**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-Q**





(Mark
      One)





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





For
      the
      quarterly period ended March 31, 2008


or





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





For
      the
      transition period from _______ to _______





Commission
      File Number: 000-27359





**CSMG
      Technologies, Inc.**


(Exact
      name of registrant as specified in its charter)


Texas
            
            74-2653437(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer Identification No.)501
                North Shoreline Drive, Suite 701 North
              Corpus
                Christi, Texas
            
            78471(Address
                of principal executive offices)
            
            (Zip
                Code)





(361)
      887-7546


(Registrant’s
      telephone number, including area code)





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





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





Large
                accelerated filer o
            
            Accelerated
                filer oNon-accelerated
                filer o
            
            Smaller
                reporting company x(Do
                not check if a smaller reporting company)





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





As
      of May
      16, 2008, there were outstanding 39,124,638 shares of the registrant’s common
      stock, $.0001 par value.









Table
      of Contents


PART
                I - FINANCIAL INFORMATION
            PageItem
                1.
            Financial
                Statements
            2Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            32Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            38Item
                4(T)
            Controls
                and Procedures
            38PART
                II - OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            38Item
                1A.
            Risk
                Factors
            40Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            40Item
                3.
            Defaults
                Upon Senior Securities
            40Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            40Item
                5.
            Other
                Information
            40Item
                6.
            Exhibits
            40


**PART
        I**
  **FINANCIAL
        INFORMATION**
  **Item
                  1.**
              **Financial
                  Statements**


**CSMG
                  TECHNOLOGIES. INC. AND SUBSIDIARIES****(FORMERLY
                  CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)****(A
                  DEVELOPMENT STAGE COMPANY)****CONDENSED
                  CONSOLIDATED BALANCE SHEETS****MARCH
                  31, 2008 AND DECEMBER 31, 2007
                  (AUDITED)**
 
 **RESTATED****AUDITED****MARCH
                  31,**
              
              **DECEMBER
                  31,****2008**
              
              **2007****ASSETS****CURRENT
                  ASSETS**Cash
              
              $
              106,712
              
              $
              1,004,376Inventory
              
              
              35,670
              
              
              35,670**Total
                  current assets**
              
              
              142,382
              
              
              1,040,046Fixed
                  assets, net of depreciation
              
              
              117,538
              
              
              42,605Intangible
                  assets
              
              
              56,626
              
              
              37,157Deposits
              
              
              35,379
              
              
              -**TOTAL
                  ASSETS**
              
              $
              351,925
              
              $
              1,119,808**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)****CURRENT
                  LIABILITIES**Accounts payable and accrued expenses
              
              $
              509,137
              
              $
              640,713Accrued interest payable
              
              
              1,946,124
              
              
              1,699,124Liability for stock to be issued
              
              
              287,400
              
              
              143,459Convertible notes payable
              
              
              7,019,000
              
              
              6,845,000Notes payable
              
              
              1,323,604
              
              
              1,508,407Other current liabilities
              
              
              230,154
              
              
              279,689**Total
                  current liabilities**
              
              
              11,315,419
              
              
              11,116,392**TOTAL
                  LIABILITIES**
              
              
              11,315,419
              
              
              11,116,392**Minority
                  interest**
              
              
              (791,464
              )
              
              (635,590
              )**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
                  and38,717,238
                  and 38,018,544 issued and outstanding, respectively
              
              
              38,717
              
              
              38,018Additional paid-in capital
              
              
              16,420,285
              
              
              15,476,749Accumulated deficit
              
              
              (13,512,773
              )
              
              (13,512,773
              )Deficits accumulated during the development stage
              
              
              (13,085,486
              )
              
              (11,330,215
              )Treasury stock
              
              
              (32,773
              )
              
              (32,773
              )**Total
                  stockholders' equity (deficit)**
              
              
              (10,172,030
              )
              
              (9,360,994
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
              
              $
              351,925
              
              $
              1,119,808
 
 The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.
 
  2
  
 **CSMG
                  TECHNOLOGIES, INC. AND SUBSIDIARIES****(FORMERLY
                  CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)****(A
                  DEVELOPMENT STAGE COMPANY)****CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS****FOR
                  THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007****(WITH
                  CUMULATIVE TOTALS SINCE JANUARY 1, 2006, THE****COMMENCEMENT
                  OF THE DEVELOPMENT STAGE)**
 
 **THREE
                  MONTHS ENDED**
              
              **CUMULATIVE****MARCH
                  31,**
              
              **TOTALS
                  SINCE****2008**
              
              **2007**
              
              **JANUARY
                  1, 2006****REVENUE**
              
              $
              -
              
              $
              -
              
              $
              -**COST
                  OF REVENUES**Research
                  and development costs
              
              
              651,822
              
              
              174,376
              
              
              3,926,552**Total
                  costs of revenues**
              
              
              651,822
              
              
              174,376
              
              
              3,926,552**GROSS
                  (LOSS)**
              
              
              (651,822
              )
              
              (174,376
              )
              
              (3,926,552
              )**OPERATING
                  EXPENSES**General
                  and administrative
              
              
              456,158
              
              
              877,918
              
              
              5,286,782Stock
                  based compensation
              
              
              99,307
              
              
              -
              
              
              1,770,283Depreciation
              
              
              1,932
              
              
              96
              
              
              3,177**Total
                  operating expenses**
              
              
              557,397
              
              
              878,014
              
              
              7,060,242**NET
                  LOSS FROM OPERATIONS BEFORE OTHER EXPENSE AND****PROVISION FOR INCOME TAXES, MINORITY INTEREST AND****EXTRAORDINARY ITEM**
              
              
              (1,209,219
              )
              
              (1,052,390
              )
              
              (10,986,794
              )**OTHER
                  INCOME (EXPENSE)**Equity
                  in net income (losses) of unconsolidated companies
              
              
              -
              
              
              -
              
              
              (85,118
              )Loss
                  on sale of United Engineering
              
              
              -
              
              
              (112,072
              )
              
              (112,072
              )Interest
                  expense, net of interest income
              
              
              (651,926
              )
              
              (213,478
              )
              
              (3,049,771
              )**NET
                  LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME
                  TAXES,****MINORITY INTEREST AND EXTRAORDINARY ITEM**
              
              
              (1,861,145
              )
              
              (1,377,940
              )
              
              (14,233,755
              )Minority
                  interest
              
              
              105,874
              
              
              68,555
              
              
              947,464**NET
                  LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME
                  TAXES****AND EXTRAORDINARY ITEM**
              
              
              (1,755,271
              )
              
              (1,309,385
              )
              
              (13,286,291
              )Provision for income taxes
              
              
              -
              
              
              -
              
              
              -**NET
                  LOSS FROM OPERATIONS BEFORE EXTRAORDINARY ITEM**
              
              
              (1,755,271
              )
              
              (1,309,385
              )
              
              (13,286,291
              )Extraordinay gain
              
              
              -
              
              
              -
              
              
              200,805**NET
                  (LOSS)**
              
              $
              (1,755,271
              )
              $
              (1,309,385
              )
              $
              (13,085,486
              )**NET
                  (LOSS) PER BASIC AND DILUTED SHARES****BEFORE EXTRAORDINARY ITEM**
              
              $
              (0.05
              )
              $
              (0.04
              )
              $
              (0.39
              )**NET
                  (LOSS) PER BASIC AND DILUTED SHARES**
              
              $
              (0.05
              )
              $
              (0.04
              )
              $
              (0.38
              )**WEIGHTED
                  AVERAGE NUMBER OF****SHARES
                  OUTSTANDING**
              
              
              38,414,691
              
              
              34,405,079
              
              
              34,038,766
 
 The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.
 
  3
  **CSMG
                  TECHNOLOGIES, INC. AND SUBSIDIARIES****(FORMERLY
                  CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)****(A
                  DEVELOPMENT STAGE COMPANY)****CONDENSED
                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  (DEFICIT)****FOR
                  THE THREE MONTHS ENDED MARCH 31, 2008 AND YEARS ENDED DECEMBER
                  31, 2007
                  NAD 2006**
 **Deficits**
                  
                  
                  
                  **Accumulated****Additional**
                  
                  
                  
                  **Accumulated**
                  
                  
                  
                  **Other****Preferred
                      Stock**
                  
                  **Common
                      Stock**
                  
                  **Paid-in**
                  
                  **Accumulated**
                  
                  **During
                      the**
                  
                  **Stock**
                  
                  **Comprehensive**
                  
                  **Treasury****Shares**
                  
                  **Amount**
                  
                  **Shares**
                  
                  **Amount**
                  
                  **Capital**
                  
                  **Deficit**
                  
                  **Development
                      Stage**
                  
                  **Subscribed**
                  
                  **Income
                      (Loss)**
                  
                  **Stock**
                  
                  **Total**Balance,
                      January 1, 2006
                  
                  
                  -
                  
                  $
                  -
                  
                  
                  26,056,072
                  
                  $
                  26,056
                  
                  $
                  7,548,049
                  
                  $
                  (13,512,773
                  )
                  $
                  -
                  
                  $
                  (939
                  )
                  $
                  (339,454
                  )
                  $
                  (32,285
                  )
                  $
                  (6,311,346
                  )Common
                      shares issued for cash
                  
