**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**


**__________**




**FORM
      10-KSB**




x
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934****For
                the fiscal year ended December 31, 2005**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: 33-64840****iCURIE,
                INC.***(Name
                of Small Business Issuer in its Charter)***Nevada**
              *(State
                of Incorporation)*
            
            **91-2015441**
              (*I.R.S.
                  EmployerIdentification No.*)**1395
                Brickell Avenue**
              **Suite
                800**
              **Miami,
                Florida**
              (*Address
                of principal executive offices*)
            
            **33131**
              (*Zip
                Code)***Issuer’s
                telephone number:****(305)
                529-6290****Securities
                registered under Section 12(b) of the Exchange
                Act:****None****Securities
                registered under Section 12(g) of the Exchange
                Act:****None**Check
                whether the issuer is not required to file reports pursuant to
                Section 13 or 15(d) of the Exchange Act.£





Check
                whether the issuer (1) filed all reports required to be filed by
                Section 13 or 15(d) of the Exchange Act during the past
                12 months (or for such shorter period that the registrant was
                required to file such reports), and (2) has been subject to such
                filing
                requirements for the past 90 days. Yes xNo£Check
                if there is no disclosure of delinquent filers in response to
                Item 405 of Regulation S-B 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. xIndicate
                by check mark whether the registrant is a shell company (as defined
                in
                rule 12b-2 of the Exchange Act).
              Yes£No
                xThe
                issuer’s revenues for the fiscal year ended December 31, 2005 were
                $19,132.The
                aggregate market value of the voting common stock held by non-affiliates
                computed by reference to the price at which the stock was last sold
                as
                quoted on the OTC Bulletin Board (OTCBB), as of March 20, 2006
                was approximately $10,623,441.**DOCUMENTS
                INCORPORATED BY REFERENCE****None.**Transitional
                Small Business Disclosure Format (check one): Yes£NoR








**TABLE
      OF CONTENTS**


Part
                  IITEM
                  1. DESCRIPTION OF BUSINESS
              
              1ITEM
                  2. DESCRIPTION OF PROPERTY
              
              16ITEM
                  3. LEGAL PROCEEDINGS
              
              16ITEM
                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              
              16Part
                  IIITEM
                    5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
                    BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
              
              16ITEM
                  6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION
              
              18ITEM
                  7. FINANCIAL STATEMENTS
              
              20ITEM
                  8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND
                  FINANCIAL DISCLOSURE
              
              20ITEM
                  8A. CONTROLS AND PROCEDURES
              
              20ITEM
                  8B. OTHER INFORMATION
              
              20Part
                  IIIITEM
                  9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
              
              21ITEM
                  10. EXECUTIVE COMPENSATION
              
              24ITEM
                  11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                  AND
                  RELATED SHAREHOLDER MATTERS
              
              27ITEM
                  12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
              
              29ITEM
                  13. EXHIBITS
              
              30ITEM
                  14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
              
              30




**FORWARD-LOOKING
      STATEMENTS**




This
      report contains forward-looking statements within the meaning of Section 21E
      of
      the Securities Exchange Act of 1934. Such forward-looking statements
      involve risks and uncertainties, including, among other things, statements
      regarding our business strategy, future revenues and anticipated costs and
      expenses. Such forward-looking statements include, among others, those
      statements including the words “expects,” “anticipates,” “intends,” “believes”
and similar language. Our actual results may differ significantly from those
      projected in the forward-looking statements. Factors that might cause or
      contribute to such differences include, but are not limited to, those discussed
      in Item 6 “Management’s Discussion and Analysis or Plan of Operation.” You are
      cautioned not to place undue reliance on the forward-looking statements, which
      speak only as of the date of this report. We undertake no obligation to publicly
      release any revisions to the forward-looking statements or reflect events or
      circumstances taking place after the date of this document.




**PART
      I**




**Item
              1.**
            **Description
                of Business**




***Company
      Overview***




In
      this
      report, unless the context requires otherwise, (1) “iCurie” “Celsia
      Technologies” “we,” “our,” “us” and “the Company” refer to iCurie, Inc., a
      Nevada corporation, and its subsidiaries, including without limitation, iCurie
      Lab Holdings Limited and iCurie Lab Inc., and (2) “Cedar Mountain” refers to
      Cedar Mountain Distributors, Inc., which was the name of iCurie, Inc. prior
      to
      the July 8, 2005 share exchange described herein. Since March 2006, iCurie,
      Inc.
      and its subsidiaries have been operating under the trade name “Celsia
      Technologies.”




We
      want
      to become a world leader in developing and commercializing next-generation
      cooling solutions for the PC, flat panel display, and the LED-lighting
      industries. We plan to develop, manufacture, market, sell and license our
      patented thermal management cooling devices. We believe that our wafer-thin
      products absorb, transport, and dissipate heat more rapidly than current
      heat-pipe/heat-sink cooling solutions. Our unique cooling devices use
      microfluidic physics to move liquid at very high speeds through micro-channels
      within thin panels.




We
      have
      been provided with non-economic support and advice from the United Kingdom’s
      Trade and Investment Global Entrepreneur Program, a UK government organization
      that identifies and assists global enterprises that are planning to locate
      to UK
      or have operations in the UK. This program reviews hundreds of company
      applications annually and selects only a limited number of companies to work
      with.




The
      current industry-leading cooling technology solutions, heat-pipes/heat-sinks,
      were developed when PC processors such as the Pentium I ® &
      Pentium II ® ,
      with
      much lower speeds and cooling demands, were the industry standards. With the
      rapid development of faster processors, such as the later Intel
      Pentium ® series,
      the cooling industry has produced many versions of the limited heat-pipe and/or
      heat-sink. However, this aging technology is becoming less effective as faster
      processors produce increased heat levels. Battery life is substantially eroded
      in laptops due to heat and the energy required to operate one or more cooling
      systems. We believe our solutions offer lighter, thinner, smaller, faster,
      more
      efficient and less energy-consuming products. Moreover, we believe that our
      coolers will be more cost efficient to produce than conventional
      coolers.




1




***Corporate
      History***




The
      Company was incorporated in Nevada under the name KNETX Skates Corporation
      on
      December 23, 1999, and changed its name to Cedar Mountain Distributors, Inc.
      on
      June 9, 2000. Prior to July 8, 2005, the Company was a public “shell” company
      with nominal assets. On July 8, 2005, Cedar Mountain entered into a “share
      exchange” with the shareholders of iCurie Lab Holdings Limited (a company formed
      in the United Kingdom in March 2004 and referred to in this report as “iCurie
      UK”), whereby the shareholders of iCurie UK exchanged all of the outstanding
      common shares of iCurie UK for approximately 95% of Cedar Mountain’s outstanding
      common stock. Therefore, as a result of the share exchange, the shareholders
      of
      iCurie UK acquired control of Cedar Mountain, iCurie UK became a wholly owned
      subsidiary of Cedar Mountain, Cedar Mountain succeeded to the business and
      operations of iCurie UK and the management of iCurie UK assumed similar
      management positions with Cedar Mountain. To reflect this succession and
      continuation of iCurie UK’s business, Cedar Mountain’s name was changed to
      iCurie, Inc.




iCurie
      UK
      acquired its nanocooling intellectual property from iCurie Lab, Inc. in March
      2004, and acquired an 80.2% equity interest in iCurie Lab, Inc. (a company
      formed in the South Korea in 2000 and referred to in this report as “iCurie
      Korea”) in December 2004. The remaining 19.8% of iCurie Korea was acquired by
      iCurie UK on September 1, 2005. Therefore, as a result of the acquisition,
      iCurie Korea became a wholly owned subsidiary of iCurie UK. This transaction
      was
      described in our 8-K filed with the SEC on September 1, 2005.





***Industry
      Overview***




The
      PC
      cooling industry is an estimated $1 billion business annually. The total PC
      market, including desktops and notebooks, is estimated at approximately 171
      million units in 2005 and is growing at approximately 10% annually. In addition,
      we expect the growth of the PC cooling industry to accelerate faster than the
      growth of the PC market itself, based on the increased power consumption and
      heat output of today’s microprocessors and video cards.




We
      have
      also identified several other substantial markets for our cooling systems.
      We
      are evaluating an opportunity to supply cooling systems to the flat panel
      display market and the LED-lighting industry. Later deployments of our cooling
      technology may include the personal communication, home appliance, automotive,
      defense, air conditioning, and aerospace industries.





***Technology
      Overview***




Our
      product portfolio is based on registered and pending patents in microfluidic
      technology. We believe that our technology enables higher performance than
      current cooling systems, with no noise or vibrations, and can be commercially
      manufactured using well-known processes at a cost less than traditional cooling
      products. Our technologies are designed to be used as a stand-alone cooling
      solution, or as part of a cooling system.




2





***Market
      Information***




As
      the PC
      industry uses ever more-powerful chips, including video chips, cooling has
      become an increasingly critical issue, yet there have been few technological
      innovations in this area. The industry is highly fragmented, the market need
      is
      significant, and we believe we have a very competitive technology. As a result,
      we believe we can capture a significant share of the PC cooling
      industry.




The
      marketability of our product spans basically over all industries where heat
      emission calls for cooling. However, there are three industries where we clearly
      believe that our technology can rapidly become the product of choice. These
      three industries are the PC, flat panel display, and the LED-lighting
      industries. Companies in these industries need components with higher
      performance; are used to managing complex supply chains; and are willing to
      accept breakthrough technologies to gain competitive supremacy.




Due
      to
      market size, product competitiveness and customer need, we have chosen the
      mid
      and high-end of the PC industry as the primary target market. The high-end
      segment of the display industry is the second targeted market and the LED-
      lighting industry as the third. In a later stage, we may also address numerous
      market segments like the telecom, home appliances, automotive, aerospace, air
      conditioning, and defense industries.





We
      intend
      to address our target markets with a model that incorporates a mix of licensing
      arrangements, through which we can enter certain markets indirectly through
      the
      efforts of third parties, and direct product sales in conjunction with largely
      outsourced or joint ventured manufacturing and sales capability. We believe
      our
      approach will enable us to gain market share without large investments in
      manufacturing equipment or sales and marketing.





***Commercialization***




We
      intend
      to employ two parallel sales models when taking our cooling technology to the
      market. The first is a licensing model, which we plan to use in specific
      industries or industry segments. We believe that giving licensing partners
      exclusive rights in certain specific areas represents an expedient way of
      creating relatively certain revenues with relatively low financial risks. We
      believe that this model will also help to create visibility and credibility
      for
      our technology in other industries. We plan to pursue this sales model in mature
      industries, such as the PC industry, with well established global players.
      Pursuant to this strategy, we entered into a Patent License and Sales
      Exclusivity Agreement with Asia Vital Components (AVC) in November 2005 as
      more
      fully described herein.





The
      second sales model will be direct sales, either through an internal iCurie
      sales
      force or through joint ventures. We believe that the direct sales model will
      help increase our revenues, but may also entail increased financial risks.
      We
      plan to pursue this strategy when a technology shift is taking place in a
      particular industry that can be taken advantage of by us, or when an industry
      is
      fragmented and barriers to entry are low. Under this model, we plan to manage
      our supply, manufacturing, and distribution chains through sub contractors
      or by
      utilizing the manufacturing expertise of our partners.




3




***Competition***




Although
      we believe that our technology represents a next generation industry solution
      to
      the cooling demands of the PC, flat panel display, and the LED-lighting
      industries, we face and will continue to face intense competition. This
      competition consists of companies attempting to develop and market products
      similar to ours, as well as products incorporating alternative technologies.
      Although we believe that we have a degree of market exclusivity with respect
      to
      some of our products due to registered or pending intellectual property rights,
      there can be no guarantees that competitors will not successfully market
      products similar to ours, whether or not such products may infringe on our
      intellectual property rights. Even if we are ultimately successful in
      challenging competitors’ use of our intellectual property, any such challenge
      will likely be both expensive and time consuming, and our competitive position
      could be adversely affected notwithstanding successful legal actions to enforce
      our intellectual property rights.




In
      addition, there are several alternative technologies currently being developed
      and marketed to address the same market demands as our products. Although we
      believe our technologies provides a highly competitive solution when compared
      to
      alternative technologies, it is possible that the market may adopt one of these
      alternative technologies, which may in turn become a recognized industry
      standard. Wide market adoption of one or more of these alternative technologies
      would have an adverse affect on our competitive position. In addition, we may
      also face competition from technologies not yet developed, whether such future
      technologies address the cooling issues directly or indirectly through the
      development of products which produce less heat and therefore do not require
      an
      improved cooling solution.





In
      addition to the various forms of competition faced by us, it is likely that
      many
      of our competitors will be much larger and better capitalized than we are,
      with
      substantially more resources to devote to the development, manufacture, and
      sales of cooling technology solutions. Such competitors may also benefit from
      existing relationships and reputations within the PC, flat panel display, and
      the LED-lighting industries.





***Management
      Team***




Our
      senior management is led by Hakan Wretsell, our Chief Executive Officer, Michael
      Karpheden, our Chief Operating and Financial Officer, and Dr. Jeong Hyun Lee,
      Ph.D., our Chief Technology Officer and founder of iCurie Korea, and George
      Meyer, our Vice President for Sales & Marketing. The management team
      consists of senior level executives who have extensive experience in management,
      business development, marketing and sales, and systems development. In addition
      to the management team, we believe we have assembled a highly capable and active
      Board of Directors.





***Product
      & Technology Solutions***




*Key
      Technologies*




Our
      technologies utilize nano or micro scale environments, wherein the laws of
      physics are manipulated to create very competitive cooling solutions. These
      technologies create heat management products with higher performance, no noise,
      no vibrations, and with no or very limited positioning impact (upside-down
      etc.). The products are lightweight and have an ultra thin design. The
      products do not require a pump or external energy source to operate.




4




We
      have
      defined two technology paths. Our original Micro Cooling System (MCS)
      technology, branded as iCurie Cooled®, and NanoSpreader TechnologyTM. We believe
      both technologies have great potential in the market, but each has its different
      technical and commercial challenges.




*iCurie
      Cooled* ®
      (MCS)




This
      technology is used to create a cooling device that is a millimeter thin copper
      plate, into which specially designed micro and nano channels have been
      structured. Liquid coolant (distilled water) is placed into the micro and nano
      channels through a process known as VCS- Vacuum, Charge and Sealing. The heat
      source (CPU or other) is placed adjacent to the copper plate (as are traditional
      CPU coolers). When heat is generated, the liquid coolant absorbs the heat in
      a
      very short period of time (less than 0.02 sec). The heat causes the liquid
      coolant to change to vapor. The vapor is rapidly transported through the micro
      and nano channels. The vapor is changed back to liquid by rapidly dissipating
      the heat. The liquid coolant then returns to the heat source at a low
      temperature and is ready to repeat the process. The pressure gradients created
      by the conversion of the coolant between liquid and vapor states “pump” the
      coolant through the micro and nano channels as part of a continuous
      process.




We
      have
      been granted patents relating to our iCurie Cooled® technology in the United
      States, Korea, Japan, China, Russia, and Taiwan. In addition, we currently
      have
      pending patent applications relating to the iCurie Cooled® technology in
      Singapore, Brazil, India, and the 17 member countries of the European Union.




*Nano
      Spreader Technology* TM
      (NST)




Many
      of
      the working principles in the NST are the same as in the MCS. The configuration
      and the structuring of the NST give us significant advantages in regards to
      time
      to market. By working with different material layers between the plates, we
      can
      avoid physical segmentation and etching. This impacts the performance and the
      economy of the product. NST has a more flexible design, can cool multi sources
      and is more suitable when cooling larger areas. In addition, the NST is designed
      to be an integrated part of a Printed Circuit Board (PCB). The NST is protected
      by several pending Company patents.




*Current
      technology focus*




Management
      is currently focusing on the NST opportunity because we believe this technology
      offers a faster, more straightforward way to commercialization. In addition,
      we
      believe the NST offers potential customers an economical alternative. All
      current product and customer projects are based on the NST, which is where
      the
      main part of our resources is being allocated.




5




***Sales
      and Marketing***




*Sales*




The
      first
      three markets we plan to approach are the PC, flat panel display, and
      LED-lighting industries. We are planning for two different strategic revenue
      streams.




First,
      we
      plan to use licensing to rapidly take our technology to market, create
      credibility, and visibility for our technology. This is the preferred strategy
      in industries that show a high level of maturity. Pursuant to this strategy,
      on
      November 16, 2005, iCurie UK entered into a Patent License and Sales Exclusivity
      Agreement, dated as of November 9, 2005, with AVC giving AVC a worldwide,
      perpetual, non-revocable license to use certain of iCurie UK’s intellectual
      property to develop, manufacture, market and sell a new thermal management
      product for use in personal computers based on our technology. iCurie UK granted
      AVC the exclusive right to sell the product to personal computer manufacturers
      in the world market except for companies headquartered in Korea and Japan.
      iCurie UK has the right to purchase the product from AVC and the exclusive
      right
      to sell the product to (i) all third parties, other than personal computer
      manufacturers, and (ii) to personal computer manufacturers headquartered in
      Korea and Japan. AVC will pay iCurie UK a royalty for each product sold, either
      as a stand alone product or as part of a system. The Agreement terminates on
      December 21, 2008, provided however, that iCurie UK has the option to terminate
      AVC’s sales exclusivity in the event certain sales volumes are not met during a
      particular calendar year.




Second,
      we plan to use direct product sales to optimize the value of the technology.
      By
      managing a supply chain of sub-contractors, we plan to offer our products to
      companies in specific industry segments. The sales will be executed through
      joint ventures or through our own sales force.




*Marketing*




We
      plan
      to tailor and adopt our technology and product portfolio to our target markets.
      Our management believes that our product offers very competitive performance
      to
      existing alternatives, and can be manufactured at a similar or lower cost
      tha n those
      alternatives. This gives us numerous alternatives in regards to marketing
      messages and competitive positioning. Regardless of the competitive environment,
      we feel confident going to the market with business proposals that are lowering
      barriers to entry. We plan to utilize price-performance trade-offs to rapidly
      create partnerships and make in-roads to targeted markets.




The
      marketing strategy will be a combination of different marketing initiatives.
      We
      plan to base this strategy on a business-to-business marketing approach, where
      value is primarily determined by business economic use and large-unit
      transactions are the norm. The marketing philosophy, however, will go beyond
      a
      fixation on transactions, which very often leads to lost customers and low
      brand
      awareness in the short-term. Our ambition is to build a mutually advantageous
      long-term relationship with the customers, not just sell a product. This calls
      for knowing the customer well enough to deliver relevant products in a timely
      fashion and meeting their specific needs.




