**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




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





For
      the
      quarterly period ended September 30, 2008





OR




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





For
      the
      transition period from ________________ to ________________





Commission
      file number: **333-64840**





**CELSIA
      TECHNOLOGIES INC.**


(Exact
      Name of Registrant as Specified in Its Charter)




**Nevada**
            
            **91-2015441**(State
                or Other Jurisdiction of
            
            (IRS
                EmployerIncorporation
                or Organization)
            
            Identification
                No.)**1395
                Brickell Avenue, Suite 800, Miami Florida**
            
            **33131**(Address
                of Principal Executive Offices)
            
            (Zip
                Code)




**(305)
      529-6290**


(Registrant’s
      Telephone Number, Including Area Code)




**None**


(Former
      Name, Former Address and Former Fiscal year, if Changed Since Last
      Report)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x No  ̈




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


Large
                  accelerated filer ̈
              Accelerated
                  filer ̈Non-accelerated
                  filer ̈(Do not check if a smaller reporting company)
              Smaller
                  reporting companyx




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




Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.





Class
            
            Outstanding
                at November 10, 2008Common
                Stock, $.01 par value per share
            
            86,561,449
                shares









**TABLE
      OF CONTENTS**





**Page**PART
                I. FINANCIAL INFORMATIONItem
                1. Financial StatementsConsolidated
                Balance Sheets as of September 30, 2008 (unaudited) and December
                31,
                2007
            
            1Consolidated
                Statements of Operations (unaudited) for the three month and nine
                month
                periods ended September 30, 2008 and 2007
            
            2Consolidated
                Statements of Cash Flows (unaudited) for the nine month periods ended
                September 30, 2008 and 2007
            
            3Notes
                to Condensed Consolidated Financial Statements
            
            4-10Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            
            11Item
                3. Quantitative and Qualitative Disclosures about Market
                Risk
            
            15Item
                4T. Controls and Procedures
            
            15PART
                II. OTHER INFORMATIONItem
                1. Legal Proceedings
            
            16Item
                2. Exhibits
            
            17Signatures
            
            18




-i-




**FORWARD-LOOKING
      STATEMENTS**





Some
      of
      the statements under ‘‘Business,’’ ‘‘Management’s Discussion and Analysis of
      Financial Condition and Results of Operations,’’ “Results of Operations” and
      elsewhere in this Quarterly Report on Form 10-Q constitute forward-looking
      statements within the meaning of the Private Securities Litigation Reform Act
      of
      1995. These statements relate to future events or our strategy, future
      operations, future financial position, future revenues, projected costs,
      prospects, and the plans and objectives of management and involve known and
      unknown risks, uncertainties and other factors that may cause our or our
      industry’s actual results, levels of activity, performance or achievements to be
      materially different from any future results, levels of activity, performance
      or
      achievements expressed, implied or inferred by these forward-looking statements.
      In some cases, you can identify forward-looking statements by terminology such
      as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘could,’’ ‘‘would,’’ ‘‘expects,’’ ‘‘plans,’’
‘‘intends,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’
‘‘potential’’ or ‘‘continue’’ or the negative of such terms and other comparable
      terminology.





Although
      we believe that the expectations reflected in the forward-looking statements
      are
      reasonable, we do not know whether we can achieve positive future results,
      levels of activity, performance, or goals. Actual events or results may differ
      materially. We caution readers not to place undue reliance on any
      forward-looking statements, which speak only as of the date made, and advise
      readers that forward-looking statements involve various risks and uncertainties.
      We undertake no obligation to update any of the forward-looking statements
      after
      the date of this Quarterly Report to conform to those statements to reflect
      the
      occurrence of unanticipated events, except as required by applicable
      law.









**PART
      I.**


**FINANCIAL
      INFORMATION**




**Item
              1.**
            **Financial
                Statements**.


Celsia
        Technologies, Inc. and Subsidiaries
 Consolidated
        Balance Sheet
 (US
        Dollars)
 
 September 30, 2008
              
              December 31, 2007(unaudited)AssetsCurrent
                  AssetsCash
                  and cash equivalents
              
              $
              1,008,467
              
              $
              3,046,624Receivable
              
              
              318,435
              
              
              298,799Inventory
              
              
              68,453
              
              
              74,465Prepaid
                  expenses
              
              
              115,115
              
              
              45,661Other
              
              
              4,094
              
              
              31,785Total
                  current assets
              
              
              1,514,564
              
              
              3,497,334Guarantee
                  deposits
              
              
              20,468
              
              
              26,157Advance
                  payments
              
              
              -
              
              
              154,287Furniture
                  and equipment, net (note 1)
              
              
              591,057
              
              
              639,947Deferred
                  Financing Costs (note 1)
              
              
              1,188,842
              
              
              1,721,630Royalty
                  Advance (note 3)
              
              
              -
              
              
              -Intangible
                  Assets, net (note 3)
              
              
              -
              
              
              85,049Total
                  assets
              
              $
              3,314,931
              
              $
              6,124,404Liabilities
                  and Stockholders' Equity (Deficit)Current
                  liabilitiesAccounts
                  payable
              
              $
              575,711
              
              $
              282,055Bond
                  Payable (note 4)
              
              
              248,707
              
              
              322,582Accrued
                  expensesPayroll
                  and Related
              
              
              684,917
              
              
              652,917Other
              
              
              715,062
              
              
              576,917Accrual
                  for Employee Retirement Benefits (note 3)
              
              
              87,556
              
              
              -Other
              
              
              34,325
              
              
              26,545Total
                  current liabilities
              
              
              2,346,278
              
              
              1,861,016Accrual
                  for Employee Retirement Benefits (note 3)
              
              
              -
              
              
              86,683Convertible
                  Debenture, net of $2,832,104 as of September 30, 2008 and $4,092,051
                  as of
                  December 31, 2007 unamortized discount (note 6)
              
              
              6,065,679
              
              
              4,400,796Total
                  liabilities
              
              
              8,411,957
              
              
              6,348,495Stockholders'
                  Equity (Deficit) (note 6 & 7)Preferred
                  Stock, Series A; $.001 par value; 30,000,000 shares authorized;
                  21,306,261
                  as of September 30, 2008 and 22,320,598 as of December 31, 2007
                  issued and
                  outstanding
              
              
              21,306
              
              
              22,321Preferred
                  Stock, Series B; $.001 par value; 7,000,000 shares authorized;
                  3,063,402
                  as of September 30, 2008 and December 31, 2007 issued and
                  outstanding
              
              
              3,063
              
              
              3,063Common
                  stock; $.001 par value; 750,000,000 shares authorized; 86,561,449
                  as of
                  September 30, 2008 and 85,273,680 as of December 31, 2007 issued
                  and
                  outstanding
              
              
              86,562
              
              
              85,273Common
                  stock subscribed
              
              
              6,158
              
              
              6,158Additional
                  paid-in-capital
              
              
              40,204,229
              
              
              40,032,066Other
                  comprehensive loss
              
              
              (159,673
              )
              
              (80,478
              )Accumulated
                  (deficit)
              
              
              (45,258,671
              )
              
              (40,292,494
              )Total
                  stockholders' equity (deficit)
              
              
              (5,097,026
              )
              
              (224,091
              )Total
                  liabilities and stockholders' equity (deficit)
              
              $
              3,314,931
              
              $
              6,124,404
 
 See
        accompanying notes to consolidated financial statements
  1
 
 Celsia
        Technologies, Inc. and Subsidiaries
 Consolidated
        Statements of Operations
 (US
        Dollars)
 
 Three Months Ended
              
              Nine Months EndedSeptember 30,
              
              September 30,2008
              
              2007
              
              2008
              
              2007Revenue
              
              $
              228,157
              
              $
              208,266
              
              $
              948,203
              
              $
              506,921Costs
                  and expensesCost
                  of Sales
              
              
              255,196
              
              
              329,089
              
              
              997,637
              
              
              877,027Selling
                  and Administrative expenses
              
              
              815,008
              
              
              1,057,060
              
              
              2,235,824
              
              
              2,599,364Depreciation
              
              
              21,802
              
              
              44,406
              
              
              58,693
              
              
              133,637Amortization
                  of deferred financing cost (note 1)
              
              
              177,596
              
              
              147,761
              
              
              548,492
              
              
              231,925Miscellaneous
                  (income) expense
              
              
              (4,817
              )
              
              (3,054
              )
              
              19,502
              
              
              1,898Total
                  costs and expenses
              
              
              1,264,785
              
              
              1,575,262
              
              
              3,860,148
              
              
              3,843,851Operating
                  (loss)
              
