SAVE THE WORLD AIR INC (Form: 10QSB/A, Received: 11/20/2007 14:02:34)

SAVE THE WORLD AIR, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS	September 30, 2007 (unaudited)		December 31, 2006

Current assets
Cash	$	102,179	$	244,228
Inventory		41,461		21,314
Other current assets		56,796		81,232

Total current assets		200,436		346,774

Property and equipment , net of accumulated depreciation		212,253		322,023

Other assets		4,500		4,500

Total assets	$	417,189	$	673,297

See notes to condensed consolidated financial statements.

SAVE THE WORLD AIR, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED BALANCE SHEETS - Continued

	September 30, 2007 (unaudited)			December 31, 2006
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities

Accounts payable	$	855,402		$	233,707
Accrued expenses		769,901			468,413
Accrued research and development fees		103,347			95,000
Accrued professional fees		570,519			594,945
Loans payable to related party		81,404			-
Convertible debentures, net		1,893,041			177,926

Total current liabilities		4,273,614			1,569,991

Commitments and contingencies

Stockholders’ deficiency
Common stock, $.001 par value: 200,000,000 shares authorized, 44,559,702 and 40,081,758 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively		44,560			40,082
Common stock to be issued		-			60,000
Additional paid-in capital		31,586,808			29,430,821
Deficit accumulated during the development stage		(35,487,793	)		(30,427,597	)

Total stockholders’ deficiency		(3,856,425	)		(896,694	)

Total liabilities and stockholders’ deficiency	$	417,189		$	673,297

See notes to condensed consolidated financial statements.

SAVE THE WORLD AIR, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Three months ended September 30,						For the Nine months ended September 30,						For the Period from February 18, 1998 (Date of Inception) through September 30,
	2007			2006			2007			2006			2007
Net sales	$	-		$	-		$	22,000		$	-		$	52,000
Cost of goods sold		-			-			5,360			-			18,760
Gross profit		-			-			16,640			-			33,240

Operating expenses		873,971			1,718,614			3,177,533			5,326,222			26,080,509

Research and development expenses		98,427			95,608			539,610			274,713			4,745,024

Non-cash patent settlement costs		-			-			-			-			1,610,066

Loss before other income (expense)		(972,398	)		(1,814,222	)		(3,700,503	)		(5,600,935	)		(32,402,359	)

Other income (expense)
Other income		2,271			-			2,448			125			2,573
Interest income		12			5,966			62			12,942			16,313
Interest expense		(499,282	)		(152,769	)		(972,950	)		(2,362,687	)		(3,728,793	)
Financing fee		-			-			(47,104	)		-			(47,104	)
Placement fee		-			-			(48,000	)		-			(48,000	)
Loss on valuation of warrants		(148,455	)		-			(293,439	)		-			(293,349	)
Settlement of litigation and debt		-			-			-			-			1,017,208
Total other income (expense)		(645,454	)		(146,803	)		(1,358,893	)		(2,349,620	)		(3,081,152	)

Loss before provision for income taxes		(1,617,852	)		(1,961,025	)		(5,059,396	)		(7,950,555	)		(35,483,511	)

Provision for income taxes		-			-			800			800			4,282

Net loss	$	(1,617,852	)	$	(1,961,025	)	$	(5,060,196	)	$	(7,951,355	)	$	(35,487,793	)

Net loss per share, basic and diluted	$	(0.04	)	$	(0.05	)	$	(0.13	)	$	(0.23	)

Weighted average shares outstanding, basic and diluted		40,988,308			38,439,668			38,265,250			34,711,746

See notes to condensed consolidated financial statements.