We
      plan
      to employ an overall marketing strategy, which will include initiatives such
      as
      advertising, public relations, and customer relations management, as well as
      a
      strong focus on corporate identity. The critical aspect is to convey the
      strengths and values of the products to potential customers, such as superior
      performance, no noise, no vibrations, environmental friendliness, and reduced
      size. We plan to accomplish this through strong direct marketing programs to
      potential customers. In addition, we believe that product marketing and
      advertising through specialized computer magazines will be an important
      component in our strategy. Trade shows on a worldwide basis will be part of
      the
      long-term marketing strategy to ensure visibility in the market
      place.




6




We
      plan
      to build value through marketing based assets, such as brand, customer and
      employee relationships, channel relationship, supplier relationship, and
      intellectual capital. Our strategy is to minimize our ownership of physical
      assets. We aim to effectively employ and manage outsourced manufacturing
      capacity. Our belief is that value creation derives from building intellectual
      capital instead of owning fixed assets such as factories, buildings, etc.
      However, we do expect to own limited manufacturing capacity to enable shipment
      of sample products as well as to ensure that we can control the manufacturing
      process.




On
      March
      13, 2006, the Company re-branded itself as "Celsia Technologies," which reflects
      its ambition to establish the Company’s unique technology under a strong brand
      in the thermal management marketplace. The Company is currently considering
      changing its corporate name and ticker symbol to reflect this re-branding
      .





*Manufacturing
      Operations*




During
      2005, test and sample units were supplied to several potential customers in
      our
      targeted industries. The samples have been partially produced in our own pilot
      plant, which was inaugurated in September 2005.




Our
      product does not call for a complex manufacturing set up, the number of
      components is very limited, and we have identified key manufacturing partners.
      One important criterion has been a thorough knowledge in manufacturing of
      thermal management products.





We
      also
      believe that the manufacturing capacity of our main partner, AVC, will strongly
      contribute to the estimated volumes to the PC industry for 2006. AVC, based
      in
      Taiwan, is a leader in PC cooling systems, manufacturing heat pipes, fans and
      fins (th e standard
      PC cooling system). AVC’s major customers include Intel, IBM, Dell, HPQ, Apple,
      AMD, NEC, Sanyo Denki, Legend and Quanta. AVC recently merged with DaTech (a
      large fan supplier).




***Research
      and Development Expenditures***





Research
      and development expenditures were approximately $809,000 and $790,000 for the
      years ended 2005 and 2004, respectively.





***Employees***





As
      of
      December 31, 2005, iCurie had 36 employees. The Company’s Korea office currently
      houses 31 of the total **** 36 **** employees.
      During 2005, iCurie filled certain key positions, which are Corporate
      Controller, Legal Counsel, and a VP Sales & Marketing.




7





***Financing
      Activities***





*Share
      Exchange and Series A Offering*





*Overview*





Effective
      as of July 8, 2005, Cedar Mountain entered into a Share Exchange Agreement
      with the shareholders of iCurie UK and certain additional parties. Immediately
      prior to the execution of the Share Exchange Agreement, 3,050,001 shares of
      Cedar Mountain common stock, par value $0.001 per share, were cancelled pursuant
      to agreements between Cedar Mountain and certain shareholders of Cedar Mountain
      (including the then sole officer and director of Cedar Mountain) for an
      aggregate consideration of $214,000. Upon the consummation of the transactions
      contemplated by the Share Exchange Agreement on July 8, 2005,
      (i) Cedar Mountain acquired all of the outstanding shares of iCurie UK
      (resulting in iCurie UK becoming a wholly owned subsidiary of Cedar Mountain),
      (ii) Cedar Mountain issued 24,935,047 shares of common stock to the
      shareholders of iCurie UK and certain of their assigns, which represented
      94.864% of the issued and outstanding shares of Cedar Mountain common stock,
      (iii) the sole director and executive officer of Cedar Mountain resigned,
      (iv) directors and officers associated with iCurie UK were appointed as
      directors and officers of the Company, (v)  Amended and Restated Articles
      of Incorporation of Cedar Mountain were approved and filed which, among other
      things, changed the name of Cedar Mountain to iCurie, Inc., and designated
      30,000,000 shares of Series A Preferred Stock, par value $0.001 per share;
      and (vi) the new directors approved and adopted Amended and Restated Bylaws
      of iCurie, Inc.




Effective
      as of July 11, 2005, the Company issued 20,995,239 shares of Series A
      Preferred Stock, together with warrants exercisable for a total of 6,441,874
      shares of our common stock, to various parties (referred to in this report
      as
      the “Series A Shareholders”) in exchange for approximately $12.48 million
      in cash (at a cash price of $0.88 per share of Series A Preferred Stock) and
      the
      transfer to us on the terms described herein of $4.6 million of previously
      issued promissory notes issued by various parties (we refer to these
      transactions collectively as the “Series A Offering”). The Series A
      Offering was effectuated pursuant to Subscription Agreements (in the case of
      cash sales) and a Preferred Stock Purchase Agreement (in the case of the
      issuance of Series A Preferred Stock for promissory notes) between iCurie,
      Inc.
      and the stock recipients, each effective as of July 11, 2005. In connection
      with
      the Series A Offering, we also entered into a Registration Rights Agreement
      dated as of July 11, 2005 with the iCurie UK shareholders, Series A
      Shareholders, and certain additional parties (the “Registration Rights
      Agreement”), as described in this section under “Registration Rights
      Agreement.”




Pursuant
      to the Share Exchange Agreement, the Company agreed to assume the obligations
      of
      iCurie UK under a Placement Agent Agreement between iCurie UK, Indigo Securities
      LLC, and Axiom Capital Management Inc. (we refer to Indigo and Axiom
      collectively as the “Placement Agent”), pursuant to which the Placement Agent
      was compensated by us for its services in connection with the Share Exchange
      Agreement and the Series A Offering, as described in this section under
“Compensation to Placement Agent.” In connection with the Share Exchange
      Agreement and Series A Offering, the Company also granted warrants exercisable
      for a total of 270,000 shares of our common stock to a party that identified
      Cedar Mountain as a potential participant in the share exchange.




8




In
      connection with the share exchange and Series A Offering, (i) our executive
      officers entered into employment agreements as described under Item 10
“Executive Compensation,” (ii) we advanced a major shareholder $500,000
      payable under a pre-existing revenue sharing agreement and entered into certain
      related transactions with such shareholder, (iii) we cancelled a $1.1 million
      promissory note made by an executive officer in exchange for 1.25 million shares
      of our common stock owned by such officer, (iv) an option for 440,000 shares
      of
      iCurie UK common stock held by an executive officer was cancelled in exchange
      for a warrant to purchase 1,097,142 shares of our common stock, (v) our
      executive officers were paid certain accrued but previously unpaid salaries
      in
      cash and shares of our common stock and (vi) an executive officer agreed to
      indemnify us against certain potential liabilities related to our
      then-contemplated acquisition of 19.2% of iCurie Lab, Inc. (which was
      subsequently acquired on September 1, 2005). Additional information regarding
      the matters set forth in (ii) - (vi) above is set forth under Item 12 “Certain
      Relationships and Related Transactions.”




The
      above
      transactions were reported and described in the Company’s Form 8-K dated July 8,
      2005, as amended.




*Description
      of Note Conversion*




Pursuant
      to the Preferred Stock Purchase Agreement, secured convertible interim
      promissory notes (the “Notes”) which were issued by iCurie UK and two of its
      shareholders, Hansen Gray & Company, Inc. and Dr. Lee, in the aggregate
      principal amount of $4,600,000, were exchanged for approximately 6,810,000
      shares of Series A Preferred Stock. The number of shares of Series A Preferred
      Stock issued in the Note conversion equaled the approximate number derived
      by
      dividing (i) $4,100,000 principal amount of the Notes by $0.66, and (ii)
      $500,000 principal amount of the Notes by approximately $0.83, representing
      a
      twenty-five percent (25%) and five percent (5%) discount from the cash offering
      price of the Series A Preferred Stock, respectively. The shares of Series A
      Preferred Stock issued upon conversion of the Notes have the same rights,
      preferences and privileges as all other shares of Series A Preferred
      Stock.




*Compensation
      to Placement Agreement*




In
      connection with the share exchange and Series A Offering, the Placement Agent
      received (i) a cash fee of approximately $1.248 million, equal to ten percent
      (10%) of the aggregate gross cash proceeds received from the Series A Offering
      from subscribers, (ii) a cash fee of approximately $285,000, representing the
      unpaid portion of fees owed in connection with the original issuance of the
      Notes, (iii) warrants to purchase 1,364,528 shares of Series A Preferred Stock,
      equal to ten percent (10%) of the shares of Series A Preferred Stock purchased
      by subscribers, at an exercise price of $0.88 per share, and (iv) warrants
      to
      purchase 681,018 shares of common stock, at an exercise price of $0.88 per
      share. The Placement Agent additionally was reimbursed for actual out-of-pocket
      expenses incurred in connection with the Share Exchange Agreement and the Series
      A Offering, subject to certain limitations.




*Registration
      Rights Agreement*




*Initial
      Registration* .
      The
      Registration Rights Agreement required us to use our reasonable best efforts
      to
      file the registration statement by September 8, 2005 and cause the registration
      statement to become effective no later than one hundred and twenty (120) days
      after July 11, 2005. Under the terms of the Registration Rights Agreement,
      if
      the registration statement is not filed within 60 days of July 11, 2005 or
      declared effective within 120 days of July 11, 2005 (each a “Non-Registration
      Event”), then for each 30 day period during the pendency of such a
      Non-Registration Event, we are required to pay to the purchasers of the Series
      A
      Preferred Stock an amount equal to one percent (1%) of the purchase price paid
      for the Series A Preferred Stock ($0.88 per share), which may be paid in cash
      or
      in shares of Series A Preferred Stock (valued at $0.88 per share), at the
      Company’s option. The registration statement was filed on October 6, 2005 and
      the Company currently expects the registration statement to be declared
      effective in April 2006.




9




*Demand
      Rights* .
      If the
      initial registration statement does not register all shares of common stock
      as
      required by the Registration Rights Agreement, owners of Series A Preferred
      Stock holding more than $500,000 in value of the securities to be registered
      may
      require us to use our best efforts to cause such shares to be registered on
      other registrations, subject to certain conditions. We shall not be obligated
      to
      affect more than two (2) registrations under these demand right
      provisions.




*Piggy-Back
      Rights* .
      If the
      initial registration statement does not register all shares of common stock
      as
      required by the Registration Rights Agreement, owners of Series A Preferred
      Stock shall be entitled to “piggy back” registration rights on all registrations
      of the Company or on any demand registrations of any other investor, subject
      to
      certain conditions and the right of the Company and its underwriters to reduce
      the number of shares proposed to be registered in view of market
      conditions.




*S-3
      Rights* .
      If the
      initial registration statement does not register all shares of common stock
      as
      required by the Registration Rights Agreement, owners of Series A Preferred
      Stock shall be entitled to unlimited demand registrations on Form S-3 (if
      available to the Company) subject to certain conditions, so long as such
      registered offerings are not less than $500,000.




*Expenses* .
      The
      Company shall bear registration expenses (exclusive of underwriting discounts
      and commissions) of the initial registration and all such demands, piggy backs,
      and S-3 registrations (including the expense of one special counsel for all
      Series A Preferred Stock selling shareholders).




*Hansen
      Gray/CHL* .
      The
      common stock of the Company held by Hansen Gray & Company and CHL Investment
      Partnership (prior shareholders of iCurie UK) will not be registered, although
      such parties do have the right to demand registration of their common stock
      beginning six (6) months and twelve (12) months, respectively, after the
      effective date of such registration statement. We are required to pay certain
      liquidated damages if we do not register the shares of Hansen & Gray and CHL
      in accordance with these demand rights. The Registration Rights Agreement also
      imposes certain sale restrictions on Hansen Gray prior to the registration
      of
      its shares of our common stock.




*Summary
      of Prior Financings*




*December
      2004 Bridge Financing* .
      On
      December 2, 2004, Hansen Gray issued secured convertible promissory notes (the
      “HG Notes”) in the aggregate principal amount of $2,500,000 to various
      purchasers (the “HG Noteholders”). All of the proceeds of the HG Notes were
      distributed to iCurie UK. Upon consummation of the Series A Offering, the
      principal amount of the HG Notes were exchanged for 3,787,863 shares of Series
      A
      Preferred Stock. Upon such exchange, each HG Noteholder received the number
      of
      shares of Series A Preferred Stock equal to the number derived by dividing
      the
      principal amount of the Noteholder’s Note by $0.66 (subject to rounding),
      representing a twenty-five percent (25%) discount from the cash offering price
      per share of the Series A Preferred Stock.




10




In
      connection with the issuance of the HG Notes, iCurie UK also agreed to issue,
      and in the Series A Offering we did issue, the HG Noteholders five-year warrants
      to purchase an aggregate of 710,214 shares of common stock. Each such warrant
      entitles the holder thereof to purchase the number of shares of common stock
      equal to (i) twenty-five percent (25%) of the aggregate principal amount of
      the applicable HG Note, divided by (ii) 0.88 (subject to rounding), at an
      exercise price per share equal to $0.88. The warrants contain customary
      anti-dilution provisions. As part of the share exchange, Hansen Gray also
      transferred to the HG Noteholders an aggregate of 1,496,103 shares of common
      stock.




Also
      in
      connection with the issuance of the HG Notes, Dr. Lee issued a personal
      promissory note for $1,100,000 to an affiliate of the HG Noteholders. In
      connection with the Series A Offering, the holder of Dr. Lee’s note transferred
      the Note to us in exchange for approximately 1,667,000 shares of Series A
      Preferred Stock. We then cancelled the note in exchange for $1,100,000 of Dr.
      Lee’s common stock (valued at $0.88 per share). See Item 12 “Certain
      Relationships and Related Transactions.”




*2005
      Bridge Financings* .
      On each
      of March 17 and April 25, 2005, iCurie UK issued secured convertible
      promissory notes (the “2005 Notes”) in the principal amount of $500,000 to
      various purchasers (the “2005 Noteholders”), for an aggregate combined issuance
      of $1,000,000. The 2005 Notes ranked senior to all other debt of iCurie UK.
      As
      part of the Series A Offering, the 2005 Notes were exchanged for approximately
      1,355,600 shares of Series A Preferred Stock. Upon such exchange, each 2005
      Noteholder received the number of shares of Series A Preferred Stock equal
      to
      the number derived by dividing the principal amount of the noteholder’s 2005
      Note and accrued and unpaid interest by (i) $0.66 in the case of the
      $500,000 March 17 note issuance and (ii) approximately $0.83 in the
      case of the $500,000 April 25 note issuance (in each case subject to
      rounding), representing a twenty-five percent (25%) and five percent (5%)
      discount, respectively, from the cash offering price of the Series A Preferred
      Stock.





In
      connection with issuance of the 2005 Notes, iCurie UK also agreed to issue,
      and
      in the Series A Offering we did issue, the 2005 Noteholders five-year warrants
      to purchase 482,946 shares of common stock. Each such warrant relating to the
      March 17 note issuance entitles the holder thereof to purchase the number of
      shares of common stock equal to (i) eighty percent (80%) of the aggregate
      principal amount of the applicable 2005 Note, divided by (ii) 0.88 (subject
      to rounding), at an exercise price equal to $0.88 per share (subject to
      rounding). Each such warrant relating to the April 25 note issuance
      entitles the holder thereof to purchase the number of shares of common stock
      equal to (i) five percent (5%) of the aggregate principal amount of the
      applicable 2005 Note, divided by (ii) 0.88 (subject to rounding), at an
      exercise price equal to $0.88 per share. The warrants contain customary
      anti-dilution provisions.





*Additional
      Warrants* .
      Pursuant to the Series A Offering, each recipient of Series A Preferred Stock
      received warrants to purchase a number of shares of common stock equal to
      twenty-five percent (25%) of the number of shares of Series A Preferred Stock
      received (subject to rounding). Fifty percent (50%) of these warrants are
      exercisable at $1.10 per share and fifty percent (50%) are exercisable at $1.32
      per share.




11





*Series
      B Offering*





*Overview*





On
      December 16, 2005, iCurie issued 3,063,402 shares of its newly designated Series
      B Preferred Stock, $0.001 par value per share, to certain individuals and
      entities (the “Series B Holders”), together with warrants (the “Series B
      Warrants”) to purchase approximately 1,531,700 shares of the Company’s common
      stock, for an aggregate of $3,063,402 in cash. The sale of Series B Preferred
      Stock and Series B Warrants (the “Series B Offering”) was effected pursuant to
      Subscription Agreements between the Company and the Series B Holders, each
      effective as of December 16, 2005. In connection with the Series B Offering,
      the
      Company entered into a Registration Rights Agreement dated as of December 16,
      2005 with the Series B Holders and the Series B Placement Agents (as defined
      below) (the “Series B Registration Rights Agreement”). The terms of the Series B
      Preferred Stock are set forth in a Certificate of Designation to the Company’s
      Amended and Restated Articles of Incorporation, which certificate was filed
      on
      November 30, 2005. Fifty percent (50%) of the Series B Warrants are exercisable
      at $1.50 per share of common stock and fifty percent (50%) of the Series B
      Warrants are exercisable at $3.00 per share of common stock.





In
      connection with the Series B Offering, Indigo Securities LLC and Bridgehead
      Group Limited (collectively, the “Series B Placement Agents”) and certain of
      their assigns received (i) a cash fee of approximately $216,340, (ii) warrants
      to purchase 210,000 shares of Series B Preferred Stock at $1.50 per share,
      and
      (iii) warrants to purchase 6,340 shares of common stock at $1.50 (collectively,
      the “Series B Placement Agent Warrants”) pursuant to Placement Agent Agreements
      between the Company and each of the Series B Placement Agents.





*Series
      B Registration Rights Agreement*





Pursuant
      to the Series B Registration Rights Agreement, the Company is required to file
      a
      registration statement covering the common stock (i) into which the Series
      B
      Preferred Stock is convertible and (ii) for which the Series B Warrants and
      Series B Placement Agent Warrants are exercisable (collectively the “Registrable
      Securities”) within six (6) months after the Company’s Registration Statement on
      Form SB−2 (SEC File No. 333−127193) (filed pursuant to the Series A Offering and
      Registration Rights Agreement) is declared effective. The Company is required
      to
      maintain the effectiveness of the registration statement through the first
      anniversary of the Series B Offering and shall use its best efforts to maintain
      its effectiveness through the second anniversary of the Series B
      Offering.





