---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 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 June 30, 2008

[   ] 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 000-30299

LIGHTSCAPE TECHNOLOGIES INC.(Exact name of registrant as specified in its charter)

|Nevada                                                               | 98-0217653                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)

3/F., 80 Gloucester Road, Wanchai, Hong Kong(Address of principal executive offices)

(852) 2546-1808(Registrants telephone
number, including area code)

N/A(Former name, former address and former
fiscal year, if changed since last report)

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

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

|Large accelerated filer [   ] |                                               | Accelerated filer  [   ]     
|----------------------------- | --------------------------------------------- | -----------------------------
|                              |                                               |                              
|Non-accelerated filer   [   ] | (Do not check if a smaller reporting company) | Smaller reporting company [X]

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

---

- 2 -

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date: 55,876,410
shares of common stock issued and outstanding as of August 1, 2008.

---

- 3 -

|PART I - FINANCIAL INFORMATION                                                                      
|----------------------------------------------------------------------------------------------------
|                                                                                                    
|Item 1. Unaudited Consolidated Financial Statements.                                                
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Item 2. Managements Discussion and Analysis of
      Financial Condition and Results of Operations.
|                                                                                                    
|Item 3. Quantitative and Qualitative Disclosures About
      Market Risk.                           
|                                                                                                    
|Item 4T. Controls and Procedures.                                                                   
|                                                                                                    
|PART II - OTHER INFORMATION                                                                         
|                                                                                                    
|Item 1. Legal Proceedings.                                                                          
|                                                                                                    
|Item1A. Risk Factors.                                                                               
|                                                                                                    
|Item 2. Unregistered Sales of Equity Securities and Use
      of Proceeds.                          
|                                                                                                    
|Item 3. Defaults Upon Senior Securities.                                                            
|                                                                                                    
|Item 4. Submission of Matters to a Vote of Security Holders.                                        
|                                                                                                    
|Item 5. Other Information.                                                                          
|                                                                                                    
|Item 6. Exhibits.                                                                                   

---

- 4 -

Item 1. Financial Statements.

It is the opinion of management that the interim consolidated
financial statements for the quarter ended June 30, 2008 includes all
adjustments necessary in order to ensure that the interim consolidated financial
statements are not misleading.

Our interim consolidated financial statements are stated in
United States dollars and are prepared in accordance with generally accepted
accounting principles in the United States of America.









LIGHTSCAPE TECHNOLOGIES INC. AND SUBISIDIARIES INTERIM
CONSOLIDATED FINANCIAL STATEMENTSFOR THE THREE MONTHS ENDED JUNE 30,
2008 UNAUDITED

---

- 5 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES
|---------------------------------------------
|                                             
|CONSOLIDATED BALANCE SHEETS                  
|Expressed in US
      dollars                

|                                                                        |  | June 30,    |  |  | March 31,  | 
|----------------------------------------------------------------------- |  | ----------- |  |  | ---------- | 
|                                                                        |  | 2008        |  |  | 2008       | 
|                                                                        |  | (Unaudited) |  |  |            | 
|                                                                        |  | $           |  |  | $          | 
|ASSETS                                                                  |  |             |  |  |            | 
|Current assets:                                                         |  |             |  |  |            | 
|Cash and cash
      equivalents                                         |  | 4,438,936   |  |  | 3,976,565  | 
|Accounts receivable, net of
      allowance for doubtful accounts       |  |             |  |  |            | 
|of
      $854,533 on June 30, 2008 and $817,790 on March 31, 2008       |  | 3,426,471   |  |  | 4,438,207  | 
|Costs and estimated earnings in
      excess of billings on uncompleted |  |             |  |  |            | 
|contracts                                                               |  | 664,260     |  |  | 639,035    | 
|Prepaid expenses and other
      current assets                         |  | 1,685,960   |  |  | 1,742,031  | 
|Inventories                                                             |  | 4,016,038   |  |  | 3,903,798  | 
|Current assets of discontinued
      operations                         |  | 663,401     |  |  | 699,847    | 
|                                                                        |  |             |  |  |            | 
|Total current assets                                                    |  | 14,895,066  |  |  | 15,399,483 | 
|                                                                        |  |             |  |  |            | 
|Intangible assets, net                                                  |  | 1,512,957   |  |  | 1,700,114  | 
|Goodwill                                                                |  | 4,476,574   |  |  | 4,476,574  | 
|Plant and equipment, net                                                |  | 4,629,393   |  |  | 4,650,398  | 
|Net investment in sales-type leases of
      discontinued operation     |  | 103,695     |  |  | 126,521    | 
|                                                                        |  |             |  |  |            | 
|                                                                        |  | 10,722,619  |  |  | 10,953,607 | 
|                                                                        |  |             |  |  |            | 
|TOTAL ASSETS                                                            |  | 25,617,685  |  |  | 26,353,090 | 
|                                                                        |  |             |  |  |            | 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                    |  |             |  |  |            | 
|Current liabilities:                                                    |  |             |  |  |            | 
|Trade payables                                                          |  | 2,015,133   |  |  | 2,413,203  | 
|Amount due to a director                                                |  | 488,432     |  |  | -          | 
|Accrued expenses
      and other current liabilities                    |  | 796,979     |  |  | 763,797    | 
|Obligations under capital leases
       current portion                |  | 1,774       |  |  | 1,774      | 
|Income tax
      payable                                                |  | 388,985     |  |  | 366,281    | 
|Current liabilities of
      discontinued operations                    |  | 344,983     |  |  | 364,191    | 
|                                                                        |  |             |  |  |            | 
|Total current liabilities                                               |  | 4,036,286   |  |  | 3,909,246  | 
|                                                                        |  |             |  |  |            | 
|Non-current liabilities:                                                |  |             |  |  |            | 
|Obligations
      under capital leases  non-current portion            |  | 5,026       |  |  | 5,469      | 
|                                                                        |  |             |  |  |            | 
|Total non-current liabilities                                           |  | 5,026       |  |  | 5,469      | 
|                                                                        |  |             |  |  |            | 
|Total liabilities                                                       |  | 4,041,312   |  |  | 3,914,715  | 

---

- 6 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES
|---------------------------------------------
|                                             
|CONSOLIDATED BALANCE SHEETS (continued)      
|Expressed in US
      dollars                

|                                                          |  | June 30,    |   |  | March 31,   |  
|--------------------------------------------------------- |  | ----------- | - |  | ----------- | -
|                                                          |  | 2008        |   |  | 2008        |  
|                                                          |  | (Unaudited) |   |  | (Audited)   |  
|                                                          |  | $           |   |  | $           |  
|                                                          |  |             |   |  |             |  
|Minority interest                                         |  | 1,400,267   |   |  | 1,421,702   |  
|                                                          |  |             |   |  |             |  
|COMMITMENTS (see Note 16)                                 |  |             |   |  |             |  
|                                                          |  |             |   |  |             |  
|Shareholders' equity:                                     |  |             |   |  |             |  
|Preferred stock, par value of $0.001 each;                |  |             |   |  |             |  
|100,000,000 shares authorized, none issued or outstanding |  |             |   |  |             |  
|                                                          |  |             |   |  |             |  
|Common stock                                              |  |             |   |  |             |  
|Authorized:                                               |  |             |   |  |             |  
|800,000,000 common shares, par value $0.001 per share     |  |             |   |  |             |  
|Issued and
      outstanding:                             |  |             |   |  |             |  
|55,876,410 common shares at June 30, 2008 and at          |  |             |   |  |             |  
|March
      31, 2008                                      |  | 55,876      |   |  | 55,876      |  
|Additional paid-in capital                                |  | 34,140,708  |   |  | 34,140,708  |  
|Common stock warrants (see Note 19)                       |  | 344,673     |   |  | 344,673     |  
|Statutory surplus reserves                                |  | 28,944      |   |  | 28,944      |  
|Accumulated other comprehensive income                    |  | 1,235,736   |   |  | 1,082,442   |  
|Accumulated deficit                                       |  | (15,629,831 | ) |  | (14,635,970 | )
|                                                          |  |             |   |  |             |  
|Total shareholders' equity                                |  | 20,176,106  |   |  | 21,016,673  |  
|                                                          |  |             |   |  |             |  
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                |  | 25,617,685  |   |  | 26,353,090  |  

The accompanying notes are an integral part of these
consolidated financial statements.

---

- 7 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES    
|-------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|Expressed in US
      dollars                    

|                                                                               |  | Three Months Ended |  
|------------------------------------------------------------------------------ |  | ------------------ | -
|                                                                               |  | June 30,           |  
|                                                                               |  | 2008               |  
|                                                                               |  | $                  |  
|Revenues:                                                                      |  |                    |  
|Sale of LED solutions                                                          |  | 347,888            |  
|Sale of lighting source products                                               |  | 894,806            |  
|Contract revenue from LED solutions contracts                                  |  | 305,061            |  
|Commission and service income                                                  |  | 10,952             |  
|Total net revenues                                                             |  | 1,558,707          |  
|                                                                               |  |                    |  
|Cost of revenues:                                                              |  |                    |  
|Cost of sales of LED solutions                                                 |  | (261,110           | )
|Cost of sales of lighting source products                                      |  | (619,144           | )
|Contract costs of LED solutions
      contracts                                |  | (246,525           | )
|Costs of commission and service                                                |  | (189               | )
|Total cost of revenues                                                         |  | (1,126,968         | )
|                                                                               |  |                    |  
|Gross profit                                                                   |  | 431,739            |  
|Bad debts                                                                      |  | (85,640            | )
|Amortization                                                                   |  | (205,653           | )
|Depreciation                                                                   |  | (42,495            | )
|Selling and marketing expenses                                                 |  | (163,975           | )
|General and administrative expenses                                            |  | (936,794           | )
|                                                                               |  |                    |  
|Loss from operations                                                           |  | (1,002,818         | )
|Interest expense                                                               |  | (300               | )
|Interest income                                                                |  | 326                |  
|Other income                                                                   |  | 1,441              |  
|                                                                               |  |                    |  
|Loss from continuing operations before income
      tax and minority interests |  | (1,001,351         | )
|Income taxes                                                                   |  | -                  |  
|                                                                               |  |                    |  
|Net loss from continuing operations before minority interests                  |  | (1,001,351         | )
|Minority interests                                                             |  | 21,436             |  
|                                                                               |  |                    |  
|Net loss from continuing operations                                            |  | (979,915           | )
|                                                                               |  |                    |  
|Discontinued operations                                                        |  |                    |  
|Net loss from discontinued operations, net of
      income taxes               |  | (13,946            | )
|                                                                               |  |                    |  
|                                                                               |  |                    |  
|Net loss attributable to common shareholders                                   |  | (993,861           | )
|                                                                               |  |                    |  
|Loss per share                                                                 |  |                    |  
|- Basic and diluted                                                            |  |                    |  
|Continuing operations                                                          |  | (0.02              | )
|Discontinued operations                                                        |  | (0.00              | )
|Total                                                                          |  | (0.02              | )
|                                                                               |  |                    |  
|Weighted average number of common shares outstanding                           |  |                    |  
|- Basic and diluted                                                            |  | 55,876,410         |  

The accompanying notes are an integral part of these
consolidated financial statements.

