**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**








**Form
      10-QSB**





x
            **Quarterly
                report under Section 13 or 15(d) of the Securities Exchange Act of
                1934**
              
              **for
                the quarterly period ended June 30,
                2007**




o
            **Transition
                report under Section 13 or 15(d) of the Securities Exchange Act of
                1934**





Commission
      file number: **333-64840**




**CELSIA
      TECHNOLOGIES, INC.**


(Exact
      Name of Small Business Issuer as Specified in Its Charter)





**Nevada**
            **91-2015441**(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            (I.R.S.
                Employer
              Identification
                No.)





**1395
      Brickell Avenue, Suite 800**


**Miami,
      Florida 33131**


(Address
      of Principal Executive Offices)





**(305)
      529-6290**


(Issuer’s
      Telephone Number, Including Area Code)





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





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes oNo x





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





Class
            Outstanding
                as of August 3**,**2007Common
                Stock
            81,664,937





Transitional
      Small Business Disclosure Format: Yes oNo x










**PART
      I**


**FINANCIAL
      INFORMATION**





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


Celsia
                    Technologies, Inc. and SubsidiariesConsolidated
                    Balance Sheetas
                    of June 30, 2007Unaudited
                    (US Dollars)
  AssetsCurrent
                    AssetsCash
                    and cash equivalents
                
                $
                5,023,251Receivable
                
                
                172,474Inventory
                
                
                124,879Prepaid
                    expenses
                
                
                15,544Other
                
                
                25,525Total
                    current assets
                
                
                5,361,673Guarantee
                    deposits
                
                
                153,533Advance
                    payments
                
                
                117,012Furniture
                    and equipment, net (note 1)
                
                
                656,596Deferred
                    Charges (note 1)
                
                
                1,494,130Royalty
                    Advance (note 3)
                
                
                500,000Intangible
                    Assets, net (note 3)
                
                
                97,913Total
                    assets
                
                $
                8,380,857Liabilities
                    and Stockholders' Equity (Deficit)Current
                    liabilitiesAccounts
                    payable
                
                $
                307,973Bond
                    Payable (note 4)
                
                
                322,292Accrued
                    expensesPayroll
                    and Related
                
                
                795,624Other
                
                
                295,474Other
                
                
                65,151Total
                    current liabilities
                
                
                1,786,514Convertible
                    Debenture, net (note 6)
                
                
                5,164,801Accrual
                    for Employee Retirement Benefits (note 3)
                
                
                129,108Total
                    liabilities
                
                
                7,080,423Stockholders'
                    equity (note 6 & 7)Preferred
                    Stock, Series A; $.001 par value; 30,000,000 shares authorized;
                    23,061,505
                    issued and outstanding
                
                
                23,061Preferred
                    Stock, Series B; $.001 par value; 7,000,000 shares authorized;
                    3,063,402
                    issued and outstanding
                
                
                3,063Common
                    stock; $.001 par value; 500,000,000 shares authorized; 81,664,937
                    issued
                    and outstanding
                
                
                81,665Common
                    stock Subscribed
                
                
                7,599Additional
                    paid-in-capital
                
                
                33,888,844Other
                    comprehensive loss
                
                
                (137,546
                )Accumulated
                    (deficit)
                
                
                (32,566,252
                )Total
                    stockholders' equity
                
                
                1,300,434Total
                    liabilities and stockholders' equity
                
                $
                8,380,857
  See
                    notes to consolidated financial statements
  F-1
 Celsia
                    Technologies, Inc. and SubsidiariesConsolidated
                    Statements of OperationsUnaudited
                    (US Dollars)
  Three
                    Months Ended
                
                Six
                    Months EndedJune
                    30,
                
                June
                    30,2007
                
                2006
                
                2007
                
                2006Revenue
                
                $
                199,332
                
                $
                19,994
                
                $
                298,655
                
                $
                22,560Costs
                    and expensesCost
                    of Sales
                
                
                381,400
                
                
                185,274
                
                
                547,938
                
                
                284,254Selling
                    and Administrative expenses
                
                
                585,342
                
                
                1,383,128
                
                
                1,542,304
                
                
                2,685,163Depreciation
                
                
                45,757
                
                
                6,539
                
                
                89,231
                
                
                12,157Amortization
                    of deferred financing cost (note 1)
                
                
                79,111
                
                
                -
                
                
                84,164
                
                
                -Miscellaneous
                    (income) expense
                
                
                4,289
                
                
                (1,902
                )
                
                4,952
                
                
                2,700Total
                    costs and expenses
                
                
                1,095,899
                
                
                1,573,039
                
                
                2,268,589
                
                
                2,984,274Operating
                    (loss)
                
                
                (896,567
                )
                
                (1,553,045
                )
                
                (1,969,934
                )
                
                (2,961,714
                )Other
                    income (expenses)Financing
                    Expense (note 6)
                
                
                (6,060,564
                )
                
                -
                
                
                (6,060,564
                )
                
                -Net
                    Loss on Disposal of furniture and equipment
                
                
                -
                
                
                -
                
                
                -
                
                
                (45,900
                )Loss
                    on Investment
                
                
                -
                
                
                (110,670
                )
                
                -
                
                
                (110,670
                )Interest
                    and other income
                
                
                66,645
                
                
                29,304
                
                
                39,345
                
                
                72,691Interest
                    expense (notes 5 and 6)
                
                
                (169,907
                )
                
                (16,563
                )
                
                (185,963
                )
                
                (27,161
                )Total
                    other income (expenses)
                
                
                (6,163,826
                )
                
                (97,929
                )
                
                (6,207,182
                )
                
                (111,040
                )Net
                    (loss)
                
                $
                (7,060,393
                )
                $
                (1,650,974
                )
                $
                (8,177,116
                )
                $
                (3,072,754
                )Dividend
                    on Series A Preferred Stock (Note 7)
                
