Technology&#148;) for a product known as the Zero
Pollution-Fuel Saving Device (&#147;ZERO Device&#148;) that can be used on motor vehicles to reduce
pollution and improve fuel efficiency. As a condition to my being furnished such
information, I agree to treat any information concerning the Technology (including
without limitation all specifications, designs, processes, concepts, ideas, strategic
plans, product development plans, research and development, information about the
Company&#146;s operations, finances, reports, interpretations, forecasts and records, and any
analyses, compilations, studies or other documents, whether prepared by the Company or
others, that contain or reflect such information (collectively, the <B>&#147;Confidential
Information"</B>) in accordance with the provisions of this letter. The term
<B>&#147;Confidential Information&#148; </B>does not include information which (a)&nbsp;was or
becomes generally available to the public other than as a result of a disclosure by me or
my agents or advisors, (b)&nbsp;was or becomes available to me on a non-confidential .basis
from a source other than the Company or its advisors provided that such source is not
bound by a confidentiality agreement with the Company, (c)&nbsp;was within my possession prior
to its being furnished to me by or on behalf of the Company, provided that the source of
such information was not bound by a confidentiality agreement with the Company in respect
thereof.<BR>


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">By this letter, I agree that the Confidential Information will be used solely for the
purposes in furtherance of my advisory services to the Company and will not be used by me
in any way detrimental to the Company. I also agree that the Confidential Information
will be kept confidential by me, my agents and employees; provided, however, that (i)&nbsp;any
such information may be disclosed to my agents and employees who need to know such
information for the purpose of providing the advisory services (it being understood that
such persons shall be informed by me of the confidential nature of such information and
shall be directed by me to treat such information confidentially and shall assume the
same obligations as I under this letter) and (ii)&nbsp;any disclosure of such information may
be made to which the Company consents in writing. I shall be responsible for any breach
of this letter by my agents or employees.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P align="left" style="font-size: 10pt">Save the World Air, Inc.<BR>
Page 2 of 2


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">I shall promptly redeliver to the Company all written material containing or reflecting any
information contained in the Confidential Information (whether prepared by the Company or
otherwise) if I choose not to proceed with the advisory services, and shall not retain any
copies, extracts, or other reproductions in whole or in part of such written material. All
documents, memoranda, notes, and other writings whatsoever, prepared by me or my advisors based
on the information contained in the Confidential Information shall be destroyed, and such
destruction shall be certified in writing to the Company by an authorized officer supervising
such destruction.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">In the event I am required by legal process to disclose any of the Confidential Information, I
shall provide you with prompt notice of such requirement so that you may seek a protective order
or other appropriate remedy or waive compliance with the provisions of this letter. In the
event that a protective order or other remedy is obtained, I shall use all reasonable efforts to .
assure that all Confidential Information disclosed will be covered by such order or other remedy.
Whether such protective order or other remedy is obtained or we waive compliance with the
provisions of this letter, I will disclose only that portion of the Confidential Information that
I am legally required to disclose.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">No failure or delay by the Company in exercising any right, power or privilege under this letter
shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege. If there should arise any conflict
between the terms of this letter agreement and any other agreement concerning the advisory
services, the provisions of this letter agreement shall control. This letter shall be governed by
laws of California, U.S.A, in all respects. Any assignment of this letter by me without our prior
written consent shall be void.


<P align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt">I certify that no Confidential Information, or any portion thereof, will be exported to any
country in violation of the United States Export Administration Act and regulations thereunder. I
hereby further certify that I am not a resident of any of the following countries: Iraq, Iran,
Libya, North Korea, Syria, Laos, Mongolian People&#146;s Republic, Cuba, Cambodia, North Korea,
Nicaragua, or the People&#146;s Republic of China.


<P align="center" style="font-size: 10pt">* * *



<P align="center" style="font-size: 10pt">Very truly yours,



<P align="center" style="font-size: 10pt">/s/ K. C. Hart<BR>
<HR noshade width="26%" align="center" size="1" color="#000000">





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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<TYPE>EX-10.25
<SEQUENCE>12
<FILENAME>v07538exv10w25.htm
<DESCRIPTION>EXHIBIT 10.25
<TEXT>
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.25



<P align="center" style="font-size: 10pt"><U><B>ADVISORY SERVICES AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Advisory Services Agreement (this &#147;<B>Agreement</B>&#148;) is made and entered into as of this
26<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day of February, 2004, by and between <B>Save The World Air, Inc.</B>, a Nevada
corporation (the &#147;<B>Company</B>&#148;) and <B>Sir Jack Brabham </B>(&#147;<B>Advisor</B>&#148;), with reference to the following
facts.


<P align="center" style="font-size: 10pt"><U>RECITALS</U>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>The Company has certain rights to a proprietary technology (the <B>&#147;Technology</B>&#148;)
for a product known as the Zero Emissions Fuel Saving device (&#147;<B>ZEFS Device</B>&#148;) that is
intended to be used on motor vehicles to reduce pollution and improve fuel efficiency.
The Company desires to further develop the Technology and market and sell the ZEFS
Device.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>Advisor is well known to the public and associated with Grand Prix automobile
racing and products. The Company desires to engage Advisor, and Advisor desires to
serve the Company, in an advisory capacity on and subject to the terms of this
Agreement.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THEREFORE, the Company and Advisor hereby agree as follows:



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Section&nbsp;1</u>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Scope of Services Provided</u>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advisor shall provide advice, counsel and support to the Company&#146;s Board of Directors and
management on an as-needed basis, by telephone or in person, in matters relating to the Company&#146;s
business, including product development, marketing and promotion, and other matters concerning the
ZEFS Device as the Company may reasonably request from time to time during the term of this
Agreement. Advisor also agrees to serve on the &#147;Board of Advisors&#148; which shall report to the
Company&#146;s Board of Directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advisor agrees to appear at not less than two events per year during the term of this Agreement
subject to Advisor&#146;s prior commitments, schedule and availability, and at such other times as may
be mutually agreed, to assist and support the Company in promoting the ZEFS Device.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;2</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Compensation</U>; <U>Expenses.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As soon as practicable following the parties execution of this Agreement, the Company
shall issue to Advisor 50,000 shares of the Company&#146;s common stock, par value $.001 per share (the
&#147;Stock&#148;). The Stock shall be deemed to have a value of $.001 per share. Advisor shall execute and
deliver to the Company a subscription agreement substantially in the form attached hereto in
<U>Annex A</U>, the provisions of which are incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company shall reimburse Advisor for all reasonable and necessary out-of-pocket
expenses incurred by Advisor in performing the services requested by the Company hereunder,
including without limitation travel, meals, accommodations and phone charges, subject to Advisor&#146;s
presentation to the Company of receipts for such charges, in accordance with the Company&#146;s
practices and policies as adopted or approved from time to time.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;3</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Non-Disclosure Obligations</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advisor acknowledges that the Technology is proprietary and agrees to execute a standard
confidentiality agreement substantially in the form attached hereto in <U>Annex B</U>, the
provisions of which are incorporated herein by this reference.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;4</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Use of Advisor&#146;s Name and Likeness</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company will not use Advisor&#146;s name or likeness in any advertising or
marketing/promotional material without Advisor&#146;s prior written approval or consent, which shall not
be unreasonably withheld. Except as may be expressly agreed to by the parties hereto in writing,
the Company shall acquire no ownership or rights in or to Advisor&#146;s name or likeness that by its
use or incorporation in any company advertising or promotional materials other than the right to
use, duplicate and distribute such name or likeness as and to the extent to which Advisor may have
previously consented.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company may identify Advisor as member of the Company&#146;s Board of Advisors and may make
such disclosures as may be necessary or advisable to comply with federal securities laws, including
without limitation disclosures in filings with the U.S. Securities and Exchange Commission or press
releases as to: (1)&nbsp;the terms of this Agreement; (2)&nbsp;the appointment of Advisor to the Company&#146;s
Board of Advisors; and (3)&nbsp;Advisor&#146;s Stock ownership.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;5</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Miscellaneous Provisions.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Term</U>. The initial term of this Agreement is one year from the effective date of this
Agreement. This Agreement shall renew automatically from year to year unless terminated by either
party by giving the other not less than thirty (30)&nbsp;days&#146; prior written notice of its election to
terminate this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be but one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Governing Law</U>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>ADVISOR</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By: /s/ JACK BRABHAM
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By: /s/ EUGENE E. EICHLER</TD>
</TR>


<TR style="font-size: 1px">
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>



<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sir Jack Brabham
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:&nbsp; <U>Eugene E. Eichler</U></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:&nbsp;&nbsp; <U>Chief
Operating Officer</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="right" style="font-size: 10pt">Annex A


<P align="center" style="font-size: 10pt"><B>SUBSCRIPTION AGREEMENT</B>



<P align="center" style="font-size: 10pt"><U><B>SAVE THE WORLD AIR, INC.</B></U>



<P align="left" style="font-size: 10pt">The undersigned hereby proposes to acquire Common Stock of Save the World Air, Inc., a Nevada
corporation (the &#147;Company&#148;).



<P align="left" style="font-size: 10pt">The undersigned understands that the shares of Common Stock are being offered and sold without
registration under the Securities Act of 1933, as amended (the &#147;Act&#148;), in reliance upon the private
placement exemption contained in Sections&nbsp;4(2) and 4(6) of the Act, and Regulation&nbsp;D promulgated
thereunder, and that such reliance is based on the undersigned&#146;s representations set forth below.



<P align="left" style="font-size: 10pt">To induce the Company to accept this subscription and issue and deliver the Common Stock, the
undersigned agrees, warrants, and represents as follows:



<P align="left" style="font-size: 10pt">1. This offer is irrevocable until both parties execution and delivery of that
certain Advisory Services Agreement to which this subscription is a part and is
subject to acceptance or rejection by the Company in its sole discretion.



<P align="left" style="font-size: 10pt">2. The undersigned is acquiring the Common Stock for investment for his or her own
account, and not with a view toward distribution thereof, and with no present
intention of dividing his or her interest with others or reselling or otherwise
disposing of all or any portion of the Common Stock. The undersigned has not
offered or sold a participation in this purchase of Common Stock, and will not
offer or sell the Common Stock or interest therein or otherwise, in violation of
the Act. The Undersigned further acknowledges that he or she does not have in mind
any sale of the Common Stock currently or after the passage of a fixed or
determinable period of time or upon the occurrence or non-occurrence of any
predetermined events or consequence; and that he or she has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for or which is likely to compel a disposition of the Common
Stock and is not aware of any circumstances presently in existence that are likely
in the future to prompt a disposition of the Common Stock.



<P align="left" style="font-size: 10pt">3. The undersigned acknowledges that the shares of Common Stock have been offered
to him or her in direct communication between himself or herself and the Company or
through registered broker-dealers and not through any advertisement of any kind.



<P align="left" style="font-size: 10pt">4. The undersigned acknowledges that he or she has read or has had access to all of
the Company&#146;s filings with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, that the Company has not timely filed
its annual report of Form&nbsp;10-KSB nor does it have current audited financial
statements, that the offer and sale of Common Stock to the undersigned were based
on the representations and warranties of the undersigned in this Subscription
Agreement, and acknowledges that he or she has been encouraged to seek his or her
own legal and financial counsel to assist him or her in evaluating this investment.
The undersigned acknowledges that the Company has given him or her and all of his
or her counselors access to all information relating to the Company&#146;s business that
they or any one of them has requested. The undersigned acknowledges that he or she
has sufficient knowledge, financial and business experience concerning the affairs
and conditions of the Company so that he or she can make a reasoned decision as to
this investment in the Company and is capable of evaluating the merits and risks of
this investment. Based on the foregoing, the undersigned hereby agrees to indemnify
the Company thereof and to hold each of such persons and entities, and the
officers, directors and employees thereof harmless against all liability, costs or
expenses (including reasonable attorneys&#146; fees) arising by reason of or in
connection with any misrepresentation or any breach of such warranties of the
undersigned, or arising as a result of the sale or distribution of the Common Stock
by the undersigned in violation of the Act, the Securities Exchange Act of 1934, as
amended, or any other applicable law, either federal or state. This subscription
and the representations and warranties contained herein shall be binding upon the
heirs, legal representatives, successors and assigns of the undersigned.



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">5. The undersigned acknowledges that he or she is able to bear, and understands,
the economic risks of the proposed investment and all other risks of the company&#146;s
business.




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned represents that he or she is:



<P align="left" style="margin-left:1%; font-size: 10pt">(a)&nbsp;An Accredited Investor, as that term is defined by Regulations of the Securities
and
Exchange Commission, which means any investor meeting at least one of the
following
conditions:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(i)&nbsp;&nbsp;</TD>
    <TD>Any natural person whose individual net worth (or joint net worth with
that person&#146;s spouse. If applicable) at the time of purchase exceeds
$1000,000: or</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(ii)&nbsp;&nbsp;</TD>
    <TD>Any natural person who had an individual income in excess of
$200,000 or joint income with that person&#146;s spouse in excess of
$300,000 in each of the two most recent years and who reasonably
expects an income in excess of or joint income with that
person&#146;s spouse in excess of $300,000 in the current year: or</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(iii)&nbsp;&nbsp;</TD>
    <TD>Any other Accredited Investor as that term is defined in Regulation&nbsp;D
as adopted by the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">6.




<P align="left" style="margin-left:1%; font-size: 10pt">(a)&nbsp;The undersigned is aware of the restrictions of transferability of the
Common Stock and further understands and acknowledges that any certificates
evidencing the Common Stock will bear the following legends, to which such
interests will be subject:



<P align="left" style="margin-left:2%; font-size: 10pt"><B>THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE SECURITIES LAWS
(COLLECTIVELY, &#147;SECURITIES LAWS&#148;) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL APPLICABLE SECURITIES LAWS OR UNLESS, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER, ANY SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF SUCH SECURITIES LAWS.</B>



<P align="left" style="margin-left:1%; font-size: 10pt">(b)&nbsp;The undersigned understands that following the purchase of the Common
Stock, the Common Stock may only be disposed of pursuant to either (i)&nbsp;an
effective registration statement under the Act, or (ii)&nbsp;an exemption from the
registration requirements of the Securities Act of 1933.



<P align="left" style="margin-left:1%; font-size: 10pt">(c)&nbsp;The Company has neither filed such a registration statement with the SEC or
any state authorities nor agreed to do so, nor contemplates doing so in the
future for this offering of Common Stock, and in the absence of such a
registration statement or exemption, the undersigned may have to hold the Common
Stock indefinitely and may be unable to liquidate them in case of an emergency.



<P align="left" style="margin-left:1%; font-size: 10pt">(d)&nbsp;The undersigned acknowledges that the Company is not obligated and does not
propose to furnish the undersigned with information necessary to enable it to be
able to make sales under Rule&nbsp;144 of the Securities Act of 1933.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">7.&nbsp;&nbsp;</TD>
    <TD>The undersigned represents that he or she is a resident of
<U>England_</U> and makes the following representation:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>I, THE UNDERSIGNED, REPRESENT THAT I HAVE A PRE-EXISTING PERSONAL OR BUSINESS RELATIONSHIP
WITH THE COMPANY, ANY OFFICER, DIRECTOR OR CONTROLLING PERSON THEREOF OR HAVE, THROUGH
MYSELF OR THROUGH MY UNAFFILIATED PROFESSIONAL</TD>
</TR>



</TABLE>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>ADVISER, THE BUSINESS OR FINANCIAL EXPERIENCE TO PROTECT MY INTERESTS IN CONNECTION WITH MY
SUBSCRIPTION HERETO.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>FURTHER, I AM PURCHASING THE COMMON STOCK OFFERED HEREBY FOR INVESTMENT AND NOT WITH A VIEW
TOWARD DISTRIBUTION THEREOF.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">8.&nbsp;&nbsp;</TD>
    <TD>This Subscription Agreement has been delivered in, and shall be
construed in accordance with the laws of the State of California. Subject
to the provisions of the paragraph immediately following, any action in
connection with this Subscription Agreement shall be brought in the
appropriate state or federal court in and for the County of Los Angeles,
State of California, which shall have exclusive jurisdiction over such
action.</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Executed as of this <U>26th</U> day of February 2004</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Jack Brabham</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Signature of Subscriber</I></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sir Jack Brabham</TD>
</TR>
<TR style="font-size: 1px">

    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Print Name</I></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *<BR>
* * * * * * * * * * * * * *



<P align="left" style="font-size: 10pt">The above and foregoing Subscription accepted this <U>26th</U> day of <U>February</U>, 2004.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>Save the World Air, Inc.</B>
<BR>a Nevada corporation</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Its:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="right" style="font-size: 10pt"><B>Annex B</B>

<P align="center" style="font-size: 10pt">February&nbsp;21,2003



<P align="center" style="font-size: 10pt"><B>STRICTLY PRIVATE AND CONFIDENTIAL</B>



<P align="left" style="font-size: 10pt"><B><I>BY FACSIMILE</I></B><BR>
Save the World Air, Inc.<BR>
29229 Canwood Street, Suite&nbsp;206<BR>
Agoura Hills, California 91301


<P align="left" style="font-size: 10pt">Attention: Eugene E. Eichler, Chief Financial Officer



<P align="left" style="font-size: 10pt">Gentlemen:



<P align="left" style="font-size: 10pt">In connection with the advisory services that you have asked me to
provide to Save the World Air, Inc. (the &#147;<B>Company</B>&#148;) as a member of
its Advisory Board, I may be provided and/or have access to
technical and other information concerning the Company and its
proprietary technology (the &#147;Technology&#148;) for a product known as the
Zero Pollution-Fuel Saving Device (&#147;ZERO Device&#148;) that can be used
on motor vehicles to reduce pollution and improve fuel efficiency.
As a condition to my being furnished such information, I agree to
treat any information concerning the Technology (including without
limitation all specifications, designs, processes, concepts, ideas,
strategic plans, product development plans, research and
development, information about the Company&#146;s operations, finances,
reports, interpretations, forecasts and records, and any analyses,
compilations, studies or other documents, whether prepared by the
Company or others, that contain or reflect such information
(collectively, the &#147;<B>Confidential Information</B>&#148;) in accordance with
the provisions of this letter. The term &#147;<B>Confidential Information</B>&#148;
does not include information which (a)&nbsp;was or becomes generally
available to the public other than as a result of a disclosure by me
or my agents or advisors, (b)&nbsp;was or becomes available to me on a
non-confidential basis from a source other than the Company or its
advisors provided that such source is not bound by a confidentiality
agreement with the Company, (c)&nbsp;was within my possession prior to
its being furnished to me by or on behalf of the Company, provided
that the source of such information was not bound by a
confidentiality agreement with the Company in respect thereof.



<P align="left" style="font-size: 10pt">By this letter, I agree that the Confidential Information will be
used solely for the purposes in furtherance of my advisory services
to the Company and will not be used by me in any way detrimental to
the Company. I also agree that the Confidential Information will be
kept confidential by me, my agents and employees; <I>provided, however</I>,
that (i)&nbsp;any such information may be disclosed to my agents and
employees who need to know such information for the purpose of
providing the advisory services (it being understood that such
persons shall be informed by me of the confidential nature of such
information and shall be directed by me to treat such information
confidentially and shall assume the same obligations as I under this
letter) and (ii)&nbsp;any disclosure of such information may be made to
which the Company consents in writing. I shall be responsible for
any breach of this letter by my agents or employees.


<P align="left" style="font-size: 10pt">In the event I am required by legal process to disclose any of the
Confidential Information, I shall provide you with prompt notice of
such requirement so that you may seek a protective order or other
appropriate remedy or waive compliance with the provisions of this
letter. In the event that a protective order or other remedy is
obtained, I shall use all reasonable efforts to assure that all
Confidential Information disclosed will be covered by such order or
other remedy. Whether such protective order or other remedy is
obtained or the Company waives compliance with the provisions of
this letter, I will disclose only that portion of the Confidential
Information that I am legally required to disclose. This letter
shall be governed by laws of California, U.S.A, in all respects.



<P align="center" style="font-size: 10pt"><B>* * *</B>


<DIV align="left">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
<TD width="39%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Very truly yours,</TD>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
<TD></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Jack Brabham</TD>
<TD></TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
<TD></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>13
<FILENAME>v07538exv10w27.htm
<DESCRIPTION>EXHIBIT 10.27
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w27</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="right" style="font-size: 10pt">Exhibit 10.27


<P align="center" style="font-size: 10pt"><B>EXCLUSIVE CAPITAL RAISING AGREEMENT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Exclusive Capital Raising Agreement (the &#147;Agreement&#148;) is entered into as of the date set
forth on the signature page hereof by and between Save the World Air, Inc (&#147;STWA&#148;), and London
Aussie Marketing, Limited. (&#147;Introducer&#148;), a UK based financial consulting company, with respect to
the following:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Introducer has indicated its desire to act as an Introducer for STWA with respect to locating
private equity entities or individuals (collectively, &#147;Designated Prospects&#148;), that are interested
in providing capital to STWA. STWA is agreeable to having an Introducer act in such capacity.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STWA and Introducer hereby agree as follows:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD><U>Amount of Capital to be Raised: </U> STWA has indicated its intention to
raise up to USD $10&nbsp;million in a private placement. STWA grants exclusive rights to
Introducer to raise USD $5&nbsp;million with private equity firms.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD><U>Start and End Date of Capital Raising: </U> It is STWA&#146;s intention to
conclude the private placement by November&nbsp;2004. STWA is not bound by this date.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.&nbsp;&nbsp;</TD>
    <TD><U>Terms of Capital Raising: </U>These are as set forth in the Private
Placement Memorandum dated July&nbsp;26, 2004.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><U>IMPACT</U>


<P align="left" style="font-size: 10pt">Given the benefits to STWA for accessing professional private equity firms, STWA will advise its
other sources that the total amount to be raised by other sources is less than USD $5&nbsp;million.
This is because private equity firms have no interest in amount less than USD $5&nbsp;million.


<P align="left" style="font-size: 10pt">For example, if the private placement total is USD $7&nbsp;million, then the Introducer is allocated USD
$5&nbsp;million and USD $2&nbsp;million is allocated to other sources.


<P align="left" style="font-size: 10pt">The Introducer can raise more than USD $5&nbsp;million, and can market to others the total private
placement. For example, the Introducer can market to Designated Prospects that the full amount of
the private placement is available for funding. However, any amounts greater than USD 5&nbsp;million
raised by the Introducer must have prior approval of both Bruce McKinnon and Eugene Eichler.


<P align="left" style="font-size: 10pt">The Introducer understands that if private individuals subscribe to the whole amount, then STWA has
the right to decide whether to go with the private investor or whether private equity funding would
be more or less beneficial.



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>STWA hereby appoints Introducer, and Introducer agrees to use its best
efforts to (a)&nbsp;locate, and solicit Designated Prospects, (b)&nbsp;prepare reports to STWA
on the status of discussion with Designated Prospects and (c)&nbsp;devote as much time,
attention and skill as may be necessary to conduct such activities properly.
Introducer shall ask Eugene E. Eichler and Bruce McKinnon if they would like to attend
the introduction meetings prior to any formal presentations. Introducer shall have no
right to use the STWA logo in any manner or for any purpose without the prior written
consent of STWA. Introducer will also comply with any other requirements reasonably
requested by STWA. Introducer will only introduce Designated Prospects to whom
Introducer reasonably believes are &#147;accredited investors&#148; as defined by Rule&nbsp;501 under
the Securities Act of 1933, as amended.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD><U>Designation of Designated Prospects</U>. A private equity, business
entity or individual shall be deemed a Designated Prospect hereunder, if introduced by
Mark Thornton, director of the Introducer.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.&nbsp;&nbsp;</TD>
    <TD><U>Definition of Designated Person</U>. A Designated Prospect is a person
who (i)&nbsp;is not an existing shareholder of STWA, a party to a contract with STWA or a
business entity or individual who can be demonstrated by written materials (such as
sales reports) to have already been known to STWA as a potential source of financing,
(ii)&nbsp;has not been brought or introduced to STWA by any other person in connection with
a capital raising transaction, and (iii)&nbsp;is an &#147;accredited investor&#148; as defined in
Rule&nbsp;501 under the Securities Act of 1933, as amended. A person shall cease to be a
Designated Prospect for all purposes hereof upon the date twelve months following its
or his introduction to STWA by Introducer.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.&nbsp;&nbsp;</TD>
    <TD><U>Effect of Direct or Indirect Introductions</U>. A Designated Prospect
includes any person who invests in STWA through a direct or indirect introduction made
by Introducer.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.&nbsp;&nbsp;</TD>
    <TD><U>Independent Contractor</U>. Introducer is and at all times shall be an
independent contractor in all matters relating to this agreement. Introducer and its
employees are not agents of STWA for any purposes and have no power or authority,
whether apparent, actual, ostensible or otherwise, to bind or commit STWA in any way.
Introducer and its employees are not and shall not be employees of STWA for any
purpose and shall not be entitled to any benefits STWA provides to its employees.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.&nbsp;&nbsp;</TD>
    <TD><U>Introducer&#146;s Fee</U>. In consideration for the services performed by
Introducer hereunder, STWA shall pay to Introducer an Introducer&#146;s fee (&#147;Introducer&#146;s
Fee&#148;) with respect to each capital raising transaction consummated with a Designated
Prospect. The Introducer&#146;s Fee is a cash compensation calculated as eight percent <B>(8%)</B>
of the total proceeds received by STWA from Designated Prospect. Introducer&#146;s Fee is
only upon STWA&#146;s receipt of proceeds of a financing involving the Designated Prospect,
the receipt of which STWA has the right to accept or reject, in whole or in part, in
its sole and absolute discretion. STWA shall not be obligated to pay any fee to
Introducer with respect to a Designated Prospect for which a financing is not
completed.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.&nbsp;&nbsp;</TD>
    <TD><U>Expenses</U>. STWA shall not be responsible for any of the expenses
Introducer incurs in connection with Introducer&#146;s performance of its services
hereunder.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.&nbsp;&nbsp;</TD>
    <TD><U>No Obligation</U>. Introducer acknowledges that the decision to pursue
discussions with a Designated Prospect with respect to a possible capital raising
transaction is solely STWA&#146;s and that STWA shall have no obligation to pursue any
Designated Prospect that Introducer brings to STWA. Introducer agrees and understands
that the decision to accept or reject an investment from any potential investor is for
STWA to make, in its sole and absolute discretion, including reasons related to
shareholder limitations and confidentiality.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">9.&nbsp;&nbsp;</TD>
    <TD><U>Compliance with Laws</U>. Introducer shall not enter into any agreement,
contract or arrangement with any government or government representative or with any
other person, firm, corporation, entity or enterprise imposing any legal obligation or
liability of any kind on STWA. Without limiting the generality of the foregoing,
Introducer specifically shall not sign STWA&#146;s name to any contract or other instrument
and shall not contract any debt or enter into any agreement, either express or
implied, binding to the payment of money or the</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>performance of any obligation. Moreover, Introducer shall not make any
representations or warranties on behalf of STWA to any Designated
Prospects, it being understood that such representations and warranties
will be made by STWA only in the definitive financing documents.
Introducer represents and warrants that it will conduct all of its
activities hereunder in accordance with all applicable laws, including
laws relating to qualification and licensure of broker-dealers in the
several states of the United States.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.&nbsp;&nbsp;</TD>
    <TD><U>Term</U>. This letter agreement is effective as of the date hereof and
shall continue in effect for six months unless earlier terminated in writing by both
parties. Notwithstanding the previous sentence, the period during which Introducer
shall have the right to act exclusively on behalf of the Company in connection with a
capital raising transaction shall commence as of the date hereof and terminated on
November&nbsp;15, 2004, unless extended by mutual agreement of the parties.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.&nbsp;&nbsp;</TD>
    <TD><U>Termination</U>.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:6%; font-size: 10pt">(a)&nbsp;Upon the termination of this Agreement for any reason, Introducer&#146;s
entitlement to compensation from STWA shall immediately cease. Introducer
shall be entitled to receive compensation, to the extent that Designated
Prospect referrals made on or before the termination date consummate a
capital raising transaction, and STWA receives all capital to be received
under the terms of the definitive agreements within 12&nbsp;months of the date
of such termination.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.&nbsp;&nbsp;</TD>
    <TD><U>General Provisions</U>.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:6%; font-size: 10pt">(a) <U>Governing Law; Severability</U>. This Agreement shall be governed
by and under the laws of the State of New York without giving effect to
conflicts of law principles. If any provision hereof is found invalid or
unenforceable, that part shall be amended to achieve as nearly as possible
the same effect as the original provision and the remainder of this
Agreement shall remain in full force and effect.