SAVE THE WORLD AIR, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

FEBRUARY 18, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30, 2007


	Common Stock				Common stock		Additional paid-in		Deferred		Deficit accumulated during the development			Total stockholders' development stage
	Shares		Amount		to be issued		capital		compensation		stage			deficiency
BALANCE, FEBRUARY 18, 1998 (date of inception)		--	$	--	$	--	$	--	$	--	$	--		$	--
Issuance of common stock on April 18, 1998		10,030,000		10,030		--		14,270		--		--			24,300
Net loss		--		--		--		--		--		(21,307	)		(21,307	)
BALANCE, DECEMBER 31, 1998		10,030,000		10,030		--		14,270		--		(21,307	)		2,993
Issuance of common stock on May 18, 1999		198,003		198		--		516,738		--		--			516,936
Issuance of common stock for ZEFS on September 14, 1999		5,000,000		5,000		--		--		--		--			5,000
Stock issued for professional services on May 18, 1999		69,122		69		--		49,444		--		--			49,513
Net loss		--		--		--		--		--		(1,075,264	)		(1,075,264	)
BALANCE, DECEMBER 31, 1999		15,297,125		15,297		--		580,452		--		(1,096,571	)		(500,822	)
Stock issued for employee compensation on February 8, 2000		20,000		20		--		20,580		--		--			20,600
Stock issued for consulting services on February 8, 2000		100,000		100		--		102,900		--		--			103,000
Stock issued for professional services on April 18, 2000		27,000		27		--		91,233		--		--			91,260
Stock issued for directors fees on April 18, 2000		50,000		50		--		168,950		--		--			169,000
Stock issued for professional services on May 19, 2000		5,000		5		--		20,295		--		--			20,300
Stock issued for directors fees on June 20, 2000		6,000		6		--		26,634		--		--			26,640
Stock issued for professional services on June 20, 2000		1,633		2		--		7,249		--		--			7,251
Stock issued for professional services on June 26, 2000		1,257		1		--		6,674		--		--			6,675
Stock issued for employee compensation on June 26, 2000		22,000		22		--		116,798		--		--			116,820
Stock issued for consulting services on June 26, 2000		9,833		10		--		52,203		--		--			52,213
Stock issued for promotional services on July 28, 2000		9,675		9		--		47,205		--		--			47,214
Stock issued for consulting services on July 28, 2000		9,833		10		--		47,975		--		--			47,985
Stock issued for consulting services on August 4, 2000		35,033		35		--		74,585		--		--			74,620
Stock issued for promotional services on August 16, 2000		25,000		25		--		56,225		--		--			56,250
Stock issued for consulting services on September 5, 2000		12,833		13		--		28,861		--		--			28,874
Stock issued for consulting services on September 10, 2000		9,833		10		--		14,740		--		--			14,750
Stock issued for consulting services on November 2, 2000		9,833		10		--		8,643		--		--			8,653

SAVE THE WORLD AIR, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY - CONTINUED