                $
                (41,144
                )
                $
                (340,721
                )
                $
                (41,144
                )
                $
                (677,698
                )Deemed
                    Dividend on Series A & B Preferred Stock
                
                $
                (652,318
                )
                
                
                
                $
                (652,318
                )Net
                    Loss Attributable to Common Shareholders
                
                $
                (7,753,855
                )
                $
                (1,991,695
                )
                $
                (8,870,578
                )
                $
                (3,750,452
                )Net
                    Loss per Share:Basic
                    and Diluted
                
                $
                (0.14
                )
                $
                (0.07
                )
                $
                (0.19
                )
                $
                (0.13
                )Weighted
                    Average Shares Outstanding
                
                
                54,809,238
                
                
                29,761,545
                
                
                45,646,974
                
                
                29,640,109
  See
                    notes to consolidated financial statements
  F-2
 Celsia
                    Technologies, Inc. and SubsidiariesConsolidated
                    Statements of Cash FlowsUnaudited
                    (US Dollars)
  Six
                    Months EndedJune
                    30,2007
                
                2006Cash
                    flows from operating activities:Net
                    (loss)
                
                $
                (8,177,116
                )
                $
                (3,072,754
                )Adjustments
                    to reconcile net (loss) to net cash (used)by
                    operating activities:Depreciation
                
                
                89,231
                
                
                12,157Amortization
                    of Deferred Charges
                
                
                84,164
                
                
                -Interest
                    on Convertible Debt
                
                
                112,935Issuance
                    of warrants for service
                
                
                75,229Financing
                    Expense
                
                
                6,060,564Stock
                    Based Compensation
                
                
                183,025
                
                
                132,111Loss
                    on Investment
                
                
                -
                
                
                110,670Loss
                    on Disposal of Furniture and Equipment
                
                
                
                
                
                45,901Imputed
                    Interest, Net
                
                
                -
                
                
                (12,844
                )Changes
                    to certain other accounts:Receivable
                
                
                (117,022
                )
                
                64,695Inventory
                
                
                3,634
                
                
                (34,906
                )Advance
                    payments
                
                
                18,091
                
                
                (20,279
                )Prepaid
                    expenses
                
                
                18,748
                
                
                39,000Accounts
                    payable
                
                
                (112,797
                )
                
                (108,183
                )Accrued
                    expenses
                
                
                (299,328
                )
                
                (80,132
                )Accrual
                    for Employee Retirement Benefits
                
                
                (18,004
                )
                
                165,607Other
                
                
                (10,955
                )
                
                (42,707
                )Net
                    cash (used) by operating activities
                
                
                (2,089,601
                )
                
                (2,801,664
                )Cash
                    flows from investing activities:Deposits
                
                
                (22,727
                )
                
                (879
                )(Acquisition)
                    Redemption of short-term financial instrument
                
                
                -
                
                
                (10,543
                )Purchase
                    of furniture and equipment
                
                
                (51,855
                )
                
                (79,058
                )Net
                    cash (used) by investing activities
                
                
                (74,582
                )
                
                (90,480
                )Cash
                    flows from financing activities:Short-term
                    borrowings
                
                
                
                
                
                (231,683
                )Long-term
                    borrowings
                
                
                
                
                
                39,243Deferred
                    Finance Charge
                
                
                (1,107,966
                )Proceeds
                    from issuance of Convertible Debt
                
                
                8,000,000Net
                    cash (used) provided by financing activities
                
                
                6,892,034
                
                
                (192,440
                )Net
                    (decrease) increase in cash and cash equivalents
                
                
                4,727,851
                
                
                (3,084,584
                )Cash
                    and cash equivalents - beginning of period
                
                $
                295,400
                
                $
                6,009,966Cash
                    and cash equivalents - end of period
                
                $
                5,023,251
                
                $
                2,925,382Supplemental
                    cash flow disclosureNoncash
                    financing activityDuring
                    2007 and 2006 the Company recorded stock compensationarrangements
                    for certain employees and directors
                
                $
                183,025
                
                $
                132,111During
                    2007, the Company recorded a premium on the conversion ofissued
                    notes payable to convertible debenture as a deferred finance
                    charge
                
                $
                115,000
                
                $
                -During
                    2007, the Company issued warrants to placement agentsfor
                    convertible debenture as a deferred finance charge
                
                $
                355,328
                
                $
                -
  See
                    notes to consolidated financial statements
  F-3
 Celsia
          Technologies, Inc. and Subsidiaries
 Notes
          to
          Consolidated Financial Statements
 June
          30,
          2007
  **Note
          1 - Summary of significant accounting policies**
  **Organization**
  Celsia
          Technologies, Inc. (the "Company" or "Celsia"), a US Corporation incorporated
          in
          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 anticipates being the first Company to take this innovative
          thermal management technology from the laboratory to high volume manufacturing,
          and operate as both a licensor of the technology and a vertically integrated
          provider of customized applications.
  The
          Company's corporate headquarters is located in Miami, USA with subsidiaries
          in
          London, United Kingdom and Seoul, South Korea. Our Design and Manufacturing
          operations are based in Seoul. Our patented 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 should be able to achieve improved
          product performance without trading off size, weight or cost
          considerations.
  Celsia
          Technologies, Inc.'s subsidiaries consist of (i) Celsia Technologies UK
          Limited
          ("UK Subsidiary"), a United Kingdom Company formerly known as iCurie Lab
          Holdings Limited, and (ii) Celsia Technologies Korea, Inc. ("Korea Subsidiary"),
          a Korean Company formerly known as iCurie Lab, Inc. In consolidation, all
          significant intercompany balances and transactions have been eliminated.
  **Financial
          reporting**
  The
          accompanying unaudited condensed consolidated financial statements have
          been
          prepared in accordance with accounting principles generally accepted in
          the
          United States of America for interim financial information. They do not
          include
          all of the information and footnotes required by accounting principles
          generally
          accepted in the United States of America for complete financial statements.
          In
          the opinion of management, all adjustments, consisting of normal recurring
          accruals, considered necessary for a fair presentation have been included.
          Operating results for the six month period ended June 30, 2007 are not
          necessarily indicative of the results that may be expected for the year
          ended
          December 31, 2007.
  The
          Company prepares its financial statements in conformity with accounting
          principle generally accepted in the United States of America, which require
          management to make estimates and assumptions that affect the reported amounts
          in
          the financial statement 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
          investments, equity securities issued, prepaid royalties, registration
          rights,
          and intangible assets.
  **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 hav sustained accumulated losses since inception of approximately $32.5
          million. The Company and its Subsidiaries have funded operations through
          equity
          and debt financing since inception. All these factors raise substantial
          doubt
          over the Company's ability to continue as a going concern.
  **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 and South Korea,
          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 affiliated through common
          management. During 2006, the Company recorded a $110,670 loss on investment
          to
          bring its carry basis down to its estimated net realizable value. These
          shares
          have been fully reserved and carry a book value of $ 0 as of June 30, 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.
  -
                Collection
                    is reasonably assured.
  The
          Company recognized revenues of $298,655 and $22,560 for the six months
          ende June
          30,
          2007 and 2006, respectively, from customer orders for test samples and
          commercial deliveries.
  F-4
  **Deferred
          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 $1,578,294 and are being
          amortized on a straight-line basis over the stated term of the loan.
          Amortization expense for the six months ended June 30, 2007 amounted to
          $84,164.
  **Furniture
          and equipment**
  Furniture
          and equipment at June 30, 2007 are summarized as follows:
 Vehicles
                  