---

- 8 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES                               
|----------------------------------------------------------------------------
|                                                                            
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
      COMPREHENSIVE LOSS
|FOR THE THREE MONTHS ENDED JUNE 30, 2008 (UNAUDITED)                        
|Expressed in US
      dollars (except for number of common shares)          

|                         |  |                     |  |  |        |  |  |          |  |  |            |  |  |                                   |  |  | Accumulated Other |  |  |             |  |  |             |  
|------------------------ |  | ------------------- |  |  | ------ |  |  | -------- |  |  | ---------- |  |  | --------------------------------- |  |  | ----------------- |  |  | ----------- |  |  | ----------- | -
|                         |  | Common
      Shares |  |  |        |  |  |          |  |  |            |  |  | Comprehensive
      (Loss) Income |  |  |                   |  |  |             | 
|                         |  |                     |  |  |        |  |  |          |  |  |            |  |  |                                   |  |  |                   |  |  | Foreign     |  |  |             |  
|                         |  |                     |  |  |        |  |  | Common   |  |  | Additional |  |  | Statutory                         |  |  | Unrealized        |  |  | Currency    |  |  |             |  
|                         |  |                     |  |  |        |  |  | Stock    |  |  | Paid-In    |  |  | Surplus                           |  |  | Loss on           |  |  | Translation |  |  | Accumulated |  
|                         |  | Number              |  |  | Amount |  |  | Warrants |  |  | Capital    |  |  | Reserves                          |  |  | Investments       |  |  | Adjustment  |  |  | Deficit     |  
|                         |  |                     |  |  |        |  |  |          |  |  |            |  |  |                                   |  |  |                   |  |  |             |  |  |             |  
|Balance at March 31,     |  |                     |  |  |        |  |  |          |  |  |            |  |  |                                   |  |  |                   |  |  |             |  |  |             |  
|2008                     |  | 55,876,410          |  |  | 55,876 |  |  | 344,673  |  |  | 34,140,708 |  |  | 28,944                            |  |  | -                 |  |  | 1,082,442   |  |  | (14,635,970 | )
|                         |  |                     |  |  |        |  |  |          |  |  |            |  |  |                                   |  |  |                   |  |  |             |  |  |             |  
|Foreign currency         |  |                     |  |  |        |  |  |          |  |  |            |  |  |                                   |  |  |                   |  |  |             |  |  |             |  
|translation adjustment   |  | -                   |  |  | -      |  |  | -        |  |  | -          |  |  | -                                 |  |  | -                 |  |  | 153,294     |  |  | -           |  
|Net loss                 |  | -                   |  |  | -      |  |  | -        |  |  | -          |  |  | -                                 |  |  | -                 |  |  | -           |  |  | (993,861    | )
|                         |  |                     |  |  |        |  |  |          |  |  |            |  |  |                                   |  |  |                   |  |  |             |  |  |             |  
|Balance at June 30, 2008 |  | 55,876,410          |  |  | 55,876 |  |  | 344,673  |  |  | 34,140,708 |  |  | 28,944                            |  |  | -                 |  |  | 1,235,736   |  |  | (15,629,831 | )

The accompanying notes are an integral part of these
consolidated financial statements.

---

- 9 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES    
|-------------------------------------------------
|                                                 
|CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|Expressed in US
      dollars                    

|                                                                                  |  | Three Months   |  
|--------------------------------------------------------------------------------- |  | -------------- | -
|                                                                                  |  | Ended June 30, |  
|                                                                                  |  | 2008           |  
|                                                                                  |  | $              |  
|Cash flows from continuing operating activities:                                  |  |                |  
|Net loss                                                                          |  | (979,915       | )
|                                                                                  |  |                |  
|Adjustment to reconcile net loss from continuing operation
      to               |  |                |  
|net cash (used in) generated from continuing
      operating activities:          |  |                |  
|Amortization of intangible assets                                                 |  | 205,653        |  
|Depreciation expense                                                              |  | 108,086        |  
|Minority interest                                                                 |  | (21,436        | )
|Changes in operating assets and liabilities,
      net of acquisitions:           |  |                |  
|Decrease (Increase) in operating assets:                                          |  |                |  
|Accounts receivable,
      net of allowance for doubtful debts                    |  | 1,011,736      |  
|Costs and estimated earnings in
      excess of billings on uncompleted contracts |  | (25,225        | )
|Prepaid expenses
      and other current assets                                   |  | 56,071         |  
|Inventories                                                                       |  | (112,240       | )
|Increase (Decrease) in operating
      liabilities:                               |  |                |  
|Discount on redeemable convertible
      notes                                    |  | -              |  
|Trade payables                                                                    |  | (398,070       | )
|Accrued expenses and other current
      liabilities                              |  | 171,955        |  
|Income tax payable                                                                |  | 22,704         |  
|                                                                                  |  |                |  
|Net cash provided by (used in) continuing operating
      activities              |  | 39,319         |  
|Net cash provided by discontinued operating activities                            |  | 33,388         |  
|Net cash provided by (used in) operating activities                               |  | 72,707         |  
|                                                                                  |  |                |  
|Cash flows from investing activities:                                             |  |                |  
|Purchase of plant and equipment and intangible assets                             |  | (2,814         | )
|Increase in construction in progress                                              |  | -              |  
|                                                                                  |  |                |  
|Net cash (used in) investing activities of
      continuing operations            |  | (2,814         | )
|Net cash provided by investing activities of discontinued operations              |  | -              |  
|Net cash (used in) investing activities                                           |  | (2,814         | )

---

- 10 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES                      
|-------------------------------------------------------------------
|                                                                   
|CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
      (continued)
|Expressed in US
      dollars                                      

|                                                                         |  | Three Months   |  
|------------------------------------------------------------------------ |  | -------------- | -
|                                                                         |  | Ended June 30, |  
|                                                                         |  | 2008           |  
|                                                                         |  | $              |  
|                                                                         |  |                |  
|Cash flows from financing activities:                                    |  |                |  
|Repayment of capital lease obligations                                   |  | (443           | )
|Advance from a director                                                  |  | 488,432        |  
|                                                                         |  |                |  
|Net cash provided by financing activities of
      continuing operations |  | 487,989        |  
|Net cash (used in) financing activities of discontinued operations       |  | (11            | )
|Net cash provided by (used in) financing activities                      |  | 487,978        |  
|                                                                         |  |                |  
|Effect of foreign exchange rate changes                                  |  | (61,645        | )
|                                                                         |  |                |  
|Net increase (decrease) in cash and cash equivalents                     |  | 496,226        |  
|Cash and cash equivalents at beginning of the period                     |  | 3,978,500      |  
|                                                                         |  |                |  
|Cash and cash equivalents at end of the period (a)                       |  | 4,474,726      |  
|                                                                         |  |                |  
|Supplemental disclosure of cash flows information                        |  |                |  
|Interest expense paid                                                    |  | 301            |  
|Income taxes paid                                                        |  | 19,280         |  

(a) Includes $35,790 and $19,278 of cash that is included on
  the balance sheet with Current assets from discontinued operations as of June
  30, 2008 and 2007, respectively.

The accompanying notes are an integral part of these consolidated
  financial statements.

---

- 11 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

Lightscape Technologies Inc. (Lightscape) was incorporated
under the laws of the State of Nevada. On April 20, 2007, the Company changed
its name from Global Innovative System Inc. to Lightscape Technologies Inc. The
Company is a holding company, and together with its subsidiaries (the Company)
is principally engaged in three business activities: (i) light-emitting diode
(LED) outdoor advertising, (ii) LED solutions and (iii) lighting source
products.

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Principle of Consolidation and Basis of Presentation

The accompanying consolidated financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles in the United States of America and include the financial statements
of the Company and its majority-owned subsidiaries. All significant intercompany
transactions and balances are eliminated on consolidation.

The accompanying unaudited consolidated financial statements as
of June 30, 2008 and for the three months ended June 30, 2008 and 2007 have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Regulation S-X
applicable to smaller reporting companies. In the opinion of management, these
unaudited consolidated interim financial statements include all adjustments
considered necessary to make the financial statements not misleading. The
results of operations for the three months ended June 30, 2008 are not
necessarily indicative of the results for the full fiscal year ending March 31,
2009. The unaudited consolidated interim financial statements should be read in
conjunction with the Company's audited consolidated financial statements and
notes thereto for the year ended March 31, 2008 as reported in Form 10-KSB.