              
              (1,036,628
              )
              
              (1,366,996
              )
              
              (2,911,945
              )
              
              (3,336,930
              )Other
                  income (expenses)Financing
                  Expense (note 6)
              
              
              -
              
              
              (3,430,591
              )
              
              (177,956
              )
              
              (9,491,155
              )Interest
                  and other income
              
              
              (43,885
              )
              
              77,567
              
              
              57,189
              
              
              116,912Loss
                  from Impairment of Intangible Asset
              
              
              (129,432
              )
              
              
              
              
              (129,432
              )Interest
                  expense (notes 5 and 6)
              
              
              (603,691
              )
              
              (626,113
              )
              
              (1,804,035
              )
              
              (812,076
              )Total
                  other income (expenses)
              
              
              (777,008
              )
              
              (3,979,137
              )
              
              (2,054,234
              )
              
              (10,186,319
              )Net
                  (loss)
              
              $
              (1,813,636
              )
              $
              (5,346,133
              )
              $
              (4,966,179
              )
              $
              (13,523,249
              )Dividend
                  on Series A Preferred Stock (note 7)
              
              $
              (97,742
              )
              $
              (101,296
              )
              $
              (292,363
              )
              $
              (142,440
              )Deemed
                  Dividend on Series A & B Preferred Stock
              
              
              
              
              
              
              
              
              
              
              $
              (652,318
              )Net
                  Loss Attributable to Common Shareholders
              
              $
              (1,911,378
              )
              $
              (5,447,429
              )
              $
              (5,258,542
              )
              $
              (14,318,007
              )Net
                  Loss per Share:Basic
                  and Diluted
              
              $
              (0.02
              )
              $
              (0.07
              )
              $
              (0.06
              )
              $
              (0.25
              )Weighted
                  Average Shares Outstanding
              
              
              86,293,860
              
              
              83,258,145
              
              
              85,726,430
              
              
              58,412,810
 
 See
        accompanying notes to consolidated financial statements
  2
 
 Celsia
        Technologies, Inc. and Subsidiaries
 Consolidated
        Statements of Cash Flows
 (US
        Dollars)
 
 September 30,2008
              
              2007Cash
                  flows from operating activities:Net
                  (loss)
              
              $
              (4,966,179
              )
              $
              (13,523,249
              )Adjustments
                  to reconcile net (loss) to net cash (used) by operating
                  activities:Depreciation
              
              
              58,693
              
              
              133,637Amortization
                  of Deferred Financing Costs
              
              
              548,492
              
              
              231,925Issuance
                  of Common Stock for Debenture Principal and Interest
                  Conversion
              
              
              12,660Interest
                  on Convertible Debt
              
              
              -Issuance
                  of warrants for service
              
              
              -
              
              
              75,229Issuance
                  of warrants as settlement
              
              
              
              
              
              32,700Beneficial
                  Conversion Feature
              
              
              
              
              
              3,430,591Amortization
                  of Debt Discount
              
              
              1,259,947
              
              
              574,736Accrete
                  Interest on Convertible Debenture
              
              
              404,936
              
              
              -Financing
                  Expense
              
              
              -
              
              
              6,060,564Stock
                  Based Compensation
              
              
              163,064
              
              
              150,291Changes
                  to certain other accounts:Receivable
              
              
              (19,636
              )
              
              (183,161
              )Inventory
              
              
              6,012
              
              
              238Advance
                  payments
              
              
              154,287
              
              
              (43,380
              )Prepaid
                  expenses
              
              
              (69,454
              )
              
              (16,655
              )Accounts
                  payable
              
              
              293,656
              
              
              (48,038
              )Accrued
                  expenses
              
              
              170,145
              
              
              (208,510
              )Accrual
                  for Employee Retirement Benefits
              
              
              873
              
              
              (23,433
              )Other
              
              
              (51,539
              )
              
              (28,607
              )Net
                  cash (used) by operating activities
              
              
              (2,034,043
              )
              
              (3,385,122
              )Cash
                  flows from investing activities:Guarantee
                  Deposits
              
              
              5,689
              
              
              (13,294
              )Purchase
                  of furniture and equipment
              
              
              (9,803
              )
              
              (64,119
              )Net
                  cash (used) by investing activities
              
              
              (4,114
              )
              
              (77,413
              )Cash
                  flows from financing activities:Deferred
                  Finance Charge
              
              
              -
              
              
              (1,139,607
              )Proceeds
                  from Issuance of Convertible Debt
              
              
              -
              
              
              8,350,000Net
                  cash provided by financing activities
              
              
              -
              
              
              7,210,393Net
                  (decrease) increase in cash and cash equivalents
              
              
              (2,038,157
              )
              
              3,747,858Cash
                  and cash equivalents - beginning of period
              
              $
              3,046,624
              
              $
              295,400Cash
                  and cash equivalents - end of period
              
              $
              1,008,467
              
              $
              4,043,258Supplemental
                  cash flow disclosureNoncash
                  financing activityDuring
                  2008 and 2007 the Company recorded stock compensation arrangements
                  for
                  certain employees and directors
              
              $
              163,064
              
              $
              150,291During
                  2008 Preferred Shares were converted into Common Shares
              
              $
              1,014
              
              $
              -During
                  2008, the Company recorded a premium given to the Debenture Holders
                  as a
                  Financing Expense
              
              $
              177,956
              
              $
              -During
                  2007, the Company recorded a premium on the conversion of issued
                  notes
                  payable to convertible debenture as a deferred finance
                  charge
              
              $
              -
              
              $
              115,000During
                  2007, the Company issued warrants to placement agents for convertible
                  debenture as a deferred finance charge
              
              $
              -
              
              $
              876,544
 
 See
        accompanying notes to consolidated financial statements
  3
 
 Celsia
        Technologies, Inc. and Subsidiaries
 Notes
        to
        Consolidated Financial Statements
 September
        30, 2008
 
 **Note
        1 - Summary of significant accounting policies**
 
 **Organization**
 
 Celsia
        Technologies, Inc. (the "Company" or "Celsia"), a US Corporation incorporated
        in
        the State of Nevada, is formerly known as iCurie, Inc. Celsia's 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. Celsia is taking its innovative thermal management technology from
        the
        laboratory to high volume manufacturing, and operating as both a licensor
        of the
        technology and a vertically integrated provider of customized
        applications.
 
 The
        Company's corporate headquarters is located in Miami, Florida, USA with
        subsidiaries in London, United Kingdom, Seoul, South Korea, and Taipei, Taiwan.
        During 2007, the Company relocated its Design and Manufacturing operations
        from
        Seoul, Korea to Taipei, Taiwan. Celsia's operations in Seoul, Korea remained
        as
        a sales and administrative office for the region. The Company's patented
        NanoSpreaderTM is 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 improved product performance without trading off size, weight
        or
        cost considerations.
 
 The
        Company is currently in the process of shutting down the offices in Seoul,
        Korea
        and relocating any remaining functions to Taiwan. It is anticipated that
        this
        process will be complete by the end of 2008.
 
 Celsia's
        subsidiaries consist of (i) Celsia Technologies UK Limited ("UK Subsidiary"),
        a
        United Kingdom Company formerly known as iCurie Lab Holdings Limited, (ii)
        Celsia Technologies Korea, Inc. ("Korea Subsidiary"), a Korean Company formerly
        known as iCurie Lab, Inc, and (iii) Celsia Technologies Taiwan, Inc. ("Taiwan
        Subsidiary"). In consolidation, all significant intercompany balances and
        transactions have been eliminated.
 
 **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 equity
        securities issued, registration rights, intangible assets, and accounting
        for
        convertible debentures.
 
 **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 of approximately $45.3 and $40.3 million
        as of September 30, 2008 and December 31, 2007, respectively. 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.
 
 **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 dates 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, South Korea,
        and
        Taiwan, and they have not experienced any losses on their cash
        balances.
 
 **Inventory**
 
 Inventory
        consists of finished goods ready to be sold to customers. Inventories are
        carried at the lower of cost or market value.
 
 **Investment**
 
 The
        UK
        Subsidiary owns 527,000 shares of an entity formerly affiliated through common
        management. These shares have been fully reserved and carry a book value
        of $0
        as of September 30, 2008 and December 31, 2007.
 
