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: March
      31, 2007





[
      ]
      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.
                Employer Identification No.)





8300
                Greensboro Drive, Suite 800
              McLean,
                Virginia 22102
            
            703.918.4904(Address
                of Principal Executive Office)
            
            (Issuer
                Telephone No. Including Area 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 o No x


The
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of May 4, 2007 are as follows:





Class
                of Securities
            
            Shares
                OutstandingCommon
                Stock, $0.001 par value
            
            297,692,991





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





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








**Index
      to Unaudited Financial Statements**





PageCondensed
                  Consolidated Balance Sheets
              2Condensed
                  Consolidated Statements of Operations and Comprehensive
                  Loss
              3Condensed
                  Consolidated Statements of Cash Flows
              4Notes
                  to Condensed Consolidated Financial Statements
              5












**Thorium
      Power, Ltd.**


**(A
      Development Stage Company)**


**Condensed
      Consolidated Balance Sheets**


**(Unaudited)**
              
              **(Audited)****March
                  31,**
              
              **December
                  31****2007**
              
              **2006****ASSETS****Currrent
                  Assets**Cash
                  and cash equivalents
              
              $
              9,026,195
              
              $
              10,927,775Prepaid
                  expenses & other current assets
              
              
              146,667
              
              
              394,443Total
                  Current Assets
              
              
              9,172,862
              
              
              11,322,218Property
                  Plant and Equipment -net
              
              
              20,312
              
              
              21,290**Other
                  Assets**Patent
                  costs - net
              
              
              217,875
              
              
              217,875Security
                  deposits
              
              
              2,049
              
              
              2,049Total
                  Other Assets
              
              
              219,924
              
              
              219,924**Total
                  Assets**
              
              $
              9,413,098
              
              $
              11,563,432**Liabilities
                  and Stockholders' Deficiency****Current
                  Liabilities**Current
                  portion long term debt
              
              $
              4,449
              
              $
              4,739Accounts
                  payable and accrued liabilities
              
              
              947,866
              
              
              1,121,083Other
                  current liabilities
              
              
              0
              
              
              347,690Warrant
                  liability
              
              
              0
              
              
              1,132,440Total
                  Current Liabilities
              
              
              952,315
              
              
              2,605,952Notes
                  Payable - long term
              
              
              9,296
              
              
              10,433**Total
                  Liabilites**
              
              
              961,611
              
              
              2,616,385Commitments
                  and contingencies**Common
                  Stock with Registration Rights**Common
                  Stock subject to continuing registration, $0.001 par value, 36,659,837
                  shares issuedand
                  outstanding at March 31, 2007 and December 31, 2006
              
              
              12,041,373
              
              
              12,041,373**Stockholders'
                  Deficiency**Preferred
                  stock, $0.001 par value, 50,000,000 authorized shares, no shares
                  issued
                  and outstanding
              
              
              0
              
              
              0Common
                  stock, $0.001 par value, 500,000,000 authorized, 260,340,554 shares
                  issued
                  and 259,490,554 shares outstanding at March 31, 2007 and 257,291,709
                  shares issued and 256,441,709 shares outstanding at December 31,
                  2006
              
              
              260,341
              
              
              257,292Additional
                  paid in capital - stock and stock equivalents
              
              
              26,460,130
              
              
              23,148,560Deficit
                  accumulated during the development stage
              
              
              (29,955,382
              )
              
              (27,177,989
              )Common
                  stock reserved for issuance, 1,000,000 shares at March 31, 2007
                  and
                  4,000,000 shares at December 31, 2006
              
              
              350,000
              
              
              1,200,000Accumulated
                  other comprehensive income
              
              
              27,581
              
              
              18,861Deferred
                  stock compensation
              
              
              (476,706
              )
              
              (285,200
              )Treasury
                  stock - 850,000 shares
              
              
              (255,850
              )
              
              (255,850
              )**Total
                  Stockholders' Deficiency**
              
              
              (3,589,886
              )
              
              (3,094,326
              )**Total
                  Liabilities and Stockholders' Deficiency**
              
