**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the quarterly period ended March 31, 2008OR ̈
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the transition period from ________________ to
                ________________





Commission
      file number: **333-64840**





**CELSIA
      TECHNOLOGIES INC.**


(Exact
      Name of Registrant as Specified in Its Charter)




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




**(305)
      529-6290**


(Registrant’s
      Telephone Number, Including Area Code)




**None**


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




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




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




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




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




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





Class
            
            Outstanding
                at May 13, 2008Common
                Stock, $.01 par value per share
            
            85,565,713
                shares








**TABLE
      OF CONTENTS**





**Page**PART
                I.
            
            1Item
                1.
            Financial
                Statements
            1Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            13Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            16Item
                4.
            Controls
                and Procedures
            17PART
                II.
            
            18Item
                6.
            Exhibits
            18




-i-





**PART
      I**


**FINANCIAL
      INFORMATION**





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


Celsia
        Technologies, Inc. and Subsidiaries
 Consolidated
        Balance Sheet
 (US
        Dollars)
 
 March 31, 2008
              
              December 31, 2007(unaudited)AssetsCurrent
                  AssetsCash
                  and cash equivalents
              
              $
              2,387,729
              
              $
              3,046,624Receivable
              
              
              407,324
              
              
              298,799Inventory
              
              
              92,769
              
              
              74,465Prepaid
                  expenses
              
              
              63,893
              
              
              45,661Other
              
              
              19,075
              
              
              31,785Total
                  current assets
              
              
              2,970,790
              
              
              3,497,334Guarantee
                  deposits
              
              
              25,132
              
              
              26,157Advance
                  payments
              
              
              145,979
              
              
              154,287Furniture
                  and equipment, net (note 1)
              
              
              671,420
              
              
              639,947Deferred
                  Charges (note 1)
              
              
              1,544,034
              
              
              1,721,630Royalty
                  Advance (note 3)
              
              
              -
              
              
              -Intangible
                  Assets, net (note 3)
              
              
              89,934
              
              
              85,049Total
                  assets
              
              $
              5,447,289
              
              $
              6,124,404Liabilities
                  and Stockholders’ Equity (Deficit)Current
                  liabilitiesAccounts
                  payable
              
              $
              531,244
              
              $
              282,055Bond
                  Payable (note 4)
              
              
              303,475
              
              
              322,582Accrued
                  expensesPayroll
                  and Related
              
              
              666,917
              
              
              652,917Other
              
              
              464,173
              
              
              576,917Other
              
              
              24,667
              
              
              26,545Total
                  current liabilities
              
              
              1,990,476
              
              
              1,861,016Convertible
                  Debenture, net of $3,668,736 as of March 31, 2008 and $4,092,051
                  as of
                  December 31, 2007 unamortized discount (note 6)
              
              
              5,229,047
              
              
              4,400,796Accrual
                  for Employee Retirement Benefits (note 3)
              
              
              94,030
              
              
              86,683Total
                  liabilities
              
              
              7,313,553
              
              
              6,348,495Stockholders’
                  Equity (Deficit) (note 6 & 7)Preferred
                  Stock, Series A; $.001 par value; 30,000,000 shares authorized;
                  22,032,963
                  as of March 31, 2008 and 22,320,598 as of December 31, 2007 issued
                  and
                  outstanding
              
              
              22,033
              
              
              22,321Preferred
                  Stock, Series B; $.001 par value; 7,000,000 shares authorized;
                  3,063,402
                  as of March 31, 2008 and December 31, 2007 issued and outstanding
              
              
              3,063
              
              
              3,063Common
                  stock; $.001 par value; 500,000,000 shares authorized; 85,565,713
                  as of
                  March 31, 2008 and 85,273,680 as of December 31, 2007 issued and
                  outstanding
              
              
              85,566
              
              
              85,273Common
                  stock subscribed
              
              
              6,158
              
              
              6,158Additional
                  paid-in-capital
              
              
              40,085,518
              
              
              40,032,066Other
                  comprehensive loss
              
              
              (96,997
              )
              
              (80,478
              )Accumulated
                  (deficit)
              
              
              (41,971,605
              )
              
              (40,292,494
              )Total
                  stockholders’ equity (deficit)
              
              
              (1,866,264
              )
              
              (224,091
              )Total
                  liabilities and stockholders’ equity (deficit)
              
              $
              5,447,289
              
              $
              6,124,404
 
 See
        notes
        to consolidated financial statements
  1
  Celsia
        Technologies, Inc. and Subsidiaries
 Consolidated
        Statements of Operations
 (US
        Dollars)
 Three Months Ended
                  March 31,2008
                
                2007Revenue
                
                $
                305,688
                
                $
                99,323Costs
                    and expensesCost
                    of Sales
                
                
                294,725
                
                
                166,538Selling
                    and Administrative expenses
                
                
                740,555
                
                
                956,962Depreciation
                
                
                16,969
                
                
                43,474Amortization
                    of deferred financing cost (note 1)
                
                
                193,300
                
                
                5,053Miscellaneous
                    (income) expense
                
                
                11,712
                
                
                663Total
                    costs and expenses
                
                
                1,257,261
                
                
                1,172,690Operating
                    (loss)
                
                
                (951,573
                )
                
                (1,073,367
                )Other
                    income (expenses)Financing
                    Expense (note 6)
                
                
                (177,956
                )
                
                -Interest
                    and other income
                
                
                83,539
                
                
                (27,300
                )Interest
                    expense (notes 5 and 6)
                
                
                (633,121
                )
                
                (16,056
                )Total
                    other income (expenses)
                
                
                (727,538
                )
                
                (43,356
                )Net
                    (loss)
                
                $
                (1,679,111
                )
                $
                (1,116,723
                )Dividend
                    on Series A Preferred Stock (note 7)
                
                $
                (97,942
                )
                $
                (400,322
                )Net
                    Loss Attributable to Common Shareholders
                
                $
                (1,777,053
                )
                $
                (1,517,045
                )Net
                    Loss per Share:Basic
                    and Diluted
                
                $
                (0.02
                )
                $
                (0.04
                )Weighted
                    Average Shares Outstanding
                
                
                85,376,373
                
                
                36,382,907
 
 See
        notes
        to consolidated financial statements
  2
 
 Celsia
        Technologies, Inc. and Subsidiaries
 Consolidated
        Statements of Cash Flows
 (US
        Dollars)
 
