**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10−Q**





(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, 2008





**o
      TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**


For
      the
      transition period from ____________ to _____________




Commission
      File Number: 000-28543




**THORIUM
      POWER, LTD.**


(Exact
      name of registrant as specified in its charter)





Nevada
            
            91-1975651(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Empl. Ident. No.)





8300
                Greensboro Drive, Suite 800
              McLean,
                VA 22102
              (Address
                of principal executive offices, Zip
                Code)




703.918.4904(Registrant’s
                telephone number, including area
                code)




Indicate
      by check mark whether the registrant (1) has 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 large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.




Large
                  Accelerated Filer o
              
              Accelerated
                  Filer oNon-Accelerated
                  Filer   o
              (Do
                  not check if a smaller reporting company)
              Smaller
                  reporting company x




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 April 30, 2008 is as follows:





Class
                of Securities
            
            Shares
                OutstandingCommon
                Stock, $0.001 par value
            
            299,334,532





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





**ITEM
      1. FINANCIAL STATEMENTS**




**THORIUM
      POWER, LTD.**





**UNAUDITED
      FINANCIAL STATEMENTS**





**THREE
      MONTHS ENDED MARCH 31, 2008 AND 2007**





**TABLE
      OF CONTENTS**





PageCondensedConsolidated
                Balance Sheets
            
            2CondensedConsolidated
                Statements of Operations and Comprehensive Loss
            
            3CondensedConsolidated
                Statements of Cash Flows
            
            4CondensedConsolidated
                Statement of Changes in Stockholders’ Equity
            
            5Notes
                to Consolidated Financial Statements
            
            6-10




1




**Thorium
        Power Ltd.**
 **Condensed
        Consolidated Balance Sheets**
 **(Unaudited)**


**March
                31**
            
            **December
                31****2008**
            
            **2007****(Unaudited)**
            
            **(Audited)****ASSETS****Current
                Assets**Cash
                and cash equivalents
            
            $
            4,705,577
            
            $
            9,907,691Marketable
                securities - available for sale
            
            
            1,996,925
            
            
            -Prepaid
                expenses & other current assets
            
            
            232,158
            
            
            204,035Deferred
                project costs
            
            
            51,729
            
            
            371,631Total
                Current Assets
            
            
            6,986,389
            
            
            10,483,357Property
                Plant and Equipment –net
            
            
            27,665
            
            
            30,676**Other
                Assets**Patent
                costs –
                net
            
            
            217,875
            
            
            217,875Security
                deposits
            
            
            2,049
            
            
            2,049Total
                Other Assets
            
            
            219,924
            
            
            219,924**Total
                Assets**
            
            **$**
            **7,233,978**
            ****
            **$**
            **10,733,957****Liabilities
                and Stockholders' Equity****Current
                Liabilities**Accounts
                payable and accrued liabilities
            
            $
            2,645,888
            
            $
            2,122,649Current
                portion long term debt
            
            
            -
            
            
            4,651Customer
                deposit and other current liabilities
            
            
            493,095
            
            
            1,206,875Deferred
                revenue
            
            
            -
            
            
            3,793,125Total
                Current Liabilities
            
            
            3,138,983
            
            
            7,127,300Notes
                Payable - long term
            
            
            -
            
            
            5,782**Total
                Liabilities**
            
            
            3,138,983
            
            
            7,133,082Commitments
                and contingencies**Stockholders'
                Equity**Preferred
                stock, $-.001 par value, 50,000,000 authorized shares, no shares
                issued
                and outstanding
            
            
            -
            
            
            -Common
                stock, $-.001par value, 500,000,000 authorized, 299,334,532 shares
                issued
                and outstanding at March 31, 2008 and 299,014,182 shares issued and
                outstanding at December 31, 2007
            
            
            299,334
            
            
            299,014Additional
                paid in capital - stock and stock equivalents
            
            
            43,156,026
            
            
            41,791,735Deficit
            
            
            (39,418,507
            )
            
            (38,630,572
            )Common
                stock reserved for issuance, 2,000,000 shares at March 31, 2008 and
                December 31, 2007
            
            
            590,000
            
            
            590,000Accumulated
                other comprehensive income (loss)
            
            
            (101,580
            )
            
            30,143Deferred
                stock compensation
            
            
            (430,278
            )
            
            (479,445
            )**Total
                Stockholders' Equity**
            
            
            4,094,995
            
            
            3,600,875**Total
                Liabilities and Stockholders' Equity**
            
            **$**
            **7,233,978**
            ****
            **$**
            **10,733,957**




**The
        accompanying notes are an integral part of these consolidated financial
        statements**
  2
  **Thorium
          Power Ltd.**
 **Condensed
          Consolidated Statements of Operations and Comprehensive Loss**
 **(Unaudited)**
 Three
                      Months EndedMarch
                      31,(Unaudited)2008
                  
                  2007Revenue:
                  
                  $
                  
                  
                  $Consulting
                      revenue
                  
                  
                  3,815,125
                  
                  
                  -Total
                      Revenue
                  
                  
                  3,815,125
                  
                  
                  -Cost
                      of Consulting Services Provided
                  
                  
                  1,648,004
                  
                  
                  -Gross
                      Margin
                  
                  
                  2,167,121
                  
                  
                  -Operating
                      ExpensesGeneral
                      and administrative
                  
                  
                  1,519,046
                  
                  
                  1,525,779Research
                      and development expenses
                  
                  
                  130,661
                  
                  
                  28,683Stock-based
                      compensation
                  
                  
                  1,363,803
                  
                  
                  1,335,517Total
                      Operating Expenses
                  
                  
                  3,013,510
                  
                  
                  2,889,979Operating
                      loss
                  
                  
                  (846,389
                  )
                  
                  (2,889,979
                  )Other
                      Income and (Expenses)Interest
                      income/expense, other
                  
                  
                  89,282
                  
                  
                  112,586Total
                      Other Income and Expenses
                  
                  
                  89,282
                  
                  
                  112,586Net
                      loss before income taxes
                  
                  
                  (757,107
                  )
                  
                  (2,777,393
                  )Income
                      taxes
                  
                  
                  30,828
                  
                  
                  -Net
                      loss
                  
                  
                  (787,935
                  )
                  
                  (2,777,393
                  )Other
                      Comprehensive Income (Loss)Unrealized
                      gain (loss) marketable securities
                  
                  
                  (131,723
                  )
                  
                  8,720Total
                      Comprehensive Loss
                  
                  $
                  (888,830
                  )
                  $
                  (2,768,673
                  )Net
                      Loss Per Common Share, Basic and diluted
                  
                  $
                  (.00
                  )
                  $
                  (.01
                  )Weighted
                      Average Number of shares outstanding for the period used to
                      compute per
                      share data
                  
                  
                  299,064,014
                  
                  
                  295,165,399
  **The
        accompanying notes are an integral part of these consolidated financial
        statements**




**Thorium
        Power Ltd.**
 **Condensed
        Consolidated Statements of Cash Flows**
 **(Unaudited)**




Three
                Months EndedMarch
                31(Unaudited)2008
            
            2007Operating
                Activities:Net
                Loss
            
            $
            (787,935
            )
            $
            (2,777,393
            )Adjustments
                to reconcile net loss from operations to net cash used in operating
                activities:Shares
                issued for other than cash for payment of expenses
            
            
            1,363,803
            
            
            1,430,673Depreciation
                and amortization
            
            
            3,011
            
            
            978Amortization
                of deferred revenue
            
            
            (3,793,125
            )
            
            0Amortization
                of deferred project costs
            
            
            1,609,129
            
            
            0Unrealized
                loss on marketable securities –
                available
                for sale
            
            
            (131,723
            )
            
            0Changes
                in non-cash operating working capital items:Prepaid
                expenses and other current assets
            
            
            (28,123
            )
            
            247,776Accounts
                payable, accrued liabilities and other current liabilities
            
            
            523,239
            
            
            (802,187
            )Other
                current liabilities
            
            
            (713,780
            )
            
            0Deferred
                project costs
            
            
            (1,289,227
            )
            