 **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; and
 -  Collection
        is reasonably assured.
 
 The
        Company recognized revenues of $948,203 and $506,921 for the nine months
        ended
        September 30, 2008 and 2007, respectively, from customer orders for test
        samples
        and commercial deliveries.
  4
  
 **Deferred
        financing costs**
 
 In
        connection with obtaining debt financing as described in Note 6, the Company
        incurred legal and other related fees. Deferred financing costs incurred
        in
        connection with long-term financing amounted to $2,131,150 and are being
        amortized on a straight-line basis over the stated term of the loan.
        Amortization expense for the nine months ended September 30, 2008 and 2007
        amounted to $548,492 and $231,925, respectively.
 
 **Furniture
        and equipment**
 
 Furniture
        and equipment are summarized as follows:
 
 September 30,
              
              December 31,2008
              
              2007Vehicles
              
              $
              43,004
              
              $
              73,331Machinery
              
              
              658,046
              
              
              596,505Furniture
                  and fixtures
              
              
              332,843
              
              
              429,1481,033,893
              
              
              1,098,984Accumulated
                  depreciation
              
              
              (442,836
              )
              
              (459,037
              )$
              591,057
              
              $
              639,947
 
 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 nine months ended September 30, 2008 and 2007 amounted to
        $58,693 and $133,637, 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 earnings by the weighted-average number of shares plus the dilutive
        effect of convertible debt and preferred shares and outstanding options and
        warrants. Approximately 21 million and 3 million shares to be issued upon
        conversion of Series A and Series B Preferred Shares, respectively, were
        excluded from the calculation of diluted earnings per share for the periods
        ended September 30, 2008 and 2007, respectively, because they were
        anti-dilutive. Approximately 136 million and 65 million shares to be issued
        upon
        conversion of the convertible debentures were excluded from the **** calculation
        of diluted earnings per share as of September 30, 2008 and 2007, respectively,
        because they were anti-dilutive. **** Approximately
        205 million and 187 million options and warrants to purchase shares of the
        companies stock were excluded from the calculation of diluted earnings per
        share
        as of September 30, 2008 and 2007, 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 throughout the
        world.
 
 **Foreign
        currency translation**
 
 The
        reporting and functional currency of the Company and its UK Subsidiary is
        the
        U.S. Dollar, while the functional currency of the Korea and Taiwan subsidiaries
        are the Korean Won and the New Taiwanese Dollar, respectively.
 
 The
        assets and liabilities of the Korea and Taiwan Subsidiaries have been translated
        into U.S. Dollars at the prevailing period-end rate of exchange, while the
        related income and expense items were translated at the average rate of exchange
        during the period. The resulting translation adjustments are accumulated
        in a
        separate component of stockholders' equity (deficit).
 
 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) for the nine months
        ended September 30, 2008 and 2007 amounted to ($79,195) and ($51,293),
        respectively. Accordingly, comprehensive loss for the nine months ended
        September 30, 2008 and 2007 amounted to $5,045,374 and $13,574,532,
        respectively.
 
 **Fair
        value of financial instruments**
 
 The
        Company's cash, receivables, accounts payable, short-term debt, bonds payable,
        and the face amount of its convertible debentures represent financial
        instruments whose carrying amounts reasonably approximate their fair
        value.
 
 **Recent
        accounting pronouncements**
 
 In
        September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
        No. 157, “Fair Value Measurements” (“SFAS 157”), which provides guidance for
        measuring the fair value of assets and liabilities, as well as requires expanded
        disclosures about fair value measurements. ** SFAS
        157
        indicates that fair value should be determined based on the assumptions
        marketplace participants would use in ** pricing
        the asset or liability, and provides additional guidelines to consider in
        determining the market-based measurement . ** SFAS
        No.
        157 is effective for fiscal years beginning after November 15,
        2007.
  5
 
 The
        adoption of this standard did not have a material effect on the Company’s
        results of operations or financial position.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities” ** (“SFAS
        159”). SFAS 159 permits all entities to choose to measure eligible items at fair
        value at specified election dates. ** SFAS
        No.
        159 is effective for fiscal years beginning after November 15, 2007. ** The
        adoption of this standard did not have a material effect on the Company’s
        results of operations or financial position.
 
 In
        December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS
        141(R)”), which replaces SFAS 141. ** SFAF
        141(R) requires assets and liabilities acquired in a business combination,
        contingent consideration, and certain acquired contingencies ** to
        be
        measured at their fair values as of the date of acquisition. SFAS 141(R)
        also
        requires that acquisition-related costs and restructuring ** costs
        be
        recognized separately from the business combination. SFAS 141(R) is effective
        for fiscal years beginning after December 15, 2008 ** and
        will
        be effective for business combinations entered into after January 1,
        2009.
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements, an Amendment ** ARB
        No.
        51” (“SFAS 160”). SFAS 160 clarifies the accounting for noncontrolling interests
        and establishes accounting and reporting ** standards
        for the noncontrolling interest in a subsidiary, including classification
        as a
        component of equity. SFAS 160 is effective for ** fiscal
        years beginning after December 15, 2008. The Company does not currently have
        any
        minority interests.
 
 In
        March
        2008, the FASB issued SFAS No. 161 “Disclosure about Derivative Instruments and
        Hedging Activities - an amendment of FASB statements No. 133” (“SFAS 161”) which
        provides revised guidance for enhanced disclosures about how and why an entity
        uses derivative instruments, how derivative ** instruments
        and related hedged items are accounted for under FAS 133, and how derivative
        instruments and the related hedged items affect and entity’s financial position,
        financial performance and cash flows. SFAS 161 is effective for the Company’s
        fiscal year beginning January 1, 2009. The Company ** does
        not
        currently have any derivative instruments and is not involved in any hedging
        activities.
 
 In
        May
        2008, the FASB issued SFAS No. 162 “The Hierarchy of Generally Acceptable
        Accounting Principles” (“SFAS 162”). SFAS 162 ** identifies
        the source of accounting principles and the framework for selecting the
        principles to be used in the preparation of financial ** statements
        of non-governmental entities that are presented in conformity with generally
        accepted accounting principles in the United States. This ** statement
        is effective 60 days following the SEC’s approval of the Public Company
        Accounting Oversight Board amendments to AU Section 411, ** “The
        Meaning of Present Fairly in Conformity with Generally Accepted Accounting
        Principles”. Although the Company will continue to evaluate ** the
        application of SFAS 162, the Company does not currently believe the adoption
        of
        SFAS 162 will have a material impact on its consolidated ** financial
        statements.
 
 **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 ** South
        Korea, and Taiwan. Operating loss carry forwards in the United States
        approximated $6,800,000 ** at
        December 31, 2007, and can be carried forward for 20 years, expiring in the
        years 2025-2027. ** Operating
        loss carryforwards in the United Kingdom approximated $5,000,000 at ** December
        31, 2007, 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 $6,300,000
        at ** December
        31, 2007, and expire in the years 2008-2012. At December 31, 2007, the
        Company ** has
        a
        deferred tax asset of approximately $5,600,000 and has recorded a full valuation
        allowance ** against
        the deferred tax asset resulting from these tax loss carry
        forwards.
 
 **Note
        3 - Commitments and Contingencies**
 
 **Operating
        Leases**
 
 The
        Company has a lease in Seoul, Korea for its Sales and Administrative office
        which expires in October 2009.
 The
        Company has a lease in Taipei, Taiwan for its Design and Manufacturing Center
        which expires in September 2009.
 As
        of
        December 31, 2007, the minimum future rental commitments under all
        non-cancelable operating leases with terms greater than one year, are as
        follows:
 
 Year Ending December 31,2008
              
              $
              100,5992009
              
              $
              77,953$
              178,552
 
 **Employment
        contracts**
 
 The
        Company has entered into employment agreements with some of its officers
        /
        employees for terms ranging between one and two years. Under the terms of
        the
        contracts these officers / employees are entitled to minimum compensation
        of
        approximately $274,000 in 2008. Other employees contracts have expired and
        are
        employed at will with no minimum compensation.
 
 On
        August
        15, 2007, the Company entered into an agreement with Core Strategies, LLC
        (“Core
        Strategies”) which provides services of several Core Strategies partners
        including Joseph Formichelli as Chief Executive Officer of the Company on
        a
        full-time basis, and a marketing and sales executives on a part-time basis.
        The
        Company pays Core Strategies $20,000 per month and has issued 8,000,000 warrants
        to purchase the Company’s common stock. Effective October 1, 2008, the Company
        terminated the contract with Core Strategies and hired the CEO and sales
        executive.
 
 **Accrual
        for Employment Retirement Benefits**
 
 The
        Company has recorded a liability of $87,556 and $86,683 as of September 30,
        2008
        and December 31, 2007, respectively, for employment retirement benefits.
        The
        Company believes that any liability will be settled with the closing of the
        Korean office to be completed by year end.
 
