U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**FORM
      10-QSB**





(Mark
      One)


x QUARTERLY
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934


For
      the
      quarterly period ended: September
      30, 2007





o TRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934


For
      the
      transitional period from __________________ to __________________





**Commission
      File No. 000-28543**





**THORIUM
      POWER, LTD.**





(Name
      of
      Small Business Issuer in Its Charter)





NEVADA
            
            91-1975651(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                EmployerIdentificationNo.)





8300
                Greensboro Drive, Suite 800
              McLean,
                Virginia 22102
            
            703.918.4904(Address
                of PrincipalExecutiveOffice)
            
            (Issuer
                Telephone No.IncludingArea
                Code)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.





Yes x No
o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).





Yes
oNo
x


The
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of October 1, 2007 are as follows:





Class
                of Securities
            
            Shares
                OutstandingCommon
                Stock, $0.001 par value
            
            297,065,650




Transitional
      Small Business Disclosure Format (check one): Yes o No
x









**ITEM
                1.**
              **FINANCIAL
                  STATEMENTS**




**Thorium
      Power Ltd.**


**(A
      Development Stage Company)**


**Consolidated
      Balance Sheets**





**(Unaudited)**
            
            **(Audited)****September 30,**
            
            **December 31****2007**
            
            **2006****ASSETS****Currrent
                Assets**Cash
                and cash equivalents
            
            $
            6,470,292
            
            $
            10,927,775Prepaid
                expenses & other current assets
            
            
            87,430
            
            
            394,443Total
                Current Assets
            
            
            6,557,722
            
            
            11,322,218Property
                Plant and Equipment -net
            
            
            15,077
            
            
            21,290**Other
                Assets**Patent
                costs - net
            
            
            217,875
            
            
            217,875Security
                deposits
            
            
            2,049
            
            
            2,049Total
                Other Assets
            
            
            219,924
            
            
            219,924**Total
                Assets**
            
            $
            6,792,723
            
            $
            11,563,432**Liabilities
                and Stockholders' Equity****Current
                Liabilities**Current
                portion long term debt
            
            $
            4,583
            
            $
            4,739Accounts
                payable and accrued liabilities
            
            
            522,518
            
            
            1,121,083Other
                current liabilities
            
            
            0
            
            
            347,690Warrant
                liability
            
            
            0
            
            
            1,132,440Total
                Current Liabilities
            
            
            527,101
            
            
            2,605,952Notes
                Payable - long term
            
            
            6,904
            
            
            10,433**Total
                Liabilites**
            
            
            534,005
            
            
            2,616,385Commitments
                and contingencies - note 9**Common
                Stock with Registration Rights**Common
                    Stock subject to continuing registration, $0.001 par value, 36,659,837
                    shares issued and outstanding at December 31,
                    2006
            
            
            0
            
            
            12,041,373**Stockholders'
                Equity (Deficiency)**Preferred
                stock, $0.001 par value, 50,000,000 authorized shares, no shares
                issued
                and outstanding
            
            
            0
            
            
            0Common
                stock, $0.001par value, 500,000,000 authorized, 297,065,650 shares
                issued
                and outstanding at September 30, 2007 and 257,291,709 shares outstanding
                at December 31, 2006
            
            
            297,066
            
            
            257,292Additional
                paid in capital - stock and stock equivalents
            
            
            40,583,375
            
            
            23,148,560Deficit
                accumulated during the development stage
            
            
            (34,721,636
            )
            
            (27,177,989
            )Common
                stock reserved for issuance, 1,000,000 shares at September 30, 2007
                and
                4,000,000 shares at December 31, 2006
            
            
            350,000
            
            
            1,200,000Accumulated
                other comprehensive income
            
            
            22,135
            
            
            18,861Deferred
                stock compensation
            
            
            (272,222
            )
            
            (285,200
            )Treasury
                stock - 850,000 shares oustanding at December 31, 2006
            
            
            0
            
            
            (255,850
            )**Total
                Stockholders' Equity (Deficiency)**
            
            
            6,258,718
            
            
            (3,094,326
            )**Total
                Liabilities and Stockholders' Equity (Deficiency)**
            
            $
            6,792,723
            
            $
            11,563,432









**Thorium
      Power Ltd.**


**(A
      Development Stage Company)**


**Consolidated
      Statements of Operations and Comprehensive Loss**


**(Unaudited)**





Nine
                Months Ended
            
            Three
                Months Ended
            
            Cumulative Period
                from January 8,
              1992 (Inception) toSeptember
                30,
            
            September
                30,
            
            September 30,2007
            
            2006
            
            2007
            
            2006
            
            2007Revenue:License
                revenue
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            624,985Total
                Revenue
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            624,985Operating
                ExpensesGeneral
                and administrative
            
            
            3,907,464
            
            
            2,121,768
            
            
            1,113,731
            
            
            1,224,973
            
            
            17,062,025Research
                and development expenses
            
            
            297,064
            
            
            10,000
            
            
            141,593
            
            
            0
            
            
            4,223,622Stock-based
                compensation
            
            
            3,582,344
            
            
            6,707,098
            
            
            1,127,610
            
            
            6,707,098
            
            
            14,943,961Total
                Operating Loss
            
            
            7,786,872
            
            
            8,838,866
            
            
            2,382,934
            
            
            7,932,071
            
            
            35,604,623Other
                (Income) and ExpensesGain
                on fair value of warrant derivatives
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            (1,902,286
            )Interest
                income/expense, other
            
            
            (301,824
            )
            
            10,154
            
            
            (84,888
            )
            
            4,601
            
            
            (448,654
            )Stock
                settlement expense
            
            
            37,160
            
            
            0
            
            
            0
            
            
            0
            
            
            129,420Registration
                right expense
            
            
            21,440
            
            
            0
            
            
            0
            
            
            0
            
            
            375,146Warrant
                expense
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            963,387Total
                Other Income and Expenses
            
            
            (243,224
            )
            
            10,154
            
            
            (84,888
            )
            
            4,601
            
            
            (882,987
            )Net
                Loss
            
            $
            (7,543,648
            )
            $
            (8,849,020
            )
            $
            (2,298,046
            )
            $
            (7,936,672
            )
            $
            34,721,636Other
                Comprehensive Income (Loss)Unrealized
                Gain Marketable Securities
            
            
            3,274
            
            
            0
            
            
            3,931
            
            
            0Total
                Comphensive Loss
            
            $
            (7,540,374
            )
            $
            (8,849,020
            )
            $
            (2,294,115
            )
            $
            (7,936,672
            )Net
                Loss Per Common Share, Basic and diluted
            
            $
            (0.03
            )
            $
            (0.07
            )
            $
            (0.01
            )
            
            (0.07
            )Weighted
                Average Number of shares outstanding for the period used to compute
                per
                share data
            
            
            296,297,409
            
            
            120,883,001
            
            
            296,170,196
            
            
            118,025,548







**Thorium
      Power Ltd.**


**(A
      Development Stage Company)**


**Consolidated
      Statements of Cash Flows**


**(Unaudited)**









9
                Months Ended
            
            Cumulative
              amounts
              January 8, 1992
                (Inception)September
                30,
            
            to September2007
            
            2006
            
            30, 2007Operating
                ActivitiesNet
                Loss for the period
            
            $
            (7,543,648
            )
            $
            (8,849,020
            )
            $
            (34,721,636
            )Adjustments
                to reconcile net loss from operations to net cash used in operating
                activities:Shares
                issued for other than cash for payment of expenses
            
            
            3,735,500
            
            
            5,019,479
            
            
            15,185,365Gain
                on fair value of warrant liability
            
            
            0
            
            
            0
            
            
            (1,902,286
            )Depreciation
                and Amoritzation
            
            
            6,213
            
            
            19,363
            
            
            363,424Gain
                or loss on disposition of assets
            
            
            0
            
            
            0
            
            
            86,855Warrant
                Expense
            
            
            0
            
            
            0
            
            
            963,387Settlement
                Expense
            
            
            37,161
            
            
            0
            
            
            129,421Allocated
                general and administrative expenses - contributed capital
            