                  $
                  71,622Machinery
                  
                  
                  600,008Furniture
                      and fixtures
                  
                  
                  391,4441,063,074Accumulated
                      depreciation
                  
                  
                  (406,478
                  )$
                  656,596
  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 six months ended June 30, 2007 and 2006 amounted to $89,231
          and
          $12,157, 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
          23 million and 3 million shares to be issued upon conversion of Series
          A and
          Series B, respectively, Preferred Shares were excluded from the calculation
          of
          diluted earnings per share for the period ended June 30, 2007, because
          they were
          anti-dilutive.
  Approximately
          21 million and 3 million shares to be issued upon conversion of Series
          A and
          Series B, respectively, Preferred Shares were excluded from the calculation
          of
          diluted earnings per share for the period ended June 30, 2006, because
          they were
          anti-dilutive.
  Approximately
          65 million shares to be issued upon conversion of the convertible debenture
          were
          excluded from the calculation of diluted earnings per share for the period
          ended
          June 30, 2007 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.
  **Research
          and development costs**
  Research
          and development costs are expensed as incurred and amounted to $263,418
          and
          $455,852 for the six months ended June 30, 2007 and 2006,
          respectivel
  **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 Korea Subsidiary is the Korean
          Won.
  The
          assets and liabilities of the Korea Subsidiary 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 six months
          ended June 30, 2007 and 2006 amounted to ($18,982) and $(13,810), respectively.
          Accordingly, comprehensive loss for the six months ended June 30, 2007
          and 2006
          amounted to $8,196,098 and $3,086,564, respectively.
  **Fair
          value of financial instruments**
  The
          Company's cash, receivables, accounts payable, short-term debt, and bonds
          payable represent financial instruments whose carrying amounts reasonably
          approximate their fair value.
  **Recent
          accounting pronouncements**
  In
          July
          2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
          No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB
          Statement No. 109 (FIN 48), which provides clarification related to the
          process
          associated with accounting for uncertain tax positions recognized in
          consolidated financial statements. FIN 48 prescribes a more-likely-than-not
          threshold for financial statement recognition and measurement of a tax
          position
          taken, or expected to be taken, in a tax return. FIN 48 also provides guidance
          related to, among other things, classification, accounting for interest
          and
          penalties associated with tax positions, and disclosure requirements. FIN
          48 is
          effective for fiscal years beginning after December 15, 2006. The adoption
          of
          this statement did not have a material effect on the Company's future reported
          financial position or results of operations.
  F-5
  In
          September 2006, the 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 . The adoption of this standard is not expected
          to 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.
  The
          adoption of this standard is not expected to have a material effect on
          the
          Company’s results of operations or financial position.
  In
          September 2006, the SEC issued Staff Accounting Bulletin No. 108 “Considering
          the Effects of Prior Year Misstatements when Quantifying Misstatements
          in
          Current Year Financial Statements" *.* This
          bulletin requires companies to consider the effect of prior year misstatements
          for past and current financials statements when determining the materiality
          of
          these misstatements, and to make appropriate adjustments to the financial
          statements and related disclosures accordingly. This requirement is in
          effect
          for all companies with fiscal years ending after November 15, 2006. SAB
          No. 108
          is effective for fiscal years ending after November 15, 2006. The adoption
          of
          this statement did not have a material effect on the Company's reported
          financial position or results of operations.
  **Note
          2 - Income Taxes**
  The
          Company recognizes deferred tax assets and liabilities created by temporary
          differences between the financial statement and tax basis of assets and
          liabilities. Deferred tax assets and liabilities are computed on such temporary
          differences, including available net operating loss carry forwards and
          tax
          credits, by applying enacted statutory tax rates applicable to the years
          when
          such differences are expected to reverse. A valuation allowance is provided
          on
          deferred tax assets to the extent that it is more likely than not that
          such
          deferred tax assets will not be realized.
  The
          Company currently operates in the United States, while its Subsidiaries
          operate
          in the United Kingdom and South Korea. Operating loss carryforwards in
          the
          United States approximated $8,000,000 at December 31, 2006, and can be
          carried
          forward for 20 years, expiring in the years 2025-2026.
  Operating
          loss carryforwards in the United Kingdom approximated $9,000,000 at December
          31,
          2006, 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 $4,300,000 at December 31,
          2006,
          and expire in the years 2007-2011. The Company has a deferred tax asset
          of
          approximately $6,700,000 and has recorded a full valuation allowance against
          the
          deferred tax asset resulting from these tax loss carry-forwards.
  **Note
          3 - Commitments**
  **Operating
          Leases**
  The
          Company has two leases in Seoul, Korea for its pilot plant, as well as
          for its
          administrative and research office. One lease expires in March 2008 and
          the
          other in July 2007. As of December 31, 2006, the minimum future rental
          commitments under all non-cancelable operating leases with terms greater
          than
          one year, are as follows:
 Year
                      Ending December 31,2007
                  