 **Royalty
        Agreement**
 
 On
        May
        18, 2005, the UK Subsidiary 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 the UK Subsidiary's revenue exceeds $25
        million. The agreement is terminated once the aggregate payment to CHL and
        Hansen Gray totals $50 million. During 2005, the Company paid a Royalty Advance
        to Hansen Gray totaling $500,000.
  6
 
 On
        July
        18, 2007, the Company and AMF Capital, Inc. (formerly known as Hansen Gray
&
Company, Inc) (“AMF”) entered into a Settlement Agreement and Release pursuant
        to which the Company and AMF resolved certain claims of AMF against the Company.
        Pursuant to the Settlement Agreement, the Company paid a Royalty Advance
        of
        $100,000 in cash to AMF and issued to AMF a warrant to purchase 1,000,000
        shares
        of common stock of the Company at an exercise price of $0.88 per share, and
        AMF
        released the Company from any and all claims except for certain specified
        contractual rights as set forth in the Settlement Agreement. The Company
        has
        recorded a full valuation allowance resulting from these prepaid
        royalties.
 
 CHL
        is an
        organization in which Dr. Jeong Hyun Lee (a former director of the Company)
        holds an interest in. Hansen Gray is an entity in which Alan Miller (a former
        director of the Company) holds an interest in.
 
 **Intangible
        Assets**
 
 In
        April
        2007, Celsia acquired certain assets and liabilities together with two sales
        executives and a thermal management customer base from CheongNam International
        Co. Ltd. ("CNIT"), a Korean entity, for approximately $70,000. The Company
        has
        recorded assets of approximately $88,000, liabilities of approximately $82,000
        and intangible asset (which is the value assigned to the acquired customer
        list)
        of approximately $64,000. The Company is amortizing this customer list over
        36
        months.
 
 The
        Company has also recorded an intangible asset for costs incurred with filing
        approved patents and trademarks of approximately $34,000. The Company has
        written off the value of both of these assets in connection with the closing
        of
        the Korean subsidiary.
 
 **Registration
        Rights**
 
 The
        Company entered into a registration rights agreement with the holders of
        the
        Series B Preferred shares dated December 16, 2005. Under the terms of the
        Registration Rights Agreement, the Company was required to use its best efforts
        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. 333-128856) was declared effective. The Company was required to
        maintain the effectiveness of the Initial Registration Statement through
        the
        first anniversary of the Closing Date and was to use its best efforts to
        maintain the effectiveness of the Initial Registration Statement through
        the
        second anniversary of the Closing Date. This agreement was amended on May
        25,
        2007 to reflect the subordination of rights under this agreement to the
        registration rights agreement entered into by the Company on May 25, 2007
        as
        described below.
 
 The
        Company entered into a registration rights agreement with the Convertible
        Debenture Holders dated May 25, 2007 (see Note 6). Under the terms of the
        registration rights agreement, the Company is required to file a Registration
        Statement (the "Initial Registration Statement") covering the Common Stock
        (i) into which the Debentures are convertible and (ii) for which the
        Warrants and Placement Agent Warrants are exercisable (collectively, the
        “Registrable Securities”) within 30 days of a demand by Debenture Holders or
        within six (6) months after the Closing Date. If the Initial Registration
        Statement is not filed on or prior to its Filing Date, or in certain other
        circumstances, the Company shall pay to each Debenture Holder an amount in
        cash
        equal to 1.0% of the aggregate purchase price paid by such Debenture Holder
        pursuant to the Purchase Agreement for any unregistered securities then held
        by
        such Debenture Holder. The Company has fulfilled its requirements by filing
        the
        Registration Statement on Form SB-2 (SEC File No. 333-147564) which was declared
        effective on December 11, 2007.
 
 **Litigation**
 
 On
        October 19, 2007, the Company's former President, CEO, and Board of Director,
        filed a lawsuit in the Miami-Dade County Circuit Court claiming failure to
        pay
        bonuses, severance, and other benefits in connection with his previously
        reported termination by the Company. The Company has filed a motion to Compel
        Arbitration and Stay Proceedings as provided by the employment contract with
        the
        Company. On April 16, 2008, the court granted the Company's motion and
        ordered (i) that the Plaintiff commence arbitration in accordance with the
        terms
        of the employment agreement within six (6) months of the date of the order
        and
        (ii) all proceedings are stayed until the conclusion of the arbitration
        proceedings.  Pursuant to the court order, if arbitration is not timely
        commenced the action will be dismissed. The Company believes the employee's
        claims are without merit and intends to defend the action vigorously. The
        settlement of this action is not expected to have a material impact on the
        Company's financial position.
 
 **Note
        4 - Bond payable**
 
 The
        bond
        payable (Won 300 million) at September 30, 2008 and December 31, 2007, was
        issued to a third party in December 2002 and matures in December 2007. The
        bond
        carries no interest and has been discounted using a 7% interest rate. The
        bond
        payable is summarized as follows:
 
 September 30,
              
              December 31,2008
              
              2007Face
                  Amount
              
              $
              248,707
              
              $
              322,582Less:
                  Discount
              
              
              (93,926
              )
              
              (93,926
              )Plus:
                  Amortization of discount
              
              
              93,926
              
              
              93,926Carrying
                  value
              
              $
              248,707
              
              $
              322,582
 
 **Note
        5 - Notes Payable**
 
 On
        February 20, 2007 and April 20, 2007, the Company issued Secured Convertible
        Promissory Notes (the “Notes”) in an aggregate principal amount of $1,000,000
        and $150,000, respectively, to certain purchasers (the “Noteholders”) pursuant
        to the terms of Securities Purchase Agreements dated as of February 20, 2007
        by
        and between the Company and the Noteholders. The Notes carry an annual interest
        rate of 10%, with all principal and accrued interest being due and payable
        on
        June 20, 2007; provided, however, that upon the terms and subject to the
        conditions of the Notes, all outstanding principal and interest on the Notes
        will automatically convert into securities of the Company issued pursuant
        to a
        Company financing meeting certain conditions (a “Qualified Financing”), if such
        Qualified Financing is effectuated on or prior to June 20, 2007. All principal
        and accrued interest on the Notes shall become payable prior to
        June 20, 2007 upon certain events of default relating to, among
        things, the bankruptcy or dissolution of the Company, the sale of substantially
        all of the Company’s assets and certain breaches by the Company of the terms and
        conditions of the Notes and related agreements. The obligations evidenced
        by the
        Notes were secured by a pledge of substantially all of the Company’s assets,
        including the capital stock of Celsia Technologies UK Limited and Celsia
        Technologies Korea, Inc. In connection with the issuance of the Notes, the
        Company’s former Chief Executive Officer and former Chief Financial Officer had
        agreed to transfer approximately 735,000 shares of Company common stock held
        by
        such executives to the Noteholders in the event that a Qualified Financing
        does
        not occur on or prior to June 20, 2007.
 
 On
        May
        25, 2007, the Company issued Convertible Debentures which met the conditions of
        a Qualified Financing. The Notes, totaling principal of $1,150,000, interest
        of
        $27,847, and a 10% premium on principal totaling $115,000, were automatically
        converted into the Convertible Notes (see Note 6). Upon completion of the
        transaction, the 735,000 shares of Company common stock pledged by the Company's
        former Chief Executive Officer and former Chief Financial Officer were returned
        to them.
  7
 
 **Note
        6 - Convertible Debentures**
 
 On
        May
        25, 2007, the Company issued 8% Secured Convertible Debentures due May 25,
        2010
        (the “Debentures”) in the aggregate principal amount of $8,142,847 to certain
        individuals and entities, together with warrants exercisable for a total
        of
        70,752,778 shares of the Company’s common stock at a price of $0.144, for an
        aggregate of $6,850,000 in cash and the surrender of previously outstanding
        promissory notes of the Company totaling $1,292,847 (see Note 5). The Company
        used the Black Scholes option-pricing model to value the warrants issued
        to the
        Debenture Holders and applied it to the principal amount to determine the
        convertible debt discount. The Company will amortize the discount over the
        life
        of the Debenture (36 months).
 
 On
        August
        17, 2007, the Company issued an additional 8% Secured Convertible Debenture
        due
        May 25, 2010 in the principal amount of $350,000, together with a warrant
        to
        purchase 2,800,000 shares of the Company’s common stock at a price of $0.144,
        for $350,000 in cash, on the same terms as the Company’s debentures and warrants
        issued on May 25, 2007.
 