                  
                  -
                  
                  
                  -
                  
                  
                  4,549,122
                  
                  
                  4,549
                  
                  
                  668,340
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  672,889Common
                      shares issued for conversion of notes and interest
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,493,109
                  
                  
                  2,493
                  
                  
                  1,504,965
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,507,458Common
                      shares issued for services
                  
                  
                  -
                  
                  
                  -
                  
                  
                  366,115
                  
                  
                  366
                  
                  
                  200,741
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  201,107Common
                      shares subscribed
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  451
                  
                  
                  -
                  
                  
                  -
                  
                  
                  451Stock
                      based compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  82,498
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  82,498Net
                      income (loss) as restaed
                  
                  
                  **-**
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (2,889,760
                  )
                  
                  -
                  
                  
                  2,265
                  
                  
                  -
                  
                  
                  (2,887,495
                  )Balance,
                      December 31, 2006 as restated
                  
                  
                  -
                  
                  
                  -
                  
                  
                  33,464,418
                  
                  
                  33,464
                  
                  
                  10,004,593
                  
                  
                  (13,512,773
                  )
                  
                  (2,889,760
                  )
                  
                  (488
                  )
                  
                  (337,189
                  )
                  
                  (32,285
                  )
                  
                  (6,734,438
                  )Common
                      shares issued for cash
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,086,715
                  
                  
                  1,087
                  
                  
                  619,904
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  620,991Common
                      shares issued for conversion of notes and interest
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,733,248
                  
                  
                  2,733
                  
                  
                  1,745,690
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,748,423Common
                      shares issued for services
                  
                  
                  -
                  
                  
                  -
                  
                  
                  744,500
                  
                  
                  744
                  
                  
                  313,669
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  314,413Common
                      shares cancelled during the year
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (10,337
                  )
                  
                  (10
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (10
                  )Common
                      shares subscribed purchased as treasury stock
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  488
                  
                  
                  -
                  
                  
                  (488
                  )
                  
                  -Discounts
                      on conversions of notes payable
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  922,001
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  922,001Issuance
                      of warrants
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  186,092
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  186,092Issuance
                      of options
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  96,322
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  96,322Sale
                      of United Engineering
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  337,189
                  
                  
                  -
                  
                  
                  337,189Stock
                      based compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,588,478
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,588,478Net
                      loss as restated
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (8,440,455
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (8,440,455
                  )Balance,
                      December 31, 2007 as restated
                  
                  
                  -
                  
                  
                  -
                  
                  
                  38,018,544
                  
                  
                  38,018
                  
                  
                  15,476,749
                  
                  
                  (13,512,773
                  )
                  
                  (11,330,215
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (32,773
                  )
                  
                  (9,360,994
                  )Common
                      shares issued for cash
                  
                  
                  -
                  
                  
                  -
                  
                  
                  18,000
                  
                  
                  18
                  
                  
                  17,982
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  18,000Common
                      shares issued for conversion of notes and interest
                  
                  
                  -
                  
                  
                  -
                  
                  
                  530,688
                  
                  
                  531
                  
                  
                  371,549
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  372,080Common
                      shares issued for conversion of warrants
                  
                  
                  -
                  
                  
                  -
                  
                  
                  51,155
                  
                  
                  51
                  
                  
                  93,614
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  93,665Common
                      shares issued for investment in subsidiary
                  
                  
                  -
                  
                  
                  -
                  
                  
                  98,851
                  
                  
                  99
                  
                  
                  85,901
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  86,000Discounts
                      on conversions of notes payable
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  275,183
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  275,183Stock
                      based compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  99,307
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  99,307Net
                      loss for the three months ended March 31, 2008
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,755,271
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (1,755,271
                  )Balance,
                      March 31, 2008
                  
                  
                  -
                  
                  $
                  -
                  
                  
                  38,717,238
                  
                  $
                  38,717
                  
                  $
                  16,420,285
                  
                  $
                  (13,512,773
                  )
                  $
                  (13,085,486
                  )
                  $
                  -
                  
                  $
                  -
                  
                  $
                  (32,773
                  )
                  $
                  (10,172,030
                  )
 
 The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements.
 
  4
  **CSMG
                  TECHNOLOGIES, INC. AND SUBSIDIARIES****(FORMERLY
                  CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)****(A
                  DEVELOPMENT STAGE COMPANY)****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOW****FOR
                  THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007****(WITH
                  CUMULATIVE TOTALS SINCE JANUARY 1, 2006, THE****COMMENCEMENT
                  OF THE DEVELOPMENT STAGE)**
 **THREE
                      MONTHS ENDED**
                  
                  **CUMULATIVE****MARCH
                      31,**
                  
                  **TOTALS
                      SINCE****2008**
                  
                  **2007**
                  
                  **JANUARY
                      1, 2006****CASH
                      FLOWS FROM OPERATING ACTIVITIES:**Net (loss)
                  
                  $
                  (1,755,271
                  )
                  $
                  (1,309,385
                  )
                  $
                  (13,085,486
                  )**Adjustments
                      to reconcile net (loss)****to
                      net cash (used in) operating activities:**Stock issued for services
                  
                  
                  93,666
                  
                  
                  280,000
                  
                  
                  609,186Stock issued for interest
                  
                  
                  36,000
                  
                  
                  128,445
                  
                  
                  36,000Stock based compensation
                  
                  
                  99,307
                  
                  
                  -
                  
                  
                  1,770,283Discount on conversion of notes payable
                  
                  
                  275,183
                  
                  
                  225,098
                  
                  
                  1,794,358Warrants issued for commissions
                  
                  
                  -
                  
                  
                  -
                  
                  
                  186,092Options issued to consultant
                  
                  
                  -
                  
                  
                  -
                  
                  
                  96,322Equity loss from investee
                  
                  
                  -
                  
                  
                  -
                  
                  
                  85,118Depreciation
                  
                  
                  1,932
                  
                  
                  96
                  
                  
                  3,177Minority interest
                  
                  
                  (105,874
                  )
                  
                  (68,555
                  )
                  
                  (947,464
                  )Write off FAS 144 assets
                  
                  
                  -
                  
                  
                  -
                  
                  
                  476,304Loss
                      on sale of United Engineering
                  
                  
                  -
                  
                  
                  112,072
                  
                  
                  112,072**Change
                      in assets and liabilities**(Increase)
                      in inventory
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (35,670
                  )(Increase)
                      in deposits
                  
                  
                  (35,379
                  )
                  
                  -
                  
                  
                  (35,379
                  )Increase
                      (decrease) in accounts payable and accrued expenses
                  
                  
                  164,437
                  
                  
                  (58,099
                  )
                  
                  643,147(Decrease)
                      in other current liabilities
                  
                  
                  (49,535
                  )
                  
                  (8,170
                  )
                  
                  (125,428
                  )**Total
                      adjustments**
                  
                  
                  479,737
                  
                  
                  610,887
                  
                  
                  4,668,118**Net
                      cash (used in) operating activities**
                  
                  
                  (1,275,534
                  )
                  
                  (698,498
                  )
                  
                  (8,417,368
                  )**CASH
                      FLOWS FROM INVESTING ACTIVITIES:**Capital
                      expenditures
                  
                  
                  (76,865
                  )
                  
                  -
                  
                  
                  (120,715
                  )Acquisitions
                      of intangible assets
                  
                  
                  (19,469
                  )
                  
                  -
                  
                  
                  (56,626
                  )Proceeds
                      from sale of United Engineering
                  
                  
                  -
                  
                  
                  278,500
                  
                  
                  278,500**Net
                      cash provided by (used in) investing activities**
                  
                  
                  (96,334
                  )
                  
                  278,500
                  
                  
                  101,159**CASH
                      FLOWS FROM FINANCING ACTIVITIES:**Issuance of stock for cash
                  
                  
                  18,000
                  
                  
                  28,997
                  
                  
                  1,312,330Cash received for stock to be issued
                  
                  
                  287,400
                  
                  
                  -
                  
                  
                  287,400Repayment of notes payable
                  
                  
                  (5,196
                  )
                  
                  -
                  
                  
                  (51,640
                  )Repayment of convertible notes payable
                  
                  
                  (150,000
                  )
                  
                  -
                  
                  
                  (250,000
                  )Borrowings of notes payable
                  
                  
                  -
                  
                  
                  252,724
                  
                  
                  2,605,831Borrowings of convertible notes payable
                  
                  
                  324,000
                  
                  
                  -
                  
                  
                  4,519,000**Net
                      cash provided by financing activities**
                  
                  
                  474,204
                  
                  
                  281,721
                  
                  
                  8,422,921**NET
                      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS**
                  
                  
                  (897,664
                  )
                  
                  (138,277
                  )
                  
                  106,712**CASH
                      AND CASH EQUIVALENTS - BEGINNING OF YEAR**
                  
                  
                  1,004,376
                  
                  
                  868,217
                  
                  
                  -**CASH
                      AND CASH EQUIVALENTS - END OF PERIOD**
                  
                  $
                  106,712
                  
                  $
                  729,940
                  
                  $
                  106,712**SUPPLEMENTAL
                      INFORMATION OF CASH FLOW ACTIVITY**Cash paid during the period for interest
                  