                  $
                  113,8322008
                  
                  $
                  13,871$
                  127,703
  **Employment
          contracts**
  The
          Corporation has entered into employment agreements with 19 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 $1,200,000 in 2007 and $230,000 in 2008. In addition, some
          agreements provide for bonuses and stock option based upon performance
          criteria
          as defined in the respective agreements.
  **Accrual
          for Employment Retirement Benefits**
  The
          Company has recorded a liability of $129,108 as of June 30, 2007, as a
          result of
          a legal decision by the Korean Supreme Court in 2006 related to employment
          benefits. The Company believes that this potential liability will not be
          paid
          within the current year, and it has therefore been recorded as a long term
          liability.
  **Commitments
          to a third party**
  According
          to an agreement between the Korea Subsidiary and Sae Han IT, on May 21,
          2004, The
          Korea
          Subsidiary is to provide 25 percent of gross margin to B.A.C. Network (BAC)
          from
          the micro cooling systems business for 3 years from the initial sales to
          include
          only LG Electronics, LGIBM, and others to which LG Electronics and LGIBM
          will
          supply the Company's products. Gross margin is determined based on the
          difference between suppliers' unit cost and selling price to purchaser.
          Through
          June 30, 2007, no qualifying sales have occurred.
  **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
          which
          is recorded as a royalty advance.
  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 affiliated through common
          management.
  **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.
  F-6
  **Registration
          Rights**
  The
          Company entered into a registration rights agreement with the preferred
          series B
          share holders dated December 16, 2005. Under the terms of the Registration
          Rights Agreement, the Company is required to 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) is declared effective. The Company is required to maintain
          the
          effectiveness of the Initial Registration Statement through the first
          anniversary of the Closing Date and shall use its best efforts to maintain
          the
          effectiveness of the Initial Registration Statement through the second
          anniversary of the Closing Date. 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. 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. Management
          has not
          accrued a liability for this contingency as they feel the non-performance
          of the
          filing requirement is remote.
  **Note
          4 - Bond payable**
  The
          bond
          payable (Won 300 million) at June 30, 2007, was issued to Asia Vital Components
          in December 2002 and matures in December 2007. The bond carries no interest
          and
          has been discounted using a 7% interest rate. At June 30, 2007 the unamortized
          bond discount amounted to $2,892.
  The
          bond
          payable at June 30, 2007 is summarized as follows:
 Face
                      Amount
                  