<P align="left" style="margin-left:6%; font-size: 10pt">(b) <U>Construction</U>. The headings set forth in this Agreement are for
convenience only and shall not be used in interpreting the text of the
section in which they appear. The parties acknowledge that each party and
its counsel has reviewed and revised this Agreement and that the rule of
construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or schedules hereto, or any documents executed
in connection herewith. When necessary herein, all terms used in the
singular shall apply to the plural, and all terms used in the masculine or
feminine gender shall apply to the neuter.



<P align="left" style="margin-left:6%; font-size: 10pt">(c) <U>Disputes</U>. Any dispute arising under or in any way related to
this Agreement shall be submitted to binding arbitration by the American
Arbitration Association (the &#147;Association&#148;) in accordance with the
Association&#146;s commercial rules then in effect. The arbitration shall be
conducted only in New York, New York. The arbitration shall be binding on
the parties and the arbitration award may be confirmed by any court of
competent jurisdiction. In no event shall the demand for arbitration be
made after the date when institution of legal or equitable proceedings
based on such claim, dispute or other matter in question would be barred
by the applicable statute of limitations. In the event of any dispute
between the parties hereto, arising out of or relating to this Agreement
or the breach hereof, or the interpretation hereof, the prevailing party
shall be entitled to recover from the losing party reasonable expenses,
attorneys&#146; fees, and costs incurred in connection therewith or in the
enforcement or


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P align="left" style="margin-left:6%; font-size: 10pt">collection of any judgment or award rendered therein. The &#147;prevailing
party&#148; means the party determined by the arbitration proceeding to have
most nearly prevailed, even if such party did not prevail in all matters,
not necessarily the one in whose favor a judgment or award is rendered.
Further, in the event of any default by a party under this Agreement, such
defaulting party shall pay all the expenses and attorneys&#146; fees incurred
by the other party in connection with such default, whether or not any
arbitration is commenced.



<P align="left" style="margin-left:6%; font-size: 10pt">(d) <U>Confidential Information</U>. Introducer acknowledges that, in the
course of performing its duties under this Agreement, it may obtain
information relating to STWA that is not available to the public
(&#147;Confidential Information&#148;). As a condition to entering into this
Agreement, Introducer shall have executed the customary form of
Confidentiality or Non- Disclosure Agreement used by STWA and Introducer
further agrees to execute any amended or revised agreement that may
subsequently be adopted by STWA. In amplification of Introducer&#146;s duties
under such agreements Introducer agrees to hold at all times, both during
the term of this Agreement and at all times thereafter, such Confidential
Information in the strictest confidence, and shall not use such
Confidential Information for any purpose, other than as may be reasonably
necessary for the performance of its duties as an Introducer pursuant to
this Agreement, without STWA&#146;s prior written consent. Introducer shall not
disclose any Confidential Information to any person or entity (other than
employees, consultants and advisors of Introducer who are obligated to
protect the Confidential Information from disclosure or misuse and as to
whom Introducer shall be responsible to STWA for any such unauthorized
disclosure or use), without STWA&#146;s prior written consent. Notwithstanding
the above, the terms of this Agreement shall not alter, in any way, the
obligations of Introducer and STWA pursuant to any Confidentiality
Agreement or Non-Disclosure Agreement previously entered into between
Introducer and STWA. The terms of any such Confidentiality Agreement or
Non-Disclosure Agreement shall survive the termination of this Agreement.



<P align="left" style="margin-left:6%; font-size: 10pt">(e) <U>Entire Agreement</U>. This Agreement constitutes the entire
Agreement and final understanding of the parties with respect to the
subject matter hereof and supersedes all prior and/or contemporaneous
understandings and/or discussions between the parties, whether written or
verbal, express or implied, relating in any way to the subject matter
hereof including, but not limited any other arrangements between the
parties for contingency fees. This Agreement may not be altered, amended,
modified or otherwise changed in any way except by a written agreement,
signed by both parties.



<P align="left" style="margin-left:6%; font-size: 10pt">(f) <U>Notices</U>. Any notice or other communication pursuant hereto shall
be given to a party at the address below its signature hereto by (i)&nbsp;personal
delivery, (ii)&nbsp;commercial overnight delivery service with written
verification of receipt, or (iii)&nbsp;registered or certified mail. If so
mailed or delivered, a notice shall be deemed given on the earlier of the
date of actual receipt or three days after the date of transmission by
authorized means.


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><U>(g)</U>&nbsp;&nbsp;</TD>
    <TD><U>Nonassignability</U>. Neither this Agreement, nor any
rights, duties or interest herein, shall be assigned, transferred,
pledged, hypothecated or otherwise conveyed by either party without
the prior written consent of the other party. Any such attempted
conveyance in violation of this paragraph shall be void and shall
constitute a default entitling the other party to terminate this
Agreement.</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><U>(h)</U>&nbsp;&nbsp;</TD>
    <TD><U>Due Authority</U>. The signing officers of STWA and
Introducer represent and warrant to each other that they are
empowered to enter into, and to be legally bound by, this Agreement.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">IN WITNESS WHEREOF, STWA and Introducer have executed this Agreement as of<BR>
<B>July&nbsp;29, 2004.</B>


<P align="left" style="font-size: 10pt"><B>LONDON AUSSIE MARKETING LIMITED (&#147;INTRODUCER&#148;)</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>/s/ Mark Thornton</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>By: Mark Thornton</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Title: Director</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>SAVE THE WORLD AIR, INC. (&#147;STWA&#148;)</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Eugene E. Eichler</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>By:
&nbsp;&nbsp;&nbsp;Eugene E. Eichler</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Title: President, Treasurer,<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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</DIV>



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<TYPE>EX-10.28
<SEQUENCE>14
<FILENAME>v07538exv10w28.htm
<DESCRIPTION>EXHIBIT 10.28
<TEXT>
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<P align="right" style="font-size: 10pt">Exhibit 10.28

<P align="center" style="font-size: 10pt"><U><B>CONSULTING AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement (this &#147;Agreement&#148;), dated as of November&nbsp;19, 2004, between Save the World Air,
Inc., a Nevada corporation (the &#147;Company&#148;), and London Aussie Marketing, Ltd. (the &#147;Consultant&#148;).


<P align="center" style="font-size: 10pt"><U>RECITALS</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company is in the business, among other things, of supplying the goods described
on Exhibit&nbsp;A attached hereto (the &#147;Goods&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Consultant has provided services to the Company including the introduction of the
Company to a strategic partner (the &#147;Strategic Partner&#148;);


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company and Consultant desire to enter into a relationship whereby Consultant
will provide services to the Company on the terms and conditions set forth herein.


<P align="center" style="font-size: 10pt"><U>AGREEMENT</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW THEREFORE, the parties hereto, intending to be legally bound, agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Scope of Services to Be Provided</U>. Consultant shall provide to the
Company, on an as needed basis, assistance, advice and support relating to the Company&#146;s business,
as the Company may request from time to time. Without limiting the generality of the foregoing,
Consultant shall:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Shall undertake and perform the following tasks and such additional or other
responsibilities as may be reasonably assigned to Consultant from time to time by the Company&#146;s
Chief Executive Officer, Chief Operating Officer, or Director of Research and Development:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Managing the Company&#146;s relationship with the Strategic Partner, including
management services already provided by Consultant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;Assisting the Strategic Partner in soliciting orders for, and generating
contracts with respect to, the Products, including assistance already provided by Consultant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Assist in the preparation of regular monthly reports to the Company on the efforts
expended and undertaken on each project assigned to or undertaken by Consultant.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Term</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;This Agreement shall continue in full force for a period of <U> 7</U>, years unless
earlier terminated in accordance with this Section&nbsp;2 or Section&nbsp;6. The obligations of Consultant
upon the termination of this Agreement for any reason are described in Section&nbsp;7.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;This Agreement shall be automatically renewed for successive one-year


<P align="center" style="font-size: 10pt">1
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<P align="left" style="font-size: 10pt">terms unless either
party provides written notice of its election not to renew this Agreement at least 60&nbsp;days prior to
the expiration of the then current term, in which case the Agreement shall terminate upon
expiration of such term.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Compensation of Consultant</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Royalties</U>. In full consideration of all rights granted herein and all services
performed and to be performed hereunder, the Company will pay to Consultant royalties from revenues
derived from contracts with customers generated by the Strategic Partner, provided that the
Strategic Partner was instrumental in generation of such contracts, subject to the Company&#146;s
acceptance of the Strategic Partner and entry into a binding joint venture, strategic alliance or
similar agreement of Strategic Partner, as follows.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Consultant shall be paid a royalty equal to 1.25% of Gross Receipts (as defined
below) from revenues derived from contracts generated by the Strategic Partner.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&#147;Gross Receipts&#148; shall mean 100% of all sums received by or credited to the
Company and its affiliates from unrelated third parties from revenues that are derived from
contracts generated by the Strategic Partner and that originate from the country in
which such contract is located. Gross Receipts shall be deemed to exclude sums received by
the Company and/or its affiliates which represent sales taxes, value added taxes, excise taxes, and
similar taxes which are collected by the Company and its affiliates as required by any requisite
taxing authorities of any government, but limited to the extent that such taxes are paid and not
returned or credited to the Company or an affiliate. Gross Receipts shall also be deemed to
exclude foreign currencies to the extent any foreign licensing society or organization collects or
withholds any portion thereof on behalf of or for the benefit of the Company. With respect to
foreign currencies received by the Company and its affiliates in connection herewith, it is agreed
and understood that such sums received shall be included in Gross Receipts hereunder, whether or
not such sums have been received in U.S. dollars in the United States, and whether or not such sums
which are capable of being remitted to the United States have yet been remitted. Gross Receipts
are not subject to retroactive adjustments for returns, refunds, credits, settlements, rebates and
discounts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;Royalties shall be payable pursuant to this Section 8(a) during the period
beginning on the date of this Agreement and ending on the date occurring ten years thereafter.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;All amounts payable to Consultant pursuant to this Section 8(a) shall be paid
by the Company no later than 30&nbsp;days after the end of each calendar quarter in respect of the
applicable Gross Receipts amounts actually received by the Company in such quarter. A statement of
account prepared by the Company shall accompany each such payment to Consultant.


<P align="center" style="font-size: 10pt">2
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Warrants</U>. Subject to compliance with applicable securities laws, the Company shall
issue to Mark Thornton, an individual, warrants to purchase shares of common stock of the Company
as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Warrants to purchase 50,000 shares of common stock of the Company issuable upon
the date hereof in exchange for the Consultant&#146;s introduction of the Strategic Partner to the
Company. Such warrants shall have a term of five years and have an exercise price of $1.00 per
share.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;Warrants to purchase 450,000 shares of common stock of the Company, subject to
and issuable upon the Company making a formal public announcement that it has entered into a
binding joint venture, strategic alliance or similar agreement with the Strategic Partner. Such
warrants shall have a term of five years and have an exercise price of $1.00 per share. Shares
shall be in the name of London Ausie Marketing Ltd.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Form&nbsp;S-8 Registration</U>. The Company agrees to file with the Securities and
Exchange Commission as soon as practicable a registration statement on Form S-8 (or other available
form) registering the resale of the shares of common stock issuable upon exercise of the warrants
to be issued pursuant to Section&nbsp;3(b).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Nondisclosure</U>. Without the express prior written consent of the Company,
Consultant shall not reveal to any third party any information of the Company that is identified by
the Company as being of a confidential or proprietary nature (the &#147;Confidential Information&#148;).
Confidential Information may be used by Consultant only with respect to performance of its
obligations under this Agreement, and only by those employees of Consultant who have a need to know
such information for the purposes related to this Agreement. Consultant shall protect the
Confidential Information by using the same degree of care (but no less than a reasonable degree of
care) to prevent the unauthorized use, dissemination or publication of such Confidential
Information that the Company uses. Consultant&#146;s obligation with respect to any Confidential
Information under this Section&nbsp;5 shall continue after and survive the termination of this
Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>No Servicing by Consultant</U>. It is understood by Consultant that it is
not authorized by this Agreement to perform servicing of any kind upon any Goods in the Territory
or elsewhere, absent the express prior written approval of the Company.


<P align="center" style="font-size: 10pt">3
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Termination</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company shall have the right to terminate this Agreement effective immediately by
written notice to Consultant if:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Consultant engages in any conduct which threatens injury to the good name and
reputation of the Company;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;the Company has reasonable grounds to believe that Consultant will be unable,
whether because of financial difficulty or otherwise, to fulfill satisfactorily its obligations
under this Agreement;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;Consultant fails to conduct its business in accordance with all applicable
laws or regulations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Either party to this Agreement may terminate this Agreement effectively immediately upon
written notice if the other party becomes insolvent, discontinues its business, has a receiver
appointed for it, any petition is filed by or against it in accordance with the bankruptcy laws, or
any assignment is made by it for the benefit of creditors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;In the event either party to this Agreement shall fail to perform or fulfill any of its
responsibilities as set forth herein, the other party may notify such defaulting party of the
matter in breach and if such matter is not cured within 30&nbsp;days after receipt of such notice the
complaining party may by further written notice immediately terminate this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Either party may terminate this Agreement in its sole discretion by giving to the other
party no less than 90&nbsp;days written notice thereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Effect of Termination</U>. Consultant shall immediately upon termination
return to the Company all Confidential Information within its possession, including any documents
of a confidential or proprietary nature concerning the Goods which it has in its possession and all
forms, brochures and samples pertaining to the Goods. Any and all amounts due to Consultant
pursuant to this Agreement in respect of orders that were placed prior to the date of termination
shall be paid to Consultant pursuant to the manner described in Section&nbsp;8.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Applicable Law</U>. This Agreement shall be construed in accordance with,
and shall be governed by, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Counterparts</U>. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Amendments</U>. The provisions of this Agreement may be waived, altered,
amended or repealed in whole or in part only on the written consent of all the parties to this
Agreement.



<P align="center" style="font-size: 10pt">4
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Notice</U>. All notices, demands, and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (i)&nbsp;on the date of delivery if
delivered in person to the party to whom such notice is given, (ii)&nbsp;on the date such notice is
posted by mail, postage prepaid, registered mail, properly addressed to the party receiving such
notice, or (iii)&nbsp;upon the date of telex transmission, if by telex. Any notices hereunder shall be
sent to the following addresses and telex numbers or such other addresses or telex numbers as may
be designated by a party in writing from time to time in accordance with the procedure stated
herein:

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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If to the Company:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Save the World Air, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">5125 Lankershim Boulevard</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">North Hollywood, CA 91601</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile: 818-487-8003</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Eugene Eichler</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If to Consultant:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">London Aussie Marketing, Ltd.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2053 8th Avenue #2C</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">New York, NY 10026</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telephone: 212-222-0440</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Mark Thornton</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Divisibility</U>. If any of the terms, provisions, covenants or conditions
of this Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the provisions shall remain in full effect and shall in no way be
affected, impaired or invalidated.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Final Agreement of the Parties</U>. This Agreement supersedes and
terminates any and all prior agreements or contracts, written or oral, entered into between the
parties hereto with respect to the subject matter hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Assignment</U>. This Agreement may not be assigned by Consultant, in whole
or in part, to any other party without the express written consent of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Headings</U>. The Section headings in this Agreement are for convenience of
reference only and shall have no bearing on the enforcement or interpretation of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Waiver</U>. No waiver, forbearance or failure by either party of its rights
to enforce any provision of this Agreement shall constitute a waiver or estoppel of such party&#146;s
right to enforce such provision thereafter or to enforce any other provision of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Jurisdiction</U>. The parties hereby unconditionally and irrevocably agree
that the state and federal courts of California and any California or federal court competent to
hear appeals therefrom shall have the exclusive jurisdiction over any and all actions arising out
of or


<P align="center" style="font-size: 10pt">5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">in relation to this Agreement, or for the breach hereof.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;<U>Relationship of the Parties</U>. Consultant is not an employee of the
Company for any purpose whatsoever, but is an independent contractor. The parties, by this
Agreement, have not entered into any form of joint venture or any other mutual enterprise, other
than the rendering by Consultant of the services for the Company in accordance with the terms
hereof. All expenses and disbursements, including, but not limited to, those for travel and
maintenance, entertainment, office, clerical, and general selling expenses, that may be incurred by
Consultant in connection with this Agreement shall be born wholly and completely by Consultant, and
the Company shall not be in any way responsible or liable therefore. Consultant does not have, nor
shall it hold itself out as having, any right, power, or authority to create any contract or
obligation, either expressed or implied, on behalf, in the name of, or binding upon the Company.
Any and all agents and employees of Consultant shall be at Consultant&#146;s own risk, expense and
supervision, and the agents and employees of Consultant shall not have any claim against the
Company for salaries, commissions, items of cost, or any other form of compensation. Consultant
shall indemnify and hold the Company harmless from any cost and liability caused by any
unauthorized act of Consultant, its agents or employees.


<P align="center" style="font-size: 10pt">&#091;remainder of page intentionally left blank&#093;



<P align="center" style="font-size: 10pt">6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first written
above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">&#147;Company&#148;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">SAVE THE WORLD AIR, INC.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Eugene Eichler</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name: Eugene E. Eichler</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: President and Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">&#147;Consultant&#148;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">LONDON AUSSIE MARKETING, LTD.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Mark Thornton</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="1" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">7
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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><U><B>Exhibit&nbsp;A</B></U>



<P align="center" style="font-size: 10pt"><U>Description of the Goods</U>



<P align="left" style="font-size: 10pt">1. ZEFS devices



<P align="left" style="font-size: 10pt">2. CAT-MATE devices




<P align="center" style="font-size: 10pt">A-1
</DIV>

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<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>15
<FILENAME>v07538exv10w29.htm
<DESCRIPTION>EXHIBIT 10.29
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w29</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="right" style="font-size: 10pt">Exhibit 10.29



<P align="center" style="font-size: 10pt"><B>EMPLOYMENT AGREEMENT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AGREEMENT made as of the 1st day of September&nbsp;2004 by and between SAVE THE WORLD AIR, INC.
(&#147;STWA&#148;), a Nevada chartered corporation, and Erin Brockovich (the &#147;Executive&#148;).


<P align="left" style="font-size: 10pt"><U><B>BACKGROUND</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;STWA desires to employ the Executive and the Executive is willing to serve on the terms and
conditions herein provided.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;In order to effect the foregoing, the parties hereto desire to enter into an employment
agreement on the terms and conditions set forth below.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the premises and the respective covenants and agreements
of the parties contained herein, and intending to be legally bound hereby, the parties hereto agree
as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U><B>Definitions and Special Provisions</B></U> Each capitalized word and term used herein
shall have the meaning ascribed to it in the glossary appended hereto, unless the context in which
such word or term is used otherwise clearly requires further definition. Such glossary is
incorporated herein by reference and made a part hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U><B>Employment</B></U>. STWA hereby agrees to employ the Executive, and the Executive hereby
agrees to serve STWA, on the terms and conditions set forth herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U><B>Term of Agreement</B></U> The Executive&#146;s employment under this Agreement shall commence on
the date hereof and, except as otherwise provided herein, shall continue until July&nbsp;31, 2005;
provided, however, that commencing on July&nbsp;31, 2005 and each anniversary thereafter, the term of
this Agreement shall automatically be extended for one additional year beyond the term otherwise
established unless, prior to such date, STWA or the Executive shall have given a Notice of
Non-Extension.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U><B>Position and Duties</B></U> The Executive shall serve as Vice President of Environmental
Affairs of STWA and she shall have such responsibilities, duties and authority as may, from time to
time, be generally associated with such position and or as specifically detailed in the company&#146;s
official &#147;Position Description.&#148; In addition, the Executive shall serve in such capacity, with
respect to each Subsidiary or affiliated company, as the Board of Directors of each such Subsidiary
or affiliated company shall designate from time to time. During the term of this Agreement, she
shall devote such working time and efforts to the business and affairs of STWA, it&#146;s Subsidiaries
and affiliated companies as directed from time to time by her supervising officer. Not
withstanding, nothing herein shall be construed as precluding her from devoting a reasonable amount
of time to her other business activities with Masry &#038; Vititoe and Erin Brockovich, Inc. provided
they do not represent conflicts with her assigned responsibilities in this section and are not
otherwise in any way detrimental to STWA.


<P align="right" style="font-size: 10pt">&nbsp; 1



<P align="center" style="font-size: 10pt">&nbsp;
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<DIV style="font-family: 'Times New Roman',Times,serif">





<P align="left" style="margin-left:6%; font-size: 10pt">5. <U><B>Compensation and Related Matters.</B></U>



<P align="left" style="margin-left:6%; font-size: 10pt"><U><B>Base Compensation</B></U>. During the period of the Executive&#146;s employment hereunder,
STWA shall pay to her annual base compensation of not less than $60,000.00;



<P align="left" style="margin-left:6%; font-size: 10pt">The Board(s) of Directors of STWA shall periodically review the Executive&#146;s employment
performance, in accordance with policies generally in effect from time to time, for
possible merit or cost-of-living increases in such base compensation. Except for a
reduction, should such reduction occur, which is proportionate to a company-wide
reduction in executive pay, the annual base compensation paid to the Executive in any
period shall not be less than the annual base compensation paid to her in any prior
period. The frequency and manner of payment of such base compensation shall be in
accordance with STWA&#146;s executive payroll practices from time to time in effect



<P align="left" style="margin-left:6%; font-size: 10pt"><U><B>Incentive Compensation</B></U>. During the period of the Executive&#146;s employment
hereunder, she shall be eligible to participate in certain incentive plans, stock
option plans, and similar arrangements in accordance with her supervisor&#146;s
recommendation at award levels consistent and commensurate with her position and
duties hereunder.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>Employee Benefit Plans and Other Plans or Arrangements </B></U> The
Executive shall be entitled to participate in all Employee Benefit Plans of STWA that
either, are in effect at present or that may be adopted in the future. In addition,
she shall be entitled to participate in and enjoy any other plans and arrangements
which provide for sick leave, vacation, or personal days, provided to or for the
officers of STWA from time to time. Notwithstanding the foregoing, Executive shall be
entitled to at least four (4)&nbsp;weeks vacation per calendar year during each year of
employment. Such vacation shall be prorated during the year 2004 based on the date of
this Agreement.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Expenses</B></U>. During the period of the Executive&#146;s employment hereunder,
she shall be entitled to receive prompt reimbursement for all reasonable and customary
expenses, including transportation expenses, incurred by her in performing services
hereunder in accordance with the general policies and procedures established by STWA.
Not withstanding, such expenses require the Executive&#146;s supervisor approval prior to
their expenditures.



<P align="left" style="margin-left:6%; font-size: 10pt">6. <U><B>Termination By Reason of Disability</B></U>



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>In General</B></U>. In the event the Executive becomes unable to perform her
duties on a basis as required by reason of the occurrence of her Disability and,
within 30&nbsp;days after a Notice of Termination is given, she shall not have returned to
perform such duties, her employment may be terminated by STWA.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Compensation </B></U>During any period of disability during which Executive
is unable to perform the services required of Executive hereunder and remains
employed, her salary hereunder shall be payable only to the extent of, and subject to,
Employer&#146;s policies and practices then in effect with regard to sick leave and
disability benefits.


<P align="right" style="font-size: 10pt">&nbsp; 2



<P align="center" style="font-size: 10pt">&nbsp;
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<DIV style="font-family: 'Times New Roman',Times,serif">





<P align="left" style="margin-left:6%; font-size: 10pt">7. <U><B>Termination By STWA for Cause</B></U>



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>In General</B></U>. STWA may terminate Executive&#146;s employment for gross
negligence, conviction of a felony or any other conviction reflecting dishonesty, or
breach of this Agreement, and in any such event, all obligations of Employer hereunder
shall immediately terminate.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Compensation</B></U>. Within 30&nbsp;days after the Executive&#146;s termination under
Subparagraph (a), STWA shall pay her, in one lump sum, her accrued but unpaid base
compensation and vacation compensation earned through the Date of Termination.