                  $
                  194
                  
                  $
                  -
                  
                  $
                  241,083Cash paid during the period for income taxes
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -**SUPPLEMENTAL
                      INFORMATION ON NONCASH ACTIVITY**Conversion of notes payable to common stock
                  
                  $
                  179,607
                  
                  $
                  -
                  
                  $
                  2,941,192Conversion of accrued interest to common stock
                  
                  $
                  49,014
                  
                  $
                  -
                  
                  $
                  646,361Conversion of notes payable and accrued interest for liability
                      for stock
                      to be issued
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  143,459Issuance of stock for notes payable and accrued interest previously
                      converted
                  
                  $
                  103,060
                  
                  $
                  -
                  
                  $
                  103,060
 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.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION**
  The
        unaudited condensed consolidated financial statements included herein have
        been
        prepared, without audit, pursuant to the rules and regulations of the Securities
        and Exchange Commission (“SEC”). The condensed consolidated 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 Form - 10-K and 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, however, the
        carbon
        dioxide separation of landfill gas component has not been an active service
        since 2005.
  6
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 
 **NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION** **(CONTINUED)**
  The
        live
        tissue bonding operations is contained in Live Tissue Connect, Inc., a
        subsidiary that is owned 86% by the Company. 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
        31 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. The Company has received the
        European CE Mark on the Electro surgery generator as well as having their
        technology approved for commercial development in Ukraine by the Ukraine
        Ministry of Health. In February 2008, the Company’s majority owned subsidiary,
        Live Tissue Connect, Inc. has opened an office in Goleta, California, hired
        a
        worldwide sales manager, software engineer, and three instrument
        engineers.
  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 was 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., and has since been
        removed and put into storage. 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 11 , Litigation, a legal dispute ensued as well as RTC filing bankruptcy.
 
  7
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION** **(CONTINUED)**
  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.
        During
        2007, the Company dismantled the equipment and moved the equipment to storage
        due to the fact that there was not sufficient raw gas at the landfill. The
        contract has expired.
 
 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.
 
 In
        October 2007, the Board of Directors agreed to have the Company’s majority-owned
        subsidiary Live Tissue Connect, Inc. submit to the Securities and Exchange
        Commission (SEC) an initial public offering (IPO). The Company anticipates
        this
        to occur in the second quarter of 2008.
 
 **Going
        Concern**
 
 As
        shown
        in the accompanying condensed consolidated financial statements the Company
        has
        incurred a loss of **$** 1,755,271
        and $1,309,385 for the three months ended March 31, 2008 and 2007, respectively,
        as well as a cumulative loss from January 1, 2006 (commencement of the
        development stage) through March 31, 2008 of $13,085,486 and has a working
        capital deficiency of $ 11,173,037 and $10,076,346 as of March 31, 2008 and
        December 31, 2007, respectively.
  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.
   8
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION** **(CONTINUED)**
  **Going
        Concern** **(Continued)**
 
 Empire
        Financial Group was successful in raising the full $3,025,000. The Company
        and
        Empire Financial Group has extended this offering for up to a minimum of
        $3,000,000 as well as a letter of intent relating to the raising of an
        additional $25,000,000 for a potential initial public offering of Live Tissue
        Connect, Inc., the tissue welding technology subsidiary of the Company, of
        which
        Empire has raised $4,244,000 ($100,000 was paid back to an investor on October
        1, 2007 and $150,000 was paid to an investor on February 25, 2008) as of
        March
        31, 2008. The total of $7,019,000, which includes $3,025,000 and $4,244,000
        raised by Empire Financial Group, less the repayments of $100,000 and $150,000
        is currently classified as “Convertible Notes Payable” on the consolidated
        balance sheet at March 31, 2008.
  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 has moved their equipment from the Chastang site to storage.
        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 in 2006.
        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 commercially, manufacturing and distributing
        their live tissue bonding equipment in the second quarter of 2008. The Company
        has signed contracts with leading instrument and electro surgery generator
        design and manufacturing companies and has started manufacturing of the
        commercial equipment that will be licensed or sold to perform surgeries.
  The
        Company’s long-term success is dependent upon obtaining FDA approval on its
        electro surgery generator (the Company achieved the approval for the C E
        Marking
        for European Union markets and we are in the CE Mark process for our hand
        instruments)  as well as worldwide acceptance of their products.
  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.
   9
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        1-**  **ORGANIZATION
        AND BASIS OF PRESENTATION** **(CONTINUED)**
  **Going
        Concern** **(Continued)**
  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
        majority-owned subsidiary. All intercompany accounts and transactions have
        been
        eliminated in consolidation. Minority interests have been reflected in the
        consolidated financial statements for the percentage of the subsidiary not
        owned
        by the Company.
  **Development
        Stage Company**
  The
        Company commencing on January 1, 2006 entered into the development stage.
        Prior
        to January 1, 2006, the Company was operating in the carbon dioxide separator
        of
        landfill gas business exclusively. The Company has not been conducting
        significant operations in this business for 2006 and 2007, and has been in
        the
        development of their live tissue connect business. Therefore, management
        considers themselves to have commenced the development stage effective January
        1, 2006 as defined in Statement of Financial Accounting Standards (SFAS)
        No. 7,
“ *Accounting
        and Reporting by Development Stage Enterprises* ”.
        Additionally, the Company has allocated a substantial portion of their time
        and
        investment in bringing their services to the market, and the raising of capital.
        The Company has commenced the purchasing of raw materials to manufacture
        their
        generators in late 2007, and believes that they will commence revenues in
        2008.
  **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.
  10
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
  **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.
        All
        amounts contained in this financial institution pose a risk to the Company
        however the Company believes the risk to be minimal.
  **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 are 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.
 
  11
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
  **Comprehensive
        Income**
  The
        Company adopted Statement of Financial Accounting Standards No, 130, “Reporting
        Comprehensive Income,” (SFAS No. 130). SFAS No. 130 requires the reporting of
        comprehensive income in addition to net income from operations.
 
 Comprehensive
        income is a more inclusive financial reporting methodology that includes
        disclosure of information that historically has not been recognized in the
        calculation of net income.
  **Currency
        Risk**
  The
        Company transacts business in currencies other than the U.S. Dollar. All
        currency transactions occur in the spot foreign exchange market and the Company
        does not use currency forward contracts, currency options, currency borrowings
        interest rate swaps or any other derivative hedging strategy at this point
        in
        time.
  The
        Company has determined that based on the cash flow, sales price, sales market,
        expense, financing, and inter-company transactions and arrangements indicators
        set forth in FASB 52, *Foreign
        Currency Translation* ,
        that
        the functional currency of the Company is that of the US Dollar.
  **Inventory**
  Inventory
        is recorded at the lower of cost and net realizable value and is accounted
        for
        on the first-in first-out basis (FIFO).
  **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.
  12
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (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 year ended December 31, 2007.
  The
        Company’s options issued in 2007 were valued in accordance with SAFAS 123R. The
        Company recognized $96,322 in expense for the year ended December 31, 2007.
        The
        options issued in Live Tissue Connect, Inc. to the board were valued at
        $1,588,478 and $82,498 for the years ended December 31, 2007 and 2006,
        respectively, and $99,307 for the three months ended March 31, 2008 and are
        considered stock based compensation
   13
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 and
        reflected as such in the condensed consolidated statements of operations.
  14
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (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 sheets 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.
  **Uncertainty
        in Income Taxes**
  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. Management has adopted FIN 48 for 2007, and they evaluate their tax
        positions on an annual basis, and has determined that as of March 31, 2008,
        no
        additional accrual for income taxes is necessary.
  **(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.
   15
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
  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.
  The
        following is a reconciliation of the computation for basic and diluted EPS:
  **Three
                  Months Ended****March
                  31,**
              
              **March
                  31,****2008**
              
              **2007**Net
                  (loss)
              
              $
              (1,755,271
              )
              $
              (1,309,385
              )Weighted-average
                  common sharesoutstanding
                  :Basic
              
              
              38,414,691
              
              
              34,405,079Options
              
              
              1,125,000
              
              
              1,025,000Warrants
              
              
              830,941
              
              
              600,000Diluted
              
              
              40,370,632
              
              
              36,030,079Basic
                  net (loss) per share
              
              $
              (0.05
              )
              $
              (0.04
              )Diluted
                  net (loss) per share
              
              $
              (0.05
              )
              $
              (0.04
              )
  **Recent
        Issued Accounting Standards**
  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 condensed 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.
 
  16
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
  **Recent
        Issued Accounting Standards** **(Continued)**
  In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements, an amendment of Accounting Research Bulletin
        No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for
        ownership interests in subsidiaries held by parties other than the parent,
        changes in a parent’s ownership of a noncontrolling interest, calculation and
        disclosure of the consolidated net income attributable to the parent and
        the
        noncontrolling interest, changes in a parent’s ownership interest while the
        parent retains its controlling financial interest and fair value measurement
        of
        any retained noncontrolling equity investment. SFAS 160 is effective for
        financial statements issued for fiscal years beginning after December 15,
        2008,
        and interim periods within those fiscal years. Early adoption is prohibited.
        Management is determining the impact that t he
        adoption of SFAS No. 160 will have on the Company’s condensed consolidated
        financial position, results of operations or cash flows.
 
