March 31,
2005
 Mr.
Carlos Pacho
 Senior
Assistant Chief Accountant
 United
States Securities and Exchange Commission
 Division
of Corporate Finance
 Washington,
D.C. 20549
 
 Ms.
Inessa Berenbaum
 Staff
Accountant
 United
States Securities and Exchange Commission
 Division
of Corporate Finance
 Washington,
D.C. 20549
 
 RE:  **Lighting
Science Group Corporation**
 **Form
10-KSB for the fiscal year ended Decembers 31, 2004**
 **Filed
February 9, 2005**
 **File
No. 0-20354**
 
 Dear Mr.
Pacho and Ms. Berenbaum:
 
 Thank you
for speaking with Ed Turner, Larry Yurcho, and me on Friday, March 25, 2005
about the matters contained in the letter dated March 18, 2005 from the SEC to
Lighting Science Group Corporation. Mr. Turner and Mr. Yurcho are partners with
the independent accounting firm of Turner, Stone & Company, the independent
auditors for Lighting Science Group Corporation. This letter will respond to the
questions and comments raised in the above-referenced letter and will summarize
our understanding of the discussion last Friday.
 
 To
facilitate the discussion, I have reproduced your comments prior to our
response.
 
 COMMENT
#1
 Financial
Statements
 
 1.
    We
      note that you have not presented audited pre-emergence comparative
      financial statements for the period January 1 through September 26, 2003.
      We understand that paragraph 40 of SOP 90-7 states that comparative
      financial statements that straddle a confirmation date should not be
      presented. However, as footnote 2 of that paragraph indicates, it is the
      staff’s position to require the presentation of predecessor financial
      statements. We would not object if you presented those statements in far
      right hand column after “cumulative from September 26, 2003 through
      December 31, 2004,” separating the predecessor financial statements column
      with a bold face line. Please revise or advise.
 
 RESPONSE:
 It was
our opinion at the time the 2004 financial statements were prepared (and it is
still our opinion) that to include the activity from January 1 through September
25, 2003 would not “enhance the overall disclosure in [the] filing.” In fact,
the last sentence of footnote 2 of paragraph 40 of SOP 90-7 states, “Attempts to
disclose and explain exceptions that affect comparability would likely result in
reporting that is so unwieldy it would not be useful.” This seemed particularly
relevant to the situation of Lighting Science Group Corporation because the line
of business of the company prior to the confirmation of the plan of
reorganization was home healthcare, whereas the line of business subsequent to
the confirmation of the plan of reorganization became the manufacturing and
distribution of LED light bulbs.
 
 However,
we now understand that it is the position of the SEC that such financial
information should be presented. Therefore, we will include this information in
an amended Form 10-KSB and present it in the manner described in your comment
above.
 
 A request
was made by Larry Yurcho for additional time beyond the 10-day period noted in
the initial letter. Mr. Yurcho noted that the additional time would be needed to
allow the audit report to be completed for the financial statements covering
this time period. Mr. Pacho granted an extension to April 30, 2005. We assume
this means that the deadline for filing an amended Form 10-KSB is April 30,
2005.
 
 
 COMMENT
#2
 Acquisition-related
intangible assets
 
 2.
    We
      note your intellectual property is being amortized over twenty years
      beginning June 1, 2004. Tell us how you determined its useful
      life.
 
 RESPONSE:
 As the
comment correctly noted, the intellectual property is being amortized over
twenty years. One of the reasons that twenty years was selected as the useful
life is that the life of a utility patent issued by the United States Patent and
Trademark Office is twenty years. At the time that Lighting Science Group
Corporation (known as The Phoenix Group Corporation at that time) acquired
Lighting Science, Inc., four provisional patent applications had been filed on
the intellectual property. The intent was to file final patents to replace the
provisional patent applications as soon after the acquisition date (June 1,
2004) as possible. Those final patents were filed within the first 120 days
after the acquisition of the intellectual property. Page 7 of the report
entitled *Identifiable
Intangible Assets, Market Value Report as of June 1, 2004* issued
by the independent valuation firm of Brownstone Associates also notes that the
life of a patent is twenty years.
 
 There is
no credible evidence to suggest that the life of the intellectual property
covered by the patents will be less than twenty years. Although no one can
predict the future, it is our belief that the income stream from products based
upon light emitting diode technology will, in fact, exceed twenty years.
Incandescent lighting was developed over 125 years ago, and it is still the most
popular form of lighting around the world. However, if a newer technology is
developed that diminishes the value of the intellectual property, the annual
impairment testing will take this into account, and the remaining value of the
intellectual property will be adjusted accordingly at that time.
 