Use of Estimates

The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and demand
deposits which are unrestricted as to withdrawal and use, and which have
maturities of three months or less when purchased.

---

- 12 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Accounts Receivables and Allowance for Doubtful Accounts

The Company performs certain credit evaluation procedures and
does not require collateral for financial instruments subject to credit risk.
The Company believes that credit risk is limited because the Company routinely
assesses the financial strength of its customers and, based upon factors
surrounding the credit risk of its customers, establishes an allowance for
uncollectible accounts receivable. As a consequence, the Company believes that
its accounts receivable credit risk exposure beyond such allowances is limited.
The Company recognizes an allowance for doubtful accounts to ensure accounts
receivable are not overstated due to uncollectibility and are maintained for all
customers based on a variety of factors, including the length of time the
receivables are past due, significant one-time events and historical experience.
An additional reserve for individual accounts is recorded when the Company
becomes aware of a customer's inability to meet its financial obligation, such
as in the case of bankruptcy filings or deterioration in the customer's
operating results or financial position. If circumstances related to customers
change, estimates of the recoverability of receivables would be further
adjusted. As of June 30, 2008 and March 31, 2008, the allowance for doubtful
accounts was approximately $854,500 and $817,800, respectively.

Inventories

Inventories are stated at the lower of cost or market value.
Cost is determined on the first-in, first-out basis. Write-down of potentially
obsolete or slow-moving inventory is recorded based on managements analysis of
inventory levels and the Company's assessment of estimated obsolescence based
upon assumptions about future demand and market conditions. Further write-down
of the value may be required in the future if there is rapid technological and
structural change in the industry. This may reduce the results of operations of
the Company.

Goodwill

The Company accounted for acquisitions of business in
accordance with SFAS No. 141 Business Combinations, which resulted in the
recognition of goodwill. Goodwill represents the excess of the purchase price
over the fair value of net assets acquired in business combinations accounted
for under the purchase method. Goodwill is not subject to amortization but will
be subject to periodic evaluation for impairment. Goodwill is stated in the
consolidated balance sheet at cost less accumulated impairment loss of $526,863.

Intangible Assets

The Company acquired certain intangible assets through the
acquisition of subsidiaries. These intangible assets are comprised of
trademarks, customer lists and relationships, unfulfilled purchase orders,
completed technology for the production of Aihua Ultra-High Pressure Mercury
(AHP) lamps and High Intensity Discharge (HID) lamps, a customer base and a
distributor base. The acquired trademarks were determined to have indefinite
useful lives which are not subject to amortization, unless and until the useful
lives are determined to no longer be indefinite.

---

- 13 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Intangible Assets (continued)

The Company reviews the trademarks annually for impairment or
more frequently if events or changes in circumstances indicate that the asset
might be impaired. The completed technologies for the production of AHP and HID,
distributor base, customer lists and relationships and unfulfilled purchase
orders are subject to amortization over their respective economic useful lives
and reviewed for impairment if the carrying amount of these intangible assets
are determined to be not recoverable or their carrying amounts exceed their fair
market values. If an impairment loss is recognized, the adjusted carrying amount
of the intangible assets would be the new accounting basis.

The estimation of the useful lives of the trademarks, completed
technologies for the production of AHP and HID, distributor base, customer lists
and relationships will be affected by factors such as a change in demand,
unanticipated competition change in technology, legislative action that results
in an uncertain or an adverse change in the regulatory environment or changes in
distribution channels and business climate. If an impairment loss were to be
recognized, the results of operations and the financial position of the Company
would be adversely affected.

Software and licenses are recognized as intangible assets at
cost less accumulated amortization. These assets are generally amortized over
three years.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for potential impairment
based on a review of projected undiscounted cash flows associated with these
assets. Long-lived assets are included in impairment evaluations when events and
circumstances exist that indicate the carrying amount of these assets may not be
recoverable. Measurement of impairment losses for long-lived assets that the
Company expects to hold and use is based on the estimated fair value of the
assets. Therefore, future changes in the Companys strategy and other changes in
its operations could impact the projected future operating results that are
inherent in estimates of fair value, resulting in impairments in the future.
Additionally, other changes in the estimates and assumptions, including the
discount rate and expected long-term growth rate, which drive the valuation
techniques employed to estimate the fair value of long-lived assets could change
and, therefore, impact the assessments of impairment in the future.

Plant and Equipment and Construction in Progress

Plant and equipment is recorded at cost less accumulated
depreciation. Depreciation is provided on a straight-line basis over the
estimated useful lives of the assets. Estimated useful lives of equipment are as
follows:

|Testing equipment               | 4 years                                                      
|------------------------------- | -------------------------------------------------------------
|Office equipment                | 3  4 years                                                  
|Furniture and fixtures          | 3 - 4 years                                                  
|Leasehold improvements          | shorter of 4 years or the remaining terms of
      the leases
|Motor vehicles                  | 5 - 7 years                                                  
|Moulds                          | 3 years                                                      
|Factory machinery and equipment | 10 - 16 years                                                

---

- 14 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Plant and Equipment and Construction in Progress (continued)

Construction in progress is stated at cost which comprises all
direct costs incurred in relation to their construction.

The cost of construction in progress will not be depreciated
until the construction is completed and the assets are transferred to a specific
category of plant and equipment and put into service.

Expenditures for repairs, maintenance and minor renewals and
betterments are expensed as incurred.

Net Investment in Sales - Type Leases

At the time a sales-type lease is consummated, the Company
records the gross finance receivable, less unearned income. Unearned income is
recognized as lease income using the interest method over the term of the lease
and is included as financing revenue in the Company's consolidated statements of
operations. The Company reviews minimum lease payments receivable for
collectability on a periodic basis. The review consists primarily of an analysis
based upon current information available about the customer as well as the
current economic environment, value of leased assets net of repossession cost
and prior history. Impairment is measured using the fair value of the leased
assets when foreclosure is probable. Using this information, the Company
determines the expected cash flow for the receivable and calculates a
recommended estimate of the potential loss and the probability of loss. For
those accounts in which the loss is probable, the Company records a specific
reserve.

Revenue Recognition

The Company recognizes revenue when it has persuasive evidence
of an arrangement, the product has been delivered and installed or the services
have been provided to the customer, the sales price is fixed or determinable,
and collectability is reasonably assured. In addition to the aforementioned
general policy, the following are specific revenue recognition policies for each
major category of revenue.

LED outdoor advertising revenue  Revenues from
advertising services, net of agency rebates and commissions, are recognized
ratably over the year in which the advertisement is displayed. Prepayments for
the advertising services are deferred and recognized as revenue when the
advertising services are rendered.

Sale of LED solutions - The Company sells its products
directly to end users and through distributors. Revenue is recognized when the
product is delivered to the customer and all other revenue recognition criteria
are met.

---

- 15 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

Contract revenue from LED solutions - Revenues are
recognized on the percentage-of-completion method, measured by the ratio of
costs incurred up to a given date to estimated total costs for each contract.

Contract costs include all direct material, labor, subcontract
and other costs and those indirect costs related to contract performance, such
as indirect salaries and wages, equipment repairs and depreciation, insurance
and payroll taxes. Administrative and general expenses are charged to expense as
incurred. Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined. Changes in job performance, job
conditions and estimated profitability, including those changes arising from
contract penalty provisions and final contract settlements may result in
revisions to costs and income and are recognized in the period in which the
revisions are determined. An amount attributable to contract claims is included
in revenues when realization is probable and the amount can be reliably
estimated. The Company generally provides a one-year warranty for workmanship
under its contracts. Warranty claims historically have been inconsequential.

The asset, Costs and estimated earnings in excess of billings
on uncompleted contracts represents revenues recognized in excess of amounts
billed on these contracts. The liability Billings in excess of costs and
estimated earnings on uncompleted contracts represents billings in excess of
revenues recognized on these contracts.

Sale of lighting source products - The Company sells its
products directly to end users and through distributors. Revenue is recognized
when the product is delivered to the customer and all other revenue recognition
criteria are met.

Rental income - Revenue from rentals and operating
leases without any acceptance provisions is recognized on a straight-line basis
over the term of the rental or lease.

Commission and service income - Revenue from consulting
services related to energy-saving feasibility studies is recognized when
granted. Services are considered granted when the Company delivers its
assessment to its customer and the customer signs the acceptance report.

Sales-type lease income - Represents finance income
attributable to sales-type leases and is recognized over the term of the lease,
using the effective interest method.

Income Taxes

Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the carrying amounts
of existing assets and liabilities and their respective tax bases as well as
operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when it is more likely than
not that some or all of the deferred tax assets will not be realized.

---

- 16 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Foreign Currency Translation

The functional currency of the Company is Hong Kong dollars
(HKD). Transactions in other currencies are recorded in HKD at the rates of
exchange prevailing when the transactions occur. Monetary assets and liabilities
denominated in other currencies are measured in HKD at rates of exchange in
effect at the balance sheet dates. Exchange gains and losses are recorded in the
consolidated statements of operations as a component of current period earnings.

For financial reporting purposes, the financial statements of
the Company which are prepared using the functional currency have been
translated into United States dollars. Assets and liabilities are translated at
the exchange rates at the balance sheet dates and revenue and expenses are
translated at the average exchange rate for the period and stockholders equity
is translated at historical exchange rates. Any translation adjustments
resulting from the translation are included in foreign exchange adjustment in
other comprehensive income, a component of stockholders equity.

Segment Information

The Companys segment reporting is prepared in accordance with
Statement of Financial Accounting Standards No. 131, Disclosures about Segments
of an Enterprise and Related Information (SFAS 131). The management approach
required by SFAS 131 requires that the internal reporting structure used by
management for making operating decisions and assessing performance, be used as
the source for presenting the Companys reportable segments.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade
receivables, and trade payables approximate their fair values due to the
short-term maturity of these instruments. The fair value of long-term debts and
capital lease obligations approximate their carrying values based on interest
rates currently available to the Company.