 In
        December 2007, the FASB issued SFAS 141R, *Business Combinations* (“SFAS 141R”), which replaces FASB SFAS 141, *Business Combinations.* This Statement retains the fundamental requirements in SFAS 141 that the
        acquisition method of accounting be used for all business combinations and
        for
        an acquirer to be identified for each business combination. SFAS 141R defines
        the acquirer as the entity that obtains control of one or more businesses
        in the
        business combination and establishes the acquisition date as the date that
        the
        acquirer achieves control.  SFAS 141R will require an entity to record
        separately from the business combination the direct costs, where previously
        these costs were included in the total allocated cost of the
        acquisition.  SFAS 141R will require an entity to recognize the assets
        acquired, liabilities assumed, and any non-controlling interest in the acquired
        at the acquisition date, at their fair values as of that date.  This
        compares to the cost allocation method previously required by SFAS No.
        141.  SFAS 141R will require an entity to recognize as an asset or
        liability at fair value for certain contingencies, either contractual or
        non-contractual, if certain criteria are met.  Finally, SFAS 141R will
        require an entity to recognize contingent consideration at the date of
        acquisition, based on the fair value at that date.  This Statement
        will be effective for business combinations completed on or after the first
        annual reporting period beginning on or after December 15,
        2008.  Early adoption of this standard is not permitted and the
        standards are to be applied prospectively only.  Upon adoption of this
        standard, there would be no impact to the Company’s results of operations and
        financial condition for acquisitions previously
        completed. The
        adoption of SFAS No. 141R is not expected to have a material effect on the
        Company’s condensed consolidated financial position, results of operations or
        cash flows.
   17
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES** **(CONTINUED)**
  **Recent
        Issued Accounting Standards** **(Continued)**
  In
        December 2007, the Securities and Exchange Commission issued Staff Accounting
        Bulletin No. 110, “ *Use
        of a Simplified Method in Developing Expected Term of Share
        Options* ”
(“SAB
        110”). SAB 110 expenses the current view of the staff that it will accept a
        company’s election to use the simplified method discussed in Staff Accounting
        Bulletin No. 107, “ *Share
        Based Payment* ”,
        (“SAB
        107”), for estimating the expected term of “plain vanilla” share options
        regardless of whether the company has sufficient information to make more
        refined estimates. SAB 110 became effective for the Company on January 1,
        2008.
        The adoption of SAB 110 is not expected to have a material impact on the
        Company’s financial position.
 
 Other
        accounting standards that have been issued or proposed by the FASB or other
        standards-setting bodies that do not require adoption until a future date
        and
        are not expected to have a material impact on the condensed consolidated
        financial statements upon adoption.
  **NOTE
        3-**  **INVENTORY**
  Inventory
        consists of the following at March 31, 2008 and December 31, 2007,
        respectively:
  **March
                  31,**
              
              **December
                  31,****2008**
              
              **2007**Parts
                  and materials
              
              $
              47,560
              
              $
              47,560Less:
                  Reserve for obsolescence
              
              
              (11,890
              )
              
              (11,890
              )Total,
                  net
              
              $
              35,670
              
              $
              35,670
 
  18
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        4-**  **FIXED
        ASSETS**
  Fixed
        assets consist of the following as of March 31, 2008 and December 31,
        2007:
  **Estimated
                  Useful**
              
              **March
                  31,**
              
              **December
                  31,****Lives
                  (Years)**
              
              **2008**
              
              **2007**Equipment
              
              
              3-7
              
              $
              101,626
              
              $
              58,027Furniture
                  and fixtures
              
              
              7
              
              
              51,198
              
              
              39,114Software
              
              
              3
              
              
              5,975
              
              
              -Leasehold
                  improvements
              
              
              15
              
              
              15,206
              
              
              -174,005
              
              
              97,141Less:
                  Accumulated depreciation
              
              
              
              
              
              (56,467
              )
              
              (54,536
              )Total,
                  net
              
              
              
              
              $
              117,538
              
              $
              42,605
  Depreciation
        expense was $1,932 and $96 for the three months ended March 31, 2008 and
        2007,
        respectively.
  **NOTE
        5-**  **INTANGIBLE
        ASSETS**
  Intangible
        assets consist of patent costs on the live tissue connect technology. Until
        the
        Company receives approval on these patents, no amortization will be expensed.
        Upon approval, the Company anticipates the amortization to be over a period
        of
        fifteen years.
  **NOTE
        6-**  **CONVERTIBLE
        NOTES PAYABLE**
  The
        Company from July 27, 2006 through March 31, 2008 raised $7,269,000 (of which
        $250,000 was repaid during 2007 and 2008) 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 LTC’s common stock price. The Company has
        accrued $993,408 in interest through March 31, 2008. The total due the investors
        as of March 31, 2008 is $8,012,408, which includes $7,109,000 of principal
        and
        $993,408 of accrued interest. The entire balance is reflected as a current
        liability on the Company’s condensed consolidated balance sheets.
  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.
   19
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        7-**  **NOTES
        PAYABLE**
  The
        Company from time to time entered into various note agreements with shareholders
        of the Company. The 8 notes that remain as of March 31, 2008 commenced from
        2000
        through 2005, and accrue interest at rates ranging from 8% to 15%.
  The
        remaining principal of these 8 notes as of March 31, 2008 is $1,323,604.
        Accrued
        interest through March 31, 2008 on these notes is $952,716, for a total amount
        due as of March 31, 2008 of $2,276,320.
  The
        Company’s management has been very successful over the past few years in
        converting these notes into shares of common stock. For the three months
        ended
        March 31, 2008, the Company has converted $331,680 in accrued interest
        ($49,014), notes payable ($179,607), and a discount on conversion of the
        notes
        payable of $103,060 to additional paid in capital based on the beneficial
        conversion price into 530,688 shares of common stock. For the year ended
        December 31, 2007, the Company has converted $1,748,423 in notes plus accrued
        interest into 2,733,248 shares of stock. In addition, the Company recorded
        a
        discount in the amount of $922,001 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 YA Global
        Investments, L.P. (f/k/a Cornell Capital Partners) whereby the Company may
        issue
        and sell to YA Global Investments, L.P. 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 on October 18, 2007 repaid
        the
        remaining $242,000 in principal along with interest in the amount of $132,687
        with the issuance of 535,267 shares of common stock to YA Global Investments,
        L.P. There is no further indebtedness to YA Global Investments, L.P. These
        shares were issued pursuant to an exemption from registration under Section
        4(2)
        of the Securities Act of 1933, as amended. The purchaser of these shares
        is
        aware that they are restricted. There were no warrants or options issued
        in the
        Cornell transaction.
   20
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        7-**  **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 March 31, 2008 on these notes amounts to $522,036, for a total amount
        due under these notes of $1,152,036. The notes accrue interest at rates ranging
        between 8% and 10% per annum.
  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 claimed 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. The Company has moved to transfer these proceedings to
        the
        Federal District Court for the Northern District of Illinois, where the
        bankruptcy proceedings are.
  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 bringing the total claim
        over $900,000 and under $1,000,000. 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.  Discovery has been completed and the Company has filed
        a motion for summary judgment with respect to the Plaintiff’s claims, the
        briefing of which by the parties has yet to be fully completed. No trial
        date
        has been set.
  21
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        7-**  **NOTES
        PAYABLE** **(CONTINUED)**
  ***Banco
        Panamericano***
  The
        Company is in default on a note with an initial balance of $203,800 to Banco
        Panamericano 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 March 31, 2008 including interest at 12%
        is
        $391,169).
  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
        Company believes they are the injured party and 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.
  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 bringing the total claim to
        $1,013,648.  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.  Discovery has been
        completed and Plaintiff has submitted a contested motion for summary judgment
        that is under consideration by the Court. A trial date of December 10, 2007,
        has
        been continued pending the outcome of this motion.
 