If
      the
      registration statement is not effective at any time during the period beginning
      270 days after the Series B Offering and ending one year after the Series B
      Offering, holders of the Registrable Securities holding more than $500,000
      in
      value of the Registrable Securities may require the Company to use its best
      efforts to cause such shares to be registered. The Company shall not be
      obligated to effect more than two (2) registrations under such demand
      registration provisions.





Subject
      to certain conditions, the holders of the Registrable Securities shall be
      entitled to “piggy back” registration rights on all registrations of the
      Company. Holders of the Registrable Securities shall be entitled to unlimited
      demand registrations on Form S−3 (if available to the Company) so long as such
      registered offerings are not less than $500,000. The Company shall bear
      registration expenses of all such demands, piggy backs, and S−3
      registrations.




12





***Description
      of Capital Stock***




As
      of the
      date of this filing, we have issued and outstanding approximately 29,316,035
      shares of common stock, 20,995,239 shares of Series A Preferred Stock and
      3,063,402 shares of Series B Preferred Stock. Our Amended and Restated Articles
      of Incorporation authorize 150,000,000 shares of common stock and 100,000,000
      of
      preferred stock, 30,000,000 of which has been designated as Series A Preferred
      Stock and 7,000,000 of which has been designated as Series B Preferred
      Stock.





*Common
      Stock*




Holders
      of shares of common stock are entitled to dividends as and when declared by
      our
      Board of Directors from funds legally available therefor, and upon liquidation,
      dissolution, or winding-up of the Company and are entitled to share ratably
      in
      all assets remaining after payment of liabilities. We have not paid any
      dividends nor do we anticipate paying any dividends on our common stock in
      the
      foreseeable future. It is our present policy to retain earnings, if any, for
      use
      in the development of our business. The holders of shares of common stock do
      not
      have preemptive rights, are entitled to one vote for each share of common stock
      held of record by them, and do not have the right to cumulate their votes for
      election of directors.





*Series
      A Preferred Stock*




Holders
      of the Series A Preferred Stock are entitled to receive cumulative, compounding
      dividends in preference to any dividend on our common stock at an annual rate
      of
      eight percent (8%), payable as, when and if declared by the Company, in cash
      or
      additional shares of Series A Preferred Stock (which shall be valued at the
      original purchase price per share of $0.88) at our option. The holders of Series
      A Preferred Stock are entitled to participate pro rata in any dividends paid
      on
      the common stock on an as-if-converted basis. In the event of any sale,
      bankruptcy or dissolution of the Company, the holders of the Series A Preferred
      Stock are entitled to receive in preference to the holders of the common stock
      a
      per share amount equal to the original purchase price plus any accrued and
      unpaid dividends (the “Liquidation Preference”). After the payment of the
      Liquidation Preference to the holders of the Series A Preferred Stock, the
      remaining assets shall be distributed ratably to the holders of the common
      stock. A merger, acquisition, sale of voting control or sale of substantially
      all of the assets of the Company in which the pre-transaction shareholders
      of
      the Company do not own a majority of the outstanding shares of the surviving
      corporation shall be deemed to be a sale of the Company.




The
      holders of the Series A Preferred Stock have the right to convert the Series
      A
      Preferred Stock and any accrued dividends, at any time, into shares of common
      stock. The initial conversion price is $0.88, subject to adjustment as provided
      below, resulting in an initial conversion rate of 1:1. At our option, the Series
      A Preferred Stock and any accrued dividends shall be converted into common
      stock, at the then applicable conversion price, in the event that (i) the
      holders of at least a majority of the outstanding Series A Preferred Stock
      consent to such conversion; (ii) we receive $50 million of additional equity
      based financing after July 11, 2005; or (iii) the common stock is quoted at
      a
      price per share equal to three (3) times the then current conversion price
      of
      the Series A Preferred Stock for twenty (20) consecutive trading days and such
      shares are traded at an average daily dollar volume of $250,000 (average share
      price times the average volume) during the same twenty (20) day trading
      period.




13




The
      conversion price of the Series A Preferred Stock and the exercise price of
      the
      Company warrants described in this report are subject to a weighted average
      antidilution adjustment to reduce dilution in the event that we issue additional
      equity securities at a purchase price less than the applicable conversion price
      in the case of the Series A Preferred Stock or the applicable exercise price
      in
      the case of the warrants, in each case, subject to certain exceptions. The
      conversion price is also subject to proportional adjustment for stock splits,
      stock dividends, recapitalizations and the like.




The
      Series A Preferred Stock votes together with the common sto c k
      and not
      as a separate class except as specifically provided by their terms or as
      otherwise required by law. Each share of Series A Preferred Stock has a number
      of votes equal to the number of shares of common stock then issuable upon
      conversion of such share of Series A Preferred Stock.




So
      long
      as fifty percent (50%) or more of the Series A Preferred Stock remains
      outstanding, the holders of the Series A Preferred Stock, voting as a separate
      class, shall be entitled to elect two members of our Board of Directors, one
      of
      whom will be an independent director. So long as twenty five percent (25%)
      or
      more (but less than fifty percent (50%)) of the Series A Preferred Stock remain
      outstanding, the holders of the Series A Preferred Stock, voting as a separate
      class, shall be entitled to elect one member of our Board of Directors (whether
      or not independent). The common share holders have the right to elect two board
      members. Until July 11, 2006, one representative appointed by the Placement
      Agents is entitled to observer rights at all board meetings.




The
      consent of the directors elected by the holders of Series A Preferred Stock
      is
      required for any action that (i) alters or changes in a material manner the
      rights, preferences or privileges of the Series A Preferred Stock, (ii)
      increases or decreases the authorized number of shares of common or preferred
      stock, (iii) constitutes the incurrence of indebtedness by the Company which
      possesses rights senior to the Series A Preferred Stock (other than indebtedness
      incurred in the ordinary course of our business, consistent with past practice,
      and certain additional exceptions), (iv) creates (by reclassification or
      otherwise) any new class or series of shares or securities having rights,
      preferences or privileges senior to or on a parity with the Series A Preferred
      Stock, (v) results in the redemption of any shares of common stock (other than
      pursuant to equity incentive agreements with service providers giving us the
      right to repurchase shares upon the termination of services), (vi) results
      in
      any merger, other corporate reorganization, sale of control, or any transaction
      in which all or substantially all of the assets of the Company are sold; except
      in the event that the merger, corporate reorganization, sale of control, or
      sale
      of all or substantially all of the assets of the Company results in the Series
      A
      Preferred Stock receiving three (3) times the amount paid for their Series
      A
      Preferred Stock at original issuance, (vii) amends or waives any provision
      of
      our Articles of Incorporation or Bylaws relative to the Series A Preferred
      Stock, or (viii) increases the authorized size of our board. The consent of
      the
      directors elected by the holders of the Series A Preferred Stock is also
      required for certain additional actions until such time as the registration
      statement is effective. In addition, (i) the consent of the holders of the
      Series A Preferred Stock, voting as a separate class, is required in order
      for
      us to authorize the issuance of any securities ranking senior to, or pari passu
      with the Series A Preferred Stock as to the payment of dividends or liquidation
      preference, and (ii) following the effectiveness of the registration statement,
      holders of fifty percent (50%) or more of the Series A Preferred Stock issued
      as
      of July 11, 2005 may require us to reincorporate in the State of
      Delaware.




14





*Series
      B Preferred Stock*





Subject
      and subordinate to the liquidation rights of the Series A Preferred Stock,
      in
      the event of any sale of the Company, the holders of the Series B Preferred
      Stock shall be entitled to receive in preference to the holders of the common
      stock a per share amount equal to $1.00 (the “Series B Liquidation Preference”).
      After the payment of the Series B Liquidation Preference to the holders of
      the
      Series B Preferred Stock, the remaining assets of the Company shall be
      distributed ratably to the holders of the common stock. A merger, acquisition,
      sale of voting control or sale of substantially all of the assets of the Company
      in which the pre−transaction shareholders of the Company do not own a majority
      of the outstanding shares of the surviving corporation shall be deemed to be
      a
      sale of the Company.





Subject
      and subordinate to the liquidation rights of the Series A Preferred Stock,
      in
      the event of any bankruptcy filing or dissolution by the Company, the holders
      of
      the Series B Preferred Stock shall be entitled to receive in preference to
      the
      holders of the common stock a per share amount equal to the Series B Liquidation
      Preference. After the payment of the Series B Liquidation Preference to the
      holders of the Series B Preferred Stock, the remaining assets shall be
      distributed ratably to the holders of the common stock, the Series A Preferred
      Stock and the Series B Preferred Stock on a common equivalent
      basis.





The
      holders of the Series B Preferred Stock have the right to convert the Series
      B
      Preferred Stock at any time into shares of common stock at an initial conversion
      rate of 1:1, subject to adjustment as provided below. At the option of the
      Company, the Series B Preferred Stock shall be converted into common stock,
      at
      the then applicable conversion price, in the event that (i) the holders of
      at
      least a majority of the outstanding Series B Preferred Stock consent to such
      conversion; (ii) all of the holders of the outstanding Series A Preferred Stock
      convert to common stock; (iii) the Company receives $15 million of additional
      equity based financing after the Series B Closing Date at three (3) times the
      then current conversion price of the Series B Preferred Stock; or (iv) the
      common stock trades at a price per share equal to three (3) times the then
      current conversion price of the Series B Preferred Stock for 20 consecutive
      trading days and such shares are traded at an average daily dollar volume of
      $250,000 (average share price times the average volume) during the same 20
      day
      trading period.





The
      conversion price of the Series B Preferred Stock and the exercise price of
      the
      Series B Warrants are subject to a weighted average antidilution adjustment
      (based on all outstanding shares of preferred and common stock) to reduce
      dilution in the event that the Company issues additional equity securities
      (other than shares issued pursuant to outstanding and reserved employee options
      and certain other specified issuances) at a purchase price less than the
      applicable conversion price in the case of the Series B Preferred Stock or
      the
      applicable exercise price in the case of the Series B Warrants. The conversion
      price is also subject to proportional adjustment for stock splits, stock
      dividends, recapitalizations and the like.





The
      Series B Preferred Stock vote together with the common stock and not as a
      separate class. Each share of Series B Preferred Stock has a number of votes
      equal to the number of shares of common stock then issuable upon conversion
      of
      such share of Series B Preferred Stock.




15




**Item
              2.**
            **Description
                of Property**




The
      Company’s principal offices are currently located in leased space at 1395
      Brickell Avenue, Suite 800, Miami, Florida 33131, and the phone number is
      305-529-6290. We anticipate that our headquarters in the United States will
      consist of top management, who will set and manage strategic priorities,
      business plans, business tactics, budgets, financing and legal matters. We
      also
      anticipate that management of sales strategy and tactics with key account
      management will also be part of the United States office. iCurie Lab, Inc.,
      which is the Company’s research, development and manufacturing center, is and
      will continue to be located in Seoul, Korea. The Company’s telephone number in
      Korea is 011-82-2-3452-2005 and its fax number is 011-82-2-3452-3650. We believe
      that Korea is an excellent location to recruit highly skilled engineers. The
      main responsibilities of the Korean office are to develop and industrialize
      the
      planned technology portfolio, lab prototypes and pre-serial manufacturing,
      as
      well as quality control.




We
      currently lease an office, research and manufacturing facilities in Seoul,
      Korea
      and office space in Miami, Florida. Our leased facilities in Korea consist
      of
      approximately 380 square meters of office space and approximately 750 square
      meters of space used as a pilot plant to begin product manufacturing.
      Approximate monthly rent (including a 10% value added tax) for the Korean office
      and plant is 5,500,000 KWON (approximately $5,445) and 8,527,200 KWON
      (approximately $8,442), respectively. The leases on the office and plant space
      expire on March 29, 2006 and July 26, 2006, respectively. The office lease
      in
      Korea will be moved to a new 453 square meter location in April 2006. The
      monthly rent of 4,730,000 KWON (approximately $4,683) includes 10% value added
      tax and runs through March 2008. Our space in Miami consists of a furnished
      office, which includes secretarial and other amenities at a charge of
      approximately $3,030 per month under a contract expiring June 15,
      2006.




**Item
              3.**
            **Legal
                Proceedings**




None.




**Item
              4.**
            **Submission
                of Matters to a Vote of Security
                Holders**




There
      were no matters submitted to a vote of the holders of the Company’s common stock
      during the fourth quarter of fiscal 2005.




**PART
      II**




**Item
              5.**
            **Market
                For Common Equity and Related Stockholder Matters and Small Business
                Issuer Purchases of Equity
                Securities**




***Market
      Information***




Our
      common stock is available for quotation on the Over the Counter Bulletin Board
      maintained by the National Association of Securities Dealers under the symbol
      “ICUR.OB.” There is no assurance that our common stock will continue to be
      quoted or that any liquidity exists for our shareholders. Prior to the share
      exchange and issuance of Series A Preferred Stock in July, 2005, although our
      common stock was available for quotation on the Over the Counter Bulletin Board,
      there was no public trading market for our common stock and no public trades
      of
      our common stock were reported on the OTC Bulletin Board during the fiscal
      years
      ended December 31, 2003 and December 31, 2004, and the first two quarters of
      the
      fiscal year ending December 31, 2005. The following table provides the quarterly
      high and low bids per share of common stock reported on the Over the Counter
      Bulletin Board for the last two quarters of 2005. The following quotations
      reflect inter-dealer prices, without retail mark-up, mark-down or commission,
      and may not represent actual transactions. The source of this information is
      NASDAQ Over the Counter Bulletin Board Research Reports.




16







**Fiscal
                2005**
            **High**
            **Low**Third
                Quarter
            $2.35
            $1.25Fourth
                Quarter
            $1.60
            $1.06




***Holders***




As
      of
      March 20, 2006, the approximate number of holders of record of our common stock,
      which is our only class of common equity, was 79. This number does not include
      holders which hold the securities in street name.




***Dividends***





We
      have
      not generated any material revenues nor had net profits from operations. We
      have
      not paid any cash dividends on our common stock or our preferred stock. The
      declaration and payment of dividends in the future will be determined by our
      Board of Directors considering the conditions then existing, including our
      earnings, financial condition, capital requirements and other
      factors.





***Securities
      Authorized for Issuance Under Equity Compensation
      Plans***





The
      following table provides information as of December 31, 2005 with respect to
      the
      Company’s common shares that may be issued under our iCurie, Inc. 2005 Stock
      Incentive Plan, which was approved by our shareholders and is our only equity
      compensation plan:





**EQUITY
      COMPENSATION PLAN INFORMATION**





Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights(a)
            Weighted-average
                exercise price of outstanding options, warrants and rights
              (b)
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))(c)iCurie
                2005 Stock incentive Plan
            2,510,337
            $0.88
            2,987,078




17




**Item
              6.**
            **Management’s
                Discussion and Analysis or Plan of
                Operation**




This
      report contains forward looking statements within the meaning of Section 21E
      of
      the Securities Exchange Act of 1934. These forward looking statements are
      subject to certain risks and uncertainties that could cause actual results
      to
      differ materially from historical results or anticipated results, including
      those set forth in this report and the Company’s public filings. The following
      discussion and analysis should be read in conjunction with "Selected Financial
      Data" and the Company's financial statements and notes thereto included
      elsewhere in this report.





**Plan
      of Operation**




Our
      operations include research, development, manufacturing, sales and marketing
      of
      heat management products developed and designed by our Company. We believe
      our
      technology is ready for commercialization and we are currently working with
      10
      to 15 potential customers in several projects designed to commercially produce
      and/or sell our products. We believe that the heat emission problem has
      accelerated and is now seriously threatening the development of new heat
      generating products in several industries. New cooling technologies should
      therefore enable companies to develop new products with higher performance,
      increased efficiency and with smaller size. The mission of the Company is to
      become a world leader in developing and commercializing this next generation
      of
      cooling solutions for the PC, flat panel display, and LED- lighting industries.




We
      expect
      to have sufficient funds to execute our business plan over the next twelve
      months (from December 31, 2005). However, the Company may need to raise
      additional capital over the next twelve months to fund projects which are
      currently not included in our business plan and will contribute to increased
      growth. There
      can
      be no assurance that additional capital will not be required, or that we will
      be
      able to successfully raise such capital if needed or that we will not attempt
      to
      raise additional capital if an appropriate opportunity presents itself. In
      the
      event the Company is not able to commercialize its products in anticipated
      volumes during the next twelve months, and is unable to contain expenses without
      adversely effecting the operations, the Company will require additional capital
      in order to continue its current operations.




We
      expect
      our research and development activities to continue to be focused on product
      projects undertaken in conjunction with potential customers relating to the
      use
      and/or modification of our product for use by such customers.




We
      expect
      our capital expenditures over the next twelve months to be focused on
      complementing our pilot plant, inaugurated in September 2005, with specific
      volume driven equipment and on specific research and development related test
      equipment. All such expenditures will be invested in Seoul, South Korea, where
      our research and development headquarters are located or together with
      sub-manufacturers in their manufacturing plants.




We
      believe we are sufficiently staffed to execute our 2006 business plan. Planned
      new employees are strictly replacement hirings. However, if unforeseen
      opportunities arise, we are prepared to reevaluate and change our
      plans.




During
      the quarter ended December 31, 2005, we continued to make progress towards
      building the Company and commercializing our technology. We received product
      test results, which lead to certain related test product orders, and also
      continued discussions and price negotiations with potential customers and
      strategic partners. We managed to add strategic projects to our prospect
      portfolio and we passed important milestones of ongoing projects. We also
      managed to receive and deliver our first commercial order. In addition, a large
      part of our test orders generated revenues.




18




As
      described under **“** Product
      & Technology Solutions,” management has decided to focus the main part of
      our resources on the Nano Spreader TechnologyTM (NST). This new technology path
      is meant to be a more economical and a faster way to commercialization.




As
      previously reported in our public filings, we received approximately
      $12.48 million in gross cash proceeds from a Preferred Stock Series A
      offering in July, 2005 and in connection with such financing added experienced
      business leaders to our Board of Directors. Additionally, we completed the
      purchase of the remaining 19.8% of common stock in our Korean subsidiary, making
      it a wholly owned subsidiary.