            0Net
                Cash Used In Operating Activities
            
            
            (3,244,731
            )
            
            (1,900,153
            )Investing
                Activities:Net
                Cash Used In Investing Activities
            
            
            -
            
            
            -Financing
                Activities:Proceeds
                from issue of common shares
            
            
            49,975
            
            
            -Payments
                on notes payable and other
            
            
            (10,433
            )
            
            (1,427
            )Net
                Cash Provided By (Used In) Financing Activities
            
            
            39,542
            
            
            (1,427
            )Net
                Decrease In Cash and Cash Equivalents
            
            
            (3,205,189
            )
            
            (1,901,580
            )Cash
                and Cash Equivalents, Beginning of Period
            
            
            9,907,691
            
            
            10,927,775Reclassification
                of cash equivalents to marketable securities - available for
                sale
            
            
            (1,996,925
            )
            
            -Cash
                and Cash Equivalents, End of Period
            
            $
            4,705,577
            
            $
            9,026,195Supplemental
                Disclosure of Cash Flow InformationCash
                paid during the year:Interest
                paid
            
            $
            183
            
            $
            323Income
                taxes paid
            
            $
            30,828
            
            $
            -Non-cash
                transactionsConversion
                of liabilities to equity
            
            $
            -
            
            $
            1,166,440




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




4




**Thorium
        Power Ltd.**
 **Condensed
        Consolidated Statements of Changes in Stockholders’ Equity**
 **For
        Three Months Ended March 31, 2008 (Unaudited) and Year Ended December 31,
        2007**




Common
                Stock
            
            Additional
            
            
            
            Stock
                Committed
            
            Accumulated
            
            Deferred
            
            Treasury
                Stock
            
            Stockholders’Shares
            
            Amount
            
            Paid-in
                Capital
            
            Deficit
            
            Future
                Issuance
            
            Comprehensive
                Income
            
            Stock
                Compensation
            
            Shares
            
            Amount
            
            EquityBalance
                - December 31, 2006
            
            
            257,291,709
            
            $
            257,292
            
            $
            23,148,560
            
            $
            (27,177,989
            )
            $
            1,200,000
            
            $
            18,861
            
            $
            (285,200
            )
            $
            (850,000
            )
            
            (255,850
            )
            $
            (3,094,326
            )Issuance
                of stock for services
            
            
            808,916
            
            
            809
            
            
            232,678
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            233,487Issuance
                of stock for payment of liabilities
            
            
            714,120
            
            
            714
            
            
            277,727
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            278,441Stock
                based compensation - shares committed for future issuance and
                issued
            
            
            2,350,000
            
            
            2,350
            
            
            866,150
            
            
            
            
            
            (1,200,000
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            (331,500
            )Stock
                Option Expense
            
            
            
            
            
            
            
            
            3,991,317
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3,991,317Net
                loss for the period
            
            
            
            
            
            
            
            
            
            
            
            (11,452,583
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (11,452,583
            )Unrealized
                gains on marketable securities
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            11,282
            
            
            
            
            
            
            
            
            
            
            
            11,282Amortization
                of deferred stock compensation costs
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            395,755
            
            
            
            
            
            
            
            
            395,755Reclassification
                of warrant liability to additional paid in capital
            
            
            
            
            
            
            
            
            1,132,444
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,132,444Cashless
                exercise of stock options and warrants
            
            
            888,534
            
            
            888
            
            
            (888
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Retirement
                of treasury stock
            
            
            (850,000
            )
            
            (850
            )
            
            (255,000
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            850,000
            
            
            255,850
            
            
            -Stock
                settlement –
                merger
            
            
            128,139
            
            
            128
            
            
            37,032
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            37,160Stock
                based compensation - officers, directors and employees
            
            
            1,022,927
            
            
            1,023
            
            
            357,002
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            358,025Reclassification
                of temporary equity to permanent equity
            
            
            36,659,837
            
            
            36,660
            
            
            12,004,713
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            12,041,373Stock
                based compensation –
                shares
                committed for future issuance
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            590,000
            
            
            
            
            
            (590,000
            )
            
            
            
            
            
            
            
            -Balance
                - December 31, 2007
            
            
            299,014,182
            
            $
            299,014
            
            $
            41,791,735
            
            $
            (38,630,572
            )
            $
            590,000
            
            $
            30,143
            
            $
            (479,445
            )
            $
            -
            
            
            -
            
            $
            3,600,875Unrealized
                loss on marketable securities
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (131,723
            )
            
            
            
            
            
            
            
            
            
            
            (131,723
            )Exercise
                of stock options
            
            
            320,350
            
            
            320
            
            
            49,655
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            49,975Stock
                option expense
            
            
            
            
            
            
            
            
            1,314,636
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,314,636Stock
                based compensation - officers, directors and employees
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            49,167
            
            
            
            
            
            
            
            
            49,167Net
                loss for the period
            
            
            
            
            
            
            
            
            
            
            
            (787,935
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (787,935
            )Balance
                - March 31, 2008
            
            
            299,334,532
            
            
            299,334
            
            
            43,156,026
            
            
            (39,418,507
            )
            
            590,000
            
            
            (101,580
            )
            
            (430,278
            )
            
            -
            
            
            -
            
            
            4,094,995




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


5




**Thorium
      Power, Ltd.**


**Notes
      to the Condensed Consolidated Financial Statements**





1.  Basis of
      presentation and nature of operations





a)  Basis of
      presentation





The
      accompanying unaudited condensed consolidated financial statements of the
      Company and its subsidiary have been prepared in accordance with the rules
      and
      regulations of the Securities and Exchange Commission (the “SEC”) including the
      instructions to Form 10-Q and Regulation S-X. Certain information and note
      disclosures normally included in financial statements prepared in accordance
      with generally accepted accounting principles in the United States of America
      have been condensed or omitted from these statements pursuant to such rules
      and
      regulation and, accordingly, they do not include all the information and notes
      necessary for comprehensive consolidated financial statements and should be
      read
      in conjunction with our audited consolidated financial statements for the year
      ended December 31, 2007, included in our Annual Report on Form 10-K for the
      year
      ended December 31, 2007.





In
      the
      opinion of the management of the Company, all adjustments, which are of a normal
      recurring nature, necessary for a fair statement of the results for the
      three-month periods have been made. Results for the interim period presented
      are
      not necessarily indicative of the results that might be expected for the entire
      fiscal year.




b)  Nature
      of Operations





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. On
      February 14, 2006 Novastar Resources Ltd. (“Novastar”), now called Thorium Power
      Ltd., entered into an Agreement and merged on October 6, 2006 with Thorium
      Power, Inc. (Collectively after the merger, all entities are
      referred to as the “Company" or “Thorium”). Thorium is engaged in two
      business segments. The first business segment is the development, promotion
      and
      marketing of its patented nuclear fuel designs: (1) thorium/uranium nuclear
      fuel
      and (2) thorium/reactor-grade plutonium disposing fuel. The Company also has
      a
      conceptual design of a 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. 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 power industry, securing political and some financial support
      from the United States and Russian governments





Our
      business model expanded in 2007 and our second business segment is providing
      consulting and strategic advisory services to companies and governments planning
      to create or expand electricity generation capabilities using nuclear power
      plants. We started working on our first consulting project in December 2007
      and
      completed this first consulting project in March 2008. We secured our second
      consulting project in March 2008 and are working to expand our consulting
      business in 2008 and future years.





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 the final design of our fuel
      technology for VVER-1000 reactors and demonstration of our fuel in a VVER-1000
      operating reactor commence in the next three to four 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.





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.





We
      may in
      the future be designated as a potentially responsible party (PRP) by federal
      and
      state agencies with respect to certain sites with which we may have direct
      or
      indirect future involvement. Such designations can be made regardless of the
      extent of our involvement.




2.  Summary
      of significant accounting policies




a)
      Consolidation




These
      financial statements include the accounts of Thorium Ltd (a Nevada corporation)
      and our wholly-owned subsidiary, Thorium Power, Inc. (a Delaware corporation).