FEBRUARY 18, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30, 2007


	Common Stock						Common stock		Additional paid-in			Deferred		Deficit accumulated during the development			Total stockholders' development stage
	Shares			Amount			to be issued		capital			compensation		stage			deficiency
Stock issued for consulting services on November 4, 2000		9,833			10			--		8,643			--		--			8,653
Stock issued for consulting services on December 20, 2000		19,082			19			--		9,522			--		--			9,541
Stock issued for filing services on December 20, 2000		5,172			5			--		2,581			--		--			2,586
Stock issued for professional services on December 26, 2000		12,960			13			--		4,912			--		--			4,925
Other stock issuance on August 24, 2000		2,000			2			--		4,258			--		--			4,260
Common shares cancelled		(55,000	)		(55	)		--		(64,245	)		--		--			(64,300	)
Net loss		--			--			--		--			--		(1,270,762	)		(1,270,762	)
BALANCE, DECEMBER 31, 2000		15,645,935			15,646			--		1,437,873			--		(2,367,333	)		(913,814	)
Stock issued for consulting services on January 8, 2001		9,833			10			--		3,038			--		--			3,048
Stock issued for consulting services on February 1, 2001		9,833			10			--		3,235			--		--			3,245
Stock issued for consulting services on March 1, 2001		9,833			10			--		2,743			--		--			2,753
Stock issued for legal services on March 13, 2001		150,000			150			--		47,850			--		--			48,000
Stock issued for consulting services on April 3, 2001		9,833			10			--		2,448			--		--			2,458
Stock issued for legal services on April 4, 2001		30,918			31			--		7,699			--		--			7,730
Stock issued for professional services on April 4, 2001		7,040			7			--		1,753			--		--			1,760
Stock issued for consulting services on April 5, 2001		132,600			132			--		33,018			--		--			33,150
Stock issued for filing fees on April 30, 2001		1,233			1			--		2,033			--		--			2,034
Stock issued for filing fees on September 19, 2001		2,678			2			--		2,274			--		--			2,276
Stock issued for professional services on September 28, 2001		150,000			150			--		92,850			--		--			93,000
Stock issued for directors services on October 5, 2001		100,000			100			--		59,900			--		--			60,000
Stock issued for legal services on October 17, 2001		11,111			11			--		6,655			--		--			6,666
Stock issued for consulting services on October 18, 2001		400,000			400			--		379,600			--		--			380,000
Stock issued for consulting services on October 19, 2001		150,000			150			--		187,350			--		--			187,500
Stock issued for exhibit fees on October 22, 2001		5,000			6			--		6,745			--		--			6,751
Stock issued for directors services on November 2, 2001		1,000,000			1,000			--		949,000			--		--			950,000
Stock issued for consulting services on November 7, 2001		20,000			20			--		16,980			--		--			17,000

SAVE THE WORLD AIR, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY - CONTINUED

FEBRUARY 18, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30, 2007


	Common Stock				Common stock			Additional paid-in		Deferred			Deficit accumulated during the development			Total stockholders' development stage
	Shares		Amount		to be issued			capital		compensation			stage			deficiency
Stock issued for consulting services on November 20, 2001		43,000		43		--			42,097		--			--			42,140
Stock issued for consulting services on November 27, 2001		10,000		10		--			9,790		--			--			9,800
Stock issued for consulting services on November 28, 2001		187,000		187		--			183,073		--			--			183,260
Intrinsic value of options issued to employees		--		--		--			2,600,000		(2,600,000	)		--			--
Fair value of options issued to non-employees for services		--		--		--			142,318		--			--			142,318
Amortization of deferred compensation		--		--		--			--		191,667			--			191,667
Net loss		--		--		--			--		--			(2,735,013	)		(2,735,013	)
BALANCE, DECEMBER 31, 2001		18,085,847		18,086		--			6,220,322		(2,408,333	)		(5,102,346	)		(1,272,271	)
Stock issued for directors services on December 10, 2002		2,150,000		2,150		--			857,850		--			--			860,000
Common stock paid for, but not issued (2,305,000 shares)		--		--		389,875			--		--			--			389,875
Fair value of options issued to non-employees for services		--		--		--			54,909		(54,909	)		--			--
Amortization of deferred compensation		--		--		--			--		891,182			--			891,182
Net loss for the year ended December 31, 2002		--		--		--			--		--			(2,749,199	)		(2,749,199	)
BALANCE, DECEMBER 31, 2002		20,235,847		20,236		389,875			7,133,081		(1,572,060	)		(7,851,545	)		(1,880,413	)
Common stock issued, previously paid for		1,425,000		1,425		(213,750	)		212,325		--			--			--
Common stock issued, previously paid for		880,000		880		(220,000	)		219,120		--			--			--
Stock issued for cash on March 20, 2003		670,000		670		--			166,830		--			--			167,500
Stock issued for cash on April 4, 2003		900,000		900		--			224,062		--			--			224,962
Stock issued for cash on April 8, 2003		100,000		100		--			24,900		--			--			25,000
Stock issued for cash on May 8, 2003		1,150,000		1,150		--			286,330		--			--			287,480
Stock issued for cash on June 16, 2003		475,000		475		--			118,275		--			--			118,750
Stock issued for legal services on June 27, 2003		83,414		83		--			45,794		--			--			45,877
Debt converted to stock on June 27, 2003		2,000,000		2,000		--			498,000		--			--			500,000
Stock and warrants issued for cash on July 11, 2003		519,000		519		--			129,231		--			--			129,750
Stock and warrants issued for cash on September 29, 2003		1,775,000		1,775		--			441,976		--			--			443,751
Stock and warrants issued for cash on October 21, 2003		1,845,000		1,845		--			459,405		--			--			461,250
Stock and warrants issued for cash on October 28, 2003		1,570,000		1,570		--			390,930		--			--			392,500
Stock and warrants issued for cash on November 19, 2003		500,000		500		--			124,500		--			--			125,000