 March
                  31,2008
              
              2007Cash
                  flows from operating activities:Net
                  (loss)
              
              $
              (1,679,111
              )
              $
              (1,116,723
              )Adjustments
                  to reconcile net (loss) to net cash (used) by operating activities:Depreciation
              
              
              16,969
              
              
              43,474Amortization
                  of Deferred Charges
              
              
              193,300
              
              
              5,053Amortization
                  of Debt Discount
              
              
              423,316
              
              
              -Financing
                  Expense
              
              
              404,936
              
              
              -Stock
                  Based Compensation
              
              
              53,456
              
              
              93,441Changes
                  to certain other accounts:Receivable
              
              
              (108,525
              )
              
              (53,151
              )Inventory
              
              
              (18,304
              )
              
              3,632Advance
                  payments
              
              
              8,308
              
              
              10,128Prepaid
                  expenses
              
              
              (18,232
              )
              
              17,146Accounts
                  payable
              
              
              249,189
              
              
              36,422Accrued
                  expenses
              
              
              (98,744
              )
              
              79,822Accrual
                  for Employee Retirement Benefits
              
              
              7,347
              
              
              (30,097
              )Other
              
              
              (45,383
              )
              
              52,756Net
                  cash (used) by operating activities
              
              
              (611,478
              )
              
              (858,097
              )Cash
                  flows from investing activities:Deposits
              
              
              1,025
              
              
              1,542Purchase
                  of furniture and equipment
              
              
              (48,442
              )
              
              (22,865
              )Net
                  cash (used) by investing activities
              
              
              (47,417
              )
              
              (21,323
              )Cash
                  flows from financing activities:Deferred
                  Finance Charge
              
              
              -
              
              
              (192,026
              )Long-term
                  borrowings
              
              
              
              
              
              1,000,000Net
                  cash (used) provided by financing activities
              
              
              -
              
              
              807,974Net
                  (decrease) increase in cash and cash equivalents
              
              
              (658,895
              )
              
              (71,446
              )Cash
                  and cash equivalents - beginning of period
              
              $
              3,046,624
              
              $
              295,400Cash
                  and cash equivalents - end of period
              
              $
              2,387,729
              
              $
              223,954Supplemental
                  cash flow disclosureNoncash
                  financing activityDuring
                  2008 and 2007 the Company recorded stock compensation arrangements
                  for
                  certain employees and directors
              
              $
              53,456
              
              $
              93,441During
                  2008 Preferred Shares were converted into Common Shares
              
              $
              288
              
              $
              -
 
 See
        notes
        to consolidated financial statements
  3
  Celsia
        Technologies, Inc. and Subsidiaries
 Notes
        to
        Consolidated Financial Statements
 March
        31,
        2008
 
 **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 is taking this innovative thermal management technology
        from
        the laboratory to high volume manufacturing, and operating as both a licensor
        of
        the technology and a vertically integrated provider of customized applications.
 
 The
        Company’s corporate headquarters is located in Miami, USA with subsidiaries in
        London, United Kingdom, Seoul, South Korea, and Taipei, Taiwan. During 2007,
        the
        Company relocated its Design and Manufacturing operations from Seoul, Korea
        to
        Taipei, Taiwan. Our operations in Seoul, Korea remain as a sales and
        administrative office for the region. 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 are 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, (ii) Celsia Technologies Korea, Inc. ("Korea Subsidiary"),
        a
        Korean Company formerly known as iCurie Lab, Inc, and (iii) Celsia Technologies
        Taiwan, Inc. ("Taiwan Subsidiary"). In consolidation, all significant
        intercompany balances and transactions have been eliminated.
 
 **Financial
        reporting**
 
 The
        Company prepares its financial statements in conformity with accounting
        principles generally accepted in the United States of America, which require
        management to make estimates and assumptions that affect the reported amounts
        in
        the financial statements. Although these statements are based on management’s
        best knowledge of current events and actions that the Company may undertake
        in
        the future, actual results could differ from those estimates.
 
 Significant
        estimates required to be made by management include the valuation of equity
        securities issued, registration rights, intangible assets, and accouting
        for
        convertible debentures.
 
 **Going
        Concern**
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern, which contemplates the realization of assets
        and
        satisfaction of liabilities in the normal course of business. The Company
        and
        its Subsidiaries have recently commenced limited revenue producing operations
        and have sustained accumulated losses approximately $42.0 and $40.3 million
        as
        of March 31, 2008 and December 31, 2007, respectively. The Company and its
        Subsidiaries have funded operations through equity and debt financing since
        inception. All these factors raise substantial doubt over the Company’s ability
        to continue as a going concern.
 
 **Cash
        and Cash Equivalents**
 
 Cash
        and
        cash equivalents include all cash balances and highly liquid investments,
        including time deposits, which are readily convertible into known amounts
        of
        cash and have an original maturity dates of three months or less. The Company
        and its Subsidiary’s cash and cash equivalents are maintained in banks and
        financial institutions in the United States, United Kingdom, South Korea,
        and
        Taiwan, and they have not experienced any losses on their cash balances.
 
 **Inventory**
 
 Inventory
        consists of finished goods ready to be sold to customers. Inventories are
        carried at the lower of cost or market value.
 
 **Investment**
 
 The
        UK
        Subsidiary owns 527,000 shares of an entity formerly affiliated through common
        management. These shares have been fully reserved and carry a book value
        of $0
        as of March 31, 2008 and December 31, 2007.
 
 4
  **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 $305,688 and $99,323 for the three months
        ended
        March 31, 2008 and 2007, respectively, from customer orders for test samples
        and
        commercial deliveries.
  **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 $2,131,150 and are being
        amortized on a straight-line basis over the stated term of the loan.
        Amortization expense for the three months ended March 31, 2008 and March
        31,
        2007 amounted to $193,300 and $5,053, respectively.
  **Furniture
        and equipment**
 
 Furniture
        and equipment are summarized as follows:
 
 March 31,
                2008
              
              December 31,
                2007Vehicles
              
              $
              52,471
              
              $
              73,331Machinery
              
              
              632,306
              
              
              596,505Furniture
                  and fixtures
              
              
              415,434
              
              
              429,1481,100,211
              
              
              1,098,984Accumulated
                  depreciation
              
              
              (428,791
              )
              
              (459,037
              )$
              671,420
              
              $
              639,947
 
 Furniture
        and equipment are stated at cost. Major renewals and betterments, which prolong
        the useful life or enhance the value of assets, are capitalized. Depreciation
        is
        computed using the straight-line method over the estimated life of five years
        for machinery and equipment, furniture and fixtures, and vehicles. Depreciation
        expense for the three months ended March 31, 2008 and 2007 amounted to $16,969
        and $43,474, 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 22 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
        March 31, 2008 and 2007, respectively, because they were anti-dilutive.
        Approximately 136 million shares to be issued upon conversion of the convertible
        debentures were excluded from the **** calculation
        of diluted earnings per share as of March 31, 2008 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 $35,024 and
        $87,566 for the three months ended March 31, 2008 and 2007, respectively.
 