 The
        entire balance of shareholder notes is reflected as current liabilities as
        they
        are all overdue.
  22
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        8-**  **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
        March 31, 2008 and December 31, 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
        March 31, 2008 and December 31, 2007, the Company had 38,717,238 and 38,018,544
        shares issued and outstanding.
  For
        the
        three months ended March 31, 2008, the Company had issued the following
        stock:
  530,688
        shares issued in conversion of notes payable, accrued interest and discount
        on
        conversion in the amount of $331,680.
  18,000
        shares issued for cash in the amount of $18,000.
  51,155
        shares issued for conversion of warrants in the amount of $93,655 which were
        expensed in the three months ended March 31, 2008.
  98,851
        shares issued to a former owner of a subsidiary of the company for their
        investment of $50,000 plus interest that was accrued for $36,000 (total
        investment $86,000).
  For
        the
        years ended December 31, 2007 and 2006, the Company had issued the following
        stock:
  1,086,715
        and 4,549,122 shares issued for cash in the amount of $620,991 and $672,889,
        respectively.
  744,500
        and 366,115 shares issued for services at a value of $314,413 and $201,107,
        respectively.
  2,733,248
        and 2,493,109 shares issued in conversion of notes payable and accrued interest
        in the amount of $1,748,423 and $1,507,458, respectively.
  23
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        8-**  **STOCKHOLDERS’
        EQUITY (DEFICIT)** **(CONTINUED)**
  ***Options***
  The
        Company currently has three stock option plans. The following table summarizes
        the activity of the Company’s stock option plan.
 March
                    31, 2008Weighted-averageNumber
                    of
                
                exerciseOptions
                
                priceMarch
                    31, 2008:Outstanding
                    - beginning of period
                
                
                1,125,000
                
                $
                0.46Granted
                
                
                -
                
                
                -Exercised/Expired
                
                
                (-
                )
                
                -Outstanding
                    - end of period
                
                
                1,125,000
                
                $
                0.46Exercisable
                    at end of period
                
                
                1,125,000
                
                $
                0.46
  March
                    31, 2007Weighted-averageNumber
                    of
                
                exerciseOptions
                
                priceMarch
                    31, 2007:Outstanding
                    - beginning of period
                
                
                925,000
                
                $
                0.37Granted
                
                
                50,000
                
                
                .62Exercised/Expired
                
                
                (-
                )
                
                -Outstanding
                    - end of period
                
                
                975,000
                
                $
                0.40Exercisable
                    at end of period
                
                
                975,000
                
                $
                0.40
 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 and 100,000 options to a
        consultant in October 2007 that were vested. These options were expensed
        at a
        value of $96,322 by utilizing the black-scholes method.
  In
        addition, Live Tissue Connect, Inc. granted 70,000, 2,875,000 and 1,000,000
        options in the three months ended March 31, 2008, the years ended December
        31,
        2007 and 2006, respectively. Of those options granted 53,333, 2,800,000 and
        1,000,000 were vested and Live Tissue Connect, Inc. recorded $99,307, $1,588,478
        and $82,498 in stock based compensation (see Note 12 for 2007 and 2006
        figures).
  24
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        8-**  **STOCKHOLDERS’
        EQUITY (DEFICIT)** **(CONTINUED)**
  ***Warrants***
  The
        Company has issued the following warrants as of March 31, 2008:
 
 **Exercise**
              **Date****Warrants**
              **Price**
              **Issued**
              
              **Term**180,000
              $            
                  0.40
              5/15/2006
              
              7.5
                  years360,000
              $0.40
                  - $0.75
              11/1/2006
              
              7
                  years290,941
              $            
                  0.57
              5/18/2007
              
              7
                  years830,941
 
 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
  **NOTE
        9-**  **COMMITMENTS**
  **Rental
        - CSMG - Texas**
  The
        Company leases office space at its corporate headquarters in Corpus Christi,
        Texas under an operating lease that has initial or remaining non-cancelable
        lease terms and expires in March 2013. The following presents the approximate
        future minimum lease payments required under this lease:
 **For
                    the Periods Ended****March
                    31,**2009
                
                $
                59,4002010
                
                
                61,7762011
                
                
                64,2472012
                
                
                66,8172013
                
                
                69,490$
                321,730
  25
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        9-**  **COMMITMENTS** **(CONTINUED)**
  **Rental
        - CSMG - Texas** **(Continued)**
  In
        accordance with this lease, the Company paid a security deposit in the amount
        of
        $4,950 in March 2008 (lease commencement) and this amount is included in
        the
        condensed consolidated balance sheets as prepaid expenses.
  **Rental
        - LTC - California**
  The
        Company leases office space for its majority owned subsidiary in Goleta,
        California under an operating lease that has initial or remaining non-cancelable
        lease terms and expires in February 2010. The following presents the approximate
        future minimum lease payments required under this lease:
  **For
                    the Periods Ended****March
                    31,**2009
                
                $
                47,6282010
                
                
                58,212$
                105,840
  In
        accordance with this lease, the Company paid a security deposit in the amount
        of
        $30,429 in February 2008 (lease commencement) and this amount is included
        in the
        condensed consolidated balance sheets as prepaid expenses.
  Rent
        expense for the three months ended March 31, 2008 and 2007 were $19,505 and
        $3,697, respectively and are included in the condensed consolidated statements
        of operations under general and administrative expenses.
  **NOTE
        10-**  **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.
  26
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        10-**  **PROVISION
        FOR INCOME TAXES** **(CONTINUED)**
  At
        March
        31, 2008, deferred tax assets consist of the following:
 Net
                  operating losses
              
              $
              6,818,524Valuation
                  allowance
              
              
              (6,818,524
              )$
              -
  At
        March
        31, 2008, the Company had net operating loss carryforward in the amount of
        $19,481,496 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.
  A
        reconciliation of the Company’s effective tax rate as a percentage of income
        before taxes and federal statutory rate for the three months ended March
        31,
        2008 and 2007 is summarized below.
  2008
              
              2007Federal
                  statutory rate
              
              
              (35.0
              )%
              
              (35.0
              )%State
                  income taxes, net of federal benefits
              
              
              0.0
              
              
              0.0Valuation
                  allowance
              
              
              35
              
              
              35.00
              %
              
              0
              %
 **NOTE
        11-**  **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 bringing the total claim to
        $1,013,648.  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.  Discovery has been
        completed and Plaintiff has submitted a contested motion for summary judgment
        that is under consideration by the Court. A trial date of December 10, 2007,
        has
        been continued pending the outcome of this motion.
   27
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        11-**  **LITIGATION** **(CONTINUED)**
  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 bringing the total claim
        over $900,000 and under $1,000,000. 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.  Discovery has been completed and the Company has filed
        a motion for summary judgment with respect to the Plaintiff’s claims, the
        briefing of which by the parties has yet to be fully completed. No trial
        date
        has been set.
 
 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 equipment has been removed from the landfill site and placed in
        storage.
 
 CSMG
        Technologies, Inc. v.  Gordon W.  Allison ,
        Case No. 4:07-cv-00715 in the Southern District of Texas District Court. In
        Gordon Allison’s answer to the Company’s complaint seeking unspecified damages
        in connection with claims based upon fraudulent statements, breach of fiduciary
        duty and promissory estoppel with respect to investments in projects Gordon
        Allison involved the Company, Allison filed a counterclaim seeking damages
        of
        approximately $328,041 principal and interest for amounts allegedly due under
        the terms of a November 5, 2003 promissory note issued to him by the Company,
        unpaid salary of $150,000, unspecified payment for services rendered,
        reimbursement of expenses estimated at $23,000 and punitive damages in an
        unspecified amount. The litigation is in the discovery stage, and the Company
        believes the counterclaim is without merit. The Company is vigorously defending
        the counterclaim.
  28
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        12-**  **RESTATEMENT
        OF PRIOR FINANCIAL STATEMENTS**
  The
        Company has restated its consolidated financial statements for the years
        ended
        December 31, 2007 and 2006 to account for the correction of an error related
        to
        an adjustment made to record the value of the granting of stock options by
        Live
        Tissue Connect, Inc. The adjustments decreased the net loss and deficits
        accumulated during the development stage in the amounts of $1,366,091 and
        $70,948 for the years ended December 31, 2007 and 2006, respectively. In
        addition, additional paid in capital increased $1,588,478 and $82,498 at
        December 31, 2007 and 2006, respectively and minority interest was reduced
        by
        $222,387 and $11,550 at December 31, 2007 and 2006, respectively. The net
        loss
        per share for the year ended December 31, 2007 decreased ($.03) from ($.20)
        to
        ($.23). There was no change in the Company’s net loss per share for the year
        ended December 31, 2006.
 
 The
        following charts reflect the changes of the individual line items changed
        in the
        consolidated financial statements.
 
 **December
                  31, 2006**Net
                  loss prior to restatement
              $
              (2,818,812
              )(1)
              
              (70,948
              )Net
                  loss after restatement
              $
              (2,889,760
              )Deficits
                  accumualted during the development stage-
                  prior to restatement
              $
              (2,818,812
              )(1)
              
              (70,948
              )Deficits
                  accumualted during the development stage-
                  after restatement
              $
              (2,889,760
              )Loss
                  per share - prior to restatement
              $
              (0.09
              )(1)
              -Loss
                  per share - after restatement
              $
              (0.09
              )(1)
                  Reflects correction of an error related to the value attributable
                  to the
                  1,000,000 options vested
   29
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        12-**  **RESTATEMENT
        OF PRIOR FINANCIAL STATEMENTS** **(CONTINUED)**
  **December
                  31, 2006****Previously**
              
              
              
              
              
              **Cumulative*****Statement
                  of Operations***
              
              **Reported**
              
              **Restated**
              
              **Change**
              
              **Column**Stock
                  based compensation
              
              
              -
              
              
              82,498
              
              
              (82,498
              )
              
              (82,498
              )Minority
                  interest
              
              
              (219,229
              )
              
              (230,779
              )
              
              11,550
              
              
              11,550Net
                  loss
              
              
              (2,818,812
              )
              
              (2,889,760
              )
              
              (70,948
              )
              
              (70,948
              )***Balance
                  Sheet***Additional
                  paid-in capital
              
              
              9,922,095
              
              
              10,004,593
              
              
              82,498Minority
                  interest
              
              
              (13,229
              )
              
              (24,779
              )
              
              (11,550
              )Deficits
                    accumulated during the development stage
              
              
              (2,818,812
              )
              