            
            0
            
            
            290,769
            
            
            290,769Changes
                in non-cash operating working capital items:Prepaid
                expenses and other current assets
            
            
            307,013
            
            
            6,273
            
            
            29,954Accounts
                payable, accrued liabilities and other current liabilities
            
            
            (999,311
            )
            
            (337,750
            )
            
            21,657Other
                assets
            
            
            0
            
            
            0
            
            
            5,518Net
                Cash (Used In) Operating Activities
            
            
            (4,457,072
            )
            
            (3,850,886
            )
            
            (19,547,572
            )Investing
                ActivitiesPurchase
                of equipment
            
            
            0
            
            
            (10,961
            )
            
            (285,145
            )Proceeds
                from the sale of equipment
            
            
            0
            
            
            0
            
            
            13,583Acquisition
                of patents
            
            
            0
            
            
            (6,664
            )
            
            (411,669
            )Other
            
            
            3,274
            
            
            0
            
            
            (4,293
            )Net
                Cash (Used In) Investing Activities
            
            
            3,274
            
            
            (17,625
            )
            
            (687,524
            )Financing
                ActivitiesProceeds
                from Issue of common shares
            
            
            0
            
            
            2,202,678
            
            
            14,498,016Capitalization
                of Share Issue costs
            
            
            0
            
            
            0
            
            
            (441,553
            )Payments
                on notes payable and other
            
            
            (3,685
            )
            
            (3,079
            )
            
            11,486Proceeds
                of loan - related party
            
            
            0
            
            
            1,766,628
            
            
            384,690Repayment
                of loan - related party
            
            
            0
            
            
            (41,830
            )
            
            (239,659
            )Purchase
                of treasury stock
            
            
            0
            
            
            0
            
            
            (255,850
            )Other
            
            
            0
            
            
            0
            
            
            5,850Cash
                acquired in recapitalization of Thorium Power Inc.
            
            
            0
            
            
            0
            
            
            12,742,408Net
                Cash Provided By Financing Activities
            
            $
            (3,685
            )
            $
            3,924,397
            
            $
            26,705,388Net
                Increase In Cash and Cash Equivalents
            
            $
            (4,457,483
            )
            $
            55,886
            
            $
            6,470,292Cash
                and Cash Equivalents, Beginning Of Period
            
            
            10,927,775
            
            
            283
            
            
            0Cash
                and Cash Equivalents, End Of Period
            
            $
            6,470,292
            
            $
            56,169
            
            $
            6,470,292Supplemental
                Disclosure of Cash Flow InformationCash
                paid during the year:Interest
                paid
            
            $
            524
            
            $
            3,880
            
            $
            4,404Income
                taxes paid
            
            $
            -
            
            $
            -
            
            $
            -Non-cash
                transactionsConversion
                of liabilities to equity
            
            $
            1,410,884
            
            $
            4,100
            
            $
            1,514,084









**Thorium
        Power, Ltd.**
 **(A
        Development Stage Company)**
 **Notes
        to the Consolidated Financial Statements**
  1.  BASIS
        OF PRESENTATION
 
 The
        unaudited financial information of Thorium Power Ltd. (the “Company”) and
        subsidiaries furnished herein has been prepared by the Company pursuant to
        the
        rules and regulations of the Securities and Exchange Commission (the “SEC”) and
        reflects all adjustments, which in the opinion of management are necessary
        to
        fairly state the Company's interim financial position and the results of
        its
        operations for the periods presented. Certain information and note disclosures
        normally included in financial statements prepared in accordance with GAAP
        have
        been condensed or omitted from these statements pursuant to such rules and
        regulations and, accordingly, this report on Form 10-QSB should be read in
        conjunction with the Company's financial statements and notes thereto included
        in the Company's Form 10-KSB for the fiscal year ended December 31, 2006.
        The
        Company assumes that the users of the interim financial information herein
        have
        read or have access to the audited financial statements for the preceding
        fiscal
        year and that the adequacy of additional disclosure needed for a fair
        presentation may be determined in that context. Accordingly, footnote
        disclosure, which would substantially duplicate the disclosure contained
        in the
        Company's Form 10-KSB for the fiscal year ended December 31, 2006, has been
        omitted. The results of operations for the nine month and three month periods
        ended September 30, 2007 are not necessarily indicative of results for the
        entire fiscal year ending December 31, 2007.
 
 2.  NATURE
        OF OPERATIONS AND MERGER WITH THORIUM POWER INC.
  Radkowsky
        Thorium Power Corp., incorporated in the state of Delaware on January 8,
        1992
        (“Inception”), changed its name to Thorium Power, Inc. in Apri1 2001. Thorium
        Power, Inc. is engaged in the development, promotion and marketing of its
        three
        patented nuclear fuel designs: (1) Thorium/uranium nuclear fuel, (2)
        Thorium/reactor-grade plutonium disposing fuel, and (3) Thorium/weapons-grade
        plutonium disposing fuel. These fuels are designed to be used in existing
        light
        water reactors. Presently, we are focusing most of our efforts on demonstrating
        and testing our nuclear fuel technology for the Russian designed VVER-1000
        reactors.
 
 Once
        our
        reactor fuels are further developed and tested, we plan to license our
        intellectual property rights to fuel fabricators, nuclear generators, and
        governments for use in commercial light water nuclear reactors, or sell the
        technology to a major nuclear company or government contractor or some
        combination of the two. We anticipate having our technology fully developed
        for
        VVER-1000 reactors and our fuel tested in a VVER-1000 operating reactor in
        the
        next three years. Presently all our research, testing and demonstration
        activities are being conducted in Russia. Our research operations are subject
        to
        various political, economic, and other risks and uncertainties inherent in
        Russia.
 
 Our
        nuclear fuel process is dependent on the ability of suppliers of the mineral
        thorium, to provide it to our future customers on a timely basis and also
        on
        favorable pricing terms. The loss of certain principal suppliers of thorium
        or a
        significant reduction in thorium availability from principal suppliers could
        have a material adverse effect on the future operating results of the
        Company.
 
 We
        participate in a highly regulated industry that is characterized by governmental
        regulation. Our results of operations are affected by a wide variety of factors
        including general economic conditions, decreases in the use or public favor
        of
        nuclear power, the ability of our technology, the ability to safeguard the
        production of nuclear power and safeguarding our patents and intellectual
        property from competitors. Due to these factors, we may experience substantial
        period-to-period fluctuations in our future operating results.
 
 Operations
        to date have been devoted primarily to continued development of our fuel
        designs, filing for certain patents relating to our technology, developing
        strategic relationships within the nuclear industry, securing political and
        some
        financial support from the United States and Russian governments, and
        administrative functions. We, therefore, based on our current operations,
        prepare our accompanying consolidated financial statements as a Development
        Stage Enterprise.
  
 
 3.  SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES
 
 a)
        Consolidation
  These
        financial statements include the accounts of Thorium Ltd (a Nevada corporation)
        and our wholly-owned subsidiaries, Thorium Power, Inc. (a Delaware corporation)
        and TP Acquisition Corp., (a Delaware corporation), collectively the
        (“Company”).
 
 On
        October 6, 2006, a merger took place between Thorium Power, Ltd. and Thorium
        Power, Inc. For financial reporting purposes, this merger transaction was
        recorded as a recapitalization of Thorium Power, Inc., whereby Thorium Power,
        Inc. is deemed to be the continuing surviving entity for accounting purposes,
        but through reorganization, has deemed to have adopted the capital structure
        of
        Thorium Power, Ltd. Accordingly, all references to common shares of Thorium
        Power Inc.’s common stock have been restated to reflect the equivalent number of
        Thorium Power, Ltd.’s common shares.
  All
        significant intercompany transactions and balances have been eliminated in
        consolidation.
  b)
        Use of
        Estimates
  The
        preparation of financial statements, in conformity with accounting principles
        generally accepted in the United States of America, 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 revenue and expenses
        during the reporting period. Actual results could differ from those
        estimates.
 