 For the
reason stated above, we chose twenty years as the useful life of the
intellectual property because the life of a patent was the most objective
measure of the useful life, and it was also the shortest of the alternatives
that we considered.
 
 
 COMMENT
#3
 Impairment
 
 3.
    We
      note your reorganization value in excess of amounts allocable to
      identifiable assets of $2,793,224 and that in accordance with FAS 142 the
      reorganization value is treated the same as goodwill and is not amortized.
      The circumstances giving rise to this reorganization value were created
      from the bankruptcy of the company prior to the acquisition of Lighting
      Science, Inc. We also note that as of the date of your report, the Company
      continues with its plans to develop and sell products based upon the
      technology acquired in the acquisition of Lighting Science. Based on the
      above information and per paragraph 36 of FAS 142, it appears that you
      have two reporting units, one for the company’s assets prior to the
      acquisition of Lighting Science, Inc. and one for Lighting Science, Inc.
      assets acquired on June 1, 2004. Tell us and disclose how you have tested
      reorganization value, specifically addressing the two-step approach, and
      the reporting unit used. Please revise or
advise.
 
 RESPONSE:
 As a
preface to this response, it is important to note that on December 23, 2004 The
Phoenix Group Corporation announced that it was changing its name to Lighting
Science Group Corporation by means of a parent/subsidiary merger with its wholly
owned subsidiary, Lighting Science, Inc. Pursuant to a resolution approved by
the board of directors, The Phoenix Group Corporation filed a certificate of
merger with the office of the Secretary of State of Delaware to complete the
merger of Lighting Science with and into The Phoenix Group Corporation and the
name change. The merger was effective January 1, 2005. Thus, as of January 1,
2005, the name of the registrant is Lighting Science Group Corporation
(hereinafter referred to as “LSGC”), and it has no actively operating
subsidiaries.
 
 *How
the reorganization value was tested* : The
reorganization value of $2,793,224 was originally determined as of the date the
plan of reorganization was deemed effective (September 26, 2003). The
methodology to arrive at this amount was detailed in Note 2 to the audited
financial statements for the period September 26 through December 31, 2003.
Those financial statements were presented in Form 10-KSB for the year ended
December 31, 2003, which was filed with the SEC.
 
 The
reorganization value in excess of amounts allocable to identifiable assets arose
as a result of the structure of the reorganized entity that was approved by the
creditors of The Phoenix Group Corporation in the Chapter 11 bankruptcy
proceedings during 2003. The creditors voted to allow a debt instrument owned by
Match, Inc. (a company owned by a revocable trust controlled by the chairman and
chief executive officer of The Phoenix Group Corporation) to remain in place and
to survive the bankruptcy proceedings. The creditors placed significant value on
the experience of existing management and the contacts that management had
within the local community and the national business community. The nature of
that intangible asset was characterized as “reorganization value in excess of
amounts allocable to identifiable assets” with an implicit value of $2,793,224
as of the effective date of the plan of reorganization (September 26, 2003).
This item is tantamount to an
intangible asset as
defined in SOP 90-7 and treated the same as goodwill .
 
 The
acquisition of Lighting Science, Inc. on June 1, 2004 created additional
intangible assets on the books of LSGC (known at that time as The Phoenix Group
Corporation). As detailed in Note 2 to the financial statements presented in
Form 10-QSB for the quarter ended June 30, 2004, total intangible assets
acquired in the acquisition of Lighting Science , Inc. amounted to $2,421,097.
This brought the total of intangible assets on the consolidated balance sheet of
The Phoenix Group Corporation to approximately $5.2 million as of June 30, 2004.
 
 All of LSGC’ s
intangible assets relate to the manufacturing
and sale of lighting products, which is its only
reporting unit (an d also its
only operating segment ). This
acquisition did not affect in any way the company’s reporting structure as
contemplated within the context of SFAS No. 142, paragraph 36. From the time of
the bankruptcy reorganization through the current date the company has only one
operating segment, as defined in paragraph 10 of SFAS No. 131, and its reporting
structure at this time does not consist of any level below this one operating
segment.
 
 No
additional intangible assets were acquired during the quarter ended September
30, 2004. To comply with FAS 142, the Phoenix Group Corporation engaged the
services of the independent valuation firm of Brownstone Associates to determine
the market fair value of
the intangibles of the consolidated entity — The Phoenix Group Corporation being
the parent and Lighting Science, Inc. being the subsidiary.
 
