U.S.
      SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





**FORM
      10-QSB**





x
      QUARTERLY REPORT
      PURSUANT TO SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      quarterly period ended September 30, 2007


OR


o
      TRANSITION REPORT
      PURSUANT TO SECTION 13


OR
      15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934


For
      the
      transition period from ____________ to ____________








**CSMG
      TECHNOLOGIES, INC.**


(Exact
      name of registrant as specified in its charter)




Texas
              (state
                of
              incorporation)
            0-27359
              (Commission
                File Number)
            74-2653437
              (IRS
                Employer
              I.D.
                Number)





501
      North
      Shoreline Drive, Suite 701 North


Corpus
      Christi, TX 78471


(301)
      887-7546


____________________________________________________


(Address
      and telephone number of registrant's principal


executive
      offices and principal place of business)





Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act:


Common
      Stock, $0.001 par value


(Title
      of
      Class)





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





As
      of
      October 31, 2007, the Company had 38,018,544 shares of its $.001 par value
      common stock issued and outstanding.





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





Transitional
      Small Business Disclosure Format (check one): Yes o No x


1


**TABLE
      OF CONTENTS**







PagePART I - FINANCIAL
              INFORMATION
            
            3Item 1.Financial
              Statements
            
            3Item 2.Management’s
              Discussion and Analysis or Plan of Operation
            
            24Item 3.Controls
              and Procedures
            
            30PART II - OTHER INFORMATION
            
            31Item 1.Legal
              Proceedings
            
            31Item 2.Unregistered
              Sales of Equity Securities and Use of Proceeds
            
            31Item 6.Exhibits
            
            32SIGNATURES
            
            33







2


**PART
      I - FINANCIAL INFORMATION**





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





PageConsolidated Balance Sheets September
                30, 2007 (Unaudited)and
                December 31, 2006
              
              4Consolidated
                Statement of Operations (Unaudited)September
                30,
                2007 and 2006
              
              5Consolidated
                Statement of Cash Flows (Unaudited)September
                30,
                2007 and 2006
              
              6Notes to the Financial
                Statements
              
              7





3




**CSMG
                  TECHNOLOGIES, INC. AND SUBSIDIARIES****(FORMERLY
                  CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)****CONDENSED
                  CONSOLIDATED BALANCE SHEET (UNAUDITED)****SEPTEMBER
                  30, 2007****ASSETS****CURRENT
                  ASSET**
  Cash
              
              $
              101,968**Total
                  current asset**
              
              
              101,968Fixed
                  assets, net of depreciation
              
              
              2,943**OTHER
                  ASSET**Patents
              
              
              13,959**TOTAL
                  ASSETS**
              
              $
              118,870**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)****CURRENT
                  LIABILITIES**Accounts
                  payable and accrued expenses
              
              $
              848,390Accrued
                  interest payable
              
              
              1,643,681Convertible
                  notes payable
              
              
              4,090,000Notes
                  payable
              
              
              1,851,101Other
                  current liabilities
              
              
              341,582**Total
                  current liabilities**
              
              
              8,774,754**Long-term
                  Liabilities**Long-term
                  contract - IAW
              
              
              96,000**TOTAL
                  LIABILITIES**
              
              
              8,870,754**Minority
                  interest**
              
              
              206,000**STOCKHOLDERS'
                  EQUITY (DEFICIT)**Preferred
                  stock, par value $0.001 per share, 10,000,000 shares authorized
                  andno
                  shares issued and outstanding
              
              
              -Common
                  stock, par value $0.001 per share, 80,000,000 shares authorized
                  and36,670,777
                  issued, 36,181,923 shares outstanding and 488,854 shares
                  subscribed
              
              
              36,671Additional
                  paid-in capital
              
              
              12,748,779Stock
                  subscriptions receivable
              
              
              (488
              )Accumulated
                  deficit
              
              
              (21,373,372
              )Accumulated
                  other comprehensive income (loss)
              
              
              (337,189
              )Treasury
                  stock
              
              
              (32,285
              )**Total
                  stockholders' equity (deficit)**
              
              
              (8,957,884
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
              
              $
              118,870The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.




4


**CSMG
                  TECHNOLOGIES, INC. AND SUBSIDIARIES****(FORMERLY
                  CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)****CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                  (UNAUDITED)****FOR
                  THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2007 AND
                  2006**
  **NINE
                  MONTHS**
              
              
              **THREE
                  MONTHS****ENDED**
              
              
              **ENDED****SEPTEMBER
                  30,**
              
              
              **SEPTEMBER
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****REVENUE**
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -**COST
                  OF REVENUES**Research
                  and development costs
              
              
              1,926,303
              
              
              355,554
              
              
              721,019
              
              
              322,027**Total
                  costs of revenues**
              
              
              1,926,303
              
              
              355,554
              
              
              721,019
              
              
              322,027**GROSS
                  PROFIT (LOSS)**
              
              
              (1,926,303
              )
              
              (355,554
              )
              
              (721,019
              )
              
              (322,027
              )**OPERATING
                  EXPENSES**General
                  and administrative
              
              
              1,643,315
              
              
              1,542,136
              
              
              614,930
              
              
              1,054,752Depreciation
                  and impairment
              
              
              548
              
              
              288
              
              
              226
              
              
              96**Total
                  operating expenses**
              
              
              1,643,863
              
              
              1,542,424
              
              
              615,156
              
              
              1,054,848**NET
                    LOSS FROM OPERATIONS BEFORE OTHER**
                  **EXPENSE
                    AND PROVISION FOR INCOME TAXES**
                    **AND
                      MINORITY INTEREST**
              
              
              (3,570,166
              )
              
              (1,897,978
              )
              
              (1,336,175
              )
              
              (1,376,875
              )**OTHER
                  EXPENSE**Equity
                  in net income (losses) of unconsolidated companies
              
              
              -
              
              
              (64,811
              )
              
              -
              
              
              (10,998
              )Gain
                  on sale of United Engineering
              
              
              225,117
              
              
              -
              
              
              -
              
              
              -Interest
                  expense, net of interest income
              
              
              (1,477,510
              )
              
              (252,342
              )
              
              (204,909
              )
              
              (114,178
              )**NET
                    LOSS FROM OPERATIONS BEFORE PROVISION**
                  **FOR
                    INCOME TAXES, MINORITY INTEREST AND**
                  **EXTRAORDINARY
                    GAIN**
              
              
              (4,822,559
              )
              
              (2,215,131
              )
              
              (1,541,084
              )
              
              (1,502,051
              )Minority
                  interest
              
              
              -
              
              
              -
              
              
              -
              
              
              -**NET
                  LOSS FROM OPERATIONS BEFORE PROVISION**
                **FOR
                  INCOME TAXESAND EXTRAORDINARY GAIN**
              
              
              (4,822,559
              )
              
              (2,215,131
              )
              
              (1,541,084
              )
              
              (1,502,051
              )Provision
                  for income taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -**NET
                  LOSS FROM OPERATIONS BEFORE EXTRAORDINARY GAIN**
              
              
              (4,822,559
              )
              
              (2,215,131
              )
              
              (1,541,084
              )
              
              (1,502,051
              )Extraordinary
                  gain
              
              
              -
              
              
              200,805
              
              
              -
              
              
              200,805**NET
                  (LOSS) APPLICABLE TO SHARES**
              
              $
              (4,822,559
              )
              $
              (2,014,326
              )
              $
              (1,541,084
              )
              $
              (1,301,246
              )**NET
                  (LOSS) PER BASIC AND DILUTED SHARES****BEFORE
                  EXTRAORDINARY GAIN**
              
              $
              (0.14
              )
              $
              (0.08
              )
              $
              (0.04
              )
              $
              (0.05
              )**NET
                  (LOSS) PER BASIC AND DILUTED SHARES**
              
              $
              (0.14
              )
              $
              (0.07
              )
              $
              (0.04
              )
              $
              (0.04
              )**WEIGHTED
                  AVERAGE NUMBER OF****SHARES
                  OUTSTANDING**
              
              
              35,671,225
              
              
              28,756,025
              
              
              36,601,504
              
              
              30,925,399
  The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.