              (2,889,760
              )
              
              (70,948
              )***Statement
                  of Changes in Stockholders' (Deficit)***Additional
                  paid-in capital
              
              
              9,922,095
              
              
              10,004,593
              
              
              82,498Net
                  loss for the period
              
              
              (2,818,812
              )
              
              (2,889,760
              )
              
              (70,948
              )***Statement
                  of Cash Flow***Net
                  loss
              
              
              (2,818,812
              )
              
              (2,889,760
              )
              
              (70,948
              )
              
              (70,948
              )Stock
                  based compensation
              
              
              -
              
              
              82,498
              
              
              82,498
              
              
              82,498Minority
                  interest
              
              
              (219,229
              )
              
              (230,779
              )
              
              (11,550
              )
              
              (11,550
              )
 
 **December
                  31, 2007**Net
                  loss prior to restatement
              $
              (7,074,364
              )(1)
              (1,366,091
              )Net
                  loss after restatement
              $
              (8,440,455
              )Deficits
                  accumualted during the development stage-
                  prior to restatement
              $
              (9,893,176
              )(1)
              
              (1,437,039
              )Deficits
                  accumualted during the development stage-
                  after restatement
              $
              (11,330,215
              )Loss
                  per share - prior to restatement
              $
              (0.20
              )(1)
              
              (0.03
              )Loss
                  per share - after restatement
              $
              (0.23
              )(1)
                  Reflects correction of an error related to the value attributable
                  to the
                  1,000,000 options vested in 2006 and the 2,800,000 options vested
                  in
                  2007.
  30
  **CSMG
        TECHNOLOGIES, INC. AND SUBSIDIARIES**
 **(FORMERLY
        CONSORTIUM SERVICE MANAGEMENT GROUP, INC.)**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**
 **MARCH
        31, 2008 AND 2007 (UNAUDITED)**
 
 **NOTE
        12-**  **RESTATEMENT
        OF PRIOR FINANCIAL STATEMENTS** **(CONTINUED)**
  **December
                  31, 2007****Previously**
              
              
              
              
              
              **Cumulative*****Statement
                  of Operations***
              
              **Reported**
              
              **Restated**
              
              **Change**
              
              **Column**Stock
                  based compensation
              
              
              -
              
              
              1,588,478
              
              
              (1,588,478
              )
              
              (1,670,976
              )Minority
                  interest
              
              
              (388,424
              )
              
              (610,811
              )
              
              222,387
              
              
              233,937Net
                  loss
              
              
              (7,074,364
              )
              
              (8,440,455
              )
              
              (1,366,091
              )
              
              (1,437,039
              )***Balance
                  Sheet***Additional
                  paid-in capital
              
              
              13,805,773
              
              
              15,476,749
              
              
              1,670,976Minority
                  interest
              
              
              (401,653
              )
              
              (635,590
              )
              
              (233,937
              )Deficits
                    accumulated during the development stage
              
              
              (9,893,176
              )
              
              (11,330,215
              )
              
              (1,437,039
              )***Statement
                  of Changes in Stockholders' (Deficit)***Additional
                  paid-in capital
              
              
              13,805,773
              
              
              15,476,749
              
              
              1,670,976Net
                  loss for the period
              
              
              (7,074,364
              )
              
              (8,440,455
              )
              
              (1,366,091
              )***Statement
                  of Cash Flow***Net
                  loss
              
              
              (7,074,364
              )
              
              (8,440,455
              )
              
              (1,366,091
              )
              
              (1,437,039
              )Stock
                  based compensation
              
              
              -
              
              
              1,588,478
              
              
              1,588,478
              
              
              1,670,976Minority
                  interest
              
              
              (388,424
              )
              
              (610,811
              )
              
              (222,387
              )
              
              (233,937
              )
 