In
      December, the company received approximately $3.1 million in cash proceeds
      from
      a Preferred Stock Series B offering. Net of related fees the company received
      approximately $2.8 million. The company plans to use the funds for working
      capital as well as for limited capital investments as our strategy is to work
      with outsourcing partners.




*Liquidity
      of the Company*




Our
      source of liquidity is the approximate $10 million in net cash proceeds
      generated from our July Preferred Stock Series A offering as well as the
      Series B offering of $2.8 million in net proceeds described above. Our main
      usage of cash during the third and fourth quarter has been related to product
      development, loan redemption, fund raising expenses, establishing the pilot
      plant and general and administrative expenses. However, the fourth quarter’s
      main uses of cash have been for general and administrative expenses. In
      addition, as described above, we purchased the remaining 19.8% of our Korean
      subsidiary for approximately $2.0 million.




Based
      on
      our current operating plan, we anticipate using our cash mainly to continue
      our
      efforts to commercialize our technology solutions as described above. The main
      cash uses will be for sales and marketing, general and administrative, and
      research and development expenses. Investments will be focused on product
      development and manufacturing. All investments will be driven by
      commercialization opportunities. The total cash need for the next twelve months
      is estimated to approximately $6.9 million, starting at January 1, 2006.
      The main portion of the cash need is for operating expenses and a smaller
      portion is for investments in manufacturing and R&D. The ratio between
      current assets and current liabilities at December 31, 2005 is approximately
      3.4. However, a significant portion of current liabilities relates to penalties
      payable pursuant to the Registration Rights Agreement with the Series A
      Preferred Stock holders which will have no cash impact as the Company is
      planning to settle such penalties by issuing additional shares of Series A
      Preferred Stock as permitted under the Registration Rights Agreement .




We
      anticipate that our annual revenue run rate in the fourth quarter of 2006 would
      be approximately $10 million. In the event the Company is not able to
      commercialize its products in anticipated volumes during the next
      twelve  months,
      and is unable to contain expenses without adversely affecting operations, the
      Company will require additional capital in order to continue its operations.
      There can be no assurance that we will be able to obtain the necessary funds
      in
      a timely manner or the terms on which such funds may be obtained.




Since
      inception, we have not generated material revenue from operations and there
      can
      be no assurance that we will generate revenue in the future.




19




*Significant
      Estimates*




The
      Company prepares its financial statements in conformity with accounting
      principles generally accepted in the United States of America, which require
      management to make estimates and assumptions that affect the reported amounts
      in
      the financial statements. Although these statements are based on management’s
      best knowledge of current events and actions that the Company may undertake
      in
      the future, actual results could differ from those estimates. Significant
      estimates required to be made by management include the valuation of 1)
      investments, 2) equity securities issued, 3) beneficial conversion features
      embedded in securities, and 4) registration rights.




**Item
              7.**
            **Financial
                Statements**


The
      financial statements and report of independent registered public accounting
      firm
      are included herein immediately following the signature page to this
      report.




**Item
                8.**
              **Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure**


Previously
      reported in the Company’s 8-K filed with the SEC on September 1,
      2005.




**Item
                8A.**
              **Controls
                  and Procedures**




Our
      current principal executive officer and principal financial officer evaluated
      the effectiveness of the Company’s disclosure controls and procedures (as
      defined in Rule 15(d)-15(e) under the Exchange Act) as of the end of the period
      covered by this report. Based on this evaluation, the Company’s current
      principal executive officer and principal financial officer have concluded
      that
      the Company’s disclosure controls and procedures are effective in ensuring that
      the information required to be disclosed by the Company in 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.





There
      have not been any changes in the Company’s internal control over financial
      reporting during the Company’s fourth fiscal quarter that has materially
      affected, or is reasonably likely to materially affect, the Company’s internal
      control over financial reporting.





**Item
                8B.**
              **Other
                  Information**


None.




20




**PART
      III**




**Item
              9.**
            **Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act**




The
      following table sets forth certain information about our executive officers
      and
      directors. Messrs. Clarke and Osborn were elected as directors by the holders
      of
      the Series A Preferred Stock in accordance with the terms of such stock. All
      directors and executive officers of the Company have served in such capacities
      since July 2005.





**Name**
            **Age**
            **Position**Hakan
                Wretsell
            45
            Chief
                Executive Officer, President and DirectorMichael
                Karpheden
            44
            Chief
                Operating Officer, Chief Financial Officer and
                SecretaryDr.
                Jeong-Hyun Lee
            41
            Chief
                Technology Officer and DirectorAlan
                B. Miller
            52
            DirectorDavid
                H. Clarke
            64
            DirectorPeter
                Rugg
            58
            DirectorGregory
                J. Osborn
            41
            Director




***Biographies
      of Executive Officers and Directors***




**Hakan
      Wretsell** has
      been
      iCurie’s Chief Executive Officer since September 1, 2004. Mr. Wretsell brings
      over fifteen years of management experience to iCurie, including executive
      positions with LM Ericsson (NASDAQ: ERICY), one of the largest supplier of
      mobile systems in the world, where he worked in various capacities from
      1988-2000. Mr. Wretsell served as the Executive Vice President and General
      Manager, Region Americas, from 1998-2000, where he was responsible for
      restructuring Ericsson’s North and Latin American operations, which resulted in
      strong volume growth and generated more than $2.0 billion in annual sales under
      his leadership. Mr. Wretsell currently serves as a director of Teleplus
      Enterprises, Inc. (OTCBB: TLPE).




**Michael
      Karpheden**  has
      been
      iCurie’s Chief Financial and Operating Officer since September 1, 2004. Mr.
      Karpheden served as VP of Finance & Logistics of LM Ericsson, Region
      Americas, consumer products, from 1998-2001. Furthermore, Mr. Karpheden held
      several executive positions in the US, Germany, Russia, and Sweden during his
      twelve-year career with Ericsson. Mr. Karpheden served as Chief Operating
      Officer of Strax Inc., a Latin American leader in the distribution of mobile
      phones and accessories, from 2002-2003, and served as Vice President, Finance
      and Operations, at Strax Inc. from 2001-2002. From 2003-2004, Mr. Karpheden
      served as President and Managing Partner of Business Growth Consultants Inc.
      Mr.
      Karpheden has over fifteen years of international financial and operational
      leadership experience and has extensive experience in finance and corporate
      governance issues. Mr. Karpheden currently serves as a director of Teleplus
      Enterprises, Inc. (OTCBB: TLPE).




**Dr.
      Jeong-Hyun Lee** founded
      iCurie Lab, Inc. in 2000 and has been the Chief Technology Officer of iCurie
      since September 1, 2004. Dr. Lee received his doctorate from Case Western
      University and formerly worked with NASA and Samsung. Dr. Lee pioneered the
      core
      technology that dissipates heat quickly and efficiently from devices such as
      PCs, laptops and other chip driven devices.




21




**Alan
      B. Miller** has over
      twenty-five years of Wall Street and financial expertise, including his tenure
      from 1990 to 2003 as founder and president of Winchester Investment Securities,
      an investment banking and general securities firm based in Overland Park,
      Kansas. Winchester, which had five branches and forty-five registered
      representatives, had participated in private placements, IPOs, market making
      and
      general securities trading. Also from 1990 to 2003, Mr. Miller was president
      and
      senior analyst of Trendways Wall Street Watch, a stock market newsletter and
      hotline. Mr. Miller has served as vice president of the investment firm of
      Duggan and Co. and began his career as a registered representative with Stern
      Brothers in Kansas City, Missouri where he became one of the firm’s top
      producing stockbrokers. Mr. Miller is a director of Hansen Gray & Company,
      Inc, a significant shareholder of the Company.




**David
      H. Clarke** has
      served as Chairman of the Board and Chief Executive Officer of Jacuzzi Brands,
      Inc., formerly U.S. Industries, Inc., since May 1995. Mr. Clarke was Vice
      Chairman of Hanson PLC from 1993 and Deputy Chairman and Chief Executive Officer
      of Hanson Industries, the U.S. arm of Hanson, from 1992. Prior to 1992, Mr.
      Clarke served as President of Hanson Industries. Mr. Clarke has a number of
      business interests through his family holding company. He is the largest
      shareholder and a director of DOBI Medical International (DBMI), a development
      stage company with a new technology breast cancer imaging device now in FDA
      clinical trials. He is also an investor in and Vice Chairman of Untied Pacific
      Industries, a Hong Kong based (HKSE - 176) company with operations in Shenzhen,
      China. Untied Pacific Industries is engaged in electronic component design
      and
      contract manufacturing. Mr. Clarke is also a member of the board of directors
      of
      Fiduciary Trust International, a subsidiary of Franklin Resources, a company
      engaged in investment management.




**Peter
      Rugg** is a
      Senior Partner of Tatum Partners, LLP in New York. He has over 30 years of
      diversified business experience with special competence in capital structure
      and
      creative financing alternatives. Mr. Rugg has extensive experience in
      international natural resource businesses and offshore business migration.
      He
      has experience in commercial and investment banking, merger and acquisitions,
      turnaround situations, project finance, and corporate restructuring. Mr. Rugg
      has managed public company financial reporting, investor relations, tax
      compliance and audit, budget and planning and information technology systems
      including relational database, desktop, and multi-currency accounting. Mr.
      Rugg
      is chairman of the Company’s audit committee.




**Gregory
      J. Osborn** is
      a
      managing partner of IndiGo Ventures, LLC. Prior to launching IndiGo, Mr. Osborn
      founded Seed Capital, which provided new business development, strategic
      partnering and fundraising services for cutting-edge Internet companies, and
      served as head of business development for FreeRide.com. His background in
      finance and investment began on Wall Street, working at the headquarters offices
      of L.F. Rothschild & Co. and Drexel, Burnham, Lambert as an Account
      Executive and as Vice President at Smith Barney Harris & Upham, First Vice
      President at Paine Webber, and Senior Vice President of Axiom Capital
      Management. Mr. Osborn serves on the Board of Directors of Powerhouse
      Technologies Group, Inc., Children of Bellevue and ideavillage.com. Mr. Osborn
      also serves as corporate advisor to Advance Nanotech Inc. IndiGo Ventures is
      an
      affiliate of Indigo Securities, LLC, which acted as placement agent for, and
      received fees from, the Company, as described herein.




22





***Board
      Composition and Committees***




The
      Company anticipates that its Board of Directors will eventually be composed
      of
      seven (7) directors. We are currently completing the identification of a
      suitable candidate to fill the remaining position on our Board of Directors.
      The
      composition of our Board of Directors, and any Audit Committee and Compensation
      Committee, will be subject to the corporate governance rules promulgated by
      the
      SEC and by our primary trading market. All members of our Board of Directors
      will hold office until the next annual meeting of stockholders and election
      and
      qualification of their successors.





The
      Board
      of Directors of iCurie, Inc. has determined that Mr. Rugg, chairman of the
      Audit
      Committee, is (i) the "audit committee financial expert" as defined by the
      SEC's
      regulations and (ii) independent as defined in the rules of the
      NASD.




***Code
      of Ethics***




We
      have
      adopted a Code of Business Conduct and Ethics that embodies policies encouraging
      individual and peer integrity, ethical behavior and our responsibilities to
      our
      employees, customers, suppliers, stockholders, and the public, and
      includes:




•  Prohibiting
      conflicts of interest (including protecting corporate
      opportunities);




•  Protecting
      our confidential and proprietary information and that of our customers and
      vendors;




•  Treating
      our employees, customers, suppliers and competitors fairly;




•  Encouraging
      full, fair, accurate, timely and understandable disclosure;




•  Protecting
      and properly using company assets;




•  Complying
      with laws, rules and regulations (including insider trading laws);
      and




•  Encouraging
      the reporting of any unlawful or unethical behavior.





The
      code
      applies to every officer, director and employee. We also expect that those
      with
      whom we do business (including our agents, consultants, suppliers and customers)
      will also adhere to the code. All of our officers, directors and employees
      must
      carry out their duties in accordance with the policies set forth in this code
      and with applicable laws and regulations. This code has been filed as an exhibit
      to this report.





***Section
      16(a) Beneficial Ownership Reporting Compliance***





The
      Company does not have a class of securities registered under Section 12 of
      the
      Exchange Act, and therefore Section 16 does not apply to the Company’s
      securities.




23






**Item
              10.**
            **Executive
                Compensation**




***Annual
      Compensation***





The
      following table sets forth information for each of our executive officers for
      the fiscal years ended December 31, 2005, 2004 and 2003. Because the Company
      is
      the successor to the business of iCurie UK and iCurie Lab, Inc., which it
      acquired on July 8, 2005, the information provided below relates to our
      executive officers’ positions with iCurie UK and iCurie Lab, Inc. during the
      periods presented below:





**SUMMARY
      COMPENSATION TABLE**




**Long-term
                Compensation****Annual
                Compensation**
            
            
            **Awards**
            
            
            **Payouts****Name
                And Principal Position**
            
            
            **Year**
            
            **Salary**(1)**($)**
            
            
            **Bonus****($**)****
            
            
            **Restricted
                Stock Award(s)**
              **($)**(4)
            
            
            **Securities
                Underlying Options / SARs**
              **(#**)****
            
            
            **All
                Other Compensation**
              **($**)****Hakan
                Wretsell, President and Chief Executive Officer, iCurie UK(2)
            
            
            2005
              
              2004
              
              2003
            
            $256,000
              
              $250,000
              
              $0(2)
            
            
            $66,250
              
              $0
              
              $0
            
            
            $94,842
              
              $0
              
              $0
            
            
            326,779
              
              0
              
              0
            
            
            $2,100(3)
              
              $0
              
              $0Michael
                Karpheden, Chief Operating and Financial Officer, iCurie UK(2)
            
            
            2005
              
              2004
              
              2003
            
            $215,000
              
              $210,000
              
              $0(2)
            
            
            $46,830
              
              $0
              
              $0
            
            
            $49,167
              
              $0
              
              $0
            
            
            326,779
              
              0
              
              0
            
            
            $2,100(3)
              
              $0
              
              $0Dr.
                Jeong Hyun Lee, Ph.D., Chief Executive Officer, iCurie Lab,
                Inc.
            
            
            2005
              
              2004
              
              2003
            
            $256,000
              
              $250,000
              
              $50,314
            
            
            $66,250
              
              $53,802
              
              $0
            
            
            57,191
              
              0
              
              0
            
            
            326,779
              
              0
              
              0
            
            
            $0(3)
              
              $0
              
              $0






(1)
            Amounts earned per prior employment
              agreements. Actual salaries received during 2004 were $11,408, $14,408
              and
              $103,539 for Mr. Wretsell, Mr. Karpheden and Dr. Lee, respectively
              (Dr.
              Lee, whose salaries were paid in KWON, also received $50,314 in salary
              during 2003). Other than the $53,802 bonus paid to Dr. Lee, no bonuses
              or
              stock compensation was paid during fiscal 2004 and 2003. Certain accrued
              and unpaid salaries were paid at the closing of the Series A Offering.
              See
              “Employment Agreements” below and Item 12 “Certain Relationships and
              Related Transactions.”(2)
            Mr. Wretsell and Mr. Karpheden were
              appointed
              officers of iCurie UK on September 1,
              2004.




24




(3)
            Mr.
              Wretsell and Mr. Karpheden received a car allowance. Dr. Lee is provided
              with a company car.(4)
            Unvested restricted stock as of December
              31,
              2005 totaled 1,470,508 shares and vest quarterly through December 31,
              2006.


****


Brenda
      Hall served as President, Chief Executive
      Officer, Chief Financial Officer and Secretary of the Company until July 8,
      2005, when the share exchange was consummated. Ms. Hall received no salary,
      wage
      or other compensation from the Company during 2005, 2004 or 2003.




***Options***




The
      following table sets forth information relating to option grants made by the
      Company in 2005:




**OPTION/SAR
      GRANTS IN LAST FISCAL YEAR** **(1)**


**(Individual
      Grants)**




**Name**
            **Number
                Of Securities Underlying Options / SARs Granted
                (#)**
            **Percent
                Of Total Options / SARs Granted To Employees In Fiscal
                Year**
            **Exercise
                Or Base Price ($/Sh)**
            **Expiration
                Date**Hakan
                Wretsell
            326,779
            13%
            $0.88
            2015Michael
                Karpheden
            326,779
            13%
            $0.88
            2015Dr.
                Jeung Hyun Lee, Ph.D.
            326,779
            13%
            $0.88
            2015




(1)
            No
                options were granted prior to 2005. Options vest quarterly through
                December 31, 2006. No value has been assigned to the options as the
                exercise price is above fair market value. As of December 31, 2005,
                no
                options have been exercised.




***Director
      Compensation***




The
      external directors of the Company, Alan Miller, David Clarke, and Peter Rugg,
      shall each receive compensation for their services since appointment through
      June 30, 2006, in the amount of $8,000 plus an option to purchase 100,000 common
      shares, 50,000 of which vested upon issuance in December 2005 as an appointment
      bonus, and the remaining 50,000 shall vest quarterly for two years.




***Employment
      Agreements***




Hakan
      Wretsell, Michael Karpheden, and Dr. Lee have each entered into employment
      agreements with the Company effective July 11, 2005. The employment agreements
      are effective until January 1, 2007, and replaced such officers’ prior
      employment agreements with iCurie UK. The employment agreements contain
      customary provisions regarding the ownership and assignment of all intellectual
      property (all of which is and remains our sole property), prohibitions on
      solicitation of customers and employees following termination of employment,
      and
      our right to terminate such officers at any time for cause, or without cause
      upon a payment equal to six months of such officer’s base salary (plus six
      months continuation of certain benefits). The following chart sets forth certain
      summary information regarding base salary, bonus, and equity compensation
      provided in the employment agreements:




25





**Mr.
                Wretsell**
            **Mr.
                Karpheden**
            **Dr.
                Lee**Annual
                Salary
            $262,500
            $220,500
            $262,500Closing
                Bonus(1)
            $40,000
                and 45,455 shares of common stock
            $33,600
                and 38,182 shares of common stock
            $40,000
                and 45,455 shares of common stock2005
                Bonus(2)
            Up
                to 100% of base salary ($262,500)
            Up
                to 60% of base salary ($132,300)
            Up
                to 100% of base salary ($262,500)2006
                Bonus(2)
            Up
                to 200% of base salary ($525,000)
            Up
                to 120% of base salary ($264,600)
            Up
                to 200% of base salary ($525,000)Stock
                Grants(3)
            1,633,897
                shares of common stock
            1,143,728
                shares of common stock
            980,338
                shares of common stockStock
                Options(3)
            326,779
                shares of common stock
            326,779
                shares of common stock
            326,779
                shares of common stockAccrued,
                Unpaid Salary(4)
            $30,207
                and 34,326 shares of common stock
            $22,708
                and 25,805 shares of common stock
            $60,124
                and 68,322 shares of common stock




(1)
            Closing bonus paid on September 1,
              2005.(2)
            Annual bonus amounts are determined
              based on
              certain financial and non-financial targets. Amounts to be paid
              approximately 50% in cash and 50% in shares of our common stock (valued
              at
              then-current market price).(3)
            Subject to staggered vesting. Options
              have an
              exercise price of $0.88 per share. Stock grants and options vest in
              full
              upon (i) termination without cause, (ii) a change in control of the
              Company or (iii) when the Company’s operating revenues reach $17 million.
              490,169 shares of Mr. Wretsell’s stock grant and 326,779 shares of Mr.
              Karpheden’s stock grant vested as of the closing of the Series A Offering
              on July 11, 2005. Mr. Karpheden has forfeited 204,237 restricted shares
              which otherwise would have vested September 30, 2005.(4)
            Represents accrued and unpaid salary
              for
              periods prior to the Series A Offering. Amounts were paid/issued July
              11,
              2005. See Item 12 “Certain Relationships and Related
              Transactions.”