 5
 **Foreign
        currency translation**
 
 The
        reporting and functional currency of the Company and its UK Subsidiary is
        the
        U.S. Dollar, while the functional currency of the Korea and Taiwan subsidiaries
        are the Korean Won and the New Taiwanese Dollar, respectively.
 
 The
        assets and liabilities of the Korea and Taiwan Subsidiaries have been translated
        into U.S. Dollars at the prevailing period-end rate of exchange, while the
        related income and expense items were translated at the average rate of exchange
        during the period. The resulting translation adjustments are accumulated
        in a
        separate component of stockholders’ equity (deficit).
 
 The
        Company follows Financial Accounting Standards No. 130 (SFAS 130) "Reporting
        Comprehensive Income." SFAS 130 requires a Company to report comprehensive
        income (loss) and its components in a full set of financial statements.
        Comprehensive income (loss) includes the change in equity during a period
        from
        transactions and other events and circumstances from non-owner sources, such
        as
        unrealized gains (losses) on foreign currency translation adjustments. Changes
        in unrealized foreign currency translation gains (losses) for the three months
        ended March 31, 2008 and 2007 amounted to ($16,519) and $37,258, respectively.
        Accordingly, comprehensive loss for the three months ended March 31, 2008
        and
        2007 amounted to $1,695,630 and $1,079,465, respectively.
 
 **Fair
        value of financial instruments**
 
 The
        Company’s cash, receivables, accounts payable, short-term debt, bonds payable,
        and the face amount of its convertible debentures represent financial
        instruments whose carrying amounts reasonably approximate their fair value.
  **Recent
        accounting pronouncements**
 
 In
        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 ** 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 . ** SFAS
        No.
        157 is effective for fiscal years beginning after November 15, 2007. ** The
        adoption of this standard did not have a material effect on the Company’s
        results of operations or financial position. **
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities” ** (“SFAS
        159”). SFAS 159 permits all entities to choose to measure eligible items at fair
        value at specified election dates. ** SFAS
        No.
        159 is effective for fiscal years beginning after November 15, 2007. ** The
        adoption of this standard did not have a material effect on the Company’s
        results of operations or financial position. **
 
 In
        December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS
        141(R)”), which replaces SFAS 141. ** SFAF
        141(R) requires assets and liabilities acquired in a business combination,
        contingent consideration, and certain acquired contingencies ** to
        be
        measured at their fair values as of the date of acquisition. SFAS 141(R)
        also
        requires that acquisition-related costs and restructuring ** costs
        be
        recognized separately from the business combination. SFAS 141(R) is effective
        for fiscal years beginning after December 15, 2008 ** and
        will
        be effective for business combinations entered into after January 1,
        2009. **
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements, an Amendment ** ARB
        No.
        51” (“SFAS 160”). SFAS 160 clarifies the accounting for noncontrolling interests
        and establishes accounting and reporting ** standards
        for the noncontrolling interest in a subsidiary, including classification
        as a
        component of equity. SFAS 160 is effective for ** fiscal
        years beginning after December 15, 2008. The Company does not currently have
        any
        minority interests. **
 
 **Note
        2 - Income Taxes**
 
 The
        Company recognizes deferred tax assets and liabilities created by
        temporary ** differences
        between the financial statement and tax basis of assets and
        liabilities. ** Deferred
        tax assets and liabilities are computed on such temporary
        differences, ** including
        available net operating loss carry forwards and tax credits, by
        applying ** enacted
        statutory tax rates applicable to the years when such differences
        are ** expected
        to reverse. A valuation allowance is provided on deferred tax assets to
        the ** extent
        that it is more likely than not that such deferred tax assets will not be
        realized.
  The
        Company currently operates in the United States, while its Subsidiaries operate
        in the United Kingdom ** South
        Korea, and Taiwan. Operating loss carryforwards in the United States
        approximated $6,800,000 ** at
        December 31, 2007, and can be carried forward for 20 years, expiring in the
        years 2025-2027. ** Operating
        loss carryforwards in the United Kingdom approximated $5,000,000 at ** December
        31, 2007, and can be carried forward indefinitely, provided the
        Company ** (i)
        doesn’t cease operations and (ii) doesn’t change its business
        nature, ** while
        operating loss carryforwards in South Korea approximated $6,300,000
        at ** December
        31, 2007, and expire in the years 2008-2012. At December 31, 2007, the
        Company ** has
        a
        deferred tax asset of approximately $5,600,000 and has recorded a full valuation
        allowance ** against
        the deferred tax asset resulting from these tax loss carry-forwards. **
 
 6
 **Note
        3 - Commitments and Contingencies**
 
 **Operating
        Leases**
 
 The
        Company has a lease in Seoul, Korea for its Sales and Administrative office
        which expires in October 2009. The Company has a lease in Taipei, Taiwan
        for its
        Design and Manufacturing Center which expires in September 2009. As of December
        31, 2007, the minimum future rental commitments under all non-cancelable
        operating leases with terms greater than one year, are as follows:
 
 Year
                  Ending December 31,2008
              
              $
              100,5992009
              
              $
              77,953$
              178,552
 
 **Employment
        contracts**
 
 The
        Company has entered into employment agreements with some of its officers
        /
        employees for terms ranging between one and two years. Under the terms of
        the
        contracts these officers / employees are entitled to minimum compensation
        of
        approximately $274,000 in 2008. Other employees contracts have expired and
        are
        employed at will with no minimum compensation.
 
 On
        August
        15, 2007, the Company entered into an agreement with Core Strategies, LLC
        (“Core
        Strategies”) which provides services of several Core Strategies partners
        including Joseph Formichelli as Chief Executive Officer of the Company on
        a
        full-time basis, and a marketing and sales executives on a part-time basis.
        The
        agreement is effective from August 15, 2007 through August 14, 2009. The
        Company
        pays Core Strategies $20,000 per month and has issued 8,000,000 warrants
        to
        purchase the Company’s common stock.
 