<P align="left" style="margin-left:6%; font-size: 10pt">8. <U><B>Termination By STWA Without Disability or Cause</B></U>



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>In General</B></U>. In the event STWA intends to terminate the Executive&#146;s
employment for any reason other than Disability or Cause, it shall deliver a Notice of
Termination to her which specifies a Date of Termination not less than 30&nbsp;days
following the date of such notice.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Compensation and Benefits During Remaining Term of Agreement</B></U>. In the
event of the termination of the Executive&#146;s employment under Subparagraph (a), STWA
shall pay or provide the compensation and benefits described in Paragraph&nbsp;6(b), except
that all such compensation and benefits shall be for the remaining term of this
Agreement determined in accordance with Section&nbsp;3 hereof, unless a change in control
has occurred prior to such termination of employment, in which case all such
compensation and benefits shall be for a term of one (1)&nbsp;year from the Date of
Termination and the term of this Agreement shall continue until all such compensation
and benefits are paid to Executive in full.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U><B>Death During Remaining Term of Agreement </B></U>In the event of Executive&#146;s
death during the term of his employment, this Agreement shall terminate and Employer
shall only be obligated to pay Executive&#146;s estate or legal representative accrued
salary and benefits to the extent earned by Executive prior to her death.



<P align="left" style="margin-left:6%; font-size: 10pt">9. <U><B>Termination By the Executive </B></U>



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>In General</B></U>. In the event the Executive intends to terminate her
employment, she shall deliver a Notice of Termination to STWA which specifies a Date
of Termination not less than 30&nbsp;days following the date of such notice.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Compensation </B></U>Within 30&nbsp;days after the Executive&#146;s termination under
Subparagraph (a), STWA shall pay her, in one lump sum, her accrued but unpaid base
compensation and vacation compensation earned through the Date of Termination.



<P align="left" style="margin-left:6%; font-size: 10pt">10. <U><B>Withholding Taxes</B></U>. All compensation and benefits provided for herein
shall, to the extent required by law, be subject to federal, state, and local tax
withholding.



<P align="left" style="margin-left:6%; font-size: 10pt">11. <U><B>Confidential Information</B></U>. The Executive agrees that subsequent to her
employment with STWA, she will not, at any time, communicate or disclose to any
unauthorized person,


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<P align="left" style="margin-left:6%; font-size: 10pt">without the written consent of the STWA, any proprietary or other confidential
information concerning STWA or any Subsidiary of STWA; provided, however, that the
obligations under this paragraph shall not apply to the extent that such matters (i)
are disclosed in circumstances where the Executive is legally obligated to do so, or
(ii)&nbsp;become generally known to and available for use by the public otherwise than by
her wrongful act or omission; and provided further, that she may disclose any
knowledge of insurance, financial, legal and economic principles, concepts and ideas
which are not solely and exclusively derived from the business plans and activities of
STWA.



<P align="left" style="margin-left:6%; font-size: 10pt">12. <U><B>Covenants Not to Compete or to Solicit</B></U>.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><B>Noncompetition</B></U>. During the period in which she is employed by STWA
and, if the Executive&#146;s employment terminates under Paragraphs 6, for a period of 12
months after the Date of Termination (the &#147;Noncompetition Period&#148;), the Executive
shall not, without the written consent in writing of the Board of Directors of STWA,
become an executive officer, partner, consultant, director, or a four and nine-tenths
percent or greater shareholder or equity owner of any entity engaged in any similar
activity as STWA it&#146;s Subsidiaries and affiliated companies. If at the time of the
enforcement of this paragraph a court holds that the duration, scope, or area
restrictions stated herein are unreasonable under the circumstances then existing and,
thus, unenforceable, STWA and the Executive agree that the maximum duration, scope, or
area reasonable under such circumstances shall be substituted for the stated duration,
scope, or area.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><B>Nonsolicitation</B></U>. During her employment and the Noncompetition
Period, the Executive shall not, whether on her own behalf or on behalf of any other
individual or business entity, solicit, endeavor to entice away from STWA, a
Subsidiary or any affiliated company, or otherwise interfere with the relationship of
STWA, a Subsidiary or any affiliated company with any person who is, or was within the
then most recent 12&nbsp;month period, an employee or associate thereof; provided, however,
that this subparagraph shall not apply following the occurrence of a Change in
Control.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U><B>Extension of Noncompetition Period</B></U> The Non-Competition Period shall
be automatically extended by the length of time (if any) in which the Executive is in
violation of any of the terms of this Section&nbsp;19.



<P align="left" style="margin-left:6%; font-size: 10pt">13. <U><B>Arbitration</B></U>. To the extent permitted by applicable law, any controversy
or dispute arising out of or relating to this Agreement, or any alleged breach hereof,
shall be settled by arbitration in Los Angeles, California in accordance with the
commercial rules of the American Arbitration Association then in existence (to the
extent such rules are not inconsistent with the provisions of this Agreement), it
being understood and agreed that the arbitration panel shall consist of three
individuals acceptable to the parties hereto. In the event that the parties cannot
agree on three arbitrators within 20&nbsp;days following receipt by one party of a demand
for arbitration from another party, then the Executive and STWA shall each designate
one arbitrator and the two arbitrators selected shall select the third arbitrator.
The arbitration panel so selected shall convene a hearing no later than 90&nbsp;days
following the selection of the panel. The arbitration award shall be final and
binding upon the parties, and judgment may be entered thereon in the California
Superior Court or in any other court of competent jurisdiction.


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<P align="left" style="margin-left:6%; font-size: 10pt">14. <U><B>Additional Equitable Remedy</B></U> The Executive acknowledges and agrees that
STWA&#146;s remedy at law for a breach or a threatened breach of the provisions of
Paragraphs 18 and 19 would be inadequate; and, in recognition of this fact and
notwithstanding the provisions of Paragraph&nbsp;20, in the event of such a breach or
threatened breach by her, it is agreed that STWA shall be entitled to request
equitable relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction, or any other equitable remedy which may then be
available. Nothing in this paragraph shall be construed as prohibiting STWA from
pursuing any other remedy available under this Agreement for such a breach or
threatened breach.



<P align="left" style="margin-left:6%; font-size: 10pt">15. <U><B>Related Agreements</B></U>. Except as may otherwise be provided herein, to the
extent that any provision of any other agreement between STWA and the Executive shall
limit, qualify, duplicate, or be inconsistent with any provision of this Agreement,
the provision in this Agreement shall control and such provision of such other
agreement shall be deemed to have been superseded, and to be of no force or effect, as
if such other agreement had been formally amended to the extent necessary to
accomplish such purpose.



<P align="left" style="margin-left:6%; font-size: 10pt">16. <U><B>No Effect on Other Rights</B></U>. Except as otherwise specifically provided
herein, nothing contained in this Agreement shall be construed as adversely affecting
any rights the Executive may have under any agreement, plan, policy or arrangement to
the extent any such right is not inconsistent with the provisions hereof.



<P align="left" style="margin-left:6%; font-size: 10pt">17. <U><B>Exclusive Rights and Remedy</B></U>. Except for any explicit rights and remedies
the Executive may have under any other contract, plan or arrangement with STWA, the
compensation and benefits payable hereunder and the remedy for enforcement thereof
shall constitute her exclusive rights and remedy in the event of her termination of
employment.



<P align="left" style="margin-left:6%; font-size: 10pt">18. <U><B>Notices</B></U>. Any notice required or permitted under this Agreement shall be
sufficient if it is in writing and shall be deemed given (i)&nbsp;at the time of personal
delivery to the addressee, or (ii)&nbsp;at the time sent certified mail, with return
receipt requested, addressed as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If to the Executive:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Erin Elizabeth Brockovich</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">29365 Castlehill Drive</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agoura Hills, CA 91301</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If to STWA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">5125 Lankersham Boulevard</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">North Hollywood, CA 91601</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: Chairman of the Board of Directors</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">The name or address of any addressee may be changed at any time and from time to time by notice
similarly given.



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<P align="left" style="margin-left:6%; font-size: 10pt">19. <U><B>No Waiver</B></U>. The failure by any party to this Agreement at any time or
times hereafter to require strict performance by any other party of any of the
provisions, terms, or conditions contained in this Agreement shall not waive, affect,
or diminish any right of the first party at any time or times thereafter to demand
strict performance therewith and with any other provision, term, or condition
contained in this Agreement. Any actual waiver of a provision, term, or condition
contained in this Agreement shall not constitute a waiver of any other provision,
term, or condition herein, whether prior or subsequent to such actual waiver and
whether of the same or a different type. The failure of STWA to promptly terminate
the Executive&#146;s employment for Cause or the Executive to promptly terminate her
employment for Good Reason shall not be construed as a waiver of the right of
termination, and such right may be exercised at any time following the occurrence of
the event giving rise to such right.



<P align="left" style="margin-left:6%; font-size: 10pt">20. <U><B>Survival</B></U>. Notwithstanding the nominal termination of this Agreement and
the Executive&#146;s employment hereunder, the provisions hereof which specify continuing
obligations, compensation and benefits, and rights (including the otherwise applicable
term hereof) shall remain in effect until such time as all such obligations are
discharged, all such compensation and benefits are received, and no party or
beneficiary has any remaining actual or contingent rights hereunder.



<P align="left" style="margin-left:6%; font-size: 10pt">21. <U><B>Severability</B></U>. In the event any provision in this Agreement shall be held
illegal or invalid for any reason, such illegal or invalid provision shall not affect
the remaining provisions hereof, and this Agreement shall be construed, administered
and enforced as though such illegal or invalid provision were not contained herein.



<P align="left" style="margin-left:6%; font-size: 10pt">22. <U><B>Binding Effect and Benefit</B></U>. The provisions of this Agreement shall be
binding upon and shall inure to the benefit of the successors and assigns of STWA and
the executors, personal representatives, surviving spouse, heirs, devisees, and
legatees of the Executive.



<P align="left" style="margin-left:6%; font-size: 10pt">23. <U><B>Entire Agreement</B></U>. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and it supersedes all prior
discussions and oral understandings of the parties with respect thereto.



<P align="left" style="margin-left:6%; font-size: 10pt">24. <U><B>No Assignment</B></U>. This Agreement, and the benefits and obligations
hereunder, shall not be assignable by any party hereto except by operation of law.



<P align="left" style="margin-left:6%; font-size: 10pt">25. <U><B>No Attachment</B></U>. Except as otherwise provided by law, no right to receive
compensation or benefits under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation, or to set off, execution, attachment, levy, or similar process, and any
attempt, voluntary or involuntary, to effect any such action shall be null and void.



<P align="left" style="margin-left:6%; font-size: 10pt">26. <U><B>Captions</B></U>. The captions of the several paragraphs and subparagraphs of
this Agreement have been inserted for convenience of reference only. They constitute
no part of this Agreement and are not to be considered in the construction hereof.



<P align="left" style="margin-left:6%; font-size: 10pt">27. <U><B>Counterparts</B></U>. This Agreement may be executed in any number of
counterparts, each of which shall be deemed one and the same instrument which may be
sufficiently evidenced by any one counterpart.


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<P align="left" style="margin-left:6%; font-size: 10pt">28. <U><B>Number</B></U>. Wherever any words are used herein in the singular form, they
shall be construed as though they were used in the plural form, as the context
requires, and vice versa.



<P align="left" style="margin-left:6%; font-size: 10pt">29. <U><B>Applicable Law</B></U>. Except to the extent preempted by federal law, the
provisions of this Agreement shall be construed, administered, and enforced in
accordance with the domestic internal law of the State of California without reference
to its laws regarding conflict of laws.



<P align="left" style="margin-left:6%; font-size: 10pt">IN WITNESS WHEREOF, the parties have executed this Agreement, or caused it to be
executed, as of the date first above written.

<P>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
</TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ ERIN E. BROCKOVICH&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Erin Elizabeth Brockovich</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">SAVE THE WORLD AIR, INC.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EUGENE E. EICHLER&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E Eichler, President</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attest:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Janice Holder<BR>
Corporate Secretary</TD>
</TR>
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</TABLE>
</DIV>


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<P align="left" style="font-size: 10pt"><B>GLOSSARY</B>




<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Board of Directors&#148; </B>means the board of directors of the relevant corporation.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Cause&#148; </B>means (i)&nbsp;a documented repeated and willful failure by the Executive to
perform her duties, but only after written demand and only if termination is effected
by action taken by a vote of (A)&nbsp;prior to a Change in Control, at least a majority of
the directors of STWA then in office, or (B)&nbsp;after a Change in Control, at least 80%
of the non-officer directors of STWA then in office, (ii)&nbsp;her final conviction of a
felony, (iii)&nbsp;conduct by her which constitutes moral turpitude which is directly and
materially injurious to STWA or any Material Subsidiary, (iv)&nbsp;willful material
violation of corporate policy, or (v)&nbsp;the issuance by the regulator of STWA or any
Subsidiary or affiliated company of an unappealable order to the effect that she be
permanently discharged.



<P align="left" style="margin-left:6%; font-size: 10pt">For purposes of this definition, no act or failure to act on the part of the Executive
shall be considered &#147;willful&#148; unless done or omitted not in good faith and without
reasonable belief that the action or omission was in the best interest of STWA or any
of its Subsidiaries or affiliated companies.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Change in Control&#148; means </B>the occurrence of any of the following events:



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any Person (except (i)&nbsp;STWA or any Subsidiary or prior affiliate of STWA, or
(ii)&nbsp;any Employee Benefit Plan (or any trust forming a part thereof) maintained by
STWA or any Subsidiary or prior affiliate of STWA) is or becomes the beneficial owner,
directly or indirectly, of STWA&#146;s securities representing 19.9% or more of the
combined voting power of STWA&#146;s then outstanding securities, or 50.1% or more of the
combined voting power of a Material Subsidiary&#146;s then outstanding securities, other
than pursuant to a transaction described in Clause (c);



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) there occurs a sale, exchange, transfer or other disposition of substantially
all of the assets of STWA or a Material Subsidiary to another entity, except to an
entity controlled directly or indirectly by STWA;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) there occurs a merger, consolidation, share exchange, division or other
reorganization of or relating to STWA, unless&#151;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the shareholders of STWA immediately before such merger, consolidation, share
exchange, division or reorganization own, directly or indirectly, immediately
thereafter at least two-thirds of the combined voting power of the outstanding voting
securities of the Surviving Company in substantially the same proportion as their
ownership of the voting securities immediately before such merger, consolidation,
share exchange, division or reorganization; and



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the individuals who, immediately before such merger, consolidation, share
exchange, division or reorganization, are members of the Incumbent Board continue to
constitute at least two-thirds of the board of directors of the Surviving Company;
provided, however, that if the election, or nomination for election by STWA&#146;s
shareholders, of any new director was approved by a vote of at least two-thirds of the
Incumbent Board, such director


<P align="center" style="font-size: 10pt">G-8



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<P align="left" style="margin-left:6%; font-size: 10pt">shall, for the purposes hereof, be considered a member of the Incumbent Board;
and provided further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of either an
actual or threatened Election Contest or Proxy Contest, including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest; and



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) no Person (except (A)&nbsp;STWA or any Subsidiary or prior affiliate of STWA,
(B)&nbsp;any Employee Benefit Plan (or any trust forming a part thereof) maintained by STWA
or any Subsidiary or prior affiliate of STWA, or (C)&nbsp;the Surviving Company or any
Subsidiary or prior affiliate of the Surviving Company) has beneficial ownership of
19.9% or more of the combined voting power of the Surviving Company&#146;s outstanding
voting securities immediately following such merger, consolidation, share exchange,
division or reorganization;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) a plan of liquidation or dissolution of STWA, other than pursuant to
bankruptcy or insolvency laws, is adopted; or



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) during any period of two consecutive years, individuals who, at the beginning
of such period, constituted the Board of Directors of STWA cease for any reason to
constitute at least a majority of such Board of Directors, unless the election, or the
nomination for election by STWA&#146;s shareholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were directors
at the beginning of the period; provided, however, that no individual shall be
considered a member of the Board of Directors of STWA at the beginning of such period
if such individual initially assumed office as a result of either an actual or
threatened Election Contest or Proxy Contest, including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest.



<P align="left" style="margin-left:6%; font-size: 10pt">Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred if a Person becomes the beneficial owner, directly or indirectly, of
securities representing 19.9% or more of the combined voting power of STWA&#146;s then
outstanding securities solely as a result of an acquisition by STWA of its voting
securities which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person; provided, however,
that if a Person becomes a beneficial owner of 19.9% or more of the combined voting
power of STWA&#146;s then outstanding securities by reason of share repurchases by STWA and
thereafter becomes the beneficial owner, directly or indirectly, of any additional
voting securities of STWA, then a Change in Control shall be deemed to have occurred
with respect to such Person under Clause (a).



<P align="left" style="margin-left:6%; font-size: 10pt">Notwithstanding anything contained herein to the contrary, if the Executive&#146;s
employment is terminated and she reasonably demonstrates that such termination (i)&nbsp;was
at the request of a third party who has indicated an intention of taking steps
reasonably calculated to effect a Change in Control and who effects a Change in
Control, or (ii)&nbsp;otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes hereof, a Change in
Control shall be deemed to have occurred on the day immediately prior to the date of
such termination of her employment.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;STWA&#148; </B>means Save The World Air, Inc.


<P align="center" style="font-size: 10pt">G-9



<P align="center" style="font-size: 10pt">&nbsp;
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<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Date of Termination&#148; </B>means:



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) if the Executive&#146;s employment is terminated for Disability, 30&nbsp;days after the
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period);



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if the Executive&#146;s employment terminates by reason of her death, the date
of her death;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) if the Executive&#146;s employment is terminated by STWA for Cause, the date of
termination specified in the Notice of Termination and determined in accordance with
Section&nbsp;8(a);



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) if the Executive&#146;s employment is terminated by her without Good Reason, the
date of termination specified in the Notice of Termination and determined in
accordance with Section&nbsp;9(a);



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) if the Executive&#146;s employment is terminated by STWA for any reason other than
for Disability or Cause, the date specified in the Notice of Termination and
determined in accordance with Section&nbsp;10(a); or



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) if the Executive&#146;s employment is terminated by her for Good Reason, the
termination date specified in the Notice of Termination and determined in accordance
with Section&nbsp;11(a);



<P align="left" style="margin-left:6%; font-size: 10pt">provided, however that the Date of Termination shall mean the actual date of
termination in the event the parties mutually agree to a date other than that
described above.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Defined Benefit Plan&#148; </B>has the meaning ascribed to such term in Section&nbsp;3(35) of ERISA.



<P align="left" style="margin-left:6%; font-size: 10pt">.<B>&#147;Disability&#148; </B>has the meaning ascribed to the term &#147;permanent and total disability&#148; in
Section&nbsp;22(e)(3) of the IRC.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Employee Benefit Plan&#148; </B>has the meaning ascribed to such term in Section&nbsp;3(3) of ERISA.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;ERISA&#148; </B>means the Employee Retirement Income Security Act of 1974, as amended and as
the same may be amended from time to time.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Excise Tax&#148; </B>means the tax imposed by Section&nbsp;4999 of the IRC (or any similar tax that
may hereafter be imposed by federal, state or local law).



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Executive&#148; </B>means NAME OF EXECUTIVE, an individual residing in ADDRESS, California.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Incumbent Board&#148; </B>means the Board of Directors of STWA as constituted at any relevant
time.


<P align="center" style="font-size: 10pt">G-10



<P align="center" style="font-size: 10pt">&nbsp;
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<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;IRC&#148; </B>means the Internal Revenue Code of 1986, as amended and as the same may be
amended from time to time.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Notice of Non-Extension&#148; </B>means a written notice delivered to or by the Executive
which advises that the Agreement will not be extended as provided in Paragraph&nbsp;3.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Notice of Termination&#148; </B>means a written notice that (i)&nbsp;indicates the specific
termination provision in this Agreement relied upon, (ii)&nbsp;sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the
Executive&#146;s employment under the provision so indicated, and (iii)&nbsp;gives the required
advance notice of termination.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Person&#148; </B>has the same meaning as such term has for purposes of Sections 13(d) and
14(d) of the 1934 Act.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Subsidiary&#148; </B>means any business entity of which a majority of its voting power or its
equity securities or equity interests is owned, directly or indirectly by STWA.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Successor&#148; </B>means any Person that succeeds to, or has the practical ability to control
(either immediately or with the passage of time), STWA&#146;s business directly, by merger
or consolidation, or indirectly, by purchase of STWA&#146;s voting securities or all or
substantially all of its assets.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Surviving Company&#148; </B>means the business entity that is a resulting company following a
merger, consolidation, share exchange, division or other reorganization of or relating
to STWA.



<P align="left" style="margin-left:6%; font-size: 10pt"><B>&#147;Total Payments&#148; </B>means the compensation and benefits that become payable under the
Agreement or otherwise (and which may be subject to an Excise Tax) by reason of the
Executive&#146;s termination of employment, less the federal, state and local income tax
(but not any Excise Tax) on such compensation and benefits, in each case determined
without regard to any Gross-Up Payments that may also be made.


<P align="center" style="font-size: 10pt">G-11




<P align="center" style="font-size: 10pt">&nbsp;
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<DESCRIPTION>EXHIBIT 10.30
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<P align="right" style="font-size: 10pt">Exhibit 10.30



<P align="center" style="font-size: 10pt"><U><B>REPRESENTATION AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement (this &#147;Agreement&#148;), dated as of October&nbsp;1, 2004, between Save the World Air,
Inc., a Nevada corporation (the &#147;Company&#148;), and Dr.&nbsp;Gurminder Singh, an individual (the
&#147;Representative&#148;).


<P align="center" style="font-size: 10pt"><U>RECITALS</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company is in the business, among other things, of supplying the goods described
on Exhibit&nbsp;A attached hereto (the &#147;Goods&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Representative has represented to the Company that it has the capability and
interest to promote the sale of the Goods in the Republic of India (the &#147;Territory&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company and the Representative desire to enter into a relationship whereby the
Representative will act as the representative of the Company for the Goods in the Territory on the
terms and conditions set forth herein.


<P align="center" style="font-size: 10pt"><U>AGREEMENT</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW THEREFORE, the parties hereto, intending to be legally bound, agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Appointment of Representative</U>. The Company hereby appoints the Representative, and
the Representative hereby accepts appointment, as the Company&#146;s representative in the Territory to
solicit orders for, and generate contracts with respect to, the Goods from all potential customers
in the Territory and to undertake such further actions in connection with the sale of and
contracting for the Goods as are described in this Agreement. The Representative shall not solicit
or accept any orders for, or generate contracts with respect to, the Goods outside of the
Territory.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Term; Exclusivity</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;This Agreement shall continue in full force for a period of two years unless earlier
terminated in accordance with this Section&nbsp;2 or Section&nbsp;13. The obligations of the Representative
upon the termination of this Agreement for any reason are described in Section&nbsp;14.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Representative&#146;s representation of the Company in the Territory shall be on an
exclusive basis until March&nbsp;31, 2005.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Provided that the Representative fulfills its obligations set forth in Section&nbsp;4(c), the
Representative&#146;s representation of the Company shall continue on an exclusive basis until October
1, 2005.



<P align="center" style="font-size: 10pt">1
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;If the Company enters into any contracts with respect to the Goods generated by the
Representative on or prior to October&nbsp;1, 2005, the Representative&#146;s representation of the Company
shall continue on an exclusive basis until October&nbsp;1, 2006.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;If the Company does not enter into any contracts with respect to the Goods generated by
the Representative on or prior to October&nbsp;1, 2005, the Representative&#146;s representation of the
Company shall continue on a non-exclusive basis until October&nbsp;1, 2006.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;If the Representative fails to fulfill its obligations set forth in Section&nbsp;4(c), or if
the Company does not enter into any contracts with respect to the Goods generated by the
Representative by October&nbsp;1, 2006, this Agreement shall terminate immediately.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;This Agreement shall be automatically renewed for successive one-year terms unless either
party provides written notice of its election not to renew this Agreement at least 60&nbsp;days prior to
the expiration of the then current term, in which case the Agreement shall terminate upon
expiration of such term.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Scope of Goods</U>. At its sole discretion, upon 14&nbsp;days prior written notice to the
Representative, the Company may, from time to time:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>delete from Exhibit&nbsp;A any item described therein, the production of which has
been discontinued or limited by the manufacturer thereof;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>substitute for any item described on Exhibit&nbsp;A the description of a similar
item; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>add to Exhibit&nbsp;A the description of any new item that is similar in kind to any
item already described therein.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Selling Effort of Representative</U>. The Representative shall make its best efforts
to solicit orders for and generate contracts with respect to Goods in the Territory. In
furtherance of such efforts, the Representative covenants that:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>it shall train its sales staff in the characteristics of the Goods, and shall
make them available for training, if necessary, in accordance with Section&nbsp;6;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>it shall not deal, directly or indirectly, in any merchandise identical or
similar to the Goods, other than the Goods; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>on or prior to March&nbsp;31, 2005, it shall conduct formal meetings with and
introduce the Company and the Goods to senior decision makers within the following
agencies, organizations and companies in the Territory:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)&nbsp;&nbsp;</TD>
    <TD>Prime Minister&#146;s Office, Republic of India</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)&nbsp;&nbsp;</TD>
    <TD>Automotive Research Association of India</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)&nbsp;&nbsp;</TD>
    <TD>Bajaj Auto Ltd.
</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">2
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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)&nbsp;&nbsp;</TD>
    <TD>Tata Enterprises</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(v)&nbsp;&nbsp;</TD>
    <TD>City of Delhi</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(vi)&nbsp;&nbsp;</TD>
    <TD>Dr.&nbsp;Ashok Khosla (Development Alternatives Group)</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Sales Policy</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Representative agrees that the Company, in its sole discretion, has the absolute right
to establish, and change from time to time, all or any of the terms governing the sale of the
Goods. Such terms shall include, but shall not be limited to, those concerning the price of the
Goods, method and place of delivery and warranties thereon. The terms of sale of the Goods shall
be as set forth in materials provided to the Representative by the Company from time to time. The
Company, in its sole discretion, shall have the right to amend such terms from time to time by
written notice to the Representative.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Representative shall make no representation or statement concerning the
characteristics of the Goods that is not in conformity with the descriptions thereof that may from
time to time be provided to the Representative by the Company. In the event that the
Representative is uncertain concerning any term of sale or characteristics of the Goods, it shall
immediately notify the Company thereof and shall be instructed by the Company on the matter in
question.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Training, Advertising Material, Etc</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company shall, at its expense and to the extent that it deems reasonably necessary,
provide training and advice to the Representative and its agents and employees in connection with
the characteristics of the Goods, the soliciting of orders therefor and similar matters.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company shall, at its expense, provide the Representative with a reasonable number of
the Company&#146;s brochures, order forms, advertising materials, samples and other information
reasonably necessary for the Representative&#146;s performance hereunder. The Company shall not be
required to provide materials in any language other than English.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Representative shall, at its expense, undertake reasonably to advertise the Goods by
such means as it deems desirable (which may include, by way of illustration, trade journals,
newspapers and participation in trade shows); provided that the Representative shall furnish in
writing to the Company, no later than 21&nbsp;days prior to initiating any form of advertising, a full
written description thereof, and shall then follow any revisions thereto (which may include
complete rejection) made in writing by the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;The Representative may, in all appropriate places, identify itself as the authorized
representative of the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Handling and Acceptance of Orders and Payment Therefor.</U>


<P align="center" style="font-size: 10pt">3
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Representative shall solicit orders for the Goods using the order form furnished for
such purpose by the Company. Immediately upon obtaining an order from a customer, the
Representative shall forward the order form thereof to the Company, retaining a copy for its own
records. Each such order shall be subject to the acceptance or rejection of the Company in its
sole discretion, and it is understood that the Company shall be under no obligation to accept any
order. The Company shall notify the customer directly, with a copy to the Representative, of
whether the order is accepted or rejected.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;When the Representative has obtained an order from a new customer, it shall, at its
expense, check the credit rating of the customer by reasonable means and include a report thereon
with the order form it forwards to the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Payment for all accepted orders shall be made directly from the customer to the Company.
Invoicing, collection and all other matters connected with the sale of the Goods to the customer
shall be the responsibility solely of the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Compensation of the Representative</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Royalties</U>. In full consideration of all rights granted herein and all services to
be performed hereunder, the Company will pay to the Representative royalties from revenues derived
from contracts with customers located in the Territory generated by the Representative.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;The Representative shall be paid a royalty equal to 2% of Gross Receipts from revenues
derived from contracts with customers located in the Territory generated by the Representative.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&#147;Gross Receipts&#148; shall mean 100% of all sums received by or credited to the Company and
its affiliates from unrelated third parties from revenues derived from contracts with customers
located in the Territory generated by the Representative. Gross Receipts shall be deemed to
exclude sums received by the Company and/or its affiliates which represent sales taxes, value added
taxes, excise taxes, and similar taxes which are collected by the Company and its affiliates as
required by any requisite taxing authorities of any government, but limited to the extent that such
taxes are paid and not returned or credited to the Company or an affiliate. Gross Receipts shall
also be deemed to exclude foreign currencies to the extent any foreign licensing society or
organization collects or withholds any portion thereof on behalf of or for the benefit of the
Company. With respect to foreign currencies received by the Company and its affiliates in
connection herewith, it is agreed and understood that such sums received shall be included in Gross
Receipts hereunder, whether or not such sums have been received in U.S. dollars in the United
States, and whether or not such sums which are capable of being remitted to the United States have
yet been remitted. Gross Receipts are not subject to retroactive adjustments for returns, refunds,
credits, settlements, rebates and discounts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;Royalties shall be payable pursuant to this Section 8(a) during the period beginning on
the date of this Agreement and ending on the date occurring ten years thereafter.