 On
        January 1, 2008, the Company elected to accrete to, and increase, the
        outstanding principal amount due under the Debenture by $404,936 pursuant
        to the
        terms of the Debenture.
 
 The
        convertible debentures payable is summarized as follows:
 
 September 30,
              
              December 31,2008
              
              2007Face
                  Amount
              
              $
              8,897,783
              
              $
              8,492,847Less:
                  Discount
              
              
              (5,062,256
              )
              
              (5,062,256
              )Plus: Amortization of discount
              
              
              2,230,152
              
              
              970,205Carrying value
              
              $
              6,065,679
              
              $
              4,400,796
 
 The sale
        of Debentures and Warrants (the “Debenture Offering”) was effected pursuant to a
        Securities Purchase Agreement dated as of May 25, 2007 between the Company
        and
        the Debenture Holders (the “Purchase Agreement”). In connection with the
        Debenture Offering, the Company entered into a Security Agreement and
        Registration Rights Agreement, each dated as of May 25, 2007, with the Debenture
        Holders (see Note 3).
 
 In
        connection with the Debenture Offerings, the placement agents (i) received
        a
        cash fee of approximately $618,000 and (ii) are entitled to receive warrants
        to
        purchase 5,120,000 shares of the Company’s common stock at a price of $0.144.
        The Company has recorded payments to the placement agents as a deferred cost
        (see Note 1).
 
 As
        part
        of the debt financing, each holder of Series A & B Preferred Stock who
        certified their status as an accredited investor was issued 2.19 shares of
        Common Stock for each share of Preferred Stock held. The Company has recorded
        a
        financing expense of $6,060,564 representing the fair value of the 50,504,696
        shares of Common Stock issued as an inducement to the Series A & B Preferred
        Shareholders to consent to the convertible debenture. As of December 31,
        2007,
        46,517,737 shares of Common Stock have been issued and the remaining 3,986,959
        shares have been recorded as Common Stock subscribed. As part of the same
        consent, the holders of the Series A & B Preferred shares agreed to modify
        the terms of the preferred stock to eliminate their seniority to the Debenture
        holders in regards to the sale or liquidation of the Company, forfeit any
        unpaid
        and undeclared dividends through May 24, 2007, lower the dividend rate on
        the
        Series A Preferred Stock to two percent per annum (2%) going forward, and
        eliminate certain additional rights of the preferred stock. In addition,
        the
        holders of the Series A & B Preferred shares waived any future anti-dilution
        rights.
 
 Upon
        issuing the Debentures, the Company triggered certain anti-dilution provisions
        in the Company's warrants which lowered the conversion price and increased
        the
        number of shares the warrant is convertible for. The Company used the
        Black-Scholes option-pricing model to determine the fair market value of
        the
        adjusted warrants and recorded a deemed dividend of $652,318 (see note
        7).
 
 The
        Debenture Holders shall be entitled to receive interest on the aggregate
        unconverted and then outstanding principal amount of their Debentures at
        the
        rate of 8% per annum, payable quarterly, in cash or Common Stock at the
        discretion of the Company, and subject to certain limitations and restrictions.
        The Debentures are secured by substantially all of the Company’s assets. The
        Debenture Holders have the right to convert the Debentures at any time into
        shares of Common Stock at an initial conversion price of $0.125. The exercise
        price of the Warrants and Placement Agent Warrants are $.144 per share. The
        initial conversion price of the Debentures and the exercise price of the
        Warrants and Placement Agent Warrants are subject to adjustment upon certain
        events.
 
 The
        Company triggered adjustments to the conversion price of the Debenture and
        the
        exercise price of the Warrants as a result of the Company's financial results
        for the period ending September 30, 2007, which became effective November
        15,
        2007. The Debenture Holders now have the right to convert the Debentures
        at any
        time into shares of Common Stock at a conversion price of $0.0625. The number
        of
        Warrants issued to the Debenture Holders and the Placement Agents increased
        to
        147,105,556 and 10,240,000, respectively, and the exercise price was reduced
        to
        $0.072 per share.
 
 The
        Company used the Black Scholes option-pricing model to value the adjusted
        warrants issued to the Debenture Holders and applied it to the principal
        amount
        to determine the convertible debt discount which totaled $5,062,256. The
        Company
        will amortize the discount over the life of the Debenture (36 months). During
        the six months ended June 30, 2008, the Company amortized $836,632 of the
        debt
        discount into interest expense. As a result of the adjustment to the conversion
        price, the Company has recognized a beneficial conversion feature and recorded
        a
        Financing Expense totaling $3,430,591 during the year ended December 31,
        2007.
 
 On
        March
        26, 2008, the Company obtained consent from more than 70% of the Debenture
        Holders to modify the terms of the Debentures to provide that, in lieu of
        making
        the interest payments due thereunder in cash or in shares of common stock
        of the
        Company on the interest payment due dates, the interest payments shall accrue
        and be paid in full in cash on May 25, 2010, the Debenture maturity date. 
As an incentive to provide the consent, the Company shall distribute to the
        Debenture Holders a one time distribution equal to the value of 2% of the
        outstanding principal amount due under the Debentures as of March 31, 2008
        totaling approximately $178,000, which will be paid in cash on the maturity
        date.   Each Debenture Holder shall have the right, in its sole
        discretion, to convert any accrued but unpaid interest on the principal amount
        due under the Debentures into shares of common stock of the Company at the
        applicable Interest Conversion Rate at any time prior to the maturity
        date.
 
 During
        the nine month period ended September 30, 2008, the Company issued 160,000
        shares of common stock for the conversion of $10,000 in Debentures principal
        and
        issued 97,925 shares of common stock for the conversion of $2,350 in accrued
        interest.
 
 **Note
        7 - Stockholders' equity**
 
 **Capital
        stock**
 
 At
        September 30, 2008 and December 31, 2007, the Company had an authorized number
        of shares of 750,000,000 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. As of
        September 30, 2008, the total issued and outstanding shares were 86,561,449
        Common Shares, 21,306,261 Preferred Series A Shares, and 3,063,402 Preferred
        Series B Shares. As of December 31, 2007, the total issued and outstanding
        shares were 85,273,680 Common Shares, 22,320,598 Preferred Series A Shares,
        and
        3,063,402 Preferred Series B Shares.
  8
 
 During
        the years ended December 31, 2007, 740,907 shares of Preferred Series A were
        converted to Common Shares, respectively, at a rate of 1:1.
 
 During
        the nine months ended September 30, 2008, 1,014,337 shares of Preferred Series
        A
        were converted to Common Shares, respectively, at a rate of 1:1.
 
 **Share
        Exchange Agreement and Series A Offering**
 
 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 6,441,895 shares
        of the
        Company's 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. (These
        transactions are collectively referred as the “Series A Offering").
 
 In
        connection with the Series A Offering, the Company entered into a Registration
        Rights Agreement dated as of July 11, 2005 with the Company's shareholders,
        Series A Shareholders, and certain additional parties. 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 was declared effective in April 2006. On August 10, 2006, the
        Company issued 970,550 Series A Preferred Shares valued at $902,611 to Preferred
        Series A Share Holders in settlement of the Non-Registration Events. This
        agreement was amended on May 25, 2007 to reflect the subordination of rights
        under this agreement to the registration rights agreement entered into by
        the
        Company on May 25, 2007 (see Note 3).
 
 **Terms
        of Series A Preferred**
 
 Subject
        and subordinate to the liquidation rights of the Company’s Secured Convertible
        Promissory Noteholders, 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,
        in
        the event of any sale or dissolution of the Company. 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.
 
 Prior
        to
        May 25, 2007, the holders of Series A Preferred Stock were 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. On August 10, 2006, the
        Company issued approximately 1,700,000 shares of Series A Preferred Stock
        as
        dividends to all holders of record on July 11, 2006, valued at approximately
        $1,500,000. As of May 25, 2007, the Series A Preferred Stock consented to
        waive
        any unpaid and undeclared dividends which resulted in the elimination of
        approximately $1,172,000 in accumulated, unpaid and undeclared dividends
        (see
        Note 6). In addition, the Series A Preferred Shareholders consented to lower
        the
        compounding dividend rate to two percent (2%) per annum. As of March 31,
        2007,
        accumulated, undeclared dividends on the Series A Preferred Shares totaled
        approximately $339,400.
 
 **Terms
        of Series B Preferred**
 
 Subject
        and subordinate to the liquidation rights of the Company’s Secured Convertible
        Promissory Noteholders and Series A Preferred Stock, 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, in the event of any sale
        or
        dissolution of the Company. 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. Holders of the
        Series B Preferred Stock receive on an as-converted basis any distributions
        paid
        on the Common Stock.
 