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, the
      net
      operating loss carry-forward and the valuation allowance for deferred taxes
      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)
      Revenue Recognition





*Revenue* —at
      the
      present time we are deriving all of our revenue from our consulting business
      segment, by offering consulting and strategic advisory services to foreign
      governments planning to create or expand electricity generation capabilities
      using nuclear power plants. Our fee type and structure that we offer for each
      client engagement is dependant on a number of variables, including the size
      of
      the client, the complexity, the level of the opportunity for us to improve
      the
      client’s electricity generation capabilities using nuclear power plants and
      other factors. All of the Company's revenues for the first quarter of 2008
      had
      been derived from the completion of substantially all the defined contract
      deliverables required from the first consulting contract that we entered into
      in
      December 2007.




6


**Thorium
      Power, Ltd.**


**Notes
      to the Condensed Consolidated Financial Statements**





Our
      first
      consulting contract was with one foreign country, where the consulting fee
      was
      fixed and determinable under the contract. The consulting fee could have been
      refundable under the provision of this contract if we would have breached the
      contract, such as not deliver the final report to the foreign government.
      Therefore, based on these contract terms, the consulting fee revenue from this
      contract was recognized on the completed performance model.
      We
      completed substantially all of the deliverables in our first consulting project
      in March 2008 and therefore recognized all of the revenue in accordance to
      the
      completed performance model revenue recognition guidelines. We received all
      of
      this revenue in December 2007, in advance of our billing in March 2008. The
      amount billed in advance of the period in which service is rendered was recorded
      as a liability in the accompanying balance sheet captioned “Deferred revenue”,
      in 2007.





Based
      on
      the completion of the above contract and the current work we are performing
      on
      new consulting contracts that we entered into, we are no longer a development
      stage company in 2008, as we have now have a consulting services business
      segment that has recognized revenue earned in the first quarter of 2008 and
      will
      continue to recognize revenue in future periods.





The
      total
      consulting revenue recognized under this contract during the three months ended
      March 31, 2008 was $3,793,125, which was the balance in the deferred revenue
      balance sheet account at December 31, 2007, as no revenue from this contract
      had
      been recognized in 2007. All costs directly related to producing the final
      report or completion of this project, such as consulting costs, other
      professional fees and various administrative support and other costs, were
      capitalized as deferred project costs (current asset on the accompanying balance
      sheet). Deferred project costs are then recognized or amortized to an expense
      captioned, cost of consulting services provided, on the accompanying statement
      of operations, when the revenue is to be recognized or when the project was
      completed in the first quarter of 2008. Total deferred project costs that were
      charged to expense or cost of consulting services provided for the three months
      period ended March 31, 2008 was $1,648,004. Indirect corporate overhead incurred
      that was not allocated to the consulting business segment is being reported
      in
      the business segment information chart in note 4 as unallocated corporate
      overhead costs.





The
      deferred project costs at March 31, 2008, for our larger follow-on consulting
      project that we started in March 2008 with the same foreign country totaled
      $51,729. We anticipate recognizing revenue of $4.3 million from this second
      consulting project in future reporting periods, and will therefore charge any
      corresponding deferred project costs in the future reporting periods to cost
      of
      consulting services provided.





Travel
      costs and other reimbursable costs were offset, in accordance with the
      consulting agreement, against the balance sheet account captioned customer
      deposit account, which is shown as a current liability on the balance sheet.
      The
      customer deposit account is money advanced to us for expenses incurred that
      were
      in accordance with the contract, are to be reimbursed back to us. The total
      travel and other reimbursable expenses charged for this first consulting
      project, for the three months ended March 31, 2008 was $713,780.





The
      Company’s future operations and earnings will depend on the results of the
      Company’s operations in foreign countries. There can be no assurance that the
      Company will be able to successfully conduct such operations, and a failure
      to
      do so would have a material adverse effect on the Company’s financial position,
      results of operations, and cash flows. Also, the success of the Company’s
      operations will be subject to numerous contingencies, some of which are beyond
      management’s control. These contingencies include general and regional economic
      conditions, prices for the Company’s services, competition, and changes in
      regulations. Because the Company is dependent on international operations,
      particularly in one country right now, the Company will be subject to various
      additional political, economic, and other uncertainties.




For
      our
      first business segment, once the company's thorium-based nuclear fuel designs
      have advanced to a commercially usable stage the company will seek to license
      its technology to major government contractors or nuclear companies, working
      for
      the US and other governments. We expect that our revenue from license fees
      will
      be recognized on a straight-line basis over the expected period of the related
      license term.





d)
      Segment Reporting




The
      Company uses the “management approach” in determining reportable operating
      segments. The management approach considers the internal organization and
      reporting used by the Company's chief operating decision maker for making
      operating decisions and assessing performance as the source for determining
      the
      Company's reportable segments. The Company has determined that the Company
      has
      two operating segments as mentioned above and defined by SFAS 131, “Disclosures
      about Segments of an Enterprise and Related Information”. The two reporting
      business segments are our fuel technology business segments and our consulting
      services business.





e) ** Deferred
      Project Costs





The
      Company defers certain costs related to its consulting business segment, until
      the Company recognized revenue in accordance with its agreement. These costs
      are
      then expensed in the period in which the consulting project or deliverable
      as
      specified in the contract is obtained. Management periodically reviews and
      revises, when necessary, its estimate of the future benefit of these costs
      and
      expenses them if it is deemed there no longer is a future benefit. At March
      31,
      2008, and December 31, 2007, capitalized deferred project costs totaled $51,729
      and $371,631, respectively.





f)
      Cash
      and Cash Equivalents and Marketable Securities





At
      March
      31, 2008 the Company held auction rate and other government bonds that were
      purchased in December 2006 with a total original cost of $2,114,443, which
      now
      carry a fair market value of $1,996,925 (total unrealized loss on these
      securities of $117,518 for the three months ended March 31, 2008). These
      securities are now being reclassified at March 31, 2008, based on a change
      of
      market conditions in these securities in the auction market for the three months
      ended March 31, 2008 as mentioned below, from cash equivalents to marketable
      securities available for sale in the accompanying balance sheet and statement
      of
      cash flows at March 31, 2008 and for the three months then ended.





These
      securities as well as cash equivalents, all being held by one prominent US
      financial institution had a total market value of $5,850,640 at March 31, 2008.
      These auction rate securities were defined and classified by this financial
      institution as cash equivalents at December 31, 2007 and 2006. These securities
      were liquid to the company in 2007 and 2006 with cash available on an as needed
      basis to the company on a weekly or monthly basis (less than a 3 month period
      which is the company’s policy for cash equivalents). This financial institution
      reported the cost and fair market value of these securities as being the same
      throughout the 2007 year and at the years ended December 31, 2007 and 2006,
      with
      no realized or unrealized gain or loss in market value on these auction rate
      securities in 2007 and 2006. Based on the company’s favorable sales experience
      as finding these securities liquid in 2007 and 2006 and based on information
      received from this prominent financial institution at December 31, 2007 and
      2006, the company classified these securities in the same manner as this
      financial institution did at December 31, 2007 and 2006, as cash equivalents
      at
      December 31, 2007 and 2006.





However,
      for the three months ended March 31, 2008, market conditions for these
      securities started to change and the company, due to the decline in the
      liquidity and market value of these securities for the three month period ended
      March 31, 2008, reclassified these securities from cash equivalents to
      marketable securities. This reclassification was recorded on the cash flow
      statement for the three months ended March 31, 2008 of $1,996,925 with the
      cash
      at the beginning of the period on the statement of cash flows changed from
      $9,907,691 to $7,910,766, a decrease of $1,996,925, that was a result of this
      reclassification at March 31, 2008 from cash equivalents to marketable
      securities available for sale. These marketable securities have various
      maturities ($738,200 – mature 6/1/30, $752,377 – mature
      12/15/39
      and $506,348 mature 10/1/08).





The
      Company’s investments in these marketable securities are classified as
      available-for-sale securities under FAS-115, Accounting for Certain Investments
      in Debt and Equity Securities. These securities are reported at their fair
      market value, with unrealized holding gains and losses reported in other
      comprehensive income. The total unrealized loss reported on all securities
      for
      the three months ended March 31, 2008 are $131,723 which is being recorded
      in
      other comprehensive loss for the three months ended March 31, 2008.