5


**CSMG
                  TECHNOLOGIES, INC. AND SUBSIDIARIES****(FORMERLY
                  CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOW
                  (UNAUDITED)****FOR
                  THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND
                  2006**
  **2007**
              
              
              **2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  (loss)
              
              $
              (4,822,559
              )
              $
              (2,014,326
              )**Adjustments
                  to reconcile net (loss)****to
                  net cash (used in) operating activities:**Stock
                  issued for services
              
              
              314,413
              
              
              148,275Stock
                  issued for interest
              
              
              -
              
              
              494,792Discount
                  on notes payable
              
              
              761,421
              
              
              -Warrants
                  issued for commissions
              
              
              186,092
              
              
              -Options
                  issued to consultant
              
              
              28,247
              
              
              -Equity
                  loss from investee
              
              
              -
              
              
              64,811Depreciation
              
              
              548
              
              
              288Write
                  off of assets
              
              
              -
              
              
              476,304**Change
                  in assets and liabilities**Decrease
                  in other assets
              
              
              53,383
              
              
              -Increase
                  (decrease) in accounts payable and accrued expenses
              
              
              1,274,174
              
              
              (1,307,242
              )**Total
                  adjustments**
              
              
              2,618,278
              
              
              (122,772
              )**Net
                  cash (used in) operating activities**
              
              
              (2,204,281
              )
              
              (2,137,098
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES:**Capital
                  expenditures
              
              
              -
              
              
              (3,875
              )Patent
                  acquisitions
              
              
              (13,959
              )
              
              -**Net
                  cash (used in) investing activities**
              
              
              (13,959
              )
              
              (3,875
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Issuance
                  of stock for cash
              
              
              165,991
              
              
              672,942Repayment
                  of long-term contract
              
              
              (104,000
              )
              
              -Borrowings
                  of notes payable
              
              
              50,000
              
              
              -Borrowings
                  of convertible notes payable
              
              
              1,340,000
              
              
              2,439,012**Net
                  cash provided by financing activities**
              
              
              1,451,991
              
              
              3,111,954**NET
                  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS**
              
              
              (766,249
              )
              
              970,981**CASH
                  AND CASH EQUIVALENTS - BEGINNING OF PERIOD**
              
              
              868,217
              
              
              -**CASH
                  AND CASH EQUIVALENTS - END OF PERIOD**
              
              $
              101,968
              
              $
              970,981**SUPPLEMENTAL
                  INFORMATION OF CASH FLOW ACTIVITY**Cash
                  paid during the year for interest
              
              $
              25,000
              
              $
              -**SUPPLEMENTAL
                  INFORMATION ON NONCASH ACTIVITY**Conversion
                  of notes payable to common stock
              
              $
              957,877
              
              $
              -Conversion
                  of accrued interest to common stock
              
              $
              494,974
              
              $
              -The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.






6


**CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2007 AND 2006 (UNAUDITED)**






**NOTE
      1-** **ORGANIZATION
      AND BASIS OF PRESENTATION**




The
      unaudited condensed financial statements included herein have been prepared,
      without audit, pursuant to the rules and regulations of the Securities and
      Exchange Commission (“SEC”). The condensed financial statements and notes are
      presented as permitted on Form 10-QSB and do not contain information included
      in
      the Company’s annual statements and notes. Certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with accounting principles generally accepted in the United States of America
      have been condensed or omitted pursuant to such rules and regulations, although
      the Company believes that the disclosures are adequate to make the information
      presented not misleading. It is suggested that these condensed consolidated
      financial statements be read in conjunction with the December 31, 2006 audited
      financial statements and the accompanying notes thereto. While management
      believes the procedures followed in preparing these condensed consolidated
      financial statements are reasonable, the accuracy of the amounts are in some
      respects dependent upon the facts that will exist, and procedures that will
      be
      accomplished by the Company later in the year.





These
      condensed unaudited condensed consolidated financial statements reflect all
      adjustments, including normal recurring adjustments which, in the opinion of
      management, are necessary to present fairly the consolidated operations and
      cash
      flows for the periods presented.







CSMG
      Technologies, Inc., formerly, Consortium Service Management Group, Inc. (the
      “Company”), a Texas corporation, was incorporated on November 17, 1992. On
      January 18, 2007, the Company changed its name to CSMG Technologies, Inc. and
      increased its total number of authorized shares to 90,000,000 and the number
      of
      common shares to 80,000,000.




The
      Company is a technology management company. The technologies involve live tissue
      bonding and CO2 (carbon dioxide) separation of landfill gas.




The
      live
      tissue bonding technology focuses on bonding living soft biological tissue
      used
      in surgical procedures which eliminates the need for sutures, staples, sealants
      or glues. The Company has an agreement with the E.O. Paton Institute of
      Electrical Welding of the Ukraine National Academy of Sciences and International
      Association of Welding and owns the technology including the worldwide rights
      of
      licensing, patenting, manufacturing, development and distribution of this
      technology. To date, we have 37 issued or pending patents in the United States
      and overseas in connection with the live tissue bonding equipment. In addition,
      in June 2007, the Company filed a 510(K) submission with the U.S. Food and
      Drug
      Administration for the duct and vessel sealer and two instruments, as well
      as
      having their technology approved for commercial development in Ukraine by the
      Ukraine Ministry of Health.




7
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      1-** **ORGANIZATION
      AND BASIS OF PRESENTATION** **(CONTINUED)**




The
      Company also has 1 patent issued in both the United States and Canada on the
      carbon dioxide separator technology. This was also developed in Ukraine, and
      promotes the economical separation of methane from carbon dioxide gas emanating
      from landfills. Landfills generate a commingled mixture of methane and carbon
      dioxide gas which prevents it from being commercially sold as fuel. The Ukraine
      technology has developed an economical carbon dioxide separator that removes
      the
      carbon dioxide to allow the methane gas to be sold to utility companies as
      well
      as other industrial and commercial customers. The first installation began
      in
      2002 in Mobile, Alabama with completion originally estimated to be in the second
      quarter of 2003.







The
      carbon dioxide separator equipment is now installed at the Chastang landfill
      in
      Mobile, Alabama which is owned by the city of Mobile but operated by Waste
      Management Inc. and Transamerican Waste Industries Inc. An agreement existed
      between Transamerican Waste Industries Inc. and Resource Technology Corporation
      (RTC) which gave RTC the sole and exclusive right to collect, extract and remove
      landfill gas from the property. At this time RTC contracted with the Company
      to
      extract the methane gas. Accordingly, the Company installed the carbon dioxide
      separator at the landfill in 2002 and 2003. Waste Management Inc. asserted
      that
      the carbon dioxide equipment produced methane gas that failed to meet Mobile
      Gas
      quality specifications. As a result and as noted in Note 9 , Litigation, a legal dispute ensued as well as RTC filing bankruptcy. The Company
      is removing the equipment from the landfill and storing the equipment while
      the Company seeks another site.





On
      February 14, 2006, the Company signed a contract with DuPont to provide up
      to
      500,000 MMbtu commercial quality gas to their plant outside Mobile, Alabama.
      There is no requirement in this contract for gas quality specifications,
      however, the Company believes that based on current raw gas analysis, the gas
      produced will exceed current specifications.





In
      1994,
      the Company formed United Engineering Company, a Ukraine and U.S. joint stock
      company registered under the laws of Ukraine with 14 of Ukraine’s largest
      defense contractors and Ukraine State Property fund. The purpose was to perform
      dismantlement of weapons of mass destruction under the START Treaty. The Company
      initially had a 50% ownership that was reduced to 33.3% in 2000. The Company
      recorded this investment under the equity method, and maintained its investment
      until March 2007, when their interest was sold for net proceeds of
      $278,500.





The
      Company recently has been focusing on their live tissue bonding technology,
      and
      has hired an internationally recognized medical device expert, a surgical device
      design company to design and manufacture the live tissue connect generator,
      as
      well as bringing on a major U.S. University to complete laboratory work and
      adding advisors that are surgeons, engineers and scientists to work on this
      project in the Ukraine.




8
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      1-** **ORGANIZATION
      AND BASIS OF PRESENTATION** **(CONTINUED)**




***Going
      Concern***





As
      shown
      in the accompanying condensed consolidated financial statements the Company
      has
      incurred a loss of **$** 4,822,559
      and $2,215,131 (prior to the extraordinary gain of $200,805) for the nine months
      ended September 30, 2007 and 2006, respectively, and has a working capital
      deficiency of $8,672,786 as of September 30, 2007.




The
      Company’s management has raised funds through equity and debt offerings. In June
      2006, Empire Financial Group and the Company entered into a best efforts bridge
      financing transaction for $3,025,000. Empire Financial Group was successful
      in
      raising the full $3,025,000 which is currently classified as notes payable
      -
      others on the condensed consolidated balance sheet at September 30, 2007, which
      will likely be converted to equity. The Company and Empire Financial Group
      has
      extended this offering for up to an additional $3,000,000 of which Empire has
      raised $1,065,000 as of September 30, 2007, as well as entering into a letter
      of
      intent relating to the raising of an additional $5,000,000 for a potential
      initial public offering of Live Tissue Connect, Inc., the tissue welding
      technology subsidiary of the Company. (see NOTE 10- SUBSEQUENT
      EVENTS)




One
      of
      the principal reasons for the Company’s ability to continue as a going concern
      involves the carbon dioxide separator business. The equipment manufactured
      removes CO2 from landfill gas, raw landfill gas that has high air content
      requires additional landfill gathering system tuning to reduce air content
      or
      additional oxygen and nitrogen removal equipment. Our system fits well is within
      specifications on the Company’s agreement with DuPont. The Chastang project
      however, generated no production, and cost the Company approximately $2,000,000.
      The Company is in process of either moving their equipment from the Chastang
      site to another location or to storage or salvage. Despite, the new gas purchase
      contract the Company entered into, the Company did impair the value of their
      equipment. In addition to this impairment, the Company impaired the value of
      obtaining their patents for both the CO2 separator equipment as well as the
      patents related to the live tissue bonding. The total of the patent impairment
      was approximately $650,000.




Management’s
      plans to address these conditions include raising additional funds, through
      Empire Financial Group, as well as the manufacturing of their live tissue
      bonding equipment in the last quarter of 2007. The Company has signed contracts
      with leading instrument and electro surgery generator design and manufacturing
      companies and has completed manufacturing of the prototype equipment that will
      be licensed or sold to perform surgeries.