<P align="center" style="font-size: 10pt">4
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;All amounts payable to the Representative pursuant to this Section 8(a) shall be paid by
the Company no later than 30&nbsp;days after the end of each calendar quarter in respect of the
applicable Gross Receipts amounts actually received by the Company in such quarter. A statement of
account prepared by the Company shall accompany each such payment to the Representative.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Warrants</U>. Subject to compliance with applicable securities laws, the Company
shall issue to the Representative warrants to purchase an aggregate of 50,000 shares of common
stock of the Company on the date hereof. Such warrants shall have a term of five years and have an
exercise price of $1.00 per share. In addition, subject to compliance with applicable securities
laws, the Company shall issue to the Representative additional warrants to purchase an aggregate of
50,000 shares of common stock of the Company on March&nbsp;31, 2005, provided that the Representative
has fulfilled its obligations set forth in Section&nbsp;4(c). Such additional warrants shall have a
term of five years and have an exercise price of $&#95;&#95;&#95;*&#95;&#95;&#95;per share.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Weighted average of shares price from January&nbsp;1, 2005 through March&nbsp;31, 2005 discounted by
30% .


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Advances for Travel Expenses</U>. The Company shall advance the sum of $10,000 in
U.S. dollars to the Representative to be used by the Representative for travel expenses to the
Territory. Such amounts advanced shall be credited against royalties payable to the Representative
pursuant to Section&nbsp;8(a).



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Orders Directly to the Company and Payments Directly to the
Representative</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;If an order for the Goods from a customer located in the Territory is made directly from
such customer to the Company, the Company shall notify the Representative thereof. If such order
is accepted by the Company, any revenue amounts actually received in respect thereof by the Company
for delivery in the Territory shall be subject to a royalty payable to the Representative in
accordance with Section&nbsp;8.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;In the event that any customer for the Goods whose order has been accepted by the Company
makes payment therefore to the Representative rather than to the Company, the Representative shall
immediately forward such payment to the Company.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Reports</U>. Every three months commencing with the date hereof, the Representative
shall make a report to the Company concerning (i)&nbsp;its activities under this Agreement from the date
of the last such report to the date of the report in question and (ii)&nbsp;the proposed activities of
the Representative hereunder for the following three months. In addition, the Representative shall
notify the Company at once concerning any major development in the Territory with respect to the
sale of the Goods.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Nondisclosure</U>. Without the express prior written consent of the Company, the
Representative shall not reveal to any third party any information of the Company that is
identified by the Company as being of a confidential or proprietary nature (the &#147;Confidential
Information&#148;). Confidential Information may be used by the Representative only with respect to
performance of its obligations under this Agreement, and only by those employees of the
Representative who have a need to know such information for the purposes related to this


<P align="center" style="font-size: 10pt">5
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<P align="left" style="font-size: 10pt">Agreement. The Representative shall protect the Confidential Information by using the same degree
of care (but no less than a reasonable degree of care) to prevent the unauthorized use,
dissemination or publication of such Confidential Information that the Company uses. The
Representative&#146;s obligation with respect to any Confidential Information under this Section&nbsp;11
shall be for a period of 10&nbsp;years after the date the Confidential Information is received by the
Representative.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>No Servicing by Representative</U>. It is understood by the Representative that it is
not authorized by this Agreement to perform servicing of any kind upon any Goods in the Territory
or elsewhere, absent the express prior written approval of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Termination</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company shall have the right to terminate this Agreement effective immediately by
written notice to the Representative if:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;the Representative engages in any conduct which threatens injury to the good name and
reputation of the Company;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;the Company has reasonable grounds to believe that the Representative will be unable,
whether because of financial difficulty or otherwise, to fulfill satisfactorily its obligations
under this Agreement;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;the Representative fails to conduct its business in accordance with all applicable laws
or regulations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Either party to this Agreement may terminate this Agreement effectively immediately upon
written notice if the other party becomes insolvent, discontinues its business, has a receiver
appointed for it, any petition is filed by or against it in accordance with the bankruptcy laws, or
any assignment is made by it for the benefit of creditors.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;In the event either party to this Agreement shall fail to perform or fulfill any of its
responsibilities as set forth herein, the other party may notify such defaulting party of the
matter in breach and if such matter is not cured within 30&nbsp;days after receipt of such notice the
complaining party may by further written notice immediately terminate this Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Either party may terminate this Agreement in its sole discretion by giving to the other
party no less than 90&nbsp;days written notice thereof.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Effect of Termination</U>. If this Agreement terminates for any reason whatsoever,
the Representative shall no longer be the sales representative of the Company for the Goods in the
Territory, effective on the date of such termination. The Representative shall immediately upon
termination return to the Company all Confidential Information within its possession, including any
documents of a confidential or proprietary nature concerning the Goods which it has in its
possession and all forms, brochures and samples pertaining to the Goods. The Representative shall
cease to identify itself as an authorized sales representative of the Company


<P align="center" style="font-size: 10pt">6
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<P align="left" style="font-size: 10pt">and shall give notice to all publications that list the Representative as such that such listing is
to be discontinued as soon as possible. Any and all amounts due to the Representative pursuant to
this Agreement in respect of orders that were placed prior to the date of termination shall be paid
to the Representative pursuant to the manner described in Section&nbsp;8. The Representative
understands that upon termination of this Agreement, the Company may, in its discretion, notify
customers and potential customers in the Territory that the Representative is longer the
representative of the Company in the Territory, and the Representative agrees that any orders for
the Goods that it receives after such termination shall be immediately forwarded by it to the
Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Applicable Law</U>. This Agreement shall be construed in accordance with, and shall
be governed by, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Counterparts</U>. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Amendments</U>. The provisions of this Agreement may be waived, altered, amended or
repealed in whole or in part only on the written consent of all the parties to this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;<U>Notice</U>. All notices, demands, and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given (i)&nbsp;on the date of delivery if delivered
in person to the party to whom such notice is given, (ii)&nbsp;on the date such notice is posted by
mail, postage prepaid, registered mail, properly addressed to the party receiving such notice, or
(iii)&nbsp;upon the date of telex transmission, if by telex. Any notices hereunder shall be sent to the
following addresses and telex numbers or such other addresses or telex numbers as may be designated
by a party in writing from time to time in accordance with the procedure stated herein:

<P align="left" style="font-size: 10pt; margin-left: 6%">If to the Company:

<P align="left" style="font-size: 10pt; margin-left: 6%">Save the World Air, Inc.<BR>
5125 Lankershim Boulevard<BR>
North Hollywood, CA 91601<BR>
Facsimile: 818-487-8003<BR>
Attention: Eugene Eichler

<P align="left" style="font-size: 10pt; margin-left: 6%">If to the Representative:

<P align="left" style="font-size: 10pt; margin-left: 6%">Dr.&nbsp;Gurminder Singh<BR>
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Facsimile: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>


<P align="center" style="font-size: 10pt">7
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;<U>Divisibility</U>. If any of the terms, provisions, covenants or conditions of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions shall remain in full effect and shall in no way be affected, impaired
or invalidated.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;<U>Final Agreement of the Parties</U>. This Agreement supersedes and terminates any and
all prior agreements or contracts, written or oral, entered into between the parties hereto with
respect to the subject matter hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;<U>Assignment</U>. This Agreement may not be assigned by the Representative, in whole or
in part, to any other party without the express written consent of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.&nbsp;<U>Headings</U>. The Section headings in this Agreement are for convenience of reference
only and shall have no bearing on the enforcement or interpretation of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.&nbsp;<U>Waiver</U>. No waiver, forbearance or failure by either party of its rights to
enforce any provision of this Agreement shall constitute a waiver or estoppel of such party&#146;s right
to enforce such provision thereafter or to enforce any other provision of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24.&nbsp;<U>Jurisdiction</U>. The parties hereby unconditionally and irrevocably agree that the
state and federal courts of California and any California or federal court competent to hear
appeals therefrom shall have the exclusive jurisdiction over any and all actions arising out of or
in relation to this Agreement, or for the breach hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25.&nbsp;<U>Relationship of the Parties</U>. The Representative is not an employee of the Company
for any purpose whatsoever, but is an independent contractor. The parties, by this Agreement, have
not entered into any form of joint venture or any other mutual enterprise, other than the rendering
by the Representative of the services for the Company in accordance with the terms hereof. All
expenses and disbursements, including, but not limited to, those for travel and maintenance,
entertainment, office, clerical, and general selling expenses, that may be incurred by the
Representative in connection with this Agreement shall be born wholly and completely by the
Representative, and the Company shall not be in any way responsible or liable therefore. The
Representative does not have, nor shall it hold itself out as having, any right, power, or
authority to create any contract or obligation, either expressed or implied, on behalf, in the name
of, or binding upon the Company. Any and all agents and employees of the Representative shall be
at the Representative&#146;s own risk, expense and supervision, and the agents and employees of the
Representative shall not have any claim against the Company for salaries, commissions, items of
cost, or any other form of compensation. The Representative shall indemnify and hold the Company
harmless from any cost and liability caused by any unauthorized act of the Representative, its
agents or employees.


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<P align="center" style="font-size: 10pt">8
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first written
above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">&#147;Company&#148;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">SAVE THE WORLD AIR, INC.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Eugene E. Eichler</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name: Eugene E. Eichler</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">&#147;Representative&#148;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">/s/ Gurminder Singh</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Dr.&nbsp;Gurminder Singh Sept. 28<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>,2004</TD>
</TR>
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<P align="center" style="font-size: 10pt"><U><B>Exhibit&nbsp;A</B></U>



<P align="center" style="font-size: 10pt"><U>Description of the Goods</U>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>ZEFS devices</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD>CAT-MATE devices</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt">A-1
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<FILENAME>v07538exv10w31.htm
<DESCRIPTION>EXHIBIT 10.31
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.31



<P align="center" style="font-size: 10pt"><U><B>ADVISORY SERVICES AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Advisory Services Agreement (this &#147;<B>Agreement</B>&#148;) is made and entered into as of this
&#95;&#95;&#95;day of August, 2002, by and between <B>Save The World Air, Inc.</B>, a Nevada corporation (the
&#147;<B>Company</B>&#148;) and <B>Bobby Unser, Jr. </B>(&#147;<B>Advisor</B>&#148;), with reference to the following facts.


<P align="center" style="font-size: 10pt"><U>RECITALS</U>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>The Company has certain rights to a proprietary technology (the <B>&#147;Technology</B>&#148;)
for a product known as the Zero Emissions Fuel Saving device (&#147;<B>ZEFS Device</B>&#148;) that is
intended to be used on motor vehicles to reduce pollution and improve fuel efficiency.
The Company desires to further develop the Technology and market and sell the ZEFS
Device.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>Advisor is well known to the public and associated with automobile racing and
products. The Company desires to engage Advisor, and Advisor desires to serve the
Company, in an advisory capacity on and subject to the terms of this Agreement.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THEREFORE, the Company and Advisor hereby agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;1.</U> <U>Scope of Services Provided.</u>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 Advisor shall provide advice, counsel and support to the Company&#146;s Board of Directors and
management on an as-needed basis, by telephone or in person, in matters relating to the Company&#146;s
business, including product development, marketing and promotion, and other matters concerning the
ZEFS Device as the Company may reasonably request from time to time during the term of this
Agreement. Advisor also agrees to serve on the &#147;Advisory Board&#148; which shall report to the Company&#146;s
Board of Directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 Advisor agrees to appear at not less than two events per year during the term of this
Agreement subject to Advisor&#146;s prior commitments, schedule and availability, and at such other
times as may be mutually agreed, to assist and support the Company in promoting the ZEFS Device.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;2</U>. <U>Compensation</U>; <U>Expenses.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 As soon as practicable following the parties execution of this Agreement, the Company
shall issue to Advisor 50,000 shares of the Company&#146;s common stock, par value $.001 per share (the
&#147;Stock&#148;). The Stock shall be deemed to have a value of $.001 per share. Advisor shall execute and
deliver to the Company a subscription agreement substantially in the form attached hereto in
<U>Annex A</U>, the provisions of which are incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 The Company shall reimburse Advisor for all reasonable and necessary out-of-pocket
expenses incurred by Advisor in performing the services requested by the Company hereunder,
including without limitation travel, meals, accommodations and phone charges, subject to Advisor&#146;s
presentation to the Company of receipts for such charges, in accordance with the Company&#146;s
practices and policies as adopted or approved from time to time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;3</U>. <U>Non-Disclosure Obligations</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advisor acknowledges that the Technology is proprietary and agrees to execute a standard
confidentiality agreement substantially in the form attached hereto in <U>Annex B</U>, the
provisions of which are incorporated herein by this reference.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;4</U>. <U>Use of Advisor&#146;s Name and Likeness</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 The Company will not use Advisor&#146;s name or likeness in any advertising or
marketing/promotional material without Advisor&#146;s prior written approval or consent, which shall not
be unreasonably withheld. Except as may be expressly agreed to by the parties hereto in writing,
the Company shall acquire no ownership or rights in or to Advisor&#146;s name or likeness that by its
use or incorporation in any company advertising or promotional materials other than the right to
use, duplicate and distribute such name or likeness as and to the extent to which Advisor may have
previously consented.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 The Company may identify Advisor as member of the Company&#146;s Advisory Board and may make
such disclosures as may be necessary or advisable to comply with federal securities laws, including
without limitation disclosures in filings with the Securities and Exchange Commission or press
releases as to: (1)&nbsp;the terms of this Agreement; (2)&nbsp;the appointment of Advisor to the Company&#146;s
Advisory Board; and (3)&nbsp;Advisor&#146;s Stock ownership.


<P align="left" style="font-size: 10pt"><U>Section&nbsp;5</U>. <U>Miscellaneous Provisions.</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <U>Term</U>. The initial term of this Agreement is one year from the effective date of
this Agreement. This Agreement shall renew automatically from year to year unless terminated by
either party by giving the other not less than thirty (30)&nbsp;days&#146; prior written notice of its
election to terminate this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be but one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <U>Governing Law</U>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" align="left" valign="top"><B>ADVISOR</B>
</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD colspan="3" align="left" valign="top"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Bobby Unser Jr.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Eugene E. Eichler</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bobby Unser, Jr.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Operating Officer</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">2
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>ANNEX A</B>



<P align="center" style="font-size: 10pt"><B>SUBSCRIPTION AGREEMENT</B>



<P align="center" style="font-size: 10pt"><U><B>SAVE THE WORLD AIR, INC.</B></U>


<P align="left" style="font-size: 10pt">The undersigned hereby proposes to acquire Common Stock of Save the World Air, Inc., a Nevada
corporation (the &#147;Company&#148;).


<P align="left" style="font-size: 10pt">The undersigned understands that the shares of Common Stock are being offered and sold without
registration under the Securities Act of 1933, as amended (the &#147;Act&#148;), in reliance upon the private
placement exemption contained in Sections&nbsp;4(2) and 4(6) of the Act, and Regulation&nbsp;D promulgated
thereunder, and that such reliance is based on the undersigned&#146;s representations set forth below.


<P align="left" style="font-size: 10pt">To induce the Company to accept this subscription and issue and deliver the Common Stock, the
undersigned agrees, warrants, and represents as follows:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>This offer is irrevocable until both parties execution and delivery of that
certain Advisory
Service Agreement to which this subscription is a part and is subject to acceptance
or rejection by
The Company in its sole discretion.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD>The undersigned is acquiring the Common Stock for investment for his or her own
account, and not with a view toward distribution thereof, and with no present
intention of dividing his or her interest with others or reselling or otherwise
disposing of all or any portion of the Common Stock. The undersigned has not
offered or sold a participation in this purchase of Common Stock, and will not
offer or sell the Common Stock or interest therein or otherwise, in violation of
the Act. The Undersigned further acknowledges that he or she does not have in mind
any sale of the Common Stock currently or after the passage of a fixed or
determinable period of time or upon the occurrence or non-occurrence of any
predetermined events or consequence; and that he or she has no present or
contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for or which is likely to compel a disposition of the Common
Stock and is not aware of any circumstances presently in existence that are likely
in the future to prompt a disposition of the Common Stock.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that the shares of Common Stock have been offered
to him or her in direct communication between himself or herself and the Company or
through registered broker-dealers and not through any advertisement of any kind.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that he or she has read or has had access to all of
the Company&#146;s filings with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, that the Company has not timely filed
its annual report of Form 10-KSB nor does it have current audited financial
statements, that the offer and sale of Common Stock to the undersigned were based
on the representations and warranties of the undersigned in this Subscription
Agreement, and acknowledges that he or she has been encouraged to seek his or her
own legal and financial counsel to assist him or her in evaluating this investment.
The undersigned acknowledges that the Company has given him or her and all of his
or her counselors access to all information relating to the Company&#146;s business that
they or any one of them has requested. The undersigned acknowledges that he or she
has sufficient knowledge, financial and business experience concerning the affairs
and conditions of the Company so that he or she can make a reasoned decision as to
this investment in the Company and is capable of evaluating the merits and risks of
this investment. Based on the foregoing, the undersigned hereby agrees to indemnify
the Company thereof and to hold each of such persons and entities, and the
officers, directors and employees thereof harmless against all liability, costs or
expenses (including reasonable attorneys&#146; fees) arising by reason of or in
connection with any misrepresentation or any breach of such warranties of the
undersigned, or arising as a result of the sale or distribution of the Common Stock
by the undersigned in violation of the Act, the Securities Exchange Act of 1934, as
amended, or any other applicable law, either federal or state. This subscription
and the representations and warranties contained herein shall be binding upon the
heirs, legal representatives, successors and assigns of the undersigned.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.&nbsp;&nbsp;</TD>
    <TD>(a)&nbsp;The undersigned is aware of the restrictions of transferability of the
Common Stock and further understands and acknowledges that any certificates
evidencing the Common Stock will bear the following legends, to which such
interests will be subject:</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:6%; font-size: 10pt"><B>THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE SECURITIES LAWS
(COLLECTIVELY, &#147;SECURITIES LAWS&#148;) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL APPLICABLE SECURITIES LAWS OR UNLESS, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER, ANY SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF SUCH SECURITIES LAWS.</B>



<P align="left" style="margin-left:2%; font-size: 10pt">(b)&nbsp;The undersigned understands that following the purchase of the Common
Stock, the Common Stock may only be disposed of pursuant to either (i)&nbsp;an
effective registration statement under the Act, or (ii)&nbsp;an exemption from the
registration requirements of the Securities Act of 1933.



<P align="left" style="margin-left:2%; font-size: 10pt">(c)&nbsp;The Company has neither filed such a registration statement with the SEC or
any state authorities nor agreed to do so, nor contemplates doing so in the
future for this offering of Common Stock, and in the absence of such a
registration statement or exemption, the undersigned may have to hold the Common
Stock indefinitely and may be unable to liquidate them in case of an emergency.



<P align="left" style="margin-left:2%; font-size: 10pt">(d)&nbsp;The undersigned acknowledges that the Company is not obligated and does not
propose to furnish the undersigned with information necessary to enable it to be
able to make sales under Rule&nbsp;144 of the Securities Act of 1933.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.&nbsp;&nbsp;</TD>
    <TD>The undersigned represents that he or she is a resident of
<U>U.S.A.</U> and makes the following representation:</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:2%; font-size: 10pt">I, THE UNDERSIGNED, REPRESENT THAT I HAVE A PRE-EXISTING PERSONAL OR BUSINESS RELATIONSHIP
WITH THE COMPANY, ANY OFFICER, DIRECTOR OR CONTROLLING PERSON THEREOF OR HAVE, THROUGH
MYSELF OR THROUGH MY UNAFFILIATED PROFESSIONAL ADVISER, THE BUSINESS OR FINANCIAL EXPERIENCE
TO PROTECT MY INTERESTS IN CONNECTION WITH MY SUBSCRIPTION HERETO.



<P align="left" style="margin-left:2%; font-size: 10pt">FURTHER, I AM PURCHASING THE COMMON STOCK OFFERED HEREBY FOR INVESTMENT AND NOT WITH A VIEW
TOWARD DISTRIBUTION THEREOF.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.&nbsp;&nbsp;</TD>
    <TD>This Subscription Agreement has been delivered in, and shall be
construed in accordance with the laws of the State of California. Subject
to the provisions of the paragraph immediately following, any action in
connection with this Subscription Agreement shall be brought in the
appropriate state or federal court in and for the County of Los Angeles,
State of California, which shall have exclusive jurisdiction over such
action.</TD>
</TR>

</TABLE>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Executed as of this<BR>
day of August&nbsp;&nbsp;, 2002<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Bobby Unser Jr.
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Bobby Unser Jr.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">&#149; * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *<BR>
&#149; * * * * * * * * * * * * * * * * *


<P align="left" style="font-size: 10pt">The above and foregoing Subscription accepted this <U>5</U> day of <U>September</U> 2002.





<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>Save the World Air, Inc.</B><BR>
a Nevada corporation<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">Eugene E. Eichler
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Its: &nbsp;Chief Operating Officer     &nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>ANNEX B<BR>
Confidentiality Agreement</B>



<P align="center" style="font-size: 10pt">August&nbsp;&nbsp;, 2002



<P align="center" style="font-size: 10pt"><B>STRICTLY PRIVATE AND CONFIDENTIAL</B>



<P align="left" style="font-size: 10pt"><B><I>BY FACSIMILE</I></B><BR>
Save the World Air, Inc.<BR>
29229 Canwood Street, Suite&nbsp;206<BR>
Agoura Hills, California 91301


<P align="left" style="font-size: 10pt">Attention: Eugene E. Eichler, Chief Financial Officer



<P align="left" style="font-size: 10pt">Gentlemen:

<P align="left" style="font-size: 10pt">In connection with the advisory services that you have asked me to provide to Save the World Air,
Inc. (the &#147;<B>Company</B>&#148;) as a member of its Advisory Board, I may be provided and/or have access to
technical and other information concerning the Company and its proprietary technology (the
&#147;Technology&#148;) for a product known as the Zero Pollution-Fuel Saving Device (&#147;ZERO Device&#148;) that can
be used on motor vehicles to reduce pollution and improve fuel efficiency. As a condition to my
being furnished such information, I agree to treat any information concerning the Technology
(including without limitation all specifications, designs, processes, concepts, ideas, strategic
plans, product development plans, research and development, information about the Company&#146;s
operations, finances, reports, interpretations, forecasts and records, and any analyses,
compilations, studies or other documents, whether prepared by the Company or others, that contain
or reflect such information (collectively, the &#147;<B>Confidential Information</B>&#148;) in accordance with the
provisions of this letter. The term &#147;<B>Confidential Information</B>&#148; does not include information which
(a)&nbsp;was or becomes generally available to the public other than as a result of a disclosure by me
or my agents or advisors, (b)&nbsp;was or becomes available to me on a non-confidential basis from a
source other than the Company or its advisors provided that such source is not bound by a
confidentiality agreement with the Company, (c)&nbsp;was within my possession prior to its being
furnished to me by or on behalf of the Company, provided that the source of such information was
not bound by a confidentiality agreement with the Company in respect thereof.


<P align="left" style="font-size: 10pt">By this letter, I agree that the Confidential Information will be used solely for the purposes in
furtherance of my advisory services to the Company and will not be used by me in any way
detrimental to the Company. I also agree that the Confidential Information will be kept
confidential by me, my agents and employees; <I>provided, however</I>, that (i)&nbsp;any such information may
be disclosed to my agents and employees who need to know such information for the purpose of
providing the advisory services (it being understood that such persons shall be informed by me of
the confidential nature of such information and shall be directed by me to treat such information
confidentially and shall assume the same obligations as I under this letter) and (ii)&nbsp;any
disclosure of such information may be made to which the Company consents in writing. I shall be
responsible for any breach of this letter by my agents or employees.