7


**Thorium
      Power, Ltd.**


**Notes
      to the Condensed Consolidated Financial Statements**





3.  Financial
      Status of the Company - March 31, 2008




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 quarter of 2009.
      The Company anticipates generating revenue from its present and future
      consulting contracts it currently anticipates it will obtain in 2008. If future
      consulting contracts are not obtained, the Company will have future issuances
      of
      its stock or incur debt, in order to provide funds to continue its operations
      into 2009 and beyond.





4.
      Business Segments





The
      Company has two principal operating segments, which are fuel technology and
      consulting services. These operating segments were determined based on the
      nature of the operations and the services offered. Operating segments are
      defined as components of an enterprise about which separate financial
      information is available that is evaluated regularly by the chief operating
      decision-maker in deciding how to allocate resources and in assessing
      performance. The Company’s chief executive officer, chief operating officer and
      chief financial officer have been identified as the chief operating decision
      makers. The Company’s chief operating decision makers direct the allocation of
      resources to operating segments based on the profitability and cash flows of
      each respective segment.





The
      Company evaluates performance based on several factors, of which the primary
      financial measure is business segment income before taxes. The accounting
      policies of the business segments are the same as those described in “Note 1:
      Summary of Significant Accounting Policies.” There is no allocation of corporate
      level assets or expenses even though they contribute to both segments. The
      following tables show the operations of the Company’s reportable
      segments:





Fuel Technology
            
            Consulting
            
            Corporate
                andEliminations
            
            TotalNet
                sales
            
            
            0
            
            
            3,815,125
            
            
            0
            
            
            3,815,125Income
                before taxes
            
            
            (389,521
            )
            
            2,167,121
            
            
            (2,534,707
            )
            
            (757,107
            )Total
                assets
            
            
            217,875
            
            
            51,729
            
            
            6,964,374
            
            
            7,233,978Property
                additions
            
            
            0
            
            
            0
            
            
            0
            
            
            0Interest
                expense
            
            
            0
            
            
            0
            
            
            183
            
            
            183Depreciation
            
            
            0
            
            
            0
            
            
            3,010
            
            
            3,010




5.  Research and
      Development Costs





Research
      and development costs, included in the statement of operations amounted to
      $130,661 and $28,683 for the three months ended March 31, 2008 and 2007,
      respectively and total cumulative expense of $4,813,974 from January 8, 1992
      (date of inception of Thorium Power, Inc.) to March 31, 2008.




6.  Stockholders'
      Equity





Total
      Common stock outstanding at March 31, 2008 was 299,334,532. At March 31, 2008,
      there were 768,834 stock purchase warrants and 51,534,306 stock options
      outstanding, all totaling 351,637,672 of total stock and stock equivalents
      outstanding at March 31, 2008.




a) Common
      Stock Issuances – Exercise
      of stock
      options





On
      March
      14, 2008, 320,350 stock options that were assumed in the merger and held by
      one
      consultant, was exercised at a strike price of $.156 per share for total
      consideration of $49,975. Accordingly, 320,350 shares of the company’s common
      stock were issued in accordance with this option agreement.





b)
      Share-based Compensation





Total
      stock options outstanding at March 31, 2008 were 51,534,306 and 27,830,562
      of
      these total options were vested at March 31, 2008.





Stock
      option transactions to the employees, directors, advisory board members and
      consultants are summarized as follows for March 31, 2008:





2008**Stock
                Options Outstanding**Beginning
                of the Year
            
            
            51,354,656Granted
            
            
            500,000Exercised
            
            
            (320,350
            )Forfeited
            
            
            -Outstanding
                end of the period
            
            
            51,534,306Options
                exercisable at the end of the period
            
            
            27,830,562




The
      above
      table includes options issued as of March 31, 2008 as follows:




i.
            A
                total of 13,504,742 non-qualified 5-10 year options have been issued
                by
                Thorium Power, Ltd., to advisory board members at exercise prices
                of $0.30
                to $0.64 per share.




8


**Thorium
      Power, Ltd.**


**Notes
      to the Condensed Consolidated Financial Statements**





ii.
            A
                total of 31,552,636 5-10 year options have been issued to directors,
                officers and employees of the Company, at exercise prices of $0.24
                to
                $0.80 per share. From this total, 18,619,906 options are outstanding
                to
                the Chief Executive Officer who is also a director, .with remaining
                contractual lives of 1-9.9 years. All other options issued have a
                remaining contractual life ranging from 4.75 years to 9.9
                years.





iii.
            A
                total of 6,476,928 non-qualified 3-10 year options have been issued
                to
                consultants of the Company, at exercise prices of $0.16 to $0.35
                per
                share.





The
      following table provides certain information with respect to the
      above-referenced stock options that are outstanding and exercisable at March
      31,
      2008:




Stock
                  Options Outstanding
              
              Stock
                  Options Vested**Exercise
                  Prices**
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual Life**
                **- Years**
              
              **Number of**
                **Awards**
              
              **Number of**
                **Awards**
              
              **Weighted**
                **Average**
                **Exercise Price**$0.16
                  - $0.29
              
              
              3.7
              
              
              16,641,813
              
              
              12,584,880
              
              $
              0.19$0.30-$0.44
              
              
              8.1
              
              
              12,709,503
              
              
              2,404,796
              
              $
              0.37$0.45-$0.63
              
              
              5.5
              
              
              12,982,990
              
              
              7,882,547
              
              $
              0.50$0.64-$0.80
              
              
              7.9
              
              
              9,200,000
              
              
              4,958,339
              
              $
              0.77Total
              
              
              6.0
              
              
              51,534,306
              
              
              27,830,562
              
              $
              0.42





The
      aggregate intrinsic value of stock options outstanding at March 31, 2008 was
      $1,132,639 of which $1,132,639 related 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 ($0.28
      per share amounts as of March 31, 2008)





Assumptions
      used in the Black Scholes option-pricing model for the three months ended March
      31, 2008 were as follows:





Average
                risk-free interest rate
            
            
            4.06%
                - 4.45%Average
                expected life
            
            
            5-10
                yearsExpected
                volatility
            
            
            99%
                - 275%Expected
                dividends
            
            
            0%





During
      the three months ended March 31, 2008 and 2007, $1,363,803 and $1,335,517 was
      recorded as stock-based compensation expense in the statement of operations,
      respectively. The result of all the above stock option grants that occurred
      after January 1, 2006 for Thorium Power Inc and stock option grants for Thorium
      Power Ltd that were recorded in the statement of operations totaled $1,314,636
      for the three months ended March 31, 2008 and $5,355,120 for the period from
      January 1, 2006 to March 31, 2008 (non-deductible for tax purposes, may provide
      a tax deduction for the Company when exercised). Some volatility factors used
      for five option grants in its fiscal year ended June 30, 2006 for Novastar,
      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.





Stock
      compensation to two executive officers totaled $590,000, as a one time stock
      grant pursuant to employment agreements that entered into in 2007, recorded
      to
      common stock reserved for issuance. The amortization of deferred stock
      compensation, recorded as stock based compensation for the three months ended
      March 31, 2008 was $49,167.





c).
      Warrants





There
      were 768,834 warrants outstanding as of March 31, 2008.





At
      March
      31, 2008 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**$0.39
            
            
            
            
            
            768,834
            
            
            
            
            
            .4




On
      November 17, 2006 the Board of Directors of Thorium Power, Ltd. authorized
      the
      extension of the expiration date of all common stock purchase warrants above
      by
      six months from the expiration date identified on the respective warrants.




d).
      Common Stock and Warrants reserved for Future Issuance




9


**Thorium
      Power, Ltd.**


**Notes
      to the Condensed Consolidated Financial Statements**




Common
      stock reserved for future issuance consists of:




**Shares
                of**
            
            **Stock****Common**
            
            **Purchase****Stock**
            
            **Warrants**
            
            **Amount**Stock-based
                Compensation
            
            
            2,000,000
            
            
            0
            
            $
            590,000




The
      Compensation Committee of the Board of Directors unanimously voted to issue
      2
      million shares of restricted stock as an incentive for the Company’s COO and CFO
      to work for the Company. The price used to value these shares was the market
      price as of the date of the stock grant.