The
      Company’s long-term success is dependent upon obtaining FDA approval, and
      worldwide acceptance of their products.




9
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      1-** **ORGANIZATION
      AND BASIS OF PRESENTATION** **(CONTINUED)**




***Going
      Concern (Continued)***




The
      Company is subject to certain risks common to technology-based companies.
      Principal risks to the Company include uncertainty of growth in market
      acceptance for its products; history of losses in recent years; ability to
      remain competitive in response to new technologies; costs to defend, as well
      as
      risks of losing patent and intellectual property rights; reliance on limited
      number of suppliers; reliance on outsourced manufacture of its products for
      quality control and product availability; uncertainty of demand for its products
      in certain markets; ability to manage growth effectively; dependence on key
      members of its management; and its ability to obtain adequate capital to fund
      future operations.




The
      condensed consolidated financial statements do not include any adjustments
      relating to the carrying amounts of recorded assets or the carrying amounts
      and
      classification of recorded liabilities that may be required should the Company
      be unable to continue as a going concern.




**NOTE
      2-** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**




**Principles
      of Consolidation**




The
      condensed consolidated financial statements include those of the Company and
      its
      wholly-owned subsidiary. All intercompany accounts and transactions have been
      eliminated in consolidation.




**Use
      of Estimates**




The
      preparation of condensed consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the date of the financial statements and the reported amounts
      of
      revenue and expenses during the reporting period. Actual results could differ
      from those estimates.






**Cash
      and Cash Equivalents**




The
      Company considers all highly liquid debt instruments and other short-term
      investments with a maturity of three months or less, when purchased, to be
      cash
      equivalents.




The
      Company maintains cash and cash equivalent balances at one financial institution
      that is insured by the Federal Deposit Insurance Corporation up to $100,000.




10
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      2-** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**




**Fixed
      Assets**




Fixed
      assets are stated at cost, less accumulated depreciation. Depreciation is
      provided using the straight-line method over the estimated useful lives of
      the
      related assets (primarily three to five years). Costs of maintenance and repairs
      are charged to expense as incurred.




**Recoverability
      of Long-Lived Assets**




The
      Company reviews the recoverability of its long-lived assets on a periodic basis
      whenever events and changes in circumstances have occurred which may indicate
      a
      possible impairment. The assessment for potential impairment is based primarily
      on the Company’s ability to recover the carrying value of its long-lived assets
      from expected future cash flows from its operations on an undiscounted basis.
      If
      such assets are determined to be impaired, the impairment recognized is the
      amount by which the carrying value of the assets exceeds the fair value of
      the
      assets. Fixed assets to be disposed of by sale are carried at the lower of
      the
      then current carrying value or fair value less estimated costs to
      sell.




**Research
      and Development**




The
      Company annually incurs costs on activities that relate to research and
      development of new technology and products. Research and development costs
      are
      expensed as incurred.




**Revenue
      Recognition**




The
      Company has not generated revenue in many years. The Company anticipates that
      they will record revenue in accordance with Staff Accounting Bulletin 104.
      The
      criteria for recognition is as follows:




1)
            Persuasive
                evidence of an arrangement exists;


2)
            Delivery
                has occurred or services have been
                rendered;


3)
            The
                seller’s price to the buyer is fixed or determinable, and


4)
            Collectibility
                is reasonably assured.




**Stock-Based
      Compensation**




On
      December 16, 2004, the Financial Accounting Standards Board (“FASB”) published
      Statement of Financial Accounting Standards No. 123 (Revised 2004),
“ *Share-Based
      Payment* ”
(“SFAS
      123R”). SFAS 123R requires that compensation cost related to share-based payment
      transactions be recognized in the financial statements. Share-based payment
      transactions within the scope of SFAS 123R include stock options, restricted
      stock plans, performance-based awards, stock appreciation rights, and employee
      share purchase plans. The provisions of SFAS 123R, as amended, are effective
      for
      small business issuers beginning as of the next interim period after December
      15, 2005. The Company has adopted these provisions as of January 1, 2006 and
      this adoption did not have a material effect on the Company’s
      operations.




11
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      2-** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**




**Stock-Based
      Compensation** **(Continued)**





On
      January 1, 2006, the Company adopted the provisions of FAS No. 123R “Share-Based
      Payment” (“FAS 123R”) which requires recognition of stock-based compensation
      expense for all share-based payments based on fair value. Prior to January
      1,
      2006, the Company measured compensation expense for all of its share-based
      compensation using the intrinsic value method prescribed by Accounting
      Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to
      Employees” (“APB 25”) and related interpretations. The Company has provided pro
      forma disclosure amounts in accordance with FAS No. 148, “Accounting for
      Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
      Statement No. 123” (“FAS 148”), as if the fair value method defined by FAS No.
      123, “Accounting for Stock Based Compensation” (“FAS 123”) had been applied to
      its stock-based compensation.





The
      Company has elected to use the modified-prospective approach method. Under
      that
      transition method, the calculated expense in 2006 is equivalent to compensation
      expense for all awards granted prior to, but not yet vested as of January 1,
      2006, based on the grant-date fair values estimated in accordance with the
      original provisions of FAS 123. Stock-based compensation expense for all awards
      granted after January 1, 2006 is based on the grant-date fair values estimated
      in accordance with the provisions of FAS 123R. The Company recognizes these
      compensation costs, net of an estimated forfeiture rate, on a pro rata basis
      over the requisite service period of each vesting tranche of each award. The
      Company considers voluntary termination behavior as well as trends of actual
      option forfeitures when estimating the forfeiture rate.





The
      Company measures compensation expense for its non-employee stock-based
      compensation under the Financial Accounting Standards Board (FASB) Emerging
      Issues Task Force (EITF) Issue No. 96-18, “ *Accounting
      for Equity Instruments that are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* ”.
      The
      fair value of the option issued is used to measure the transaction, as this
      is
      more reliable than the fair value of the services received. The fair value
      is
      measured at the value of the Company’s common stock on the date that the
      commitment for performance by the counterparty has been reached or the
      counterparty’s performance is complete. The fair value of the equity instrument
      is charged directly to compensation expense and additional paid-in
      capital.




The
      Company’s warrants issued in May 2007, were not stock based compensation and
      were recorded in accordance with EITF 96-18. The Company recognized $186,092
      in
      expense for the nine months ended September 30, 2007.




12
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      2-** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**




**Segment
      Reporting**




The
      Company follows the provisions of SFAS 131, “Disclosures about Segments of an
      Enterprise and Related Information.” This standard requires that companies
      disclose operating segments based on the manner in which management
      disaggregates the Company in making internal operating decisions. The Company
      believes that there is only one operating segment at this time as their CO2
      separator business is inactive.





**Fair
      Value of Financial Instruments**





The
      carrying amounts
      reported in the condensed consolidated balance sheet for cash and cash
      equivalents, and accounts payable approximate fair value because of the
      immediate or short-term maturity of these financial instruments. For the notes
      payable, the carrying amount reported is based upon the incremental borrowing
      rates otherwise available to the Company for similar borrowings.




**Income
      Taxes**




Under
      Financial Accounting Standards Board Statement No. 109, “Accounting for Income
      Taxes,” the liability method is used in accounting for income taxes. Under this
      method, deferred tax assets and liabilities are determined based on differences
      between financial reporting and tax bases of assets and liabilities, and are
      measured using the enacted tax rates and laws that will be in effect when the
      differences are expected to reverse.




**(Loss)
      Per Share of Common Stock**




Basic
      net
      (loss) per common share (“EPS”) is computed using the weighted average number of
      common shares outstanding for the period. Diluted earnings per share includes
      additional dilution from common stock equivalents, such as stock issuable
      pursuant to the exercise of stock options and warrants. Common stock equivalents
      are not included in the computation of diluted earnings per share when the
      Company reports a loss because to do so would be anti-dilutive for the periods
      presented.




All
      options and warrants to purchase shares of common stock and convertible notes
      were not included as they would be considered anti-dilutive as the Company
      had a
      loss for both periods.




13
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      2-  
SUM** **MARY
      OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**




The
      following is a reconciliation of the computation for basic and diluted EPS:


**Nine
                  Months Ended****September
                  30,**
              
              
              **September
                  30,****2007**
              
              
              **2006**Net (loss)
              
              $
              (4,822,559
              )
              $
              (2,215,131
              )Weighted-average common sharesoutstanding :Basic
              
              
              35,671,225
              
              
              28,756,025Options
              
              
              1,025,000
              
              
              975,000Warrants
              
              
              890,941
              
              
              200,000Diluted
              
              
              37,587,166
              
              
              29,931,025Basic net (loss) per share
              
              $
              (0.14
              )
              $
              (0.08
              )Diluted net (loss) per share
              
              $
              (0.14
              )
              $
              (0.08
              )




**Recent
      Issued Accounting Standards**




On
      December 16, 2004, FASB issued SFAS No. 153, “Exchanges of Non-monetary Assets,
      an amendment of APB Opinion 29, Accounting for Non-monetary Transaction” ("SFAS
      153"). This statement amends APB Opinion 29 to eliminate the exception for
      non-monetary exchanges of similar productive assets and replaces it with a
      general exception for exchanges of non-monetary assets that do not have
      commercial substance. Under SFAS 153, if a non-monetary exchange of similar
      productive assets meets a commercial-substance criterion and fair value is
      determinable, the transaction must be accounted for at fair value resulting
      in
      recognition of any gain or loss. SFAS 153 is effective for non-monetary
      transactions in fiscal periods that begin after June 15, 2005. The adoption
      of
      SFAS 153 has not had a material impact on its financial position, results of
      operations or cash flows.