 **Accrual
        for Employment Retirement Benefits**
 
 The
        Company has recorded a liability of $94,030 and $86,683 as of March 31, 2008
        and
        December 31, 2007, respectively, for employment retirement benefits. The
        Company
        believes that this liability will not be paid within the current year, and
        it
        has therefore been recorded as a long term liability.
  **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.
 
 On
        July
        18, 2007, the Company and AMF Capital, Inc. (formerly known as Hansen Gray
&
Company, Inc) (“AMF”) entered into a Settlement Agreement and Release pursuant
        to which the Company and AMF resolved certain claims of AMF against the Company.
        Pursuant to the Settlement Agreement, the Company paid a Royalty Advance
        of
        $100,000 in cash to AMF and issued to AMF a warrant to purchase 1,000,000
        shares
        of common stock of the Company at an exercise price of $0.88 per share, and
        AMF
        released the Company from any and all claims except for certain specified
        contractual rights as set forth in the Settlement Agreement. The Company
        has
        recorded a full valuation allowance resulting from these prepaid royalties.
 
 CHL
        is an
        organization in which Dr. Jeong Hyun Lee (a former Director of the Company)
        holds an interest in. Hansen Gray is an entity in which Alan Miller (a former
        Director of the Company) holds an interest in.
 
 **Intangible
        Assets**
 
 In
        April
        2007, Celsia acquired certain assets and liabilities together with two sales
        executives and a thermal management customer base from CheongNam International
        Co. Ltd. ("CNIT"), a Korean entity, for approximately $70,000. The Company
        has
        recorded assets of approximately $88,000, liabilities of approximately $82,000
        and intangible asset (which is the value assigned to the acquired customer
        list)
        of approximately $64,000. The Company is amortizing this customer list over
        36
        months.
 
 The
        Company has also recorded an intangible asset for costs incurred with filing
        approved patents and trademarks of approximately $34,000.
 
 7
 **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 was required to use its best efforts to file
        a
        Registration Statement covering the underlying Common Stock within six months
        after the Company’s Registration Statement on Form SB-2 (SEC File
        No. 333-128856) was declared effective. The Company was required to
        maintain the effectiveness of the Initial Registration Statement through
        the
        first anniversary of the Closing Date and was to use its best efforts to
        maintain the effectiveness of the Initial Registration Statement through
        the
        second anniversary of the Closing Date. This agreement was amended on May
        25,
        2007 to reflect the subordination of rights under this agreement to the
        registration rights agreement entered into by the Company on May 25, 2007
        as
        described below.
 
 The
        Company entered into a registration rights agreement with the Convertible
        Debenture Holders dated May 25, 2007 (see Note 6). Under the terms of the
        Registration Rights Agreement, the Company is required to file a Registration
        Statement (the "Initial Registration Statement") covering the Common Stock
        (i) into which the Debentures are convertible and (ii) for which the
        Warrants and Placement Agent Warrants are exercisable (collectively, the
        “Registrable Securities”) within 30 days of a demand by Debenture Holders or
        within six (6) months after the Closing Date. If the Initial Registration
        Statement is not filed on or prior to its Filing Date, or in certain other
        circumstances, the Company shall pay to each Debenture Holder an amount in
        cash
        equal to 1.0% of the aggregate purchase price paid by such Debenture Holder
        pursuant to the Purchase Agreement for any unregistered securities then held
        by
        such Debenture Holder. The Company has fulfilled its requirements by filing
        the
        Registration Statement on Form SB-2 (SEC File No. 333-147564) which was declared
        effective on December 11, 2007.
 
 **Litigation**
 
 On
        October 19, 2007, the Company’s former President, CEO, and Board of Director,
        filed a lawsuit in the Miami-Dade County Circuit Court claiming failure to
        pay
        bonses, severance, and other benefits in connection with his previously reported
        termination by the Company. The Company has filed a motion to Compel Arbitration
        and Stay Proceedings as provided by the employment contract with the Company.
        On
        April 16, 2008, the court granted the Company’s motion and ordered (i) that
        the Plaintiff commence arbitration in accordance with the terms of the
        employment agreement within six (6) months of the date of the order and (ii)
        all
        proceedings are stayed until the conclusion of the arbitration
        proceedings.  Pursuant to the court order, if arbitration is not timely
        commenced the action will be dismissed. The Company believes the employee’s
        claims are without merit and intends to defend the action vigorously. The
        settlement of this action is not expected to have a material impact on the
        Company’s financial position.
 
 **Note
        4 - Bond payable**
 
 The
        bond
        payable (Won 300 million) at March 31, 2008 and December 31, 2007, was issued
        to
        a third party in December 2002 and matures in December 2007. The bond carries
        no
        interest and has been discounted using a 7% interest rate. The bond payable
        is
        summarized as follows:
 
 March 31,
                2008
              
              December 31,
                2007Face
                  Amount
              
              $
              303,475
              
              $
              322,582Less:
                  Discount
              
              
              (93,926
              )
              
              (93,926
              )Plus:
                  Amortization of discount
              
              
              93,926
              
              
              93,926Carrying
                  value
              
              $
              303,475
              
              $
              322,582
  **Note
        5 - Notes Payable**
 
 On
        February 20, 2007 and April 20, 2007, the Company issued Secured Convertible
        Promissory Notes (the “Notes”) in an aggregate principal amount of $1,000,000
        and $150,000, respectively, to certain purchasers (the “Noteholders”) pursuant
        to the terms of Securities Purchase Agreements dated as of February 20, 2007
        by
        and between the Company and the Noteholders. The Notes carry an annual interest
        rate of 10%, with all principal and accrued interest being due and payable
        on
        June 20, 2007; provided, however, that upon the terms and subject to the
        conditions of the Notes, all outstanding principal and interest on the Notes
        will automatically convert into securities of the Company issued pursuant
        to a
        Company financing meeting certain conditions (a “Qualified Financing”), if such
        Qualified Financing is effectuated on or prior to June 20, 2007. All principal
        and accrued interest on the Notes shall become payable prior to
        June 20, 2007 upon certain events of default relating to, among
        things, the bankruptcy or dissolution of the Company, the sale of substantially
        all of the Company’s assets and certain breaches by the Company of the terms and
        conditions of the Notes and related agreements. The obligations evidenced
        by the
        Notes were secured by a pledge of substantially all of the Company’s assets,
        including the capital stock of Celsia Technologies UK Limited and Celsia
        Technologies Korea, Inc. In connection with the issuance of the Notes, the
        Company’s former Chief Executive Officer and former Chief Financial Officer had
        agreed to transfer approximately 735,000 shares of Company common stock held
        by
        such executives to the Noteholders in the event that a Qualified Financing
        does
        not occur on or prior to June 20, 2007.
  On
        May
        25, 2007, the Company issued Convertible Debentures which met the conditions
        of
        a Qualified Financing. The Notes, totaling principal of $1,150,000, interest
        of
        $27,847, and a 10% premium on principal totaling $115,000, were automatically
        converted into the Convertible Notes (see Note 6). Upon completion of the
        transaction, the 735,000 shares of Company common stock pledged by the Company’s
        former Chief Executive Officer and former Chief Financial Officer were returned
        to them.
 