  31
  **Item
                    2.**
                **Management’s
                    Discussion and Analysis of Financial Condition and Results of
                    Operations**
  *The
          following discussion should be read in conjunction with the Financial Statements
          and the notes thereto that appear in Item 1 of this Quarterly Report on
          Form
          10-Q, as well as the information provided in our Annual Report on Form
          10-K for
          our fiscal year ended December 31, 2007.*
  **Overview**
  The
          following is a discussion of: (i) our results of operations and financial
          condition for the three months ended March 31, 2008 versus March 31, 2007;
          (ii)
          our liquidity and capital resources; and (iii) our critical accounting
          policies.
          CSMG Technologies Inc., formerly,
          Consortium Service Management Group, Inc., a
          Texas
          corporation (“we”, “us” or the “Company”), was incorporated on November 17,
          1992. On January 18, 2007, we changed our name to CSMG Technologies, Inc.
          and
          increased our total number of authorized shares to 90,000,000,
          which includes 80,000,000 authorized shares of common stock and 10,000,000
          shares of undesignated preferred stock .
  We
          are a
          technology management company. Our technologies involve Live Tissue
          Bonding/Welding and CO2 (carbon dioxide) separation of landfill
          gas.
  Our
          Live
          Tissue Bonding/Welding technology focuses on bonding living soft biological
          tissue used in surgical procedures which eliminates the need for sutures,
          staples, sealants or glues. We have an agreement with the E.O. Paton Institute
          of Electrical Welding of the Ukraine National Academy of Sciences and
          International Association of Welding and we own the rights to this technology
          including the worldwide rights of licensing, patenting, manufacturing,
          development and distribution of this technology. To date, we have 31 issued
          or pending patents in the United States and overseas relating to our Live
          Tissue
          Bonding/Welding technology. In addition, in June 2007, we filed a 510(K)
          submission with the United States Food and Drug Administration for the
          duct and
          vessel sealer and two instruments, received the European CE Mark on the
          electrosurgery generator, and our technology has been approved for commercial
          development in Ukraine by the Ukraine Ministry of Health.
  We
          also
          have one patent issued in both the United States and Canada relating to
          our
          carbon dioxide separator technology. This technology 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 the methane from being commercially
          sold
          as fuel. Our technology has been developed as an economical carbon dioxide
          separator that removes the carbon dioxide from landfill emissions to allow
          the
          methane gas to be sold to utility companies as well as other industrial
          and
          commercial customers.
  The
          carbon dioxide separator equipment has been installed at the Chastang landfill
          in Mobile, Alabama since 2002, which landfill is owned by the city of Mobile
          but
          operated by Waste Management Inc. and Transamerican Waste Industries Inc.
          An
          agreement between Transamerican Waste Industries Inc. and Resource Technology
          Corporation (RTC) 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, we 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, we
          believe
          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 has been removed from the site and put in temporary
          storage.
  In
          1994,
          we formed United Engineering Company, a Ukraine and United States 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. We
          initially had a 50% ownership that was reduced to 33.3% in 2000. We recorded
          this investment under the equity method, and maintained our investment
          until
          March 2007, when we sold our interest in United Engineering Company for
          net
          proceeds of $278,500.
   32
  We
          recently have been focusing on its live bonding technology and has hired
          an
          internationally recognized medical device expert and a surgical device
          design
          company to design and manufacture the live tissue connect generator, as
          well as
          bringing on a major United States university to complete laboratory work
          and
          adding advisors that are surgeons, engineers and scientists to work on
          this
          project in the Ukraine. We have started production of generator and hand
          instruments.
  **Results
          of Operations and Financial Condition**
  **Three
          Months Ended March 31, 2008 versus March 31, 2007**
  *Total
          Operating Revenues*
  We
          recognized $0 in revenue during the three months ended March 31, 2008 and
          for
          the three months ended March 31, 2007. 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 represents research and development costs and were
          $651,822 and $174,376 for the three months ended March 31, 2008 and 2007,
          respectively.
  *Total
          Operating Expenses*
  Total
          operating expenses for the three months ended March 31, 2008 were $557,397,
          as
          compared to $878,014 for the three months ended March 31, 2007. This represented
          a decrease of $320,617, or approximately 37%. Operating expenses included
          payroll, professional fees, and related expenses, rent expense, and other
          general and administrative expenses. The decrease from 2008 to 2007 is
          a result
          of reduced financing fees and charges for stock issued for services and
          stock
          issued for interest in the first quarter of 2008, as well as the fact that
          our
          first quarter of 2007 included a charge for the loss on sale of our interest
          in
          United Engineering Company.
  We
          depreciate fixed assets. This resulted in an expense of $1,932 and $96
          for the
          three months ended March 31, 2008 and 2007, 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 March 31, 2008 and 2007, we determined
          that
          there was no impairment charge.
  *Other
          Income (Expense)*
  Included
          in other income (expense) is interest expense, net of interest income of
          $651,926 and $213,478 for the three months ended March 31, 2008 and 2007,
          respectively. Included in the 2008 interest expense is $103,060 in discounts
          on
          the conversion of notes payable to common stock.
  *Net
          Income (Loss)*
  We
          reported a net (loss) from operations of $(1,755,271), or $(0.05) per share
          on a
          basic and diluted basis, for the three months ended March 31, 2008 versus
          $(1,309,385), or $(0.04) per share on a basic and diluted basis, for the
          three
          months ended March 31, 2007. The increase in the net loss is attributable
          to the
          expanded research and development efforts in Kiev, as well as the interest
          expense.
  *Provision
          for Income Taxes*
  There
          was
          no provision for income taxes for the three months ended March 31, 2008
          and
          2007, respectively. There was no provision due to the carry forward of
          approximately $19,481,496 of net operating losses as of March 31, 2008
          that we
          reserved in valuation allowances against this deferred tax asset.
   33
  **Liquidity
          and Capital Resources**
  During
          the three months ended March 31, 2008, the balance in cash and cash equivalents
          decreased by $897,664 compared to a decrease of $138,277 for the three
          months
          ended March 31, 2007. This decrease is primarily attributable to cash used
          in
          operating activities, which was attributable to a net loss from operations
          of
          ($1,755,271) partially offset by the discount on notes payable of $275,183
          and
          an increase in accounts payable and accrued expenses of $164,437. This
          compares
          to a decrease in cash from operating activities for the three months ended
          March
          31, 2007 of ($698,498), which was attributable to a net loss from operations
          of
          ($1,309,385). Net cash from financing activities totaled $474,204 and $281,721
          for the three months ended March 31, 2008 and 2007, respectively.
  As
          of
          March 31, 2008, we had current assets of $142,382, consisting of $106,712
          in
          cash and $35,670 in inventory.
  As
          of
          March 31, 2008, we had $11,315,419 in current liabilities, primarily consisting
          of $509,137 in accounts payable and accrued expenses, $1,946,124 in accrued
          interest payable, $7,019,000 of convertible notes payable and $1,323,604
          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 those of us and our
          majority-owned subsidiary. All intercompany accounts and transactions have
          been
          eliminated in consolidation. Minority interests have been reflected in
          the
          consolidated financial statements for the percentage of the subsidiary
          not owned
          by us.
  *Research
          and Development*
  We
          annually incur costs on activities that relate to research and development
          of
          new technology and products. Research and development costs are expensed
          as
          incurred.
   34
  *Revenue
          Recognition*
  We
          have
          not generated revenue in many years. We anticipate that we will record
          revenue
          in accordance with Staff Accounting Bulletin 104. The criteria for recognition
          are 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)  Collectability
          is reasonably assured.
  *Comprehensive
          Income*
  We
          adopted Statement of Financial Accounting Standards No, 130, “Reporting
          Comprehensive Income,” (SFAS No. 130). SFAS No. 130 requires the reporting of
          comprehensive income in addition to net income from operations.
  Comprehensive
          income is a more inclusive financial reporting methodology that includes
          disclosure of information that historically has not been recognized in
          the
          calculation of net income.
  *Currency
          Risk*
  We
          transact business in currencies other than the U.S. Dollar. All currency
          transactions occur in the spot foreign exchange market, and we do not use
          currency forward contracts, currency options, currency borrowings interest
          rate
          swaps or any other derivative hedging strategy at this point in
          time.
  We
          have
          determined that based on the cash flow, sales price, sales market, expense,
          financing, and inter-company transactions and arrangements indicators set
          forth
          in FASB 52, Foreign Currency Translation, that our functional currency
          is that
          of the U.S. Dollar.
  *Inventory*
  Inventory
          is recorded at the lower of cost and net realizable value and is accounted
          for
          on the first-in first-out basis (FIFO).
  *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. We adopted these provisions as
          of
          January 1, 2006 and this adoption did not have a material effect on our
          operations.
  On
          January 1, 2006, we 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,
          we
          measured compensation expense for all of our 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 notes to our condensed consolidated financial statements
          include 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.
   35
  We
          have
          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. We recognize 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. We consider voluntary termination
          behavior as well as trends of actual option forfeitures when estimating
          the
          forfeiture rate.
  We
          measure compensation expense for 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 our 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.
  Our
          warrants issued in May 2007 were not stock based compensation and were
          recorded
          in accordance with EITF 96-18. We recognized $186,092 in expense for the
          year
          ended December 31, 2007.
  Our
          options issued in 2007 were valued in accordance with FAS 123R. We recognized
          $96,322 in expense for the year ended December 31, 2007. The options issued
          in
          Live Tissue Connect, Inc. to the board were valued at $1,588,478 and $82,498
          for
          the years ended December 31, 2007 and 2006, respectively, and $99,307 for
          the
          three months ended March 31, 2008 and are considered stock based compensation
          and reflected as such in the condensed consolidated statements of
          operations.
  *Segment
          Reporting*
  We
          follow
          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. We believe that there is only one
          operating
          segment at this time, as our CO2 separator business is inactive.
  *Fair
          Value of Financial Instruments*
  The
          carrying amounts reported in the condensed consolidated balance sheets
          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.
  *Uncertainty
          in Income Taxes*
  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. Management has adopted FIN 48 for 2007, and they evaluate their tax
          positions on an annual basis, and has determined that as of March 31, 2008,
          no
          additional accrual for income taxes is necessary.
   36
  *(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
          we report
          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 we had a
          loss for
          both periods.
  **Recent
          Issued Accounting Standards**
  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 condensed 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.
  In
          December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
          Consolidated Financial Statements, an amendment of Accounting Research
          Bulletin
          No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for
          ownership interests in subsidiaries held by parties other than the parent,
          changes in a parent’s ownership of a noncontrolling interest, calculation and
          disclosure of the consolidated net income attributable to the parent and
          the
          noncontrolling interest, changes in a parent’s ownership interest while the
          parent retains its controlling financial interest and fair value measurement
          of
          any retained noncontrolling equity investment. SFAS 160 is effective for
          financial statements issued for fiscal years beginning after December 15,
          2008,
          and interim periods within those fiscal years. Early adoption is prohibited.
          Management is determining the impact that the adoption of SFAS No. 160
          will have
          on our condensed consolidated financial position, results of operations
          or cash
          flows.
  In
          December 2007, the FASB issued SFAS 141R, Business Combinations (“SFAS 141R”),
          which replaces FASB SFAS 141, Business Combinations. This Statement retains
          the
          fundamental requirements in SFAS 141 that the acquisition method of accounting
          be used for all business combinations and for an acquirer to be identified
          for
          each business combination. SFAS 141R defines the acquirer as the entity
          that
          obtains control of one or more businesses in the business combination and
          establishes the acquisition date as the date that the acquirer achieves
          control.
          SFAS 141R will require an entity to record separately from the business