<P align="left" style="font-size: 10pt">In the event I am required by legal process to disclose any of the Confidential Information, I
shall provide you with prompt notice of such requirement so that you may seek a protective order or
other appropriate remedy or waive compliance with the provisions of this letter. In the event that
a protective order or other remedy is obtained, I shall use all reasonable efforts to assure that
all Confidential Information disclosed will be covered by such order or other remedy. Whether such
protective order or other remedy is obtained or the Company waives compliance with the provisions
of this letter, I will disclose only that portion of the Confidential Information that I am legally
required to disclose. This letter shall be governed by laws of California, U.S.A, in all respects.



<P align="center" style="font-size: 10pt"><B>* * *</B>



<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Very truly yours,<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Bobby Unser , Jr.
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Bobby Unser , Jr.</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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<DOCUMENT>
<TYPE>EX-10.32
<SEQUENCE>18
<FILENAME>v07538exv10w32.htm
<DESCRIPTION>EXHIBIT 10.32
<TEXT>
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.32



<P align="center" style="font-size: 10pt"><U><B>ADVISORY SERVICES AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Advisory Services Agreement (this &#147;<B>Agreement</B>&#148;) is made and entered into as of this
&#95;&#95;&#95;day of August, 2002, by and between <B>Save the World Air, Inc.</B>, a Nevada corporation (the
&#147;<B>Company</B>&#148;) and <B>Jack Reader </B>(&#147;<B>Advisor</B>&#148;), with reference to the following facts.


<P align="center" style="font-size: 10pt"><U>RECITALS</U>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>The Company has certain rights to a proprietary technology (the <B>&#147;Technology</B>&#148;)
for a product known as the Zero Emissions Fuel Saving device (&#147;<B>ZEFS Device</B>&#148;) that is
intended to be used on motor vehicles to reduce pollution and improve fuel efficiency.
The Company desires to further develop the Technology and market and sell the ZEFS
Device.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>Advisor is a well respected international systems engineer. The Company desires
to engage Advisor, and Advisor desires to serve the Company, in an advisory capacity on
and subject to the terms of this Agreement.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THEREFORE, the Company and Advisor hereby agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;1</U>. <U>Scope of Services Provided</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 Advisor shall provide advice, counsel and support to the Company&#146;s Board of Directors and
management on an as-needed basis, by telephone or in person, in matters relating to the Company&#146;s
business, including product development, marketing and promotion, and other matters concerning the
ZEFS Device as the Company may reasonably request from time to time during the term of this
Agreement. Advisor also agrees to serve on the &#147;Advisory Board&#148; which shall report to the Company&#146;s
Board of Directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 Advisor agrees to appear at not less than two events per year during the term of this
Agreement subject to Advisor&#146;s prior commitments, schedule and availability, and at such other
times as may be mutually agreed, to assist and support the Company in promoting the ZEFS Device.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;2</U>. <U>Compensation</U>; <U>Expenses.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 As soon as practicable following the parties execution of this Agreement, the Company
shall issue to Advisor 50,000 shares of the Company&#146;s common stock, par value $.001 per share (the
&#147;Stock&#148;). The Stock shall be deemed to have a value of $.001 per share. Advisor shall execute and
deliver to the Company a subscription agreement substantially in the form attached hereto in
<U>Annex A</U>, the provisions of which are incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 The Company shall reimburse Advisor for all reasonable and necessary out-of-pocket
expenses incurred by Advisor in performing the services requested by the Company hereunder,
including without limitation travel, meals, accommodations and phone charges, subject to Advisor&#146;s
presentation to the Company of receipts for such charges, in accordance with the Company&#146;s
practices and policies as adopted or approved from time to time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;3</U>. <U>Non-Disclosure Obligations</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advisor acknowledges that the Technology is proprietary and agrees to execute a standard
confidentiality agreement substantially in the form attached hereto in <U>Annex B</U>, the
provisions of which are incorporated herein by this reference.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;4</U>. <U>Use of Advisor&#146;s Name and Likeness</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 The Company will not use Advisor&#146;s name or likeness in any advertising or
marketing/promotional material without Advisor&#146;s prior written approval or consent, which shall not
be unreasonably withheld. Except as may be expressly agreed to by the parties hereto in writing,
the Company shall acquire no ownership or rights in or to Advisor&#146;s name or likeness that by its
use or incorporation in any company advertising or promotional materials other than the right to
use, duplicate and distribute such name or likeness as and to the extent to which Advisor may have
previously consented.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 The Company may identify Advisor as member of the Company&#146;s Advisory Board and may make
such disclosures as may be necessary or advisable to comply with federal securities laws, including
without limitation disclosures in filings with the Securities and Exchange Commission or press
releases as to: (1)&nbsp;the terms of this Agreement; (2)&nbsp;the appointment of Advisor to the Company&#146;s
Advisory Board; and (3)&nbsp;Advisor&#146;s Stock ownership.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;5</U>. <U>Miscellaneous Provisions.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <U>Term</U>. The initial term of this Agreement is one year from the effective date of
this Agreement. This Agreement shall renew automatically from year to year unless terminated by
either party by giving the other not less than thirty (30)&nbsp;days&#146; prior written notice of its
election to terminate this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be but one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <U>Governing Law</U>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" align="left" valign="top"><B>ADVISOR</B>
</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD colspan="3" align="left" valign="top"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ JACK READER
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EUGENE E. EICHLER</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jack Reader
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Eugene E. Eichler</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Operating Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>ANNEX A<BR>
Subscription Agreement</B>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt">SUBCRIPTION AGREEMENT



<P align="center" style="font-size: 10pt"><U>SAVE THE WORLD AIR, INC.</U>


<P align="left" style="font-size: 10pt">The undersigned hereby proposes to acquire Common Stock of Save the World Air, Inc., a Nevada
corporation (the &#147;Company&#148;).


<P align="left" style="font-size: 10pt">The undersigned understands that the shares of Common Stock are being offered and sold without
registration under the Securities Act of 1933, as amended (the &#147;Act&#148;), in reliance upon the private
placement exemption contained in Sections&nbsp;4(2) and 4(6) of the Act, and Regulation&nbsp;D promulgated
thereunder, and that such reliance is based on the undersigned&#146;s representations set forth below.


<P align="left" style="font-size: 10pt">To induce the Company to accept this subscription and issue and deliver the Common Stock, the
undersigned agrees, warrants, and represents as follows:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>This offer is irrevocable until both parties execution and delivery of that
certain Advisory Services Agreement to which this subscription is a part and
is subject to acceptance or rejection by the Company in its sole discretion.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD>The undersigned is acquiring the Common Stock for investment for his or her
own account, and not with a view toward distribution thereof, and with no
present intention of dividing his or her interest with others or reselling or
otherwise disposing of all or any portion of the Common Stock. The undersigned
has not offered or sold a participation in this purchase of Common Stock, and
will not offer or sell the Common Stock or interest therein or otherwise, in
violation of the Act. The Undersigned further acknowledges that he or she does
not have in mind any sale of the Common Stock currently or after the passage
of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined events or consequence; and that he or she
has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely to
compel a disposition of the Common Stock and is not aware of any circumstances
presently in existence that are likely in the future to prompt a disposition
of the Common Stock.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that the shares of Common Stock have been
offered to him or her in direct communication between himself or herself and
the Company or through registered broker-dealers and not through any
advertisement of any kind.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that he or she has read or has had access to all
of the Company&#146;s filings with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, that the Company has not timely
filed its annual report of Form 10-KSB nor does it have current audited
financial statements, that the offer and sale of Common Stock to the
undersigned were based on the representations and warranties of the
undersigned in this Subscription Agreement, and acknowledges that he or she
has been encouraged to seek his or her own legal and financial counsel to
assist him or her in evaluating this investment. The undersigned acknowledges
that the Company has given him or her and all of his or her counselors access
to all information relating to the Company&#146;s business that they or any one of
them has requested. The undersigned acknowledges that he or she has sufficient
knowledge, financial and business experience concerning the affairs and
conditions of the Company so that he or she can make a reasoned decision as to
this investment in the Company and is capable of evaluating the merits and
risks of this investment. Based on the foregoing, the undersigned hereby
agrees to indemnify the Company thereof and to hold each of such persons and
entities, and the officers, directors and employees thereof harmless against
all liability, costs or expenses (including reasonable attorneys&#146; fees)
arising by reason of or in connection with any misrepresentation or any breach
of such warranties of the undersigned, or arising as a result of the sale or
distribution of the Common Stock by the undersigned in violation of the Act,
the Securities Exchange Act of 1934, as amended, or</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>any other applicable law, either federal or state. This subscription and
the representations and warranties contained herein shall be binding upon
the heirs, legal representatives, successors and assigns of the undersigned.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">6.&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that he or she is able to bear, and understands,
the economic risks of the proposed investment and all other risks of the
Company&#146;s business.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>The undersigned represents that he or she is:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>An Accredited Investor, as that term is defined by Regulation&nbsp;D of the Securities and
Exchange Commission, which means any investor meeting at least one of the following
conditions:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(i)&nbsp;&nbsp;</TD>
    <TD>Any natural person whose individual net worth
(or joint net worth with that person&#146;s spouse, if applicable)
at the time of purchase exceeds $1,000,000; or</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(ii)&nbsp;&nbsp;</TD>
    <TD>Any natural person who had an individual income
in excess of $200,000 or joint income with that person&#146;s spouse
in excess of $300,000 in each of the two most recent years and
who reasonably expects an income in excess of $200,000 or joint
income with that person&#146;s spouse in excess of $300,000 in the
current year; or</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(iii)&nbsp;&nbsp;</TD>
    <TD>Any other Accredited Investor as that term is
defined in Regulation&nbsp;D as adopted by the Securities and
Exchange Commission.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">8.&nbsp;&nbsp;</TD>
    <TD>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned is aware of the restrictions of transferability of the
Common Stock and further understands and acknowledges that any certificates
evidencing the Common Stock will bear the following legends, to which such
interests will be subject:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD><B>THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE SECURITIES LAWS
(COLLECTIVELY, &#147;SECURITIES LAWS&#148;) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL APPLICABLE SECURITIES LAWS OR UNLESS, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER, ANY SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF SUCH SECURITIES LAWS.</B></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>The undersigned understands that following the purchase of the
Common Stock, the Common Stock may only be disposed of pursuant to
either (i)&nbsp;an effective registration statement under the Act, or (ii)
an exemption from the registration requirements of the Securities Act
of 1933.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>The Company has neither filed such a registration statement
with the SEC or any state authorities nor agreed to do so, nor
contemplates doing so in the future for this offering of Common Stock,
and in the absence of such a registration statement or exemption, the
undersigned may have to hold the Common Stock indefinitely and may be
unable to liquidate them in case of an emergency.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(d)&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that the Company is not obligated
and does not propose to furnish the undersigned with information
necessary to enable it to be able to make sales under Rule&nbsp;144 of the
Securities Act of 1933.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">9.&nbsp;&nbsp;</TD>
    <TD>The undersigned represents that he or she is a resident of Massachusetts and makes the following
representation:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>I, THE UNDERSIGNED, REPRESENT THAT I HAVE A PRE-EXISTING PERSONAL OR BUSINESS RELATIONSHIP
WITH THE COMPANY, ANY OFFICER, DIRECTOR OR CONTROLLING PERSON THEREOF OR HAVE, THROUGH
MYSELF OR THROUGH MY UNAFFILIATED PROFESSIONAL ADVISER, THE BUSINESS OR FINANCIAL EXPERIENCE
TO PROTECT MY INTERESTS IN CONNECTION WITH MY SUBSCRIPTION HERETO.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>FURTHER, I AM PURCHASING THE COMMON STOCK OFFERED HEREBY FOR INVESTMENT</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>AND NOT WITH A VIEW TOWARD DISTRIBUTION THEREOF.</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">10.&nbsp;&nbsp;</TD>
    <TD>This Subscription Agreement has been delivered in, and shall be construed in
accordance with the laws of the State of California. Subject to the provisions
of the paragraph immediately following, any action in connection with this
Subscription Agreement shall be brought in the appropriate state or federal
court in and for the County of Los Angeles, State of California, which shall
have exclusive jurisdiction over such action.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">* * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * *

<DIV align="center" style="font-size: 10pt">* * * * * * * * * * * * *
*</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Executed as of this 16, day of September, 2002.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>Save the World Air, Inc.</B><BR>
a California corporation<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Jack Reader
</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Its&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">Jack Reader
</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
above and foregoing Subscription accepted this &#95;&#95;&#95;day of &#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;&#95;, 2002


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Save the World Air, Inc.<BR>
A Nevada corporation<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Eugene E. Eichler</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">Its:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">Eugene E. Eichler
</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>ANNEX B<BR>
Confidentiality Agreement</B>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt">August&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,2002



<P align="center" style="font-size: 10pt"><B>STRICTLY PRIVATE AND CONFIDENTIAL</B>



<P align="left" style="font-size: 10pt"><B><I>BY FACSIMILE</I></B><BR>
Save the World Air, Inc.<BR>
29229 Canwood Street, Suite&nbsp;206<BR>
Agoura Hills, California 91301


<P align="left" style="font-size: 10pt">Attention: Eugene E. Eichler, Chief Financial Officer



<P align="left" style="font-size: 10pt">Gentlemen:

<P align="left" style="font-size: 10pt">In connection with the advisory services that you have asked me to provide to Save the World Air,
Inc. (the &#147;<B>Company</B>&#148;) as a member of its Advisory Board, I may be provided and/or have access to
technical and other information concerning the Company and its proprietary technology (the
&#147;Technology&#148;) for a product known as the Zero Pollution-Fuel Saving Device (&#147;ZERO Device&#148;) that can
be used on motor vehicles to reduce pollution and improve fuel efficiency. As a condition to my
being furnished such information, I agree to treat any information concerning the Technology
(including without limitation all specifications, designs, processes, concepts, ideas, strategic
plans, product development plans, research and development, information about the Company&#146;s
operations, finances, reports, interpretations, forecasts and records, and any analyses,
compilations, studies or other documents, whether prepared by the Company or others, that contain
or reflect such information (collectively, the &#147;<B>Confidential Information</B>&#148;) in accordance with the
provisions of this letter. The term &#147;<B>Confidential Information</B>&#148; does not include information which
(a)&nbsp;was or becomes generally available to the public other than as a result of a disclosure by me
or my agents or advisors, (b)&nbsp;was or becomes available to me on a non-confidential basis from a
source other than the Company or its advisors provided that such source is not bound by a
confidentiality agreement with the Company, (c)&nbsp;was within my possession prior to its being
furnished to me by or on behalf of the Company, provided that the source of such information was
not bound by a confidentiality agreement with the Company in respect thereof.


<P align="left" style="font-size: 10pt">By this letter, I agree that the Confidential Information will be used solely for the purposes in
furtherance of my advisory services to the Company and will not be used by me in any way
detrimental to the Company. I also agree that the Confidential Information will be kept
confidential by me, my agents and employees; <I>provided, however</I>, that (i)&nbsp;any such information may
be disclosed to my agents and employees who need to know such information for the purpose of
providing the advisory services (it being understood that such persons shall be informed by me of
the confidential nature of such information and shall be directed by me to treat such information
confidentially and shall assume the same obligations as I under this letter) and (ii)&nbsp;any
disclosure of such information may be made to which the Company consents in writing. I shall be
responsible for any breach of this letter by my agents or employees.


<P align="left" style="font-size: 10pt">I shall promptly redeliver to the Company all written material containing or reflecting any
information contained in the Confidential Information (whether prepared by the Company or

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">Save the World Air, Inc.<BR>
Page 2 of 2

<P align="left" style="font-size: 10pt">otherwise) if I choose not to proceed with the advisory services, and shall not retain any copies,
extracts, or other reproductions in whole or in part of such written material. All documents,
memoranda, notes, and other writings whatsoever, prepared by me or my advisors based on the
information contained in the Confidential Information shall be destroyed, and such destruction
shall be certified in writing to the Company by an authorized officer supervising such destruction.


<P align="left" style="font-size: 10pt">In the event I am required by legal process to disclose any of the Confidential Information, I
shall provide you with prompt notice of such requirement so that you may seek a protective order or
other appropriate remedy or waive compliance with the provisions of this letter. In the event that
a protective order or other remedy is obtained, I shall use all reasonable efforts to assure that
all Confidential Information disclosed will be covered by such order or other remedy. Whether such
protective order or other remedy is obtained or we waive compliance with the provisions of this
letter, I will disclose only that portion of the Confidential Information that I am legally
required to disclose.


<P align="left" style="font-size: 10pt">No failure or delay by the Company in exercising any right, power or privilege under this letter
shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege. If there should arise any conflict
between the terms of this letter agreement and any other agreement concerning the advisory
services, the provisions of this letter agreement shall control. This letter shall be governed by
laws of California, U.S.A, in all respects. Any assignment of this letter by me without our prior
written consent shall be void.


<P align="left" style="font-size: 10pt">I certify that no Confidential Information, or any portion thereof, will be exported to any country
in violation of the United States Export Administration Act and regulations thereunder. I hereby
further certify that I am not a resident of any of the following countries: Iraq, Iran, Libya,
North Korea, Syria, Laos, Mongolian People&#146;s Republic, Cuba, Cambodia, North Korea, Nicaragua, or
the People&#146;s Republic of China.



<P align="center" style="font-size: 10pt"><B>* * *</B>



<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Very truly yours,<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Jack Reader
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


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</DIV>


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<DOCUMENT>
<TYPE>EX-10.33
<SEQUENCE>19
<FILENAME>v07538exv10w33.htm
<DESCRIPTION>EXHIBIT 10.33
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.33



<P align="center" style="font-size: 10pt"><B><U>ADVISORY SERVICES AGREEMENT</U></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Advisory Services Agreement (this &#147;<B>Agreement</B>&#148;)
is made and entered into as of this &#95;&#95;&#95;th day of August, 2002, by and between <B>Save The World Air,
Inc.</B>, a Nevada corporation (the &#147;<B>Company</B>&#148;) and <B>Nate Sheldon </B>(&#147;<B>Advisor</B>&#148;), with reference to the
following facts.


<P align="center" style="font-size: 10pt"><U>RECITALS</U>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>The Company has certain rights to a proprietary technology (the <B>&#147;Technology</B>&#148;)
for a product known as the Zero Pollution-Fuel Saving Device (&#147;<B>ZERO Device</B>&#148;) that can
be used on motor vehicles to reduce pollution and improve fuel efficiency. The Company
desires to further develop the Technology and market and sell the ZERO Device.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>Advisor is well known to the industry in the Company&#146;s business. The Company
desires to engage Advisor, and Advisor desires to serve the Company, in an advisory
capacity on and subject to the terms of this Agreement.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THEREFORE, the Company and Advisor hereby agree as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;1.</U> <U>Scope of Services Provided.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 Advisor shall provide advice, counsel and support to the Company&#146;s Board of Directors and
management on an as-needed basis, by telephone or in person, in matters relating to the Company&#146;s
business, including product development, marketing and promotion and other matters concerning the
ZERO Device as the Company may reasonably request from time to time during the term of this
Agreement. Advisor also agrees to serve on the &#147;Advisory Board&#148; which shall report to the Company&#146;s
Board of Directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 Advisor agrees to appear not less than at two events per year during the
term of this Agreement subject to Advisor&#146;s prior commitments, schedule and availability, and at such
other times as May be mutually agreed, to assist and support the company in promoting the ZEFS Device.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;2.</U> <U>Compensation. Expenses.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 As soon as practicable following the parties execution of his agreement, the company
shall issue to Advisor 50,000 shares of the company of common stock, par value $.001 per share. (
the &#147;Stock&#148;). The stock shall be deemed to have to have a value of $.001 per share. Advisor shall
execute and deliver to the company a subscription agreement substantially in the form attached
hereto in Annex A, the provisions of which are incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 The Company shall reimburse Advisor for all reasonable and necessary out-of-pocket
expenses incurred by Advisor in performing the services requested by the Company hereunder,
including without limitation travel, meals, accommodations and phone charges, subject to Advisor&#146;s
presentation to the Company of receipts for such charges, in accordance with the Company&#146;s
practices and policies as adopted or approved from time to time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;3</U>. <U>Non-Disclosure Obligations</U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advisor acknowledges that the Technology is proprietary and agrees to execute a standard
confidentiality agreement substantially in the form attached hereto
in <U>Annex B</U>, the
provisions of which are incorporated herein by this reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;4.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <U>Use of Advisor&#146;s Name and Likeness</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will not use Advisor&#146;s name or likeness in any advertising or marketing/
promotional material without written approval or consent, which shall not be unreasonably
withheld. Except as may be expressly agreed to by the parties hereto in writing , the Company shall
acquire no


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">ownership or rights in or to Advisor&#146;s name or likeness that by its use or incorporation in
any company advertising or promotional materials other than the right to use , duplicate and
distribute such name or likeness as and to the extent to which Advisor&#146;s may have previously
consented.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 The Company may identify Advisor as member of the Company&#146;s Advisory Board and may
make such disclosures as may be necessary of advisable to comply with federal securities laws,
including without limitation disclosures in filing with the Securities and Exchange Commission or
press releases as to (1)&nbsp;the terms of this Agreement; (2)&nbsp;the appointment of Advisor to the
Company&#146;s Advisory Board; and (3)&nbsp;Advisor&#146;s Stock ownership.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section&nbsp;5</U>. <U>Miscellaneous Provisions.</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <U>Term</U>. The initial term of this Agreement is one year from the effective date of
this Agreement. This Agreement shall renew automatically from year to year unless terminated by
either party by giving the other not less than thirty (30)&nbsp;day&#146;s prior written notice of its
election to terminate this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <U>Counterparts</U>. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all such counterparts when taken together shall be
deemed to be but one and the same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <U>Governing Law</U>. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed or caused their respective duly
authorized officer to execute this Agreement as of the date first set forth above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>ADVISOR</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By<U>: /s/ Nate Sheldon</U><BR>
Nate Sheldon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By<U>: /s/ Eugene E. Eichler</U><BR>
Name<U>: Eugene E. Eichler</U><BR>
Title: <U>Chief Operating Officer</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>ANNEX A<BR>
Subscription Agreement</B>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>SUBSCRIPTION AGREEMENT</B>



<P align="center" style="font-size: 10pt"><U><B>SAVE THE WORLD AIR, INC.</B></U>


<P align="left" style="font-size: 10pt">The undersigned hereby proposes to acquire Common Stock of Save the World Air, Inc., a Nevada
corporation (the &#147;Company&#148;).


<P align="left" style="font-size: 10pt">The undersigned understands that the shares of Common Stock are being offered and sold without
registration under the Securities Act of 1933, as amended (the &#147;Act&#148;), in reliance upon the private
placement exemption contained in Sections&nbsp;4(2) and 4(6) of the Act, and Regulation&nbsp;D promulgated
thereunder, and that such reliance is based on the undersigned&#146;s representations set forth below.