                  $
                  325,184Less:
                      Discount
                  
                  
                  (94,661
                  )Plus:
                      Amortization of discount
                  
                  
                  91,769Carrying
                      value
                  
                  $
                  322,292
  Under
          the
          original terms, the bond was convertible into 6,667 shares (an approximate
          2%
          ownership) of common stock in the Korea Subsidiary; however, Asia Vital
          Components has waived its right to convert the bond into common
          stock.
  **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 are
          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 Chief Executive Officer
          and Chief Financial Officer have 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. Upon completion of the transaction, the 735,000 shares
          of
          Company common stock pledged by the Company's Chief Executive Officer and
          Chief
          Financial Officer were returned to them.
  **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 which totaled $3,063,133. The Company will amortize
          the discount over the life of the Debenture (36 months). During the six
          months
          ended June 30, 2007, the Company amortized $85,807 of the debt discount
          into
          interest expense.
  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 Offering, the placement agents (i) received
          a cash
          fee of approximately $590,000 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 June 30, 2007,
          45,126,469 shares of Common Stock have been issued and the remaining 5,378,227
          shares have been recorded as Common Stock subscribed. As part of the same
          consent, the Series A & B Preferred Shareholders 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 Series A & B Preferred Shareholders waived
          any future anti-dilution rights.
  F-7
  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
          conversion price of the Debentures and the exercise price of the Warrants
          and
          Placement Agent Warrants are subject to adjustment upon certain
          events.
  **Note
          7 - Stockholders' equity**
  **Capital
          stock**
  At
          June
          30, 2007, the Company had an authorized number of shares of 500,000,000
          Common
          Shares and 100,000,000 of Preferred Shares, 30,000,000 of which has been
          designated as Preferred Series A Shares and 7,000,000 of which has been
          designated Preferred Series B Shares. The total issued and outstanding
          shares
          were 81,664,937 Common Shares, 23,061,505 Preferred Series A Shares, and
          3,063,402 Preferred Series B Shares.
  During
          the year ended December 31, 2006, 560,030 shares of Preferred Series A
          were
          converted to Common Shares at a rate of 1:1. On September 30, 2006, the
          Company
          issued 6,564,104 common shares (valued at $1,772,307) to Series A and Series
          B
          Preferred Shareholders as a 25% common stock dividend.
  **Share
          Exchange Agreement and Series A Offering**
  Effective
          as of July 8, 2005, Cedar Mountain Distributors, Inc. entered into a Share
          Exchange Agreement with the shareholders of iCurie Lab Holdings Limited,
          a UK
          Company, and certain additional parties. Immediately prior to the execution
          of
          the Share Exchange Agreement 3,050,001 shares of Cedar Mountain common
          stock
          were cancelled (the "Common Stock Cancellation") pursuant to agreements
          between
          Cedar Mountain and certain shareholders of Cedar Mountain (including the
          then
          sole officer and director of Cedar Mountain) for aggregate consideration
          of
          $214,000. After the Common Stock Cancellation, 1,350,023 shares of Cedar
          Mountain remained issued and outstanding. Upon the consummation of the
          transactions contemplated by the Share Exchange Agreement on July 8, 2005,
          (i)
          Cedar Mountain acquired all of the outstanding shares of iCurie UK (resulting
          in
          iCurie UK becoming a wholly owned subsidiary of Cedar Mountain), (ii) Cedar
          Mountain issued 24,935,047 shares of common stock to the shareholders of
          iCurie
          UK and certain of their assigns, which represented 94.864% of the issued
          and
          outstanding shares of Cedar Mountain common stock, (iii) the sole director
          and
          executive officer of Cedar Mountain resigned, (iv) directors and officers
          associated with iCurie UK were appointed as directors and officers of Cedar
          Mountain, (v) Amended and Restated Articles of Incorporation of Cedar Mountain
          were approved and filed which, among other things, changed the name of
          Cedar
          Mountain to iCurie, Inc., and authorized 30,000,000 shares of Series A
          Preferred
          Stock; and (vi) the new directors approved and adopted Amended and Restated
          Bylaws of iCurie, Inc.
  The
          Share
          Exchange between the shareholders of iCurie UK, a private company, with
          Cedar
          Mountain, a non-operating public shell with nominal assets, was accounted
          for as
          an equity transaction. The stock retained by the shareholders of Cedar
          Mountain
          has been adjusted to reflect the financing transaction with the proceeds
          equal
          to the net asset value of Cedar Mountain immediately prior to the acquisition
          and the equity of iCurie has been adjusted to reflect a recapitalization
          whereby
          the prior retained earnings of Cedar Mountain were eliminated. This resulted
          in
          an adjustment to common stock and additional paid in capital to arrive
          at the
          net asset value of Cedar Mountain of $34,844. This amount has been reflected
          in
          the statement of stockholder’s equity as the effects of the July
          recapitalization of iCurie. No goodwill or other intangible asset has been
          recorded in connection with the share exchange. The historical financial
          statements of Cedar Mountain (which has since changed its name to iCurie,
          Inc)
          has become the historical financial statements of iCurie UK.
  Effective
          as of July 11, 2005, iCurie, Inc. issued 20,995,239 shares of Series A
          Preferred
          Stock, together with warrants exercisable for a total of 6,441,895 shares
          of 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. Certain of the promissory notes carried beneficial
          conversion features and as a result, during the year ended December 31,
          2005,
          the Company recorded additional interest expense of $192,959. (These
          transactions are collectively referred as the “Series A Offering”). The Series A
          Offering was effectuated pursuant to Subscription Agreements (in the case
          of
          cash sales) and a Preferred Stock Purchase Agreement (in the case of the
          issuance of Series A Preferred Stock for promissory notes) between iCurie,
          Inc.
          and the stock recipients, each effective as of July 11, 2005.
  In
          connection with the Series A Offering, 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 on April 17, 2006. At
          December 31, 2005, the Company accrued $923,790 as an estimate of the
          registration rights penalty, which amount is included in selling and
          administrative expenses in the accompanying 2005 financial statements. 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 Registration
          Rights Penalty. Hansen Gray and CHL have certain registration rights, and
          the
          holders of the Series A Preferred Shares have certain continuing rights
          under
          this Registration Rights Agreement. 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).
  F-8
  In
          addition to the warrants issued together with Series A Preferred Stock,
          681,018
          warrants for common stock and 1,364,528 warrants for preferred (Series
          A) stock
          were issued to placement agents.
  Pursuant
          to the Share Exchange Agreement, the Company agreed to assume the obligations
          of
          iCurie UK under a Placement Agent Agreement between iCurie UK, Indigo Securities
          LLC and Axiom Capital Management Inc. (Indigo and Axiom are collectively
          referred to as the “Placement Agent”), pursuant to which the
          Placement
 Agent
          was
          compensated by the Company for its services in connection with the Share
          Exchange Agreement and the Series A Offering. In connection with the Share
          Exchange Agreement and Series A Offering, the Company also granted warrants
          exercisable for a total of 270,000 shares of iCurie, Inc. common stock
          to a
          party that identified Cedar Mountain as a potential participant in the
          share
          exchange.
  In
          connection with the Share Exchange Closing and Series A Offering, (i) certain
          executive officers entered into employment agreements, (ii) iCurie, Inc.
          advanced a major shareholder $500,000 (see Note 3) payable under a pre-existing
          revenue sharing agreement and entered into certain related transactions
          with
          such shareholder, (iii) iCurie, Inc. cancelled a $1.1 million promissory
          note
          made by an executive officer in exchange for 1.25 million shares of common
          stock
          of the Company owned by such officer, (iv) an option for 440,000 shares
          of the
          Company's common stock held by an executive officer was cancelled in exchange
          for a warrant to purchase 1,097,142 shares of iCurie, Inc. common stock,
          (v)
          iCurie, Inc. executive officers were paid certain accrued but previously
          unpaid
          salaries in cash and shares of iCurie, Inc. common stock and (vi) an executive
          officer agreed to indemnify iCurie, Inc. against certain
          liabilities.
  **Terms
          of Series A Preferred**
  In
          the
          event of any sale or dissolution of the Company, the holders of the Series
          A
          Preferred shall be entitled to receive in preference to the holders of
          the
          Series B and Common Stock a per share amount equal to $0.88 plus any accrued,
          unpaid dividends. The holders of the Series A Preferred have the right
          to
          convert the Series A Preferred at any time into shares of Common Stock
          at an
          initial conversion rate of 1:1, as defined. At the option of the Company,
          if
          certain criteria as defined in the agreement are met, the Series A Preferred
          can
          be converted into Common Stock.
  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 reversal of
          approximately $1,172,000 in accumulated, unpaid and undeclared dividends.
          In
          addition, the Series A Preferred Shareholders consented to lower the compounding
          dividend rate to two percent (2%) per annum. As of June 30, 2007, accumulated,
          undeclared dividends on the Series A Preferred Shares totaled approximately
          $41,000.
  **Terms
          of Series B Preferred**
  Subject
          and subordinate to the liquidation rights of the Company’s 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
          June 30, 2007, the Company has granted approximately 6.6 million of its
          common
          stock to employees and others, of which approximately 4.3 million 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 period ended June 30, 2007 and 2006, approximately 156,000 and
          890,000
          shares, respectively, have vested and a charge to compensation expense
          of
          $102,904 and $104,766, respectively, was recorded. The remaining unvested
          shares
          valued at approximately $340,000 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 period ended June 30,
          2007 and 2006, the Company recognized stock-based compensation of $83,206
          and
          $27,334, 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 period ended
          June
          30, 2007 and 2006, the Company issued 0 and 241,000 options, respectively,
          to
          purchase common to purchase common stock.
  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 three months ended June 30, 2006 using
          the
          Black-Scholes option-pricing model:
 Risk
                      free interest rate
                  