 These
        consolidated financial statements include some amounts that are based on
        management's best estimates and judgments. The most significant estimates
        relate
        to valuation of stock grants, stock options and stock purchase warrants,
        and
        various contingent liabilities. These above-mentioned estimates and others
        may
        be adjusted as more current information becomes available, and any adjustment
        could be significant in future reporting periods.
  c)
        Prior
        Year Reclassifications
  Certain
        reclassifications have been made to our prior years' financial statements
        in
        order to conform to the current year presentation. On our Statement of
        Operations, certain general and administrative expenses were combined into
        the
        one expense caption called general and administrative expenses. These
        reclassifications had no effect on previously reported results of operations
        or
        accumulated deficit of Thorium Power, Inc.
 
 d)
        Warrants – Adoption of New Accounting Pronouncement
  Warrants
        issued in conjunction with equity financing were accounted for under the
        Emerging Issues Task Force FSP (“EITF”) Issue No. 00-19, `Accounting for
        Derivative Financial Instruments Indexed to and Potentially Settled in a
        Company's Own Stock'. In December 2006, the FASB approved FSP EITF 00-19-2
        Accounting for Registration Payment Arrangements, which establishes the standard
        that contingent obligations to make future payments under a registration
        rights
        arrangement shall be recognized and measured separately in accordance with
        Statement 5 and FASB Interpretation No. 14, Reasonable Estimation of the
        Amount of a Loss. The Company has evaluated the effect of how FSP EITF 00-19-2
        and FSP EITF Topic D-98 affected these accompanying financial statements.
        The
        adoption of FSP EITF 00-19-2 accounting pronouncement on January 1, 2007
        changed
        the classification of the warrant liability, total $1,132,440 at January
        1,
        2007, to stockholders’ equity (additional paid in capital).
 
 4.  Financial
        Status and Going Concern Considerations – September 30, 2007
  Management
        anticipates, based on its current projected working capital requirements,
        that
        it will have enough working capital funds to sustain its current operations
        at
        its current operating level, until sometime during the second calendar quarter
        of 2008. The Company will therefore need to raise additional capital before
        the
        end of the second quarter of 2008, either by having future issuances of its
        stock or incurring debt, in order to provide the additional working capital
        funds required to continue its operations into 2008 and beyond.
  
  5.  Research and
        Development Costs
 
 Research
        and development costs, amounted to $297,064 and $10,000 for the nine months
        ended September 30, 2007 and 2006 respectively, and $141,593 and $0 for the
        three months ended September 30, 2007 and 2006 respectively and $4,223,622
        from
        January 8, 1992 (Inception) to September 30, 2007
 
 6.
        Stockholders' Equity
 
 Total
        common stock outstanding at September 30, 2007 was 297,065,650. At September
        30,
        2007, there were 19,098,752 stock purchase warrants and 36,185,934 stock
        options
        outstanding, all totaling 352,350,336 of total stock and stock equivalents
        outstanding September 30, 2007.
 
 a).
        Common Stock Issued With Registration Rights - Temporary Equity Reclassified
        to
        Permanent Equity
 
 On
        May 4,
        2006, the Company completed a private placement with certain investors in
        which
        it sold an aggregate of 36,659,837 units, consisting of 36,659,837 shares
        of its
        restricted common stock and 18,329,918 common stock purchase warrants for
        $15,580,431. Each unit consists of one share of common stock and one-half
        of a
        non-transferable share purchase warrant. Each whole warrant entitles the
        holder
        of the warrant to acquire one additional share of common stock at a price
        of
        $0.65 per share and expires twelve months from the closing date of the
        subscription expiration date or term subsequently extended 6
        months.
 
 Under
        the
        terms of the sale, the investors were granted registration rights in which
        the
        Company agreed to timely file a registration statement to register the common
        shares and the shares underlying the warrants, obtain effectiveness of the
        registration statement by the SEC on or before September 1, 2006, and maintain
        the effectiveness of this registration statement for a pre-set time thereafter.
        In the event the Company failed to timely perform under the registration
        rights
        agreement, the Company agreed to pay the investors liquidated damages in
        an
        amount equal to 2% of the aggregate amount invested by the investors for
        each
        30-day period or pro rata for any portion thereof following the date by which
        the registration statement should have been effective. The initial registration
        statement was timely filed, however it was not declared effective by the
        SEC
        within the allowed time. Accordingly, the Company was liable to the investors
        for liquidated damages under the registration rights agreement.
  The
        SEC
        concluded that under EITF 00-19, common stock and warrants subject to
        registration rights where significant liquidated damages could be required
        to be
        paid to the holder of the instrument in the event the issuer fails to maintain
        the effectiveness of a registration statement for a preset time period, the
        common stock subject to such liquidated damages does not meet the tests required
        for shareholders' equity classification, and accordingly must be reflected
        between liabilities and shareholders' equity in the balance sheet until the
        conditions are eliminated. In analyzing instruments under EITF 00-19, the
        likelihood or probability related to the failure to maintain an effective
        registration statement is not a factor.
 
 Based
        on
        the above interpretation, as of May 4, 2006, the Company classified $12,041,373
        for the value of common stock subject to registration rights as temporary
        equity
        instead of shareholders' equity. In addition, the Company measured the initial
        fair value of the warrants on May 4, 2006 at $3,539,058 and classified at
        that
        date the fair value of the warrants as warrant liability instead of
        shareholders' equity.
 
 At
        the
        end of each reporting period, the value of these warrants was re-measured
        based
        on the fair value of the underlying shares, and changes to the warrant liability
        and related “gain or loss in fair value of the warrants” was recorded as a
        non-cash charge or credit to earnings. The warrant liability was reclassified
        to
        shareholders' equity when the Company adopted a new accounting pronoucement
        FSP
        00-19-2 as mentioned above in 2007.
 
 The
        SEC
        has recently issued further guidance on EITF Topic No. D-98 (financial statement
        classification of securities issued between permanent equity and temporary
        equity), and this SEC staff guidance specifically mentions that registration
        payment arrangements are considered to be a separate unit of account, and
        these
        registration payment arrangements are now accounted for in accordance with
        FASB
        Staff Position FSP 00-19-2 as a contingent obligation and not part of the
        classification of equity. Therefore the SEC staff has generally concluded
        that
        the classification of financial instruments between permanent equity and
        temporary equity should not take into account the registration payment
        arrangement. The Company has no registration payment liabilities as of September
        30, 2007. Based on the above, the Company classified $12,041,373 for the
        value
        of common stock subject to registration rights as permanent equity instead
        of
        temporary equity.
 
 
 
 b)
        Share-based Compensation
 
 The
        Company has in place a stock-based compensation plan to reward for services
        rendered by officers, directors, employees and consultants. On July 17, 2006,
        the Company amended this stock plan. The Company has reserved 75,000,000
        shares
        of common stock of its unissued share capital for the stock plan. Other
        limitations are as follows:
 
 i).
              No
                  more than an aggregate of 37.5 million shares may be issued in
                  the form of
                  restricted shares during the term of the stock
                  plan;
 
 ii).
              The
                  maximum number of shares of common stock with respect to which
                  options may
                  be granted to any one person during any fiscal year of the Company
                  may not
                  exceed 8,000,000 shares; and
 
 iii).
              The
                  maximum number of restricted shares which may be granted to any
                  one person
                  during any fiscal year of the Company may not exceed 5,000,000
                  shares.
                