              $
              9,413,098
              
              $
              11,563,432




The
      accompanying notes are an integral part of
      these condensed consolidated financial statements


2


**Thorium
        Power, Ltd.**
 **(A
        Development Stage Company)**
 **Condensed
        Consolidated Statements of Operations and Comprehensive
        Loss**
 **(Unaudited)**




Three
                  Months Ended
              
              Cumulative
                  Period from January 8, 1992 (Inception) toMarch
                  31,
              
              March
                  31,2007
              
              2006
              
              2007Revenue:License
                  revenue
              
              $
              0
              
              $
              0
              
              $
              624,985Total
                  Revenue
              
              
              0
              
              
              0
              
              
              624,985Operating
                  ExpensesGeneral
                  and administrative
              
              
              1,554,462
              
              
              330,973
              
              
              14,709,023Research
                  and development expenses
              
              
              0
              
              
              0
              
              
              3,926,558Stock-based
                  compensation
              
              
              1,335,517
              
              
              0
              
              
              12,697,134Total
                  Operating Loss
              
              
              2,889,979
              
              
              330,973
              
              
              30,707,730Other
                  (Income) and ExpensesGain
                  on fair value of warrant derivatives
              
              
              0
              
              
              0
              
              
              (1,902,286
              )Other
                  (income)/expense
              
              
              (112,586
              )
              
              866
              
              
              (259,415
              )Stock
                  settlement expense
              
              
              0
              
              
              0
              
              
              92,260Registration
                  right expense
              
              
              0
              
              
              0
              
              
              353,706Warrant
                  expense
              
              
              0
              
              
              0
              
              
              963,387Total
                  Other (Income) and Expenses
              
              
              (112,586
              )
              
              866
              
              
              (752,348
              )Net
                  Loss
              
              $
              2,777,393
              
              $
              331,839
              
              $
              29,955,382Other
                  Comprehensive Income (Loss)Unrealized
                  Gain Marketable Securities
              
              
              8,720
              
              
              0
              
              
              27,581Total
                  Comprehensive Loss
              
              $
              2,768,673
              
              $
              331,839
              
              $
              29,927,801Net
                  Loss Per Common Share, Basic and diluted
              
              $
              0.01
              
              $
              0.00Weighted
                  Average Number of shares outstanding for the period used to compute
                  per
                  share data
              
              
              295,165,399
              
              
              94,567,069




The
      accompanying notes are an integral part of
      these condensed consolidated financial statements


3


**Thorium
        Power, Ltd.**
 **(A
        Development Stage Company)**
 **Condensed
        Consolidated Statements of Cash Flows**
 **(Unaudited)**




3
                  Months Ended
              
              Cumulative
                  amountsMarch
                  31,
              
              January
                  8, 1992 (Inception)2007
              
              2006
              
              to
                  March 31, 2007Operating
                  ActivitiesNet
                  Loss for the period
              
              $
              (2,777,393
              )
              $
              (331,839
              )
              $
              (29,955,382
              )Adjustments
                  to reconcile net loss from operations to net cash used in operating
                  activities:Shares
                  issued for other than cash for payment of expenses
              
              
              1,430,673
              
              
              0
              
              
              12,880,539Gain
                  on fair value of warrant liability
              
              
              0
              
              
              0
              
              
              (1,902,286
              )Depreciation
                  and Amorization
              
              
              978
              
              
              6,564
              
              
              358,189Unrealized
                  Gain Marketable Securities
              
              
              8,720
              
              
              0
              
              
              8,720Gain
                  or loss on disposition of assets
              
              
              0
              
              
              0
              
              
              86,855Capitalization
                  of Share Issue costs
              
              
              0
              
              
              0
              
              
              (441,553
              )Warrant
                  Expense
              
              
              0
              
              
              0
              
              
              963,387Settlement
                  Expense
              
              
              0
              
              
              0
              
              
              92,260Allocated
                  general and administrative expenses - contributed capital
              
              
              0
              
              
              0
              
              
              290,769Changes
                  in non-cash operating working capital items:Prepaid
                  expenses and other current assets
              
              
              247,776
              
              
              2,987
              
              
              (29,283
              )Accounts
                  payable accrued liabilities and other current liabilities
              