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 March 31, 2008 are
      as
      follows:





Total Amount
            
            Deferred Tax
              Asset Amount**Assets**Stock-based
                compensation
            
            $
            5,335,120
            
            $
            2,134,048Approximate
                net operating loss  carry-forward
            
            
            12,100,000
            
            
            4,840,000Less:
                valuation allowance
            
            
            (17,435,120
            )
            
            (6,974,048
            )$
            -
            
            $
            -





Management
      currently believes that it is more likely than not that the forecasted taxable
      income will not be sufficient to utilize the tax loss carry-forward, which
      totaled approximately $12.1 million before their expiration in the years 2026
      through 2028, to fully recover the deferred tax asset. The Company has net
      operating loss carry-forward for federal and state tax purposes with
      substantially all of the net operating losses expected to expire unused or
      not
      be available to offset future taxable income, due to the Internal Revenue Code
      Section 382 limitation for the ownership change that occurred on October 6,
      2006. As a result, the amount of the deferred tax assets considered realizable
      was reduced 100% by a valuation allowance. In the near term, the company will
      compute the actual Internal Revenue Code Section 382 limitation which will
      change the reported net operating loss carry-forward and the valuation allowance
      shown above. The Company has no other deferred tax assets or
      liabilities.





The
      company had paid income taxes of $30,822 due to the reason that many of the
      company’s operating expenses in its 2006 tax year were classified under the
      internal revenue code as start up costs and were not deductible for tax purposes
      and the company had interest income that was taxable for tax purposes. This
      tax
      amount is not included in the above deferred tax asset information as it is
      deemed not significant at March 31, 2008.





8.  Research
      Agreement





On
      December 27, 2007, Thorium Power, Inc. (“TPI”), a wholly-owned subsidiary of the
      Company, entered into an agreement for ampoule irradiation testing (the
“Agreement”) with the Russian Research Centre “Kurchatov Institute”
(“Kurchatov”). The ampoule irradiation testing program has been ongoing since
      2002 pursuant to earlier agreements between TPI and Kurchatov. Under the
      Agreement TPI agreed to compensate Kurchatov for irradiation testing of TPI’s
      proprietary nuclear fuel designs conducted in 2006 and 2007. Pursuant to the
      Agreement, TPI is obligated to pay to Kurchatov $410,000.00 (liability accrued
      December 31, 2007), and Kurchatov is obligated to transfer to TPI the worldwide
      rights in all of the test data generated in the course of the irradiation
      testing of TPI’s proprietary nuclear fuel designs in 2006 and 2007 and Kurchatov
      agrees not to use, in any manner, the work product associated with such testing
      or exercise any rights associated therewith without the written consent of
      TPI.
      Further, Kurchatov is obligated to provide to TPI and its affiliates specified
      information and documentation for audit purposes, and to obtain any and all
      permits from Russian governmental entities which may be required in order for
      Kurchatov to perform under the Agreement. In addition to this agreement, there
      are consulting agreements with several consultants working on various projects
      for the company, which total approximately $15,000 per month.





9.  Commitments
      and Contingencies





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.


10




**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.





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





The
      following discussion should be read in conjunction with our financial
      statements, together with the notes to those statements, included elsewhere
      in
      this report. The following discussion contains forward-looking statements that
      involve risks, uncertainties, and assumptions such as statements of our plans,
      objectives, expectations, and intentions. Our actual results may differ
      materially from those discussed in these forward-looking statements because
      of
      the risks and uncertainties inherent in future events.





**General
      Overview**





We
      are a
      developer of proprietary nuclear fuel designs and a provider of nuclear energy
      consulting services, each of which will be described in the following
      sections.





***Consulting
      Business Segment***





Presently
      all of our revenue comes from one foreign government-owned entity. We were
      retained by this foreign government-owned entity on November 30, 2007 to provide
      consulting services designed to produce a roadmap that would constitute the
      first phase of a feasibility study (“Roadmap”) for a prospective program to
      deploy civilian nuclear power plants within the foreign country, whereby acting
      as strategic advisor for the entity responsible for managing nuclear energy
      related activities in the country. The Roadmap contract agreement called for
      a
      $5 million upfront payment for professional fees and expenses, for a 15 week
      effort to develop a roadmap with recommendations related to timelines,
      organizational structure and priorities for subsequent phases of the country’s
      future nuclear energy program. We completed the Roadmap project in March 2008
      and then entered into a larger follow-on consulting agreement (“Quickstart”)
      with the same foreign government-owned entity. The terms of the Quickstart
      project calls for an upfront payment of professional fees to Thorium Power
      of
      $4.3 million for a 3 month period. Certain reimbursable expenses that are to
      be
      paid back to us are capped at 20% of the total professional fees and will be
      billed separately to this entity.





In
      future
      consulting engagements, including services for other clients, we expect that
      revenues may be derived from fixed professional fee agreements or from fees
      generated through hourly rates billed on a time and expense basis. In the
      future, we may recognize revenue as the consulting services are performed
      (percentage of completion) instead of at the completion date of the project,
      as
      we did for the Roadmap project. Going forward, we aim to enter into additional
      consulting contracts to provide support and assistance to commercial and
      governmental entities that are looking to develop and expand their nuclear
      power
      industry capabilities and infrastructure. Our growth strategy in the consulting
      services business is focused on the following:




11




Primarily:
      Further strengthening the relationship with our one existing client and
      increasing the revenue potential by providing additional consulting services;





Secondarily:
      Expanding our client base by further penetrating our markets and attracting
      new
      clients with similar needs as our existing client, and also enhancing and
      extending our services, including the creation of new service offerings





Our
      most
      significant expense related to our consulting business segment is the cost
      of
      services before reimbursable expenses, which generally relates to costs
      associated with generating consulting revenues, and includes employee payroll
      expenses and benefits, contractor compensation, vendor compensation, marketing
      expenses and direct costs of training and recruiting the consulting staff.
      Consultant compensation consists of salaries, incentive compensation and
      benefits. As revenues are generated from services performed by our permanent
      staff and contractors, our success depends on attracting, retaining and
      motivating talented, creative and experienced professionals at all
      levels.





***Nuclear
      Fuel Technology Business Segment***





For
      almost the past decade we have been engaged in the development of proprietary
      nuclear fuel designs which we intend ultimately to introduce for sale into
      two
      markets: (1) nuclear fuel designs for use in commercial nuclear power plants
      and
      (2) nuclear fuel designs for reactor-grade plutonium disposition. In addition,
      we have a conceptual nuclear fuel design for weapons-grade plutonium
      disposition. These three types of 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.





While
      we
      do not currently have any direct revenues from our research and development
      activities regarding our proprietary nuclear fuel technology, 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, we are utilizing
      certain common corporate capabilities in both our technology and consulting
      businesses. We believe we can leverage our general nuclear technology, business
      and regulatory expertise and industry relationships, to optimize our technology
      development plans as well as create integrated advisory services with the
      highest levels of expertise and experience in the nuclear power industry.
      Additionally, our knowledge of and credibility in addressing proliferation
      related issues that we have developed over many years, benefit our new
      consulting business. Our advisory services include a focus on non-proliferation
      and operational transparency of nuclear power programs.





**Material
      Opportunities and Challenges**





***Nuclear
      Energy Consulting Services***





Our
      emergence in the field of nuclear energy consulting is in direct response to
      the
      need for independent assessments and highly qualified technical consulting
      services from countries looking to establish nuclear energy programs, while
      still providing a blueprint for safe, clean, efficient and cost-effective
      non-proliferative nuclear power. We offer full-scope planning and advisory
      services for new and existing markets, and offer such services without a bias
      towards or against any reactor vendor or fuel technology. We believe that there
      are significant opportunities available to provide services to governments
      that
      are dedicated to non-proliferative and transparent nuclear
      programs.