                  
                  8.02
                  %Expected
                      Term (years)
                  
                  
                  5Expected
                      volatility
                  
                  
                  100.00
                  %Dividend
                      Yield
                  
                  
                  0.00
                  %
  Information
          about all employee options outstanding is as follows:
 **2007**
                  
                  **2006****Weighted
                      Average**
                  
                  
                  
                  **Weighted
                      Average**For
                        the six months ended June 30,
                  
                  **Shares**
                  
                  **Exercise
                      Price**
                  
                  **Shares**
                  
                  **Exercise
                      Price**Options
                      Outstanding at beginning of period
                  
                  
                  3,176,015
                  
                  $
                  0.79
                  
                  
                  2,510,337
                  
                  $
                  0.88Granted
                  
                  
                  0
                  
                  $
                  -
                  
                  
                  241,000
                  
                  $
                  0.74Cancelled
                  
                  
                  (104,000
                  )
                  $
                  0.88
                  
                  
                  0
                  
                  $
                  -Options
                      Outstanding at end of period
                  
                  
                  3,072,015
                  
                  $
                  0.79
                  
                  
                  2,751,337
                  
                  $
                  0.87
  F-9
  **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 acheivement 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 and has valued the issuance to them
          at
          approximately $220,000. The Company has recorded an expense totaling
          approximately $55,000 related to this issuance for the year ended December
          31,
          2006. No value was assigned to the warrants received by the
          Company.
  On
          May
          25, 2007, the Company issued warrants to purchase 70,752,778 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 of Celsia common stock
          to the
          Placement Agents and recorded $355,328 as deferred charges.
  During
          the period ended June 30, 2007, the Company issued warrants to purchase
          1,300,000 and 346,153 of Celsia common stock to a consultant. The Company
          recorded a consulting expense of $59,410 and $15,819, respectively, for
          these
          issuances.
  A
          summary
          of the issued and outstanding warrants are as follows:
 **Old****Exercise****Price**
                  
                  **Old
                      # of Warrants Outstanding**
                  
                  **Anti-Dilution
                      Exercise Price**
                  
                  **Anti-Dilution
                      # of Warrants Outstanding**
                  
                  **#
                      of Warrants Exercisable**
                  
                  **Expiration
                      Date**$
                      0.144
                  
                  
                  76,218,931
                  
                  
                  n/a
                  
                  
                  n/a
                  
                  
                  70,752,778
                  
                  
                  May
                      2012$
                      0.32
                  
                  
                  1,500,000
                  
                  
                  n/a
                  
                  
                  n/a
                  
                  
                  375,000
                  
                  
                  September
                      2011$
                      0.35
                  
                  
                  346,153
                  
                  
                  n/a
                  
                  
                  n/a
                  
                  
                  346,153
                  
                  
                  May
                      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
                      2010
 **Warrants
          to Purchase Preferred Stock**
  During
          2005, the Company issued various warrants to placement agents in connection
          with
          the Series A and B Offerings. A summary of these warrants are as
          follows:
 **Old****Exercise****Price**
                  
                  **Old
                      # of Warrants Outstanding**
                  
                  **New****Exercise****Price**
                  
                  **New
                      # of Warrants Outstanding**
                  
                  **#
                      of Warrants Exercisable**
                  
                  **Expiration
                      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
                      2010
  **Note
          8 - Subsequent Event**
  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 $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.
 
 F-10





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





Management
      believes the following discussion is relevant to an assessment and understanding
      of the financial condition, financial results and plan of operation of Celsia
      Technologies, Inc. and its subsidiaries (collectively “we” or the “Company”) as
      of June 30, 2007. The discussion should be read in conjunction with the
      unaudited condensed consolidated financial statements and notes thereto included
      in this Form 10-QSB.




Our
      operations include research, development, sales and marketing of our own
      patented technology portfolio as well as operating our pilot plant. During
      2006
      we commercialized our technology and executed several commercial orders. During
      the second quarter of 2007, the Company continued on the commercialization
      path
      and executed commercial deliveries. The Company also acquired substantially
      all
      of the assets and liabilities of CheongNam International Co. Ltd. (CNIT), a
      Korean entity, for approximately $70,000 **,** which
      included the hiring of two
      sales executives and the
      acquisition of a
      thermal
      management customer base .
      The
      Company expects to market its Nanospreader products and thermal solutions to
      CNIT’s client base. **** In
      addition, we are currently involved with many potential customers in several
      projects designed to commercially produce and sell our products. Furthermore,
      technology companies face challenges as they develop and manufacture new and
      more powerful components and products, which generate heat and require a
      solution to dissipate the heat. We believe that the heat emission problem has
      accelerated and is now seriously threatening the development of new heat
      generating products in several industries. Our cooling technologies should
      therefore enable companies to develop new products with higher performance,
      increased efficiency and with smaller size. We want to become a world leader
      in
      developing and commercializing this next generation of cooling solutions for
      the
      PC, LED-lighting, flat panel display, and the communication and entertainment
      industries. Management has decided to focus the main part of the resources
      on
      the Nano Spreader TechnologyTM (NST). This technology path is meant to be a more
      economical and faster way to commercialize our products compared to our MCS
      technology.