In
      May
      2005, the FASB issued Statement of Financial Accounting Standard No. 154, *“Accounting
      Changes and Error Corrections”* (“SFAS
      154”). SFAS 154 is a replacement of APB No. 20, *“Accounting
      Changes”* ,
      and
      SFAS No. 3, *“Reporting
      Accounting Changes in Interim Financial Statements”* .
      SFAS
      154 applies to all voluntary changes in accounting principle and changes the
      requirements for accounting and reporting of a change in accounting principle.
      This statement establishes that, unless impracticable, retrospective application
      is the required method for reporting of a change in accounting principle in
      the
      absence of explicit transition requirements specific to the newly adopted
      accounting principle. It also requires the reporting of an error correction
      which involves adjustments to previously issued financial statements similar
      to
      those generally applicable to reporting an accounting change retrospectively.
      SFAS 154 is effective for accounting changes and corrections of errors made
      in
      fiscal years beginning after December 15, 2005. The adoption of SFAS 154 has
      not
      had a material impact on its financial position, results of operations or cash
      flows.






14
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      2-** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**




**Recent
      Issued Accounting Standards** **(Continued)**





In
      February 2006, the FASB issued Statement of Financial Accounting Standard No.
      155, *“Accounting
      for Certain Hybrid Instruments”* (“SFAS
      155”). FASB 155 allows financial instruments that have embedded derivatives to
      be accounted for as a whole (eliminating the need to bifurcate the derivative
      from its host) if the holder elects to account for the whole instrument on
      a
      fair value basis. This statement is effective for all financial instruments
      acquired or issued after the beginning of an entity’s first fiscal year that
      begins after September 15, 2006. The adoption of SFAS 155 has not had a material
      impact on its financial position, results of operations or cash
      flows.




In
      September 2006, the FASB issued SFAS 157, “Fair Value Measurements.” This
      standard defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles, and expands disclosure about fair
      value measurements. This statement is effective for financial statements issued
      for fiscal years beginning after November 15, 2007. Early adoption is
      encouraged. The adoption of SFAS 157 is not expected to have a material impact
      on the consolidated financial statements.




In
      September 2006, the FASB issued SFAS 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements
      87, 88, 106 and 132(R)” (“SFAS 158”). SFAS 158 requires an employer to recognize
      the over-funded or under-funded status of a defined benefit postretirement
      plan
      (other than a multiemployer plan) as an asset or liability in its statement
      of
      financial position and to recognize changes in that funded status in the year
      in
      which the changes occur through comprehensive income. SFAS 158 also
      requires the measurement of defined benefit plan assets and obligations as
      of
      the date of the employer’s fiscal year-end statement of financial position (with
      limited exceptions). Management does not expect adoption of SFAS 158 to have
      a
      material impact on the Company’s consolidated financial statements.




In
      February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115”, (“FAS 159”) which permits entities to choose to measure many financial
      instruments and certain other items at fair value at specified election dates.
      A
      business entity is required to report unrealized gains and losses on items
      for
      which the fair value option has been elected in earnings at each subsequent
      reporting date. This statement is expected to expand the use of fair value
      measurement. FAS 159 is effective for financial statements issued for fiscal
      years beginning after November 15, 2007, and interim periods within those fiscal
      years.




15
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      2-** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**




**Recent
      Issued Accounting Standards** **(Continued)**




In
      July
      2006, the FASB issued Interpretation No. 48 (FIN No. 48), “Accounting for
      Uncertainty in Income Taxes.” This interpretation requires recognition and
      measurement of uncertain income tax positions using a “more-likely-than-not”
approach. FIN No. 48 is effective for fiscal years beginning after December
      15,
      2006. The adoption of FIN No. 48 is not expected to have a material impact
      on
      the consolidated financial statements.




In
      September 2006, the United States Securities and Exchange Commission (“SEC”)
      issued SAB 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements.”




This
      SAB
      provides guidance on the consideration of the effects of prior year
      misstatements in quantifying current year misstatements for the purpose of
      a
      materiality assessment. SAB 108 establishes an approach that requires
      quantification of financial statement errors based on the effects of each of
      the
      company’s financial statements and the related financial statement disclosures.
      SAB 108 permits existing public companies to record the cumulative effect of
      initially applying this approach in the first year ending after November 15,
      2006 by recording the necessary correcting adjustments to the carrying values
      of
      assets and liabilities as of the beginning of that year with the offsetting
      adjustment recorded to the opening balance of retained earnings. Additionally,
      the use of the cumulative effect transition method requires detailed disclosure
      of the nature and amount of each individual error being corrected through the
      cumulative adjustment and how and when it arose. The adoption of SAB 108 is
      not
      expected to have a material impact on the consolidated financial
      statements.




**NOTE
      3-** **FIXED
      ASSETS**




Fixed
      assets consist of the following as of September 30, 2007:


**Estimated
                  Useful****Lives
                  (Years****)**Computer
                  equipment     
5
              
              $
              57,166Less:
                  Accumulated depreciation
              
              
              (54,223
              )Total,
                  net
              
              $
              2,943




Depreciation
      expense was $548 and $288 for the nine months ended September 30, 2007 and
      2006,
      respectively. The Company wrote off $8,118 of fully depreciated equipment in
      the
      nine months ended September 30, 2007.




16
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      4-** **CONVERTIBLE
      NOTES PAYABLE**




The
      Company from July 27, 2006 through September 30, 2007 raised $4,090,000 through
      Empire Financial Group in the form of convertible notes. The notes commenced
      interest accrual on January 1, 2007, at 15% per annum, and are convertible
      into
      Live Tissue Connect, Inc. shares at 50% of the IPO of the Company’s common stock
      price. The Company has accrued $516,489 in interest for the nine months ended
      September 30, 2007. The total due the investors as of September 30, 2007 is
      $4,606,489. The entire balance is reflected as a current liability on the
      Company’s condensed consolidated balance sheet.




Empire
      received 290,941 warrants on May 18, 2007 as part of their commission for the
      raising of the money. The Company recorded these warrants in accordance with
      EITF 96-18 and recognized an expense in the amount of $186,092.




**NOTE
      5-** **NOTES
      PAYABLE**




The
      Company from time to time entered into various note agreements with shareholders
      of the Company. The 20 notes that remain as of September 30, 2007 commenced
      from
      2000 through 2005, and accrue interest at rates ranging from 8% to 15%.




The
      remaining principal of these 20 notes as of September 30, 2007 is $1,851,101.
      Accrued interest through September 30, 2007 on these notes is $1,127,192, for
      a
      total amount due as of September 30, 2007 of $2,978,293.




The
      Company’s management has been very successful over the past few years in
      converting these notes into shares of common stock. For the nine months ended
      September 30, 2007, the Company has been successful in converting $1,373,738
      in
      notes plus accrued interest into 2,197,981 shares of stock. In addition, the
      Company recorded a discount in the amount of $761,421 to additional paid in
      capital based on the beneficial conversion price.




Included
      in the notes payable are:




***Cornell
      Capital***




On
      March
      29, 2004, the Company entered into an equity line of credit with Cornell Capital
      Partners whereby the Company may issue and sell to Cornell up to $10,000,000
      in
      common stock. Under this arrangement, Cornell advanced the Company $1,000,000
      in
      2004, all of which has been repaid through conversions to common stock.




The
      Company in 2005 was advanced $600,000 under a convertible debenture. In
      accordance with this agreement, the Company has been repaying this through
      issuances of stock under Rule 144. The Company has repaid $358,000 in principal
      with the remaining balance of $242,000 plus interest in the amount of $132,687
      due as of September 30, 2007. The Company also has escrowed 488,854 shares
      of
      its common stock with Cornell’s escrow agent to use as repayment. (see NOTE 10-
      SUBSEQUENT EVENTS)




17
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      5-** **NOTES
      PAYABLE** **(CONTINUED)**




**Included
      in notes payable but remain in litigation are the
      following:** ******


***Stonegate
      Management, Ltd.***




The
      Company in 2001 entered into four one-year note agreements with Stonegate
      Management in the original principal balance of $630,000. Accrued interest
      through September 30, 2007 on these notes amounts to $467,263, for a total
      amount due under these notes of $1,097,263. The notes accrue interest at rates
      ranging between 8% and 10% per annum. The Company’s attorneys and Stonegate have
      been negotiating a repayment schedule, however no agreement has been reached.




In
      relation to these notes, the Company on December 12, 2005, was served a suit
      in
      the Circuit Court for Hillsborough County Florida by Nature Coast Collections,
      Inc. The suit named the Company as well as certain officers, Donald Robbins
      and
      Gordon Allison as guarantors of the four notes. Nature Coast Collections, Inc.
      is the assignee of the original payee, Stonegate Management, Ltd., a Costa
      Rican
      entity. The Company filed a motion for dismissal of the proceedings for lack
      of
      jurisdiction in Florida, and this was granted.