12




Our
      major
      challenge in pursuing our business is that the decision making process for
      nuclear power programs typically involves careful consideration by many parties
      and therefore requires significant time. Also, many of the potential clients
      that could benefit from our services are in regions of the world where tensions
      surrounding nuclear energy are high, or in countries where public opinion play
      an important role. Domestic and international political pressure may hinder
      our
      efforts to provide nuclear energy services, regardless of our focus on
      non-proliferative nuclear power.





***Proprietary
      Nuclear Fuel Technology Development***





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 two
      different types, or variants, of thorium-based 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. We also have developed
      a
      conceptual design for a fuel 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.





We,
      through our wholly owned subsidiary Thorium Power, Inc., have been developing
      relations with relevant entities within the United States and Russian
      governments for over fourteen years. Thorium Power, Inc., in cooperation with
      these governments, has been demonstrating its fuel designs in a research reactor
      in Russia for over four years. Independent analyses of the technology have
      been
      performed, including a May 2005 report by the IAEA and an April 2005 report
      by
      Westinghouse Electric Company LLC (“Westinghouse”). The IAEA and Westinghouse
      analyses were positive and management believes that they can help lead to the
      favorable reception of our nuclear fuel designs in the future.





We
      are
      also working with Russian nuclear research institutes and Russian nuclear
      regulatory authorities to have one or more of the fuel designs demonstrated
      in a
      Russian VVER-1000 reactor within the next three to four years, if we are able
      to
      obtain necessary support and enter into agreements with the Russian government
      and Russian research institutes. We believe that it will be necessary to enter
      into commercial arrangements with one or more major nuclear fuel fabricators,
      which in many cases are also nuclear fuel vendors, as a prerequisite to having
      our fuel designs widely deployed in global markets.





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-based fuel
      designs.





We
      have
      also been conducting research and development relating to a variant of these
      nuclear fuel designs for use in existing and future Western pressurized water
      reactors (PWR).





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. We believe
      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.




13




Thorium
      Power, Inc. has been building relationships with companies and organizations
      in
      the nuclear power industry for several years. We will attempt to cause some
      or
      all of these companies and organizations to work in a consortium or a joint
      venture type arrangement with us in the future, however, we may not be able
      to
      develop any such consortium or arrangement in the near term or at all. The
      companies that we have identified for potential relationships have existing
      contracts with nuclear power plant owner-operators under which they supply
      nuclear fuel branded with their name to such nuclear power plants. We will
      attempt to cause these nuclear fuel vending companies to provide their nuclear
      power plant operating customers with fuels that are designed with our
      technology. To do so, we will need to enter into agreements with one or more
      of
      these companies. Without such arrangements it would be more difficult for us
      to
      license our fuel designs because, in addition to the reputations, guarantees,
      services, and other benefits that these nuclear fuel vendors provide when
      selling fuel to nuclear power plant operators, they also often have multi-year
      fuel supply contracts with the reactor operators. These multi-year fuel supply
      contracts act as a barrier to entry into the market, such that it can be almost
      impossible to penetrate some markets for nuclear fuel without working with
      a
      nuclear fuel vendor that can support long term contracts. If we are successful
      in demonstrating our fuel designs in Russia and in continuing to build
      relationships with nuclear fuel vendors, we believe it may lead to one or more
      of these major companies in the nuclear power industry working with us in
      producing and selling our nuclear fuel designs to commercial reactor operators
      and governments.





**Plan
      of Operation**




***Business
      Segments and Periods Presented***




Prior
      to
      January 1, 2008, we operated as a single reportable segment. As a result of
      the formation of our consulting services business segment in December 2007,
      and
      based on a review of SFAS No. 131, Disclosures about Segments of an
      Enterprise and Related Information, we have determined that we now operate
      in
      two business segments in 2008, "the nuclear fuel technology business" and the
      "consulting business." We
      present our segment information along the same lines that our chief executive,
      chief operating officer and chief financial officer review our operating results
      in assessing performance and allocating resources.




We
      have
      provided a discussion of our results of operations on a consolidated basis
      and
      have also provided certain detailed segment information for each of our business
      segments below, in order to provide a meaningful discussion of our business
      segments.




Business
      Segments Results of Operations




Nuclear Fuel Technology
            
            Consulting
            
            Unallocated
              Corporate
              Overhead and
              Eliminations
            
            TotalNet
                sales
            
            
            0
            
            
            3,815,125
            
            
            0
            
            
            3,815,125Income
                (loss) before taxes
            
            
            (389,521
            )
            
            2,167,121
            
            
            (2,534,707
            )
            
            (757,107
            )Total
                assets
            
            
            217,875
            
            
            51,729
            
            
            6,964,374
            
            
            7,233,978Property
                additions
            
            
            0
            
            
            0
            
            
            0
            
            
            0Interest
                expense
            
            
            0
            
            
            0
            
            
            183
            
            
            183Depreciation
            
            
            0
            
            
            0
            
            
            3,010
            
            
            3,010




14




**Factors
      Affecting the Comparability of Business Segment Results**




As
      discussed above, our formation of our consulting services business segment
      at
      the end of 2007 (December 2007), impacts the comparability of our results of
      segment operations in the first quarter of 2008 versus the first quarter of
      2007, as we were not performing consulting services during the first quarter
      of
      2007.




***Consulting
      Business***





At
      the
      present time we are deriving all of our $3.8 million of revenue from our
      consulting business segment, by offering consulting and strategic advisory
      services to foreign governments planning to create or expand electricity
      generation capabilities using nuclear power plants benefiting from thorium-based
      or other nuclear fuels. Our fee type and structure that we offer for each client
      engagement is dependant on a number of variables, including the size of the
      client, the complexity, the level of the opportunity for us to improve the
      client’s electricity generation capabilities using nuclear power plants and
      other factors. All of the Company's revenues for the first quarter of 2008
      had
      been derived from the completion of substantially all the defined contract
      deliverables required from the first consulting contract that we entered into
      in
      December 2007. The cost of consulting services provided are approximately
      $1.7million for the three months ended March 31, 2008, which consists primarily
      of direct labor consulting expenses and other labor support costs incurred,
      to
      complete our first consulting project. Other indirect corporate overhead
      incurred was not allocated to the consulting business segment and is reported
      above in the business segment information chart as unallocated corporate
      overhead costs.





Based
      on
      the completion of the above contract and the current work we are performing
      on
      new consulting contracts that we entered into in 2008, we are no longer a
      development stage company in 2008.





***Fuel
      Technology Business***





Over
      the
      next 12 to 15 months we expect to incur approximately $5 million in research
      and
      development expenses related to the development of our proprietary nuclear
      fuel
      designs. We expect to incur these expenses after we have entered into formal
      agreements 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 spent approximately
      $131,000 for research and development in 2008 and a cumulative amount from
      the
      date of our inception (January 8, 1992, date of inception of Thorium Power
      Inc.)
      to March 31, 2008 of $4,813,974. In addition we incurred approximately $259,000
      in salary, benefits and other general and administrative support costs. We
      have
      established an office in Moscow and leased office space as of May 1,
      2008.





Over
      the
      next several years, we expect that our research and development activities
      will
      increase and 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)
      Continuing capsule irradiation testing of seed and blanket fuel samples in
      a
      research reactor and performing post-irradiation examination of fuel samples
      that have reached the target burn-up level 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.





15




***Financial
      Status***





At
      March
      31, 2008, our total assets were approximately $7 million and total liabilities
      as of March 31, 2008 were approximately $3.1 million. We had a working capital
      surplus of approximately $3.8 million at March 31, 2008.





We
      expect
      that our present working capital will meet our foreseeable working capital
      needs
      for the next 10 - 12 months from the date of this filing. Since the
      end of the fiscal quarter, our consulting revenues have improved our total
      cash
      and marketable securities position balance substantially to $9.7 million as
      of
      April 28, 2008, primarily due to the $4.3 million received in April 2008 as
      pre-payment for the Quickstart consulting contract that we entered into in
      March
      2008, as mentioned above.