In
      addition to the equity compensation payable to Mr. Wretsell, Mr. Karpheden
      and
      Dr. Lee as described above, such executives are also entitled to the following
      equity compensation: (i) in the event the Company’s 2006 revenue exceeds
      projections by at least 5%, options to purchase that number of shares of common
      stock equal to 12.5% of such executive’s aggregate ownership of Company equity
      as of the closing of the Series A Offering (assuming full vesting of all
      warrants, options or restricted share grants) at an exercise price of $1.10
      per
      share, (ii) in the event the Company’s 2007 revenue exceeds projections by at
      least 5%, options to purchase that number of shares of common stock equal to
      12.5% of such executive’s aggregate ownership of Company equity as of the
      closing of the Series A Offering (assuming full vesting of all warrants, options
      or restricted share grants) at an exercise price of $1.32 per share, and (iii)
      options to purchase that number of shares of common stock equal to 25% of the
      Option Pool (as defined below) in the event Company revenues in 2006 or 2007
      exceed projections by at least 25%, at a per share exercise price equal to
      the
      greater of $0.88 or the 2006 volume weighted average common stock price (whether
      such options are granted with respect to 2006 or 2007 revenues). All of the
      above equity awards will vest annually over a three year period calculated
      retroactively from July 11, 2005, the closing of the Series A Offering (for
      example, assuming a June 30, 2005 closing, a 12.5% equity award in January
      2007
      for exceeding 2006 revenues would be 33.3% vested on the date of grant, with
      the
      remaining two-thirds vesting on June 30, 2007 and June 30, 2008). Any earned
      but
      unvested awards will vest in full upon the executive’s termination without
      cause. The calculation of the executives’ equity ownership for purposes of (iii)
      above shall not include the shares of common stock issued to Dr. Lee pursuant
      to
      the share exchange or the 1,097,142 shares of common stock issuable to Dr.
      Lee
      upon the exercise of the warrant described herein. All equity compensation
      may
      be structured as options, restricted stock or other award, although the number
      of shares and vesting schedule will remain the same.




26




The
      employment agreements also provide for customary employee benefits such as
      insurance and 401(K) or similar arrangements. In the event any officer is
      required to relocate to London, such officer will be provided with a reasonable
      car and housing allowance for a period of twelve months and will be reimbursed
      for reasonable moving expenses. The officers also received certain payments
      of
      cash and shares of common stock at the closing of the Series A Offering, which
      represented earned but unpaid compensation. See Item 12 “Certain Relationships
      and Related Transactions.”





We
      have
      also adopted the iCurie 2005 Stock Incentive Plan to create a pool of 9,803,380
      shares of common stock available for options and other equity grants. The
      incentive plan will be used for attracting and retaining employees, directors
      and consultants and will be granted at fair market value from time to time
      under
      the guidance and approval of our Board of Directors or its Compensation
      Committee, if one is later established.




**Item
              11.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Shareholder Matters**




The
      following table sets forth, as of March 20, 2006, information regarding the
      beneficial ownership of shares of our common stock by each person known by
      us to
      own five percent or more of the outstanding shares of our common stock, by
      each
      of our executive officers, by each of our directors, and by all executive
      officers and directors as a group. Beneficial ownership of shares is determined
      in accordance with SEC rules and generally includes any shares over which a
      person exercises sole or shared voting or investment power. The information
      set
      forth below, including ownership percentages and voting power percentages,
      is
      based on an aggregate of 29,316,035 shares of common stock outstanding as of
      March 20, 2006. All shares of common stock underlying Series A Preferred Stock
      or Series B Preferred Stock owned by each person and common stock underlying
      warrants, stock options or other stock-based awards that are presently
      exercisable or exercisable within 60 days of the date of this report by each
      person are deemed to be outstanding and beneficially owned by the person holding
      the Series A Preferred Stock or Series B Preferred Stock, stock options,
      warrants, and other stock-based awards respectively, for the purpose of
      computing the ownership percentage of that person, but are not considered
      outstanding for the purpose of computing the percentage ownership of any other
      person.




27




Unless
      otherwise indicated, to our knowledge, each person listed in the table below
      has
      sole voting and investment power with respect to the shares shown as
      beneficially owned by such person, except to the extent applicable law gives
      spouses shared authority. Except as otherwise noted, each shareholder’s address
      is c/o iCurie, Inc., 1395 Brickell Avenue, Suite 800, Miami, Florida, 33131.
      See
      Item 5 “Market for Common Equity and Related Stockholder Matters and Small
      Business Issuer Purchases of Equity Securities” for certain information
      regarding our equity compensation plan.




**NON-MANAGEMENT
      BENEFICIAL HOLDERS**




Name
                And Address
              Of
                Beneficial Owners
            Shares
                of
              Common
                Stock
            Percentage
                as of
              March
                20, 2005Hansen
                Gray & Company, Inc.
              6100
                Neil Road, Suite 500
              Reno,
                Nevada 89511
            8,629,376
            29.44%CHL
                Investment Partnership
              475-1
                Gwachundong, Gwachun Shi,
              Gyeong
                Gi Do,
              Republic
                of Korea 427-080
            2,493,505
            8.51%Gryphon
                Master Fund, LP(1)
              100
                Crescent Court, Suite 475
              Dallas,
                Texas 75201
            3,409,092
            10.42%Invision
                Company Ltd.(2)
              CPG
                Primatrust SA, 12, rue de Saint-Victor
              1206
                Geneva, Switzerland
            3,750,000
            11.34%GSSF
                Master Fund, LP(3)
              100
                Crescent Court, Suite 475
              Dallas,
                Texas 75201
            2,025,089
            6.46%








**OFFICERS
      AND DIRECTORS**




Name
                And Address
              Of
                Executive Officers
            
            
            Shares
                of
              Common
                Stock
            
            
            Percentage
                as of
              March
                20, 2005Jeong
                Hyun Lee, Ph.D.(4)
            
            
            12,908,412
            
            
            42.14
            %Hakan
                Wretsell(5)
            
            
            1,961,361
            
            
            6.64
            %Michael
                Karpheden(6)
            
            
            1,236,365
            
            
            4.19
            %Greg
                Osborn(7)
            
            
            361,262
            
            
            1.22
            %Peter
                Rugg(8)
            
            
            144,409
            
            
            0.49
            %David
                Clarke(9)
            
            
            75,000
            
            
            0.26
            %Alan
                Miller(10)
            
            
            75,000
            
            
            0.26
            %Officers
                and Directors as a Group(11)
            
            
            16,761,809
            
            
            52.99
            %









(1)
            Includes 2,727,274 shares of Series
              A
              Preferred Stock and warrants to purchase 681,818 shares of common
              stock.(2)
            Includes 3,000,000 shares of Series
              B
              Preferred Stock and warrants to purchase 750,00 shares of common
              stock.(3)
            Includes 1,533,029 shares of Series
              A
              Preferred Stock and warrants to purchase 472,060 shares of common
              stock.(4)
            Includes (i) 11,563,587 shares of common
              stock (including 490,169 shares subject to vesting and forfeiture),
              (ii)
              options to acquire 217,853 shares of common stock which will be
              exercisable within sixty (60) days, and (iii) warrants to purchase
              1,097,142 shares of common stock. Dr. Lee is also the sole general
              partner
              of CHL Investment Partnership, and may be deemed to beneficially own
              the
              shares held by such entity.(5)
            Includes (i) 1,743,508 shares of common
              stock
              (including 571,864 shares subject to vesting and forfeiture) and (ii)
              options to acquire 217,853 shares of common stock which will be
              exercisable within sixty (60) days.(6)
            Includes (i) 1,018,512 shares of common
              stock
              (including 939,491405,801 shares subject to vesting and forfeiture)
              and
              (ii) options to acquire 217,853 shares of common stock which will be
              exercisable within sixty (60) days.(7)
            Includes (i) 74,805 shares of common
              stock,
              (ii) 189,393 shares of Series A Preferred Stock, and (iii) warrants
              to
              purchase 97,064 shares of common stock. Mr. Osborn is a Managing Partner
              of Indigo Ventures LLC, which beneficially owns 1,115,843 shares of
              our
              common stock (which includes warrants to purchase 352,578 shares of
              common
              stock and 763,265 shares of Preferred Stock).(8)
            Includes (i) 14,961 shares of common
              stock,
              (ii) 37,878 shares of Series A Preferred Stock, (iii) options to acquire
              75,000 shares of common stock which will be exercisable within sixty
              (60)
              days and (iv) warrants to purchase 16,570 shares of common
              stock.(9)
            Includes options to acquire 75,000 shares
              of
              common stock which will be exercisable within sixty (60) days. Mr.
              Clarke
              is affiliated with GSB Holdings, Inc., which beneficially owns 416,469
              shares of our common stock (which includes (i) 89,766 shares of common
              stock, (ii) 227,272 shares of Series A Preferred Stock, and (iii) warrants
              to purchase 99,431 shares of common stock).(10)
            Includes options to acquire 75,000 shares
              of
              common stock which will be exercisable within sixty (60) days. Mr.
              Miller
              is a director of Hansen Gray & Company, Inc., a significant
              shareholder of the Company, as reported
              above.




28




**Item
              12.**
            **Certain
                Relationships and Related
                Transactions**




In
      connection with the acquisition of iCurie Lab, Inc. and its intellectual
      property in 2004, iCurie UK agreed to pay CHL Investment Partnership and Hansen
      Gray a royalty fee equal to two percent (2%) of Company revenues over $25
      million, up to an aggregate royalty of $50 million. CHL Investment Partnership
      receives fifty-seven percent (57%) and Hansen Gray receives forty-three percent
      (43%) of such royalty. This arrangement is documented in a Revenue Share
      Agreement dated as of May 18, 2005. At the closing of the Series A Offering,
      Hansen Gray received a cash advancement of $500,000 against its right to receive
      these royalty payments from us.




As
      discussed above in Item 1 “Description of Business - Financing Activities,” Dr.
      Lee issued a promissory note for $1,100,000 to iCurie Bridge Funding, LLC,
      an
      affiliate of the HG Noteholders, in 2004. Pursuant to the Preferred Stock
      Purchase Agreement, iCurie Bridge Funding LLC transferred this note to us in
      exchange for 1,667,000 shares of Series A Preferred Stock (reflecting an
      approximate twenty-five percent (25%) discount from the per share cash offering
      price of $0.88 per share). The Company and Dr. Lee then entered into an
      agreement to, and did, cancel this promissory note in exchange for the transfer
      of 1,250,000 of Dr. Lee’s shares of our common stock to us (valued at $0.88 per
      share). This $1,100,000 note constitutes a portion of the $4,600,000 Note
      conversion referred to in this report.




As
      discussed above in Item 1 “Description of Business - Financing Activities,”
Hansen Gray issued the $2,500,000 of HG Notes to the HG Noteholders in 2004.
      Pursuant to the Preferred Stock Purchase Agreement, the HG Noteholders
      transferred their notes to us in exchange for approximately 3,787,863 shares
      of
      Series A Preferred Stock (reflecting an approximate twenty-five percent (25%)
      discount from the per share cash offering price of $0.88 per share). Hansen
      Gray
      then entered into an agreement with us pursuant to which: (i) Hansen Gray
      cancelled an outstanding note of $1,500,000 previously issued by iCurie UK
      to
      Hansen Gray; (ii) we paid an advance of $500,000 to Hansen Gray from amounts
      payable in the future to Hansen Gray under the Revenue Share Agreement; (iii)
      Hansen Gary executed a $1,500,000 debenture in favor of the Company; and (iv)
      secured its obligation under such debenture by its right to receive payments
      under the Revenue Share Agreement. The $2,500,000 in HG Notes, Dr. Lee’s
      $1,100,000 note and the $1,000,000 in 2005 Notes constitute the $4,600,000
      Note
      conversion referred to elsewhere in this report.




iCurie
      UK
      owns 527,000 common shares of Hansen Gray, and Hakan Wretsell and Michael
      Karpheden each own 25,000 common shares and warrants to purchase 129,167 common
      shares of Hansen Gray (which amounts, in the aggregate, represent approximately
      one and a half percent (1.5%) of Hansen Gray’s common shares on a fully diluted
      basis). Dr. Lee owns 2,000,000 common shares of Hansen Gray (which amounts
      to
      approximately 3.33% of Hansen Gray’s common shares on a fully diluted
      basis).




Dr.
      Lee
      held an option exercisable for 440,000 shares of iCurie UK common stock, which
      was converted at the closing of the Series A Offering into a warrant exercisable
      for 1,097,142 shares of our common stock at an exercise price of $1.09 per
      share.




Mr.
      Wretsell, Mr. Karpheden and Dr. Lee were owed aggregate earned but unpaid
      salaries of $60,414, $45,417 and $120,248, respectively, which was paid at
      the
      closing of the Series A Offering. Approximately fifty percent (50%) of these
      amounts were paid in cash and fifty percent (50%) in shares of common stock
      (valued at $0.88 per share solely for such compensation purposes and without
      regard to fair market value).




29





As
      reported in our 8-K dated August 26, 2005 and filed with the SEC on September
      1,
      2005, iCurie UK acquired from Mr. Won Gyu Moon the 54,619 shares of common
      stock
      of iCurie Lab, Inc. (approximately 19.8% of iCurie Lab’s common stock) not
      previously owned by iCurie UK. The purchase price for the shares was
      2,046,638,345 KWON (approximately $1.99 million), plus an amount equal to
      certain transfer taxes in an aggregate amount of approximately 31,009,147 KWON
      (approximately $30,000), for a total amount payable by us of 2,077,647,492
      KWON
      (approximately $2.02 million). Mr. Moon agreed to acquire the iCurie Lab, Inc.
      shares from Ms. Il Han Kim, the wife of Dr. Lee. Ms. Kim in turn agreed to
      acquire the shares from 14 individuals and entities (the “Minority
      Shareholders”). The transactions between (i) iCurie UK and Mr. Moon, (ii) Mr.
      Moon and Ms. Kim, and (iii) Ms. Kim and the Minority Shareholders were
      consummated in one closing process, and neither Mr. Moon nor Ms. Kim realized
      any profit or received any commission or other form of remuneration in
      connection with the transactions, although iCurie UK agreed to reimburse such
      individuals for transfer taxes in the amount referred to above.





Indigo
      Ventures LLC, where Greg Osborn is a managing partner, receives a monthly fee
      of
      $15,000 for consulting services.




**Item
              13.**
            **Exhibits**




A
      list of
      exhibits filed herewith is contained in the exhibit index that immediately
      precedes such exhibits and is incorporated herein by reference.





**Item
              14.**
            **Principal
                Accountant Fees and
                Services**




***Audit
      Fees***





The
      aggregate fees billed for professional services rendered by our principal
      accountant for the audit of the Company’s annual financial statements and review
      of the financial statements included in the Company’s Forms 10-QSB or services
      that are normally provided by the accountant in connection with statutory and
      regulatory filings or engagements for fiscal years 2005 and 2004 were $85,250
      and $44,700 respectively.





***Audit
      Related Fees***





The
      aggregate fees billed for assurance and related services by our principal
      accountant that are reasonably related to the performance of the audit or review
      of our financial statements, other than those previously reported in this Item
      14, for the fiscal years ended December 31, 2005 and 2004 were $56,450 and
      $0,
      respectively.





***Tax
      Fees***





The
      aggregate fees billed for professional services rendered by our principal
      accountant for tax compliance, tax advice and tax planning for the fiscal years
      ended December 31, 2005 and 2004 were $0 and $0, respectively.




***All
        Other Fees***
 
 The
        aggregate fees billed for products and services provided by the principal
        accountant, other than those previously in this Item 14, for the fiscal years
        ended December 31, 2005 and 2004 were $0 and $0, respectively.
 
 ***Board
        of Directors/Audit Committee***
 
 It
        is the
        policy of the Company for all work performed by our principal accountant
        to be
        approved in advance by the Board of Directors. All of the services described
        above in this Item 14 were approved in advance by our Board of Directors.
        In
        August 2005, the Board formed an audit committee which will approve all future
        services.




30




**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**iCURIE,
                INC.**Date:
                March29,
                2006
            By:
            /s/
                Hakan
                WretsellHakan
                Wretsell, President and Chief
              Executive
                Officer (Principal Executive Officer)Date:
                March29,
                2006
            By:
            /s/
                Michael
                KarphedenMichael
                Karpheden, Chief Financial Officer (Principal Financial and Accounting
                Officer)


In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.




Signature
            Title
            
            Date/s/
                Hakan Wretsell*
              Hakan
                Wretsell
            President,
                Chief Executive Officer and Director
            
            March29,
                  2006/s/
                Dr. Jeong Hyun Lee*
              Dr.
                Jeong Hyun Lee, Ph.D.
            Chief
                Technology Officer and Director
            
            March29,
                  2006/s/
                Alan B. Miller*
              Alan
                B. Miller
            Director
            
            March29,
                  2006/s/
                David H. Clarke*
              David
                H. Clarke
            Director
            
            March29,
                  2006/s/
                Peter Rugg*
              Peter
                Rugg
            Director
            
            March29,
                  2006/s/
                Gregory Osborn*
              Gregory
                Osborn
            Director
            
            March29,
                  2006*
                By:/s/
                Michael Karpheden
              Michael
                Karpheden
            Individually
                and as Attorney-in-Fact
            
            March29,
                2006







32





**Supplemental
      Information to be Furnished With Reports Filed Pursuant to Section 15(d) of
      the
      Exchange Act By Non-reporting Issuers:**




No
      annual
      report or proxy material has been sent to security holders of the Company.
      If
      such report or proxy material is furnished to security holders subsequent to
      the
      filing of the annual report on this Form, the registrant shall furnish copies
      of
      such material to the Commission when it is sent to security
      holders.