<P align="left" style="font-size: 10pt">To induce the Company to accept this subscription and issue and deliver the Common Stock, the
undersigned agrees, warrants, and represents as follows:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>This offer is irrevocable until both parties execution and delivery of that certain Advisory
Services Agreement to which this subscription is a part and is subject to acceptance or
rejection by the Company in its sole discretion.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD>The undersigned is acquiring the Common Stock for investment for his or her own account, and
not with a view toward distribution thereof, and with no present intention of dividing his or
her interest with others or reselling or otherwise disposing of all or any portion of the
Common Stock. The undersigned has not offered or sold a participation in this purchase of
Common Stock, and will not offer or sell the Common Stock or interest therein or otherwise, in
violation of the Act. The Undersigned further acknowledges that he or she does not have in
mind any sale of the Common Stock currently or after the passage of a fixed or determinable
period of time or upon the occurrence or non-occurrence of any predetermined events or
consequence; and that he or she has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for or which is likely to compel
a disposition of the Common Stock and is not aware of any circumstances presently in existence
that are likely in the future to prompt a disposition of the Common Stock.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that the shares of Common Stock have been offered to him or her
in direct communication between himself or herself and the Company or through registered
broker-dealers and not through any advertisement of any kind.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that he or she has read or has had access to all of the
Company&#146;s filings with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, that the Company has not timely filed its annual report of Form
10-KSB nor does it have current audited financial statements, that the offer and sale of
Common Stock to the undersigned were based on the representations and warranties of the
undersigned in this Subscription Agreement, and acknowledges that he or she has been
encouraged to seek his or her own legal and financial counsel to assist him or her in
evaluating this investment. The undersigned acknowledges that the Company has given him or
her and all of his or her counselors access to all information relating to the Company&#146;s
business that they or any one of them has requested. The undersigned acknowledges that he or
she has sufficient knowledge, financial and business experience concerning the affairs and
conditions of the Company so that he or she can make a reasoned decision as to this investment
in the Company and is capable of evaluating the merits and risks of this investment. Based on
the foregoing, the undersigned hereby agrees to indemnify the Company thereof and to hold each
of such persons and entities, and the officers, directors and employees thereof harmless
against all liability, costs or expenses (including reasonable attorneys&#146; fees) arising by
reason of or in connection with any misrepresentation or any breach of such warranties of the
undersigned, or arising as a result of the sale or distribution of the Common Stock by the
undersigned in violation of the Act, the Securities Exchange Act of 1934, as amended, or any
other applicable law, either federal or state. This subscription and the representations and
warranties contained herein shall be binding upon the heirs, legal representatives, successors
and assigns of the undersigned.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.&nbsp;&nbsp;</TD>
    <TD>(a)&nbsp;The undersigned is aware of the restrictions of transferability of the Common Stock and
further understands and acknowledges that any certificates evidencing the Common Stock will
bear the following legends, to which such interests will be subject:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD><B>THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE SECURITIES LAWS
(COLLECTIVELY, &#147;SECURITIES LAWS&#148;) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL APPLICABLE SECURITIES LAWS OR UNLESS, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER, ANY SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF SUCH SECURITIES LAWS.</B></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>The undersigned understands that following the purchase of the Common Stock, the Common
Stock may only be disposed of pursuant to either (i)&nbsp;an effective registration statement under
the Act, or (ii)&nbsp;an exemption from the registration requirements of the Securities Act of
1933.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>The Company has neither filed such a registration statement with the SEC or any state
authorities nor agreed to do so, nor contemplates doing so in the future for this offering of
Common Stock, and in the absence of such a registration statement or exemption, the
undersigned may have to hold the Common Stock indefinitely and may be unable to liquidate them
in case of an emergency.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(d)&nbsp;&nbsp;</TD>
    <TD>The undersigned acknowledges that the Company is not obligated and does not propose to
furnish the undersigned with information necessary to enable it to be able to make sales under
Rule&nbsp;144 of the Securities Act of 1933.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">6.&nbsp;&nbsp;</TD>
    <TD>The undersigned represents that he or she is a resident of &#95;&#95;&#95;and makes the
following representation:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>I, THE UNDERSIGNED, REPRESENT THAT I HAVE A PRE-EXISTING PERSONAL OR BUSINESS RELATIONSHIP
WITH THE COMPANY, ANY OFFICER, DIRECTOR OR CONTROLLING PERSON THEREOF OR HAVE, THROUGH
MYSELF OR THROUGH MY UNAFFILIATED PROFESSIONAL ADVISER, THE BUSINESS OR FINANCIAL EXPERIENCE
TO PROTECT MY INTERESTS IN CONNECTION WITH MY SUBSCRIPTION HERETO.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>FURTHER, I AM PURCHASING THE COMMON STOCK OFFERED HEREBY FOR INVESTMENT AND NOT WITH A VIEW
TOWARD DISTRIBUTION THEREOF.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">7.&nbsp;&nbsp;</TD>
    <TD>This Subscription Agreement has been delivered in, and shall be construed in accordance with
the laws of the State of California. Subject to the provisions of the paragraph immediately
following, any action in connection with this Subscription Agreement shall be brought in the
appropriate state or federal court in and for the County of Los Angeles, State of California,
which shall have exclusive jurisdiction over such action.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">Executed as of this___



<P align="center" style="font-size: 10pt">Day of August, 2002



<P align="center" style="font-size: 10pt">By /s/ Nathan E Sheldon



<P align="center" style="font-size: 10pt">Nate Sheldon


<P align="center" style="font-size: 10pt">* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *<BR>
* * * * * * * * * * * * * * * * * * * * *

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">





<P align="center" style="font-size: 10pt">The above and foregoing
Subscription accepted this ___day of___, 2002.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="2%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>&nbsp;</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Save the World Air, Inc.<BR></B>&nbsp;&nbsp;<B>A
Nevada corporation</B></TD>
</TR>
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</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="55%">&nbsp;</TD>
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    <TD width="40%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By: /s/ Eugene E. Eichler<BR>
Its: Chief Operating Officer</B></TD>
</TR>
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</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>ANNEX B<BR>
Confidentiality Agreement</B>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P align="center" style="font-size: 10pt">August&nbsp;&nbsp;, 2002



<P align="center" style="font-size: 10pt"><B>STRICTLY PRIVATE AND CONFIDENTIAL</B>



<P align="left" style="font-size: 10pt"><B><I>BY FACSIMILE</I></B><BR>
Save the World Air, Inc.<BR>
29229 Canwood Street, Suite&nbsp;206<BR>
Agoura Hills, California 91301


<P align="left" style="font-size: 10pt">Attention: Eugene E. Eichler, Chief Financial Officer


<P align="left" style="font-size: 10pt">Gentlemen:

<P align="left" style="font-size: 10pt">In connection with the advisory services that you have asked me to provide to Save the World Air,
Inc. (the &#147;<B>Company</B>&#148;) as a member of its Advisory Board, I may be provided and/or have access to
technical and other information concerning the Company and its proprietary technology (the
&#147;Technology&#148;) for a product known as the Zero Pollution-Fuel Saving Device (&#147;ZERO Device&#148;) that can
be used on motor vehicles to reduce pollution and improve fuel efficiency. As a condition to my
being furnished such information, I agree to treat any information concerning the Technology
(including without limitation all specifications, designs, processes, concepts, ideas, strategic
plans, product development plans, research and development, information about the Company&#146;s
operations, finances, reports, interpretations, forecasts and records, and any analyses,
compilations, studies or other documents, whether prepared by the Company or others, that contain
or reflect such information (collectively, the &#147;<B>Confidential Information</B>&#148;) in accordance with the
provisions of this letter. The term &#147;<B>Confidential Information</B>&#148; does not include information which
(a)&nbsp;was or becomes generally available to the public other than as a result of a disclosure by me
or my agents or advisors, (b)&nbsp;was or becomes available to me on a non-confidential basis from a
source other than the Company or its advisors provided that such source is not bound by a
confidentiality agreement with the Company, (c)&nbsp;was within my possession prior to its being
furnished to me by or on behalf of the Company, provided that the source of such information was
not bound by a confidentiality agreement with the Company in respect thereof.


<P align="left" style="font-size: 10pt">By this letter, I agree that the Confidential Information will be used solely for the purposes in
furtherance of my advisory services to the Company and will not be used by me in any way
detrimental to the Company. I also agree that the Confidential Information will be kept
confidential by me, my agents and employees; <I>provided, however</I>, that (i)&nbsp;any such information may
be disclosed to my agents and employees who need to know such information for the purpose of
providing the advisory services (it being understood that such persons shall be informed by me of
the confidential nature of such information and shall be directed by me to treat such information
confidentially and shall assume the same obligations as I under this
letter) and (ii)&nbsp;any disclosure of such information may be made to which the Company consents in
writing. I shall be responsible for any breach of this letter by my agents or employees.



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P align="left" style="font-size: 10pt">Save the World Air, Inc.<BR>
Page 2 of 2

<P align="left" style="font-size: 10pt">In the event I am required by legal process to disclose any of the Confidential Information, I
shall provide you with prompt notice of such requirement so that you may seek a protective order or
other appropriate remedy or waive compliance with the provisions of this letter. In the event that
a protective order or other remedy is obtained, I shall use all reasonable efforts to assure that
all Confidential Information disclosed will be covered by such order or other remedy. Whether such
protective order or other remedy is obtained or we waive compliance with the provisions of this
letter, I will disclose only that portion of the Confidential Information that I am legally
required to disclose. This letter shall be governed by laws of California, U.S.A, in all respects.



<P align="center" style="font-size: 10pt"><B>* * *</B>



<P align="center" style="font-size: 10pt">Very truly yours,



<P align="center" style="font-size: 10pt"><U>/s/ Nathan E. Sheldon</U><BR>
Nate Sheldon




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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<TYPE>EX-10.34
<SEQUENCE>20
<FILENAME>v07538exv10w34.htm
<DESCRIPTION>EXHIBIT 10.34
<TEXT>
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.34



<P align="center" style="font-size: 10pt">ASSIGNMENT OF PATENT RIGHTS



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Assignment of Patent Rights (the &#147;Agreement&#148;) is effective as of the <U>1st </U>day of
September, 2003 (the &#147;Effective Date&#148;), by and between Adrian Menzell, an individual (&#147;Assignor&#148;),
and Save the World Air, Inc., a Nevada corporation with a principal place of business at 5125
Lankershim Blvd., North Hollywood, California 91601 (&#147;Assignee&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Assignor has filed a Provisional Patent Application in Australia entitled,
&#147;Improvements in or Relating to Emission Control Systems&#148; attached hereto as <U>Exhibit&nbsp;A </U>(the
&#147;Provisional Patent Application&#148;);


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Assignor is the owner of all right, title and interest in and to the patent described
in the Provisional Patent Application and all corresponding U.S. and foreign patents and patent
applications, including, but not limited to, those specified in <U>Schedule&nbsp;A </U>attached hereto
(the &#147;Patent Rights&#148;);


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Assignor desires to assign and Assignee desires to acquire, the entire and exclusive
right, title and interest in and to the Patent Rights and the underlying inventions described
therein, in Australia, the United States and throughout the world; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Assignor is willing to assign to Assignee all rights, title and interest in and to
the Patent Rights and the underlying inventions described therein in Australia, the United States
and throughout the world, subject to the terms and conditions of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged
by Assignor, Assignor hereby irrevocably assigns, transfers and conveys to Assignee, and Assignee
hereby accepts, all of Assignor&#146;s right, title and interest throughout the world in and to the
Patent Rights, the underlying inventions described therein and all existing and future design
modifications and improvements thereon, and any and all patent applications whether U.S. or foreign
that are or may be granted therefrom including without limitation any extensions, continuations,
continuations-in-part, divisions, reissues, reexaminations, and renewals thereof, or other
equivalents thereof, and further, all rights and privileges pertaining to the Patent Rights and any
and all patent applications thereof whether U.S. or foreign that are or may be granted therefrom
including, without limitation, the right, if any, to sue or bring other actions for past, present
and future infringement thereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assignor further assigns to and empowers Assignee, its successors, assigns or nominees, all
rights to make applications for patents or other farms of protection for said inventions, design
modifications and improvements and to prosecute such applications as well as to claim and receive
the benefit of the right of priority provided by the International Convention for the Protection of
Industrial Property, as amended, or by any convention which may henceforth be substituted for it,
and the right to invoke and claim such right of priority without further written or oral
authorization.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assignor further agrees that Assignor will, with out charge to Assignee, but at Assignee&#146;s
expense (a)&nbsp;cooperate with Assignee in the prosecution of U.S. patent applications and foreign
counterparts on the invention and any design modifications and improvements; b) execute,


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">verify, acknowledge and deliver all such further papers, including patent applications and
instruments of transfer; and (c)&nbsp;perform such other acts as Assignee lawfully may request to
obtain, maintain, defend or enforce patent applications and patents for the inventions, design
modifications and improvements in any and all countries, and to vest title thereto in Assignee, or
Assignee&#146;s successors and assigns.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Assignee is unable for any reason whatsoever to secure Assignor&#146;s signature
to any document it is entitled to under the preceding paragraph, Assignor hereby irrevocably
designates and appoints Assignee and its duly authorized officers and agents, as his agents and
attorneys-in-fact to act for and on his behalf and instead of him, to execute and file any such
document and to do all other lawfully permitted acts to further the purposes of the foregoing with
the same legal force and effect as if executed by Assignee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assignee shall reimburse Assignor for all costs and expenses (including legal fees) incurred
by Assignor in preparing and filing the Provisional Patent Application up to US$10,000.00. Assignee
shall also make a one-time issuance to Assignor of 20,000 shares of the Company&#146;s common stock,
which shall be issued to Assignor after he has filed the Provisional Patent Application. Assignee
shall further pay a royalty fee of $US0.25 per unit, or product within the scope of the Patent
Rights (&#147;Unit&#148;), sold. Royalties due under this agreement shall be payable quarterly on a
country-by-country basis until (i)&nbsp;the expiration of the last-to-expire issued patent included
within the Patent Rights that has not been held invalid in a final decision of a court of competent
jurisdiction, and that has not been disclaimed or admitted to be invalid or unenforceable through
reissue or otherwise, covering such Unit in such country or (ii)&nbsp;if no such patent has issued in a
country, until the tenth anniversary of the first commercial sale of a Unit in such country.
Assignee shall keep and maintain complete and accurate records of the transactions for the purpose
of determining the royalty amounts payable under this Agreement. Such books and records shall be
kept at the principal place of Assignee&#146;s business for at least five (5)&nbsp;years following the end of
the calendar quarter to which they pertain and will he made available to Assignor, or its
representative, for inspection during ordinary business hours, no more than once every twelve (12)
months. If any such examination shall disclose any deficiency of five percent (5%) or more,
Assignee shall pay, in addition to such deficiency, the reasonable costs of such examination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding any provision to the contrary herein, Assignee shall promptly provide notice
to Assignor of each country for which Assignee intends to file patent applications corresponding to
the Patent Rights, but in no event less than ninety (90)&nbsp;days prior to the expiration of the
deadline for filing such applications under applicable international law, If
Assignee does not intend to file patent applications. Assignor may elect, at its sole cost and
expense, to have Assignee file patent applications in any such country for which Assignee does not
intend to file patent applications, provided that Assignor provides prior notice to Assignee no
later than sixty (60)&nbsp;days prior to the filing deadline and advances the attorneys&#146; fees, costs and
expenses of such filings anticipated by Assignee. In such event, Assignee will provide to Assignor
a non-exclusive, non-transferable license under the Patent Rights to manufacture, market and sell
products that embody the inventions described in the Patent Rights for those countries, subject to
customary restrictions regarding quality assurance, trademark use, protection against gray market
sales, and patent marking provisions of the intellectual property laws of the applicable countries
in which the products are manufactured, distributed or sold.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">Assignor may not sublicense the rights granted in this Agreement. In the event that Assignee
abandons the patent applications, the Patent Rights may revert back to Assignor upon Assignor&#146;s
reimbursement of Assignee&#146;s costs and expenses (including legal fees) incurred in connection with
the patent applications. Assignee agrees to use reasonable commercial efforts to diligently file
patent applications, unless pursuit and protection of the patent applications may infringe on other
patents or be disputed, or Assignee determines, in its sole discretion, that the products cannot
feasibly be manufactured, marketed or sold.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as expressly provided herein, each party agrees not to disclose any terms of this
Agreement to any third party without the consent of the other party; provided,
disclosures may be made as required by securities or other applicable laws, or to actual or
prospective corporate partners, or to a party&#146;s accountants, attorneys and other professional
advisors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The parties further agree that, upon execution of this Agreement, the Consulting Agreement,
attached hereto as <U>Exhibit&nbsp;B</U> and incorporated herein by reference, shall be the controlling
agreement between the parties.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall be governed by and enforced in accordance with the laws of the State
of California and the United States of America, without giving effect to any
conflicts of law principles.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall be binding on, and shall inure to the benefit of, the parties hereto and
their respective successors and assigns.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each party represents that it has taken all necessary action to authorize the execution and
delivery of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be executed in any number of counterparts, each of which shall be deemed to
be an original, and all such counterparts when taken together shall be deemed to be but one and the
same instrument.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective duly authorized officers, as of the Effective Date.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ADRIAN MENZELL:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">SAVE THE WORLD AIR, INC.:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ ADRIAN MENZELL
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EUGENE E. EICHLER</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Title: Chief Operating Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Date: February&nbsp;24, 2004</TD>
</TR>
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</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">On this <U>24th</U> day of <U>February</U>, 2004, before me appeared <U>Eugene Eichler and
Adrian Menzell</U>, the person who signed this instrument, who acknowledged that he/she signed it as a free act on
his/her own behalf or on behalf of the Assignor with authority to do so.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">State of California<BR><BR>
County of Los Angeles
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">)<BR>
)<BR>
)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><BR>ss.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#091;PRISICILLA HARRIET DEVORE<BR>
Commission # 1279247<BR>
Notary Public &#150; California<BR>
Los Angeles County<BR>
My Comm. Expires Oct. 30, 2004&#093;<BR><BR>
/s/ Priscilla Harriet Devore<BR>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><U>Exhibit&nbsp;A</U>



<P align="center" style="font-size: 10pt">Provisional Patent Application



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><U>Exhibit&nbsp;B</U>



<P align="center" style="font-size: 10pt">Consulting Agreement

<P align="center" style="font-size: 10pt">&#091;agreement not entered
into&#093;


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt">Schedule&nbsp;A



<P align="center" style="font-size: 10pt"><U>List of Patent Applications for Menzell Patent</U>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.35
<SEQUENCE>21
<FILENAME>v07538exv10w35.htm
<DESCRIPTION>EXHIBIT 10.35
<TEXT>
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<P align="right" style="font-size: 10pt"><B>EXHIBIT 10.35</B>



<P align="center" style="font-size: 10pt"><B>GLOBAL DEED OF ASSIGNMENT</B>



<P align="left" style="font-size: 10pt"><B>BETWEEN Adrian Menzell</B>


<P align="left" style="font-size: 10pt">27 Park Avenue, Broadbeach, 4218, Queensland, Australia


<P align="center" style="font-size: 10pt">(the &#147;<B>Assignor</B>&#148;)



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>AND</B>&nbsp;&nbsp;&nbsp;</TD>
    <TD><B>SAVE THE WORLD AIR, INC.</B></TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">A Nevada Corporation of 5125 Lankershim Blvd., North Hollywood, California 91601 USA



<P align="center" style="font-size: 10pt">(the &#147;<B>Assignee</B>&#148;)



<P align="left" style="font-size: 10pt"><B>RECITALS</B>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">A.&nbsp;&nbsp;</TD>
    <TD>The Assignor is the inventor of Improvements in or Relating to Emission Control Systems (the
&#147;<B>Invention</B>&#148;) forms of which are described in Australian Patent Applications</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Appn No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Title</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Filed</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2003902450
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Improvements in or Relating to Emission Control Systems
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">20May03</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2003904515
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Improvements in or Relating to Emission Control Systems
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">21Aug03</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2003904811
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Improvements in or Relating to Emission Control Systems
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">4Sep03</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2004900084
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Improvements in or Relating to Emission Control Systems
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">8Jan04</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2004900192
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Improvements in or Relating to Emission Control Systems
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">16Jan04</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2004903000
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Inline Exhaust Device to Improve Efficiency of a
Catalytic Converter
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">4Jun04</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(the &#147;<B>Applications</B>&#148;).


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">B.&nbsp;&nbsp;</TD>
    <TD>The Assignor has agreed to assign to the Assignee and the Assignee desires to take assignment
of any and all the rights, title and interest of the Assignor in and to the Invention and the
Applications on a world wide basis.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>THIS DEED WITNESSES</B>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>The Assignor assigns to the Assignee all rights, title and interest in and to the Invention
and the Applications including, but without limitation:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>all rights, title and interest in and to any Patent or Patents
which may be granted on the Invention and/or the Applications in any and all
countries in the world including, but without limitation, the U.S.A.,
Australia, Europe, Japan, Canada and China, including rights to sue in
respect of any infringement of any such Patent or Patents from the date
when the Applications becomes or became open for public inspection, for the full term of any such Patent or</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>Patents together with any extension of the term of any such Patent or Patents
as may be granted;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>all rights and powers such as subsist at the date of this Deed,
to make one or more further applications for Letter Patent or other form of
protection in the name of the Assignee in any country, region or part of the
world including, but without limitation, the USA, Australia, Europe, Japan,
Canada, China, and for an International patent application(s) in respect of the
Invention, and all rights, title and interest in and to any Letters Patent or
other form of protection to mature from any such applications for the full term
thereof together with any extension of term of any such Patent or Patents or
any other form of protection as may be granted.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>All other rights including copyright.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD>The Assignor agrees to cooperate and do all things necessary and to sign, execute and deliver
all necessary documents, forms and papers to be produced or obtained by the Assignee in
connection with any applications for Letters Patent or other form of protection for the
subject matter of the Invention, in Australia or elsewhere, but at the cost of the Assignee.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>EXECUTED </B>as a <B>DEED</B>. on the 26<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day of June&nbsp;2004



<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left"><B>SIGNED</B></TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left"><B>/s/ Adrian Menzell</B>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>Adrian Menzell</B>   &nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Witness</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left"><B>SIGNED</B></TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD valign="bottom" align="left"><B>SAVE THE WORLD AIR, INC.</B><BR></TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">                                 <B>/s/ Eugene E. Eichler</B>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="bottom" colspan="3" align="left"><B>Eugene E. Eichler</B>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Witness</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.1
<SEQUENCE>22
<FILENAME>v07538exv14w1.htm
<DESCRIPTION>EXHIBIT 14.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv14w1</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="right" style="font-size: 10pt">EXHIBIT&nbsp;14.1


<DIV align="center">
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<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Policies and Procedures
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><B>CODE OF BUSINESS CONDUCT AND ETHICS</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>I.</B>&nbsp;&nbsp;</TD>
    <TD><B>INTRODUCTION</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Code of Business Conduct and Ethics is designed to ensure compliance with legal
requirements and our standards of business conduct. All directors and employees of Save the World
Air, Inc. (the &#147;Company&#148;) are expected to read and understand this Code of Business Conduct and
Ethics, uphold these standards in day-to-day activities, comply with all applicable policies and
procedures, and ensure that all agents and contractors are aware of, understand and adhere to these
standards.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the principles described in this Code of Business Conduct and Ethics are general in
nature, you should also review all applicable Company policies and procedures for more specific
instruction, and contact the Nominating and Corporate Governance Committee if you have any
questions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nothing in this Code of Business Conduct and Ethics, in any company policies and procedures,
or in other related communications (verbal or written) creates or implies an employment contract or
term of employment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are committed to continuously reviewing and updating our policies and procedures.
Therefore, this Code of Business Conduct and Ethics is subject to modification. This Code of
Business Conduct and Ethics supersedes all other such codes, policies, procedures, instructions,
practices, rules or written or verbal representations to the extent they are inconsistent.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please sign the acknowledgment form at the end of this Code of Business Conduct and Ethics and
return the form to the Nominating and Corporate Governance Committee indicating that you have
received, read, understand and agree to comply with the Code of Business Conduct and Ethics. The
signed acknowledgment form will be located in your personnel file.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>II.</B>&nbsp;&nbsp;</TD>
    <TD><B>COMPLIANCE IS EVERYONE&#146;S BUSINESS</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ethical business conduct is critical to our business. As an employee or director, your
responsibility is to respect and adhere to these practices. Many of these practices reflect legal
or regulatory requirements. Violations of these laws and regulations can create significant
liability for you, the Company, its directors, officers, and other employees.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Part of your job and ethical responsibility is to help enforce this Code of Business Conduct
and Ethics. You should be alert to possible violations and report possible violations to the Human
Resources Department or the Nominating and Corporate Governance Committee of the Board of Directors
(&#147;Nominating Committee&#148;). You must cooperate in any internal or external investigations of
possible violations. Reprisal, threats, retribution or retaliation against any person who has in
good faith reported a violation or a suspected violation of law, this Code of Business Conduct or
other


<P align="center" style="font-size: 10pt">1
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Policies and Procedures
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Company policies, or against any person who is assisting in any investigation or process with
respect to such a violation, is prohibited.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Violations of law, this Code of Business Conduct and Ethics, or other Company policies or
procedures should be reported to the Human Resources Department or the Nominating Committee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Violations of law, this Code of Business Conduct and Ethics or other Company policies or
procedures by Company employees can lead to disciplinary action up to and including termination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In trying to determine whether any given action is appropriate, use the following test.
Imagine that the words you are using or the action you are taking is going to be fully disclosed in
the media with all the details, including your photo. If you are uncomfortable with the idea of
this information being made public, perhaps you should think again about your words or your course
of action.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In all cases, if you are unsure about the appropriateness of an event or action, please seek
assistance in interpreting the requirements of these practices by contacting the Human Resources
Department.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>III.</B>&nbsp;&nbsp;</TD>
    <TD><B>YOUR RESPONSIBILITIES TO THE COMPANY AND ITS SHAREHOLDERS</B></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;General Standards of Conduct</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company expects all employees, agents and contractors to exercise good judgment to ensure
the safety and welfare of employees, agents and contractors and to maintain a cooperative,
efficient, positive, harmonious and productive work environment and business organization. These
standards apply while working on our premises, at offsite locations where our business is being
conducted, at Company-sponsored business and social events, or at any other place where you are a
representative of the Company. Employees, agents or contractors who engage in misconduct or whose
performance is unsatisfactory may be subject to corrective action, up to and including termination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Applicable Laws</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All Company directors, employees, agents and contractors must comply with all applicable laws,
regulations, rules and regulatory orders. Company employees located outside of the United States
must comply with laws, regulations, rules and regulatory orders of the United States, including the
Foreign Corrupt Practices Act and the U.S. Export Control Act, in addition to applicable local
laws. Each employee, agent and contractor must acquire appropriate knowledge of tie requirements
relating to his or her duties sufficient to enable him or her to recognize potential dangers and to
know when to seek advice from the Human Resources Department on specific Company policies and
procedures. Violations of laws, regulations, rules and orders may subject the employee, agent or
contractor to individual criminal or civil liability, as well as to discipline by the


<P align="center" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="right" style="font-size: 10pt">Exhibit&nbsp;14.2


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<TR><TD>&nbsp;</TD></TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD width="47%"></TD>
    <TD width="5%"></TD>
    <TD width="47%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Policies and Procedures
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><B>CODE OF ETHICS FOR DIRECTORS AND<BR>
SENIOR EXECUTIVE OFFICERS</B>



<P align="left" style="font-size: 10pt"><B>Purpose</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of this Code of Ethics is to promote the honest and ethical conduct of the Senior
Executives (as defined below) of Save the World Air, Inc. (&#147;STWA&#148;), including the ethical handling
of actual or apparent conflicts of interest between personal and professional relationships; full,
fair, accurate, timely and understandable disclosure in periodic reports filed by STWA and
compliance with all applicable rules and regulations applicable to STWA and its officers.


<P align="left" style="font-size: 10pt"><B>Applicability</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Code of Ethics is presently applicable to all STWA&#146;s Directors, its Chairman/Chief
Executive Officer, President and Chief Operating Officer (and persons appointed to &#147;senior
executive positions&#148; at later dates), together, &#147;Senior Executives.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While we expect honest and ethical conduct in all aspects of our business from all of our
employees, we expect the highest possible honest and ethical conduct from our Senior Executives.
As a Senior Executive, you are an example for other employees and we expect you, through your
leadership role, to foster a culture of transparency, integrity and honesty. Your responsibilities
include maintaining a culture of high ethical standards and commitment to compliance and a work
environment that encourages employees to raise concerns, and promptly addresses employee compliance
concerns.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STWA&#146;s Code of Business Conduct, which this Code of Ethics for Senior Executive, sets forth
the fundamental principles and key policies and procedures that govern the conduct of all STWA
employees, officers and directors. You are bound by the requirements and standards set forth in
the Code of Business Conduct, as well as those set forth in this Code of Ethics and other
applicable policies and procedures. In the event of any conflict between the Code of Business
Conduct and this Code of Ethics, this Code of Ethics shall govern your behavior or any required
approvals or waivers. Compliance with this Code of Ethics is a condition of your employment or
directorship and any violations of this Code may result in disciplinary action, up to and including
termination of your employment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Waivers of this Code of Ethics may be made only by the Board of Directors of STWA or a
committee of the Board of Directors comprised solely of independent directors. Any waivers of this
Code of Ethics will be disclosed in accordance with applicable law, regulation or the requirements
of any listing criteria of an exchange upon which STWA&#146;s stock may be traded.


<P align="center" style="font-size: 10pt">1
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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%"></TD>
    <TD width="5%"></TD>
    <TD width="47%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Policies and Procedures
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>Compliance With Laws, Rules&nbsp;And Regulations</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You are expected to comply with both the letter and spirit of all applicable laws, rules and
regulations governing the conduct of our business and to report any suspected violations of all
applicable laws, rules and regulations to either the Chair of the Audit Committee or the Chair of
the Corporate Governance Committee. You will not be subject to retaliation because of a good faith
report of a suspected violation of this Code of Ethics.