The
      Company has produced revenues of $199,332 for the three months ended June 30,
      2007 compared to $19,994 for the same period last year. The revenues are a
      result of customers paying for test samples, commercial deliveries, and
      commercial sales to CNIT’s (now our) customer base. Cost of sales for the three
      months ended June 30, 2007 was $381,400 compared to $185,274 for the same period
      last year. This higher cost of sales is attributable to increased production
      activity originating from an increasing demand for our products.




On
      May
      25, 2007, the Company obtained additional funds through the issuance of 8 %
      secured convertible debentures in the aggregate amount of $8,142,847, of which
      $6,850,000 was paid in cash and the remainder through the surrender of
      previously outstanding promissory notes of the Company. Furthermore, the Company
      issued 70,752,778 warrants to the debenture holders to purchase the Company’s
      common stock. The debentures are due on May 25, 2010. In connection with the
      debenture offering, the company’s placement agents received a cash fee of
      $590,000 and 5,120,000 warrants to purchase the Company’s common stock. In
      addition, each holder of 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 one-time financing expense
      of
      $6,060,564 for the 50,504,696 shares of Common Stock to be issued to the holders
      of Company preferred stock **.** Furthermore, 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 and
      recorded a deemed dividend of $652,318. This entry will have no cash
      impact.




2




The
      Company is working with tight cost controls in order to manage its
      commercialization process. A
      majority of our expenses in the quarter ended June 30, 2007 were from selling
      and administrative expenses, which include research and development activities.
      The selling and administrative expenses for the three months ended June 30,
      2007 were approximately $585,000 compared to approximately $1,383,000 for the
      same period last year. The decrease compared to last year is mainly attributable
      to increased functional efficiency. Furthermore, the Company reversed a portion
      of its executive bonus accrual from prior periods (2006) of approximately
      $400,000 that will not materialize. Adjusted for the expense reversal, the
      gross
      expenses were approximately $985,000 for the three months ended June 30, 2007.
      In connection with the debenture financing, the company incurred legal and
      due
      diligence fees of approximately $500,000. The company has recorded these
      expenses as deferred charges and these expenses will be amortized over the
      length of the loan period. Additionally, the Company recorded an interest
      expense of approximately $170,000 for the three months ended June 30, 2007.
      Approximately $56,000 is pertaining to the debenture financing and has cash
      impact starting in January 2008. The remaining interest expense results from
      amortization of a debt discount recorded based upon the fair value of the
      warrants issued to the debenture holders and has no cash impact on the
      Company.




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 the potential customer.
      During the second quarter of 2007, the majority of our R&D resources were
      dedicated to customer projects and for the design of products with commercial
      opportunities. This is expected to continue during the remainder of 2007.




We
      expect
      our capital expenditures over the next twelve months to be focused on
      complementing our 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. We
      are
      currently evaluating to recruit one sales executive in order to efficiently
      continue to execute our business
      plan and make sure that we fully capitalize on the market opportunity. As of
      June 30, 2007 the Company **** employed
      24 people, 20 of
      which were
      located in Korea. Other additional new employees are strictly replacement
      hirings. However, if opportunities arise with what we believe are significant
      upsides with reasonable risks, we are prepared to reevaluate and change our
      plans.




During
      the quarter ended June 30, 2007, we continued to make progress towards building
      the Company and commercializing our technology. We have received additional
      product test orders, which 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 on a limited
      volume basis into commercial products. The mix between sample order deliveries
      and commercial deliveries increased during the second quarter of 2007 in favor
      of commercial deliveries. ****




3





*Liquidity
      and Capital Resources*




Our
      main
      sources of liquidity are the approximate $10.0 million in net cash proceeds
      generated from our 2005 Series A Preferred Stock offering, the $2.8 million
      in
      net proceeds from our Series B offering in 2005, the cash proceeds from the
      $1.0
      million issuance of promissory notes in February 2007, which was later increased
      with $150,000 in April, and the issuance of the debentures in May 2007 for
      an
      aggregate amount of $6,850,000 in cash. The operational cash outflow for the
      three months ended June 30, 2007 has been approximately $417,000 per month,
      which includes a reduction of older accounts payables that amounts to
      approximately $149,000. Our main use of cash during the three months ended
      June
      2007 has been related to product development driven by customer projects and
      general and administrative expenses. Prior to the Series A Preferred Stock
      issuance in July 2005, the Company had limited liquidity and approximately
      $2.5
      million in convertible debt.




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 cash uses will be for sales and marketing,
      general and administrative, and research and development expenses. Investments
      will be focused on product development and manufacturing. All investments will
      be driven by commercialization opportunities. The total cash need for the next
      twelve months is estimated to be approximately $4.5 million, starting at July
      1,
      2007. The main portion of the cash need is for sales activities, operating
      expenses, cost of sales, and a smaller portion is for investments in
      manufacturing and R&D. We expect to fund these activities through the cash
      received from the debenture financing and cash generated from
      operations.




The
      ratio
      between current assets and current liabilities at June 30, 2007 was
      approximately 3.0. However, a significant portion, approximately $725,000,
      of
      current liabilities relates to expenses that have limited cash
      impact.




*Significant
      Estimate* *s*




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




4




*Recent
      accounting pronouncement*




In
      July
      2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB
      Statement No. 109 (FIN 48), which provides clarification related to the process
      associated with accounting for uncertain tax positions recognized in
      consolidated financial statements. FIN 48 prescribes a more-likely-than-not
      threshold for financial statement recognition and measurement of a tax position
      taken, or expected to be taken, in a tax return. FIN 48 also provides guidance
      related to, among other things, classification, accounting for interest and
      penalties associated with tax positions, and disclosure requirements. FIN 48
      is
      effective for fiscal years beginning after December 15, 2006. The adoption
      of
      this statement did not have a material effect on the Company's future reported
      financial position or results of operations.