SAVE THE WORLD AIR, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY - CONTINUED

FEBRUARY 18, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30, 2007


	Common Stock				Common stock			Additional paid-in			Deferred			Deficit accumulated during the development			Total stockholders' development stage
	Shares		Amount		to be issued			capital			compensation			stage			deficiency
Finders' fees related to stock issuances		--		--		43,875			(312,582	)		--			--			(268,707	)
Common stock paid for, but not issued (25,000 shares)		--		--		6,250			--			--			--			6,250
Amortization of deferred comp		--		--		--			--			863,727			--			863,727
Net loss for year ended December 31, 2003		--		--		--			--			--			(2,476,063	)		(2,476,063	)
BALANCE, DECEMBER 31, 2003		34,128,261		34,128		6,250			10,162,177			(708,333	)		(10,327,608	)		(833,386	)
Common stock issued, previously paid for		25,000		25		(6,250	)		6,225			--			--			--
Stock issued for director services on March 31, 2004		50,000		50		--			74,950			--			--			75,000
Stock issued for finders fees on March 31, 2004		82,500		82		--			12,293			--			--			12,375
Stock issued for finders fees on March 31, 2004		406,060		407		--			101,199			--			--			101,606
Stock issued for services on April 2, 2004		65,000		65		--			99,385			--			--			99,450
Debt converted to stock on April 2, 2004		60,000		60		--			91,740			--			--			91,800
Stock issued upon exercise of warrants on May 21, 2004		950,000		950		--			189,050			--			--			190,000
Stock issued for directors services on June 8, 2004		600,000		600		--			1,019,400			--			--			1,020,000
Stock issued for cash on August 25, 2004		550,000		550		--			549,450			--			--			550,000
Stock issued upon exercise of options on August 30, 2004		4,000		4		--			1,596			--			--			1,600
Stock issued for cash on September 8, 2004		25,000		25		--			24,975			--			--			25,000
Stock issued for consulting services on September 15, 2004		50,000		49		--			65,451			--			--			65,500
Stock issued for patent settlement on September 22, 2004		20,000		20		--			24,780			--			--			24,800
Stock issued for research and development on October 6, 2004		65,000		65		--			90,935			--			--			91,000
Stock issued for cash on October 6, 2004		25,000		25		--			24,975			--			--			25,000
Stock issued for cash on October 15, 2004		150,000		150		--			149,850			--			--			150,000
Stock issued upon exercise of stock options on October 21, 2004		6,500		6		--			2,594			--			--			2,600
Stock issued for cash on November 3, 2004		25,000		25		--			24,975			--			--			25,000
Stock issued for cash on November 18, 2004		172,500		173		--			172,327			--			--			172,500
Stock issued for cash on December 9, 2004		75,000		75		--			74,925			--			--			75,000
Stock issued for cash on December 23, 2004		250,000		250		--			249,750			--			--			250,000
Finders fees related to stock issuances		--		--		--			(88,384	)		--			--			(88,384	)
Common stock paid for, but not issued (119,000 shares)		--		--		119,000			--			--			--			119,000
Intrinsic value of options issued to employees		--		--		--			248,891			(248,891	)		--			--

