##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 Form 10-QSB
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
for the quarterly period ended September 30, 2005
 o
    
    Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 333-64840
 iCURIE, INC.
  Nevada
    
    91-2015441(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)
 1395 Brickell Avenue, Suite 800
Miami, Florida 33131
 (305) 529-6290
 þ o
 o þ
  Class
    
    Outstanding as of November 11, 2005Common Stock
    
    29,212,591
 o þ
    TABLE OF CONTENTS  PART I FINANCIAL INFORMATIONItem 1. Financial Statements.iCurie, Inc. Consolidated Balance Sheet as of September 30, 2005 Unaudited (US Dollars)Consolidated Statement of OperationsConsolidated Statement of Cash FlowsNote 1  Summary of significant accounting policiesNote 2  Income TaxesNote 3  CommitmentsNote 4  Stockholders equityNote 5  Short-term borrowingNote 6  Bond payableItem 2. Managements Discussion and Analysis or Plan of Operation.Item 3. Controls and Procedures.PART II OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds.Item 4. Submission of Matters to a Vote of Security Holders.Item 6. Exhibits.SIGNATURESEXHIBIT INDEXForm of Common Stock CertificateSection 302 CertificationSection 302 CertificationSection 906 CertificationSection 906 Certification    Table of Contents  
 PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 
 AssetsCurrent AssetsCash and cash equivalents
    
    $
    5,075,526Receivable
    
    
    78,009Advance payments
    
    
    102,393Prepaid expenses
    
    
    59,608Other
    
    
    43,010Total current assets
    
    
    5,358,546Guarantee deposits
    
    
    123,417Investment (note 1)
    
    
    110,670Furniture and equipment, net (note 1)
    
    
    571,265Royalty Advance (note 3)
    
    
    500,000Other assets
    
    
    45Total assets
    
    $
    6,663,943Liabilities and Stockholders Equity (Deficit)Current liabilitiesAccounts payable
    
    $
    517,656Short-term borrowings (note 5)
    
    
    248,465Accrued expenses
    
    
    990,566Other
    
    
    21,561Total current liabilities
    
    
    1,778,248Bond payable (note 6)
    
    
    247,490Total liabilities
    
    
    2,025,738Stockholders equity (deficit) (note 4)Common stock
    
    
    29,213Common stock Subscribed
    
    
    196Preferred Stock, Series A
    
    
    20,995Additional paid-in-capital
    
    
    16,509,461Other comprehensive loss
    
    
    (38,135
    )Unearned Compensation
    
    
    (168,141
    )Accumulated (deficit)
    
    
    (11,715,384
    )Total stockholders equity (deficit)
    
    
    4,638,205Total liabilities and stockholders equity (deficit)
    
    $
    6,663,943
  2
    Table of Contents  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Costs and expensesSelling and Administrative expenses
    
    
    1,968,628
    
    
    
    473,476
    
    
    
    4,237,356
    
    
    
    1,380,915Depreciation
    
    
    39,992
    
    
    
    21,517
    
    
    
    61,017
    
    
    
    35,507Amortization of deferred financing cost
    
    
    220,745
    
    
    
    
    
    
    
    316,661
    
    
    
    Miscellaneous
    
    
    4,999
    
    
    
    2,516
    
    
    
    15,792
    
    
    
    9,872Total costs and expenses
    
    
    2,234,364
    
    
    
    497,509
    
    
    
    4,630,826
    
    
    
    1,426,294Operating (loss)
    
    
    (2,234,364
    )
    
    
    (497,509
    )
    
    
    (4,630,826
    )
    
    
    (1,426,294
    )Other income (expenses)Loss on Investment (note 1)
    
    
    (105,903
    )
    
    
    
    
    
    
    (105,903
    )Interest and other income
    
    
    37,174
    
    
    
    2
    
    
    
    53,904
    
    
    
    71Interest
expense (notes 4, 5 and 6)
    
    
    (13,020
    )
    
    
    (19,747
    )
    
    
    (257,424
    )
    
    
    (78,502
    )Total other income (expenses)
    
    
    (81,749
    )
    
    
    (19,745
    )
    
    
    (309,423
    )
    