 **Stock
        Compensation**
 
 Through
        September 30, 2008 and 2007, the Company has granted approximately 4.6 million
        of its common stock to employees and others, of which approximately 4.4 common
        shares have vested. 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 May
        2009.
        For the nine months ended September 30, 2008 and 2007, approximately 0 and
        166,000 shares, respectively, vested and a charge to compensation expense
        of
        $14,250 and $37,922, respectively, was recorded. The remaining unvested shares
        valued at approximately $14,250 are being amortized over their respective
        vesting periods.
 
 **Employee
        Stock Options**
 
 On
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        Statement of Financial Accounting Standards (SFAS) No. 123R, “Share-Based
        Payment,” using the modified prospective method. For the nine months ended
        September 30, 2008 and 2007, the Company recognized stock-based compensation
        of
        $148,814 and $116,842, respectively. The Company considers voluntary termination
        behavior as well as trends of actual option forfeitures when estimating its
        forfeiture rate. Given the limited history of outstanding options, the Company
        has estimated a 0% forfeiture rate and has only recorded actual forfeitures
        as
        incurred.
 
 Stock
        options issued under the Company’s Long-term Incentive Plans are granted with an
        exercise price equal or greater than the market price of the Company’s stock at
        the date of grant and expire ten years from the date of grant. These options
        generally vest over a two- or three-year period. During the nine months ended
        September 30, 2008 and 2007, the Company issued 2.2 million and 0 options,
        respectively, to purchase common stock which had a fair market value of $32,780
        and $0, respectively, which was calculated using the Black-Scholes
        option-pricing model.
 
 The
        fair
        value of each option granted is estimated on the date of grant using the
        Black-Scholes option-pricing method. Given its limited trading history, the
        Company used volatility from companies in the same industry. The Company
        estimated the expected option life and the expected forfeiture rate. The
        risk-free rate is based on the U.S. Treasury yield curve in effect at the
        time
        of grant for the estimated life of the option. The Company has not made any
        dividend payments on common stock nor does it have plans to pay dividends
        in the
        foreseeable future. The following assumptions were used to estimate the fair
        value of options granted during the noted periods using the Black-Scholes
        option-pricing model:
  9
 
 2008
              
              2007Risk
                  free interest rate
              
              
              5.00
              %
              
              7.33-8.25
              %Forfeiture
                  Rate
              
              
              0.00
              %
              
              0.00
              %Expected
                  Term (years)
              
              
              5
              
              
              5Expected
                  volatility
              
              
              100.00
              %
              
              100.00
              %Dividend
                  Yield
              
              
              0.00
              %
              
              0.00
              %
 
 Information
        about all employee options outstanding is as follows:
 
 For the nine months ended September 30,
              
              **2008**
              
              **2007****Weighted Average**
              
              
              
              **Weighted Average****Shares**
              
              **Exercise Price**
              
              **Shares**
              
              **Exercise Price**Options
                  Outstanding at beginning of period
              
              
              16,117,500
              
              $
              0.15
              
              
              3,176,015
              
              $
              0.79Granted
              
              
              2,200,000
              
              $
              0.0625
              
              
              0
              
              $
              -Cancelled
              
              
              0
              
              $
              -
              
              
              -
              
              $
              -Options
                  Outstanding at end of period
              
              
              18,317,500
              
              $
              0.14
              
              
              3,176,015
              
              $
              0.79
 
 As
        of
        September 30, 2008, a total of 7,909,532 employee stock options are exercisable
        and the unamortized stock compensation is $224,542.
 
 **Warrants
        to Purchase Common Stock**
 
 During
        2005, the Company issued various warrants to various parties in connection
        with
        the Series A and B Offerings. On May 25, 2007, upon issuing the Debentures,
        the
        Company triggered certain anti-dilution provisions in these warrant agreements
        which lowered the conversion price and increased the number of shares the
        warrant is convertible for. The Company used the Black-Scholes option-pricing
        model to determine the fair market value of the adjusted warrants and recorded
        a
        deemed dividend of $652,318. The tables below show the effect of the repriced
        warrants and increase in the number of shares.
 
 On
        September 11, 2006, the Company issued warrants to purchase 1,500,000 of
        Celsia
        common stock to a third party as part of a distribution agreement. As part
        of
        the same agreement, the Company received warrants to purchase 500,000 shares
        of
        the distributors common stock. The warrants vest 25% in December 2006, 25%
        in
        December 2007, and 50% contingent upon achievement of volume thresholds.
        The
        agreement was executed with the intention that the value of each warrant
        to be
        materially similar in value. Management has estimated the fair market value
        of
        both issuances using the Black-Scholes Option pricing model and has valued
        the
        warrant issuance to them at approximately $220,000. The Company has recorded
        an
        expense totaling approximately $139,000 related to this issuance as of December
        31, 2007. No value was assigned to the warrants received by the
        Company.
 
 On
        May
        25, 2007, the Company issued warrants to purchase 70,752,778 shares of Celsia
        common stock to the Debenture Holders (see Note 6). The Company valued the
        warrants to determine the discount on the debenture. In addition, the Company
        become obligated to issue warrants to purchase 5,120,000 shares of Celsia
        common
        stock to the Placement Agents and recorded $355,328 as deferred
        charges.
 
 On
        July
        18, 2007, the Company issued AMF Capital, Inc. a warrant to purchase 1,000,000
        shares of common stock of the Company at an exercise price of $0.88 per share
        as
        part of a settlement (see Note 3). The Company recorded an expense of $32,700
        for the issuances.
 
 On
        August
        17, 2007, the Company issued warrants to purchase 2,800,000 of Celsia common
        stock to the Debenture Holders (see Note 6). The Company valued the warrants
        to
        determine the discount on the debenture.
 
 The
        Company triggered adjustments to the exercise price of the Debenture Warrants
        as
        a result of the Company's financial results for the period ending September
        30,
        2007, which became effective on November 15, 2007. The number of Warrants
        issued
        to the Debenture Holders and the Placement Agents increased to 147,105,556
        and
        10,240,000, respectively, and the exercise price was reduced to $0.072 per
        share. The Company recorded a deferred charge of $521,216 for the additional
        warrants issued to the placement agent.
 
 During
        the year ended December 31, 2007, the Company issued warrants to purchase
        1,300,000 shares of common stock to a consultant and recorded $59,410 as
        a
        consulting expense. During the year ended December 31, 2007, the Company
        issued
        1,440,000 shares of common stock and warrants to purchase 720,000 in
        satisfaction of a $90,000 outstanding liability.
 
 A
        summary
        of the issued and outstanding warrants are as follows:
 
 **Old**
              
              **Old**
              
              **Anti-Dilution**
              
              **Anti-Dilution****Exercise**
              
              **# of Warrants**
              
              **Exercise**
              
              **# of Warrants**
              
              **# of Warrants**
              
              **Expiration****Price**
              
              **Outstanding**
              
              **Price**
              
              **Outstanding**
              
              **Exercisable**
              
              **Date**$   
                  0.072
              
              
              720,000
              
              
              n/a
              
              
              n/a
              
              
              720,000
              
              
              December 2012$  
                     0.11
              
              
              1,300,000
              
              
              n/a
              
              
              n/a
              
              
              1,300,000
              
              
              December 2012$  
                   0.144
              
              
              78,672,778
              
              $
              0.072
              
              
              157,345,556
              
              
              157,345,556
              
              
              May 2012$    
                   0.32
              
              
              1,500,000
              
              
              n/a
              
              
              n/a
              
              
              750,000
              
              
              September 2011$     
                  0.88
              
              
              1,000,000
              
              
              n/a
              
              
              n/a
              
              
              1,000,000
              
              
              July 2012$     
                  0.88
              
              
              681,018
              
              $
              0.144
              
              
              681,018
              
              
              681,018
              
              
              July 2009$     
                  0.88
              
              
              1,186,820
              
              $
              0.36
              
              
              2,862,308
              
              
              2,862,308
              
              
              July 2010$     
                  1.09
              
              
              1,097,142
              
              $
              0.36
              
              
              2,646,027
              
              
              2,646,027
              
              
              July 2010$     
                  1.10
              
              
              2,759,357
              
              $
              0.45
              
              
              6,789,387
              
              
              6,789,387
              
              
              July 2010$     
                  1.32
              
              
              2,759,357
              
              $
              0.53
              
              
              6,882,126
              
              
              6,882,126
              
              
              July 2010$     
                  1.50
              
              
              772,190
              
              $
              0.60
              
              
              1,941,836
              
              
              1,941,836
              
              
              December 2010$     
                  3.00
              
              
              765,850
              
              $
              1.16
              
              
              1,986,069
              
              
              1,986,069
              
              
              December 2010181,134,327
              
              
              184,904,327
 
 **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:
 
 **Old**
              
              **Old**
              
              **New**
              
              **New****Exercise**
              
              **# of Warrants**
              
              **Exercise**
              
              **# of Warrants**
              
              **# of Warrants**
              
              **Expiration****Price**
              
              **Outstanding**
              
              **Price**
              
              **Outstanding**
              
              **Exercisable**
              
              **Date**$     
                  0.88
              
              
              1,364,528
              
              $
              0.144
              
              
              1,364,528
              
              
              1,364,528
              
              
              July
                  2010$      1.50
              
              
              210,000
              
              $
              0.144
              
              
              210,000
              
              
              210,000
              
              
              December
                  20101,574,528
              
              
              1,574,528
  10




**Item
              2.**
            **Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations**




*The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with our consolidated financial
      statements and the notes thereto appearing elsewhere in this Quarterly Report
      on
      Form 10-Q.*