 8
 **Note
        6 - Convertible Debentures**
 
 On
        May
        25, 2007, the Company issued 8% Secured Convertible Debentures due May 25,
        2010
        (the “Debentures”) in the aggregate principal amount of $8,142,847 to certain
        individuals and entities, together with warrants exercisable for a total
        of
        70,752,778 shares of the Company’s common stock at a price of $0.144, for an
        aggregate of $6,850,000 in cash and the surrender of previously outstanding
        promissory notes of the Company totaling $1,292,847 (see Note 5). The Company
        used the Black Scholes option-pricing model to value the warrants issued
        to the
        Debenture Holders and applied it to the principal amount to determine the
        convertible debt discount. The Company will amortize the discount over the
        life
        of the Debenture (36 months).
 
 On
        August
        17, 2007, the Company issued an additional 8% Secured Convertible Debenture
        due
        May 25, 2010 in the principal amount of $350,000, together with a warrant
        to
        purchase 2,800,000 shares of the Company’s common stock at a price of $0.144,
        for $350,000 in cash, on the same terms as the Company’s debentures and warrants
        issued on May 25, 2007.
 
 On
        January 1, 2008, the Company elected to acrete to, and increase, the outstanding
        principal amount due under the Debenture by $404,936 pursuant to the terms
        of
        the Debenture.
 
 The
        convertible debentures payable is summarized as follows:
 
 March 31,
                2008
              
              December 31,
                2007Face
                  Amount
              
              $
              8,897,783
              
              $
              8,492,847Less:
                  Discount
              
              
              (5,062,256
              )
              
              (5,062,256
              )Plus:
                  Amortization of discount
              
              
              1,393,520
              
              
              970,205Carrying
                  value
              
              $
              5,229,047
              
              $
              4,400,796
  The
        sale
        of Debentures and Warrants (the “Debenture Offering”) was effected pursuant to a
        Securities Purchase Agreement dated as of May 25, 2007 between the Company
        and
        the Debenture Holders (the “Purchase Agreement”). In connection with the
        Debenture Offering, the Company entered into a Security Agreement and
        Registration Rights Agreement, each dated as of May 25, 2007, with the Debenture
        Holders (see Note 3).
 
 In
        connection with the Debenture Offerings, the placement agents (i) received
        a
        cash fee of approximately $618,000 and (ii) are entitled to receive warrants
        to
        purchase 5,120,000 shares of the Company’s common stock at a price of $0.144.
        The Company has recorded payments to the placement agents as a deferred cost
        (see Note 1).
 
 As
        part
        of the debt financing, each holder of Series A & B Preferred Stock who
        certified their status as an accredited investor was issued 2.19 shares of
        Common Stock for each share of Preferred Stock held. The Company has recorded
        a
        financing expense of $6,060,564 representing the fair value of the 50,504,696
        shares of Common Stock issued as an inducement to the Series A & B Preferred
        Shareholders to consent to the convertible debenture. As of December 31,
        2007,
        46,517,737 shares of Common Stock have been issued and the remaining 3,986,959
        shares have been recorded as Common Stock subscribed. As part of the same
        consent, the 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.
 
 Upon
        issuing the Debentures, the Company triggered certain anti-dilution provisions
        in the Company’s warrants which lowered the conversion price and increased the
        number of shares the warrant is convertible for. The Company used the
        Black-Scholes option-pricing model to determine the fair market value of
        the
        adjusted warrants and recorded a deemed dividend of $652,318 (see note 7).
 
 The
        Debenture Holders shall be entitled to receive interest on the aggregate
        unconverted and then outstanding principal amount of their Debentures at
        the
        rate of 8% per annum, payable quarterly, in cash or Common Stock at the
        discretion of the Company, and subject to certain limitations and restrictions.
        The Debentures are secured by substantially all of the Company’s assets. The
        Debenture Holders have the right to convert the Debentures at any time into
        shares of Common Stock at an initial conversion price of $0.125. The exercise
        price of the Warrants and Placement Agent Warrants are $.144 per share. The
        initial conversion price of the Debentures and the exercise price of the
        Warrants and Placement Agent Warrants are subject to adjustment upon certain
        events.
 
 9
 The
        Company triggered adjustments to the conversion price of the Debenture and
        the
        exercise price of the Warrants as a result of the Company’s financial results
        for the period ending September 30, 2007, which became effective November
        15,
        2007. The Debenture Holders now have the right to convert the Debentures
        at any
        time into shares of Common Stock at a conversion price of $0.0625. The number
        of
        Warrants issued to the Debenture Holders and the Placement Agents increased
        to
        147,105,556 and 10,240,000, respectively, and the exercise price was reduced
        to
        $0.072 per share.
  The
        Company used the Black Scholes option-pricing model to value the adjusted
        warrants issued to the Debenture Holders and applied it to the principal
        amount
        to determine the convertible debt discount which totaled $5,062,256. The
        Company
        will amortize the discount over the life of the Debenture (36 months). During
        the three months ended March 31, 2008, the Company amortized $423,316 of
        the
        debt discount into interest expense. As a result of the adjustment to the
        conversion price, the Company has recognized a beneficial conversion feature
        and
        recorded a Financing Expense totaling $3,430,591 during the year ended December
        31, 2007.
 