                On
                  January 1, 2006, the Company adopted FAS-123R. In March 2005, the
                  SEC
                  staff expressed their views with respect to FAS-123R in Staff Accounting
                  Bulletin No. 107, Share-Based Payment (“SAB 107”). SAB 107 provides
                  guidance on valuing options. Prior to January 1, 2006, the Company
                  accounted for share-based payments under the recognition and measurement
                  provisions of APB Opinion No. 25, Accounting for Stock Issued to
                  Employees
                  (“APB 25”), and related Interpretations, as permitted by FAS-123. In
                  accordance with APB 25, no compensation cost was required to be
                  recognized
                  for options granted that had an exercise price equal to the market
                  value
                  of the underlying common stock on the date of grant. The Company
                  adopted
                  FAS-123R using the modified-prospective-transition method. Under
                  that
                  transition method, compensation cost recognized in future interim
                  and
                  annual reporting periods includes: a) compensation cost for all
                  share-based payments granted prior to, but not yet vested as of
                  January 1,
                  2006, based on the grant-date fair value estimated in accordance
                  with the
                  original provisions of FAS-123, and b) compensation cost for all
                  share-based payments granted subsequent to January 1, 2006, based
                  on the
                  grant-date fair value estimated in accordance with the provisions
                  of
                  FAS-123R.
  The
        adoption of FAS-123R had no effect on cash flow from operations or cash flow
        from financing activities for the three months ended June 30, 2007. FAS-123R
        requires the cash flows from tax benefits resulting from tax deductions in
        excess of the compensation cost recognized for those options (“excess tax
        benefits”) to be classified as financing cash flows. Prior to the adoptions of
        FAS-123R, excess tax benefits would have been classified as operating cash
        inflows. The Company has not recognized, and does not expect to recognize
        in the near future, any tax benefit related to stock-based compensation costs
        as
        a result of the full valuation allowance on our net operating loss carry
        forwards.
 
 The
        Company recognizes share-based compensation expense for all service-based
        awards
        with graded vesting schedules on a straight-line basis over the requisite
        service period for the entire award. Initial accruals of compensation expense
        are based on the estimated number of shares for which requisite service is
        expected to be rendered. Estimates are revised if subsequent information
        indicates that forfeitures will differ from previous estimates, and the
        cumulative effect on compensation cost of a change in the estimated forfeitures
        is recognized in the period of the change.
 
 For
        awards with service conditions and graded vesting that were granted prior
        to the
        adoption of FAS-123R, the Company estimates the requisite service period
        and the
        number of shares expected to vest and recognize compensation expense for
        each
        tranche on a straight-line basis over the estimated requisite service period
        of
        the award or over a period ending with an employee's eligible retirement
        date,
        if earlier. Adjustments to compensation expense as a result of revising the
        estimated requisite service period are recognized prospectively.
 
 Total
        stock options outstanding at September 30, 2007 were 36,185,934 and 18,080,603
        of these total options were vested at September 30, 2007.
 
 
  Stock
        option transactions to the employees, directors, advisory board members and
        consultants are summarized as follows:


September 30, 2007**Stock
                  Options Outstanding**Outstanding –
                  Beginning of Period
              
              
              34,578,993Issued
              
              
              8,307,990Expired
              
              
              (6,395,495
              )Forfeited
              
              
              (305,554
              )Outstanding
                  end of the period
              
              
              36,185,934Options
                  exercisable at the end of the period
              
              
              18,080,603




The
        above
        table includes options issued and outstanding as of September 30, 2007 from
        Thorium Power, Ltd. as follows:
 
 i).
              A
                  total of 4,950,000 non-qualified 10 year options have been issued
                  by
                  Thorium Power, Ltd., to advisory board members at exercise prices
                  of $0.25
                  to $0.64 per share.
  ii).
              A
                  total of 6,000,000 non-qualified 5 year options have been issued
                  to
                  advisory board members at an exercise prices of $.27 to $0.445
                  per share
                  and
  iii).
              A
                  total of 18,903,654 non-qualified 2 year, 5 year and 10 year options
                  have
                  been issued to directors and officers of the Company, at exercise
                  prices
                  of $0.30 to $0.80 per share. From this total, 7,200,000 options
                  were
                  issued to Chief Executive Officer who is also a director, on February
                  14,
                  2006, with a remaining contractual life of 8.8 years. On January
                  16, 2007
                  our Chief Executive Officer was issued 1,486,412 options to replace
                  the
                  same number of stock options he was granted from Thorium Power,
                  Inc, prior
                  to the merger, that were expiring January 2007. The exercise price
                  of
                  these options was increased from its original strike price of $0.39
                  per
                  share to $0.50 per share with a new contractual life of 2 years.
                  Also from
                  the total options cited above, 1 million options were issued to
                  our Chief
                  Operating Officer, pursuant to an employment agreement, on February
                  1,
                  2007 at an exercise price of $0.35 per share, vesting over 4 years
                  with
                  the first 6 months vesting on August 1, 2007, with a contractual
                  term of
                  10 years. Also included are 1,500,000 options issued July 5, 2007
                  to our
                  Chairman of the Board, pursuant to an employment agreement at an
                  exercise
                  of $0.27 per share, vesting over 3 years, with a contractual term
                  of 10
                  years.
 
 The
        following table provides certain information with respect to the
        above-referenced stock options that are outstanding and exercisable at September
        30, 2007:
 
 Stock
                  Options Outstanding
              
              Stock
                  Options Vested**Exercise
                  Prices**
              
              **Number ofAwards**
              
              **WeightedAverageRemaining****ContractualLife
                  – Years**
              
              **Number ofAwards**
              
              **WeightedAverageExercisePrice**$0.16
                  - $0.29
              
              
              10,516,256
              
              
              5.64
              
              
              6,778,761
              
              $
              0.20$0.30-$0.44
              
              
              3,292,242
              
              
              4.95
              
              
              1,253,356
              
              $
              0.34$0.45-$0.63
              
              
              13,177,436
              
              
              5.82
              
              
              6,240,149
              
              $
              0.49$0.64-$0.80
              
              
              9,200,000
              
              
              8.42
              
              
              3,808,337
              
              $
              0.77Total
              
              
              36,185,934
              
              
              6.35
              
              
              18,080,603
              
              $
              0.46
 
 
  Assumptions
        used in the Black Scholes option-pricing model are as follows:
 
 The
        aggregate intrinsic value of stock options outstanding at September 30, 2007
        was
        $ 288,313 of which $ 288,313 relates to vested awards. Intrinsic value is
        calculated based on the difference between the exercise price of the underlying
        awards and the quoted price of our common stock as of the reporting date
        ($0.21
        per share as of September 30, 2007).
 
 **June 30, 2007**Average
                  risk-free interest rate
              
              4.06%
                  - 4.52%Average
                  expected life
              
              10
                  yearsExpected
                  volatility
              
              96%
                  - 275%Expected
                  dividends
              
              0%
 
 During
        the nine and three months ended September 30, 2007, $3,582,344 and $1,127,610
        respectively was recorded as stock-based compensation expense in the statement
        of operations. The result of all the above stock option grants included in
        stock-based compensation in the statement of operations, totaled $3,219,365
        and
        $1,091,343 respectively, for the nine and three months ended September 30,
        2007
        (non-deductible for tax purposes, may provide a tax deduction for the Company
        when exercised). Stock compensation to executive officers totaled $77,778
        for
        the nine months ended September 30, 2007. This compensation was recorded
        as a
        result of the issuance of 1 million shares of restricted stock to the Company’s
        new Chief Operating Officer, pursuant to an employment agreement entered
        into
        effective February 1, 2007. These shares vest monthly over a 36 month period
        and
        the stock price was $0.35 per share on the date of the agreement. This stock
        issuance resulted in a total deferred stock compensation expense of $350,000,
        to
        be recognized over a 36 month period starting February 1, 2007. For the nine
        and
        three months ended September 30, 2007, $77,778 and $29,167 respectively of
        this
        total compensation amount was recognized as stock compensation expense and
        the
        remaining amount $272,222 was recorded as deferred stock compensation, a
        contra
        equity account on the balance sheet. Some stock volatility factors used by
        Thorium Power Ltd. for five option grants in its fiscal year ended June 30,
        2006
        calculated the volatility factor for Black Scholes using the term of the
        option,
        which is general practice, not from the announcement date of the merger,
        January
        5, 2006, which was later determined to be a more applicable date range due
        to
        the announcement date being the date the stock market reflected the merger
        in
        the valuation of the Company's stock. This difference in these volatility
        factors for these five option grants is not material to these financial
        statements, therefore, no current adjustment to the volatility factors was
        made
        to these financial statements for these five option grants and we have decided
        to continue to use these factors for future expense recognition of options
        under
        SFAS #123R.
  c).
        Warrants
 
 At
        September 30, 2007, there were 19,098,752 warrants outstanding.
 