On
      June
      30, 2006, the Company and the two officers were again served by Nature Coast
      Collections, Inc., this time in the Federal District Court for the Southern
      District of Texas. The Company has answered the complaint and filed a
      counterclaim alleging, among other matters, that Nature Coast Collections,
      Inc.
      is an affiliate of RTC, a debtor in bankruptcy, whom the Company entered into
      a
      transaction with in regards to their CO2 separation equipment. The Company
      alleges that they should be authorized to offset its losses caused by the
      contractual relationship with RTC against the claims brought on by Nature Coast
      Collections, Inc. These proceedings have been moved to the Federal District
      Court for the Northern District of Illinois, where the bankruptcy proceedings
      are. The litigation is in the pleadings stage and discovery has
      commenced.




***Banco
      Panamericano***




The
      Company is in default on a note with an initial balance of $203,800 to Banco
      Pamamericano that became due April 1, 2002. On February 10, 2005, Banco
      Panamericano filed suit in the Circuit Court of Cook County, Illinois for
      $514,920 (balance accrued as of September 30, 2007 including interest at 12%
      is
      $368,685).




The
      note
      was funded in large part to assist in funds needed for the Chastang transaction,
      and the Company alleges that Banco Panamericano is not a bank, but a Nebraska
      corporation that is affiliated with RTC and that the proceeds were to be repaid
      from the proceeds of the sale of the methane gas that never occurred based
      on
      RTC’s failure to perform under the contract. The litigaion is in the pleadings
      stage and discovery has commenced.




The
      Company believes they are the injured party an that the litigation properly
      belongs in RTC’s Chapter 11 proceedings in the federal bankruptcy court. On
      December 6, 2005, the case was moved to the United States Bankruptcy Court.




The
      entire balance of shareholder notes is reflected as current liabilities as
      they
      are all overdue.




18
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      6-** **STOCKHOLDERS’
      EQUITY (DEFICIT)**




***Preferred
      Stock***




The
      Company has 10,000,000 authorized shares of preferred stock, par value
      $.001.




On
      December 28, 1995, the Company authorized the issuance of 75,669 shares of
      Series A preferred stock, $10.00 face amount, $.001 par value which paid a
      cumulative dividend on net corporate profit equal to 8% of the face amount
      of
      the outstanding stock. If the Company did not realize profits, preferred stock
      dividends are not accruable. Such preferred stock is preferred over all common
      stock in the event of corporate liquidation and dissolution to the extent of
      its
      unredeemed face amount.




On
      September 29, 2000, the Board of Directors approved the conversion of these
      shares into 1,210,704 common shares.




As
      of
      September 30, 2007, there are no shares issued and outstanding.




***Common
      Stock***




On
      January 18, 2007, the Company increased the authorized shares of common stock
      to
      80,000,000.




As
      of
      September 30, 2007, the Company has 36,670,777 issued, 36,181,923 shares
      outstanding and 488,854 subscribed.




For
      the
      nine months ended September 30, 2007, the Company has issued the following
      stock:




274,215
      shares issued for cash in the amount of $165,991.




744,500
      shares issued for services at a value of $314,413.




2,197,981
      shares issued in conversion of notes payable and accrued interest in the amount
      of $1,373,738.




***Options***




The
      Company currently has three stock option plans. The following table summarizes
      the activity of the Company’s stock option plan.




September
                30, 2007Weighted-averageNumber
                of
            
            
            exerciseOptions
            
            
            priceSeptember
                30,
                2007:Outstanding
                -
                beginning of period
            
            
            975,000
            
            $
            0.42Granted
            
            
            50,000
            
            
            0.62Exercised/Expired
            
            
            (-
            )
            
            -Outstanding
                -
                end of period
            
            
            1,025,000
            
            $
            0.45Exercisable
                at
                end of period
            
            
            975,000
            
            $
            0.45








19
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      6-** **STOCKHOLDERS’
      EQUITY (DEFICIT)** **(CONTINUED)**




***Options
      (Continued)***




The
      Company’s options expire at various times through 2017. All options issued in
      2003 through 2005 were issued at or above market value. The Company issued
      50,000 options to a consultant in February 2007 that were vested. These options
      were expensed at a value of $28,247 by utilizing the black-scholes method.




***Warrants***




The
      Company has issued the following warrants as of September 30,
      2007:


**Exercise**
                  **Date****Warrants**
                  
                  **Price**
                  **Issued**
                  **Term**200,000
                  $
                  0.40
                  5/15/2006
                  7.5
                      years400,000
                  $
                  0.40
                      - $0.75
                  11/1/2006
                  7
                      years290,941
                  $
                  0.57
                  5/18/2007
                  7
                      years890,941


The
      290,941 Warrants issued in May 2007 were valued utilizing the Black - Scholes
      method as follows:





Stock
              Price
            $.74Strike
              Price
            $.57Expected
              Life
              of Warrant
            7 yrs.Annualized
              Volatility
            100.61 %Discount
              Rate
            4.50%Annual
              Rate
              of Quarterly Dividends
            NoneCall
              Option
              Value
            $.6396





20
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      7-** **COMMITMENTS**




**Rental**




The
      Company leases office space under an operating lease that has initial or
      remaining non-cancelable lease terms and expires in May 2008. The lease
      agreement provides for an annual 3% escalation of the base rent. As of September
      30, 2007, the following presents the approximate future minimum lease payments
      required under this lease:




**For
                  the Periods Ended****September
                  30,**2008
              $
              10,144




Rent
      expense for the nine months ended September 30, 2007 and 2006 was $8,074 and
      $14,157 respectively.




**NOTE
      8-** **PROVISION
      FOR INCOME TAXES**




Deferred
      income taxes will be determined using the liability method for the temporary
      differences between the financial reporting basis and income tax basis of the
      Company’s assets and liabilities. Deferred income taxes are measured based on
      the tax rates expected to be in effect when the temporary differences are
      included in the Company’s tax return. Deferred tax assets and liabilities are
      recognized based on anticipated future tax consequences attributable to
      differences between financial statement carrying amounts of assets and
      liabilities and their respective tax bases.





At
      September 30, 2007, deferred tax assets consist of the following:




Net
                  operating losses
              
              $
              5,224,744Valuation
                  allowance
              
              
              (5,224,744
              )$
              -
  At
      September 30, 2007, the Company had net operating loss carryforward in the
      approximate amount of $14,927,839 available to offset future taxable income
      through 2027. The Company established valuation allowances equal to the full
      amount of the deferred tax assets due to the uncertainty of the utilization
      of
      the operating losses in future periods.







21
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      8-** **PROVISION
      FOR INCOME TAXES** **(CONTINUED)**




A
      reconciliation of the Company’s effective tax rate as a percentage of income
      before taxes and federal statutory rate for the nine months ended September
      30,
      2007 and 2006 is summarized below.




2007
            
            
            2006Federal
                statutory rate
            
            
            (35.0)%
            
            
            (34.0)State
                income
                taxes, net of federal benefits
            
            
            0.0
            
            
            0.0Valuation
                allowance
            
            
            35
            
            
            34.00%
            
            
            0%






**NOTE
      9-** **LITIGATION**




Banco
      Panamericano v.  Consortium Service Management Group. Inc. and CSMG Gastech
      LLC , 
      Case No.  1:07-cv-00015 now pending in the Northern District of Illinois
      District Court as Case No. 06 C 7195.  Plaintiff claims damages in the
      amount of $514,920 as of February 9, 2005, together with interest and costs,
      arising out of a disputed promissory note.  The Company has answered
      setting forth several affirmative defenses and counterclaims focused on the
      affiliation of the Plaintiff with a customer of the Company and based on
      misrepresentation.  The litigation is still in the pleading stage and
      discovery has commenced.





Nature
      Coast Collections, Inc. v.  Consortium Service Management Group, Inc.,
      Donald S.  Robbins and Gordon W.  Allison ,
      Case
      No. 2:06-cv-273 originally pending in the Southern District of Texas
      District Court and recently ordered transferred to the Northern District of
      Illinois.  Plaintiff claims damages of $630,000, with interest and costs,
      arising out of a series of disputed promissory notes. The Company has
      answered setting forth several affirmative defenses and counterclaims focused
      on
      the affiliation of the Plaintiff with an offshore affiliate of a customer of
      the
      Company and based on misrepresentation.  The litigation is in the pleading
      stage and discovery has commenced.




There
      is
      a dispute, not subject to a court proceeding, between Waste Management Company,
      Inc. (“Waste Management”) and the Company with regard to the Chastang Waste Site
      in Chastang, Alabama.  Waste Management was to maintain the site so as to
      produce marketable levels of waste site gas.  The site has failed to
      produce such volume and Waste Management has requested the Company to remove
      its
      equipment from the site.  The Company has commenced the disassembly of the
      equipment in preparation for removal of the equipment from the site. A written
      demand for removal was received from Waste Management on August 9,
      2007.




22
 **CSMG
            TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
            CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **SEPTEMBER
            30, 2007 AND 2006 (UNAUDITED)**




**NOTE
      10-** **SUBSEQUENT
      EVENTS**




On
      October 18, 2007 the Company sold to YA Global Investments, L.P. (f/k/a Cornell
      Capital Partners, LP) ("YA") 535,267 shares of CSMG common stock as payment
      in
      full of all principal and interest in the amount of $374,686.79 owed by the
      Company to YA under a promissory note dated March 24, 2005 issued by the Company
      to YA. The Company has no further indebtedness to YA. The above securities
      were
      issued pursuant to an exemption from registration under Section 4(2) of the
      Securities Act of 1933, as amended, to a person who is sophisticated in such
      transactions and who had knowledge of and access to sufficient information
      about
      the Company to make an informed investment decision. The purchaser of these
      securities was aware that they were restricted securities.