 On
        March
        26, 2008, the Company obtained consent from more than 70% of the Debenture
        Holders to modify the terms of the Debentures to provide that, in lieu of
        making
        the interest payments due thereunder in cash or in shares of common stock
        of the
        Company on the interest payment due dates, the interest payments shall accrue
        and be paid in full in cash on May 25, 2010, the Debenture maturity date. 
As an incentive to provide the consent, the Company shall distribute to the
        Debenture Holders a one time distribution equal to the value of 2% of the
        outstanding principal amount due under the Debentures as of March 31, 2008
        totaling approximately $178,000, which will be paid in cash on the maturity
        date.   Each Debenture Holder shall have the right, in its sole
        discretion, to convert any accrued but unpaid interest on the principal amount
        due under the Debentures into shares of common stock of the Company at the
        applicable Interest Conversion Rate at any time prior to the maturity date.
  **Note
        7 - Stockholders’ equity**
 
 **Capital
        stock**
 
 At
        March
        31, 2008 and December 31, 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. As of March 31, 2008, the
        total
        issued and outstanding shares were 85,565,713 Common Shares, 22,032,963
        Preferred Series A Shares, and 3,063,402 Preferred Series B Shares. As of
        December 31, 2007, the total issued and outstanding shares were 85,273,680
        Common Shares, 22,320,598 Preferred Series A Shares, and 3,063,402 Preferred
        Series B Shares.
 
 During
        the years ended December 31, 2007, 740,907 shares of Preferred Series A were
        converted to Common Shares, respectively, at a rate of 1:1. During the three
        months ended March 31, 2008, 287,635 shares of Preferred Series A were converted
        to Common Shares, respectively, at a rate of 1:1.
 
 **Share
        Exchange Agreement and Series A Offering**
 
 Effective
        as of July 11, 2005, the Company issued 20,995,239 shares of Series A Preferred
        Stock, together with warrants exercisable for a total of 6,441,895 shares
        of the
        Company’s common stock at prices ranging from $0.88 - $1.32, to various parties
        in exchange for approximately $12.48 million in cash (at a cash price of
        $0.88
        per share of Series A Preferred Stock) and the transfer of $4.6 million of
        previously issued promissory notes issued by various parties. (These
        transactions are collectively referred as the “Series A Offering").
 
 In
        connection with the Series A Offering, the Company entered into a Registration
        Rights Agreement dated as of July 11, 2005 with the Company’s shareholders,
        Series A Shareholders, and certain additional parties. Under the terms of
        the
        Registration Rights Agreement, if a registration statement is not filed within
        60 days of July 11, 2005 or declared effective within 120 days of July 11,
        2005
        (each a "Non-registration Event"), then for each 30 day period during the
        pendancy of such a Non-Registration Event, the company is required to pay
        to the
        selling shareholders liquidated damages in an amount equal to one percent
        (1%)
        of the aggregated price such selling shareholders paid for the Company’s series
        A Preferred stock (deemed to be $0.88 per share), which the company may pay
        in
        cash or additional shares of series A Preferred Stock (valued at $0.88 per
        share), at the company’s option. The registration statement was filed on October
        6, 2005 and was declared effective in April 2006. On August 10, 2006, the
        Company issued 970,550 Series A Preferred Shares valued at $902,611 to Preferred
        Series A Share Holders in settlement of the Non-Registration Events. This
        agreement was amended on May 25, 2007 to reflect the subordination of rights
        under this agreement to the registration rights agreement entered into by
        the
        Company on May 25, 2007 (see Note 3).
 
 **Terms
        of Series A Preferred**
 
 Subject
        and subordinate to the liquidation rights of the Company’s Secured Convertible
        Promissory Noteholders, the holders of the Series A Preferred shall be
        entitled to receive in preference to the holders of the Series B and Common
        Stock a per share amount equal to $0.88 plus any accrued, unpaid dividends,
        in
        the event of any sale or dissolution of the Company. The holders of the
        Series A Preferred have the right to convert the Series A Preferred at
        any time into shares of Common Stock at an initial conversion rate of 1:1,
        as
        defined. At the option of the Company, if certain criteria as defined in
        the
        agreement are met, the Series A Preferred can be converted into Common
        Stock.
 
 Prior
        to
        May 25, 2007, the holders of Series A Preferred Stock were entitled to receive
        cumulative, compounding dividends at a rate of eight percent (8%) per annum
        as,
        when and if declared by the Board of Directors of the Company. The dividends
        may
        be paid in cash or shares of Series A Preferred Stock (valued at original
        issue
        price) at the sole discretion of the Company. Holders of Series A Preferred
        Stock also receive on an as-converted basis any distributions paid on the
        common
        stock. No dividends may be paid on common stock unless all unpaid cumulative
        dividends on the Series A Preferred Stock are paid. On August 10, 2006, the
        Company issued approximately 1,700,000 shares of Series A Preferred Stock
        as
        dividends to all holders of record on July 11, 2006, valued at approximately
        $1,500,000. As of May 25, 2007, the Series A Preferred Stock consented to
        waive
        any unpaid and undeclared dividends which resulted in the elimination of
        approximately $1,172,000 in accumulated, unpaid and undeclared dividends
        (see
        Note 6). In addition, the Series A Preferred Shareholders consented to lower
        the
        compounding dividend rate to two percent (2%) per annum. As of March 31,
        2007,
        accumulated, undeclared dividends on the Series A Preferred Shares totaled
        approximately $339,400.
 
 10
 **Terms
        of Series B Preferred**
 
 Subject
        and subordinate to the liquidation rights of the Company’s Secured Convertible
        Promissory Noteholders and Series A Preferred Stock, the holders of the
        Series B Preferred shall be entitled to receive in preference to the holders
        of
        the Common Stock a per share amount equal to $1.00, in the event of any sale
        or
        dissolution of the Company. The holders of the Series B Preferred have the
        right to convert the Series B Preferred at any time into shares of Common
        Stock at an initial conversion rate of 1:1, as defined. At the option of
        the
        Company, if certain criteria as defined in the agreement are met, the
        Series B Preferred can be converted into Common Stock. Holders of the
        Series B Preferred Stock receive on an as-converted basis any distributions
        paid
        on the Common Stock.
 