<P align="left" style="font-size: 10pt"><B>Fraud, Theft, Bribery And Similar Conduct</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any act that involves theft, fraud, embezzlement, or misappropriation of any property,
including that of STWA or any of its employees, suppliers or customers, is prohibited. Offering or
accepting kickbacks or bribes are forbidden.


<P align="left" style="font-size: 10pt"><B>Auditors</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fraudulently influencing, misleading, coercing or manipulating the auditor of STWA&#146;s financial
statements for the purpose of rendering those financial statements materially misleading is
prohibited.


<P align="left" style="font-size: 10pt"><B>Revenue Recognition</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Executives must ensure that all revenue transactions are completed, to the best of the
Senior Executive&#146;s knowledge, in accordance with STWA&#146;s revenue recognition policies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All commitments or representations made to customers or distributors or potential customers or
distributors must be included in the final contract with the customer or distributor or related
documentation submitted with customer or distributor orders. Employees must not make any
commitments to the customer or distributor, orally or in writing, which have not been documented in
the agreement or submitted to the STWA finance and/or contract departments. STWA prohibits
side-letters or kickbacks with customers or distributors or potential customers or distributors.


<P align="left" style="font-size: 10pt"><B>Accurate Periodic Reporting and Disclosure</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a public company, STWA is required to file periodic and other reports with the Securities
and Exchange Commission (&#147;SEC&#148;). STWA&#146;s policy is to make full, fair, accurate, timely and
understandable disclosure in compliance with all applicable laws and regulations in all reports and
documents that STWA files with, or submits to, the SEC and in all other public communications made
by STWA. As a Senior Executive, you are required to promote compliance with this policy and to
abide by all STWA standards, policies and procedures designed to promote compliance with this
policy.


<P align="center" style="font-size: 10pt">2
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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%"></TD>
    <TD width="5%"></TD>
    <TD width="47%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Policies and Procedures
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>Accurate Record Keeping</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Every Senior Executive must maintain accurate and complete records, including providing
accurate and complete information to the accounting and the finance departments. No false,
misleading or artificial entries may be made on, or be provided for entry on, STWA&#146;s books and
records. No funds or assets may be maintained by STWA for any illegal or improper purposes. All
transactions must be fully and completely documented and recorded in STWA&#146;s accounting records. It
is against STWA policy to make entries that intentionally conceal or disguise the true nature of
any transaction.


<P align="left" style="font-size: 10pt"><B>Conflicts of Interest</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is STWA&#146;s policy that you should avoid transactions, commitments, and other activities
which are not in STWA&#146;s best interests or which could involve an actual conflict, or the appearance
of a conflict, between your interests and those of STWA.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is not possible to define all situations that could involve a conflict of interest; in most
instances, however, sound business judgment should be sufficient to evaluate a situation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A conflict of interest exists when your loyalties are divided between STWA&#146;s interests and
your own interests, those of your family, or those of a customer, supplier or competitor. You are
expected to avoid both the fact and appearance of conflicts of interest.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The prohibition against acting in a dual capacity in transacting STWA business, and from
acquiring interests adverse to STWA, is applicable irrespective of your intentions and without
regard to whether the action caused, or has the potential to cause, injury to STWA.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is presented as a guide in determining circumstances that might create conflicts
of interest; they are not intended, however, to cover all possible situations.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Representing STWA in any transaction if your personal interests might
affect your ability to represent STWA&#146;s interests fairly and impartially. You
must not knowingly or voluntarily permit yourself to be placed in a position where
your interests may become adverse to STWA&#146;s interests. You must not allow
personal relationships with current or prospective customers or suppliers to
influence business decisions.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Investment by you or a member of your immediate family in a customer,
supplier, or competitor (or any company/partnership affiliated with a customer,
supplier, or competitor) of STWA is prohibited if you have or would have the
opportunity to influence business transactions between STWA and the customer,
supplier, or competitor. Passive investments in</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">3
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</TABLE>

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    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
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</DIV>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>publicly traded companies shall not be a violation if you or a member of your
immediate family owns less than 1% of such company&#146;s outstanding stock.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>You must not take for yourself nor direct to others any existing
business or any opportunities for prospective business that could be considered by
STWA.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>It is a conflict of interest to serve as a director of any company
that competes with STWA. You may not serve as a director of a private company
that is a supplier, customer, developer, or other business partner without first
obtaining the approval of the Chair of the Corporate Governance Committee. You
also may not become a director of any public company, without first obtaining the
approval of the Chair of the Corporate Governance Committee.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>You must not speculate or deal in materials, supplies, equipment or
products that STWA buys or sells, or in property rights in which STWA may be
interested.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Solicitation or acceptance by you or a member of your immediate family
of any personal loan or guarantee from a customer, supplier or competitor.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before acting in a manner that creates or appears to create a conflict of interest, you must
make full disclosure to and obtain written approval of either the Chair of the Audit Committee or
the Chair of the Corporate Governance Committee.


<P align="left" style="font-size: 10pt"><B>Compliance with the Code; Reporting of Violations</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you have questions about this Code of Ethics for Senior Executive and Financial Officers,
you should seek guidance from STWA&#146;s legal counsel. If you know of or suspect a violation of
applicable laws or regulations or this Code of Ethics for Senior Executive and Financial Officers,
you must immediately report that information to either the Chair of the Audit Committee or to the
Chair of the Board of Directors. <I>No one will be subject to retaliation because of a good faith
report of a suspected violation.</I>


<P align="left" style="font-size: 10pt"><B>No Rights Created</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Code of Ethics is a statement of certain fundamental principles, policies and procedures
that govern STWA&#146;s Senior Executives in the conduct of STWA&#146;s business. It is not intended to and
does not create any rights in any employee, customer, supplier, competitor, stockholder or any
other person or entity.


<P align="center" style="font-size: 10pt">4
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</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
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<P align="left" style="font-size: 10pt"><B><I>ACKNOWLEDGMENT</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have received and read the Code of Ethics for Senior Executive and Financial Officers, and I
understand its contents. I agree to comply fully with the standards contained in the Code of
Ethics and STWA&#146;s related policies and procedures. I understand that I have an obligation to
promptly report to either the Chair of the Audit Committee or the Chair of the Corporate Governance
Committee any suspected violation of the Code of Ethics for Senior Executive and Financial
Officers.

<DIV align="center">
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    <TD width="50%">&nbsp;</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD colspan="2" align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
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</DIV>



<P align="center" style="font-size: 10pt">5
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    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
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<P align="left" style="font-size: 10pt">Company.
Such individual violations may also subject the Company to civil or criminal liability or the loss
of business.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Conflicts of Interest</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of us has a responsibility to the Company, our shareholders and each other. Although this
duty does not prevent us from engaging in personal transactions and investments, it does demand
that we avoid situations where a conflict of interest might occur or appear to occur. The Company
is subject to scrutiny from many different individuals and organizations. We should always strive
to avoid even the appearance of impropriety.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;What constitutes conflict of interest? A conflict of interest exists where the interests or
benefits of one person or entity conflict with the interests or benefits of the Company. Examples
include:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<B>Employment/Outside Employment. </B>In consideration of your employment with the
Company, you are expected to devote your full attention to the business interests of the Company.
You are prohibited from engaging in any activity that interferes with your performance or
responsibilities to the Company or is otherwise in conflict with or prejudicial to the Company.
Our policies prohibit any employee from accepting simultaneous employment with a Company supplier,
customer, developer or competitor, or from taking part in any activity that enhances or supports a
competitor&#146;s position. Additionally, you must disclose to the Company any interest that you have
that may conflict with the business of the Company. If you have any questions on this requirement,
you should contact your supervisor or the Human Resources Department.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<B>Outside Directorships. </B>It is a conflict of interest to serve as a director of
any company that competes with the Company. Although you may serve as a director of a Company
supplier, customer, developer, or other business partner, our policy requires that you first obtain
approval from the Company&#146;s Nominating Committee before accepting a directorship. Any compensation
you receive should be commensurate to your responsibilities. Such approval may be conditioned upon
the completion of specified actions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<B>Business Interests. </B>If you are considering investing in a Company customer,
supplier, developer or competitor, you must first take great care to ensure that these investments
do not compromise your responsibilities to the Company. Many factors should be considered in
determining whether a conflict exists, including the size and nature of the investment; your
ability to influence the Company&#146;s decisions; your access to confidential information of the
Company or of the other company; and the nature of the relationship between the Company and the
other company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <B>Related Parties. </B>As a general rule, you should avoid conducting Company
business with a relative or significant other, or with a business in which a relative or
significant other is associated in any significant role. Relatives include spouse, sister,
brother, daughter, son, mother, father, and parents, aunts, uncles, nieces,


<P align="center" style="font-size: 10pt">3
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    <TD width="50%">&nbsp;</TD>
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    <TD width="50%">&nbsp;</TD>
</TR>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Policies and Procedures
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
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<P align="left" style="font-size: 10pt">nephews, cousins, step
relationships, and in-laws. Significant others include persons living in a spousal (including same
sex) or familial fashion with an employee.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If such a related party transaction is unavoidable, you must fully disclose the nature of the
related party transaction to the Company&#146;s President/Chief Financial Officer. If determined to be
material to the Company by the President/Chief Financial Officer, the Company&#146;s Audit Committee
must review and approve, in writing in advance such related party transactions. The most
significant related party transactions, particularly those involving the Company&#146;s directors or
senior executive officers, must be reviewed and approved in writing in advance by the Company&#146;s
Board of Directors. The Company must report all such material related party transactions under
applicable accounting rules, Federal securities laws, SEC rules and regulations, and securities
market rules. Any dealings with a related party must be conducted in such a way that no
preferential treatment is given to this business.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company discourages the employment of relatives and significant others in positions or
assignments within the same department and prohibits the employment of such individuals in
positions that have a financial dependence or influence (e.g., an auditing or control relationship,
or a supervisor/subordinate relationship). The purpose of this policy is to prevent the
organizational impairment and conflicts that are a likely outcome of the employment of relatives or
significant others, especially in a supervisor/subordinate relationship. If a question arises
about whether a relationship is covered by this policy, the Human Resources Department is
responsible for determining whether an applicant&#146;s or transferee&#146;s acknowledged relationship is
covered by this policy. The Human Resources Department shall advise all affected applicants and
transferees of this policy. Willful withholding of information regarding a prohibited
relationship/reporting arrangement may be subject to corrective action, up to and including
termination. If a prohibited relationship exists or develops between two employees, the employee
in the senior position must bring this to the attention of his/her supervisor. The Company retains
the prerogative to separate the individuals at the earliest possible time, either by reassignment
or by termination, if necessary.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;<B>Other Situations. </B>Because other conflicts of interest may arise, it would be
impractical to attempt to list all possible situations. If a proposed transaction or situation
raises any questions or doubts in your mind you should consult the Human Resources Department.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>D.&nbsp;Corporate Opportunities</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employees, officers and directors may not exploit for their own personal gain opportunities
that are discovered through the use of corporate property, information or position unless the
opportunity is disclosed fully in writing to the Company&#146;s Board of Directors and the Board of
Directors declines to pursue such opportunity.


<P align="center" style="font-size: 10pt">4
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    <TD width="50%">&nbsp;</TD>
</TR>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Policies and Procedures
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
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</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>E.&nbsp;Protecting the Company&#146;s Confidential Information</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s confidential information is a valuable asset. The Company&#146;s confidential
information includes product architectures; source codes; product plans and road maps; names and
lists of customers, dealers, and employees; and financial information. This information is the
property of the Company and may be protected by patent, trademark, copyright and trade secret laws.
All confidential information must be used for Company business purposes only. Every employee,
agent and contractor must safeguard it. <B>THIS RESPONSIBILITY INCLUDES NOT DISCLOSING THE COMPANY
CONFIDENTIAL INFORMATION SUCH AS INFORMATION REGARDING THE COMPANY&#146;S PRODUCTS OR BUSINESS OVER THE
INTERNET. </B>You are also responsible for properly labeling any and all documentation shared with or
correspondence sent to the Company&#146;s outside counsel as &#147;Attorney-Client Privileged&#148;. This
responsibility includes the safeguarding, securing and proper disposal of confidential information
in accordance with the Company&#146;s policy on Maintaining and Managing Records set forth in Section
III.I of this Code of Business Conduct and Ethics. This obligation extends to confidential
information of third parties, which the Company has rightfully received under Non-Disclosure
Agreements. See the Company&#146;s policy dealing with Handling Confidential Information of Others set
forth in Section&nbsp;IV.D of this Code of Business Conduct and Ethics.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<B>Proprietary Information and Invention Agreement. </B>When you joined the Company,
you signed an agreement to protect and hold confidential the Company&#146;s proprietary information.
This agreement remains in place for as long as you work for the Company and after you leave the
Company. Under this agreement, you may not disclose the Company&#146;s confidential information to
anyone or use it to benefit anyone other than the Company without the prior written consent of an
authorized Company officer.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<B>Disclosure of Company Confidential Information. </B>To further the Company&#146;s
business, from time to time our confidential information may be disclosed to potential business
partners. However, such disclosure should never be done without carefully considering its
potential benefits and risks. If you determine in consultation with your manager and other
appropriate Company management that disclosure of confidential information is necessary, you must
then contact the President to ensure that an appropriate written nondisclosure agreement is signed
prior to the disclosure. The Company has standard nondisclosure agreements suitable for most
disclosures. You must not sign a third party&#146;s nondisclosure agreement or accept changes to the
Company&#146;s standard nondisclosure agreements without review and approval by the Company&#146;s President.
In addition, all Company materials that contain Company confidential information, including
presentations, must be reviewed and approved by the Company&#146;s President prior to publication or
use. Furthermore, any employee publication or publicly made statement that might be perceived or
construed as attributable to the Company, made outside the scope of his or her employment with the
Company, must be reviewed and approved in writing in advance by the Company&#146;s President and must
include the Company&#146;s standard disclaimer that the publication or statement represents the views of
the specific author and not of the Company.


<P align="center" style="font-size: 10pt">5
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<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="50%">&nbsp;</TD>
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    <TD width="50%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Policies and Procedures
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<B>Requests by Regulatory Authorities. </B>The Company and its employees, agents and
contractors must cooperate with appropriate government inquiries and investigations. In this
context, however, it is important to protect the legal rights of the Company with respect to its
confidential information. All government requests for information, documents or investigative
interviews must be referred to the Company&#146;s President. No financial information may be disclosed
without the prior approval of the President/Chief Financial Officer.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;<B>Company Spokespeople. </B>Specific policies have been established regarding who
may communicate information to the press and the financial analyst community. All inquiries or
calls from the press arid financial analysts should be referred to the Chairman/CEO or the
President. The Company has designated its CEO and President/CFO as official Company spokespeople
for financial matters. These designees are the only people who may communicate with the press on
behalf of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>F.&nbsp;Obligations Under Securities Laws: &#147;Insider&#148; Trading</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Obligations under the U.S. securities laws apply to everyone. In the normal course of
business, officers, directors, employees, agents, contractors and consultants of the Company may
come into possession of significant, sensitive in formation. This information is the property of
the Company &#151; - you have been entrusted with it. You may not profit from it by buying or selling
securities yourself, or passing on the information to others to enable them to profit or for them
to profit on your behalf. The purpose of this policy is both to inform you of your legal
responsibilities and to make clear to you that the misuse of sensitive information is contrary to
Company policy and U.S. securities laws.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insider trading is a crime, penalized by fines of up to $5,000,000 and 20&nbsp;years in jail for
individuals. In addition, the SEC may seek the imposition of a civil penalty of up to three times
the profits made or losses avoided from the trading. Insider traders must also disgorge any
profits made, and are often subjected to an injunction against future violations. Finally, insider
traders may be subjected to civil liability in private lawsuits.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employers and other controlling persons (including supervisory personnel) are also at risk
under U.S. securities laws. Controlling persons may, among, other things, face penalties of the
greater of $25,000,000 or three times the profits made or losses avoided by the trader if they
recklessly fail to take preventive steps to control insider trading.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thus, it is important both to you and the Company that insider-trading violations not occur.
You should be aware that stock market surveillance techniques are becoming increasingly
sophisticated, and the chance that U.S. federal or other regulatory authorities will detect and
prosecute even small-level trading is significant. Insider trading rules are strictly enforced,
even in instances when the financial transactions seem small. You should contact the
President/President/Chief Financial Officer if you are unsure as to whether or not you are free to
trade.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For more details, and to determine if you are restricted from trading during trading blackout
periods, you should review the Company&#146;s Insider Trading Compliance Program. You can request a
copy of this policy from the President. You should take the time to read the Insider Trading
Compliance Program carefully, paying particular attention to the specific policies and the
potential criminal and civil liability and/or disciplinary action for insider trading violations.
Directors, employees, agents and contractors of the Company who violate this Policy are also be
subject to disciplinary action by the Company, which may include termination of employment or of
business relationship. All questions regarding the Company&#146;s Insider Trading Compliance Program
should be directed to the Company&#146;s President/President/Chief Financial Officer.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>G.&nbsp;Prohibition Against Short Selling of Company Stock</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Company director, officer or other employee, agent or contractor may, directly or
indirectly, sell any equity security, including derivatives, of the Company if he or she (1)&nbsp;does
not own the security sold, or (2)&nbsp;if he or she owns the security, does not deliver it against such
sale (a &#147;short sale against the box&#148;) within twenty days thereafter, or does not within five days
after such sale deposit it in the mails or other usual channels of transportation. No Company
director, officer or other employee, agent or contractor may engage in short sales. A short sale,
as defined in this policy, means any transaction whereby one may benefit from a decline in the
Company&#146;s stock price. While employees who are not senior executive officers or directors are not
prohibited by law from engaging in short sales of Company&#146;s securities, the Company has adopted as
policy that employees may not do so as well.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>H.&nbsp;Use of Company&#146;s Assets</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<B>General. </B>Protecting the Company&#146;s assets is a key fiduciary responsibility of
every employee, agent and contractor. Care should be taken to ensure that assets are not
misappropriated, loaned to others, or sold or donated, without appropriate authorization. All
Company directors, employees, agents and contractors are responsible for the proper use of Company
assets, and must safeguard such assets against loss, damage, misuse or theft. Employees, agents or
contractors who violate any aspect of this policy or who demonstrate poor judgment in the manner in
which they use any Company asset may be subject to disciplinary action, up to and including
termination of employment or business relationship at the Company&#146;s sole discretion. Company
equipment and assets are to be used for Company business purposes only. Employees, agents and
contractors may not use Company assets for personal use, nor may they allow any other person to use
Company assets. Employees who have any questions regarding this policy should bring them to the
attention of the Company&#146;s Human Resources Department.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <B>Physical Access Control. </B>The Company has and will continue to develop
procedures covering physical access control to ensure privacy of communications,


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<P align="left" style="font-size: 10pt">maintenance of the
security of the Company communication equipment, and safeguard Company assets from theft, misuse
and destruction. You are personally responsible for complying with the level of access control
that has been implemented in the facility where you work on a permanent or temporary basis. You must not defeat or cause to be defeated
the purpose for which the access control was implemented.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<B>Company Funds. </B>Every Company employee is personally responsible for all
Company funds over which he or she exercises control. Company agents and contractors should not be
allowed to exercise control over Company funds. Company funds must be used only for Company
business purposes. Every Company employee, agent and contractor must take reasonable steps to
ensure that the Company receives good value for Company funds spent, and must maintain accurate and
timely records of each and every expenditure. Expense reports must be accurate and submitted in a
timely manner. Company directors, employees, agents and contractors must not use Company funds for
any personal purpose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;<B>Computers and Other Equipment. </B>The Company strives to furnish employees with
the equipment necessary to efficiently and effectively do their jobs. You must care for that
equipment and use it responsibly only for Company business purposes. If you use Company equipment
at your home or off-site, take precautions to protect it from theft or damage, just as if it were
your own. If the Company no longer employs you, you must immediately return all Company equipment.
While computers and other electronic devices are made accessible to employees to assist them in
performing their jobs and to promote Company&#146;s interests, all such computers and electronic
devices, whether used entirely or partially on the Company&#146;s premises or with the aid of the
Company&#146;s equipment or resources, must remain fully accessible to the Company and, to the maximum
extent permitted by law, will remain the sole and exclusive property of the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employees, agents and contractors should not maintain any expectation of privacy with respect
to information transmitted over, received by, or stored in any electronic communications device
owned, leased, or operated in whole or in part by or on behalf of the Company. To the extent
permitted by applicable law, the Company retains the right to gain access to any information
received by, transmitted by, or stored in any such electronic communications device, by and through
its employees, agents, contractors, or representatives, at any time, either with or without an
employee&#146;s or third party&#146;s knowledge, consent or approval.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;<B>Software. </B>All software used by employees to conduct Company business must be
appropriately licensed. Never make or use illegal or unauthorized copies of any software, whether
in the office, at home, or on the road, since doing so may constitute copyright infringement and
may expose you and the Company to potential civil and criminal liability. In addition, use of
illegal or unauthorized copies of software may subject the employee to disciplinary action, up to
and including termination. The Company&#146;s IT Department may inspect Company computers periodically
to verify that only approved and licensed software has been installed. Any non-licensed/supported
software will be removed.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;<B>Electronic Usage. </B>The purpose of this policy is to make certain that employees
utilize electronic communication devices in a legal, ethical, and appropriate manner. This policy
addresses the Company&#146;s responsibilities and concerns regarding the fair and proper use of all
electronic communications devices within the organization,
including computers, e-mail, connections to the Internet, intranet and extranet and any other
public or private networks, voice mail, video conferencing, facsimiles, and telephones. Posting or
discussing information concerning the Company&#146;s products or business on the Internet without the
prior written consent of the Company&#146;s CFO is prohibited. Any other form of electronic
communication used by employees currently or in the future is also intended to be encompassed under
this policy. It is not possible to identify every standard and rule applicable to the use of
electronic communications devices. Employees are therefore encouraged to use sound judgment
whenever using any feature of our communications systems. The complete set of policies with
respect to electronic usage of the Company&#146;s assets is located at the principal offices in North
Hollywood, California, United States. You are expected to review, understand and follow such
policies and procedures.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>I.&nbsp;Maintaining and Managing Records</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of this policy is to set forth and convey the Company&#146;s business and legal
requirements in managing records, including all recorded information regardless of medium or
characteristics. Records include paper documents, CDs, computer hard disks, email, floppy disks,
microfiche, microfilm or all other media. The Company is required by local, state, federal,
foreign and other applicable laws, rules and regulations to retain certain records and to follow
specific guidelines in managing its records. Civil and criminal penalties for failure to comply
with such guidelines can be severe for employees, agents, contractors and the Company, and failure
to comply with such guidelines may subject the employee, agent or contractor to disciplinary
action, up to and including termination of employment or business relationship at the Company&#146;s
sole discretion.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>J.&nbsp;Records on Legal Hold</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A legal hold suspends all document destruction procedures in order to preserve appropriate
records under special circumstances, such as litigation or government investigations. The
Company&#146;s President determines and identifies what types of Company records or documents are
required to be placed under a legal hold. Every Company employee, agent and contractor must comply
with this policy. Failure to comply with this policy may subject the employee, agent or contractor
to disciplinary action, up to and including termination of employment or business relationship at
the Company&#146;s sole discretion.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s President will notify you if a legal hold is placed on records for which you are
responsible. You then must preserve and protect the necessary records in accordance with
instructions from the Company&#146;s President. <B>RECORDS OR SUPPORTING DOCUMENTS THAT HAVE BEEN PLACED
UNDER A LEGAL HOLD MUST NOT BE DESTROYED, ALTERED OR MODIFIED UNDER ANY CIRCUMSTANCES. </B>A legal
hold remains effective until it is officially released in


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<P align="left" style="font-size: 10pt">writing by the Company&#146;s President. If
you are unsure whether a document has been placed under a legal hold, you should preserve and
protect that document while ,you check with the Company&#146;s President.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you have any questions about this policy you should contact the Company&#146;s President.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>K.&nbsp;Payment Practices</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<B>Accounting Practices. </B>The Company&#146;s responsibilities to its shareholders and
the investing public require that all transactions be fully and accurately recorded in the
Company&#146;s books and records in compliance with all applicable laws. False or misleading entries,
unrecorded funds or assets, or payments without appropriate supporting documentation and approval
are strictly prohibited and violate Company policy and the law. Additionally, all documentation
supporting a transaction should fully and accurately describe the nature of the transaction and be
processed in a timely fashion.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<B>Political Contributions. </B>The Company reserves the right to communicate its
position on important issues to elected representatives and other government officials. It is the
Company&#146;s policy to comply fully with all local, state, federal, foreign and other applicable laws,
rules and regulations regarding political contributions. The Company&#146;s funds or assets must not be
used for, or be contributed to, political campaigns or political practices under ally circumstances
without the prior written approval of the Company&#146;s Board of Directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<B>Prohibition of Inducements. </B>Under no circumstances may employees, agents or
contractors offer to pay, make payment, promise to pay, or issue authorization to pay any money,
gift, or anything of value to customers, vendors, consultants, etc. that is perceived as intended,
directly or indirectly, to improperly influence any business decision, any act or failure to act,
any commitment of fraud, or opportunity for the commission of any fraud. Inexpensive gifts,
infrequent business meals, celebratory events and entertainment, provided that they are not
excessive or create an appearance of impropriety, do not violate this policy. Questions regarding
whether a particular payment or gift violates this policy should be directed to Human Resources
Department.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>L.&nbsp;Foreign Corrupt Practices Act</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company requires full compliance with the Foreign Corrupt Practices Act (FCPA)&nbsp;by all of
its employees, agents, and contractors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The anti-bribery and corrupt payment provisions of the FCPA make illegal any corrupt offer,
payment, promise to pay, or authorization to pay any money, gift, or anything of value to any
foreign official, or any foreign political party, candidate or official, for the purpose of:
influencing any act or failure to act, in the official capacity of that foreign official or party;
or inducing the foreign official or party to use influence to affect a decision of a foreign
government or agency, in order to obtain or retain business for anyone, or direct business to
anyone.