    
    (78,431
    )Net (loss)
    
    $
    (2,316,113
    )
    
    $
    (517,254
    )
    
    $
    (4,940,249
    )
    
    $
    (1,504,725
    )Dividend on
Preferred Stock
    
    $
    (307,024
    )
    
    
    
    
    
    $
    (307,024
    )
    
    
    Net Loss
Attributable to Common Shareholder
    
    $
    (2,623,137
    )
    
    $
    (517,254
    )
    
    $
    (5,247,273
    )
    
    $
    (1,504,725
    )Net Loss per Share:Basic
    
    $
    (0.09
    )
    
    $
    (0.02
    )
    
    $
    (0.20
    )
    
    $
    (0.06
    )Weighted Average Shares OutstandingBasic
    
    
    28,668,779
    
    
    
    24,935,047
    
    
    
    26,193,301
    
    
    
    24,935,047
  3
    Table of Contents  2005
    
    
    2004Cash flows from operating activities:Net (loss)
    
    $
    (4,940,249
    )
    
    $
    (1,504,725
    )Adjustments to reconcile net (loss) to net cash (used)
by operating activities:Depreciation
    
    
    61,017
    
    
    
    35,507Amortization
    
    
    322,984
    
    
    
    3,925Beneficial conversion feature on long-term debt
    
    
    192,959
    
    
    
    Loss on Investment
    
    
    105,903
    
    
    
    Finders Fee Settlement
    
    
    38,219
    
    
    
    Amortization
of Deferred Compensation
    
    
    138,024
    
    
    
    Imputed interest
    
    
    (17,156
    )
    
    
    7,298Changes to certain other accounts:Receivable
    
    
    50,185
    
    
    
    6,461Advance payments
    
    
    (57,367
    )
    
    
    (79,706
    )Prepaid expenses
    
    
    (82,301
    )
    
    
    (5,166
    )Royalty Advance
    
    
    (500,000
    )
    
    
    Accounts payable
    
    
    207,167
    
    
    
    (31,111
    )Accrued expenses
    
    
    119,262
    
    
    
    628,402Other
    
    
    33,077
    
    
    
    28,161Net cash (used) by operating activities
    
    
    (4,328,276
    )
    
    
    (910,954
    )Cash flows from investing activities:Acquisition of subsidiary
    
    
    (2,025,344
    )
    
    
    (110,643
    )Deposits
    
    
    (74,311
    )
    
    
    Acquisition of short-term financial instrument
    
    
    19,322
    
    
    
    (17,361
    )Repayment of long-term loans
    
    
    
    
    
    
    (12,500
    )Guarantee deposits
    
    
    
    
    
    
    8,611Purchase of furniture and equipment
    
    
    (462,029
    )
    
    
    (111,902
    )Net cash (used) by investing activities
    
    
    (2,542,362
    )
    
    
    (243,795
    )Cash flows from financing activities:Short-term borrowings
    
    
    (423,344
    )
    
    
    (301,100
    )Long-term borrowings
    
    
    1,000,000
    
    
    
    Deferred financing fees
    
    
    (100,000
    )
    
    
    Issuance of common stock
    
    
    110,643
    
    
    
    1Net proceeds
from the issuance of preferred stock
    
    
    11,096,252
    
    
    
    Proceeds from subscribed equity
    
    
    
    
    
    
    1,375,000Repayment of convertible bond
    
    
    (2,030
    )
    
    
    43,403Offering costs
    
    
    (755,127
    )
    
    
    (98,799
    )Net cash provided by financing activities
    
    
    10,926,394
    
    
    
    1,018,505Net increase in cash and cash equivalents
    
    
    4,055,756
    
    
    
    (136,244
    )Cash and cash equivalents  beginning of period
    
    
    1,019,770
    
    
    
    155,982Cash and cash equivalents  end of period
    
    $
    5,075,526
    
    
    $
    19,738Supplemental cash flow disclosureNoncash financing activityDuring 2005 the Company recorded a beneficial preferred
stock conversion feature on certain Long-term debt
(see Note 4)
    
    $
    192,959
    
    
    
    During 2005
the Company recorded deferred stock compensation arrangements for
certain employees and directors
    