In
      September 2006, the 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. The adoption of this standard is not expected to
      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. The adoption of this standard is not expected to have a material effect
      on the Company’s results of operations or financial position.





In
      September 2006, the SEC issued Staff Accounting Bulletin No. 108
“Considering the Effects of Prior Year Misstatements when Quantifying
      Misstatements in Current Year Financial Statements”. This bulletin requires
      companies to consider the effect of prior year misstatements for past and
      current financials statements when determining the materiality of these
      misstatements, and to make appropriate adjustments to the financial statements
      and related disclosures accordingly. This requirement is in effect for all
      companies with fiscal years ending after November 15, 2006. SAB No. 108 is
      effective for fiscal years ending after November 15, 2006. The adoption of
      this
      statement did not have a material effect on the Company's reported financial
      position or results of operations.




*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.




5




*Market
      Risks*




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




*Forward-Looking
      Statements*




When
      used
      in this Form 10-QSB or other filings by the Company with the Securities and
      Exchange Commission, in our press releases or other public or shareholder
      communications, or in oral statements made with the approval of an authorized
      Company officer, the words or phrases “would be”, “will allow”, “intends to”,
“will likely result”, “are expected to”, “will continue”, “is anticipated”,
“estimate”, “project”, or similar expressions are intended to identify
“forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995.




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 do not undertake, and
      specifically disclaim, any obligation to update any forward-looking statements
      to reflect occurrences or unanticipated events or circumstances after the date
      of such statement.




**Item
      3.****Controls
      and Procedures.**




We
      have
      evaluated, with the participation of our Chief Executive Officer and Chief
      Financial Officer, the effectiveness of the design and operation of our
      disclosure controls and procedures as of June 30, 2007 pursuant to Exchange
      Act
      Rule 15d-15. Based upon that evaluation, the Chief Executive Officer and Chief
      Financial Officer concluded that our disclosure controls and procedures are
      effective in timely alerting them to material information relating to the
      Company required to be included in our periodic SEC filings. There were no
      changes made in our internal control over financial reporting, as such term
      is
      defined in Exchange Act Rule 15d-15(f), during the period covered by this report
      that have materially affected, or are reasonably likely to materially affect,
      these controls subsequent to the date of their last evaluation.




**PART
      II**


**OTHER
      INFORMATION**





**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds.**




On
      May
      25, 2007, the Company issued the debentures and warrants to certain purchasers
      as reported herein and in the Company’s current report on Form 8-K filed on June
      1, 2007. The issuance of such securities was exempt from registration under
      the
      Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section
      4(2) thereof. The Company made this determination in part based on the
      representations of the purchasers of such securities, which included, in
      pertinent part, that such purchasers were “accredited investors” within the
      meaning of Rule 501 of Regulation D promulgated under the Securities
      Act.




6




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




A
      shareholder consent was submitted to the holders of the Company’s preferred
      stock during the second quarter of fiscal 2007 to consent to (i) an amendment
      and restatement of the Company’s Articles of Incorporation and (ii) certain
      matters related to the issuance of the Debentures and Warrants. The Company
      received consents from holders of 18,313,230 shares of Series A Preferred Stock,
      representing 79.41% of the outstanding Series A Preferred Stock, and 3,013,402
      shares of Series B Preferred Stock, representing 98.37% of the outstanding
      Series B Preferred Stock.




**Item
      6.**  **Exhibits.**




Exhibit Number
            Exhibit




3(i).1*
            Amended
                and Restated Articles ofIncorporation**.**




4.1*
            Form
                of Debenture.




4.2*
            Form
                ofWarrant.




4.3*
            Form
                of warrant issueable to the Placement Agents pursuant to the Debenture
                issuance.




10.1*
            Securities
                Purchase AgreementdatedMay
                25, 2007 between the Company and purchasers of the
                Debentures.




10.2*
            Registration
                Rights Agreement dated May 25, 2007 between the Company and purchasers
                of
                the Debentures.




10.3*
            Security
                Agreement dated May 25, 2007 by and among the Company, Celsia Technologies
                UK Limited (“Celsia UK”), Celsia Technologies Korea, Inc. (“Celsia Korea”)
                and purchasers of the Debentures.




10.4*
            Form
                of Subsidiary Guarantee dated May 25, 2007 executed by each of Celsia
                UK
                and Celsia Korea pursuant to the Debenture
                issuance.




10.5*
            Placement
                Agent Agreement dated May 1, 2007 by and among the Company and the
                Placement Agents.




10.6*
            Amendment
                to Placement Agent Agreement dated May 25, 2007 by and among the
                Company
                and the Placement Agents.




7




10.7**
            Second
                Amendment toCelsia
                Technologies, Inc. 2005 Stock Incentive
                Plan.




31.1
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of2002.




31.2
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of2002.




32.1
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of2002.




32.2
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of2002.




*  Included
      as an exhibit to Celsia Technologies Inc.’s Current Report on Form 8-K filed June  1 , 2007.




**  Represents
      a management contract or compensatory plan or arrangement.


8


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the Registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**CELSIA
                TECHNOLOGIES, INC.**
              (Registrant)Date:August
              7, 2007
            By:
            /s/ Hakan
              WretsellHakan
                Wretsell
              Chief
                Executive Officer




By:
            /s/ Michael
              KarphedenMichael
                  Karpheden
                Chief
                  Financial Officer




9


**EXHIBIT
      INDEX**




10.7
            Second
                Amendment to Celsia Technologies, Inc. 2005 Stock Incentive
                Plan




31.1
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002




31.2
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002




32.1
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002




32.2
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002




10