              
              (810,907
              )
              
              (517,318
              )
              
              210,061Other
                  assets
              
              
              0
              
              
              0
              
              
              5,518Net
                  Cash (Used In) Operating Activities
              
              
              (1,900,153
              )
              
              (839,606
              )
              
              (17,432,206
              )Investing
                  ActivitiesPurchase
                  of equipment
              
              
              0
              
              
              (1,057
              )
              
              (285,145
              )Proceeds
                  from the sale of equipment
              
              
              0
              
              
              0
              
              
              13,583Acquisition
                  of patents
              
              
              0
              
              
              (300
              )
              
              (411,669
              )Other
                  assets
              
              
              0
              
              
              0
              
              
              (7,567
              )Net
                  Cash (Used In) Investing Activities
              
              
              0
              
              
              (1,357
              )
              
              (690,798
              )Financing
                  ActivitiesProceeds
                  from Issue of common shares
              
              
              0
              
              
              1,543,774
              
              
              14,498,016Payments
                  on notes payable and other
              
              
              (1,427
              )
              
              (1,011
              )
              
              13,744Proceeds
                  of loan - related party
              
              
              0
              
              
              (28,430
              )
              
              384,690Repayment
                  of loan - related party
              
              
              0
              
              
              0
              
              
              (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 (Used In) Financing Activities
              
              $
              (1,427
              )
              $
              1,514,333
              
              $
              27,149,199Net
                  Increase In Cash and Cash Equivalents
              
              $
              (1,901,580
              )
              $
              673,370
              
              $
              9,026,195Cash
                  and Cash Equivalents, Beginning Of Period
              
              
              10,927,775
              
              
              283
              
              
              0Cash
                  and Cash Equivalents, End Of Period
              
              $
              9,026,195
              
              $
              673,653
              
              $
              9,026,195Supplemental
                  Disclosure of Cash Flow InformationCash
                  paid during the year:Interest
                  paid
              
              $
              323
              
              $
              566
              
              $
              3,292Income
                  taxes paid
              
              $
              -
              
              $
              -
              
              $
              -Non-cash
                  transactionsConversion
                  of liabilities to equity
              
              $
              1,166,440
              
              $
              4,100
              
              $
              1,269,640





The
      accompanying notes are an integral
      part of these condensed consolidated financial statements


4


**Thorium
      Power, Ltd.**


**(A
      Development Stage Company)**


**Notes
      to Condensed Consolidated Financial Statements**


**March
      31, 2007**


1.
            BASIS
                OF PRESENTATION





The
      unaudited financial information of Thorium Power, Ltd. (formerly, Novastar
      Resources 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
      three-month period ended March 31, 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”).





5


**Thorium
        Power, Ltd.**
 **(A
        Development Stage Company)**
 **Notes
        to Condensed Consolidated Financial Statements**
 **March
        31, 2007**




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, accrued
      liquidation damages pursuant to the Registration Right Agreement for the May
      4,
      2006 private placement, 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, a total of $1,132,440, to
      stockholders’ equity (additional paid in capital).








4.
            Financial
                Status and Going Concern Considerations - March 31,
                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 first calendar quarter
      of
      2008. The Company will therefore need to raise additional capital in 2007,
      either by having future issuances of its stock or incurring debt in 2007 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 $ - and $- for the three months ended March
      31, 2007 and 2006, respectively and $3,926,558 from January 8, 1992 (Inception)
      to March 31, 2007.





6.
            Stockholders'
                Equity





Total
      Common stock outstanding at March 31, 2007 was 296,150,391 (including 36,659,837
      shares of common stock with registration rights). There were also 850,000 shares
      that were held as Treasury stock at March 31, 2007, bringing the total
      number of shares issued to 297,000,391. At March 31, 2007, there were 25,282,745
      stock purchase warrants and 30,869,910 stock options outstanding, all totaling
      353,153,046 of total stock and stock equivalents outstanding March 31,
      2007.