Comprehensive Income

Comprehensive income includes all changes in equity during a
period except those resulting from investments by owners and distributions to
owners.

Stock-based Payment

The Company adopted the SFAS No. 123R, Share-Based Payment
(SFAS 123R) using the modified prospective method. Under SFAS 123R, equity
instruments issued to employees for their services are measured at the
grant-date fair value and recognized in the statement of operations over the
service period.

The Company accounts for stock options and stock issued to
non-employees for goods or services in accordance with the fair value method of
SFAS 123R which recognizes the value of such services at the fair value of the
equity instrument or of the goods or services, whichever is more readily
determinable.

---

- 17 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Basic and Diluted Earnings (Loss) per Share

The Company reports basic earnings per share in accordance with
SFAS No. 128, Earnings Per Share. Basic earnings per share is computed using
the weighted average number of shares outstanding during the periods presented.
The weighted average number of shares of the Company represents the common stock
outstanding during the period.

Diluted earnings per share is based on the assumption that if
there is no anti-dilutive effect on the basic earnings per share, all dilutive
convertible notes, options and warrants were converted or exercised. Dilution is
computed by applying the treasury stock method. Under this method, options and
warrants are assumed to be exercised at the beginning of the year (or at the
time of issuance, if later), and as if funds obtained thereby were used to
purchase common stock at the average market price during the period.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007)
(SFAS 141R), Business Combinations, which replaces SFAS 141. SFAS 141R
retains the purchase method of accounting for acquisitions, but requires a
number of changes, including changes in the way assets and liabilities are
recognized in the purchase accounting. It also changes the recognition of assets
acquired and liabilities assumed arising from contingencies, requires the
capitalization of in-process research and development at fair value, and
requires the expensing of acquisition-related costs as incurred. SFAS 141R is
effective for fiscal years beginning on or after December 15, 2008 and will
apply prospectively to business combinations completed on or after that date.
The Companys management believes that this statement will not have a
significant impact on the Companys financial statements.

In December 2007, the FASB issued SFAS No. 160 Noncontrolling
Interests in Consolidated Financial Statements - an amendment of ARB No. 51
(SFAS 160). SFAS 160 applies to all entities that prepare consolidated
financial statements, but will affect only those entities that have an
outstanding noncontrolling interest in one or more subsidiaries or that
deconsolidate a subsidiary. This statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. Earlier adoption is prohibited. Management does not expect that the
application of this standard will have any significant effect on the Company's
financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities-an amendment of FASB Statement No.
133 (SFAS 161). SFAS 161 requires enhanced disclosures about an entity's
derivative and hedging activities, including (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities (SFAS 133), and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008. The Company does not expect that the adoption of the above
recent pronouncements will have a material effect on the Company's financial
statements.

---

- 18 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 3. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS
ON UNCOMPLETED CONTRACTS

Costs and estimated earnings in excess of billings on
uncompleted contracts as of June 30, 2008 and March 31, 2008 are summarized as
follows:

|                                                         |  | June 30,    |  |  | March 31, | 
|-------------------------------------------------------- |  | ----------- |  |  | --------- | 
|                                                         |  | 2008        |  |  | 2008      | 
|                                                         |  | (Unaudited) |  |  | (Audited) | 
|                                                         |  | $           |  |  | $         | 
|Cumulative costs incurred on uncompleted
      contracts |  | 2,145,042   |  |  | 1,575,574 | 
|Cumulative estimated earnings to date                    |  | 574,623     |  |  | 1,071,896 | 
|                                                         |  | 2,719,665   |  |  | 2,647,470 | 
|Less: Billings to date                                   |  | 2,055,405   |  |  | 2,008,435 | 
|                                                         |  | 664,260     |  |  | 639,035   | 

NOTE 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the
following:

|                                     |  | June 30,    |  |  | March 31, | 
|------------------------------------ |  | ----------- |  |  | --------- | 
|                                     |  | 2008        |  |  | 2008      | 
|                                     |  | (Unaudited) |  |  | (Audited) | 
|                                     |  | $           |  |  | $         | 
|Trade deposits                       |  | -           |  |  | 1,546     | 
|Rental, utilities and other deposits |  | 455,695     |  |  | 393,373   | 
|Prepaid expenses                     |  | 951,784     |  |  | 863,092   | 
|Other receivables                    |  | 274,714     |  |  | 465,216   | 
|Others                               |  | 3,767       |  |  | 18,804    | 
|                                     |  | 1,685,960   |  |  | 1,742,031 | 

NOTE 5. INVENTORIES

Inventories by major category are summarized as follows:

|                 |  | June 30,    |  |  | March 31, | 
|---------------- |  | ----------- |  |  | --------- | 
|                 |  | 2008        |  |  | 2008      | 
|                 |  | (Unaudited) |  |  | (Audited) | 
|                 |  | $           |  |  | $         | 
|Raw materials    |  | 539,813     |  |  | 700,302   | 
|Work in progress |  | 584,691     |  |  | 589,119   | 
|Finished goods   |  | 2,891,534   |  |  | 2,614,377 | 
|                 |  | 4,016,038   |  |  | 3,903,798 | 

---

- 19 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 6. PLANT AND EQUIPMENT, NET

Plant and equipment consist of the following:

|                                |  | June 30,    |   |  | March 31,  |  
|------------------------------- |  | ----------- | - |  | ---------- | -
|                                |  | 2008        |   |  | 2008       |  
|                                |  | (Unaudited) |   |  | (Audited)  |  
|                                |  | $           |   |  | $          |  
|Testing equipment               |  | -           |   |  | -          |  
|Office equipment                |  | 666,009     |   |  | 666,009    |  
|Furniture and fixtures          |  | 16,484      |   |  | 16,428     |  
|Leasehold improvements          |  | 328,682     |   |  | 323,900    |  
|Motor vehicles                  |  | 57,800      |   |  | 56,405     |  
|Factory machinery and equipment |  | 5,429,903   |   |  | 5,349,055  |  
|Total                           |  | 6,498,878   |   |  | 6,411,797  |  
|Less: Accumulated depreciation  |  | (1,869,485  | ) |  | (1,761,399 | )
|Plant and equipment, net        |  | 4,629,393   |   |  | 4,650,398  |  

Equipment held under capital leases and included above is
summarized as follows:

|                                         |  | June 30,    |   |  | March 31, |  
|---------------------------------------- |  | ----------- | - |  | --------- | -
|                                         |  | 2008        |   |  | 2008      |  
|                                         |  | (Unaudited) |   |  | (Audited) |  
|                                         |  | $           |   |  | $         |  
|Office equipment                         |  | 8,869       |   |  | 8,869     |  
|Less: Accumulated depreciation           |  | (4,188      | ) |  | (3,449    | )
|Equipment, net held under capital leases |  | 4,681       |   |  | 5,420     |  

NOTE 7. CONSTRUCTION IN PROGRESS

Construction in progress consists of the following:

|                                                              |  | June 30,    |   |  | March 31, |  
|------------------------------------------------------------- |  | ----------- | - |  | --------- | -
|                                                              |  | 2008        |   |  | 2008      |  
|                                                              |  | (Unaudited) |   |  | (Audited) |  
|                                                              |  | $           |   |  | $         |  
|Production facilities for Xenon lights                        |  | 1,252,182   |   |  | 1,221,978 |  
|Loss on write-down of production facilities held-for-sale     |  | (939,137    | ) |  | (916,484  | )
|Transferred to current assets of
      discontinued operation |  | (313,045    | ) |  | (305,494  | )
|                                                              |  |             |   |  |           |  
|Construction in progress, net                                 |  | -           |   |  | -         |  

---

- 20 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 8. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill was recognized upon to the acquisition of equity
interests in Beijing Illumination (Hong Kong) Limited (Beijing Illumination)
and Lightscape Technologies (Macau) Limited (Lightscape Macau) and represent
the costs of the investment over the estimated fair value of the underlying net
assets acquired. Additions to goodwill in 2007 relate to the acquisition of
additional interest in Beijing Illumination and Lightscape Macau and represent
the costs of the investment over the estimated fair value of the underlying net
assets acquired.

Changes to goodwill during the three months ended June 30, 2008
and the year ended March 31, 2008 are as follows:

|                                       |  | June 30,    |  |  | March 31, |  
|-------------------------------------- |  | ----------- |  |  | --------- | -
|                                       |  | 2008        |  |  | 2008      |  
|                                       |  | (Unaudited) |  |  | (Audited) |  
|                                       |  | $           |  |  | $         |  
|Balance at the beginning of the period |  | 4,476,574   |  |  | 5,003,437 |  
|Impairment losses recognized           |  | -           |  |  | (526,863  | )
|                                       |  |             |  |  |           |  
|Balance at the end of the period       |  | 4,476,574   |  |  | 4,476,574 |  

Impairment Losses on Goodwill for Investment in Beijing
Illumination

The write-down of goodwill of $526,863 was based on the
valuation report for Beijing Illumination prepared by an independent third party
appraiser during the year ended March 31, 2008. The income approach, or the
discounted cash flow method, was used for the calculation of the goodwill
resulting from the investment in Beijing Illumination as of March 31, 2008.