33




**EXHIBIT
      INDEX**


**Exhibit
                  No.**
              **Description**2.1*
              Share
                  Exchange Agreement dated July 8, 2005, by and among Cedar Mountain
                  Distributors, Inc. and the shareholders of iCurie Lab Holdings
                  Limited.2.2*
              Form
                  of Subscription Agreement entered into between iCurie, Inc. and
                  cash
                  purchasers of Series A Preferred Stock.2.3*
              Preferred
                  Stock Purchase Agreement dated July 11, 2005, by and among iCurie,
                  Inc.
                  and purchasers of Series A Preferred Stock exchanging promissory
                  notes
                  therefor.2.4*
              Share
                  Transfer Agreement dated August 26, 2005, by and between iCurie
                  Lab
                  Holdings Limited and Mr. Won Gyu Moon.2.5
              Form
                  of Subscription Agreement entered into between iCurie, Inc. and
                  purchasers
                  of Series B Preferred Stock.3(i).1
              Amended
                  and Restated Articles of Incorporation of iCurie, Inc. (incorporated
                  by
                  reference to Exhibit 3(i).1 to iCurie, Inc.’s Quarterly Report on Form
                  10-QSB for the quarterly period ended June 30, 2005).3(i).2
              Certificate
                  of Designation to Amended and Restated Articles of Incorporation
                  of
                  iCurie, Inc.3(ii).1
              Amended
                  and Restated Bylaws of iCurie, Inc. (Incorporated by reference
                  to Exhibit
                  3(ii).1 to iCurie, Inc.’s Quarterly Report on Form 10-QSB for the
                  quarterly period ended June 30, 2005).4.4*
              Form
                  of Warrant issued to Placement Agents (for common stock, Series
                  A
                  Preferred Stock and Series B Preferred Stock).4.5*
              Form
                  of $0.88 Warrants issued to purchasers of Series A Preferred
                  Stock.4.6*
              Form
                  of $1.10 and $1.32 Warrants issued to purchasers of Series A Preferred
                  Stock and $1.50 and $3.00 Warrants issued to purchasers of Series
                  B
                  Preferred Stock.4.7*
              Warrant
                  dated July 11, 2005 between iCurie, Inc. and Dr. Jeong Hyun Lee,
                  Ph.D.4.8*+
              iCurie,
                  Inc. 2005 Stock Incentive Plan.4.9*+
              Form
                  of Option Grant under iCurie, Inc. 2005 Stock Incentive
                  Plan.4.10*+
              Form
                  of Restricted Stock Grant under iCurie, Inc. 2005 Stock Option
                  Incentive
                  Plan.
  34
  10.1*
              Registration
                  Rights Agreement dated July 11, 2005 by and among iCurie, Inc.
                  and certain
                  holders of iCurie, Inc. securities.10.2*
              Placement
                  Agent Agreement dated March 17, 2005 by and among Axiom Capital
                  Management
                  Inc., Indigo Securities, LLC, and iCurie Lab Holdings Limited (the
                  “Placement Agent Agreement”).10.3*
              Extension
                  of Placement Agent Agreement dated May 20, 2005 by and among the
                  parties
                  to the Placement Agent Agreement.10.4*
              Lock-Up
                  and Leak-Out Agreement dated July 11, 2005 by and among iCurie,
                  Inc.,
                  Hakan Wretsell, Michael Karpheden, Dr. Jeong Hyun Lee,
                  Ph.D.10.5*+
              Employment
                  Agreement dated July 11, 2005 by and between iCurie Lab Holdings
                  Limited
                  and Hakan Wretsell.10.6*+
              Employment
                  Agreement dated July 11, 2005 by and between iCurie Lab Holdings
                  Limited
                  and Michael Karpheden.10.7*+
              Employment
                  Agreement dated July 11, 2005 by and among iCurie Lab Holdings
                  Limited,
                  iCurie Lab, Inc. and Dr. Jeong Hyun Lee, Ph.D.10.8*
              Revenue
                  Share Agreement dated May 18, 2005 by and among iCurie Lab Holdings
                  Limited Hansen Gray & Company, Inc. and CHL Investment
                  Partnership.10.9*
              Securities
                  Purchase Agreement dated July 11, 2005 by and between iCurie, Inc.
                  and
                  Hansen Gray & Company, Inc.10.10*
              Note
                  Cancellation Agreement dated July 11, 2005 by and between iCurie,
                  Inc. and
                  Dr. Jeong Hyun Lee, Ph.D.10.11*
              Indemnification
                  Agreement dated July 11, 2005 by and between iCurie, Inc. and Dr.
                  Jeong
                  Hyun Lee, Ph.D.10.12
              Registration
                  Rights Agreement dated December 16, 2005 by and among iCurie, Inc.,
                  holders of Series B Preferred Stock and certain other
                  parties.10.13
              Patent
                  License and Sales Exclusivity Agreement dated November 9, 2005
                  by and
                  between iCurie Lab Holdings, Ltd. and Asia Vital Components Co.,
                  Ltd.14
              Code
                  of Ethics21
              Subsidiaries
                  of iCurie, Inc.24
              Power
                  of Attorney.31.1
              Certification
                  of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.
  35
  31.2
              Certification
                  of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.32.1
              Certification
                  of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.32.2
              Certification
                  of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.




_______________


***** Included
      as an exhibit to the Company’s Registration Statement on Form SB-2 (SEC File No.
      333−127193), filed with the SEC on October 6, 2005.





+
      Represents a management contract or compensatory plan or
      arrangement.




36


**INDEX
        TO FINANCIAL STATEMENTS**
  **iCurie,
        Inc. and Subsidiaries**
 **Consolidated
        Financial Statements**
 **Years
        Ended December 31, 2005 and 2004**
 
 Page**Report
                  of Independent Registered Public Accounting Firm**
              F-1**Financial
                  Statements:**Consolidated
                  Balance Sheet as of December 31, 2005
              F-2Consolidated
                  Statements of Operations for the years ended December 31, 2005
                  and
                  2004
              F-3Consolidated
                  Statement of Stockholders' Equity for the years ended December
                  31, 2005
                  and 2004
              F-4Consolidated
                  Statements of Cash Flows for the years ended December 31, 2005
                  and
                  2004
              F-5Notes
                  to Consolidated Financial Statements
              F-6-14




Report
      of Independent Registered Public Accounting Firm


To
        the
        Board of Directors and Stockholders of
 iCurie,
        Inc.
 
 We
        have
        audited the consolidated balance sheet of iCurie, Inc. as of December 31,
        2005,
        and the related consolidated statements of operations, stockholder’s equity
        (deficit) and cash flows for the years ended December 31, 2005 and 2004.
        These
        financial statements are the responsibility of the Company's management.
        Our
        responsibility is to express an opinion on these financial statements based
        on
        our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States) . Those standards require that
        we
        plan and perform the audit to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements. An audit also includes assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of iCurie, Inc. at December
        31,
        2005, and the results of their operations and their cash flows for the years
        ended December 31, 2005 and 2004 in conformity with accounting principles
        generally accepted in the United States of America.
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As described in note 1, at December 31, 2005
        the
        Company and its subsidiaries have commenced limited revenue producing operations
        and have an accumulated deficit of $13,641,589. These conditions raise
        substantial doubt about the Company’s ability to continue as a going concern.
        The consolidated financial statements do not include any adjustments that
        might
        result from the outcome of this uncertainty. Management has raised in excess
        of
        $15 million by issuing preferred stock during 2005 and at December 31, 2005
        has
        cash on hand approximating $6 million. Management’s plans in regard to its
        future operations are also discussed in note 1.
  **PKF**Certified
                  Public Accountants
                A
                  Professional CorporationMarch
                  7, 2006
                New
                  York, NY
  F-1




iCurie,
                    Inc. and SubsidiariesConsolidated
                    Balance Sheetas
                    of December 31, 2005(US
                    Dollars)
  AssetsCurrent
                AssetsCash
                  and cash equivalents
              
              $
              6,009,966Receivable
              
              
              95,569Advance
                  payments
              
              
              124,945Prepaid
                  expenses
              
              
              39,000Other
              
              
              165Total
                  current assets
              
              
              6,269,645Guarantee
                deposits
              
              
              127,376Investment
                (note 1)
              
              
              110,670Furniture
                and equipment, net (note 1)
              
              
              633,282Royalty
                Advance (note 3)
              
              
              500,000Total
                  assets
              
              
              7,640,973Liabilities
                and Stockholders' EquityCurrent
                LiabilitiesAccounts
                  payable
              
              $
              455,052Short-term
                  borrowings (note 5)
              
              
              231,683Accrued
                  expensesRegistration
                  Rights (note 3)
              
              
              923,790Payroll
                  and Related
              
              
              264,279Other
              
              
              97,411Other
              
              
              27,075Total
                  current liabilities
              
              
              1,999,290Bond
                payable (note 6)
              
              
              259,885Total
                  liabilities
              
              
              2,259,175Stockholders'
                equity (note 4)Preferred
                  Stock, Series A; $.001 par value; 30,000,000 shares authorized;
                  20,995,239
                  issued & outstanding
              
              
              20,995Preferred
                  Stock, Series B; $.001 par value; 7,000,000 shares authorized;
                  3,063,402
                  issued & outstanding
              
              
              3,063Common stock;
                  $.001 par value; 150,000,000 shares authorized; 29,316,035 issued
&
                  outstanding
              
              
              29,317Common
                  stock Subscribed
              
              
              167Additional
                  paid-in-capital
              
              
              19,161,937Other
                  comprehensive loss
              
              
              (77,432
              )Unearned
                  Compensation
              
              
              (114,660
              )Accumulated
                  (deficit)
              
              
              (13,641,589
              )Total
                  stockholders' equity
              
              
              5,381,798Total
                  liabilities and stockholders' equity
              
              $
              7,640,973




See
                  notes to consolidated financial statements








F-2




iCurie,
                  Inc. and SubsidiariesConsolidated
                  Statements of OperationsFor
                  the years ended December 31, 2005 and 2004(US
                  Dollars)
     Years
                  Ended December
                  31,2005
              
              
              2004Revenue
              
              $
              19,132
              
              $
              -Costs
                  and expensesCost
                  of Sales
              
              
              124,957
              
              
              -Selling
                  and Administrative expenses
              
              
              6,362,542
              
              
              2,710,629Depreciation
              
              
              95,287
              
              
              48,282Amortization
                  of deferred financing cost (note 1)
              
              
              311,323
              
              
              18,083Miscellaneous
              
              
              26,141
              
              
              6,965Total
                  costs and expenses
              
              
              6,920,250
              
              
              2,783,959Operating
                  (loss)
              
              
              (6,901,118
              )
              
              (2,783,959
              )Other
                  income (expenses)Loss
                  on Investment (note 1)
              
              
              (105,903
              )
              
              -Loss
                  from Impairment of Intangible Asset
              
              
              -
              
              
              (10,285
              )Net
                  Loss on Disposal of furniture and equipment
              
              
              -
              
              
              (262
              )Interest
                  and other income
              
              
              100,324
              
              
              14,607Interest
                  expense (notes 4, 5 and 6)
              
              
              (266,781
              )
              
              (129,054
              )Total
                  other income (expenses)
              
              
              (272,360
              )
              
              (124,994
              )Net
                  (loss)
              
              $
              (7,173,478
              )
              $
              (2,908,953
              )Dividend
                  on Series A Preferred Stock (Note 4)
              
              $
              (651,489
              )
              $
              -Net
                  Loss Attributable to Common Shareholders
              
              $
              (7,824,967
              )
              $
              (2,908,953
              )Net
                  Loss per Share:Basic
                  and Diluted
              
              $
              (0.29
              )
              $
              (0.12
              )Weighted
                  Average Shares OutstandingBasic
                  and Diluted
              
              
              26,954,611
              
              
              24,935,047See
                  notes to consolidated financial statements




F-3




iCurie,
                  Inc. and SubsidiariesConsolidated
                  Statement of Stockholders' Equityfor
                  the Years Ended December 31, 2005 and
                  2004
  Common
                  & Preferred Stock
              
              
              Additional
                  Paid-in Capital
              
              
              Common
                  Stock Subscribed
              
              
              Offering
                  Costs
              
              
              Unearned
                  StockCompensation
              
              
              
              Other
                  Comprehensive Income (Loss)
              
              
              Accumulated
                  (Deficit)
              
              
              TotalBalance
                  @ December 31, 2003
              
              $
              1,332,746
              
              $
              1,256,381
              
              $
              -
              
              $
              -
              
              $
              -
              
              
              $
              -
              
              $
              (3,559,158
              )
              $
              (970,031
              )Recapitalization
                  of Korean Subsidiary
              
              
              (1,332,745
              )
              
              1,222,102
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              (110,643
              )Capital
                  stock subscribed
              
              
              -
              
              
              -
              
              
              3,000,000
              
              
              (258,813
              )
              
              -
              
              
              
              -
              
              
              -
              
              
              2,741,187Foreign
                  currency translation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              
              (53,355
              )
              
              -
              
              
              (53,355
              )Net
                  loss for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              (2,908,953
              )
              
              (2,908,953
              )Balance
                  @ December 31, 2004
              
              $
              1
              
              $
              2,478,483
              
              $
              3,000,000
              
              $
              (258,813
              )
              $
              -
              
              
              $
              (53,355
              )
              $
              (6,468,111
              )
              $
              (1,301,795
              )Capital
                  stock subscribed
              
              
              1,631,631
              
              
              1,220,199
              
              
              (3,000,000
              )
              
              258,813
              
              
              -
              
              
              
              -
              
              
              -
              
              
              110,643Debt
                  beneficial conversion feature
              
              
              -
              
              
              192,959
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              192,959Effects
                  of July Recapitalization
              
              
              (1,606,596
              )
              
              1,641,440
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              34,844Issued
                  Preferred stock, series A
              
              
              20,995
              
              
              10,454,336
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              10,475,331Issued
                  Preferred stock, series B
              
              
              3,063
              
              
              2,835,457
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              -
              
              
              2,838,520Stock
                  compensation (common)
              
              
              4,281
              
              
              339,063
              
              
              167
              
              
              -
              
              
              (114,660
              )
              
              
              -
              
              
              -
              
              
              228,851Foreign
                  currency translation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              
              (24,077
              )
              
              -
              
              
              (24,077
              )Net
                  loss for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              
              -
              
              
              (7,173,478
              )
              
              (7,173,478
              )Balance
                  @ December 31, 2005
              
              $
              53,375
              
              $
              19,161,937
              
              $
              167
              
              $
              -
              
              $
              (114,660
              )
              
              $
              (77,432
              )
              $
              (13,641,589
              )
              $
              5,381,798




See
                  notes to consolidated financial
                  statements


F-4




iCurie,
                  Inc. and SubsidiariesConsolidated
                  Statements of Cash Flowsfor
                  the Years Ended December 31, 2005 and 2004(US
                  Dollars)
  2005
              
              
              2004Cash
                  flows from operating activities:Net
                  (loss)
              
              $
              (7,173,478
              )
              $
              (2,908,953
              )Adjustments
                  to reconcile net (loss) to net cash (used)by
                  operating activities:Depreciation
              
              
              95,287
              
              
              48,282Amortization
              
              
              311,323
              
              
              18,083Beneficial
                  conversion feature on long-term debt
              
              
              192,959
              
              
              -Loss
                  on Investment
              
              
              105,903
              
              
              -Finders
                  Fee Settlement
              
              
              38,219
              
              
              -Amortization
                  of Deferred Compensation
              
              
              228,851
              
              
              -Loss
                  on Disposal of Furniture and Equipment
              
              
              -
              
              
              262Impairment
                  Charge
              
              
              -
              
              
              10,285Imputed
                  interest
              
              
              (18,036
              )
              
              15,738Changes
                  to certain other accounts:Receivable
              
              
              (58,570
              )
              
              (50,198
              )Advance
                  payments
              
              
              (79,919
              )
              
              (22,293
              )Prepaid
                  expenses
              
              
              (34,238
              )
              
              (18,979
              )Royalty
                  Advance
              
              
              (500,000
              )
              
              -Accounts
                  payable
              
              
              160,486
              
              
              77,154Accrued
                  expenses
              
              
              730,124
              
              
              537,227Other
              
              
              28,642
              
              
              (38,353
              )Net
                  cash (used) by operating activities
              
              
              (5,972,447
              )
              
              (2,331,745
              )Cash
                  flows from investing activities:Acquisition
                  of subsidiary
              
              
              (2,025,344
              )
              
              (110,643
              )Short-term
                  loan
              
              
              -
              
              
              144,720Deposits
              
              
              (78,270
              )
              
              57,965Acquisition
                  of short-term financial instrument
              
              
              19,322
              
              
              (19,322
              )Repayment
                  of long-term loans
              
              
              -
              
              
              (161,530
              )Guarantee
                  deposits
              
              
              -
              
              
              (49,106
              )Other
              
              
              -
              
              
              937Purchase
                  of furniture and equipment
              
              
              (551,948
              )
              
              (127,782
              )Net
                  cash (used) by investing activities
              
              
              (2,636,240
              )
              
              (264,761
              )Cash
                  flows from financing activities:Short-term
                  borrowings
              
              
              -
              
              
              769,868Long-term
                  borrowings
              
              
              1,003,162
              
              
              1,500,000Deferred
                  financing fees
              
              
              (100,000
              )
              
              (229,406
              )Issuance
                  of common stock
              
              
              -
              
              
              386,437Repurchase
                  of common stock
              
              
              (214,000
              )
              
              -Proceeds
                  from the issuance of preferred series A stock
              
              
              12,482,865
              
              
              -Proceeds
                  from the issuance of preferred series B stock
              
              
              3,063,402
              
              
              -Proceeds
                  from subscribed equity
              
              
              -
              
              
              2,745,208Repayment
                  of short-term borrowings
              
              
              (408,826
              )
              