SAVE THE WORLD AIR, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY - CONTINUED

FEBRUARY 18, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30, 2007


	Common Stock						Common stock			Additional paid-in			Deferred			Deficit accumulated during the development			Total stockholders' development stage
	Shares			Amount			to be issued			capital			compensation			stage			deficiency
Fair value of options issued to non-employees for services		--			--			--			55,381			(55,381	)		--			--
Fair value of warrants issued for settlement costs		--			--			--			1,585,266			--			--			1,585,266
Fair value of warrants issued to non-employees for services		--			--			--			28,872			--			--			28,872
Amortization of deferred compensation		--			--			--			--			936,537			--			936,537
Net loss for year ended December 31, 2004		--			--			--			--			--			(6,803,280	)		(6,803,280	)
BALANCE, DECEMBER 31, 2004		37,784,821			37,784			119,000			15,043,028			(76,068	)		(17,130,888	)		(2,007,144	)
Common stock issued, previously paid for		69,000			69			(69,000	)		68,931			--			--			--
Stock issued upon exercise of warrants, previously paid for		50,000			50			(50,000	)		49,950			--			--			--
Stock issued for cash on January 20, 2005		25,000			25			--			24,975			--			--			25,000
Stock issued upon exercise of warrants on January 31, 2005		500			1			--			199			--			--			200
Stock issued for cash on February 17, 2005		325,000			325			--			324,675			--			--			325,000
Stock issued for cash on March 31, 2005		215,000			215			--			214,785			--			--			215,000
Stock issued for cash on May 17, 2005		5,000			5			--			4,995			--			--			5,000
Stock issued for cash on June 7, 2005		300,000			300			--			299,700			--			--			300,000
Stock issued for cash on August 5, 2005		480,500			480			--			480,020			--			--			480,500
Stock issued for cash on August 9, 2005		100,000			100			--			99,900			--			--			100,000
Stock issued for cash on October 27, 2005		80,000			80			--			79,920			--			--			80,000
Common stock cancelled on December 7, 2005		(8,047,403	)		(8,047	)		--			8,047			--			--			--
Stock issued for settlement of payables on December 21, 2005		--			--			57,092			--			--			--			57,092
Stock issued for settlement of payables on December 31, 2005		--			--			555,429			--			--			--			555,429
Finders fees related to stock issuances		--			--			--			(109,840	)		--			--			(109,840	)
Intrinsic value of options issued to employees		--			--			--			243,750			(243,750	)		--			--
Fair value of options issued for settlement costs		--			--			--			31,500			--			--			31,500
Fair value of warrants issued for settlement costs		--			--			--			4,957			--			--			4,957
Fair value of warrants issued to non-employees for services		--			--			--			13,505			--			--			13,505
Amortization of deferred compensation		--			--			--			--			177,631			--			177,631
Warrants issued with convertible notes		--			--			--			756,768			--			--			756,768
Intrinsic value of beneficial conversion associated with convertible notes		--			--			--			696,413


Nevada		52-2088326
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


	Page
PART I

ITEM 1. Financial Statements		1
Condensed balance sheets		1
Condensed statements of operations (unaudited)		3
Condensed statements of changes in stockholders’ deficiency (unaudited)		4
Condensed statements of cash flows (unaudited)		13
Notes to condensed financial statements (unaudited)		15
ITEM 2. Management’s Discussion and Analysis or Plan of Operations		45
ITEM 3. Controls and Procedures		58

PART II

ITEM 1. Legal Proceedings		59
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		61
ITEM 3. Defaults Upon Senior Securities		62
ITEM 4. Submission of Matters to a Vote of Security Holders		62
ITEM 5. Other Information		62
ITEM 6. Exhibits		62

SIGNATURES		63

EXHIBIT INDEX
EXHIBIT 10.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32


þ		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


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