---

- 21 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 8. GOODWILL AND INTANGIBLE ASSETS, NET (continued)

Intangible Assets

Intangible assets arise from the acquisition of interests in
subsidiaries. The costs of the intangible assets were determined during the
allocation of the purchase prices based on the estimated fair values of the
assets acquired and liabilities assumed as of the date of acquisition. Acquired
intangible assets consist of the following:

June
        30, 2008
      
      
      March
        31, 2008Accumulated
      
      
      
      
      
      
      
      
      Accumulatedamortization
      
      
      
      
      
      
      
      
      amortizationand
      
      
      
      
      
      
      
      
      andCost
      
      
      impairment
      
      
      Net
      
      
      Cost
      
      
      impairment
      
      
      Net$
      
      
      $
      
      
      $
      
      
      $
      
      
      $
      
      
      $Subject to amortizationCompleted technology  AHP
      
      1,172,616
      
      
      (1,041,373
      )
      
      131,243
      
      
      1,172,616
      
      
      (999,494
      )
      
      173,122Completed technology  HID
      
      1,214,012
      
      
      (693,128
      )
      
      520,884
      
      
      1,214,012
      
      
      (617,252
      )
      
      596,760Software and license
      
      641,077
      
      
      (398,412
      )
      
      242,665
      
      
      641,077
      
      
      (345,101
      )
      
      295,976Customer lists and relationships
      
      45,797
      
      
      (20,582
      )
      
      25,215
      
      
      45,797
      
      
      (19,437
      )
      
      26,360Distributors list
      
      179,351
      
      
      (152,611
      )
      
      26,740
      
      
      179,351
      
      
      (137,665
      )
      
      41,686Total
      
      3,252,853
      
      
      (2,306,106
      )
      
      946,747
      
      
      3,252,853
      
      
      (2,118,949
      )
      
      1,133,904Not subject to amortizationTrademark
      
      566,210
      
      
      -
      
      
      566,210
      
      
      566,210
      
      
      -
      
      
      566,210Total
      
      3,819,063
      
      
      (2,306,106
      )
      
      1,512,957
      
      
      3,819,063
      
      
      (2,118,949
      )
      
      1,700,114


The fair value of intangible assets as of March 31, 2008 was
determined based on the valuation report prepared by an independent third party
appraiser. The income approach was used to determine the net present value of
Beijing Illuminations future expected cash flows.

Amortization expenses charged to net loss from operations for
the three months ended June 30, 2008 and 2007 were approximately $205,700 and
$187,200 respectively. Anticipated amortization expense on intangible assets for
each of the following years is as follows:

|Twelve months ending June 30, |  | $       | 
|----------------------------- |  | ------- | 
|2009                          |  | 740,631 | 
|2010                          |  | 206,116 | 
|                              |  |         | 
|                              |  | 946,747 | 

---

- 22 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 9. OBLIGATIONS UNDER CAPITAL LEASES

|                                                                    |  | June 30,      |   |  | March 31, |  
|------------------------------------------------------------------- |  | ------------- | - |  | --------- | -
|                                                                    |  | 2008          |   |  | 2008      |  
|                                                                    |  | (Unaudited)   |   |  | (Audited) |  
|                                                                    |  | $             |   |  | $         |  
|Total minimum lease payments, with $nil
      representing interest |  | 6,800         |   |  | 7,243     |  
|Less: Current portion of obligations under capital leases           |  | (
      1,774 | ) |  | (1,774    | )
|Long-term portion of obligations under
      capital leases         |  | 5,026         |   |  | 5,469     |  

The following is a summary of future minimum lease payments
under capital leases as of June 30, 2008:

|Twelve months ending June 30, |  | $     | 
|----------------------------- |  | ----- | 
|2009                          |  | 1,774 | 
|2010                          |  | 1,774 | 
|2011                          |  | 1,774 | 
|2012                          |  | 1,478 | 
|                              |  | 6,800 | 

The Company entered into capital lease arrangements for leasing
equipment used in its operations. The lease is for a term of 5 years. For the
three months ended June 30, 2008, the capital lease arrangement was on a
non-interest bearing basis. The leases are on a fixed repayment basis and
require no contingent rental payments.

The interest expenses incurred on these capital leases were
$nil and $nil for the three months ended June 30, 2008 and 2007, respectively.

NOTE 10. OTHER RESERVES

The other reserves represent the statutory surplus reserve of
the Companys subsidiaries in the Peoples Republic of China (PRC).

Statutory Surplus Reserve

In accordance with the relevant laws and regulations of the PRC
and the subsidiaries articles of association, the subsidiaries are required to
appropriate 10% of their net income, after offsetting any prior years losses,
to the statutory surplus reserve. When the balance of such reserve reaches 50%
of the PRC subsidiaries share capital, any further appropriation is optional.

The statutory surplus reserve can be used to offset prior
years losses, if any, and may be converted into share capital by issuing new
shares to shareholders in proportion to their existing shareholding or by
increasing the par value of the shares currently held by them, provided that the
remaining balance of the reserve after such issue is not less than 25% of share
capital. The statutory surplus reserve is non-distributable.

---

- 23 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 11. TOTAL COMPREHENSIVE LOSS

Three MonthsEnded June 30,2008
      
      
      2007$
      
      
      $Net loss attributable to common shareholders
        of theCompany
      
      (993,861
      )
      
      (1,319,972
      )Foreign currency translation adjustments
      
      153,294
      
      
      (19,863
      )Total comprehensive loss
      
      (840,567
      )
      
      (1,339,835
      )


NOTE 12. FOREIGN CURRENCY TRANSACTION LOSS

Foreign currency transaction losses of $27,885 and of $43,750
for the three months ended June 30, 2008 and 2007, respectively, were included
in determining net losses.

NOTE 13. INCOME TAX

As of June 30, 2008 and March 31, 2008, the components of
deferred tax assets and liabilities were as follows:

|                                                                    |  | At June 30, |   |  | At March 31, |  
|------------------------------------------------------------------- |  | ----------- | - |  | ------------ | -
|                                                                    |  | 2008        |   |  | 2008         |  
|                                                                    |  | $           |   |  | $            |  
|                                                                    |  |             |   |  |              |  
|Deferred tax assets                                                 |  |             |   |  |              |  
|- tax losses                                                        |  | 1,013,754   |   |  | 961,976      |  
|- valuation allowance as of March 31, 2008                          |  | (877,511    | ) |  | (877,511     | )
|- valuation allowance increased during the three months
      ended |  |             |   |  |              |  
|June 30, 2008                                                       |  | (51,778     | ) |  | -            |  
|-Total valuation allowance at June 30, 2008                         |  | (929,299    | ) |  | (877,511     | )
|Net deferred tax assets                                             |  | 84,465      |   |  | 84,465       |  
|                                                                    |  |             |   |  |              |  
|Deferred tax liabilities                                            |  |             |   |  |              |  
|- Book depreciation and amortization in excess of tax               |  | (84,465     | ) |  | (84,465      | )
|                                                                    |  |             |   |  |              |  
|Net deferred tax                                                    |  | -           |   |  | -            |  

For the operating loss carry forwards of approximately
$6,610,575 as of June 30, 2008, $486,695 will expire in 2012, and the remainder
will be carried forward indefinitely.

As at June 30, 2008, the Company had accumulated net operating
loss carryforwards for Hong Kong tax purposes of approximately $5,395,294 that
are available to offset future taxable income. Realization of the net operating
loss carryforwards is dependent upon future profitable operations. Accordingly,
management has increased the valuation allowance by $651,592 in current period
to reduce the deferred tax asset of approximately $651,592 associated with the
net operating loss carryforwards to zero at June 30, 2008.

---

- 24 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 13. INCOME TAX (continued)

Additionally, as of June 30, 2008, the Company had accumulated
net operating loss carryforwards for Chinese tax purposes of approximately
$1,215,281. Realization of the Chinese tax net operating loss carryforwards is
dependent on future profitable operations, as well as a maximum five-year
carryforward period. Accordingly, management has recorded a valuation allowance
to reduce the deferred tax associated with the net operating loss carryforwards
to zero at June 30, 2008. These tax losses yield deferred tax assets of
approximately $1,215,831, as of June 30, 2008. The valuation allowance has
decreased approximately $13,803 from March 31, 2008 to June 30, 2008.

The components of loss before income tax and minority interests
are as follows:

Three MonthsEnded June 30,2008
      
      
      2007$
      
      
      $Hong Kong
      
      (912,071
      )
      
      (938,177
      )Macau
      
      (42,375
      )
      
      (88,204
      )Mainland, the PRC
      
      (46,905
      )
      
      (306,827
      )(1,001,351
      )
      
      (1,333,208
      )


Taxes laws applicable to the Company and its subsidiaries are
as follows:

- Tech Team Holdings Limited (TTHL) is a tax-exempted company
    incorporated in the Cayman Islands. From January 2008 onward, the tax exemption
    period ends, and TTHL will be subject to tax in respect of its assessable
    profits, if any.
- Under the current BVI law, Tech Team (China) Limiteds, Tech Team Investment
    Limiteds and Powerland Technology Limiteds income are not subject
    to taxation.
- Lightscape Technologies Inc. and Tomi Fuji Energy Pte. Limited also had
    no assessable profits earned or had tax losses brought forward to set off
    current period assessable profit during the periods presented.
- No provision for PRC income tax has been made as Tech Team Development (Zhuhai)
    Limited (TT (Zhuhai)) had no assessable profits earned during
    the three months ended June 30, 2008 and 2007. Preferential tax treatment
    has been agreed with the relevant tax authorities and TT(Zhuhai) is exempted
    from PRC income tax in the first two profitable years and is subject to half
    of the standard statutory tax rate of 15% in the subsequent three years. However,
    as TT (Zhuhai) derived no taxable profits since its commencement of operation,
    this preferential tax treatment had been expired and it will be required to
    pay a tax rate of 25% from January 2008 onward.
- Beijing Aihua New Enterprise Lighting Appliance Company Limited (“Beijing
    Aihua”) receives preferential tax treatment in the PRC from January
    2004. Bejing Aihua was fully exempt from income tax through December 31, 2005,
    and is subject to a 12% rate, which is half of the standard statutory tax
    rate of 24%, until December 2008. From January 2009 onward, Beijing Aihua
    will be subject to the statutory 25% tax rate.
- Beijing Illumination is a Hong Kong company which is subject to a tax on
    profits of 16.5% from April 1, 2008 onward.