In
      addition to the $1,065,000 provided by Empire Financial Group in the three
      months ended September 30, 2007, Empire raised an additional $2,207,500 as
      of
      October 31, 2007, as well as entering into a letter of intent relating to the
      raising of an additional $5,000,000 for a potential initial public offering
      of
      Live Tissue Connect, Inc., the tissue welding technology subsidiary of the
      Company.




23


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




*The
      information set forth and discussed in this Management’s Discussion and Analysis
      or Plan of Operation is derived from our financial statements and the related
      notes, which are included. The following information and discussion should
      be
      read in conjunction with those financial statements and notes, as well as the
      information provided in our Annual Report on Form 10-KSB for our fiscal year
      ended December 31, 2006.*





**Overview**




The
      following is a discussion of: (i) our results of operations and financial
      condition for the nine and three months ended September 30, 2007 versus
      September 30, 2006; (ii) our liquidity and capital resources; and (iii) our
      critical accounting policies. CSMG Technologies Inc., formerly, Consortium
      Service Management Group, Inc. (the “Company”), a Texas corporation, was
      incorporated on November 17, 1992. On January 18, 2007, the Company changed
      its
      name to CSMG Technologies, Inc. and increased its total number of authorized
      shares to 90,000,000 and the number of common shares to 80,000,000.





The
      Company is a technology management company. The technologies involve live tissue
      bonding and CO2 (carbon dioxide) separation of landfill gas.





The
      live
      tissue bonding technology focuses on bonding living soft biological tissue
      used
      in surgical procedures which eliminates the need for sutures, staples, sealants
      or glues. The Company has an agreement with the E.O. Paton Institute of
      Electrical Welding of the Ukraine National Academy of Sciences and International
      Association of Welding and owns the technology including the worldwide rights
      of
      licensing, patenting, manufacturing, development and distribution of this
      technology. To date, we have 39 issued or pending patents in the United States
      and overseas in connection with the live tissue bonding equipment. In addition,
      in June 2007, the Company filed a 510(K) submission with the U.S. Food and
      Drug
      Administration for the duct and vessel sealer and two instruments, as well
      as
      having their technology approved for commercial development in Ukraine by the
      Ukraine Ministry of Health.





The
      Company also has 1 patent issued in both the United States and Canada on the
      carbon dioxide separator technology. This was also developed in Ukraine, and
      promotes the economical separation of methane from carbon dioxide gas emanating
      from landfills. Landfills generate a commingled mixture of methane and carbon
      dioxide gas which prevents it from being commercially sold as fuel. The Ukraine
      technology has developed an economical carbon dioxide separator that removes
      the
      carbon dioxide to allow the methane gas to be sold to utility companies as
      well
      as other industrial and commercial customers. The first installation began
      in
      2002 in Mobile, Alabama with completion originally estimated to be in the second
      quarter of 2003.





The
      carbon dioxide separator equipment is now installed at the Chastang landfill
      in
      Mobile, Alabama which is owned by the city of Mobile but operated by Waste
      Management Inc. and Transamerican Waste Industries Inc. An agreement existed
      between Transamerican Waste Industries Inc. and Resource Technology Corporation
      (RTC) which gave RTC the sole and exclusive right to collect, extract and remove
      landfill gas from the property. At this time RTC contracted with the Company
      to
      extract the methane gas. Accordingly, the Company installed the carbon dioxide
      separator at the landfill in 2002 and 2003. Waste Management Inc. asserted
      that
      the carbon dioxide equipment produced methane gas that failed to meet Mobile
      Gas
      quality specifications. As a result and as noted in Note 9 , Litigation, a legal dispute ensued as well as RTC filing bankruptcy.





On
      February 14, 2006, the Company signed a contract with DuPont to provide up
      to
      500,000 MMbtu commercial quality gas to their plant outside Mobile, Alabama.
      There is no requirement in this contract for gas quality specifications,
      however, the Company believes that based on current raw gas analysis, the gas
      produced will exceed current specifications.  Because
      of the inability for the landfill to produce enough raw gas the equipment is
      being removed from the site put in temporary storage.





24




In
      1994,
      the Company formed United Engineering Company, a Ukraine and U.S. joint stock
      company registered under the laws of Ukraine with 14 of Ukraine’s largest
      defense contractors and Ukraine State Property fund. The purpose was to perform
      dismantlement of weapons of mass destruction under the START Treaty. The company
      initially had a 50% ownership that was reduced to 33.3% in 2000. The Company
      recorded this investment under the equity method, and maintained its investment
      until March 2007, when their interest was sold for net proceeds of
      $278,500.





The
      Company recently has been focusing on their live tissue bonding technology,
      and
      has hired an internationally recognized medical device expert, a surgical device
      design company to design and manufacture the live tissue connect generator,
      as
      well as bringing on a major U.S. University to complete laboratory work and
      adding advisors that are surgeons, engineers and scientists to work on this
      project in the Ukraine.





**Results
      of Operations and Financial Condition**




***Nine
      Months Ended September 30, 2007 versus September 30,
      2006***




*Total
      Operating Revenues*




The
      Company recognized $0 in revenue during the nine months ended September 30,
      2007
      or for the nine months ended September 30, 2006. The revenues are anticipated
      to
      commence upon FDA approval as well as global acceptance of the products that
      are
      being manufactured.




*Total
      Cost of Operating Revenues*




Our
      cost
      of operating revenues represent research and development costs and are
      $1,926,303 and $ 355,554 for the nine months ended September 30, 2007 and 2006,
      respectively.




*Total
      Operating Expenses*




Total
      operating expenses for the nine months ended September 30, 2007 were $1,643,315,
      as compared to $1,542,424 for the nine months ended September 30, 2006. This
      represented an increase of $100,891, or approximately 7%. Operating expenses
      included payroll, professional fees, and related expenses, rent expense, and
      other general and administrative expenses. The increase from 2007 to 2006 is
      a
      result of using additional consultants and outsourced investor and public
      relations to assist the Company in raising money.




We
      depreciate fixed assets. This resulted in an expense of $548 and $288 for the
      nine months ended September 30, 2007 and 2006, respectively. We determine the
      fair value of the undiscounted cash flows annually, and sooner if circumstances
      change and determination is required, to value any impairment on our intangible
      assets and long-lived assets. As of September 30, 2007 and 2006, we determined
      that there was no impairment charge.




*Other
      Income (Expense)*




Included
      in other income (expense) is net interest expense of $1,477,510 and $252,342
      for
      the nine months ended September 30, 2007 and 2006, respectively. Included in
      the
      2007 interest expense is $761,421 in discounts on the conversion of notes
      payable to common stock. The Company has also recognized a gain of $225,117
      in
      the nine months ended September 30, 2007 for the sale of United Engineering
      Company.




*Net
      Income (Loss)*




We
      reported a net (loss) from operations of $(4,822,559), or $(0.14) per share
      on a
      basic and diluted basis, for the nine months ended September 30, 2007 versus
      $(2,215,131), or $(0.08) per share on a basic and diluted basis, for the nine
      months ended September 30, 2006 prior to the recognition of an extraordinary
      gain of $200,805 in the nine months ended September 30, 2006. The increase
      in
      the net loss is attributable to the expanded research and  development
      efforts in Kiev, US FDA filing, LTC equipment commercialization and professional
      fees related to raising money, as well as the interest expense.




25




*Provision
      for Income Taxes*




There
      was
      no provision for income taxes for the nine months ended September 30, 2007
      and
      2006, respectively. There was no provision due to the carry forward of
      approximately $14,927,839 of net operating losses as of September 30, 2007
      that
      we reserved in valuation allowances against this deferred tax
      asset.




***Three
      Months Ended September 30, 2007 versus September 30,
      2006***




*Total
      Operating Revenues*




The
      Company recognized $0 in revenue during the three months ended September 30,
      2007 or for the three months ended September 30, 2006. The revenues are
      anticipated to commence upon FDA approval as well as global acceptance of the
      products that are being manufactured.




*Total
      Cost of Operating Revenues*




Our
      cost
      of operating revenues represent research and development costs and are $721,019
      and $322,027 for the three months ended September 30, 2007 and 2006,
      respectively.




*Total
      Operating Expenses*




Total
      operating expenses for the three months ended September 30, 2007 were $615,156,
      as compared to $1,054,848 for the three months ended September 30, 2006. This
      represented a decrease of $439,692, or approximately 42%. Operating expenses
      included payroll, professional fees, and related expenses, rent expense, and
      other general and administrative expenses. The decrease from 2006 to 2007 is
      a
      result of reduced financing expense and outsourced investor and public relations
      to assist the Company in raising money.




We
      depreciate fixed assets. This resulted in an expense of $226 and $96 for the
      three months ended September 30, 2007 and 2006, respectively. We determine
      the
      fair value of the undiscounted cash flows annually and sooner if circumstances
      change and determination is required, to value any impairment on our intangible
      assets and long-lived assets. As of September 30, 2007 and 2006, we determined
      that there was no impairment charge.




