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

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 o

	Non-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 o No 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		Page

Item 1.	Financial Statements	2

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4(T)	Controls and Procedures	38

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Submission of Matters to a Vote of Security Holders	40

Item 5.	Other Information	40

Item 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		$	1,004,376
Inventory		35,670			35,670
Total current assets		142,382			1,040,046

Fixed assets, net of depreciation		117,538			42,605
Intangible assets		56,626			37,157
Deposits		35,379			-


TOTAL ASSETS	$	351,925		$	1,119,808


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	509,137		$	640,713
Accrued interest payable		1,946,124			1,699,124
Liability for stock to be issued		287,400			143,459
Convertible notes payable		7,019,000			6,845,000
Notes payable		1,323,604			1,508,407
Other 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 and
no shares issued and outstanding		-			-
Common stock, par value $0.001 per share, 80,000,000 shares authorized and
38,717,238 and 38,018,544 issued and outstanding, respectively		38,717			38,018
Additional paid-in capital		16,420,285			15,476,749
Accumulated 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.

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			5,286,782
Stock based compensation		99,307			-			1,770,283
Depreciation		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.

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		-			-			-			-			-			672,889

Common shares issued for conversion of notes and interest		-		-		2,493,109			2,493			1,504,965		-			-			-			-			-			1,507,458

Common shares issued for services		-		-		366,115			366			200,741		-			-			-			-			-			201,107

Common shares subscribed		-		-		-			-			-		-			-			451			-			-			451

Stock based compensation		-		-		-			-			82,498		-			-			-			-			-			82,498

Net 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		-			-			-			-			-			620,991

Common shares issued for conversion of notes and interest		-		-		2,733,248			2,733			1,745,690		-			-			-			-			-			1,748,423

Common shares issued for services		-		-		744,500			744			313,669		-			-			-			-			-			314,413

Common 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		-			-			-			-			-			922,001

Issuance of warrants		-		-		-			-			186,092		-			-			-			-			-			186,092

Issuance of options		-		-		-			-			96,322		-			-			-			-			-			96,322

Sale of United Engineering		-		-		-			-			-		-			-			-			337,189			-			337,189

Stock based compensation		-		-		-			-			1,588,478		-			-			-			-			-			1,588,478

Net 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		-			-			-			-			-			18,000

Common shares issued for conversion of notes and interest		-		-		530,688			531			371,549		-			-			-			-			-			372,080

Common shares issued for conversion of warrants		-		-		51,155			51			93,614		-			-			-			-			-			93,665

Common shares issued for investment in subsidiary		-		-		98,851			99			85,901		-			-			-			-			-			86,000

Discounts on conversions of notes payable		-		-		-			-			275,183		-			-			-			-			-			275,183

Stock based compensation		-		-		-			-			99,307		-			-			-			-			-			99,307

Net 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.

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			609,186
Stock issued for interest		36,000			128,445			36,000
Stock based compensation		99,307			-			1,770,283
Discount on conversion of notes payable		275,183			225,098			1,794,358
Warrants issued for commissions		-			-			186,092
Options issued to consultant		-			-			96,322
Equity loss from investee		-			-			85,118
Depreciation		1,932			96			3,177
Minority interest		(105,874	)		(68,555	)		(947,464	)
Write off FAS 144 assets		-			-			476,304
Loss 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			1,312,330
Cash received for stock to be issued		287,400			-			287,400
Repayment of notes payable		(5,196	)		-			(51,640	)
Repayment of convertible notes payable		(150,000	)		-			(250,000	)
Borrowings of notes payable		-			252,724			2,605,831
Borrowings 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		$	-		$	241,083
Cash paid during the period for income taxes	$	-		$	-		$	-

SUPPLEMENTAL INFORMATION ON NONCASH ACTIVITY
Conversion of notes payable to common stock	$	179,607		$	-		$	2,941,192
Conversion of accrued interest to common stock	$	49,014		$	-		$	646,361
Conversion of notes payable and accrued interest for liability for stock to be issued	$	-		$	-		$	143,459
Issuance 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.

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.

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.

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.

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.

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.

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:

Persuasive evidence of an arrangement exists;

Delivery has occurred or services have been rendered;

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

Collectibility is reasonably assured.

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.

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

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.

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.

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 shares
outstanding :
Basic		38,414,691			34,405,079
Options		1,125,000			1,025,000
Warrants		830,941			600,000
Diluted		40,370,632			36,030,079

Basic 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.

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 the 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.

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		$	47,560

Less: Reserve for obsolescence		(11,890	)		(11,890	)

Total, net	$	35,670		$	35,670

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		$	58,027
Furniture and fixtures		7		51,198			39,114
Software		3		5,975			-
Leasehold improvements		15		15,206			-

				174,005			97,141
Less: 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.

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.

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.

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.

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.

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, 2008
				Weighted-
				average
	Number of			exercise
	Options			price
March 31, 2008:
Outstanding - beginning of period		1,125,000		$	0.46
Granted		-			-
Exercised/Expired		(-	)		-

Outstanding - end of period		1,125,000		$	0.46

Exercisable at end of period		1,125,000		$	0.46

	March 31, 2007
				Weighted-
				average
	Number of			exercise
	Options			price
March 31, 2007:
Outstanding - beginning of period		925,000		$	0.37
Granted		50,000			.62
Exercised/Expired		(-	)		-

Outstanding - end of period		975,000		$	0.40

Exercisable 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).

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 years
360,000	$0.40 - $0.75	11/1/2006	7 years
290,941	$ 0.57	5/18/2007	7 years
830,941

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

Stock Price	$.74
Strike Price	$.57
Expected Life of Warrant	7 yrs.
Annualized Volatility	100.61 %
Discount Rate	4.50%
Annual Rate of Quarterly Dividends	None
Call 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	$	59,400
2010		61,776
2011		64,247
2012		66,817
2013		69,490

	$	321,730

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	$	47,628
2010		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.

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	$	6,818,524

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

NOTE 11- LITIGATION

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)

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.

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

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			11,550
Net loss		(2,818,812	)		(2,889,760	)		(70,948	)		(70,948	)

*Balance Sheet*
Additional paid-in capital		9,922,095			10,004,593			82,498
Minority 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			82,498
Net 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			82,498
Minority 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.

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			233,937
Net 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			1,670,976
Minority 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			1,670,976
Net 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			1,670,976
Minority interest		(388,424	)		(610,811	)		(222,387	)		(233,937	)

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.

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.

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.

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.

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

Income Taxes

Uncertainty in Income Taxes

(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 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.

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.

•

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.

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)

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

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. Robbins
		Chief Executive Officer


Date: May 20, 2008	By:	/s/
		K. Bruce Jones
		Chief 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) **

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

CSMG TECHNOLOGIES, INC. 10-Q