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</TR>
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All Company directors, employees, agents and contractors whether located in the United States
or abroad, are responsible for FCPA compliance and the procedures to ensure FCPA compliance. All
managers and supervisory personnel are expected to monitor continued compliance with the FCPA to
ensure compliance with the highest moral, ethical and professional standards of the Company. FCPA
compliance includes the Company&#146;s policy on Maintaining and Managing Records in Section&nbsp;III.I of
this Code of Business Conduct and Ethics.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Laws in most countries outside of the United States also prohibit or restrict government
officials or employees of government agencies from receiving payments, entertainment, or gifts for
the purpose of winning or keeping business. No contract or agreement may be made with any business
in which a government official or employee holds a significant interest, without the prior approval
of the President.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>M.&nbsp;Export Controls</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A number of countries maintain controls on the destinations to which products or software may
be exported. Some of the strictest export controls are maintained by the United States against
countries that the U.S. government considers unfriendly or as supporting international terrorism.
The U.S. regulations are complex and apply both to exports from the United States and to exports of
products from other countries, when those products contain U.S.-origin components or technology.
Software created in the United States is subject to these regulations even if duplicated and
packaged abroad. In some circumstances, an oral presentation containing technical data made to
foreign nationals in the United States may constitute a controlled export. The President can
provide you with guidance on which countries are prohibited destinations for Company products or
whether a proposed technical presentation to foreign nationals may require a U.S. Government
license.


<P align="left" style="font-size: 10pt"><B>IV. RESPONSIBILITIES TO OUR CUSTOMERS AND OUR SUPPLIERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A.&nbsp;Customer Relationships</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If your job puts you in contact with any Company customers or potential customers, it is
critical for you to remember that you represent the Company to the people with whom you are
dealing. Act in a manner that creates value for our customers and helps to build a relationship
based upon trust. The Company and its employees have built up significant goodwill for many years.
This goodwill is one of our most important assets, and the Company directors, employees, agents
and contractors must act to preserve and enhance our reputation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>B.&nbsp;Payments or Gifts from Others</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under no circumstances may employees, agents or contractors accept any offer, payment, promise
to pay, or authorization to pay any money, gift, or anything of value from customers, vendors,
consultants, etc. that is perceived as in tended, directly or


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<P align="left" style="font-size: 10pt">indirectly, to influence any business
decision, any act or failure to act, any commitment of fraud, or opportunity for the commission of
any fraud. Inexpensive gifts, infrequent business meals, celebratory events and entertainment,
provided that they are not excessive or create an appearance of impropriety, do not violate this
policy. Questions regarding whether a particular payment or gift violates this policy are to be
directed to Human Resources or the President.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gifts given by the Company to suppliers or customers or received from suppliers or customers
should always be appropriate to the circumstances and should never be of a
kind that could create an appearance of impropriety. The nature and cost must always be accurately
recorded in the Company&#146;s books and records.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>C.&nbsp;Publications of Others</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company subscribes to many publications that help employees do their jobs better. These
include newsletters, reference works, online reference services, magazines, books, and other
digital and printed works. Copyright law generally protects these works, and their unauthorized
copying and distribution constitute copyright infringement. You must first obtain the consent of
the publisher of a publication before copying publications or significant parts of them. When in
doubt about whether you may copy a publication, consult the President.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>D.&nbsp;Handling the Confidential Information of Others</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has many kinds of business relationships with many companies and individuals.
Sometimes, they will volunteer confidential information about their products or business plans to
induce the Company to enter into a business relationship. At other times, we may request that a
third party provide confidential information to permit the Company to evaluate a potential business
relationship with that party. Whatever the situation, we must take special care to handle the
confidential information of others responsibly. We handle such confidential information in
accordance with our agreements with such third parties. See also the Company&#146;s policy on
Maintaining and Managing Records in Section&nbsp;III.I of this Code of Business Conduct and Ethics.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<B>Appropriate Nondisclosure Agreements. </B>Confidential information may take many
forms. An oral presentation about a company&#146;s product development plans may contain protected
trade secrets. A customer list or employee list may be a protected trade secret. A demo of an
alpha version of a company&#146;s new software may contain information protected by trade secret and
copyright laws.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should never accept information offered by a third party that is represented as
confidential, or which appears from the context or circumstances to be confidential, unless an
appropriate nondisclosure agreement has been signed with the party offering the information. <B>THE
PRESIDENT CAN PROVIDE NONDISCLOSURE AGREEMENTS TO FIT ANY PARTICULAR SITUATION, AND WILL COORDINATE
APPROPRIATE EXECUTION OF SUCH AGREEMENTS ON BEHALF OF THE COMPANY. </B>Even after a nondisclosure
agreement is in place, you


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<P align="left" style="font-size: 10pt">should accept only the information necessary to accomplish the purpose
of receiving it, such as a decision on whether to proceed to negotiate a deal. If more detailed or
extensive confidential information is offered and it is not necessary, for your immediate purposes,
it should be refused.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<B>Need-to-Know. </B>Once a third party&#146;s confidential information has been disclosed
to the Company, we have an obligation to abide by the terms of the relevant nondisclosure agreement
and limit its use to the specific purpose for which it was disclosed and to disseminate it only to
other Company employees with a need to know the information. Every employee, agent and contractor
involved in a potential business
relationship with a third party must understand and strictly observe the restrictions on the
use and handling of confidential information. When in doubt, consult the President.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<B>Notes and Reports. </B>When reviewing the confidential information of a third
party under a nondisclosure agreement, it is natural to take notes or prepare reports summarizing
the results of the review and, based partly on those notes or reports, to draw conclusions about
the suitability of a business relationship. Notes or reports, however, can include confidential
information disclosed by the other party and so should be retained only long enough to complete the
evaluation of the potential business relationship. Subsequently, they should be either destroyed
or turned over to the President for safekeeping or destruction. They should be treated just as any
other disclosure of confidential information is treated: marked as confidential and distributed
only to those the Company employees with a need to know.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;<B>Competitive Information. </B>You should never attempt to obtain a competitor&#146;s
confidential information by improper means, and you should especially never contact a competitor
regarding their confidential information. While the Company may, and does, employ former employees
of competitors, we recognize and respect the obligations of those employees not to use or disclose
the confidential information of their former employers.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>E.&nbsp;Selecting Suppliers</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s suppliers make significant contributions to our success. To create an
environment where our suppliers have an incentive to work with the Company, they must be confident
that they will be treated lawfully and in an ethical manner. The Company&#146;s policy is to purchase
supplies based on need, quality, service, price and terms and conditions. The Company&#146;s policy is
to select significant suppliers or enter into significant supplier agreements though a competitive
bid process where possible. Under no circumstances should any Company employee, agent or
contractor attempt to coerce suppliers in any way. The confidential information of a supplier is
entitled to the same protection as that of any other third party and must not be received before an
appropriate nondisclosure agreement has been signed. A supplier&#146;s performance should never be
discussed with anyone outside the Company without the prior approval of the President/Chief
Financial Officer. A supplier to the Company is generally free to sell its products or services to
any other party, including competitors of the Company. In some


<P align="center" style="font-size: 10pt">13
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</TR>
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<P align="left" style="font-size: 10pt">cases where the products or
services have been designed, fabricated, or developed to our specifications the agreement between
the parties may contain restrictions on sales.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>F.&nbsp;Government Relations</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is the Company&#146;s policy to comply fully with all applicable laws and regulations governing
contact and dealings with government employees and public officials, and to adhere to high ethical,
moral and legal standards of business conduct. This policy includes strict compliance with all
local, state, federal, foreign and other applicable laws, rules and regulations. If you have any
questions concerning government relations you should contact the Company&#146;s President.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>G.&nbsp;Lobbying</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employees, agents or contractors whose work requires lobbying communication with any member or
employee of a legislative body or with any government official or employee in the formulation of
legislation must have prior written approval of such activity from the President. Activities
covered by this policy include meetings with legislators or members of their staffs or with senior
executive branch officials. Preparation, research, and other background activities that are done
in support of lobbying communication are also covered by this policy even if the communication
ultimately is not made.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>H.&nbsp;Government Contracts</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is the Company&#146;s policy to comply fully with all applicable laws and regulations that apply
to government contracting. It is also necessary to strictly adhere to all terms and conditions of
any contract with local, state, federal, foreign or other applicable governments. The Company&#146;s
President must review and approve all contracts with any government entity.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>I.&nbsp;Free and Fair Competition</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most countries have well-developed bodies of law designed to encourage and protect free and
fair competition. The Company is committed to obeying both the letter and spirit of these laws.
The consequences of not doing so can be severe for all of us.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These laws often regulate the Company&#146;s relationships with its distributors, resellers,
dealers, and customers. Competition laws generally address the following areas: pricing practices
(including price discrimination), discounting, terms of sale, credit terms, promotional allowances,
secret rebates, exclusive dealerships or distributorships, product bundling, restrictions on
carrying competing products, termination, and many other practices.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Competition laws also govern, usually quite strictly, relationships between the Company and
its competitors. As a general rule, contacts with competitors should be limited and should always
avoid subjects such as prices or other terms and conditions of


<P align="center" style="font-size: 10pt">14
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</TR>
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<P align="left" style="font-size: 10pt">sale, customers, and suppliers.
Employees, agents or contractors of the Company may not knowingly make false or misleading
statements regarding its competitors or the products of its competitors, customers or suppliers.
Participating with competitors in a trade association or in a standards creation body is acceptable
when the association has been properly established, has a legitimate purpose, and has limited its
activities to that purpose.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No employee, agent or contractor shall at any time or under any circumstances enter into an
agreement or understanding, written or oral, express or implied, with any competitor concerning
prices, discounts, other terms or conditions of sale, profits or profit margins, costs, allocation
of product or geographic markets, allocation of customers, limitations on production, boycotts of
customers or suppliers, or bids or the intent to bid or even discuss or exchange information on
these subjects. In some cases, legitimate joint ventures with competitors may permit exceptions to
these rules as may bona fide purchases from or sales to competitors on non-competitive products,
but the Company&#146;s President must review all such proposed ventures in advance. These
prohibitions are absolute and strict observance is required. Collusion among competitors is
illegal, and the consequences of a violation are severe.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the spirit of these laws, known as &#147;antitrust,&#148; &#147;competition,&#148; or &#147;consumer
protection&#148; or unfair competition laws, is straightforward, their application to particular
situations can be quite complex. To ensure that the Company complies fully with these laws, each
of us should have a basic knowledge of them and should involve our President early on when
questionable situations arise.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>J.&nbsp;Industrial Espionage</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is the Company&#146;s policy to lawfully compete in the marketplace. This commitment to
fairness includes respecting the rights of our competitors and abiding by all applicable laws in
the course of competing. The purpose of this policy is to maintain the Company&#146;s reputation as a
lawful competitor and to help ensure the integrity of the competitive marketplace. The Company
expects its competitors to respect our rights to compete lawfully in the marketplace, and we must
respect their rights equally. Company directors, employees, agents and contractors may not steal
or unlawfully use the information, material, products, intellectual property, or proprietary or
confidential information of anyone including suppliers, customers, business partners or
competitors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>V.&nbsp;WAIVERS</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any waiver of any provision of this Code of Business Conduct and Ethics for a member of the
Company&#146;s Board of Directors or a senior executive officer must be approved in writing by the
independent members of the Company&#146;s Board of Directors and promptly disclosed. Any waiver of any
provision of this Code of Business Conduct and Ethics with respect any other employee, agent or
contractor must be approved in writing by the President.


<P align="center" style="font-size: 10pt">15
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</TR>
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<P align="left" style="font-size: 10pt"><B>VI.&nbsp;DISCIPLINARY ACTIONS</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The matters covered in this Code of Business Conduct and Ethics are of the utmost importance
to the Company, its shareholders and its business partners, and are essential to the Company&#146;s
ability to conduct its business in accordance with its stated values. We expect all of our
directors, employees, agents, contractors and consultants to adhere to these rules in carrying out
their duties for the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will take appropriate action against any director, employee, agent, contractor or
consultant whose actions are found to violate these policies or any other policies of the Company.
Disciplinary actions may include immediate termination of employment or business relationship at
the Company&#146;s sole discretion. Where the Company has suffered a loss, it may pursue its remedies
against the individuals or entities responsible. Where laws have been violated, the Company will
cooperate fully with the appropriate authorities. You should review the Company&#146;s policies and
procedures at for more detailed information.


<P align="left" style="font-size: 10pt"><B>ACKNOWLEDGMENT OF RECEIPT OF CODE OF BUSINESS CONDUCT AND ETHICS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have received and read the Company&#146;s Code of Business Conduct and Ethics. I understand the
standards and policies contained in the Company Code of Business Conduct and Ethics and understand
that there may be additional policies or laws specific to my job. I further agree to comply with
the Company Code of Business Conduct and Ethics.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If I have questions concerning the meaning or application of the Company Code of Business
Conduct and Ethics, any Company policies, or the legal and regulatory requirements applicable to my
job, I know I can consult my manager, the Human Resources Department or the President, knowing that
my questions or reports to these sources will be maintained in confidence.

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    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Name/Title</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Signature</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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<P align="center" style="font-size: 10pt"><B>Please sign and return this form to the President.</B>




<P align="center" style="font-size: 10pt">16
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<DESCRIPTION>EXHIBIT 14.2
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<P align="right" style="font-size: 10pt">Exhibit&nbsp;14.2


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    <TD align="right" valign="top">Save The World Air, Inc.</TD>
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<P align="center" style="font-size: 10pt"><B>CODE OF ETHICS FOR DIRECTORS AND<BR>
SENIOR EXECUTIVE OFFICERS</B>



<P align="left" style="font-size: 10pt"><B>Purpose</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of this Code of Ethics is to promote the honest and ethical conduct of the Senior
Executives (as defined below) of Save the World Air, Inc. (&#147;STWA&#148;), including the ethical handling
of actual or apparent conflicts of interest between personal and professional relationships; full,
fair, accurate, timely and understandable disclosure in periodic reports filed by STWA and
compliance with all applicable rules and regulations applicable to STWA and its officers.


<P align="left" style="font-size: 10pt"><B>Applicability</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Code of Ethics is presently applicable to all STWA&#146;s Directors, its Chairman/Chief
Executive Officer, President and Chief Operating Officer (and persons appointed to &#147;senior
executive positions&#148; at later dates), together, &#147;Senior Executives.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While we expect honest and ethical conduct in all aspects of our business from all of our
employees, we expect the highest possible honest and ethical conduct from our Senior Executives.
As a Senior Executive, you are an example for other employees and we expect you, through your
leadership role, to foster a culture of transparency, integrity and honesty. Your responsibilities
include maintaining a culture of high ethical standards and commitment to compliance and a work
environment that encourages employees to raise concerns, and promptly addresses employee compliance
concerns.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STWA&#146;s Code of Business Conduct, which this Code of Ethics for Senior Executive, sets forth
the fundamental principles and key policies and procedures that govern the conduct of all STWA
employees, officers and directors. You are bound by the requirements and standards set forth in
the Code of Business Conduct, as well as those set forth in this Code of Ethics and other
applicable policies and procedures. In the event of any conflict between the Code of Business
Conduct and this Code of Ethics, this Code of Ethics shall govern your behavior or any required
approvals or waivers. Compliance with this Code of Ethics is a condition of your employment or
directorship and any violations of this Code may result in disciplinary action, up to and including
termination of your employment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Waivers of this Code of Ethics may be made only by the Board of Directors of STWA or a
committee of the Board of Directors comprised solely of independent directors. Any waivers of this
Code of Ethics will be disclosed in accordance with applicable law, regulation or the requirements
of any listing criteria of an exchange upon which STWA&#146;s stock may be traded.


<P align="center" style="font-size: 10pt">1
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<P align="left" style="font-size: 10pt"><B>Compliance With Laws, Rules&nbsp;And Regulations</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You are expected to comply with both the letter and spirit of all applicable laws, rules and
regulations governing the conduct of our business and to report any suspected violations of all
applicable laws, rules and regulations to either the Chair of the Audit Committee or the Chair of
the Corporate Governance Committee. You will not be subject to retaliation because of a good faith
report of a suspected violation of this Code of Ethics.


<P align="left" style="font-size: 10pt"><B>Fraud, Theft, Bribery And Similar Conduct</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any act that involves theft, fraud, embezzlement, or misappropriation of any property,
including that of STWA or any of its employees, suppliers or customers, is prohibited. Offering or
accepting kickbacks or bribes are forbidden.


<P align="left" style="font-size: 10pt"><B>Auditors</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fraudulently influencing, misleading, coercing or manipulating the auditor of STWA&#146;s financial
statements for the purpose of rendering those financial statements materially misleading is
prohibited.


<P align="left" style="font-size: 10pt"><B>Revenue Recognition</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Executives must ensure that all revenue transactions are completed, to the best of the
Senior Executive&#146;s knowledge, in accordance with STWA&#146;s revenue recognition policies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All commitments or representations made to customers or distributors or potential customers or
distributors must be included in the final contract with the customer or distributor or related
documentation submitted with customer or distributor orders. Employees must not make any
commitments to the customer or distributor, orally or in writing, which have not been documented in
the agreement or submitted to the STWA finance and/or contract departments. STWA prohibits
side-letters or kickbacks with customers or distributors or potential customers or distributors.


<P align="left" style="font-size: 10pt"><B>Accurate Periodic Reporting and Disclosure</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a public company, STWA is required to file periodic and other reports with the Securities
and Exchange Commission (&#147;SEC&#148;). STWA&#146;s policy is to make full, fair, accurate, timely and
understandable disclosure in compliance with all applicable laws and regulations in all reports and
documents that STWA files with, or submits to, the SEC and in all other public communications made
by STWA. As a Senior Executive, you are required to promote compliance with this policy and to
abide by all STWA standards, policies and procedures designed to promote compliance with this
policy.


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<P align="left" style="font-size: 10pt"><B>Accurate Record Keeping</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Every Senior Executive must maintain accurate and complete records, including providing
accurate and complete information to the accounting and the finance departments. No false,
misleading or artificial entries may be made on, or be provided for entry on, STWA&#146;s books and
records. No funds or assets may be maintained by STWA for any illegal or improper purposes. All
transactions must be fully and completely documented and recorded in STWA&#146;s accounting records. It
is against STWA policy to make entries that intentionally conceal or disguise the true nature of
any transaction.


<P align="left" style="font-size: 10pt"><B>Conflicts of Interest</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is STWA&#146;s policy that you should avoid transactions, commitments, and other activities
which are not in STWA&#146;s best interests or which could involve an actual conflict, or the appearance
of a conflict, between your interests and those of STWA.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is not possible to define all situations that could involve a conflict of interest; in most
instances, however, sound business judgment should be sufficient to evaluate a situation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A conflict of interest exists when your loyalties are divided between STWA&#146;s interests and
your own interests, those of your family, or those of a customer, supplier or competitor. You are
expected to avoid both the fact and appearance of conflicts of interest.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The prohibition against acting in a dual capacity in transacting STWA business, and from
acquiring interests adverse to STWA, is applicable irrespective of your intentions and without
regard to whether the action caused, or has the potential to cause, injury to STWA.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is presented as a guide in determining circumstances that might create conflicts
of interest; they are not intended, however, to cover all possible situations.


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Representing STWA in any transaction if your personal interests might
affect your ability to represent STWA&#146;s interests fairly and impartially. You
must not knowingly or voluntarily permit yourself to be placed in a position where
your interests may become adverse to STWA&#146;s interests. You must not allow
personal relationships with current or prospective customers or suppliers to
influence business decisions.</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Investment by you or a member of your immediate family in a customer,
supplier, or competitor (or any company/partnership affiliated with a customer,
supplier, or competitor) of STWA is prohibited if you have or would have the
opportunity to influence business transactions between STWA and the customer,
supplier, or competitor. Passive investments in</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>publicly traded companies shall not be a violation if you or a member of your
immediate family owns less than 1% of such company&#146;s outstanding stock.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>You must not take for yourself nor direct to others any existing
business or any opportunities for prospective business that could be considered by
STWA.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>It is a conflict of interest to serve as a director of any company
that competes with STWA. You may not serve as a director of a private company
that is a supplier, customer, developer, or other business partner without first
obtaining the approval of the Chair of the Corporate Governance Committee. You
also may not become a director of any public company, without first obtaining the
approval of the Chair of the Corporate Governance Committee.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>You must not speculate or deal in materials, supplies, equipment or
products that STWA buys or sells, or in property rights in which STWA may be
interested.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Solicitation or acceptance by you or a member of your immediate family
of any personal loan or guarantee from a customer, supplier or competitor.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before acting in a manner that creates or appears to create a conflict of interest, you must
make full disclosure to and obtain written approval of either the Chair of the Audit Committee or
the Chair of the Corporate Governance Committee.


<P align="left" style="font-size: 10pt"><B>Compliance with the Code; Reporting of Violations</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you have questions about this Code of Ethics for Senior Executive and Financial Officers,
you should seek guidance from STWA&#146;s legal counsel. If you know of or suspect a violation of
applicable laws or regulations or this Code of Ethics for Senior Executive and Financial Officers,
you must immediately report that information to either the Chair of the Audit Committee or to the
Chair of the Board of Directors. <I>No one will be subject to retaliation because of a good faith
report of a suspected violation.</I>


<P align="left" style="font-size: 10pt"><B>No Rights Created</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Code of Ethics is a statement of certain fundamental principles, policies and procedures
that govern STWA&#146;s Senior Executives in the conduct of STWA&#146;s business. It is not intended to and
does not create any rights in any employee, customer, supplier, competitor, stockholder or any
other person or entity.


<P align="center" style="font-size: 10pt">4
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%"></TD>
    <TD width="5%"></TD>
    <TD width="47%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Policies and Procedures
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Save The World Air, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B><I>ACKNOWLEDGMENT</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have received and read the Code of Ethics for Senior Executive and Financial Officers, and I
understand its contents. I agree to comply fully with the standards contained in the Code of
Ethics and STWA&#146;s related policies and procedures. I understand that I have an obligation to
promptly report to either the Chair of the Audit Committee or the Chair of the Corporate Governance
Committee any suspected violation of the Code of Ethics for Senior Executive and Financial
Officers.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD colspan="2" align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">5
</DIV>


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<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>24
<FILENAME>v07538exv23w1.htm
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="right" style="font-size: 10pt">Exhibit&nbsp;23.1



<P align="center" style="font-size: 10pt">&#091;WEINBERG &#038; COMPANY, P.A. LETTERHEAD&#093;



<P align="center" style="font-size: 10pt">CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



<P align="left" style="font-size: 10pt">To the Board of Directors<BR>
Save The World Air, Inc.

<P align="left" style="font-size: 10pt">We hereby consent to the incorporation by reference in the previously filed Registration
Statement of Save The World Air, Inc (a Development Stage Enterprise) on Form S-8
(File No.&nbsp;333-122210) of our report, dated April&nbsp;11, 2005, appearing in this Annual
Report on Form 10-KSB of Save The World Air, Inc (a Development Stage Enterprise)
for the year ended December&nbsp;31, 2004.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ WEINBERG &#038; COMPANY, P.A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WEINBERG &#038; COMPANY, P.A.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">Boca Raton, Florida<BR>
April&nbsp;25, 2005



<P align="center" style="font-size: 10pt">
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>25
<FILENAME>v07538exv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w1</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="right" style="font-size: 10pt">EXHIBIT 31.1



<P align="center" style="font-size: 10pt"><B>CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER<BR>
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND<BR>
RULES 13A-14 AND 15D-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934</B>


<P align="left" style="font-size: 10pt">I, Edward L. Masry, Chief Executive Officer, certify that:


<P align="left" style="font-size: 10pt">1. I have reviewed this 10-KSB of Save the World Air, Inc. (the &#147;Company&#148;);


<P align="left" style="font-size: 10pt">2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;


<P align="left" style="font-size: 10pt">3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the Company&#146;s as of, and for, the periods presented ire this report;


<P align="left" style="font-size: 10pt">4. The Company&#146;s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules&nbsp;13a-15(f) and
15d-15(f)) for the Company&#146;s and have:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the Company&#146;s, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;Evaluated the effectiveness of the Company&#146;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;Disclosed in this report any change in the Company&#146;s internal control over financial
reporting that occurred during the Company&#146;s most recent fiscal quarter (the Company&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Company&#146;s internal control over financial reporting; and

<P align="left" style="font-size: 10pt">5. The Company&#146;s other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the Company&#146;s auditors and the audit committee of
the Company&#146;s board of directors (or persons performing the equivalent functions):



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the Company&#146;s
ability to record, process, summarize and report financial information; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;Any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company&#146;s internal control over financial reporting.


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: April 25, 2005&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/
EDWARD L. MASRY</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Edward L. Masry&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>26
<FILENAME>v07538exv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="right" style="font-size: 10pt">EXHIBIT 31.2



<P align="center" style="font-size: 10pt"><B>CERTIFICATION OF THE CHIEF FINANCIAL OFFICER<BR>
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND<BR>
RULES 13A-14 AND 15D-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934</B>


<P align="left" style="font-size: 10pt">I, Eugene E. Eichler, Chief Financial Officer, certify that:


<P align="left" style="font-size: 10pt">1. I have reviewed this 10-KSB of Save the World Air, Inc. (the &#147;Company&#148;);


<P align="left" style="font-size: 10pt">2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;


<P align="left" style="font-size: 10pt">3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the Company&#146;s as of, and for, the periods presented ire this report;


<P align="left" style="font-size: 10pt">4. The Company&#146;s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules&nbsp;13a-15(f) and
15d-15(f)) for the Company&#146;s and have:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the Company&#146;s, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;Evaluated the effectiveness of the Company&#146;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;Disclosed in this report any change in the Company&#146;s internal control over financial
reporting that occurred during the Company&#146;s most recent fiscal quarter (the Company&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the Company&#146;s internal control over financial reporting; and

<P align="left" style="font-size: 10pt">5. The Company&#146;s other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the Company&#146;s auditors and the audit committee of
the Company&#146;s board of directors (or persons performing the equivalent functions):



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the Company&#146;s
ability to record, process, summarize and report financial information; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;Any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company&#146;s internal control over financial reporting.


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: April 25, 2005&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/
EUGENE E. EICHLER</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Eugene E. Eichler&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>27
<FILENAME>v07538exv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="right" style="font-size: 10pt">Exhibit 32.1



<P align="center" style="font-size: 10pt"><B>Certification of Periodic Financial Report by the Chief Executive Officer and<BR>
Chief Financial Officer Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Solely for the purposes of complying with 18 U.S.C. &#167;1350, as adopted pursuant to Section&nbsp;906
of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial
Officer of Save the World Air, Inc. (the &#147;Company&#148;), hereby certify, based on our knowledge, that
the Annual Report on Form 10-KSB of the Company for the year ended December&nbsp;31, 2004 (the &#147;Report&#148;)
fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and
that the information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:   April 25, 2005&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/
EDWARD L. MASRY</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Edward L. Masry&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:   April 25, 2005&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/
EUGENE E. EICHLER</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Eugene E. Eichler&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>

</TR>
</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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