**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**








**FORM
      10-Q/A**


**(Amendment
      No. 1)**









x
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                EXCHANGE ACT OF 1934**




**FOR
      THE QUARTERLY PERIOD ENDED June 30, 2008**




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




**For
      the transition period from to** **** **to** ****


**Commission
      File Number: 001-32228**




**O2DIESEL
      CORPORATION**


(Name
      of
      small business issuer in its charter)




Delaware
            
            91-2023525(State
                or Other
              Jurisdiction
                of Incorporation)
            
            (IRS
                Employer
              Identification
                No.)




100
      COMMERCE DRIVE, Suite 301


NEWARK,
      DELAWARE 19713


(Address
      of Principal Executive Offices)




(302) 266-6000


(Issuer’s
      telephone number)




Not
      Applicable


(Former
      name, former address and former fiscal year, if changed since last
      report)




Check
      whether the Issuer (1) filed all reports required to be filed by
      Section 13 or 15(d) of the


Securities
      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 definitions of “large accelerated filer”, “accelerated filer”
and “small reporting company” in Rule 12b-2 of the Exchange Act (Check
      one):




Large
      accelerated filer o Accelerated filer o Non-accelerated filer o Smaller Reporting company x




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


Yes o No x






State
      the
      number of shares outstanding of each of the issuer’s classes of
      common


equity,
      as of the latest practicable date:




As
      of
      August 14, 2008, the registrant had 88,490,174 shares of Common
      Stock,


$0.0001
      par value per share, issued and outstanding









**EXPLANATORY
      NOTE**





O2Diesel
      Corporation (“the Company”) is filing this Amendment No. 1 to our Quarterly
      Report on Form 10-Q ("Amendment") for the six months ended June 30, 2008, which
      was originally filed on August 14, 2008 (the "Original Filing") for the purpose
      of revising management’s evaluation of Disclosure Controls and Procedures for
      the six months ended June 30, 2008 in Part I, Item 4, as a result of the
      Company’s failure to file management’s annual report on internal control over
      financial reporting in the Company’s Annual Report on Form 10-KSB for the year
      ended December 31, 2007 (the “Form 10-KSB”). The Company’s Form 10-KSB was
      originally filed on March 31, 2008 and subsequently amended with our filing
      of
      Form 10-KSB/A Amendment No. 1 on August 6, 2008 and Form 10K-SB/A Amendment
      No.
      2 filed on September 24, 2008.





Except
      for the revision described above, this Amendment does not amend, modify or
      update the Original Filing, and the Company has not updated the disclosure
      contained herein to reflect events that have occurred subsequent to the
      filing. Accordingly, this Amendment should be read in conjunction with the
      Company’s other filings made with the Securities and Exchange
      Commission.






1





**Part
      I**





**Item 4.    Controls
      and Procedures**








**DISCLOSURE
      CONTROLS AND PROCEDURES**





EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES. O2Diesel’s Chief Executive Officer and
      Chief Financial Officer have evaluated the effectiveness of O2Diesel’s
      disclosure controls and procedures(as such term is defined in Rules 13a-15
      and 15d-15 under the Securities Exchange Act of 1934, as amended) as of the
      end
      of the period covered by this quarterly report (the “Evaluation Date”). Because
      of the Company’s failure to file the required management’s annual report on
      internal control over financial reporting (“Report of Management”) in its Annual
      Report on Form 10K-SB when it was originally filed on March 31, 2008 and
      subsequently amended with the filing of Form 10K-SB/A Amendment No. 1 filed
      on
      August 6, 2008 and the filing of Form 10K-SB/A Amendment No. 2 filed on
      September 24, 2008, the Company’s Chief Executive Officer and Chief Financial
      Officer concluded that, as of June 30, 2008, our disclosure controls and
      procedures were not effective at the reasonable assurance level at that
      date.





The
      Company has remedied this failure in the effectiveness of its disclosure
      controls and procedures by filing the appropriate disclosure regarding
      Disclosure Controls and Procedures in the Form 10K-SB/A Amendment No. 1 and
      Amendment No. 2. The Company has implemented additional controls and procedures
      designed to ensure that the disclosures provided by the Company meet the
      then-current requirements of the applicable filing made under the Exchange
      Act.


CHANGES
        IN INTERNAL CONTROLS OVER FINANCIAL REPORTING. On July 14, 2008, two
        directors who were members of the Audit Committee resigned from their positions
        on the Board. The internal control activities of the Audit Committee were
        carried out in a manner consistent with prior reporting periods up to the
        date
        of their resignation. To maintain good internal review procedures for financial
        reporting, the Company’s management requested that the Form 10-Q filing for the
        period ending June 30, 2008 be reviewed by the current board members, which
        included the remaining member of the Audit Committee. This was reviewed and
        discussed during a board meeting held on August 11, 2008. Aside from this
        change, there have not been any changes in the Company’s internal controls over
        financial reporting or in other factors that have materially affected, or
        are
        reasonably likely to materially affect internal controls over financial
        reporting.




2





**Part
      II**





**Item 6.
      Exhibits**





(a)
      Exhibits




31.1
            
            Certification
                of the Chief Executive Officer pursuant to Rule 13a-14(a) or
                Rule 15d-14(a), as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            
            Certification
                of the Chief Financial Officer pursuant to Rule 13a-14(a) or
                Rule 15d-14(a), as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to 18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002






3





**SIGNATURES**








**12. SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      registrant has duly caused this report to be signed on its behalf by the
      undersigned hereunto duly authorized.




O2DIESEL
                CORPORATION
              (Registrant)Date:
                September 26, 2008
            By:
            /s/
                Alan RaeAlan
                RaeChief
                Executive Officer
              (Principal
                Executive Officer)




Date:
                September 26, 2008
            By:
            /s/
                David H. ShipmanDavid
                H. Shipman
              Chief
                Financial Officer
              (Principal
                Financial and Accounting Officer)