              (1,158,873
              )Repayment
                  of convertible bond
              
              
              7,203
              
              
              (289,827
              )Offering
                  costs
              
              
              (2,234,197
              )
              
              (258,813
              )Net
                  cash provided by financing activities
              
              
              13,599,609
              
              
              3,464,594Net
                  increase in cash and cash equivalents
              
              
              4,990,922
              
              
              868,088Cash
                  and cash equivalents - beginning of year
              
              
              1,019,044
              
              
              150,956Cash
                  and cash equivalents - end of year
              
              $
              6,009,966
              
              $
              1,019,044Supplemental
                  cash flow disclosureNoncash
                  financing activityDuring
                  2005 the Company recorded a beneficial preferredstock
                  conversion feature on certain Long-term debt(see
                  Note 4)
              
              $
              192,959
              
              $
              -During
                  2005 the Company recorded deferred stockcompensation
                  arrangements for certain employees anddirectors
              
              $
              343,512
              
              $
              -During
                  2005 the Company converted debt issued by theUK
                  subsidiary into Preferred Stock in the US Parent
              
              $
              2,500,000
              
              $
              -During
                  2005 the Company converted equity issued by theUK
                  subsidiary into Preferred Stock in the US Parent
              
              $
              1,000,000
              
              $
              -During
                  2005 the Company converted a personal promissorynote,
                  collateralized by the Company's Common Stock, intoPreferred
                  Stock in the US Parent
              
              $
              1,100,000
              
              $
              -During
                  2004 the Company subscribed Common Stock
              
              $
              -
              
              $
              254,972in
                  exchange for an investmentCash
                  paid during the year for interest
              
              $
              43,562
              
              $
              97,719See
                  notes to consolidated financial statements




F-5




iCurie,
        Inc. and Subsidiaries Notes to Consolidated Financial Statements December
        31, 2005
  **Note
        1 - Summary of significant accounting policies**
  **Organization**
  iCurie,
        Inc.'s (the "Company" or "iCurie") operations consist of research, development,
        and commercialization of next-generation cooling solutions. The Company was
        founded in 2000 to address the emerging heat problem that now threatens the
        development of higher-performing microelectronic products. iCurie anticipates
        to
        be the first Company to take this innovative thermal management technology
        from
        the laboratory to high volume manufacturing, and operate as both a licensor
        of
        the technology and a vertically integrated provider of customized
        applications.
  The
        Company's corporate headquarters is located in Miami, USA with subsidiaries
        in
        London, United Kingdom and Seoul, South Korea. Our Design and Manufacturing
        operations are based in Seoul. Our patented NanoSpreadersTM are a completely new
        alternative to conventional cooling devices. By utilizing a nano scale
        environment, the laws of physics are manipulated enabling our cooling technology
        to be thinner, lighter and deliver significantly higher thermal conductivity
        (heat transfer capacity) versus conventional options such as Heat Pipes.
        And, we
        can supply our plate-shaped heat spreaders in virtually any shape that a
        design
        engineer requires. As a result, customers are able to achieve unsurpassed
        product performance without trading off size, weight or cost
        considerations.
  On
        July
        8, 2005, Cedar Mountain Distributors, Inc. ("Cedar Mountain") entered into
        a
        Share Exchange Agreement (the "Share Exchange") with the shareholders of
        iCurie
        Lab Holdings Limited ("iCurie UK" or "Subsidiary") and certain additional
        parties (see Note 4). At the time of the Share Exchange, Cedar Mountain was
        a
        "public shell" company with no material operations. iCurie Lab Holdings Limited
        was incorporated in the United Kingdom on March 16, 2004, with the principal
        activity being the acquisition of intellectual property for the purpose of
        commercial exploitation.
  In
        2004,
        iCurie UK purchased an 80.2% interest in iCurie Lab Inc. ("iCurie Korea"
        or
        "Subsidiary"), a Korean Company incorporated on June 13, 2000, under the
        Commercial Code of South Korea. The operations of iCurie Korea include research
        and development, manufacturing, and sales of micro cooling systems using
        electronic technology. The remaining 19.8% of iCurie Korea was acquired in
        September 2005 resulting in iCurie Korea becoming a wholly owned subsidiary.
        During 2004, the intellectual property for the micro cooling system was
        transferred from iCurie Korea to iCurie UK.
  As
        a
        result of the Share Exchange, the shareholders of iCurie UK became the
        controlling shareholders of Cedar Mountain, and iCurie UK became a wholly-owned
        subsidiary of Cedar Mountain. Concurrent with the share exchange, Cedar Mountain
        changed its name to iCurie, Inc. The share exchange was treated similar to
        a
        "reverse acquisition," with Cedar Mountain being the legal acquirer and iCurie
        UK being considered the accounting acquirer (see Note 4). The historical
        financial statements of iCurie UK have become the historical financial
        statements of the Company. Subsequent to the Share Exchange, the financial
        statements include the consolidated financial position and results of operations
        of iCurie US, iCurie UK, and iCurie Korea.
  Through
        December 31, 2005, the operations of the Company and its Subsidiaries have
        included the development, certification of intellectual property, production
        and
        sale of samples. The Company opened its manufacturing facility in Seoul,
        Korea
        in October 2005.
  In
        consolidation, all significant intercompany balances and transactions have
        been
        eliminated.
  F-6
  **Financial
        reporting**
  The
        Company prepares its financial statements in conformity with accounting
        principles generally accepted in the United States of America, which require
        management to make estimates and assumptions that affect the reported amounts
        in
        the financial statements. Although these statements are based on management's
        best knowledge of current events and actions that the Company may undertake
        in
        the future, actual results could differ from those estimates.
  Significant
        estimates required to be made by management include the valuation of 1)
        investments, 2) equity securities issued, 3) beneficial conversion features
        embedded in securities, and 4) registration rights.
  **Going
        Concern**
  The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern, which contemplates the realization of assets
        and
        satisfaction of liabilities in the normal course of business. The Company
        and
        its Subsidiaries have recently commenced limited revenue producing operations
        and have sustained accumulated losses since inception of approximately $13.6
        million. The Company and its Subsidiaries have funded operations through
        equity
        and debt financing since inception. All these factors raise substantial doubt
        over the Company's ability to continue as a going concern.
  On
        July
        11, 2005, the Company received approximately $12.48 million in gross proceeds
        through a preferred stock offering made in conjunction with the Share Exchange
        Agreement with Cedar Mountain Distributors, Inc. On December 16, 2005, the
        Company received approximately $3.06 million in gross proceeds through a
        preferred stock series B offering. Management shall use the funds to
        commercialize its intellectual property and to execute its growth strategies.
        Furthermore, the Company has used the funds to pay off certain
        debts.
  **Cash
        and Cash Equivalents**
  Cash
        and
        cash equivalents include all cash balances and highly liquid investments,
        including time deposits, which are readily convertible into known amounts
        of
        cash and have an original maturity of three months or less. The Company and
        its
        Subsidiary's cash and cash equivalents are maintained in banks and financial
        institutions in the United States, United Kingdom and South Korea, and they
        have
        not experienced any losses on their cash balances.
  **Investment**
  In
        December 2004, iCurie UK received 620,000 shares of an entity affiliated
        through
        common management in connection with $3,000,000 of equity financing. In July
        2005, the Company disposed of 93,000 shares valued at $38,219 as part of
        a
        finders fee settlement. The remaining 527,000 shares have been valued by
        management at $110,670 which is management's estimate of its fair value based
        on
        the stock price of the entity at December 31, 2005. iCurie UK has recorded
        a
        realized loss in the investment totaling $105,903 during the year ended December
        31, 2005.
  **Revenue
        recognition**
  The
        Company's policy is to record revenue as earned when the following attributes
        are met.
 -  Persuasive
        evidence of a sale arrangement exists.
 -  Delivery
        has occurred to the customers.
 -  The
        sales
        price to the customer is fixed or determinable.
 -  Collection
        is reasonably assured.
  F-7
  **Deferred
        costs**
  In
        connection with obtaining debt and equity financing, iCurie UK incurred
        placement agent fees from a third party equal to 10% of the amount financed.
        The
        placement agent and the Company agreed to defer 2.5% of the 10% fee payable
        in
        2004, until 2005 at completion of fundraising. During 2004, the agent assisted
        in placing $2,500,000 in long-term debt financing and $1,000,000 in equity
        financing. During 2005 the agent assisted in placing $1,000,000 in additional
        long-term debt financing. Deferred financing costs incurred in connection
        with
        long-term financing amounted to $329,406 and were being amortized on a
        straight-line basis over the stated term of the loans. The long-term debt
        financing arrangement has been converted to preferred stock and, therefore,
        the
        Company has no additional financing fees related to this transaction.
        Amortization expense for the year ended December 31, 2005 and 2004 amounted
        to
        $311,323 and $18,083, respectively.
  **Furniture
        and equipment**
  Furniture
        and equipment at December 31, 2005 are summarized as follows:
 Vehicles
                
                $
                49,868Machinery
                
                
                491,622Furniture
                    and fixtures
                
                
                320,116Assets
                    under construction
                
                
                3,382864,988Accumulated
                    depreciation
                
                
                (231,706
                )$
                633,282
  Furniture
        and equipment are stated at cost. Major renewals and betterments, which prolong
        the useful life or enhance the value of assets, are capitalized. Depreciation
        is
        computed using the straight-line method over the estimated life of five years
        for machinery and equipment, furniture and fixtures, and vehicles. Depreciation
        expense for the year ended December 31, 2005 and 2004 amounted to $95,287
        and
        $48,282, respectively.
  **Net
        Loss per Share**
  Basic
        Loss per share is computed by dividing net loss attributable to common
        shareholders for the period by the weighted average number of common shares
        outstanding during the period. Diluted earnings per share is computed by
        dividing net loss by the weighted average number of shares plus the dilutive
        effect of convertible preferred shares and outstanding options and warrants.
        The
        weighted average shares outstanding used in the comparative 2004 periods
        is
        based upon the shares issued by the Company to effect the reverse acquisition.
        Approximately 21 million and 3 million shares to be issued upon conversion
        of
        Series A and Series B, respectively, Preferred Shares were excluded from
        the
        calculation of diluted earnings per share for the year ended December 31,
        2005
        and 2004, respectively, because they were anti-dilutive.
  **Long-lived
        assets**
  Long-lived
        assets are reviewed for impairment whenever events or changes in circumstances
        indicate that the carrying amount of the assets may not be recoverable. When
        the
        aggregate undiscounted future cash flows is less than the carrying value
        of the
        asset, an impairment loss is recognized, based on the fair value of the
        asset.
  **Business
        risks**
  The
        Company is subject to the risks associated with start-up and high growth
        companies such as the risks of raising adequate capital, producing profitable
        operations, and operating in various countries through-out the
        world.
  F-8
  **Research
        and development costs**
  Research
        and development costs are expensed as incurred and amounted to $809,033 and
        $789,641 for the year ended December 31, 2005 and 2004,
        respectively.
  **Foreign
        currency translation**
  The
        reporting and functional currency of iCurie US and UK is the U.S. Dollar,
        while
        the functional currency of iCurie Korea is the Korean Won.
  The
        assets and liabilities of iCurie Korea have been translated into U.S. Dollars
        at
        the prevailing year-end rate of exchange, while the related income and expense
        items were translated at the average rate of exchange during the year. The
        resulting translation adjustments are accumulated in a separate component
        of
        stockholders' equity.
  The
        Company follows Financial Accounting Standards No. 130 (SFAS 130) "Reporting
        Comprehensive Income." SFAS 130 requires a Company to report comprehensive
        income (loss) and its components in a full set of financial statements.
        Comprehensive income (loss) includes the change in equity during a period
        from
        transactions and other events and circumstances from non-owner sources, such
        as
        unrealized gains (losses) on foreign currency translation adjustments. Changes
        in unrealized foreign currency translation gains (losses) during 2005 and
        2004
        amounted to ($24,077) and ($53,355), respectively. Accordingly, comprehensive
        loss for the year ended December 31, 2005 and 2004 amounted to $7,197,555
        and
        $2,962,308, respectively.
  **Fair
        value of financial instruments**
  The
        Company's cash, receivables, accounts payable, short-term debt, and bonds
        payable represent financial instruments whose carrying amounts reasonably
        approximate their fair value.
  **Accounting
        for stock options**
  The
        Company has elected to follow the Accounting Principles Board Opinion No.
        25,
        Accounting for Stock Issued to Employees ("APB 25") and the related
        interpretations in accounting for its employee stock options. Under APB 25,
        because the exercise price of employee stock options equals or exceeds the
        market price of the underlying stock on the date of grant, no compensation
        has
        been recorded. The Company has adopted the disclosure-only provisions of
        Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
        for
        Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for
        Stock-Based Compensation - Transition & Disclosure."
  During
        the year ended December 31, 2005, the Company issued options to acquire
        2,510,337 shares of Common Stock to certain employees and directors at an
        exercise price of $0.88. The fair value of option grants is estimated as
        of the
        date of grant using the Black- Scholes option-pricing model with the following
        assumptions for the grant made during the year ended December 31, 2005: Expected
        life of option five (5) years, volatility rate 100%, risk-free interest rate
        ranging between 6.25%-7.15%, and a zero percent (0%) dividend
        yield.
  The
        following table illustrates the pro forma effect on net income (loss) if
        the
        Company had applied the fair value recognition provisions of FASB Statement
        No.
        148, "Accounting for Stock-Based Compensation - Transition & Disclosure, An
        Amendment to FASB Statement No. 123," to stock-based employee
        compensation.
 2005
                
                
                2004Net
                    loss attributable to common shareholders, as reported
                
                $
                (7,824,967
                )
                $
                (2,908,953
                )Add:
                      total stock-based employee compensation expense included in
                      reported net
                      loss
                
                
                -
                
                
                -Deduct:
                      stock-based compensation expense determined under the fair
                      value
                      method,the
                    fair value method, net of tax effect, for all employee
                    awards
                
                
                (69,090
                )
                
                -Pro
                    forma net loss attributable to common shareholders
                
                $
                (7,894,057
                )
                $
                (2,908,953
                )Loss
                    per shareBasic-As
                    reported
                
                $
                (0.29
                )
                $
                (0.12
                )Basic-Pro
                    Forma
                
                $
                (0.29
                )
                $
                (0.12
                )
  **Recent
        accounting pronouncements**
  In
        December 2004, the Financial Accounting Standards Board issued SFAS No. 123(R),
        "Share-Based Payment," which replaces SFAS No. 123, "Accounting for Stock-Based
        Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock Issued
        to Employees." SFAS No. 123(R) requires compensation costs relating to
        share-based payment transactions be recognized in financial statements. The
        pro
        forma disclosure previously permitted under SFAS No. 123 will no longer be
        an
        acceptable alternative to recognition of expenses in the financial statement.
        SFAS No. 123(R) is effective for awards beginning January 1, 2006. Management
        expects the impact of the adoption of this accounting policy in 2006 to have
        effects similar to the pro forma disclosures noted above.
  F-9
  In
        May
        2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections.” This
        pronouncement replaces APB Opinion 20 “Accounting Changes” and SFAS 3,
“Reporting Accounting Changes in Interim Financial Statements” and changes the
        requirements for the accounting for and reporting of a change in accounting
        principle. This Statement applies to all voluntary changes in accounting
        principle and changes required by an accounting pronouncement when that
        pronouncement does not include specific transition provisions. This Statement
        requires retrospective application to prior periods’ financial statements of
        changes in accounting principle. The prior pronouncement required that most
        voluntary changes in accounting principle be recognized by including in net
        income the cumulative effect of changing to the new accounting principle.
        The
        effect of this pronouncement is that future accounting changes, generally,
        will
        not have an effect on the current period income statement.
  **Note
        2 - Income Taxes**
  The
        Company recognizes deferred tax assets and liabilities created by temporary
        differences between the financial statement and tax basis of assets and
        liabilities. Deferred tax assets and liabilities are computed on such temporary
        differences, including available net operating loss carry forwards and tax
        credits, by applying enacted statutory tax rates applicable to the years
        when
        such differences are expected to reverse. A valuation allowance is provided
        on
        deferred tax assets to the extent that it is more likely than not that such
        deferred tax assets will not be realized.
  The
        Company currently operates in the United States, while its Subsidiaries operate
        in the United Kingdom and South Korea. Operating loss carryforwards in the
        United States approximated $1,800,000 at December 31, 2005, and can be carried
        forward for 20 years. Operating loss carryforwards in the United Kingdom
        approximated $6,900,000 at December 31, 2005, and can be carried forward
        indefinitely, provided the Company (i) doesn't cease operations and (ii)
        doesn't
        change its business nature, while operating loss carryforwards in South Korea
        approximated $3,100,000 at December 31, 2005, and expire in the years 2007-2010.
        The Company has a deferred tax asset of approximately $3,500,000 and has
        recorded a full valuation allowance against the deferred tax asset resulting
        from these tax loss carry-forwards.
  **Note
        3 - Commitments**
  **Operating
        Leases**
  The
        Company has two leases in Seoul, Korea for its pilot plant, as well as for
        its
        administrative and research office. The leases expire in July 2006 and March
        2008. At December 31, 2005, the minimum future rental commitments under all
        non-cancelable operating leases with terms greater than one year, are as
        follows:
  Year
                    Ending December 31,2006
                