 At
        September 30, 2007 the range of warrant prices for shares under warrants
        and the
        weighted-average remaining contractual life are as follows:
 **Warrants Outstandingand Exercisable****Warrants
                      - Exercise Price**
                  
                  **Number ofWarrants**
                  
                  **WeightedAverageRemaining****ContractualLife
                      – Years**$0.39
                  
                  
                  256,278
                  
                  
                  0.75$0.39
                  
                  
                  512,556
                  
                  
                  .90$0.65
                  
                  
                  18,329,918
                  
                  
                  0.11Total
                  
                  
                  19,098,752
                  
                  
                  0.14
  
  The
        investors in the May 4, 2006 private placements received detachable warrants
        for
        the purchase of 18,329,918 shares of common stock, which were valued at
        $3,539,058. For purposes of estimating the intrinsic fair value of each warrant
        as of dates of the private placements, the Company utilized the Black Scholes
        option-pricing model. The Company estimated the fair value of the warrants
        assuming no expected dividends and the following weighted-average
        assumptions:
 
 **June 30, 2007**Average
                  risk-free interest rate
              
              2.86%
                  - 4.30%Average
                  expected life
              
              1
                  yearExpected
                  volatility
              
              142%
                  - 153%Expected
                  dividends
              
              0%
 
 d).
        Common Stock and Warrants reserved for Future Issuance
 
 Common
        stock and warrants reserved for future issuance consists of:
 
 **Shares
                    of**
                  **Common**
                  **Stock**
              
              **Stock**
                  **Purchase**
                  **Warrants**
              
              **Amount**Stock-based
                  Compensation
              
              
              1,000,000
              
              
              0
              
              $
              350,000
  7.  Income
        Taxes
 
 Deferred
        income taxes reflect the net tax effects of temporary differences between
        the
        carrying amounts of assets and liabilities recognized for financial reporting
        and the amounts recognized for income tax purposes. The significant components
        of deferred tax assets (at a 40% effective tax rate) as of September 30,
        2007
        are as follows:
 
 Total Amount
              
              Deferred
                  TaxAsset Amount**Assets**Stock-based
                  compensation
              
              
              5,542,703
              
              
              2,217,081Approximate
                  net operating loss
              
              
              29,178,933
              
              
              11,671,573Less:
                  valuation allowance
              
              
              (34,721,636
              )
              
              (13,888,654)
              )$
              -
              
              
              -
 
 Management
        believes that it is more likely than not that the forecasted taxable income
        will
        not be sufficient to utilize the tax carryforwards of approximately $29,178,933,
        before its expiration in 2012 to and 2027 to fully recover the asset. As
        a
        result, the amount of the deferred tax assets considered realizable was reduced
        100% by a valuation allowance. In the near term, if estimates of future taxable
        income are increased, such an increase will change the valuation allowance.
        The
        Company has no other deferred tax assets or liabilities. The Company will
        also
        be subject to limitations under Internal Revenue Code Section 382 regarding
        the
        use of its net operating loss carryforwards in future tax years.
 
 8.  Research
        Agreement
  The
        Company has recently reached an agreement with Federal State Unitary Enterprise
        “Red Star”, a Russian government owned entity, on all terms of a contract
        whereby Thorium Power's seed and blanket fuel designs will undergo further
        irradiation testing with the goal of moving toward deployment within full-sized
        commercial reactors. The Company is also working on finalizing a
        Cooperative Research Agreement and a Joint Venture agreement with Red Star.
        These agreements are subject to approval by the Russian Federal Agency for
        Atomic Energy (RosAtom), which the Company expects to be completed during
        2007
        to early 2008.
  
 
 9.  Commitments
        and Contingencies
 
 The
        Company has employment agreements with its executive officers, the terms
        of
        which expire at various times. Such agreements provide for minimum compensation
        levels, as well as incentive bonuses that are payable if specified management
        goals are attained. Under each of the agreements, in the event the officer's
        employment is terminated (other than voluntarily by the officer or by the
        Company for cause or upon the death of the officer), the Company, if all
        provisions of the employment agreements are met, is committed to pay certain
        benefits, including specified monthly severance.


**FORWARD-LOOKING
      STATEMENTS**





This
      Quarterly Report on Form 10-QSB contains forward-looking statements within
      the
      meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as
      amended (the “Exchange Act”). The words “believe,” “expect,” “anticipate,”
“project,” “target,” “optimistic,” “intend,” “aim,” “will” or similar
      expressions are intended to identify forward-looking statements. Such statements
      include, among others, those concerning our expected financial performance
      and
      strategic and operational plans, as well as all assumptions, expectations,
      predictions, intentions or beliefs about future events. These statements are
      based on the beliefs of our management as well as assumptions made by and
      information currently available to us and reflect our current view concerning
      future events. As such, they are subject to risks and uncertainties that could
      cause our results to differ materially from those expressed or implied by such
      forward-looking statements. Such risks and uncertainties include, among many
      others: our significant operating losses; our limited operating history;
      uncertainty of capital resources; the speculative nature of our business; our
      ability to successfully implement new strategies; present and possible future
      governmental regulations; operating hazards; competition; the loss of key
      personnel; any of the factors in the “Risk Factors” section of the Company’s
      Annual Report on Form 10-KSB; other risks identified in this Report; and any
      statements of assumptions underlying any of the foregoing. You should also
      carefully review other reports that we file with the SEC. The Company assumes
      no
      obligation and does not intend to update these forward-looking statements,
      except as required by law.





**ITEM
              2.**
            **MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION.**





*The
      following analysis discusses changes in the financial condition and results
      of
      operations of Thorium Power, Ltd. and it’s subsidiary, Thorium Power, Inc., at
      and for the nine months ended on September 30, 2007 and 2006, and should be
      read
      in conjunction with our unaudited consolidated financial statements and the
      notes thereto.*





***General
      Overview***





On
      October 6, 2006, we acquired Thorium Power, Inc. through a merger transaction.
      Thorium Power, Inc. has patented proprietary nuclear fuel designs for use in
      existing commercial nuclear power plants. The merger was accounted for as a
      reverse merger and Thorium Power, Inc. is being treated as the accounting
      acquirer.





As
      discussed in more detail below, in connection with the merger, we changed our
      line of business. This new line of business, which is now our only business
      line, is research and development of proprietary nuclear fuel designs for use
      in
      nuclear power plants. We began to shift our focus to this business in
      anticipation of the merger with Thorium Power, Inc. and, upon completion of
      the
      merger, this business is conducted through both Thorium Power, Inc. and the
      Company. Our historical business preceding the merger was mineral exploration
      which has been phased out completely.





We
      are a
      development stage company. We are primarily engaged in the development of
      proprietary nuclear fuel designs which we intend ultimately to introduce for
      sale into three markets: (1) nuclear fuel designs for use in commercial nuclear
      power plants, (2) nuclear fuel designs for reactor-grade plutonium disposition,
      and (3) nuclear fuel designs for weapons-grade plutonium disposition. These
      fuel
      designs are primarily for use in existing or future VVER-1000 light water
      reactors. We have also been conducting research and development relating to
      a
      variant of these nuclear fuel designs for use in existing pressurized water
      reactors (PWR).




Our
      future customers may include nuclear fuel fabricators and/or nuclear power
      plants, and/or the U.S. or foreign governments.




To
      date,
      our operations have been devoted primarily to the development and demonstration
      of our nuclear fuel designs, developing strategic relationships within and
      outside of the nuclear power industry, securing political and financial support
      from the U.S. and Russian governments, the filing of patent applications and
      related administrative functions. We do not currently have any revenues from
      our
      activities in this area and expect that we will not generate licensing revenues
      from this business for several years, until our fuel designs can be fully tested
      and demonstrated and we obtain the proper approvals to use our nuclear fuel
      designs in nuclear reactors. Future revenues could be generated through the
      licensing of our technology and also by providing other services in the nuclear
      power industry. Accordingly, we prepare our financial statements as a
      development stage company in accordance with FASB Statement No. 7, “Accounting
      and Reporting by Development Stage Enterprises.”