6


**Thorium
      Power, Ltd.**


**(A
      Development Stage Company)**


**Notes
      to Condensed Consolidated Financial Statements**


**March
      31, 2007**






a).
      Common Stock Issued With Registration Rights - Temporary 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
      EITF
      is currently reviewing the accounting for securities with liquidated damages
      clauses as stated in EITF 05-04, The Effect of a Liquidated Damages Clause
      on a
      Freestanding Financial Instrument subject to EITF 00-19. There are currently
      several views as to how to account for this type of transaction and the EITF
      has
      not yet reached a consensus. In accordance with EITF 00-19, Accounting for
      Derivative Financial Instruments Indexed To, and Potentially Settled in the
      Company's Own Stock, and EITF 05-04, because of the potential liquidated damages
      for failure to obtain and maintain an effective registration statement is
      substantial, the value of the common stock subject to such registration rights
      should be classified as temporary equity. Additionally, in accordance with
      EITF
      00-19 and the terms of the above warrants, the fair value of the warrants was
      recorded as a liability, with an offsetting reduction to shareholders' equity.
      The warrant liability is initially measured at fair value using the Black
      Scholes option pricing model, and was then re-valued at each reporting date,
      with changes in the fair value reported as non-cash charges or credits to
      earnings reported as gain/loss on fair value of warrant
      derivatives.




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 pronouncement
      FSP
      00-19-2 as mentioned above in 2007.




b)
      Share-based Compensation





7


**Thorium
        Power, Ltd.**
 **(A
        Development Stage Company)**
 **Notes
        to Condensed Consolidated Financial Statements**
 **March
        31, 2007**


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 37,500,000 options can be granted for the purchase of restricted
                common shares.ii).
            No
                more than 8,000,000 options can be granted to any one person during
                any
                one fiscal year.




iii).
            No
                more than 5,000,000 restricted common shares can be granted to any
                one
                person during any one fiscal year.





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. The impact of adopting FAS-123R for the year ended December 31, 2006
      was to record a non-cash compensation expense of $2,184,001, of which $937,619
      was allocated prior to the merger from Thorium Power, Ltd. for services rendered
      on behalf of Thorium Power, Inc. 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 March 31, 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 adoption 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 recognizes 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 March 31, 2007 were 30,869,910 and 13,887,623
      of
      these total options were vested at March 31, 2007.





Stock
      option transactions to the employees, directors, advisory board members and
      consultants are summarized as follows:




March
                  31, 2007**Stock
                  Options Outstanding**Outstanding
                  - Beginning of Period
              
              
              34,578,993Issued
              
              
              2,686,412Expired
              
              
              (6,395,495
              )Forfeited
              
              
              —Outstanding
                  end of the period
              
              
              30,869,910Options
                  exercisable at the end of the period
              
              
              13,887,623




The
      above
      table includes options issued and outstanding as of March 31, 2007 from Thorium
      Power, Ltd. as follows:




8


**Thorium
        Power, Ltd.**
 **(A
        Development Stage Company)**
 **Notes
        to Condensed Consolidated Financial Statements**
 **March
        31, 2007**




i).
            A
                total of 2,200,000 non-qualified 10 year options have been issued
                by
                Thorium Power, Ltd., to advisory board members at exercise prices
                of $0.33
                to $0.64 per share.




ii).
            A
                total of 5,500,000 non-qualified 5 year options have been issued
                to
                advisory board members at an exercise price of $0.445 per share and
                a
                weighted average of $0.445; and




iii).
            A
                total of 17,403,654 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 the 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.





The
      following table provides certain information with respect to the
      above-referenced stock options that are outstanding and exercisable at March
      31,
      2007:





Stock
                Options Outstanding
            
            Stock
                Options Vested**Exercise
                Prices**
            
            **Number
                of Awards**
            
            **Weighted
                Average Remaining**
              **Contractual
                Life - Years**
            
            **Number
                of Awards**
            
            **Weighted
                Average Exercise Price**$0.16
                - $0.20
            
            
            5,766,256
            
            
            3.34
            
            
            5,766,256
            
            $
            0.16$0.30-$0.39
            
            
            2,692,242
            
            
            6.18
            
            
            756,132
            
            $
            0.33$0.45-$0.51
            
            
            13,211,412
            
            
            6.31
            
            
            4,706,900
            
            $
            0.48$0.64-$0.80
            
            
            9,200,000
            
            
            8.92
            
            
            2,658,335
            
            $
            0.77Total
            
            
            30,869,910
            
            
            6.5
            
            
            13,887,623
            
            $
            0.49





Assumptions
      used in the Black Scholes option-pricing model are as follows:





