UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-KSB/A(Amendment No. 1)

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|(Mark One)                                                                                   |                                                                                   
|-------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------
|ý                                                                                            | Annual report under section 13 or 15(d) of the Securities Exchange Act of 1934    
|For the fiscal year ended December 31, 2007                                                 
|OR                                                                                          
|o                                                                                            | Transition report under section 13 or 15(d) of the Securities Exchange Act of 1934
|For the transition Period
from                             to           
                  .

Commission file number: 001-32228

O2Diesel Corporation(Name of small business issuer in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)                                      |  | 91-2023525(I.R.S. Employer
Identification No.)
|----------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|100 Commerce Drive Suite 301
Newark, Delaware(Address of principal executive offices)                       |  | 19713(Zip Code)                               
|Issuer's telephone number:(302) 266-6000Securities registered under Section 12(b) of the Exchange Act: None

Securities registered
under Section 12(g) of the Exchange Act: Common Stock, $0.0001 Par Value
(Title of class)

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 ý    No o

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act) Yes o    No ý

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the Past 60 days. (See definition of affiliate in
Rule 12b-2 of the Exchange Act.)

Registrant's
revenues for its most recent fiscal year: $358,464

The
aggregate market value of the voting stock held by non-affiliates of the registrant on March 19, 2008 computed by the average bid and asked price as of
March 19, 2008, at which the stock was sold, was $21,824,668, assuming solely for purposes of this calculation that all directors and executive officers of the issuer are "affiliates." This
determination of affiliate status is not necessarily a conclusive determination for other purposes.

On
March 19, 2008, the registrant had 87,298,674 shares of common stock, $0.0001 par value per share, issued and outstanding.

TRANSITIONAL
SMALL BUSINESS DISCLOSURE FORMAT: Yes o    No ý

DOCUMENTS INCORPORATED BY REFERENCE

Documents
incorporated by reference are listed in the Exhibit Index.



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EXPLANATORY NOTE



This
Amendment No. 1 to our Annual Report on Form 10-KSB ("Amendment") for the year
ended December 31, 2007, which was originally filed on March 31, 2008 (the
"Original Filing") is for the purpose of including management's assessment of
internal control for the year ended December 31, 2007 in Part II, Item 8A(T),
and revising the certifications of the Principal Executive Officer and Principal
Financial Officer pursuant to Section 302 and 906 of the Sarbanes-Oxley Act to
conform with Item 601(b)(31) of Regulation S-B.  Part II, Item 8A(T) in this
Amendment replaces Part II, Item 8A in the Original Filing.

Except for
the revisions described above, this Amendment does not amend, modify or update
the Original Filing.  This Amendment continues to speak as of the date of the
Original Filing, and the Company has not updated the disclosure contained herein
to reflect events that have occurred subsequent to the filing of the Original
Filing.  Accordingly, this Amendment should be read in conjunction with the
Company's other filings made with the Securities and Exchange Commission
subsequent to the filing of the Original Filing, including the amendments to
those filings, if any.

















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Part II

Item 8A(T).    Controls and Procedures

DISCLOSURE CONTROLS AND PROCEDURES

O2Diesel's Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of our
disclosure controls and procedures as of December 31, 2007. The term "disclosure
controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act means controls and other procedures of a company that are designed
to ensure that information required to be disclosed by a company in the reports
that it files or submits 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 by a
company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company's management, including its
principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure. Our management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives and our
management necessarily applies its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Based on the evaluation of our
disclosure controls and procedures as of December 31, 2007, our Chief Executive
Officer and Chief Financial Officer concluded that, as of such date, our
disclosure controls and procedures were effective at the reasonable assurance
level.





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INTERNAL CONTROL OVER
FINANCIAL REPORTING

Management's Report on
Internal Control Over Financial Reporting

The Company's management is
responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in the Securities Exchange Act of 1934 Rules
13a-15(f) and 15d-15(f), as amended) for the Company.  Internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.

The Company's internal
control over financial reporting includes policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company,
(2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures are made in accordance
with authorizations of management and directors of the Company, and (3) provide
reasonable assurance that unauthorized acquisitions, use or disposition of
Company assets that could have a material effect on the Company's financial
statements would be prevented or detected on a timely basis.  Because of its
inherent limitations, internal control over financial reporting is not intended
to provide absolute assurance that a misstatement of our financial statements
would be prevented or detected.  To evaluate the effectiveness of the Company's
internal control over financial reporting, the Company's management uses the
Internal Control - Integrated Framework adopted by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO").

The Company's management has
assessed the effectiveness of the Company's internal control over financial
reporting as of December 31, 2007, using the COSO framework.  The Company's
management has determined that the Company's internal control over financial
reporting is effective as of that date.

This annual report does not
include an attestation report of the Company's registered public accounting firm
regarding internal control over financial reporting.  Management's report was
not subject to attestation by the Company's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission that
permit the company to provide only management's report in the annual report.

Changes in
Internal Controls Over Financial Reporting

During the most
recent fiscal year, 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.



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Part III

Item 13. 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 2002                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.2 |  | 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 2002                  
|32.1 |  | 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

















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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

|    | O2DIESEL CORPORATION                                                        
|--- | ----------------------------------------------------------------------------
|By: | /s/ALAN R. RAEAlan R. Rae Chief Executive Officer and DirectorAugust 6, 2008

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.

|                                    |  | TITLE                                                                |  | DATE          
|----------------------------------- |  | -------------------------------------------------------------------- |  | --------------
|                                    |  |                                                                      |  |               
|/s/ALAN R. RAEAlan R. Rae           |  | Director and Chief Executive Officer (Principal Executive Officer)   |  | August 6, 2008
|/s/DAVID H. SHIPMANDavid H. Shipman |  | Chief Financial Officer (Principal Financial and Accounting Officer) |  | August 6, 2008
|/s/ARTHUR MEYERArthur Meyer         |  | Chairman                                                             |  | August 6, 2008
|/s/KARIM JOBANPUTRAKarim Jobanputra |  | Director                                                             |  | August 6, 2008

|/s/GERSON SANTOS-LEONGerson Santos-Leon |  | Director |  | August 6, 2008
|--------------------------------------- |  | -------- |  | --------------

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