---

- 25 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 13. INCOME TAX (continued)

- Lightscape Macau is a company incorporated in Macau Special Administrative
  Region, which is subjected to progressive tax rates at a rate of 12% in
  maximum.
- Other companies are dormant and had no assessable profits earned during
  the periods presented.

Income tax expense for the three months ended June 30, 2008 and
2007 represents the provision for income tax in the following jurisdictions:

Three MonthsEnded June 30,2008
      
      
      2007$
      
      
      $Current taxes:Hong Kong
      
      -
      
      
      -Macau
      
      -
      
      
      -Mainland, PRC
      
      -
      
      
      --
      
      
      -


NOTE 14. DISCONTINUED OPERATIONS

The Company accounts for its discontinued operations under the
provisions of SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, (SFAS 144). Accordingly, the results of operations and the
related charges for discontinued operations have been classified as (Loss) from
discontinued operations, net of income taxes on the accompanying Consolidated
Statements of Operations. Assets and liabilities of the discontinued operations
have been reclassified and reflected on the accompanying Consolidated Balance
Sheets as Assets of discontinued operations and Liabilities of discontinued
operations. For comparative purposes, all prior periods presented have been
restated to reflect the reclassifications on a consistent basis.

During the year ended March 31, 2008, in order to more
effectively utilize the financial and other resources within other business
units, including the LED outdoor advertising business and LED solutions
business, the Company decided to exit the energy-savings solutions business. No
further energy-savings products will be developed, nor will the Company provide
further energy management consulting services.

Remaining assets of the energy savings segment include only
certain receivables and lease receivables less unearned interests under
sales-type leases. Except for the collection of these receivables, the Company
will no longer have any significant continuing involvement in the energy-savings
segment. Therefore, the energy savings segment has been classified as
discontinued operations. In accordance with SFAS 144, the Company has reflected
results of the energy savings segment in the consolidated statement of
operations as discontinued operations for all periods presented. The operating
results and cash flows of discontinued operations for the three months ended
June 30, 2007 have been reclassified.

Furthermore, the Company has determined to dispose of
construction in progress that was to be used for the production of a proposed
product line of its lighting source business. This asset has been stated at fair
value less costs to sell and classified as discontinued operation on the
accompanying Consolidated Balance Sheets.

---

- 26 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 14. DISCONTINUED OPERATIONS (continued)

Revenues and net loss from discontinued operations of the
energy savings business and disposal of construction in progress is as follows:

|                                          |  | Three Months   |  
|----------------------------------------- |  | -------------- | -
|                                          |  | Ended June 30, |  
|                                          |  | 2008           |  
|                                          |  | $              |  
|Operating revenue                         |  | 1,494          |  
|                                          |  |                |  
|Pre-tax loss from discontinued operations |  | (13,946        | )
|Income tax expense                        |  | -              |  
|                                          |  |                |  
|Net loss from discontinued operations     |  | (13,946        | )

NOTE 15. CONCENTRATION OF CREDIT RISK

At March 31, 2008, and June 30, 2008, the Company has a credit
risk exposure of uninsured cash in banks of $3,928,790 and $4,392,161
respectively. The Company does not require collateral or other securities to
support financial instruments that are subject to credit risk.

The Company establishes an allowance for doubtful accounts
primarily based upon the age of the receivables and factors surrounding the
credit risk of specific customers.

For the three months ended June 30, 2008, one customer
accounted for approximately 14.8% of the Companys total revenues. As of June
30, 2008, there is one customer whose account receivable to the Company
accounted for 17.7% of total accounts receivable.

The Company relies on supplies from numerous vendors. For the
three months ended June 30, 2008, the Company had no vendor that accounted for
more than 10% of total supply purchases for the quarter.

The Companys business, assets and operations is currently
focused on the LED outdoor advertising business and the sales of LED solutions
and specialty lighting source products in Hong Kong, China and Macau, and
accordingly, is affected to a significant degree by any economic, political and
legal developments in Hong Kong, China and Macau.

NOTE 16. COMMITMENTS

The Company has operating lease agreements principally for its
office facilities and factory buildings. Such leases have remaining terms of
approximately 1 to 3 years. The following is a summary of future minimum lease
payments under operating leases as of June 30, 2008. Rental expense was $65,630
and $67,875 for the three months ended June 30, 2008 and 2007, respectively.

---

- 27 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 16. COMMITMENTS (continued)

Twelve months ending June 30,

|           |  | $       | 
|---------- |  | ------- | 
|2009       |  | 214,853 | 
|2010       |  | 102,426 | 
|2011       |  | 40,167  | 
|Thereafter |  | -       | 
|           |  | 357,446 | 

Royalties

Pursuant to a supplier agreement (the Agreement) dated March
8, 2006, entered into between Beijing Illumination and an independent third
party, the independent third party appointed Beijing Illumination as a
non-exclusive licensed OEM manufacturer with rights to make and distribute
certain products worldwide. Beijing Illumination shall pay to the independent
third party, during the term of the Agreement, 7% of gross revenues of certain
products sold to customers or distributors other than this independent third
party. Such royalty payments shall survive for five years after the termination
of the Agreement.

NOTE 17. RELATED PARTY BALANCES AND TRANSACTIONS

Related Party Transactions

In 2004, the Company acquired Tomi Fuji Energy Management
Services Limited (TFEMS) by issuing shares of its own stock to TFEMS holding
company, Tomi Fuji Corporation Limited (TFCL). The owner of TFCL guaranteed
certain net profits of TFEMS for the period from the date of acquisition in
early January 2005 to June 30, 2005 (the guaranteed period). TFEMS net
profits during the guarantee period fell short of the guaranteed amount by
approximately $605,000. Management is considering taking appropriate actions to
recoup the damages thereon from the guarantor.

The Company acquired Lightscape Macau in 2006 by payment of
$1,550 (Macau Pataca (MOP) MOP12,400) and issuance of 1,200,000 shares of the
Company upon the condition that Lightscape Macau would make a net profit of not
less than $2,564,103 (HK$20,000,000) for the period from October 1, 2006 to
September 30, 2007 (the guarantee period). Lightscape Macau had a loss during
the guaranteed period and management is taking action to cancel the 1,200,000
shares issued.

Related Party Balances

The amounts due to a director and a five percent beneficial
shareholder represent cash advances from them and are unsecured, non-interest
bearing and have no fixed repayment terms. The balances related to such advances
are as follows:

|                            |  | June 30, |  |  | March 31, | 
|--------------------------- |  | -------- |  |  | --------- | 
|                            |  | 2008     |  |  | 2008      | 
|                            |  | $        |  |  | $         | 
|                            |  |          |  |  |           | 
|Amount due to a director    |  | 488,432  |  |  | -         | 
|                            |  |          |  |  |           | 
|Amount due to a shareholder |  | 45,161   |  |  | 45,161    | 

---

- 28 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 18. SEGMENT INFORMATION

The Company is engaged in three main business segments: (i) LED
outdoor advertising, (ii) LED solutions and (iii) lighting source products.
These represent the Companys reportable segments.

The accounting policies of the operating segments are the same
as those described in the Summary of Principal Accounting Policies (see Note 2).
The Company evaluates performance based on profit or loss from operations,
excluding corporate, general and administrative expenses.

|                                                               |  | Three Months   |  
|-------------------------------------------------------------- |  | -------------- | -
|                                                               |  | Ended June 30, |  
|                                                               |  | 2008           |  
|                                                               |  | $              |  
|Segment revenues from external customers:                      |  |                |  
|LED outdoor advertising                                        |  | -              |  
|LED solutions                                                  |  | 663,900        |  
|Lighting source business                                       |  | 894,807        |  
|                                                               |  | 1,558,707      |  
|                                                               |  |                |  
|Operating losses:                                              |  |                |  
|LED outdoor advertising                                        |  | -              |  
|LED solutions                                                  |  | (908,963       | )
|Lighting source business                                       |  | (92,388        | )
|                                                               |  |                |  
|Loss from continuing operations before income tax and minority |  |                |  
|interests                                                      |  | (1,001,351     | )

---

- 29 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSJUNE
30, 2008

NOTE 18. SEGMENT INFORMATION (continued)

June 30,
    
    
    March 31,2008
    
    
    2008(Unaudited)
    
    
    (Audited)$
    
    
    $Segment assets:LED outdoor advertising
    
    43,413
    
    
    -LED solutions
    
    16,010,081
    
    
    17,333,269Lighting source business
    
    8,797,095
    
    
    8,193,45324,850,589
    
    
    25,526,722Assets of discontinued operations
    
    767,096
    
    
    826,36825,617,685
    
    
    26,353,090


Geographical Information:

Three MonthsEnded June 30,2008
      
      
      2007$
      
      
      $Total sales:Mainland, the PRC
      
      645,646
      
      
      734,548Hong Kong
      
      650,751
      
      
      1,445India
      
      26,001
      
      
      17,764Mexico
      
      230,407
      
      
      -Others
      
      5,901
      
      
      61,1391,558,706
      
      
      814,896


The location of the Companys long-lived assets is as follows:

June 30,
    
    
    March 31,2008
    
    
    2008(Unaudited)
    
    
    (Audited)$
    
    
    $Hong Kong
    
    6,105,097
    
    
    6,805,936Mainland, the PRC
    
    4,617,522
    
    
    4,147,67110,722,619
    
    
    10,953,607


---

- 30 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE
30, 2008

NOTE 19. WARRANTS

In connection with the placement of 9,375,000 shares completed
on March 17, 2008, the Company issued warrants to Roth Capital Partners, LLC,
the placement agent, to purchase up to 656,250 shares of the Companys common
stock (representing 7% of the shares placed) as compensation for its placement
services. The warrants have a term of five years, are exercisable immediately
upon issuance and have an exercise price of $0.80 per share.