 To test
impairment, we considered the guidance provided in SFAS No. 142 for the
reorganization value and goodwill acquired in the Lighting Science, Inc.
acquisition and we considered the guidance provided in SFS No. 144 for the
amortization of intangible assets comprised of patents and a non-compete
agreement.
 
 Pursuant
to SFAS No. 142, we compared the fair value of the reorganization value and
Lighting Science, Inc. goodwill with their carrying values and noted that the fai r values,
as determined by an independent business valuation firm, exceeded the carrying
values of these assets.
 
 Pursuant
to SFAS No. 144, we compared the undiscounted cash flow expected to result from
the use and eventual disposition of the patents and the non-compete agreement
with their carrying values and noted that the undiscounted cash flow expected to
result exceeded the carrying values. It was this same undiscounted cash flow
that was used in the independent business valuation referred to in the preceding
paragraph.
 
 
 *The
two-step approach and the reporting unit used:* The
valuation was performed based upon one reporting unit, Lighting Science, Inc.,
because that is the only reporting unit to which fair value can be ascribed.
Said another way, using a relative fair value allocation approach would have
assigned all of the goodwill and intangible assets to one reporting unit. Thus,
the two-step approach detailed in Paragraph 37 of FAS 142 was not utilized.
 
 Based
upon the analysis summarized in their written report dated December 21, 2004,
the opinion of Brownstone Associates, Incorporated was that the market value of
the intangible assets as of September 30, 2004 could reasonably be stated to be
$14,900,000. This amount was almost three times larger than the book value
(approximately $5.2 million) of the intangible assets. Therefore, no impairment
was deemed to have occurred with respect to the intangible assets.
 
 
 COMMENT
#4
 Item
8A. Controls and Procedures
 
 4.
    We
      note your statement that your chief executive officer and your chief
      financial officer “have concluded that adequate internal controls and
      systems are in place to alert management to matters that require
      disclosure to appropriate reporting authorities.” It does not appear that
      your certifying officers have reached a conclusion that your disclosure
      controls and procedures are*effective*(emphasis added)*.*Please
      amend your Form 10-KSB to comply with the disclosure requirements of Item
      307 of Regulation S-B. That is, your must disclose the conclusion of your
      certifying officers regarding the effectiveness of your disclosure
      controls and procedures as of the end of the period covered by the report,
      based upon the evaluation of these controls and procedures (emphasis
      added). 
 RESPONSE:
 The
following paragraph was included in Item 8A. Controls and Procedures of Form
10-KSB filed on February 9, 2005:
 
 The
principal executive officer and the principal financial officer of the Company
have reviewed the Company’s disclosure controls and procedures and have
concluded that adequate internal controls and systems are in place to alert
management to matters that require disclosure to appropriate reporting
authorities.
 
 The
following paragraph was inadvertently omitted from Item 8A. It will be included
in the amended Form 10-KSB to be filed pursuant to discussions covered by this
letter.
  The
Company’s principal executive officer and principal financial officer, after
evaluating the effectiveness of the Company’s disclosure controls and procedures
(as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) as of
the end of the period covered by this report, have concluded that, based on the
evaluation of these controls and procedures, the Company’s disclosure controls
and procedures were effective.
 
 OTHER
MATTERS
 In
response to the closing portion of your letter dated March 18, 2005, Lighting
Science Group Corporation hereby provides the following
acknowledgments:
 
 ·
    Lighting
      Science Group Corporation is responsible for the adequacy and accuracy of
      the disclosure in the filings that it makes to the Securities and Exchange
      Commission;  ·
    Staff
      comments or changes to disclosure in response to staff comments do not
      foreclose the Commission from taking any action with respect to the
      filings; and  ·
    Lighting
      Science Group Corporation may not assert staff comments as a defense in
      any proceedings initiated by the Commission or any person under the
      federal securities laws of the United States. 
 Thank you
again for the time that you spent discussing these matters with Ed Turner, Larry
Yurcho, and me. In addition to the physical address of the company, I can be
reached at 214-382-3647 (office), 214-382-3631 (fax), or via email at
mike.poss@lsgc.com.
 
 Sincerely,
 
 /s/ J.
Michael Poss
 J.
Michael Poss
 Chief
Financial Officer
 
 
 cc:  Mr.
Reginald Norris
 Staff
Attorney
 United
States Securities and Exchange Commission
 Division
of Corporate Finance
 Washington,
D.C. 20549
 (with
respect to Comment #4)
 
 cc:  Mr. Larry
Spirgel
 Assistant
Director
 Division
of Corporate Finance
 United
States Securities and Exchange Commission
 Washington,
D.C. 20549
 (with
respect to Comments #1 - #4)