***Material
      Opportunities and Challenges***




We
      believe that a major opportunity for us is the possibility that our fuel
      designs, which are currently in the research and development stage, will be
      used
      in the manufacturing of nuclear fuel utilized in many existing light water
      nuclear reactors. Light water reactors are the dominant reactor types currently
      in use in the world and fuels for such reactors constitute the majority of
      the
      commercial market for nuclear fuel. Our focus is on three different types,
      or
      variants, of thorium fuel designs. The first is designed to provide reactor
      owner-operators with an economically viable alternative fuel that will not
      generate weapons-usable plutonium in the spent fuel. The second is designed
      to
      dispose of reactor-grade plutonium that has been extracted from spent fuel
      from
      commercial rectors and stockpiled in Russia, Western Europe, the U.S., Japan
      and
      other countries. The third is designed to dispose of weapons-grade plutonium
      that is stockpiled in Russia and the United States. All three of these fuel
      variants are expected to have additional benefits, including reduced volume
      and
      reduced long-term radio-toxicity of spent fuel for the same amount of
      electricity generated, as compared with the uranium fuels that are currently
      used in light water reactors and as compared with mixed
      oxide (MOX) fuel, a mixture of uranium oxide and recovered plutonium oxide
      which
      is a recycling technology used by a small number of nuclear power
      plants.




Our
      nuclear fuel designs have never been demonstrated in a full-size commercial
      reactor. Our planned demonstration of the fuels in a VVER-1000 reactor in Russia
      would provide operating experience that is critical to reactor owners and
      regulatory authorities. We believe that once the fuels have been demonstrated
      in
      the VVER-1000 reactor, this can help convince other light water reactor
      operators around the world to accept our thorium fuel designs.




We
      believe that our greatest challenge will be acceptance of these fuel designs
      by
      nuclear power plant operators, which have in the past been hesitant to be the
      first to use a new type of nuclear fuel. In addition, our fuel designs would
      require regulatory approval by relevant nuclear regulatory authorities, such
      as
      the Nuclear Regulatory Commission in the United States or its equivalent
      agencies in other countries, before they can be used in commercial reactors.
      The
      regulatory review process, which is outside of our control, may take longer
      than
      expected and may delay a rollout of the fuel designs into the market. Management
      believes that demonstration of one of the Company’s fuel designs in a commercial
      nuclear reactor would make deployment of the other designs easier due to the
      many similarities that exist among all of our fuel designs.





***Plan
      of Operation*** ****





At
      September 30, 2007, our total assets were approximately $ 6,792,723 of which
      $ 6,470,292 was
      cash. Liabilities as of September 30, 2007 totaled approximately $534,005.
      We
      had working capital surplus of approximately $6,030,621 at September 30, 2007.





Management
      presently expects that our present working capital will meet our
      foreseeable working capital needs for the next 6 to 8 months from the date
      of
      this filing of the Form 10-QSB, depending on when we start the $5 million
      funding of our nuclear fuel designs, as mentioned below. Our current average
      monthly projected working capital requirements, excluding the $5 million of
      research and development expenses we expect to incur in Russia over the next
      12-15 months, is approximately $500,000 per month (including approximately
      $100,000 per month for payroll and payroll-related fringe benefits). We will
      need to raise additional capital by way of an offering of equity securities,
      an
      offering of debt securities, or by obtaining financing through a bank or other
      entity sometime before the end of the second quarter of 2008 in order to insure
      we have the necessary working capital available to continue our operations
      throughout 2008. That financing, however, may not be available or we may not
      be
      able to obtain that financing on terms acceptable to us. If additional funds
      are
      raised through the issuance of equity securities, there may be a significant
      dilution in the value of our outstanding common stock.







Over
      the
      next 12-15 months we expect to incur approximately $5 million in research and
      development expenses related to the development of our proprietary nuclear
      fuel
      designs. Of the $5 million, the cost of seed and blanket fuel fabrication
      equipment that would be purchased and used to fabricate trial seed and blanket
      fuel rods is expected to be approximately $2 million and the cost of nuclear
      materials used in fabrication of trial seed and blanket fuel rods is estimated
      at about $850,000. We expect to incur these expenses after we have reached
      a
      formal agreement with Russian nuclear entities that will grant us licensing
      and
      other rights to use such technologies or intellectual property developed by
      the
      Russian entities. Any such agreement would require formal review and approval
      by
      the Russian Federal Agency for Atomic Energy (RosAtom). We expect this agreement
      to be finalized and submitted for formal approval to RosAtom within the next
      several months and these research expenses to be in the range of approximately
      $1.5 million to $2.0 million for fiscal 2007 and the first several months of
      2008, but it is possible that such expenses could be less or more than
      those amounts. We spent approximately $297,064 and $141,593 for the nine months
      and three months ended September 30, 2007.





Over
      the
      next 3 years, we expect that our research and development activities will be
      primarily focused on testing and demonstration of our thorium/uranium and
      thorium/reactor-grade plutonium disposing fuel designs. The main objective
      of
      this research and development phase is to prepare for full-scale demonstration
      of our nuclear fuel technology in an operating commercial VVER-1000 reactor
      in
      Russia. Key research and development activities will include: (1) Scaling up
      the
      fuel fabrication process to full length (10 feet) rods used in commercial
      VVER-1000 reactors, (2) Validating thermal hydraulic performance of full size
      (10 feet) seed and blanket fuel assembly, (3) Performing post-irradiation
      examination of seed and blanket fuel samples that have been irradiated in a
      research reactor to confirm fuel performance, and (4) Obtaining final regulatory
      approvals for insertion of fuel in VVER-1000 commercial reactors. As this
      research and development program relates to commercial applications of our
      fuel
      technology and retaining ownership or control over as much key intellectual
      property as we possibly can is critical to the long-term success of our
      licensing business model, our plan is to fully fund these research and
      development activities ourselves. At the same time, we do not currently plan
      to
      fund research, testing and demonstration of our thorium/weapons-grade plutonium
      disposing fuel, which can only be used in the U.S.-Russia
      government-to-government weapons-grade plutonium disposition program and has
      no
      commercial applications. Hence, funding for any future research and development
      activities on this fuel design would have to be provided by the U.S. government
      or other stakeholders.





Additionally,
      we will be increasing our payroll and related fringe benefits costs as well
      as
      our consulting expenses for the remainder of our fiscal year ended December
      31,
      2007, as we have hired a permanent Chief Financial Officer and will be employing
      more people to add to our consulting team




***Results
      of Operations***





Nine
      Months Ended September 30, 2007





We
      had no
      revenues during the nine months ended September 30, 2007.





Our
      total
      operating expenses for the nine months ended September 30, 2007 were
      $7,786,872 **** consisting
      of:





·
            $3,582,344
                of stock based compensation;


·
            $1,401,413****in
                professional fees consisting of


o
            $464,019
                of legal fees


o
            $411,272
                of public, investor and government
                relations


o
            $249,376
                of audit, SOX 404 consulting and accounting
                fees


o
            $276,746
                of other professional and consulting
                fees


·
            $1,059,338****of
                payroll and payroll related
                expenses


·
            $297,064
                of research and development
                expenses


·
            $368,365
                of advisory board fees and related advisory board travel
                expenses


·
            $519,751
                of travel and travel related
                expenses


·
            $558,597****in
                other general and administrative
                expenses.





Other
      income and expense was $243,224 of net other income for the nine months ended
      September 30, 2007. This consists primarily of interest income earned of
      $302,466.





Our
      net
      loss was $7,543,648 and $8,849,020 **** for
      the
      nine months ended September 30, 2007 and 2006, respectively. Our cumulative
      loss
      from January 8, 1992 to September 30, 2007 was $34,721,636.











Nine
      Months Ended September 30, 2006





We
      had no
      revenues in 2006.