                $
                109,2862007
                
                $
                51,0892008
                
                $
                12,772$
                173,148
 Rent
        expense for the year ended December 31, 2005 and 2004 amounted to $100,421
        and
        $43,840, respectively.
  **Employment
        contracts**
  The
        Corporation has entered into employment agreements with seven of its officers
        /
        employees for terms ranging between two and three years. Under the terms
        of the
        contracts these officers / employees are entitled to minimum compensation
        of
        approximately $1,300,000 in 2006 , $600,000 in 2007 and $200,000 in 2008.
        In
        addition, these agreements provide for bonuses and stock option based upon
        performance criteria as defined in the respective agreements.
  F-10
  **Commitments
        to a third party**
  According
        to an agreement between iCurie Korea and Sae Han IT, on May 21,  2004,
        iCurie Korea is to provide 25 percent of gross margin to B.A.C. Network (BAC)
        from the micro cooling systems business for 3 years from the initial sales
        to  include
        only LG Electronics, LGIBM, and others to which LG Electronics and LGIBM
        will
        supply the Company's products. Gross margin is determined based on the
        difference between suppliers' unit cost and selling price to purchaser. Through
        December 31, 2005, no qualifying sales have occurred.
  **Royalty
        Agreement**
  On
        May
        18, 2005, iCurie UK entered into a Royalty Agreement with CHL Investment
        Partnership ("CHL") and Hansen Gray & Company, Inc. ("Hansen Gray"). The
        terms of the agreement call for a payment of 1.14% and 0.86% of revenue to
        CHL
        and Hansen Gray, respectively, once iCurie UK's revenue exceeds $25 million.
        The
        agreement is terminated once the aggregate payment to CHL and Hansen Gray
        totals
        $50 million. As of December 31, 2005, the Company has paid a Royalty Advance
        to
        Hansen Gray totaling $500,000.
  CHL
        is an
        organization in which Dr. Jeong Hyun Lee (the Company's Chief Technology
        Officer
        and Director) holds an interest in. Hansen Gray is an entity affiliated through
        common management.
  **Registration
        Rights**
  The
        Company has entered into a registration rights agreement with the preferred
        series A share holders dated July 11, 2005 (see Note 4). Under the terms
        of the
        Registration Rights Agreement, if a registration statement is not filed within
        60 days of July 11, 2005 or declared effective within 120 days of July 11,
        2005
        (each a "Non-registration Event"), then for each 30 day period during the
        pendancy of such a Non-Registration Event, the company is required to pay
        to the
        selling shareholders liquidated damages in an amount equal to one percent
        (1%)
        of the aggregated price such selling shareholders paid for the Company's
        series
        A Preferred stock (deemed to be $0.88 per share), which the company may pay
        in
        cash or additional shares of series A Preferred Stock (valued at $0.88 per
        share), at the company's option. The registration statement was filed on
        October
        6, 2005 and the Company currently expects the registration statement to be
        declared effective in April 2006. The registration rights penalty has been
        recorded by management as its estimated fair market value on the date of
        the
        Preferred Stock Offering and is being revalued at each Balance Sheet date
        with
        any adjustments reflected in the Statement of Operations. At December 31,
        2005,
        included in accrued expenses is approximately $900,000 which represents the
        fair
        market value of this liability based on management's estimated effective
        date of
        the SB-2 registration statement.
  The
        Company has entered into a registration rights agreement with the preferred
        series B share holders dated December 16, 2005. Under the terms of the
        Registration Rights Agreement, the Company is required to file a Registration
        Statement covering the underlying Common Stock within six months after the
        Company's Registration Statement on Form SB-2 (SEC File No. 333-127193) is
        declared effective. The Company is required to maintain the effectiveness
        of the
        Initial Registration Statement through the first anniversary of the Closing
        Date
        and shall use its best efforts to maintain the effectiveness of the Initial
        Registration Statement through the second anniversary of the Closing Date.
        The
        Company believes it will be able to meet the requirements of the agreement
        and
        has not recorded any liability.
  **Note
        4 - Stockholders' equity**
  **Capital
        stock**
  At
        December 31, 2005, the Company had an authorized number of shares of 150,000,000
        Common Shares and 100,000,000 of Preferred Shares, 30,000,000 of which has
        been
        designated as Preferred Series A Shares and 7,000,000 of which has been
        designated Preferred Series B Shares. The total issued and outstanding shares
        were 29,316,035 Common Shares, 20,995,239 Preferred Series A Shares, and
        3,063,402 Preferred Series B Shares.
  F-11
  **Share
        Exchange Agreement and Series A Offering**
  Effective
        as of July 8, 2005, Cedar Mountain Distributors, Inc. entered into a Share
        Exchange Agreement with the shareholders of iCurie Lab Holdings Limited,
        a UK
        Company, and certain additional parties. Immediately prior to the execution
        of
        the Share Exchange Agreement 3,050,001 shares of Cedar Mountain common stock
        were cancelled (the "Common Stock Cancellation") pursuant to agreements between
        Cedar Mountain and certain shareholders of Cedar Mountain (including the
        then
        sole officer and director of Cedar Mountain) for aggregate consideration
        of
        $214,000. After the Common Stock Cancellation, 1,350,023 shares of Cedar
        Mountain remained issued and outstanding. Upon the consummation of the
        transactions contemplated by the Share Exchange Agreement on July 8, 2005,
        (i)
        Cedar Mountain acquired all of the outstanding shares of  iCurie UK
        (resulting in iCurie UK becoming a wholly owned subsidiary of Cedar Mountain),
        (ii) Cedar Mountain issued 24,935,047 shares of common stock to the shareholders
        of iCurie UK and certain of their assigns, which represented 94.864% of the
        issued and outstanding shares of Cedar Mountain common stock, (iii) the sole
        director and executive officer of Cedar Mountain resigned, (iv) directors
        and
        officers associated with iCurie UK were appointed as directors and officers
        of
        Cedar Mountain, (v) Amended and Restated Articles of Incorporation of Cedar
        Mountain were approved and filed which, among other things, changed the name
        of
        Cedar Mountain to iCurie, Inc., and authorized 30,000,000 shares of Series
        A
        Preferred Stock; and (vi) the new directors approved and adopted Amended
        and
        Restated Bylaws of iCurie, Inc.
  The
        Share
        Exchange between the shareholders of iCurie UK, a private company, with Cedar
        Mountain, a non-operating public shell with nominal assets, was accounted
        for as
        an equity transaction. The stock retained by the shareholders of Cedar Mountain
        has been adjusted to reflect the financing transaction with the proceeds
        equal
        to the net asset value of Cedar Mountain immediately prior to the acquisition
        and the equity of iCurie has been adjusted to reflect a recapitalization
        whereby
        the prior retained earnings of Cedar Mountain were eliminated. This resulted
        in
        an adjustment to common stock and additional paid in capital to arrive at
        the
        net asset value of Cedar Mountain of $34,844. This amount has been reflected
        in
        the statement of stockholder’s equity as the effects of the July
        recapitalization of iCurie. No goodwill or other intangible asset has been
        recorded in connection with the share exchange. The historical financial
        statements of Cedar Mountain (which has since changed its name to iCurie,
        Inc)
        has become the historical financial statements of iCurie UK.
  Effective
        as of July 11, 2005, iCurie, Inc. issued 20,995,239 shares of Series A Preferred
        Stock, together with warrants exercisable for a total of 6,441,895 shares
        of
        iCurie, Inc. common stock at prices ranging from $0.88 - $1.32, to various
        parties in exchange for approximately $12.48 million in cash (at a cash price
        of
        $0.88 per share of Series A Preferred Stock) and the transfer of $4.6 million
        of
        previously issued promissory notes issued by various parties. Certain of
        the
        promissory notes carried beneficial conversion features and as a result,
        during
        the year ended December 31, 2005, the Company recorded additional interest
        expense of $192,959. (These transactions are collectively referred as the
        “Series A Offering”). The Series A Offering was effectuated pursuant to
        Subscription Agreements (in the case of cash sales) and a Preferred Stock
        Purchase Agreement (in the case of the issuance of Series A Preferred Stock
        for
        promissory notes) between iCurie, Inc. and the stock recipients, each effective
        as of July 11, 2005. In connection with the Series A Offering, iCurie, Inc.
        also
        entered into a Registration Rights Agreement dated as of July 11, 2005 with
        the
        Company's shareholders, Series A Shareholders, and certain additional parties
        (see note 3).
  In
        addition to the warrants issued together with Series A Preferred Stock, 681,018
        warrants for common stock and 1,364,528 warrants for preferred (Series A)
        stock
        were issued to placement agents.
  Pursuant
        to the Share Exchange Agreement, the Company agreed to assume the obligations
        of
        iCurie UK under a Placement Agent Agreement between iCurie UK, Indigo Securities
        LLC and Axiom Capital Management Inc. (Indigo and Axiom are collectively
        referred to as the “Placement Agent”), pursuant to which the Placement Agent was
        compensated by the Company for its services in connection with the Share
        Exchange Agreement and the Series A Offering. In connection with the Share
        Exchange Agreement and Series A Offering, the Company also granted warrants
        exercisable for a total of 270,000 shares of iCurie, Inc. common stock to
        a
        party that identified Cedar Mountain as a potential participant in the share
        exchange.
  In
        connection with the Share Exchange Closing and Series A Offering, (i) certain
        executive officers entered into employment agreements, (ii) iCurie, Inc.
        advanced a major shareholder $500,000 (see Note 3) payable under a pre-existing
        revenue sharing agreement and entered into certain related transactions with
        such shareholder, (iii) iCurie, Inc. cancelled a $1.1 million promissory
        note
        made by an executive officer in exchange for 1.25 million shares of common
        stock
        of the Company owned by such officer, (iv) an option for 440,000 shares of
        the
        Company's common stock held by an executive officer was cancelled in exchange
        for a warrant to purchase 1,097,142 shares of iCurie, Inc. common stock,
        (v)
        iCurie, Inc. executive officers were paid certain accrued but previously
        unpaid
        salaries in cash and shares of iCurie, Inc. common stock and (vi) an executive
        officer agreed to indemnify iCurie, Inc. against certain
        liabilities.
  F-12
  **Terms
        of Series A Preferred**
  In
        the
        event of any sale or dissolution of the Company, the holders of the
        Series A Preferred shall be entitled to receive in preference to the
        holders of the Series B and Common Stock a per share amount equal to $0.88
        plus
        any accrued, unpaid dividends. The holders of the Series A Preferred have
        the right to convert the Series A Preferred at any time into shares of
        Common Stock at an initial conversion rate of 1:1, as defined. At the option
        of
        the Company, if certain criteria as defined in the agreement are met, the
        Series A Preferred can be converted into Common Stock. The conversion price
        of the Series A Preferred and the exercise price of the Warrants are
        subject to a weighted average antidilution adjustment. The Series A
        Preferred vote together with the Common Stock and not as a separate class.
        Each
        share of Series A Preferred has a number of votes equal to the number of
        shares of Common Stock then issuable upon conversion of such share of
        Series A Preferred. So long as 50% or more of the Series A Preferred Stock
        remains outstanding, the holders of the Series A Preferred Stock are entitled
        to
        elect two directors of the Company, and so long as 25% or more of the Series
        A
        Preferred Stock remain outstanding, the holders of the Series A Preferred
        Stock
        are entitled to elect one director of the Company. The directors elected
        by the
        Series A Preferred Stock and the holders of the Series A Preferred Stock
        each
        have approval rights over specified corporate actions. Subject to certain
        exceptions, in the event the Company proposes to offer or sell any new
        securities, the Company shall first make an offering of such new securities
        to
        each holder of Series A Preferred Stock.
  The
        holders of Series A Preferred Stock are entitled to receive cumulative,
        compounding dividends at a rate of eight percent (8%) per annum as, when
        and if
        declared by the Board of Directors of the Company. The dividends may be paid
        in
        cash or shares of Series A Preferred Stock (valued at original issue price)
        at
        the sole discretion of the Company. Holders of Series A Preferred Stock also
        receive on an as-converted basis any distributions paid on the common stock.
        No
        dividends may be paid on common stock unless all unpaid cumulative dividends
        on
        the Series A Preferred Stock are paid. As of December 31, 2005, accumulated,
        undeclared dividends on the Series A Preferred Shares totaled
        $651,489.
  The
        Company has evaluated the beneficial conversion feature and warrants related
        to
        the Series A issuance and has determined the fair market value related to
        these
        items to be immaterial. Accordingly, 100% of the proceeds has been allocated
        to
        the Series A Preferred Stock.
  **Series
        B Offering**
  On
        December 16, 2005 , iCurie, Inc. issued 3,063,402 shares of its
        Series B Preferred Stock, $0.001 par value per share (the “Series B
        Preferred”), to certain individuals and entities (the “Series B Holders”),
        together with warrants to purchase approximately 1,531,700 shares of the
        Company’s common stock (50% at $1.50 and 50% at $3.00), for an aggregate of
        $3,063,402 in cash. The sale of Series B Preferred and Warrants (the
“Series B Offering”) was effected pursuant to Subscription Agreements
        between the Company and the Series B Holders, each effective as of
        December 16, 2005. In connection with the Series B Offering, the
        Company entered into a Registration Rights Agreement dated as of
        December 16, 2005 with the Series B Holders and the Placement Agents
        (see Note 3).
  In
        connection with the Series B Offering, certain placement agents received
        (i) a cash fee of approximately $216,340, (ii) warrants to purchase 210,000
        shares of Series B Preferred at $1.50, and (iii) warrants to purchase 6,340
        shares of Common Stock at $1.50.
  **Terms
        of Series B Preferred**
  Subject
        and subordinate to the liquidation rights of the Company’s Series A
        Preferred Stock, in the event of any sale or dissolution of the Company,
        the
        holders of the Series B Preferred shall be entitled to receive in
        preference to the holders of the Common Stock a per share amount equal to
        $1.00.
        The holders of the Series B Preferred have the right to convert the
        Series B Preferred at any time into shares of Common Stock at an initial
        conversion rate of 1:1, as defined. At the option of the Company, if certain
        criteria as defined in the agreement are met, the Series B Preferred can be
        converted into Common Stock. The conversion price of the Series B Preferred
        and the exercise price of the Warrants are subject to a weighted average
        antidilution adjustment. The Series B Preferred vote together with the
        Common Stock and not as a separate class. Each share of Series B Preferred
        has a number of votes equal to the number of shares of Common Stock then
        issuable upon conversion of such share of Series B Preferred. The Series B
        Preferred does not carry any dividend.
  The
        Company has evaluated the beneficial conversion feature, registration rights,
        and warrants related to the Series B issuance and has determined the fair
        market
        value related to these items to be immaterial. Accordingly, 100% of the proceeds
        has been allocated to the Series B Preferred Stock.
  **Stock
        Compensation**
  During
        the year ended December 31, 2005, the Company issued approximately 4.28 million
        shares of its common stock to employees and others. These shares issuances
        were
        valued between $0.07-$0.50 based upon management's estimate of the fair value
        of
        the common stock on the date of issuance. These stocks grants have certain
        vesting provisions through June 2007. At December 31, 2005, 2,810,457 shares
        have vested and a charge to compensation expense of $228,851 and $0 was recorded
        during the year ended December 31, 2005 and 2004, respectively. The remaining
        unvested shares totaling $114,660 have been recorded as unearned compensation
        as
        of December 31, 2005.
  F-13
  **Stock
        Options**
  During
        2005, the Company granted options to employees and directors to purchase
        an
        aggregate of 2,510,337 shares of common stock at an exercise price of $0.88
        per
        share. The options vest over 10 years. The
        options granted had an intrinsic value of $0 since the exercise price was
        equal
        to or exceeded the fair value of the underlying common stock on the day of
        the
        grants. Information about all employee options outstanding is as follows:
 For
                    the years ended December 31,
                
                
                **2005**
                
                
                **2004****Shares**
                
                
                **Weighted
                    AverageExercise Price**
                
                
                **Shares**
                
                
                **Weighted
                    Average Exercise
                    Price**Outstanding
                    at beginning of year
                
                
                0
                
                $
                -
                
                
                0
                
                $
                -Outstanding
                    at end of year
                
                
                2,510,337
                
                $
                0.88
                
                
                0
                
                $
                -A
                    summary of employee options outstanding and employee options
                    exercisable
                    under the Company's plan is set forth below:




Outstanding
              
              
              Exercisable**Weighted
                  Average****Exercise**
              
              
              **#
                  of Options**
              
              
              **Remaining
                  Contractual**
              
              
              **Weighted
                  Average**
              
              
              **#
                  of Options**
              
              
              **Weighted
                  Average****Price**
              
              
              **Outstanding**
              
              
              **Life**
              
              
              **Exercise
                  Price**
              
              
              **Exercisable**
              
              
              **Exercise
                  Price**$
              0.88
              
              
              2,510,337
              
              
              10
                  years
              
              $
              0.88
              
              
              649,613
              
              $
              0.88




During
                  2005, the Company issued 25,000 shares to an external consultant.
                  The fair
                  market value of these options were determined using the Black-Scholes
                  method and were deemed immaterial.**Warrants
                  to Purchase Common Stock**During
                  2005, the Company issued various warrants to preferred shareholders
                  and
                  the placement agents in connection with the Series A and B
                  Offerings. A summary of these warrants are as
                  follows:




**Exercise**
              
              **#
                  of Warrants**
              
              **#
                  of Warrants**
              
              **Expiration****Price**
              
              **Outstanding**
              
              **Exercisable**
              
              **Date**$
                  0.88
              
              1,874,178
              
              1,874,178
              
              July
                  2010$
                  1.09
              
              1,097,142
              
              1,097,142
              
              July
                  2010$
                  1.10
              
              2,759,357
              
              2,759,357
              
              July
                  2010$
                  1.32
              
              2,759,357
              
              2,759,357
              
              July
                  2010$
                  1.50
              
              772,190
              
              772,190
              
              December
                  2010$
                  3.00
              
              765,850
              
              765,850
              
              December
                  2010




**Warrants
                  to Purchase Preferred Stock**During
                  2005, the Company issued various warrants to placement agents in
                  connection with the Series A and B
                  Offerings. A summary of these warrants are as
                  follows:




**Exercise**
              
              **#
                  of Warrants**
              
              **#
                  of Warrants**
              
              **Expiration****Price**
              
              **Outstanding**
              
              **Exercisable**
              
              **Date**$
                  0.88
              
              1,364,528
              
              1,364,528
              
              July
                  2010$
                  1.50
              
              210,000
              
              210,000
              
              December
                  2010




**Note
                  5 - Short-term borrowing**Short-term
                  borrowing at December 31, 2005 consists of a bank loan payable
                  with
                  interest at 5.92% per annum with an outstanding
                  balance of $231,683 (Won 234,000,000).**Note
                  6 - Bond payable**The
                  bond payable (Won 300 million) at December 31, 2005, was issued
                  to Asia
                  Vital Components
                  in December 2002 and matures in December 2007. The bond carries
no
                  interest and has been discounted using a 7% interest rate. At December
                  31,
                  2004 and December
                  31, 2005, the unamortized bond discount amounted to $53,099 and
                  $37,160,
                  respectively.




The bond payable at December 31, 2005 is summarized as
      follows:


Face
                  Amount
              
              $
              297,045Less:
                  Discount
              
              
              (86,470
              )Plus:
                  Amortization of discount
              
              
              49,310Carrying
                  value
              
              $
              259,885


Under
        the
        original terms, the bond was convertible into 6,667 shares (an approximate
        2%
        ownership) of common stock in the Subsidiary (iCurie Korea); however, Asia
        Vital
        Components has waived its right to convert the bond into common
        stock.




F-14