The
      aggregate intrinsic value of stock options outstanding at March 31, 2007 was
      $888,003 of which $888,003 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 ($0.31
      per share as of March 31, 2007)








**March31,
                2007**Average
                risk-free interest rate
            
            
            4.18%
                - 4.45%Average
                expected life
            
            
            5
                yearsExpected
                volatility
            
            
            107%
                - 275%Expected
                dividends
            
            
            0%





During
      the three months ended March 31, 2007, $1,374,406 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 $1,177,023 for the three months ended March 31, 2007
      (non-deductible for tax purposes, may provide a tax deduction for the Company
      when exercised). Stock compensation to executive officers totaled $58,333.
      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 stock
      compensation expense of $350,000, to be recognized over a 36 month period
      starting February 1, 2007. For the three months ended March 31, 2007, $19,444
      of
      this total compensation amount was recognized as stock compensation expense
      and
      the remaining amount $330,556 was recorded as deferred stock compensation,
      a
      contra equity account on the balance sheet. Some stock volatility factors used
      by the Company, 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.




9


**Thorium
      Power, Ltd.**


**(A
      Development Stage Company)**


**Notes
      to Condensed Consolidated Financial Statements**


**March
      31, 2007**






c).
      Warrants





At
      March
      31, 2007, there were 25,282,745 warrants outstanding.





At
      March
      31, 2007 the range of warrant prices for shares under warrants and the
      weighted-average remaining contractual life are as follows:




**Warrants
                  Outstanding and Exercisable****Warrants
                  - Exercise Price**
              
              **Number
                  of Warrants**
              
              **Weighted
                  Average Remaining**
                **Contractual
                  Life - Years**$0.30
                  (Assumed from Thorium Power Ltd.)
              
              
              2,104,999
              
              
              0.2$0.39
              
              
              2,743,662
              
              
              .04$0.50
                  (Assumed from Thorium Power Ltd.)
              
              
              2,104,166
              
              
              .05$0.65
                  (Assumed from Thorium Power Ltd.)
              
              
              18,39,918
              
              
              0.6Total
              
              
              25,282,745
              
              
              0.5




The
      investors in the November 23, 2005, March 30, 2006 and May 4, 2006 private
      placements received detachable warrants for the purchase of 2,104,999, 2,104,166
      and 18,329,918 shares of common stock, respectively, which were valued at
      $127,467, $281,117 and $3,539,058, respectively. 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:





**March
                31, 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**
            
            **Stock****Common**
            
            **Purchase****Stock**
            
            **Warrants**
            
            **Amount**Stock-based
                Compensation
            
            
            1,000,000
            
            
            0
            
            $
            350,000






10


**Thorium
        Power, Ltd.**
 **(A
        Development Stage Company)**
 **Notes
        to Condensed Consolidated Financial Statements**
 **March
        31, 2007**
 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 December 31, 2006
      are
      as follows:








Total
                Amount
            
            Deferred
                Tax Asset Amount**Assets**Stock-based
                compensation
            
            
            3,896,519
            
            
            1,558,608Approximate
                net operating loss
            
            
            26,097,752
            
            
            10,439,101Less:
                valuation allowance
            
            
            (29,994,271
            )
            
            (11,997,709
            )$
            —
            
            
            —





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 $26,097,752,
      before its expiration in 2012 to 2026 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.





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 irradiation
      testing with the goal of moving toward deployment within full-sized commercial
      reactors. The contract is subject to approval by the Russian Federal Agency
      for
      Atomic Energy (RosAtom), which the Company expects to be completed in the second
      quarter of 2007.