*Business*




Our
      business strategy is to become a leader in researching, developing and
      commercializing next-generation cooling solutions which are focused on the
      computer, flat panel display, LED-lighting, and communications industries.
      We
      develop, manufacture, market, sell and/or license our patented thermal
      management products and technology to original equipment manufacturers (OEMs),
      third party design/manufacturers and to total solution providers in the thermal
      management business. We believe that our products absorb, transport and
      dissipate heat more efficiently than current heat-pipe/heat-sink cooling
      solutions. Our unique cooling device uses patented combinations of liquid and
      vapor layers to manage liquid and vapor at very high speeds through
      micro-channels within the assemblies.




We
      have
      succeeded in achieving several design wins with major suppliers of graphics
      and
      memory solutions sold at both retail and into branded end products. Celsia
      has
      partnered with a major device manufacturer and our NanoSpreadersTM technology has
      been successfully demonstrated at this manufacturer’s recent technical forum on
      cooling solutions. We engage with such companies who find our technology an
      attractive solution to their thermal management needs. To improve this
      communications with future clients we have engaged and trained a rep sales
      force
      to more thoroughly cover both the USA and Europe. We believe that we provide
      better performance than competing technologies at a competitive price. Use
      of
      our products allows the OEMs and solution providers to either offer higher
      performance or run their systems cooler. We expect design wins in all of our
      target markets, which include LED’s, graphics chips, high end CPUs,
      communications equipment and memory applications.




We
      expect
      our product development, and project management activities to continue to be
      driven by commercial opportunities and undertaken as a result of potential
      customers requesting test units. The test orders that we receive from potential
      customers are fulfilled either by (1) modification of already
      commercialized products or (2) new solutions designed together with input
      from the potential customer. The majority of our R&D resources are dedicated
      to meeting and quoting on the potential customer’s requirements with an
      objective of commercial opportunities which will be available in quantities,
      to
      end users, within a three to four quarter time period.




We
      are
      managed by a team of professionals with significant operational and thermal
      solutions experience and knowledge. Our executive officers also have extensive
      experience with industry leaders in all of the major market segments we are
      engaged with, where improved cooling of electronic devices is a major
      competitive advantage. We intend to leverage this extensive experience and
      our
      relationships within such sectors to execute on our core strategy and build
      significant long-term value for our stockholders.




11




In
      December 2007, we relocated our engineering and pilot line facilities from
      Korea
      to Taiwan. Our Korean staff and facilities were downsized to a sales and
      administrative support function only and these functions will be totally phased
      out by the end of our 2008 fiscal year. The relocation to Taiwan resulted in
      a
      more responsive unit operating at lower costs. Any
      additional capital expenditures will be focused on complementing the Taiwan
      pilot plant with specific volume related equipment and on specific research
      and
      development related test equipment. All investments will be driven by
      commercialization opportunities, customer driven projects, and/or commercial
      volumes.




Our
      product test orders have led to
      several related test product deliveries ,
      as well
      as commercial orders. Test products
      are used by potential customers to examine our products’ features and
      compatibility with customer products. Although such testing procedures can
      involve numerous steps and significant timelines, in several instances our
      test
      products have advanced beyond the test phases and been incorporated into
      commercial products. The mix between sample order deliveries and commercial
      deliveries continues to increase in favor of commercial deliveries. Once our
      products are shipped to our customers, we have no additional commitment in
      order
      to recognize revenues.




***Results
      of Operations***




**Three
      Months Ended September 30, 2008 Compared to Three Months Ended September 30,
      2007**




We
      produced revenues of $228,157 for the three months ended September 30, 2008
      compared to $208,266 for the three months ended September 30, 2007. The increase
      in revenues is a result of customers paying for test samples and commercial
      deliveries of our NanoSpreadersTM. Cost of sales for the three months ended
      September 30, 2008 were $255,196 compared to $329,089 for the same period for
      the fiscal year 2007. We have decreased our cost of sales and narrowed our
      loss
      in profit margin because we have scaled down the sales of low margin thermal
      management commodity products that was part of a Korean business acquisition
      in
      April 2007.




We
      are
      currently operating with strict cost controls in order to manage our
      commercialization process. A majority of our expenses for the three months
      ended
      September 30, 2008 and 2007 were selling and administrative expenses. The
      selling and administrative expenses for the three months ended September 30,
      2008 were $815,008 compared to $1,057,060 for the same period in fiscal 2007.
      The main costs are personnel costs, professional fees, and travel expenses.
      The
      decrease in expenses is due to a company wide initiative to reduce expenses
      and
      personnel.




**Nine
      Months Ended September 30, 2008 Compared to Nine Months Ended September 30,
      2007**




We
      produced revenues of $948,203 for the nine months ended September 30, 2008
      compared to $506,921 for the nine months ended September 30, 2007. The increase
      in revenues is a result of customers paying for test samples and commercial
      deliveries of our NanoSpreadersTM. Cost of sales for the nine months ended
      September 30, 2008 were $997,637 compared to $877,027 for the same period for
      the fiscal year 2007. This increase is attributable to increased production
      activity originating from an increasing demand for our products.




12




We
      are
      currently operating with strict cost controls in order to manage our
      commercialization process. A majority of our expenses for the nine months ended
      September 30, 2008 and 2007 were selling and administrative expenses. The
      selling and administrative expenses for the nine months ended September 30,
      2008
      were $2,235,824 compared to $2,559,364 for the same period in fiscal 2007.
      The
      main costs are personnel costs, professional fees, and travel expenses. The
      decrease in expenses is due to a company wide initiative to reduce expenses
      and
      personnel.




***Liquidity
      and Capital Resources***




Our
      main
      source of liquidity and funding for our operations has historically been from
      monies raised from various financings. During fiscal 2007, we raised an
      aggregate amount of $8,492,847 in cash through the issuance of secured
      convertible debentures, which become due in May 2010. At September 30, 2008,
      our
      operational cash outflow was approximately $260,000 per month. Our main use
      of
      cash relates to product development driven by customer projects and general
      and
      administrative expenses.





In
      order
      to reduce our cash outflows, during March 2008, we obtained consent from our
      debenture holders to modify the terms of the debentures to provide that, in
      lieu
      of making the interest payments due thereunder in cash or in shares of our
      common stock on the interest payment due dates, the interest payments shall
      accrue and be paid in full in cash at the maturity date of the debentures.
      As an
      incentive to provide the consent, we agreed to pay the debenture holders, at
      the
      maturity date of the debentures, an amount in cash equal to 2% of the
      outstanding principal amount of the debentures as of March 31, 2008 (or
      approximately $178,000). Each debenture holder continues to have the right,
      in
      its sole discretion, to convert any accrued but unpaid interest on the principal
      amount due under the debentures into shares of our common stock at the
      applicable interest conversion rate at any time prior to the maturity date.




Based
      on
      our current operating plan, we anticipate using our cash mainly to continue
      commercialization efforts and to expand the distribution network for our
      technology solutions. The main uses for our cash 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. Our total cash
      needs for the next twelve months following October 1, 2008 is estimated to
      be
      approximately $1.6 million. We currently believe that our cash balances and
      anticipated cash flows from operations will be sufficient to meet our normal
      operating needs through January 2009. We expect to fund our operations,
      including capital costs and the costs of any necessary implementation of
      technological innovations, through cash generated from operations and from
      the
      proceeds of additional financing that we
      are in the process of seeking to obtain.   There can be no
      assurance that we will be successful in raising the necessary financing that
      we
      need to continue our operations. Our subsidiary has a $248,707 note payable
      to a
      strategic partner that matured in 2007 and remains unpaid.