Our
      total
      operating expenses for the nine months ended September 30, 2006 was
      $8,838,866 **** consisting
      of:





·
            $10,000
                of research and development expenses


·
            $6,707,098
                of stock-based compensation


·
            $550,000
                of contributions to the University of Texas of the Permian
                Basin


·
            $188,707
                in professional fees


·
            $245,630
                of payroll and payroll related
                expenses


·
            $106,546
                of travel expenses


·
            $1,030,885****in
                other general and administrative expenses (including allocated expenses,
                see below)





In
      accordance with the Security and Exchange Commissions Staff Accounting Bulletin
      SAB.T.1B1, an allocation of expenses attributable to Thorium Power, Inc., was
      made to Thorium Power, Inc. from Thorium Power, Ltd. for periods prior to the
      merger date of October 6, 2006. The total expenses allocated to Thorium Power,
      Inc. up to October 6, 2006 (merger date) were $7,477,700, which consisted of
      $875,602 of general and administrative expenses and $6,602,098 of stock based
      compensation from Thorium Power, Ltd. These total allocated expenses of
      approximately $7.5 million were recorded as deemed capital contributions to
      Thorium Power Inc. by Thorium Power Ltd. These expenses are recorded by Thorium
      Power Inc. prior to the merger on October 6, 2006, in the third quarter of
      2006.





Other
      income and expense was $10 ,154 of net
      other expenses for the nine months ended September 30, 2006. This consists
      primarily of $4,500 of foreign currency translation loss and interest
      expense.





Three
      Months Ended September 30, 2007





We
      had no
      revenues during the three months ended September 30, 2007.





Our
      total
      operating expenses for the three months ended September 30, 2007 were
      $2,382,934 **** consisting
      of:





·
            $1,127,610
                of stock based compensation;


·
            $422,691****in
                professional fees consisting of


o
            $179,394
                of legal fees


o
            $120,947
                of public, investor and government
                relations


o
            $86,673
                of audit, SOX 404 consulting and accounting
                fees


o
            $35,677
                of other professional and consulting
                fees


·
            $279,776****of
                payroll and payroll related
                expenses


·
            $141,593
                of research and development
                expenses


·
            $155,957
                of advisory board fees and related advisory board travel
                expenses


·
            $182,373
                of travel and travel related
                expenses


·
            $25,000
                of contributions to the University of Texas of the Permian
                Basin


·
            $47,934****in
                other general and administrative
                expenses.





Other
      income and expense was $84,888 of net other income for the three months ended
      September 30, 2007. This consists primarily of interest income earned of
      $85,006. Our net loss was $2,298,046 and $7,936,672 for the three months ended
      September 30, 2007 and 2006, respectively.





Three
      Months Ended September 30, 2006





We
      had no
      revenues during the three months ended September 30, 2006.










Our
      total
      operating expenses for the three months ended September 30, 2006 was
      $7,932,071 **** consisting
      of:





·
            $6,602,098
                of stock based compensation;


·
            $3,024****in
                professional fees


·
            $77,449****of
                payroll and payroll related
                expenses


·
            $63,464
                of travel and travel related
                expenses


·
            $875,602
                of allocated****general
                and administrative expenses prior to the merger (discussed
                above)


·
            $310,434
                of other general and administrative
                expenses





Other
      income and expense was $4,601 of net other expense for the three months ended
      September 30, 2006. This consists primarily of interest expense.





***Liquidity
      and Capital Resources***




As
      of
      September 30, 2007 and December 31, 2006, we had cash and cash equivalents
      of
      $ 6,470,292 **** and
      $10,927,775, respectively. The following table provides detailed information
      about our net cash flow for all financial statements periods presented in this
      Report.




**Cash
      Flow**


**Nine Months Ended September 30,****2007**
              
              **2006**Net
                  cash (used in) operating activities
              
              $
              (4,457,072
              )
              $
              (3,850,886
              )Net
                  cash provided by (used in) investing activities
              
              $
              3,274
              
              $
              (17,625
              )Net
                  cash provided by (used in) financing activities
              
              $
              (3,685
              )
              $
              3,924,397Net
                  cash inflow (outflow)
              
              $
              (4,457,483
              )
              $
              55,886




*Operating
      Activities* :




Net
      cash
      used for operating activities was $4,457,072 **** for
      the
      nine months ended September 30, 2007, which is an increase of $ 606,186 **** from
      the
      $ 3,850,886 **** net
      cash
      used for operating activities for the same period in 2006. This increase was
      mainly due to the
      increase in our operating expenses which resulted in an increase in our net
      loss
      for the period .




*Investing
      Activities* :




Net
      cash
      provided by investing activities in the nine months ended September 30, 2007
      was
      $3,274, which is an increase of $20,899 **** from
      net
      cash used for investing activities of $17,625 **** in
      the
      same period of 2006, due to a decrease in the purchase of equipment and the
      acquisition of patents in 2006.




*Financing
      Activities* :




Net
      cash
      used by financing activities in the nine months ended September 30, 2007 totaled
      $3,685 **** as
      compared to $3,924,397 provided by financing activities in the same period
      of
      2006. This decrease of the cash provided by financing activities was mainly
      attributable to decrease
      in proceeds from the issuance of common stock of approximately $2.2 million
      and
      the decrease in the loans from related party (Thorium Power Ltd .
      to
      Thorium Power Inc. prior to the merger October 6, 2006) of approximately $1.8
      million.









While
      management expects these proceeds will meet our foreseeable needs for the next
      6-8 months, we will need to raise additional capital by way of an offering
      of
      equity securities, an offering of debt securities, or by obtaining financing
      through a bank or other entity. If we need to obtain additional financing,
      that
      financing may not be available or we may not be able to obtain that financing
      on
      terms acceptable to us. If additional funds are raised through the issuance
      of
      equity securities, there may be a significant dilution in the value of our
      outstanding common stock.





***Off
      Balance Sheet Arrangements***




We
      do not
      have any off balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity or capital
      expenditures or capital resources that is material to an investor in our
      securities.





***Seasonality***




Our
      business has not been subject to any material seasonal variations in operations,
      although this may change in the future.




***Inflation***




As
      a
      development stage company, our business, revenues and operating results have
      not
      been affected in any material way by inflation.




***Critical
      Accounting Policies***




The
      SEC
      issued Financial Reporting Release No. 60, "Cautionary Advice Regarding
      Disclosure about Critical Accounting Policies" suggesting that companies provide
      additional disclosure and commentary on their most critical accounting policies.
      In Financial Reporting Release No. 60, the SEC has defined the most critical
      accounting policies as the ones that are most important to the portrayal of
      a
      company's financial condition and operating results, and require management
      to
      make its most difficult and subjective judgments, often as a result of the
      need
      to make estimates of matters that are inherently uncertain. Based on this
      definition, we have identified the following significant policies as critical
      to
      the understanding of our financial statements.




The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make a variety of estimates and
      assumptions that affect (i) the reported amounts of assets and liabilities
      and
      disclosure of contingent assets and liabilities as of the date of the financial
      statements and (ii) the reported amounts of revenues and expenses during the
      reporting periods covered by the financial statements.




Our
      management expects to make judgments and estimates about the effect of matters
      that are inherently uncertain. As the number of variables and assumptions
      affecting the future resolution of the uncertainties increase, these judgments
      become even more subjective and complex. Although we believe that our estimates
      and assumptions are reasonable, actual results may differ significantly from
      these estimates. Changes in estimates and assumptions based upon actual results
      may have a material impact on our results of operation and/or financial
      condition. We have identified certain accounting policies that we believe are
      most important to the portrayal of our current financial condition and results
      of operations. Our significant accounting policies are disclosed in Note 2
      to
      the Consolidated Financial Statements included in the Annual Report on Form
      10-KSB filed with the Commission on March 20, 2007, as amended on September
      11,
      2007.





Deferred
      tax assets and liabilities




We
      will
      recognize the expected future tax benefit from deferred tax assets when the
      tax
      benefit is considered to be more likely than not of being realized. Assessing
      the recoverability of deferred tax assets requires management to make
      significant estimates related to expectations of future taxable income.
      Estimates of future taxable income are based on forecasted cash flows and the
      application of existing tax laws in each jurisdiction. To the extent that future
      cash flows and taxable income differ significantly from estimates, our ability
      to realize deferred tax assets could be impacted. Additionally, future changes
      in tax laws in the jurisdictions in which we operate could limit our ability
      to
      obtain the future tax benefits.