*Other
      Income (Expense)*




Included
      in other income (expense) is net interest expense of $204,909 and $114,178
      for
      the three months ended September 30, 2007 and 2006, respectively.




*Net
      Income (Loss)*




We
      reported a net (loss) from operations of $(1,541,084), or $(0.04) per share
      on a
      basic and diluted basis, for the three months ended September 30, 2007 versus
      $(1,502,051) prior to the recognition of an extraordinary gain of $200,805
      in
      the three months ended September 30, 2006, or $(0.04) per share on a basic
      and
      diluted basis, for the three months ended September 30, 2006. Despite increased
      cost of operating revenues, the net loss remained steady due to a decrease
      in
      total operating expenses for the quarter.




*Provision
      for Income Taxes*




There
      was
      no provision for income taxes for the three months ended September 30, 2007
      and
      2006, respectively. There was no provision due to the carry forward of
      approximately $14,927,839 of net operating losses as of September 30, 2007
      that
      we reserved in valuation allowances against this deferred tax
      asset.




26




**Liquidity
      and Capital Resources**




During
      the nine months ended September 30, 2007, the balance in cash and cash
      equivalents decreased by $766,249 compared to an increase of $970,981 for the
      nine months ended September 30, 2006. This decrease is attributable solely
      to
      cash used in operating activities, which was attributable to a net loss from
      operations of ($4,822,559) offset by the discount on notes payable of $761,421
      and an increase in accounts payable and accrued expenses of $1,274,174. This
      compares to a decrease in cash from operating activities for the nine months
      ended September 30, 2006 of ($2,137,098) **,** which
      was attributable to the net loss from operations of ($2,014,326) and a decrease
      in accounts payable and accrued expenses of $1,307,242. We received proceeds
      from the issuance of convertible notes in 2007 of $1,340,000, other notes of
      $50,000 and stock for $165,991 and in 2006 received proceeds from the sale
      of
      stock of $672,942 and convertible notes of $2,439,012.




As
      of
      September 30, 2007, the only current asset was cash in the amount of
      $101,968.




As
      of
      September 30, 2007, we had $8,774,754 in current liabilities, primarily
      consisting of $848,390 in accounts payable and accrued expenses, $1,643,681
      in
      accrued interest payable, $4,090,000 of convertible notes payable and $1,851,101
      of notes payable.




Notwithstanding
      our present working capital deficiency, our condensed consolidated financial
      statements have been prepared on the assumption that we continue to have the
      ability to generate sufficient cash flows from operations or raise sufficient
      capital to ensure the reduction of the working capital deficiency and fund
      future operations, as a going concern. We have suffered significant recurring
      operating losses in the past few years, and this factor has caused significant
      doubt about our ability to continue as a going concern for a period of twelve
      months. The condensed consolidated financial statements do not include any
      adjustments that might result from the outcome of this uncertainty.




**Critical
      Accounting Policies**





Critical
      accounting polices include the areas where we have made what we consider to
      be
      particularly subjective or complex judgments in making estimates and where
      these
      estimates can significantly impact our financial results under different
      assumptions and conditions.





We
      prepare our financial statements in conformity with accounting principles
      generally accepted in the United States of America. As such, we are required
      to
      make certain estimates, judgments and assumptions that we believe are reasonable
      based upon the information available. These estimate, judgments and assumptions
      affect the reported amounts of assets and liabilities at the date of the
      financial statement and the reported amounts of revenue and expenses during
      the
      periods presented. Actual results could be different than those estimates.





We
      believe the following critical accounting policies affect our more significant
      judgments and estimates used in the preparation of our financial
      statements:





***Principles
      of Consolidation***




The
      condensed consolidated financial statements include the accounts of us and
      all
      of our wholly-owned subsidiaries. All significant intercompany accounts and
      transactions have been eliminated in consolidation.





***Research
      and Development***





The
      Company annually incurs costs on activities that relate to research and
      development of new technology and products. Research and development costs
      are
      expensed as incurred.




***Revenue
      Recognition***





The
      Company has not generated revenue in many years. The Company anticipates that
      they will record revenue in accordance with Staff Accounting Bulletin 104.
      The
      criteria for recognition is as follows:


1)
            Persuasive
                evidence of an arrangement exists;


2)
            Delivery
                has occurred or services have been rendered;


3)
            The
                seller’s price to the buyer is fixed or determinable;
                and


4)
            Collectibility
                is reasonably assured.


27




***Income
      Taxes***





We
      account for income taxes utilizing the liability method of accounting. Under
      the
      liability method, deferred taxes are determined based on differences between
      financial statement and tax bases of assets and liabilities at enacted tax
      rates
      in effect in years in which differences are expected to reverse. Valuation
      allowances are established, when necessary, to reduce deferred tax assets to
      amounts that are expected to be realized.





***Impairment
      of Long-Lived Assets***





Long-lived
      assets, primarily fixed assets and intangible assets, are reviewed for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of the assets might not be recoverable. We do not perform a
      periodic assessment of assets for impairment in the absence of such information
      or indicators. Conditions that would necessitate an impairment assessment
      include a significant decline in the observable market value of an asset, a
      significant change in the extent or manner in which an asset is used, or a
      significant adverse change that would indicate that the carrying amount of
      an
      asset or group of assets is not recoverable. For long-lived assets to be held
      and used, we recognize an impairment loss only if its carrying amount is not
      recoverable through its undiscounted cash flows and measures the impairment
      loss
      based on the difference between the carrying amount and estimated fair value.





***Earnings
      (Loss) Per Share of Common Stock***





Basic
      net
      earnings (loss) per common share is computed using the weighted average number
      of common shares outstanding. Diluted earnings per share (EPS) includes
      additional dilution from common stock equivalents, such as stock issuable
      pursuant to the exercise of stock options and warrants. Common stock equivalents
      will not be included in the computation of diluted earnings per share when
      we
      report a loss because to do so would be antidilutive for periods
      presented.





***Stock-Based
      Compensation***





On
      December 16, 2004, the Financial Accounting Standards Board (“FASB”) published
      Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based
      Payment” (“SFAS 123R”). SFAS 123R requires that compensation cost related to
      share-based payment transactions be recognized in the financial statements.
      Share-based payment transactions within the scope of SFAS 123R include stock
      options, restricted stock plans, performance-based awards, stock appreciation
      rights, and employee share purchase plans. The provisions of SFAS 123R, as
      amended, are effective for small business issuers beginning as of the first
      interim period after December 15, 2005. We adopted these provisions on January
      1, 2006, and the adoption of this pronouncement did not have a material effect
      on our condensed consolidated financial statements.





***Fair
      Value of Financial Instruments***





The
      carrying amounts reported in the condensed consolidated balance sheet for cash
      and cash equivalents, and accounts payable approximate fair value because of
      the
      immediate or short-term maturity of these financial instruments. For the notes
      payable, the carrying amount reported is based upon the incremental borrowing
      rates otherwise available to us for similar borrowings. For the convertible
      debentures, fair values were calculated at net present value using our weighted
      average borrowing rate for debt instruments without conversion features applied
      to total future cash flows of the instruments.





***Recent
      Accounting Pronouncements***





In
      May
      2005, the FASB issued Statement of Financial Accounting Standard No. 154,
“Accounting Changes and Error Corrections” (“SFAS 154”). SFAS 154 is a
      replacement of APB No. 20, *“Accounting
      Changes”* ,
      and
      SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements”. SFAS
      154 applies to all voluntary changes in accounting principle and changes the
      requirements for accounting and reporting of a change in accounting principle.
      This statement establishes that, unless impracticable, retrospective application
      is the required method for reporting of a change in accounting principle in
      the
      absence of explicit transition requirements specific to the newly adopted
      accounting principle. It also requires the reporting of an error correction
      which involves adjustments to previously issued financial statements similar
      to
      those generally applicable to reporting an accounting change retrospectively.
      SFAS 154 is effective for accounting changes and corrections of errors made
      in
      fiscal years beginning after December 15, 2005. The adoption of SFAS 154 has
      not
      had a material impact on our condensed consolidated financial
      statements.





28




In
      February 2006, the FASB issued Statement of Financial Accounting Standard No.
      155, “Accounting for Certain Hybrid Instruments” (“SFAS 155”). FASB 155 allows
      financial instruments that have embedded derivatives to be accounted for as
      a
      whole (eliminating the need to bifurcate the derivative from its host) if the
      holder elects to account for the whole instrument on a fair value basis. This
      statement is effective for all financial instruments acquired or issued after
      the beginning of an entity’s first fiscal year that begins after September 15,
      2006. The adoption of SFAS 155 has not had a material impact on our condensed
      consolidated financial statements.





In
      March
      2006, the FASB issued Statement of Financial Accounting Standard No. 156,
“Accounting for Servicing of Financial Assets, an amendment of FSB Statement
      No.
      140” (“SFAS 156”). SFAS 156 requires all separately recognized servicing assets
      and servicing liabilities to be initially measured at fair value, if
      practicable. The standard permits an entity to subsequently measure each class
      of servicing assets or servicing liabilities at fair value and report changes
      in
      fair value in the statement of operations in the period in which the changes
      occur. SFAS 156 is effective for us as of December 1, 2006. The adoption of
      SFAS
      156 has not had a material impact on our condensed consolidated financial
      statements.