13


The
      ratio
      between current assets and current liabilities at September 30, 2008 was
      approximately 0.65 to 1.0.




Our
      future liquidity and capital resource requirements will depend on many factors,
      including, but not limited to the following trends and uncertainties we face:




·
            Our
                operations continue to depend upon the continuing business of our
                existing
                customers and our ability to attract new
                customers;




·
            We
                experience competition in our industry and continuing technological
                changes;




·
            We
                compete with a number of larger companies who have greater resources
                than
                those of ours;




·
            We
                compete on the basis of industry knowledge, products, services, price,
                technological advances and system functionality and performance;
                and




·
            Our
                ability to raise additional capital for
                operations.




***Critical
      Accounting Policies and***  ***Estimates***




We
      prepare our 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 we 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) equity securities issued,
      2) registration rights, 3) intangible assets, and 4) accounting
      for convertible debentures.




***Recent
      Accounting Pronouncements***




See
      Note
      1 of the Notes to Consolidated Financial Statements included in Item 1 of this
      Quarterly Report for Recent Accounting Pronouncements.




***Off-Balance
      Sheet Arrangements***




We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources that is material to investors.




***Market
      Risks***




We
      operate in the United States, the United Kingdom, Taiwan, and South Korea,
      each
      of which has its own currency. This may cause us to experience and be exposed
      to
      different market risks such as changes in interest rates and currency
      deviations.




Our
      business is not seasonal and the effect of inflation on our revenue and
      operating results was not significant.




14


**Item
              3.**
            **Quantitative
                and Qualitative Disclosures about Market Risk**.




We
      are a
      smaller reporting company and this Item is not applicable to us.




**Item
              4. T.**
            **Controls
                and Procedures**.




***Disclosure
      Controls and Procedures***




Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in company reports filed or
      submitted under the Securities Exchange Act of 1934, or the “Exchange Act,” is
      recorded, processed, summarized and reported, within the time periods specified
      in the SEC’s rules and forms. Disclosure controls and procedures include without
      limitation, controls and procedures designed to ensure that information required
      to be disclosed in company reports filed or submitted under the Exchange Act
      is
      accumulated and communicated to management, including our chief executive
      officer and chief financial officer, as appropriate to allow timely decisions
      regarding disclosure.




Our
      management, including our principal executive officer and principal financial
      officer, evaluated the effectiveness of the design and operation of our
      disclosure controls and procedures as of September 30, 2008 and concluded
      that the disclosure controls and procedures were not effective, because certain
      deficiencies involving internal controls constituted a material weakness as
      discussed below. The material weakness identified did not result in the
      restatement of any previously reported financial statements or any other related
      financial disclosure, nor does management believe that it had any effect on
      the
      accuracy of our financial statements for the current reporting
      period.




***Management’s
      Report on Internal Control Over Financial Reporting***




Management
      is responsible for establishing and maintaining adequate “internal control over
      financial reporting” as defined in Rules 13a-15(f) and 15d-15(f) under the
      Exchange Act. Internal control over financial reporting refers to the process
      designed by, or under the supervision of, our Chief Executive Officer and Chief
      Financial Officer, and effected by our Board of Directors, management and other
      personnel, to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting principles, and
      includes those policies and procedures that:




(i)
            pertain
                to the maintenance of records that, in reasonable detail, accurately
                and
                fairly reflect the transactions and dispositions of our assets;




(ii)
            provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with generally
                accepted
                accounting principles, and that receipts and expenditures are being
                made
                only in accordance with authorizations of our management and directors;
                and




(iii)
            provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of our assets that could
                have
                a material effect on our financial statements.




15


Our
      management, including our principal executive officer and principal financial
      officer, has used the framework set forth in the report entitled “Internal
      Control—Integrated Framework” published by the Committee of Sponsoring
      Organizations of the Treadway Commission to conduct an evaluation of the
      effectiveness of our internal control over financial reporting. Based on its
      evaluation, our management concluded that our internal control over financial
      reporting was not effective because certain deficiencies involving internal
      controls constituted a material weakness. A material weakness is a deficiency,
      or a combination of control deficiencies, in internal control over financial
      reporting such that there is a reasonable possibility that a material
      misstatement of our interim financial statements will not be prevented or
      detected on a timely basis.




Our
      material weakness in our internal control over financial reporting relates
      to
      the monitoring and review of work performed by our Chief Financial Officer
      in
      the preparation of financial statements, footnotes and financial data provided
      to the our registered public accounting firm in connection with the annual
      audit. All of our financial reporting is carried out by our Chief Financial
      Officer. This lack of accounting staff results in a lack of segregation of
      duties necessary for an effective system of internal control. The material
      weakness identified did not result in the restatement of any previously reported
      financial statements or any other related financial disclosure, nor does
      management believe that it had any effect on the accuracy of our financial
      statements for the current reporting period.




In
      order
      to mitigate this material weakness to the fullest extent possible, all quarterly
      financial reports are reviewed by the Chief Executive Officer as well as the
      audit committee for reasonableness. All unexpected results are investigated.
      At
      any time, if it appears that any control can be implemented to continue to
      mitigate such weaknesses, it is immediately implemented. We intend to implement
      appropriate procedures for monitoring and review of work performed by our Chief
      Financial Officer.




***Changes
      in Internal Control over Financial Reporting***




There
      were no changes in our internal control over financial reporting that occurred
      during our last fiscal quarter that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial
      reporting.





**PART
      II.**


**OTHER
      INFORMATION**




**Item
              1.**
            **Legal
                Proceedings**




On
      October 19, 2007, our former President, CEO, and member of the Board of
      Directors, filed a lawsuit in the Miami-Dade County Circuit Court claiming
      failure to pay bonuses, severance, and other benefits in connection with his
      previously reported termination by us. We have filed a motion to Compel
      Arbitration and Stay Proceedings as provided by the employment contract with
      us.
      On April 16, 2008, the court granted our motion and ordered (i) that the
      Plaintiff commence arbitration in accordance with the terms of the employment
      agreement within six (6) months of the date of the order and (ii) all
      proceedings are stayed until the conclusion of the arbitration
      proceedings.  Pursuant to the court order, if arbitration is not timely
      commenced the action will be dismissed. We believe the employee's claims are
      without merit and intends to defend the action vigorously. The settlement of
      this action is not expected to have a material impact on our financial
      position.




16


**Item
              2.**
            **Exhibits**.


Exhibit Number
              
              Exhibit3(i).4
              
              Second
                  Amended and Restated Articles of Incorporation of Celsia Technologies,
                  Inc.31.1
              
              Certification
                  pursuant to Rules 13a – 14(a) and 15d – 14(a) under the Securities
                  Exchange Act of 1934, as amended.31.2
              
              Certification
                  pursuant to Rules 13a – 14(a) and 15d – 14(a) under the Securities
                  Exchange Act of 1934, as amended.32.1
              
              Certification
                  pursuant to 18 U.S.C. Section 1350.32.2
              
              Certification
                  pursuant to 18 U.S.C. Section
                  1350.


17





**SIGNATURES**





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




**CELSIA
                TECHNOLOGIES, INC**.Date:
                November 13, 2008
            
            By:
            /s/
                Joseph C. FormichelliJoseph
                C. FormichelliChief
                Executive OfficerBy:
            /s/
                Jorge A. FernandezJorge
                A. FernandezChief
                Financial Officer




18




**EXHIBIT
      INDEX**




The
      following exhibits are filed as part of this Form 10-Q




**Exhibit
                No.**
            
            **Description**3(i).4
            
            Second
                Amended and Restated Articles of Incorporation of Celsia Technologies,
                Inc.31.1
            
            Certification
                of Chief Executive Officer Pursuant to Rules 13a – 14(a) and 15d – 14(a)
                under the Securities Exchange Act of 1934, as amended.31.2
            
            Certification
                of Chief Financial Officer Pursuant to Rules 13a – 14(a) and 15d – 14(a)
                under the Securities Exchange Act of 1934, as amended.32.1
            
            Certification
                of Chief Executive Officer Pursuant to 18 U.S.C. Section
                1350.32.2
            
            Certification
                of Chief Financial Officer Pursuant to 18 U.S.C. Section
                1350.




19