In
      support of our longer-term business plan, 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 to finance
      our overhead and research and development expenditures. 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
      is
      approximately $800,000 per month. This financing will need to take place by
      the
      end of 2008 or early 2009, to ensure that we have the necessary working capital
      to continue our business operations in 2009 and beyond. It is important to
      note
      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. To support this financing activity, we are
      exploring transaction opportunities that could simultaneously create strategic
      industry and market alliances for the company, to support our operations in
      2009
      and beyond.




**Consolidated
      Results of Operations**





The
      following table summarizes certain aspects of the Company’s consolidated results
      of operations for the three months ended March 31, 2008 compared to the
      three months ended March 31, 2007


**Three Months Ended****March
                  31,**
              
              **(Decrease)****2008**
              
              **2007**
              
              **Change $**
              
              **Change %****Consulting
                  Revenues**
              
              $
              3,815,125
              
              
              -
              
              $
              3,815,125**Cost
                  of services provided**Consulting
                  expenses
              
              $
              1,648,004
              
              
              -
              
              $
              1,648,004%
                  of total revenues
              
              
              43
              %
              
              -
              
              
              -**Gross
                  profit**
              
              $
              2,167,121
              
              $
              -
              
              $
              2,167,121
              
              
              N/A%
                  of total revenues
              
              
              57
              %
              
              -
              
              
              -**Operating
                  Expenses**General
                  and administrative
              
              $
              1,519,046
              
              $
              1,525,779
              
              $
              (6,733
              )
              
              0
              %%
                  of total revenues
              
              
              40
              %
              
              N/A
              
              
              -Research
                  and development expenses
              
              $
              130,661
              
              $
              28,683
              
              $
              101,978
              
              
              N/A%
                  of total revenues
              
              
              3
              %
              
              N/AStock-based
                  compensation
              
              $
              1,363,803
              
              $
              1,335,517
              
              $
              28,286
              
              
              2
              %%
                  of total revenues
              
              
              36
              %
              
              N/ATotal
                  Operating Loss
              
              $
              (846,389
              )
              $
              (2,889,979
              )
              $
              2,043,590
              
              
              -71
              %%
                  of total revenues
              
              
              22
              %
              
              N/AOther
                  Income and (Expenses)Interest
                  income/expense, other
              
              $
              89,282
              
              $
              112,586
              
              $
              (23,304
              )
              
              -21
              %%
                  of total revenues
              
              
              2
              %
              
              N/A**Net
                  loss**
              
              $
              (757,107
              )
              $
              (2,777,393
              )
              $
              2,020,286
              
              
              -73
              %%
                  of total revenues
              
              
              -20
              %
              
              N/A




16




**Revenues**





The
      increase in revenues for the three months ended March 31, 2008, as compared
      to the same period in 2007, is primarily due to us coming out of the development
      stage with our consulting business segment. We earned revenue by completing
      the
      Roadmap consulting project, our first consulting project that we started working
      on in December 2007, (the fee was prepaid for this consulting contract and
      was
      received in 2007). We expect additional consulting revenues in the future
      quarters of 2008 ,
      from
      the present consulting contract we are working on now and additional consulting
      contracts we may obtain in 2008.





In
      March
      2008 we entered into a consulting agreement called Quickstart, a larger
      follow-on consulting agreement with the same foreign government-owned entity
      in
      which we worked for regarding the Roadmap project. The terms of the Quickstart
      agreement call for an upfront payment of professional fees to us of $4.3 million
      (received April 2008) for a 3 month effort. We expect to recognize the revenue
      earned from this consulting agreement in future reporting periods in 2008,
      on a
      percentage of completion basis.





**Cost
      of Services Provided**





The
      increase in the cost of services for the three months ended March 31, 2008
      are
      expenses related to the consulting, professional, administrative and other
      costs
      that were incurred to complete the work performed on our Roadmap consulting
      project, mentioned above. We anticipate incurring additional consulting and
      other support expenses in completing the Quickstart consulting project and
      other
      consulting projects that we may enter into, in future reporting periods in
      2008.





**General
      and Administrative Expenses**





The
      decrease in the general and administrative expenses for the three months ended
      March 31, 2008 are primarily due to a decrease in outside consulting costs
      that
      are recorded as administrative expenses of approximately $67,000, (from $242,000
      in 2007 to $175,000 in 2008) and a decrease of amounts paid to our advisory
      boards of approximately 92,000 (from $201,000 in 2007 to $109,000 in 2008).
      This
      decrease in general and administrative expenses was offset by an increase in
      salaries of approximately $63,000, (from $477,000 in 2007 to $540,000 in 2008)
      travel expenses of approximately $26,000 (from $125,000 in 2007 to $151,000
      in
      2008) and professional and other office expenses of approximately $63,000.
      We
      expect our general and administrative expenses to increase in future periods
      due
      to the expansion of our consulting business segment and the hiring of new
      officers, employees and consultants to help further develop and support our
      consulting and fuel technology businesses.





**Research
      and Development Costs**





The
      increase in research and development costs for the three months ended March
      31,
      2008 is due to the increase in work performed on the irradiation testing of
      our
      nuclear fuel as well as other research and development activities that are
      currently taking place in Russia, to further develop and qualify our nuclear
      fuel in preparation for its demonstration in an operating commercial reactor.
      We
      expect that our research and development expenses will increase in the future
      periods.





17





**Stock-Based
      Compensation**





The
      increase in stock based compensation for the three months ended March 31, 2008
      is due to the long-term incentive stock options that were granted under our
      stock plan to our executives, directors, advisors and employees at the end
      of
      2007, which is now being expensed as these options are vesting in 2008 and
      in
      future years. We expect that our stock based compensation will increase in
      future periods due to the granting of additional stock options and stock grants
      to attract new executives and consultants, as well as granting stock options
      and
      stock grants to our current executives, directors, consultants and other support
      staff.





**Other
      Income and Expense**





The
      decrease in other income and expense for the three months ended March 31, 2008
      is due to the decrease in interest income earned on our idle cash
      balances.





**Liquidity
      and Capital Resources**




As
      of
      March 31, 2008, we had a total of cash and cash equivalents and marketable
      securities of $6,702,502. The following table provides detailed information
      about our net cash flow for all financial statements periods presented in this
      Report.




**Cash
      Flow**




**Three Months Ended March 31,****2008**
            
            **2007**Net
                cash used in operating activities
            
            $
            (3,244,731
            )
            $
            (1,900,153
            )Net
                cash used in investing activities
            
            $
            0
            
            $
            0Net
                cash provided (used by) financing activities
            
            $
            39,542
            
            $
            (1,427
            )Net
                cash (outflow) inflow
            
            $
            (3,205,189
            )
            $
            (1,901,580
            )





In
      April
      2008 we received approximately $4.3 million as an advance payment for consulting
      services to be performed for our Quick Start consulting project mentioned above.
      This has improved our cash position to $9.7 million as of April 28,
      2008.





*Operating
      Activities*




Net
      cash
      used for operating activities was $3,244,731 for the three months ended March
      31, 2008, which is an increase of $1,344,578 from the $ 1,900,153 net cash
      used for operating activities for the same period in 2007. This increase was
      mainly due to increase
      in our cost of services expenses paid to our consultants in order to provide
      the
      necessary services for the Roadmap consulting contract completed in March 2008.
      The $5 million received from this Roadmap contract was received in
      2007.




*Financing
      Activities*




Net
      cash
      provided by financing activities in the three months ended March 31, 2008
      totaled $ 39,542 as
      compared to cash used of $1,427 in the same period of 2007. This increase in
      the
      cash provided by financing activities was mainly attributable to money received
      from the exercise of stock options of $49,975. This increase in cash provided
      by
      our financing activities was offset by an increase in our payments of notes
      payable of $10,433.




While
      management expects these proceeds, as well as income from our consulting
      operations, will meet our foreseeable needs for the next 12 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 to support our longer term business plan. 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.




18




***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***




Our
      business, revenues and operating results have not been affected in any material
      way by inflation.




***Critical
      Accounting Policies and Estimates***




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-K
      filed with the Commission on March 27, 2008.