    $
    306,165
    
    
    
    During
2005 the Company converted debt issued by the UK subsidiary into
Preferred Stock in the US parent
    
    $
    2,500,000
    
    
    
    During 2005
the Company converted equity in the UK subsidiary into Preferred
Stock in the US parent
    
    $
    1,000,000
    
    
    
    During 2005
the Company converted a personal promissory note, collateralized by
the Companys Common Stock, into Preferred Stock in the US parent
    
    $
    1,100,000
    
    
    
    During 2005
the Company accrued Preferred Stock Dividend
    
    $
    307,024
    
    
    
    
  4
    Table of Contents  Note 1  Summary of significant accounting policies
 Organization
       Financial reporting
    Going Concern
  5
    Table of Contents  Cash and Cash Equivalents
  Investment
  Revenue recognition
  
    
    Persuasive evidence of a sale arrangement exists.
    
    Delivery has occurred to the customers.
    
    The sales price to the customer is fixed or determinable.
    
    Collection is reasonably assured.
 Deferred costs
  Furniture and equipment
  Vehicles
    
    $
    48,318Machinery
    
    
    328,111Furniture and fixtures
    
    
    259,463Assets under construction
    
    
    132,809768,701Accumulated depreciation
    
    
    (197,436
    )$
    571,265
  Net Loss per Share
  6
    Table of Contents  Long-lived assets
  Business risks
  Research and development costs
  Foreign currency translation
    Fair value of financial instruments
  Accounting for stock options
    7
    Table of Contents  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Net loss as reported
    
    $
    (2,623,137
    )
    
    $
    (517,254
    )
    
    $

    (5,247,273
    )
    
    $
    (1,504,725
    )Add: total stock-based employee compensation
expense included in reported net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deduct: stock-based compensation expense
determined under the fair value method,
net of tax effect, for all employee awards
    
    
    (47,710
    )
    
    
    
    
    
    
    (47,710
    )
    
    
    Pro forma net loss
    
    $
    (2,670,847
    )
    
    $
    (517,254
    )
    
    $
    (5,294,983
    )
    
    $
    (1,504,725
    )Loss per shareBasic-As reported
    
    $
    (0.09
    )
    
    $
    (0.02
    )
    
    $
    (0.20
    )
    
    $
    (0.06
    )Basic-Pro Forma
    
    $
    (0.09
    )
    
    $
    (0.02
    )
    
    $
    (0.20
    )
    
    $
    (0.06
    )
 Recent accounting pronouncements
  
 Note 2  Income Taxes
   
 Note 3  Commitments
 Commitments to a third party
   8
    Table of Contents  Royalty Agreement between iCurie UK, CHL Investment Partnership, and Hansen Gray & Company, Inc.
   Registration Rights
   
 Note 4  Stockholders equity
 Capital stock
     9
    Table of Contents  Amount
    
    
    Issue Date
    
    
    Exercise Price
    
    
    Expiration DateWarrants to purchase Common Stock
    
    
    8,490,055
    
    
    July 2005
    
    $
    0.88 to $1.32
    
    
    
    2010Options to purchase Common Stock
    
    
    1,590,337
    
    
    July 2005-Sept 2005
    
    $
    0.88
    
    
    
    2015Warrants to purchase Preferred Stock
    
    
    1,364,528
    
    
    July 2005
    
    $
    0.88
    
    
    
    2010
 
 Note 5  Short-term borrowing
  Bank loan payable with interest at 5.92% per annum
(Won 234 million)
    
    
    224,482Loan payable to Sae Han IT (see Note 3) with interest
at 5% per annum (Won 25 million)
    
    
    23,983Total
    
    $
    248,465
 
 Note 6  Bond payable
   Face Amount
    
    
    
    
    
    $
    287,812Discount
    
    $
    83,782Amortization of discount
    
    
    (43,460
    )
    
    
    40,322Carrying value
    
    
    
    
    
    $
    247,490
  10
    Table of Contents  Item 2. Managements Discussion and Analysis or Plan of Operation.
  Plan of Operation
      11
    Table of Contents  Liquidity of the Company
     Significant Estimates
  12
    Table of Contents  Recent accounting pronouncement
  Off Balance Sheet Arrangements
  Market Risks
  Forward-Looking Statements
   