          combination the direct costs, where previously these costs were included
          in the
          total allocated cost of the acquisition. SFAS 141R will require an entity
          to
          recognize the assets acquired, liabilities assumed, and any non-controlling
          interest in the acquired at the acquisition date, at their fair values
          as of
          that date. This compares to the cost allocation method previously required
          by
          SFAS No. 141. SFAS 141R will require an entity to recognize as an asset
          or
          liability at fair value for certain contingencies, either contractual or
          non-contractual, if certain criteria are met. Finally, SFAS 141R will require
          an
          entity to recognize contingent consideration at the date of acquisition,
          based
          on the fair value at that date. This Statement will be effective for business
          combinations completed on or after the first annual reporting period beginning
          on or after December 15, 2008. Early adoption of this standard is not permitted
          and the standards are to be applied prospectively only. Upon adoption of
          this
          standard, there would be no impact to our results of operations and financial
          condition for acquisitions previously completed. The adoption of SFAS No.
          141R
          is not expected to have a material effect on our condensed consolidated
          financial position, results of operations or cash flows.
   37
  In
          December 2007, the Securities and Exchange Commission issued Staff Accounting
          Bulletin No. 110, “Use of a Simplified Method in Developing Expected Term of
          Share Options” (“SAB 110”). SAB 110 expenses the current view of the staff that
          it will accept a company’s election to use the simplified method discussed in
          Staff Accounting Bulletin No. 107, “Share Based Payment”, (“SAB 107”), for
          estimating the expected term of “plain vanilla” share options regardless of
          whether the company has sufficient information to make more refined estimates.
          SAB 110 became effective for us on January 1, 2008. The adoption of SAB
          110 is
          not expected to have a material impact on our financial position.
  **Item
                    3.**
                **Quantitative
                    and Qualitative Disclosures About Market
                    Risk**
  Not
          applicable.
  **Item
                    4T.**
                **Controls
                    and Procedures**
  **Evaluation
          of disclosure controls and procedures.**
  Our
          management, with the participation of our Chief Executive Officer and Chief
          Financial Officer, has evaluated the effectiveness of our disclosure controls
          and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)
          under
          the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of
          March 31, 2008. Based on this evaluation, our Chief Executive Officer and
          Chief
          Financial Officer concluded that our disclosure controls and procedures
          are
          effective.
  **Changes
          in internal control over financial reporting.**
  During
          the last fiscal quarter, we implemented two changes to our internal controls
          over financial reporting: (1) our majority-owned sudsidiary Live Tissue
          Connect,
          Inc. has retained an outside financial consulting firm to assist with its
          accounting and financial function; and (2) we implemented a policy that
          requires
          all financial information to be presented to our independent registered
          public
          accounting firm.
  **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.
  We
          were
          sued on February 10, 2005 by Banco Panamericano, Inc. in the Circuit Court
          of
          Cook County, Illinois, Banco Panamericano, Inc. v. Consortium Service Management
          Group, Inc. and CSMG Gastech LLC , Case No. 2005L001514. The complaint
          alleges
          that we entered into a short-term promissory note dated February 15, 2002
          (the
“Note”) by which we borrowed from Banco Panamericano $203,800 at 12% interest,
          the Note being due April 1, 2002. The complaint alleged that the Note was
          secured by all of our equipment, inventory, accounts, general intangibles
          and
          other properties. The complaint alleged that the Note is in default and
          that we
          owe Banco Panamericano $514,920 as of February 9, 2005, together with accrued
          interest and costs.
  In
          our
          answer to the complaint, we alleged as follows with regard to the allegations
          of
          Banco Panamericano:
  •
                Banco
                    Panamericano is not a bank but a Nebraska corporation that is
                    affiliated
                    with Resource Technologies Corporation (“RTC”), a company that is a debtor
                    in a federal chapter 11 reorganization
                    case.
  •
                CSMG
                    and RTC had entered into a contract (the “Contract”) whereby CSMG would
                    provide equipment (the “Equipment”), at CSMG’s cost, to filter landfill
                    gas from a landfill operated by RTC located in Alabama so as
                    to provide
                    marketable methane gas. Among RTC’s obligations under the Contract was a
                    commitment to provide a pipeline hookup to the purchaser of the
                    gas. CSMG
                    and RTC would share in the proceeds from the sale of the methane
                    gas.
   38
  •
                CSMG
                    lacked the funds to perform its obligations under the Contract,
                    RTC
                    arranged for its affiliate, Banco Panamericano, to lend CSMG
                    $203,800 to
                    enable CSMG to meet these obligations. It was understood by CSMG,
                    RTC and
                    Banco Panamericano that CSMG would liquidate the Note from its
                    share of
                    the proceeds of sale of the methane
                    gas.
  •
                CSMG
                    installed the Equipment but RTC never performed its obligations
                    under the
                    Contract and Banco Panamericano never loaned any funds to CSMG.
                    Rather,
                    Banco Panamericano advised CSMG, from time to time, that CSMG
                    had incurred
                    several indistinctly-described financial obligations to RTC and
                    that Banco
                    Panamericano had advanced the funds subject to the Note to its
                    affiliate,
                    RTC, to cover such obligations. Such allegations of CSMG indebtedness
                    to
                    RTC were not true.
  •
                The
                    intention of RC and Banco Panamericano from the beginning was
                    to have CSMG
                    execute the Note - secured by the Equipment, to cause the Note
                    to go into
                    default, and to obtain title to the Equipment through the rights
                    of a
                    secured creditor.
  We
          believe that we, not the plaintiff, is the injured party and that this
          litigation properly belongs in RTC’s chapter 11 proceedings in the federal
          bankruptcy court.
  On
          March
          2, 2005, the case was removed from the Circuit Court of Cook County, Illinois
          to
          the Federal District Court for the Northern District of Illinois. We filed
          a
          motion to have the proceeding referred to the United States Bankruptcy
          Court for
          the Northern District of Illinois where the bankruptcy proceeding of RTC
          is
          pending. The Federal District Court referred the proceeding to the United
          States
          Bankruptcy Court on December 6, 2005. On January 9, 2007, the Bankruptcy
          Court
          ruled that we did not have standing to remove the case to its jurisdiction
          and
          the case was removed from the Bankruptcy Court back to the Federal District
          Court for the Northern District of Illinois. We have filed an answer in
          the
          proceedings setting forth several affirmative defenses and counterclaims
          focused
          on the affiliation of the plaintiff with one of our customers and based
          on
          certain misrepresentations. Discovery has been completed and plaintiff
          has
          submitted a contested motion for summary judgment that is under consideration
          by
          the Court. A trial date of December 10, 2007, has been continued pending
          the
          outcome of this motion.
  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 Federal District Court for the
          Southern District of Texas and recently ordered transferred to the Federal
          District Court for the Northern District of Illinois.
  On
          June
          30, 2006, we were served with a complaint from Nature Coast Collections,
          Inc. in
          proceeding in the Federal District Court for the Southern District of Texas.
          The
          complaint alleges that Nature Coast Collections, Inc. is the assignee of
          the
          original payee, Stonegate Management, Ltd., a Costa Rican entity, of four
          promissory notes executed by us and Donald S. Robbins, our Chairman of
          the
          Board, President and Chief Executive Officer, and Gordon W. Allison, each
          as a
          guarantor. The amount claimed in the suit is the aggregate principal sum
          of
          $630,000, with interest, costs and attorney fees. We have answered the
          complaint
          and filed a counterclaim alleging, among other matters, that Nature Coast
          Collections, Inc. is an affiliate of the debtor in the bankruptcy proceeding
          in
          the Northern District of Illinois referred to above, RTC, and that we should
          be
          authorized to offset its losses caused by its contractual relationship
          with RTC
          against the claims of Nature Coast Collections, Inc. Our answer also asserted
          several affirmative defenses and counterclaims focused on the affiliation
          of the
          plaintiff with an offshore affiliate of one of our customers and based
          on
          certain misrepresentations. Discovery has been completed and the Company
          has
          filed a motion for summary judgment with respect to the Plaintiff’s claims, the
          briefing of which by the parties has yet to be fully completed. No trial
          date
          has been set.
  CSMG
          Technologies, Inc. v. Gordon W. Allison ,
          Case
          No. 4:07-cv-00715 in the Southern District of Texas District Court.
   39
  We
          have
          filed a complaint against Gordon Allison, our former executive vice president,
          seeking unspecified damages in connection with claims based upon fraudulent
          statements, breach of fiduciary duty and promissory estoppel with respect
          to our
          investments in certain projects in which we were involved through actions
          of Mr.
          Allison. Mr. Allison has filed a counterclaim seeking damages of approximately
          $328,041 principal and interest for amounts allegedly due under the terms
          of a
          November 5, 2003 promissory note issued to him by us, unpaid salary of
          $150,000,
          unspecified payment for services rendered, reimbursement of expenses estimated
          at $23,000 and punitive damages in an unspecified amount. The litigation
          is in
          the discovery stage, and we believe the counterclaim is without merit and
          we are
          vigorously defending the counterclaim.
  **Item
                    1A.**
                **Risk
                    Factors**
  Not
          applicable.
  **Item
                    2.**
                **Unregistered
                    Sales of Equity Securities and Use of
                    Proceeds**
  During
          the three months ended March 31, 2008, we made the following unregistered
          sales
          of our equity securities. All of the equity securities issued in unregistered
          sales were exempt from registration pursuant to Section 4(2) of the Securities
          Act of 1933, as amended, on the basis that all purchasers were accredited
          investors.
  •
                From
                    February 11, 2008 to March 26, 2008, we issued 530,688 shares
                    of common
                    stock in conversion of notes payable, accrued interest and discount
                    on
                    conversion in the amount of
                    $331,680.
  •
                On
                    February 25, 2008, we sold 18,000 shares of common stock for
                    cash in the
                    amount of $18,000.
  •
                On
                    March 26, 2008, we issued 51,155 shares of common stock upon
                    a cashless
                    net exercise of warrants.
  •
                On
                    January 3, 2008, we issued 98,851 shares of common stock to a
                    former
                    part-owner of one of our subsidiaries in exchange for their investment
                    in
                    the subsidiary of $50,000, plus accrued interest of $36,000 (total
                    investment $86,000).
  **Item
                    3.**
                **Defaults
                    Upon Senior Securities**
  None.
  **Item
                    4.**
                **Submission
                    of Matters to a Vote of Security
                    Holders**
  None.
  **Item
                    5.**
                **Other
                    Information**
  None.
  **Item
                    6.**
                **Exhibits**
 31.1
                  Certification
                      of the Chief Executive Officer required by Rule 13a-14(a) or
                      Rule
                      15d-14(a)
  31.2
                  Certification
                      of the Chief Financial Officer required by Rule 13a-14(a) or
                      Rule
                      15d-14(a)
  32
                  Certification
                      of the Chief Executive Officer and the Chief Financial Officer
                      required by
                      Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C.
                      1350
  40
 **SIGNATURES**
  Pursuant
          to the requirements of Section 13 or 15(d) of the Securities Exchange Act
          of
          1934, the registrant has duly caused this report to be signed on its behalf
          by
          the undersigned, thereunto duly authorized.
  **CSMG TECHNOLOGIES,
                  INC.**Date:
                  May 20, 2008
                By:
                /s/Donald
                  S. RobbinsChief
                  Executive Officer
  Date:
                    May 20, 2008
                  By:
                  /s/K.
                    Bruce JonesChief
                      Financial Officer
                    (Principal
                      Financial and Accounting
                      Officer)
  
 **CSMG
            Technologies, Inc.**
  **Form
            10-Q**
 **For
            the quarterly period ended March 31, 2008**
  **Exhibit
            Index**
   31.1
                  Certification
                      of the Chief Executive Officer required by Rule 13a-14(a) or
                      Rule
                      15d-14(a) **
  31.2
                  Certification
                      of the Chief Financial Officer required by Rule 13a-14(a) or
                      Rule
                      15d-14(a) **
  32
                  Certification
                      of the Chief Executive Officer and the Chief Financial Officer
                      required by
                      Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350
                      **
 *
            Previously filed
 **
          Filed
          herewith