 **Stock
        Compensation**
 
 Through
        March 31, 2008 and 2007, the Company has granted approximately 4.6 and 6.6
        million, respectively, of its common stock to employees and others, of which
        approximately 4.4 and 4.3 million, respectively, 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 three
        months ended March 31, 2008 and 2007, approximately 0 and 78,000 shares,
        respectively, vested and a charge to compensation expense of $4,750 and $51,838,
        respectively, was recorded. The remaining unvested shares valued at
        approximately $23,750 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 three months ended
        March 31, 2008 and 2007, the Company recognized stock-based compensation
        of
        $51,882 and $41,603, 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 three months
        ended
        March 31, 2008 and 2007, the Company issued 0 options 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 year ended December 31, 2007 and 2006
        using
        the Black-Scholes option-pricing model:
  2007Risk
                  free interest rate
              
              
              7.33-8.25
              %Expected
                  Term (years)
              
              
              5Expected
                  volatility
              
              
              100.00
              %Dividend
                  Yield
              
              
              0.00
              %
 
 Information
        about all employee options outstanding is as follows:
 
 For
                  the three months ended March 31,
              
              **2008**
              
              **2007****Shares**
              
              **Weighted Average
                  Exercise Price**
              
              **Shares**
              
              **Weighted Average
                  Exercise Price**Options
                  Outstanding at beginning of period
              
              
              16,117,500
              
              $
              0.15
              
              
              3,176,015
              
              $
              0.79Granted
              
              
              0
              
              $
              -
              
              
              0
              
              $
              -Cancelled
              
              
              0
              
              $
              -
              
              
              (104,000
              )
              $
              0.88Options Outstanding at end of period
              
              
              16,117,500
              
              $
              0.15
              
              
              3,072,015
              
              $
              0.79
  11
  **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 Option pricing model and has valued
        the
        warrant issuance to them at approximately $220,000. The Company has recorded
        an
        expense totaling approximately $139,000 related to this issuance as of December
        31, 2007. No value was assigned to the warrants received by the Company.
 
 On
        May
        25, 2007, the Company issued warrants to purchase 70,752,778 shares of Celsia
        common stock to the Debenture Holders (see Note 6). The Company valued the
        warrants to determine the discount on the debenture. In addition, the Company
        become obligated to issue warrants to purchase 5,120,000 shares of Celsia
        common
        stock to the Placement Agents and recorded $355,328 as deferred charges.
 
 On
        July
        18, 2007, the Company issued AMF Capital, Inc. a warrant to purchase 1,000,000
        shares of common stock of the Company at an exercise price of $0.88 per share
        as
        part of a settlement (see Note 3). The Company recorded an expense of $32,700
        for the issuances.
 
 On
        August
        17, 2007, the Company issued warrants to purchase 2,800,000 of Celsia common
        stock to the Debenture Holders (see Note 6). The Company valued the warrants
        to
        determine the discount on the debenture.
 
 The
        Company triggered adjustments to the exercise price of the Debenture Warrants
        as
        a result of the Company’s financial results for the period ending September 30,
        2007, which became effective on November 15, 2007. The number of Warrants
        issued
        to the Debenture Holders and the Placement Agents increased to 147,105,556
        and
        10,240,000, respectively, and the exercise price was reduced to $0.072 per
        share. The Company recorded a deferred charge of $521,216 for the additional
        warrants issued to the placement agent.
 
 During
        the year ended December 31, 2007, the Company issued warrants to purchase
        1,300,000 shares of common stock to a consultant and recorded $59,410 as
        a
        consulting expense. During the year ended December 31, 2007, the Company
        issued
        1,440,000 shares of common stock and warrants to purchase 720,000 in
        satisfaction of a $90,000 outstanding liability.
 
 A
        summary
        of the issued and outstanding warrants are as follows:
 
 **Old**
                **Exercise**
                **Price**
              
              **Old**
                **# of Warrants
                  Outstanding**
              
              **Anti-Dilution**
                **Exercise**
                **Price**
              
              **Anti-Dilution**
                **# of Warrants****Outstanding**
              
              **# of Warrants**
                **Exercisable**
              
              **Expiration**
                **Date**$
              0.072
              
              
              720,000
              
              
              n/a
              
              
              n/a
              
              
              720,000
              
              
              December
                  2012$
              0.11
              
              
              1,300,000
              
              
              n/a
              
              
              n/a
              
              
              1,300,000
              
              
              December
                  2012$
              0.144
              
              
              78,672,778
              
              $
              0.072
              
              
              157,345,556
              
              
              157,345,556
              
              
              May
                  2012$
              0.32
              
              
              1,500,000
              
              
              n/a
              
              
              n/a
              
              
              750,000
              
              
              September
                  2011$
              0.88
              
              
              1,000,000
              
              
              n/a
              
              
              n/a
              
              
              1,000,000
              
              
              July
                  2012$
              0.88
              
              
              681,018
              
              $
              0.144
              
              
              681,018
              
              
              681,018
              
              
              July
                  2009$
              0.88
              
              
              1,186,820
              
              $
              0.36
              
              
              2,862,308
              
              
              2,862,308
              
              
              July
                  2010$
              1.09
              
              
              1,097,142
              
              $
              0.36
              
              
              2,646,027
              
              
              2,646,027
              
              
              July
                  2010$
              1.10
              
              
              2,759,357
              
              $
              0.45
              
              
              6,789,387
              
              
              6,789,387
              
              
              July
                  2010$
              1.32
              
              
              2,759,357
              
              $
              0.53
              
              
              6,882,126
              
              
              6,882,126
              
              
              July
                  2010$
              1.50
              
              
              772,190
              
              $
              0.60
              
              
              1,941,836
              
              
              1,941,836
              
              
              December
                  2010$
              3.00
              
              
              765,850
              
              $
              1.16
              
              
              1,986,069
              
              
              1,986,069
              
              
              December
                  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
  12


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




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




***Forward-Looking
      Statements***




Certain
      of the matters discussed in this report, including, without limitation, matters
      discussed under this Item 2, “Management’s Discussion and Analysis of Financial
      Condition and Results of Operations,” may constitute forward-looking statements
      (as such term is defined in the Private Securities Litigation Reform Act of
      1995) and are subject to the occurrence of certain contingencies which may
      not
      occur in the time frames anticipated or otherwise, and, as a result, could
      cause
      actual results to differ materially from such statements. In some cases, you
      can
      identify forward-looking statements w hen
      used
      in this Form 10-Q 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 by
      terminology such as “may,” “will,” “should,” “could,” “would,” “expects,”
“plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential” or “continue” or the negative of such terms and other comparable
      terminology.





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.