The warrants have been accounted for as common stock warrants
at fair value in the amount of $344,673, which forms part of shareholders
equity, with the corresponding charge debited directly to additional paid-in
capital, for the year ended March 31, 2008. The valuation was performed by an
independent qualified appraiser in accordance with Generally Accepted Valuation
Methodologies, including but not limited to, the discounted cash flow method,
the Black-Scholes-Merton option pricing model, and the Binomial option model, as
required by SFAS No. 123 (revised 2004) (SFAS No. 123R) Share-based payment
issued by the FASB.

The following key valuation parameters have been used in
assessing the fair value of the warrants:

|Parameter               | As of March 31, 2008      
|----------------------- | --------------------------
|Stock price             | $1.11                     
|Exercise price          | $0.80                     
|Risk-free rate          | 2.44%                     
|Nature of the warrants  | Call                      
|Expected life           | 5 years                   
|Expected volatility     | 112.62%                   
|Expected dividend yield | 0.00%                     
|Early exercise behavior | 150% of the exercise price

---

- 31 -

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

FORWARD-LOOKING STATEMENTS

Forward-Looking Statements

This
quarterly report contains forward-looking statements as that term is defined in
Section 27A of the United States Securities Act of 1933 and Section 21E of the
United States Securities Exchange Act of 1934. These statements relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as may, should, intends,
expects, plans, anticipates, believes, estimates, predicts,
potential, or continue or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled Risk Factors, which may cause our or our industrys actual results,
levels of activity or performance to be materially different from any future
results, levels of activity or performance expressed or implied by these
forward-looking statements.

Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity or
performance. Except as required by applicable law, including the securities laws
of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.

In
this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to common shares refer
to the common shares in our capital stock. Our financial statements are prepared
in accordance with generally accepted accounting principles in the United States
of America.

As
used in this quarterly report and unless otherwise indicated, the terms we,
us and our refer to Lightscape Technologies Inc. and our subsidiaries.

Company Overview

We
were incorporated under the laws of the State of Nevada under the name Legacy
Bodysentials Inc. on September 14, 1995. On September 25, 1996, we changed our
name to Legacy Minerals Inc. and on May 18, 1998, we changed our name to
Global Commonwealth Inc. On November 12, 1999, we changed our name to Global
Innovative Systems Inc. and on April 20, 2007, we changed our name to
Lightscape Technologies Inc. The name change became effective with NASDAQs
OTC Bulletin Board at the opening for trading on April 23, 2007 under the new
stock symbol LTSC.

We
are a holding company owning subsidiaries engaged in three main business
activities: (i) light-emitting diode (LED) outdoor advertising, (ii) LED
solutions and (iii) lighting source products.

LED Outdoor Advertising Business

We
design, install and operate LED outdoor advertising billboards. We anticipate
greater activity in the LED outdoor advertising business upon the completion of
a joint venture agreement dated February 12, 2008 with Beijing Xintong Media
& Cultural Development Co. Ltd. We expect the joint venture agreement to
close in late August 2008.

***LED Solutions Business***

We
operate in three principal lines of the LED products and services industry: (i)
LED Systems, (ii) original equipment manufacturing (OEM) and Licensing, and
(iii) LED Screen Rental Service. We provide design, installation and digital
control of LED video and lighting systems; OEM and licensing of our proprietary
digital controller software system; and rentals of LED screens and related
hardware.

---

- 32 -

Lighting Source Products Business

Through
our 76.8% ownership of Beijing Illumination (Hong Kong) Limited (Beijing
Illumination), we research, develop, manufacture and sell lighting source
products. Beijing Illumination, through its wholly-owned subsidiary Beijing
Aihua New Enterprise Lighting Appliance Company Limited (Beijing Aihua),
manufactures and sells the following four main categories of high-intensity
discharge (HID) lighting products: (i) metal halide lamps; (ii) high-pressure
sodium lamps; (iii) xenon lamps; and (iv) special application HID lamps. In
addition to HID lamps, Beijing Illumination has expanded its product mix into
ultra high-pressure mercury lamps.

Material Trends and Uncertainties

Periodic
changes occur in our companys industry and business that make it reasonably
likely that aspects of our future operating results will be materially different
from our historical operating results. Sometimes these matters have not
occurred, but their existence is sufficient to raise doubt regarding the
likelihood that historical operating results are an accurate gauge of future
performance. Our company attempts to identify and describe these trends, events,
and uncertainties to assist investors in assessing the likely future performance
of our company. Investors should understand that these matters typically are
new, sometimes unforeseen, and often are fluid in nature. Moreover, the matters
described below are not the only issues that may result in variances between
past and future performance nor are they necessarily the only material trends,
events, and uncertainties that will affect our company. As a result, investors
are encouraged to use this and other information to judge for themselves the
likelihood that past performance will be indicative of future performance.

We
are building an LED outdoor advertising network in the Peoples Republic of
China (China or the PRC), Hong Kong and other areas of Asia. Following the
acquisition of Lightscape Technologies (Macau) Limited (Lightscape Macau) in
2006, our company entered the LED solutions business, which includes the design,
supply and build of LED systems, OEM and licensing of our proprietary
intelligent lighting control software, and rental of LED hardware. Our current
business strategy is focused on (i) building and expanding our LED outdoor
advertising network through existing partnerships and by establishing new
partnerships with major property owners and developers in Asia, (ii)
establishing advertising sales channels for our LED outdoor advertising network
by forming strategic partnerships with advertising agencies and (iii) growing
sales from our LED solutions business, primarily our LED systems segment,
through design, supply and build contracts with high-end real estate
developments in China, Hong Kong, Singapore and other areas of Asia. The future
performance of these specific business segments may materially affect the future
performance of our company. Our company continues to develop, manufacture and
sell lighting source products. However, we are reviewing our plans and strategic
options related to this business unit. Our company has identified this shift in
strategic business focus away from lighting source products and energy-savings
solutions towards LED outdoor advertising and LED solutions as a trend that is
reasonably likely to materially affect the comparison of historical operating
results reported herein to either past period results or to future operating
results.

Summary of Key Results

Total
net revenue for the three months ended June 30, 2008 was $1,558,707 which
represents a 91% increase from the total net revenue of $814,896 for the three
months ended June 30, 2007.

Operating
expenses, consisting of selling and marketing expenses and general and
administrative expenses, for the three months ended June 30, 2008 were
$1,132,101 which represents a 31% increase over operating expenses of $867,176
for the three months ended June 30, 2007.

Basic
loss per share for the three months ended June 30, 2008 was $0.02 compared to a
basic loss per share of $0.04 for the three months ended June 30, 2007. Fully
diluted loss per share for the three months ended June 30, 2008 was $0.02
compared to a loss per share of $0.04 on a fully diluted basis for the three
months ended June 30, 2007.

---

- 33 -

Results of Operations - Three Months Ended June 30, 2008

Our
net loss for the three months ended June 30, 2008 was $993,861 compared to a net
loss of $1,319,972 for the three months ended June 30, 2007, a decrease of
$326,111 or 25%. The decrease in net loss is primarily attributable to the
increase in sales and contract revenue from LED solutions and lighting source
products during the three months ended June 30, 2008 compared to the three
months ended June 30, 2007.

Revenues and Cost of Revenues

Total
net revenue for the three months ended June 30, 2008 was $1,558,707 representing
a 91% increase from the total net revenue of $814,896 for the three months ended
June 30, 2007. The increase in net revenues is primarily attributable to the
increase in sales and contract revenue of LED solutions by subsidiary Lightscape
Technologies (Greater China) Limited and the increase in sales of lighting
source products by subsidiary Beijing Illumination.

Specifically,
sales and contract revenue related to our LED solutions business increased to
$652,949 for the three months ended June 30, 2008 from $nil during the three
months ended June 30, 2007. The increase in revenues was due primarily to the
completion of several new LED solutions contracts during the three months ended
June 30, 2008. Our LED solutions business is expected to contribute increased
revenues in the foreseeable future as several key projects are expected to be
initiated in the near future.

Sales
from our lighting source products business derived from Beijing Illumination
were $894,806 for the three months ended June 30, 2008 compared to $804,579 for
the three months ended June 30, 2007, representing an increase of 11%. The
increase in revenues from Beijing Illumination was due primarily to the effect
of the companys change of local senior executives and internal restructuring
during the three months ended June 30, 2008. The purpose of the changes and
restructuring was to reduce manufacturing costs and foster the companys sales
and marketing network in China. Revenues from sales of lighting source products
are expected to continue to increase in the foreseeable future following the
completion of the internal restructuring initiatives. We are currently reviewing
our plans and strategic options related to our lighting source products
business.

Total
cost of revenues for the three months ended June 30, 2008 was $1,126,968 which
represents an increase of 79% as compared with the total cost of revenues of
$628,090 for the three months ended June 30, 2007. The increase in the total
cost of revenues during the three months ended June 30, 2008 was directly
associated with the corresponding increase in sales revenues.

Amortization of Intangible Assets

Our
company acquired certain intangible assets through the acquisitions of Tomi Fuji
Energy Management Services Limited (TFEMS) and Beijing Illumination. These
intangible assets are comprised of completed technology for the production of
Aihua Ultra-High Pressure Mercury (AHP) and HID lamps, trademarks, a customer
base and a distributors list. Amortization of intangible assets incurred for the
three months ended June 30, 2008 was $205,653 as compared to $187,226 for the
three months ended June 30, 2007.

Operating Expenses

Operating
expenses for the three months ended June 30, 2008 were $1,132,101 which
represents a 31% increase in operating expenses over $867,176 for the three
months ended June 30, 2007. Selling and marketing expenses as well as general
and administrative expenses constitute the components of our operating expenses.