Accounting
      for Stock Based Compensation, Stock Options and Warrants Granted to Employees
      and Non-employees




We
      adopted the provisions of SFAS 123R, which requires the use of the fair value
      method of accounting for share-based compensation. Under the fair value based
      method, compensation cost related to employee stock options or similar equity
      instruments is measured at the grant date based on the value of the award and
      is
      recognized over the service period, which is usually the vesting period. SFAS
      123R also requires measurement of cost of a liability-classified award based
      on
      its current fair value.  The fair value of the liability-classified award
      will be subsequently re-measured at each reporting date through the settlement
      date.  Change in fair value during the requisite service period will be
      recognized as compensation cost over that period.  We determine fair value
      using the Black-Scholes model. Under this model, certain assumptions, including
      the risk-free interest rate, the expected life of the options and the estimated
      fair value of our ordinary shares and the expected volatility, are required
      to
      determine the fair value of the options. If different assumptions had been
      used,
      the fair value of the options would have been different from the amount we
      computed and recorded, which would have resulted in either an increase or
      decrease in the compensation expense.





The
      options were valued using the Black-Scholes option pricing model. The
      assumptions used were as follows: volatility of 96% to 275%, a risk-free
      interest rate of 4.06% to 4.52%, dividend yield of 0% and an exercise term
      of
      one to five years.





**ITEM
              **3A(T).****
            **CONTROLS
                AND PROCEDURES.**





*Evaluation
      of Disclosure Controls and Procedures.* We
      maintain a system of disclosure controls and procedures. The term “disclosure
      controls and procedures,” as defined by regulations of the SEC, means controls
      and other procedures that are designed to ensure that information required
      to be
      disclosed in the reports that we file or submit to the SEC under the Exchange
      Act, is recorded, processed, summarized and reported, within the time periods
      specified in the SEC’s rules, regulations and forms. Disclosure controls and
      procedures include, without limitation, controls and procedures designed to
      ensure that information required to be disclosed by us in the reports that
      we
      file or submit to the SEC under the Exchange Act is accumulated and communicated
      to our management, including our principal executive officer and our principal
      financial officer, or persons performing similar functions, as appropriate
      to
      allow timely decisions to be made regarding required disclosure. Each of Seth
      Grae, our President and Chief Executive Officer, and Larry Goldman, our Acting
      Chief Financial Officer, has evaluated the design and operating effectiveness
      of
      our disclosure controls and procedures as of September 30, 2007. Based upon
      their evaluation, these executive officers have concluded that our disclosure
      controls and procedures are effective as of September 30, 2007, and were
      effective during the entire quarter ended September 30, 2007.





*Internal
      Control Over Financial Reporting.* We also
      maintain internal control over financial reporting. The term “internal control
      over financial reporting,” as defined by regulations of the SEC, means a process
      designed by, or under the supervision of, our principal executive and principal
      financial officers, or persons performing similar functions, and effected by
      the
      our board of directors, management and other personnel, 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 procedures in the U.S. (“GAAP”), and includes those policies
      and procedures that:





·
            Pertain
                to the maintenance of records that in reasonable detail accurately
                and
                fairly reflect the transactions and dispositions of our
                assets;


·
            Provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with GAAP, and
                that our
                receipts and expenditures are being made only in accordance with
                authorizations of our management and directors; and


·
            Provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of our assets that could
                have
                a material effect on our consolidated financial
                statements.





*Changes
      in Internal Control Over Financial Reporting.* There
      has been no change to our internal control over financial reporting during
      the
      quarter ended September 30, 2007 that has materially affected, or is reasonably
      likely to materially affect, our internal control over financial
      reporting.








**PART
      II**


**OTHER
      INFORMATION**





**ITEM
              1.**
            **LEGAL
                PROCEEDINGS**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings which
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. We are currently not aware
      of any such legal proceedings or claims that we believe will have a material
      adverse affect on our business, financial condition or operating
      results.




**ITEM
              2.**
            **UNREGISTERED
                SALES OF EQUITY SECURITIES OR USE OF
                PROCEEDS**





There
      were no unregistered sales of equity securities in the three months ended
      September 30, 2007.





**ITEM
              3.**
            **DEFAULTS
                UPON SENIOR SECURITIES**





There
      were no defaults upon senior securities in the three months ended September
      30,
      2007.





**ITEM
              4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**





No
      matters were submitted to a vote of security holders in the three months ended
      September 30, 2007.





**ITEM
              5.**
            **OTHER
                INFORMATION**





N/A





**ITEM
              6.**
            **EXHIBITS**





The
      following exhibits are filed with this report, except those indicated as having
      previously been filed with the SEC and are incorporated by reference to another
      report, registration statement or form. As to any shareholder of record
      requesting a copy of this report, we will furnish any exhibit indicated in
      the
      list below as filed with this report upon payment to us of our expenses in
      furnishing the information.


***Exhibit***
                ***Number***
              
              ***Description***3.1
              
              Articles
                  of Incorporation (incorporated by reference from the Company’s
                  Registration Statement on Form 10-SB filed on December 17,
                  1999).3.2
              
              By-laws
                  (incorporated by reference from the Company’s Current Report on Form 8-K
                  filed on September 18, 2006).4.1
              
              2005
                  Compensation Plan for Outside Consultants of Custom Brand Networks,
                  Inc.
                  dated March 1, 2005 (incorporated by reference from the Company’s
                  Registration Statement on Form S-8 filed on March 10,
                  2005).4.2
              
              2005
                  Augmented Compensation Plan for Outside Consultants of the Company
                  dated
                  August 15, 2005 (incorporated by reference from the Company’s Registration
                  Statement on Form S-8 filed on August 19, 2005).4.3
              
              2006
                  Stock Plan (incorporated by reference to Exhibit 10.1 of the current
                  report of the Company on Form 8-K filed February 21,
                  2006)31.1*
              
              Rule
                  13a-14(a)/15d-14(a) Certification - Principal Executive
                  Officer31.2*
              
              Rule
                  13a-14(a)/15d-14(a) Certification - Principal Accounting
                  Officer32*
              
              Section
                  1350 Certifications




*
      Filed
      Herewith







SIGNATURES





In
      accordance with section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      Registrant caused this Report on Form 10-QSB to be signed on its behalf by
      the
      undersigned, thereto duly authorized individual.





Date:
      October 25, 2007


THORIUM
                  POWER, LTD.By:
              /s/
                Seth GraeSeth
                  GraeChief
                  Executive Officer,President
                  and Director







**EXHIBIT
      INDEX**


***Exhibit***
                ***Number***
              
              ***Description***3.1
              
              Articles
                  of Incorporation (incorporated by reference from the Company’s
                  Registration Statement on Form 10-SB filed on December 17,
                  1999).3.2
              
              By-laws
                  (incorporated by reference from the Company’s Current Report on Form 8-K
                  filed on September 18, 2006).4.1
              
              2005
                  Compensation Plan for Outside Consultants of Custom Brand Networks,
                  Inc.
                  dated March 1, 2005 (incorporated by reference from the Company’s
                  Registration Statement on Form S-8 filed on March 10,
                  2005).4.2
              
              2005
                  Augmented Compensation Plan for Outside Consultants of the Company
                  dated
                  August 15, 2005 (incorporated by reference from the Company’s Registration
                  Statement on Form S-8 filed on August 19, 2005).4.3
              
              2006
                  Stock Plan (incorporated by reference to Exhibit 10.1 of the current
                  report of the Company on Form 8-K filed February 21,
                  2006)31.1*
              
              Rule
                  13a-14(a)/15d-14(a) Certification - Principal Executive
                  Officer31.2*
              
              Rule
                  13a-14(a)/15d-14(a) Certification - Principal Accounting
                  Officer32*
              
              Section
                  1350 Certifications





*Filed
      Herewith