 Item 3. Controls and Procedures.
  13
    Table of Contents  PART II
OTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 6. Exhibits.
 14
    Table of Contents  2.1*
    
    Share Exchange Agreement dated July 8, 2005, by and among Cedar Mountain Distributors, Inc.
and the shareholders of iCurie Lab Holdings Limited.2.2*
    
    Form of Subscription Agreement entered into between iCurie, Inc. and cash purchasers of
Series A Preferred Stock.2.3*
    
    Preferred Stock Purchase Agreement dated July 11, 2005, by and among iCurie, Inc. and
purchasers of Series A Preferred Stock exchanging promissory notes therefor.2.4*
    
    Share Transfer Agreement dated August 26, 2005, by and between iCurie Lab Holdings Limited
and Mr. Won Gyu Moon.3(i).1
    
    Amended and Restated Articles of Incorporation of iCurie, Inc. (incorporated by reference to
Exhibit 3(i).1 to iCurie, Inc.s Quarterly Report on Form 10-QSB for the quarterly period
ended June 30, 2005).3(ii).1
    
    Amended and Restated Bylaws of iCurie, Inc. (Incorporated by reference to Exhibit 3(ii).1
to iCurie, Inc.s Quarterly Report on Form 10-QSB for the quarterly period ended June 30,
2005).4.1
    
    Form of common stock certificate.4.2*
    
    Form of Warrant issued to Axiom Capital Management Inc., Indigo Securities, LLC and certain
affiliates thereof (for both common and Series A Preferred Stock).4.3*
    
    Form of $0.88 Warrants issued to purchasers of Series A Preferred Stock.4.4*
    
    Form of $1.10 and $1.32 Warrants issued to purchasers of Series A Preferred Stock.4.5*
    
    Warrant dated July 11, 2005 between iCurie, Inc. and Dr. Jeong Hyun Lee, Ph.D.4.6*
    
    iCurie, Inc. 2005 Stock Incentive Plan.4.7*
    
    Form of Option Grant under iCurie, Inc. 2005 Stock Incentive Plan.4.8*
    
    Form of Restricted Stock Grant under iCurie, Inc. 2005 Stock Option Incentive Plan.10.1*
    
    Registration Rights Agreement dated July 11, 2005 by and between iCurie, Inc. and certain
holders of iCurie, Inc. securities.10.2*
    
    Lock-Up and Leak-Out Agreement dated July 11, 2005 by and among iCurie, Inc., Hakan
Wretsell, Michael Karpheden, Dr. Jeong Hyun Lee, Ph.D.10.3*
    
    Employment Agreement dated July 11, 2005 by and between iCurie Lab Holdings Limited and
Hakan Wretsell.10.4*
    
    Employment Agreement dated July 11, 2005 by and between iCurie Lab Holdings Limited and
Michael Karpheden.
 15
    Table of Contents  10.5*
    
    Employment Agreement dated July 11, 2005 by and among iCurie Lab Holdings Limited, iCurie
Lab, Inc. and Dr. Jeong Hyun Lee, Ph.D.10.6*
    
    Securities Purchase Agreement dated July 11, 2005 by and between iCurie, Inc. and Hansen
Gray & Company, Inc.10.7*
    
    Note Cancellation Agreement dated July 11, 2005 by and between iCurie, Inc. and Dr. Jeong
Hyun Lee, Ph.D.10.8*
    
    Indemnification Agreement dated July 11, 2005 by and between iCurie, Inc. and Dr. Jeong Hyun
Lee, Ph.D.31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 *
    
    Included as an exhibit to iCurie, Inc.s Registration Statement on Form SB-2, SEC File No.
333-127193, and incorporated herein by reference. 16
    Table of Contents  SIGNATURES
  iCURIE, INC.
(Registrant)Date: November 16, 2005
    By:
    /s/ Hakan WretsellHakan WretsellChief Executive Officer Date: November 16, 2005
    By:
    /s/ Michael KarphedenMichael KarphedenChief Financial Officer 17
    Table of Contents  EXHIBIT INDEX
 4.1
    
    Form of common stock certificate31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 18