9.
            Commitments
                and Contingencies





Firm
      Price Commitments





The
      Company entered into a firm price commitment agreement in connection with its
      participation in the pre-conceptual design phase for the construction of a
      high-temperature test and research reactor in Texas. The agreement has created
      a
      commitment by the Company for a minimum of $1.25 million financial contribution
      toward the project. A minimum payment of $50,000 on the agreement was due and
      paid on February 22, 2006, with 10 additional payments totaling $1.2 million
      due
      by December 31, 2006. A total of $550,000 has been paid as of March 31, 2007.
      Management has decided to prioritize research and demonstration activities
      on
      its nuclear fuel designs in Russia (see above) and currently has no intention
      to
      contribute additional funding toward the high-temperature test and research
      reactor project in Texas. In Management's opinion, based on the terms and
      conditions presented in this agreement, it has no further obligations to fund
      this project.






COMMITMENTS
      AND CONTRACTUAL OBLIGATIONS





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.







11


When
      used
      in this report, the terms “Thorium Power,” the “Company,” “we,” “our,” and “us”
refer to Thorium Power, Ltd. and its wholly-owned subsidiary Thorium Power,
      Inc.
      (“Thorium Power, Inc.”) on a consolidated basis.





**FORWARD-LOOKING
      STATEMENTS**





This
      Quarterly Report on Form 10-Q 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-K; 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.





We
      file
      annual and quarterly reports and other information with the SEC. You may obtain
      and copy any document we file with the SEC at the SEC’s public reference room at
      100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information
      on the operation of the SEC’s public reference facilities by calling the SEC at
      1-800-SEC-0330. You can request copies of these documents, upon payment of
      a
      duplicating fee, by writing to the SEC at its principal office at 100 F Street,
      NE, Room 1580, Washington, D.C. 20549-1004. The SEC maintains an Internet
      website at http://www.sec.gov that contains reports and other information
      regarding issuers that file electronically with the SEC. Our SEC filings,
      including the exhibits thereto, are accessible through the Internet at that
      website.





Thorium
      Power, Ltd.’s reports on Forms 10-KSB, 10-QSB and 8-K, and amendments to those
      reports, are available for download, free of charge, as soon as reasonably
      practicable after these reports are filed with the SEC, at our website at
      www.thoriumpower.com. The content of our website is not a part of this Report.
      You may request a copy of our SEC filings, at no cost to you, by telephoning
      us
      at 703.918.4932 or writing us at: Thorium Power, Ltd., 8300 Greensboro Drive,
      Suite 800, McLean, Virginia 22102, attention: Secretary. We will not send
      exhibits to the documents, unless the exhibits are specifically requested and
      you pay our fee for duplication and delivery.








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





*The
      following analysis discusses the financial condition and results of operations
      of Thorium Power, Ltd and it’s subsidiary, Thorium Power, Inc., at and for the
      three months ended on March 31, 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
      acquiror.





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 .





12


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 in the future. 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 MOX
      fuel.




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
      March
      31, 2007, our total assets were approximately $ 9,413,098 .
      Liabilities as of March 31, 2007 totaled approximately $ 961,611 .
      We had
      working capital surplus of approximately $ 8,220,547 at March
      31, 2007.





13


While
      management presently expects that our present working capital will meet our
      foreseeable working capital needs for the next 10 months from the date of this
      filing. Our current average monthly projected working capital requirements
      for
      the company, excluding the $5 million of research and development expenses
      we
      expect to incur in Russia over the next 12-15 months, as mentioned below, 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
      in
      2007 in order to insure we have the necessary working capital available to
      continue our operations in 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
        $2 million to $2.5 million for fiscal 2007, but it is possible that such
        expenses could be less or more than those amounts. We spent approximately
        $35,000 for research and development in 2006 and no significant additional
        amounts spent in 2007, as of the date of this filing.
  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 anticipate increasing our payroll and related fringe benefits costs in our
      fiscal year ended December 31, 2007, as we are looking to hire a permanent
      Chief
      Financial Officer in 2007 to add to our management team.





***Results
      of Operations***





Quarter
      Ended March 31, 2007





We
      had no
      revenues during the three months period ended March 31, 2007.