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




We
      adopted SFAS 123(R), as of January 1, 2006. SFAS 123(R) replaced
      the existing requirements under SFAS No. 123, Accounting for Stock Based
      Compensation, and Accounting Principles Board Opinion No. 25, Accounting
      for Stock-based Compensation to Employees, or APB 25. According to
      SFAS 123(R), all forms of share-based payments to employees, including
      employee stock options and employee stock purchase plans, are treated the same
      as any other form of compensation by recognizing the related cost in the
      statement of income.




19




Under
      SFAS 123(R), stock-based compensation expense is measured at the grant date
      based on the fair value of the award, and the expense is recognized ratably
      over
      the award's vesting period. For all grants made, we recognize compensation
      cost
      under the straight-line method.




We
      measure the fair value of stock options on the date of grant using a
      Black-Scholes option-pricing model which requires the use of several estimates,
      including:




•  the
      volatility of our stock price;


•  the
      expected life of the option;


•  risk
      free
      interest rates; and


•  expected
      dividend yield.




Prior
      to the completion of our merger in October 2006, we had limited historical
      information on the price of our stock as well as employees' stock option
      exercise behavior for stock options issued prior to the merger. As a result,
      we
      could not rely on historical experience alone to develop assumptions for stock
      price volatility and the expected life of options. As such, our stock price
      volatility was estimated with reference to our historical stock price for the
      time period before the merger, from the date the announcement of the merger
      was
      made. We utilized the closing prices of our publicly-traded stock from the
      announcement date in January 2006 to determine our volatility and will continue
      to use our historical stock price closing prices to determine our volatility
      in
      2008.




The
      expected life of options is based on internal studies of historical experience
      and projected exercise behavior. We estimate expected forfeitures of stock-based
      awards at the grant date and recognize compensation cost only for those awards
      expected to vest. The forfeiture assumption is ultimately adjusted to the actual
      forfeiture rate. Estimated forfeitures are reassessed in subsequent periods
      and
      may change based on new facts and circumstances. We utilize a risk-free interest
      rate, which is based on the yield of U.S. treasury securities with a maturity
      equal to the expected life of the options. We have not and do not expect to
      pay
      dividends on our common shares.




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 4.18% to 4.45%, dividend yield of 0% and an exercise term
      of
      one to five years.




*Income
      Taxes*




We
      account for income taxes using the liability method in accordance with SFAS
      No. 109 Accounting for Income Taxes, which requires the recognition of
      deferred tax assets or liabilities for the tax-effected temporary differences
      between the financial reporting and tax bases of our assets and liabilities
      and
      for net operating loss and tax credit carry forwards. The tax expense or benefit
      for unusual items, prior year tax exposure items or certain adjustments to
      valuation allowances are treated as discrete items in the interim period in
      which the events occur.




On
      January 1, 2007, we adopted FASB Interpretation No. 48, Accounting for
      Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, or
      FIN 48. FIN 48 addresses the determination of whether tax benefits
      claimed or expected to be claimed on a tax return should be recorded in the
      financial statements. Under FIN 48, we may recognize the tax benefit from
      an uncertain tax position only if it is more likely than not that the tax
      position will be sustained on examination by the taxing authorities, based
      on
      the technical merits of the position. As a result of the implementation of
      FIN 48, we did not recognize any current tax liability for unrecognized tax
      benefits. We have estimated the amount of our net operating loss carry-forwards
      and we currently have tax professionals evaluating the amount of net operating
      loss carry-forward available to us to offset future taxable income, under
      Internal Revenue Code Section 382.




*Revenue
      Recognition from Consulting Contracts*





We
      believe one of our critical accounting policies is revenue recognition from
      our
      consulting contracts, in which we used the completed performance model for
      our
      first consulting project we completed in March 2008. We are currently primarily
      deriving our revenue from fees by offering consulting and strategic advisory
      services to foreign commercial and government owned entities planning to create
      or expand electricity generation capabilities using nuclear power plants. Our
      fee type and structure for each client engagement will depend on a number of
      variables, including the size of the client, the complexity, the level of the
      opportunity for us to improve the client’s electricity generation capabilities
      using nuclear power plants and other factors.





20




We
      will
      recognize the revenues from our second consulting contract on a percentage
      of
      completion basis. We recognize revenue in accordance with SEC Staff Accounting
      Bulletin or SAB, No. 104, Revenue Recognition. We
      recognize revenue when all of the following conditions are met:




1.
            There
                is persuasive evidence of an arrangement;





2.
            The
                service has been provided to the customer;




3.
            The
                collection of the fees is reasonably assured; and




4.
            The
                amount of fees to be paid by the customer is fixed or determinable.




In
      situations where contracts include client acceptance provisions, we do not
      recognize revenue until such time as the client has confirmed its acceptance.




Intangibles




As
      of
      March 31, 2008, on the accompanying balance sheet, we had patents with a
      net book value of $217,875. There are many assumptions and estimates that may
      directly impact the results of impairment testing, including an estimate of
      future expected revenues, earnings and cash flows, and discount rates applied
      to
      such expected cash flows in order to estimate fair value. We have the ability
      to
      influence the outcome and ultimate results based on the assumptions and
      estimates we choose for testing. To mitigate undue influence, we set criteria
      that are reviewed and approved
      by various levels of management. The determination of whether or not intangible
      assets have become impaired involves a significant level of judgment in the
      assumptions. Changes in our strategy or market conditions could significantly
      impact these judgments and require adjustments to recorded amounts of intangible
      assets.





**ITEM
      4T.****CONTROLS
      AND PROCEDURES.**





***Disclosure
      Controls and Procedures***





As
      required by Rule 13a-15 under the Exchange Act, we carried out an evaluation
      of
      the effectiveness of the design and operation of our disclosure controls and
      procedures, as of the end of the period covered by this report on Form 10-Q.
      This evaluation was carried out under the supervision and with the participation
      of our management, including our President and Chief Executive Officer, and
      our
      Chief Financial Officer. Based upon that evaluation, management concluded that
      the our disclosure controls and procedures are effective to ensure that
      information required to be disclosed in the reports that it files or submits
      under the Exchange Act is accumulated and communicated to management (including
      the chief executive officer and chief financial officer) to allow timely
      decisions regarding required disclosure and that our disclosure controls and
      procedures are effective to give reasonable assurance that the information
      required to be disclosed by us in reports that we file under the Exchange Act
      is
      recorded, processed, summarized and reported within the time periods specified
      in the rules and forms of the SEC.





There
      were no changes in our internal control over financial reporting identified
      in
      connection with the evaluation performed that occurred during the fiscal year
      covered by this report that has materially affected or is reasonably likely
      to
      materially affect, our internal control over financial reporting.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the SEC’s rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed in
      our
      reports filed under the Exchange Act is accumulated and communicated to
      management, including the Company’s Chief Executive and acting Chief Financial
      Officer as appropriate, to allow timely decisions regarding required disclosure.




21




***Internal
      Controls Over Financial Reporting***





Section
      404 of the Sarbanes-Oxley Act of 2002 requires that management document and
      test
      the Company’s internal control over financial reporting and include in this
      Quarterly Report on Form 10-Q a report on management’s assessment of the
      effectiveness of our internal control over financial reporting.





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting, as such term is defined in Rule 13a-15(f)
      of
      the Exchange Act. Under the supervision and with the participation of our
      management, including our Chief Executive Officer and Chief Financial Officer,
      we conducted an evaluation of the effectiveness of our internal control over
      financial reporting based upon the framework in Internal Control—Integrated
      Framework issued by the Committee of Sponsoring Organizations of the Treadway
      Commission (COSO). Based on that evaluation, our management concluded that
      our
      internal control over financial reporting is effective, as of March 31, 2008, and
      was
      effective during the entire quarter ended March 31, 2008.




**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 March
      31, 2008.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





There
      were no defaults upon senior securities in the three months ended March 31,
      2008.





**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 March 31, 2008 .





**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.




22




***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




23


SIGNATURES





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





Date:
      May
      13, 2008





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




24




**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


25