FASB
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an
      Interpretation of FASB Statement No. 109” - In June 2006, the FASB issued FASB
      Interpretation No. 48 (“FIN-48”), “Accounting for Uncertainty in Income Taxes -
      an Interpretation of FASB Statement No. 109.” The interpretation clarifies the
      accounting for uncertainty in income taxes recognized in an entity’s financial
      statements in accordance with SFAS No. 109, “Accounting for Income Taxes.”
Specifically, FIN-48 prescribes a recognition threshold and a measurement
      attribute for the financial statement recognition and measurement of a tax
      position taken or expected to be taken. The provisions of FIN-48 are effective
      for financial statements for fiscal years beginning after December 15, 2006.
      Accordingly, the Company will adopt FIN-48 as of January 1, 2007. The adoption
      of FIN-48 has not had a material impact on our condensed consolidated financial
      statements.





SFAS
      No.
      157, “Fair Value Measurements” - In September 2006, the FASB issued SFAS No.
      157, “Fair Value Measurements” (“SFAS 157”), which defines fair value,
      establishes a framework for measuring fair value and expands disclosures about
      fair value measurements. SFAS 157 applies whenever other accounting standards
      require or permit assets or liabilities to be measured at fair value.
      Accordingly, it does not expand the use of fair value in any new circumstances.
      Fair value under SFAS 157 is defined as the price that would be received to
      sell
      an asset or paid to transfer a liability in an orderly transaction between
      market participants at the measurement date. This Standard clarifies the
      principle that fair value should be based on the assumptions market participants
      would use when pricing an asset or liability. In support of this principle,
      SFAS
      157 establishes a fair value hierarchy that prioritizes the information used
      to
      develop those assumptions. The fair value hierarchy gives the highest priority
      to quoted prices in active markets and the lowest priority to unobservable
      data,
      for example, a reporting entity’s own data. Under SFAS 157, fair value
      measurements would be separately disclosed by level within the fair value
      hierarchy. SFAS 157 is effective for fiscal years beginning after November
      15,
      2007. Accordingly, the Company is to adopt SFAS 157 on January 1, 2008. The
      adoption of SFAS 157 is not expected to have a material effect on the Company’s
      financial position or results of operations.





Staff
      Accounting Bulletin No. 108, “Considering the Effects of Prior Year
      Misstatements When Quantifying Misstatements in Current Year Financial
      Statements” - In September 2006, the Securities and Exchange Commission issued
      Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
      Misstatements When Quantifying Misstatements in Current Year Financial
      Statements” (“SAB 108”), which provides guidance on the consideration of the
      effects of prior year misstatements in quantifying current year misstatements
      for the purpose of a materiality assessment two approaches are commonly used
      to
      evaluate the materiality of misstatements or errors in financial statements:
      the
      roll-over, also known as the current-period or income-statement approach, and
      the iron curtain, also known as the cumulative or balance-sheet approach. The
      roll-over approach quantifies a misstatement based on the amount of the error
      originating in the current-period income statement. This approach could allow
      balance sheet items to grow each year by immaterial amounts, until the
      cumulative error becomes material. The iron curtain approach quantifies a
      misstatement based on the effects of correcting the misstatement existing in
      the
      balance sheet at the end of the current period. This approach does not consider
      the income statement effects of correcting prior year misstatements in the
      current year to be errors.





29




The
      reliance on only one of these approaches, to the exclusion of the other, does
      not appropriately quantify all misstatements that could be material to
      financial-statement users. Accordingly, SAB 108 will require quantification
      of
      financial statement errors based on the effects of the error on each of an
      entity’s financial statements and the related financial statement disclosures.
      This model is commonly referred to as a dual approach because it essentially
      requires quantification of errors under both the iron-curtain and the roll-over
      approaches.





SAB
      108
      is effective for annual financial statements covering the first fiscal year
      ending after November 15, 2006. From a transition perspective, SAB 108 permits
      companies to record the cumulative effect of initially applying the dual
      approach in the first year ending after November 15, 2006 by recording any
      necessary correcting adjustments to the carrying values of assets and
      liabilities as of the beginning of that year with the offsetting adjustment
      recorded to the opening balance of retained earnings. The initial adoption
      of
      SAB 108 had no affect on the Company’s financial position, results of operations
      or cash flows.





**Item
      3. Controls and Procedures.**




***Evaluation
      of Disclosure Controls and Procedures***




We
      are
      responsible for maintaining disclosure controls and procedures designed to
      ensure that information required to be disclosed in our Exchange Act reports
      is
      recorded, processed, summarized and reported within the time periods specified
      in the SEC’s rules and regulations, and that such information is accumulated and
      communicated to our management, including our chief executive officer and chief
      financial officer, as appropriate, to allow for timely decisions regarding
      required disclosure.




In
      designing and evaluating our disclosure controls and procedures, management
      recognized that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving their objectives
      and management necessarily is required to apply their judgment in evaluating
      the
      cost-benefit relationship of possible controls and procedures and implementing
      controls and procedures based upon the application of management’s
      judgment.




Our
      management, with the participation of our Chief Executive Officer and Chief
      Financial Officer, evaluated the effectiveness of our disclosure controls and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
      Act),
      including the remedial actions discussed above, as of the end of the period
      covered by this report. Based upon this evaluation, our Chief Executive Officer
      and Chief Financial Officer concluded that as of the date of filing this report,
      our disclosure controls and procedures were effective and designed to ensure
      that material information required to be disclosed in the reports that 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 regulations
      and accumulated and communicated to them as appropriate to allow timely
      decisions regarding required disclosure.




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




There
      have not been any significant changes in our internal controls over financial
      reporting or in the factors that could significantly affect these controls
      subsequent to the date of their evaluation.




30




**PART
      II - OTHER INFORMATION**





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





*Banco
      Panamericano v.  Consortium Service Management Group. Inc. and CSMG Gastech
      LLC* , 
      Case No.  1:07-cv-00015 now pending in the Northern District of Illinois
      District Court as Case No. 06 C 7195.  Plaintiff claims damages in the
      amount of $514,920 as of February 9, 2005, together with interest and costs,
      arising out of a disputed promissory note.  The Company has answered
      setting forth several affirmative defenses and counterclaims focused on the
      affiliation of the Plaintiff with a customer of the Company and based on
      misrepresentation.  The litigation is still in the pleading stage and
      discovery has commenced.





*Nature
      Coast Collections, Inc. v.  Consortium Service Management Group, Inc.,
      Donald S.  Robbins and Gordon W.  Allison* ,
      Case
      No. 2:06-cv-273 originally pending in the Southern District of Texas
      District Court and recently ordered transferred to the Northern District of
      Illinois.  Plaintiff claims damages of $630,000, with interest and costs,
      arising out of a series of disputed promissory notes. The Company has
      answered setting forth several affirmative defenses and counterclaims focused
      on
      the affiliation of the Plaintiff with an offshore affiliate of a customer of
      the
      Company and based on misrepresentation.  The litigation is in the pleading
      stage and discovery has commenced.




There
      is
      a dispute, not subject to a court proceeding, between Waste Management Company,
      Inc. (“Waste Management”) and the Company with regard to the Chastang Waste Site
      in Chastang, Alabama. Waste Management was to maintain the site so as to produce
      marketable levels of waste site gas. The site has failed to produce such volume
      and Waste Management has requested the Company to remove its equipment from
      the
      site. The Company has commenced the disassembly of the equipment in preparation
      for removal of the equipment from the site. A written demand for removal was
      received from Waste Management on August 9, 2007. The Company is removing the
      equipment from the landfill and storing the equipment while the Company
      seeks another site.





**Item
      2.**   **Unregistered
      Sales of Equity Securities**





Set
      forth
      below are previously unreported sales of our common stock since June 30, 2007
      in
      transactions exempt from registration pursuant to Section 4(2) of the Securities
      Act of 1933 on the basis that all purchasers were accredited
      investors.





Person
            Date
            No.
                Of Shares
            Price
                per Share
            Type
                of ConsiderationKevin
                Gonzales
            7-12-07
            4054
            .74
            CashMarty
                Elbaum
            7-12-07
            40,000
            .701
            Consulting
                feesDonald
                G. Santavicca and/or
              Janice
                S. Santavicca, JTWROS.
            7-30-07
            150,000
            .56
            Cash







31




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




31.1
            Certification
                by Donald S. Robbins, Chief Executive Officer, pursuant to Rule
                13a-14(a)
            
            Provided
                herewith31.2
            Certification
                by K. Bruce Jones, Principal Financial Officer, pursuant to Rule
                13a-14(a)
            
            Provided
                herewith32.1
            Certification
                by Donald S. Robbins and K. Bruce Jones, pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002*
            
            Provided
                herewith





**
      These certifications are not deemed filed by the SEC and are not to be
      incorporated by reference in any filing of the Registrant under the Securities
      Act of 1933 or the Securities Exchange Act of 1934, irrespective of any general
      incorporation language in any filings.


32


**SIGNATURES**





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


**CSMG
              TECHNOLOGIES, INC.**Date: November
              13, 2007
            By:
            /s/ Donald
              S.
              RobbinsDonald
              S. Robbins, Chief Executive
              Officer


Date: November
              13, 2007
            By:
            /s/ K.
              Bruce
              JonesK.
              Bruce Jones, Chief Financial
              Officer




33