Our
      total
      operating expenses for the quarter ended March 31, 2007 were
      $2,889,979 **** consisting
      of:





·
            $1,335,517
                of stock based compensation;


·
            $164,364
                in professional fees


·
            $477,680
                of payroll and severance expenses;


·
            $471,762****in
                consulting expenses and all advisory board
                expenses


·
            $440,656
                in other general and administrative expenses
                .





14


Other
      income and expense was $112,586 for the quarter ended March 31, 2007. This
      consists of interest income earned.





Our
      net
      loss was $2,777,393 and $331,839 for the quarters ended March 31, 2007 and
      2006,
      respectively. Our cumulative loss from January 8, 1992 to March 2007 was
      $29,955,382





Quarter
      Ended March 31, 2006





We
      had no
      revenues in 2006.





Our
      total
      operating expenses for the quarter ended March 31, 2006 was $330,972 consisting
      of:





·
            $73,700
                research and development expenses ;


·
            $257,272
                of general and administrative
                expenses





The
      increase in operating expenses is due to our increase in employees, our advisory
      boards and other professional fees, costs related to being a public company
      as
      well as increase in other general operating expenses.





***Liquidity
      and Capital Resources***




As
      of
      March 31, 2007 and December 31,2006, we had cash and cash equivalents of
      $ 9,026,195 **** and
      $10,927,775, respectively. During the quarter ended March 31, 2007, we set
      up a
      separate account (“R&D Account”) and designated $5 million of our total cash
      to be held in this R&D Account. The following table provides detailed
      information about our net cash flow for all financial statements periods
      presented in this Report.






**Cash
      Flow**




**Quarters
                  Ended March 31,****2007**
              
              **2006**Net
                  cash used in operating activities
              
              
              1,900,153
              
              
              839,606Net
                  cash used in investing activities
              
              
              0
              
              
              1,357Net
                  cash provided (used by) financing activities
              
              
              (1,427
              )
              
              1,514,333Net
                  cash outflow (inflow)
              
              
              1,901,580
              
              
              673,370
 
 
 *Operating
      Activities*:




Net
      cash
      used for operating activities was $1,900,153 for the quarter ended March 31,
      2007 which is an increase of $1,060,547 from the $839,606 net cash used for
      operating activities for the same period in 2006. This increase was mainly
      due
      to increase in operating expenses, as described above in the results of
      operations.




*Investing
      Activities* :




Net
      cash
      used for investing activities in the quarter ended March 31, 2007 was $0, which
      is a decrease of $1,357 from net cash used for investing activities of $1,357
      in
      the same period of 2006, due to a decrease in the purchase of equipment.




15


*Financing
      Activities* :




Net
      cash
      used by financing activities in the quarter ended March 31, 2007 totaled $1,427
      as compared to $1,514,333 provided by financing activities in the same period
      of
      2006. The decrease of the cash provided by financing activities was mainly
      attributable to the decrease in proceeds received from the issuance of our
      common stock.




While
      management expects these proceeds will meet our foreseeable needs for the next
      10 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. If and when it begins marketing
      thorium and other minerals, management expects its business will be affected
      by
      inflation and commodity price volatility.




***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.





16


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 Nonemployees




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 remeasured 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 107% to 275%, a risk-free
      interest rate of 4.18% to 4.45%, dividend yield of 0% and an exercise term
      of
      one to five years.







17


**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 quarter ended March
      31,
      2007.





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





There
      were no defaults upon senior securities in the quarter ended March 31,
      2007.





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





No
      matters were submitted to a vote of security holders in the quarter ended March
      31, 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)10.1
              
              Employment
                  Agreement, dated February 1, 2007, between the Company and Erik
                  Hallstrom
                  (incorporated by reference to Exhibit 10.1 of the current report
                  of the
                  Company on Form 8-K filed February 1, 2007).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


18


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:
      May
      10, 2007


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


19


**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)10.1
                
                Employment
                    Agreement, dated February 1, 2007, between the Company and Erik
                    Hallstrom
                    (incorporated by reference to Exhibit 10.1 of the current report
                    of the
                    Company on Form 8-K filed February 1, 2007).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


20