*Overview*




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




We
      develop and commercialize technology and have succeeded in achieving several
      design wins at key OEMs. We engage with key OEM’s who are finding our technology
      an attractive solution to their thermal management problems. We believe that
      we
      provide better performance than competing technologies at a competitive price.
      This allows the OEM’s to either offer higher performance or to run their systems
      cooler. We expect design wins in all of our key target markets, LED’s, Graphics
      Chips, high end CPUs, communications equipment and memory
      applications.




13





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. The majority of our R&D resources are dedicated to
      customer projects and for the design of products with commercial opportunities.




In
      December 2007, we relocated our engineering and pilot line facilities from
      Korea
      to Taiwan. Our Korean staff and facilities were downsized to a sales and
      administrative support function only. The net result is a more responsive unit
      in Taiwan at lower costs. Any
      capital expenditures over the next twelve months will be focused on
      complementing this new Taiwan pilot plant with specific volume related equipment
      and on specific research and development related test equipment. All investments
      will be driven by commercialization opportunities, customer driven projects,
      and/or commercial volumes.




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




**Three
      Months Ended March 31, 2008 Compared to Three Months Ended March 31,
      2007**




The
      Company has produced revenues of $305,688 for the three months ended March
      31,
      2008 compared to $99,323 for the three months ended March 31, 2007. The revenues
      are a result of customers paying for test samples and commercial deliveries.
      Cost of sales for the three months ended March 31, 2008 were $294,725 compared
      to $166,538 for the same period last year. This is attributable to increased
      production activity originating from an increasing demand for our products.




We
      are
      currently operating with strict cost controls in order to manage our
      commercialization process. A majority of our expenses for the three months
      ended
      March 31, 2008 and 2007 were from selling and administrative expenses. The
      selling and administrative expenses for the three months ended March 31, 2008
      were $740,555 compared to $956,962 for the same period last year. The main
      costs
      are personnel costs, professional fees, and travel expenses. The decrease in
      expenses is due to a company wide initiative to reduce expenses and personnel.




***Liquidity
      and Capital Resources***




Our
      main
      source of liquidity and funding for our operations has historically been from
      monies raised from various financings. During fiscal 2007, we raised an
      aggregate amount of $8,000,000 in cash through the issuance of the Debentures
      in
      May 2007, which was later increased by $350,000 in August 2007. At March 31,
      2008, our operational cash outflow was approximately $300,000 per month. Our
      main use of cash relates to product development driven by customer projects
      and
      general and administrative expenses.




14




On
      May
      25, 2007, the Company obtained additional funds through the issuance of its
      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. On August 17, 2007, we issued an additional
      Debenture in the principal amount of $350,000 on the same terms as the Company’s
      debentures issued on May 25, 2007. Both issuances were accompanied by warrants
      to purchase the Company’s common stock. The Debentures mature and become are due
      on May 25, 2010.




In
      connection with the debenture financing, we incurred legal, due diligence,
      and
      placement agent fees of approximately $2,131,000. We have recorded these
      expenses as deferred charges and these expenses will be amortized over the
      length of the loan period. We have recorded amortization of deferred financing
      costs of approximately $193,000 for the three months ended March 31, 2008.  Additionally,
      we recorded an interest expense of approximately $633,000 for the three months
      ended March 31, 2008.  Approximately
      $423,000 in 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 us. The remaining $210,000 pertains to the
      debenture financing.




On
      March
      26, 2008, the Company obtained consent from more than 70% of the Debenture
      Holders to modify the terms of the Debentures to provide that, in lieu of making
      the interest payments due thereunder in cash or in shares of common stock of
      the
      Company on the interest payment due dates, the interest payments shall accrue
      and be paid in full in cash on May 25, 2010, the Debenture maturity date. As
      an
      incentive to provide the consent, the Company shall distribute to the Debenture
      Holders a one time distribution equal to the value of 2% of the outstanding
      principal amount due under the Debentures as of March 31, 2008 totaling
      approximately $178,000, which will be paid in cash on the maturity date. Each
      Debenture Holder shall have the right, in its sole discretion, to convert any
      accrued but unpaid interest on the principal amount due under the Debentures
      into shares of common stock of the Company at the applicable Interest Conversion
      Rate at any time prior to the maturity date.




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 $2.7 million, starting at April
      1, 2008. 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. We
      currently believe that our cash balances and anticipated cash flows from
      operations will be sufficient to meet our normal operating needs through
      December 2008. We have a $322,582 note payable to a strategic partner that
      matured in 2007. As of the date of this filing, no payment demand has been
      received.




15




The
      ratio
      between current assets and current liabilities at March 31, 2008 was
      approximately 1.49.




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




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




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




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




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




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




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




***Recent
      Accounting Pronouncements***




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




***Off-Balance
      Sheet Arrangements***




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




***Market
      Risks***




The Company operates
      in the United States, the United Kingdom, Taiwan, 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.




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




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




16




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




***Evaluation
      of disclosure controls and procedures***




We
      maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e)
      and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), that are designed to ensure that information required to be
      disclosed by us in reports we file or submit under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms, and that such information is accumulated and communicated
      to our management, including our principal executive officer and principal
      financial officer, as appropriate, to allow timely decisions regarding required
      disclosure.





In
      designing and evaluating our disclosure controls and procedures, management
      recognized that disclosure controls and procedures, no matter how well conceived
      and operated, can provide only reasonable assurance of achieving the desired
      control objectives, and we necessarily are required to apply our judgment in
      evaluating the cost-benefit relationship of possible disclosure controls and
      procedures.




Our
      management, including our principal executive officer and principal financial
      officer, evaluated the effectiveness of the design and operation of our
      disclosure controls and procedures as of March 31, 2008 and concluded that
      the
      disclosure controls and procedures were not effective, because certain
      deficiencies involving internal controls constituted a material weakness as
      discussed in our Annual Report on Form 10-K for the year ended December 31,
      2007, as filed with the Securities and Exchange Commission on February 28,
      2008
      (the “Annual Report”).





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




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




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




During
      the most recently completed fiscal quarter, there has been no change in our
      internal control over financial reporting that has materially affected or is
      reasonably likely to materially affect, our internal control over financial
      reporting.




17


**PART
      II**


**OTHER
      INFORMATION**





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




Exhibit
                Number
            
            Exhibit31.1
            
            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.





18





**SIGNATURES**





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




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





19




**EXHIBIT
      INDEX**




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




**Exhibit
                No.**
            
            **Description**31.1
            
            Certification
                of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.31.2
            
            Certification
                of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1
            
            Certification
                of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.32.2
            
            Certification
                of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.




20