Selling
and marketing expenses for the three months ended June 30, 2008 decreased
approximately 19% to $163,975 from $195,307 for the three months ended June 30,
2007. The decrease was mainly due to decreased advertising expenses and staff
costs. Our company anticipates that selling and marketing expenses will remain
steady or increase in the future to support our companys further expansion in
the LED outdoor advertising and LED solutions businesses.

---

- 34 -

General
and administrative expenses increased by 23% during the three months ended June
30, 2008 to $936,794 from $758,800 for the three months ended June 30, 2007. The
increase was mainly due to increased staff and business development costs for
the three months ended June 30, 2008 to provide the foundation to support our
anticipated overall business growth, particularly our LED outdoor advertising
and LED solutions businesses. These increases were partially offset by decreases
in staff and business development costs by subsidiary Beijing Illumination. Our
company anticipates that general and administrative costs will continue to
increase in the foreseeable future as our companys operations continue to
expand.

Liquidity and Capital Resources

Our
principal cash requirements are for operating expenses, including staff costs
and funding costs of inventory.

As
of June 30, 2008, our company had a net working capital surplus of $10,858,780
compared with a surplus of $11,490,237 as of March 31, 2008, representing a
decrease in working capital of $631,457. The cash and cash equivalents of our
company increased to $4,438,936 as at June 30, 2008 as compared to $3,976,565 as
of March 31, 2008. As of June 30, 2008, our company has not obtained any credit
facilities.

Cash Flow Related to Operating Activities

Operating
activities provided cash of $72,707 for the three months ended June 30, 2008 as
compared to operating activities using cash of $2,323,102 for the three months
ended June 30, 2007. The increase in cash provided by operating activities was
mainly due to the increase in revenues and corresponding decrease in net loss
from continuing operations and a decrease in accounts receivables during the
three months ended June 30, 2008 as compared to three months ended June 30,
2007.

Cash Flow Related to Investing Activities

Net
cash used in investing activities amounted to $2,814 during the three months
ended June 30, 2008 as compared with investing activities using cash of $89,384
during the three months ended June 30, 2007. The decrease in cash used in
investing activities is attributable primarily to decreased purchases of plant,
equipment and intangible assets during the three months ended June 30, 2008 as
compared to the three months ended June 30, 2007.

Our
company incurred capital expenditures of $2,814 during the three months ended
June 30, 2008 and $90,174 for the three months ended June 30, 2007. The decrease
in capital expenditures for the three months ended June 30, 2008 as compared to
June 30, 2007 was mainly attributable to decreased purchases of equipment. As of
June 30, 2008, our company did not have any material commitments for capital
expenditures and management does not anticipate that our company will spend
additional material amounts on capital expenditures in the near future.

Cash Flow Related to Financing Activities

Financing
activities generated cash of $487,978 for the three months ended June 30, 2008
as compared to financing activities using cash of $1,109 for the three months
ended June 30, 2007. The increase in net cash flow generated by financing
activities was mainly due to increase in advance from a director of our company
during the three months ended June 30, 2008 as compared to the three months
ended June 30, 2007.

Off-Balance Sheet Arrangements

Our
company has no outstanding derivative financial instruments, off-balance sheet
guarantees, interest rate swap transactions or foreign currency contracts. Our
company does not engage in trading activities involving non-exchange traded
contracts.

---

- 35 -

Item 3. Quantitative and Qualitative Disclosures About
Market Risk.

Not
  applicable.

Item 4T. Controls and Procedures.

As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered by this quarterly report, being June 30, 2008, we have
carried out an evaluation of the effectiveness of the design and operation of
our companys disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of our management,
including our Chief Executive Officer. Based upon that evaluation, our Chief
Executive Officer concluded that our disclosure controls and procedures are
effective as at the end of the period covered by this report. There have been no
significant changes in our internal controls over financial reporting that
occurred during our most recent fiscal quarter ended June 30, 2008 that have
materially affected, or are reasonably likely to materially affect our internal
controls over financial reporting.

Disclosure
controls and procedures and other procedures that are designed to ensure that
information required to be disclosed in our reports filed or submitted under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported,
within the time period specified in the Securities and Exchange Commissions
rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in our reports filed under the Securities Exchange Act of 1934 is
accumulated and communicated to management, including our Chief Executive
Officer to allow timely decisions regarding required disclosure.

Our
management, including our Chief Executive Officer and Chief Accounting Officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of the
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within our company have been detected.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We
know of no material, active, or pending legal proceeding against our company,
nor are we involved as a plaintiff in any material proceeding or pending
litigation where such claim or action involves damages for more than 10% of our
current assets as of June 30, 2008. There are no proceedings in which any of our
companys directors, officers, or affiliates, or any registered or beneficial
shareholders, is an adverse party or has a material interest adverse to our
companys interest.

Item 1A. Risk Factors.

Much
of the information included in this quarterly report includes or is based upon
estimates, projections or other forward-looking statements. Such forward-looking
statements include projections or estimates made by us and our management in
connection with our business operations. While these forward-looking statements,
and any assumptions upon which they are based, are made in good faith and
reflect our current judgment regarding the direction of our business, actual
results will almost always vary, sometimes materially, from any estimates,
predictions, projections, assumptions or other future performance suggested
herein.

Such
estimates, projections or other forward-looking statements involve various risks
and uncertainties as outlined below. We caution the reader that important
factors in some cases have affected and, in the future, could materially affect
actual results and cause actual results to differ materially from the results
expressed in any such estimates, projections or other forward-looking
statements. Prospective investors should consider carefully the risk factors set
out below.

---

- 36 -

Risks Related to Our Business

Our limited operating history makes it difficult to evaluate
our future prospects and results of operations.

We
have a limited operating history. Accordingly, you should consider our future
prospects in light of the risks and uncertainties experienced by early stage
companies in evolving markets such as the growing market for LED outdoor
advertising and LED systems inthe PRC. Some of these risks and
uncertainties relate to our ability to:

- attract new customers and increased spending per customer;
- increase awareness of our brand and continue to develop customer loyalty;
- respond to competitive market conditions;
- respond to changes in our regulatory environment;
- manage risks associated with intellectual property rights;
- maintain effective control of our costs and expenses;
- raise sufficient capital to sustain and expand our business; and
- attract, retain and motivate qualified personnel.

If
we are unsuccessful in addressing any of these risks and uncertainties, our
business may be materially and adversely affected.

We may require additional financing, the availability of
which cannot be assured, and if our company is unable to obtain such financing,
our business may fail.

Our
business plan calls for expenses, working capital and capital expenditures
necessary to continue the build-up of our LED outdoor advertising network and to
complete supply and build contracts for LED systems. However, there is no
assurance that actual cash requirements will not exceed our estimates. We may
need to raise additional funds to:

- support our planned rapid growth;
- develop new or enhanced services and technologies;
- increase our marketing efforts;
- acquire complementary businesses or technologies; and/or
- respond to competitive pressures or unanticipated requirements.

We
  depend to a large extent on outside capital over the near-term to fund our capital
  needs. Such outside capital may be obtained from additional debt or equity financing.
  We do not currently have any arrangement for financing and there is no assurance
  that capital will be available to meet our continuing development costs or,
  if the capital is available, that it will be on terms acceptable to us. The
  issuance of additional equity securities by us would result in a dilution in
  the equity interests of our current stockholders. Obtaining commercial loans,
  assuming those loans would be available, would increase our liabilities and
  future cash commitments. If we are unable to obtain financing in the amounts
  and on terms deemed acceptable to us, we may be unable to implement our business
  and growth strategies, respond to changing business or economic conditions,
  withstand adverse operating results, consummate desired acquisitions or compete
  effectively.

---

- 37 -

Our operations are cash intensive and our business could be adversely affected
  if we fail to maintain sufficient levels of working capital.

We
expend a significant amount of cash in our operations, principally to fund our
procurement of LED-based hardware. Our suppliers typically require payment in
full within 30-60 days after delivery, although some of our suppliers provide us
with credit. In turn, we typically require our customers to make payment in full
on delivery, although we offer some of our long-standing customers credit terms.
We generally fund most of our working capital requirements out of cash flow
generated from operations. If we fail to generate sufficient revenues from our
sales, or if we experience difficulties collecting our accounts receivable, we
may not have sufficient cash flow to fund our operating costs and our
profitability could be adversely affected.

Our operating results may fluctuate from period to period
and if we fail to meet market expectations for a particular period, our share
price may decline.

Our
operating results have fluctuated from period to period and are likely to
continue to fluctuate as a result of a wide range of factors, including a
historical reliance on non-recurring revenue streams. For example, our provision
of LED systems generally consists of large-scale, one-off supply and build
contracts completed for large property developments. Interim reports may not be
indicative of our performance for the year or our future performance, and
period-to-period comparisons may not be meaningful due to a number of reasons
beyond our control. We cannot assure you that our operating results will meet
the expectations of market analysts or our investors. If we fail to meet their
expectations, there may be a decline in our share price.

If there are any interruptions to or a decline in the
quality of our LED hardware supply channels, our sales could be materially and
adversely affected.

LED
video screens, modules and lighting hardware are the principal component parts
used in our sales. We procure all of our LED hardware from a number of
third-party manufacturers. Our third-party suppliers may not continue to be able
to provide an adequate supply of LED hardware to satisfy our present and future
sales needs. The supply of LED video screens, modules and lighting hardware is
dependent on the output of OEM LED manufacturers. Our current suppliers may not
be able to provide LED video screens, modules and lighting hardware of
sufficient quality to meet our quality control requirements. Any interruptions
to or decline in the amount or quality of our LED hardware supply could
materially disrupt our sales and adversely affect our business. We are
vulnerable to increases in the price of raw materials (particularly of LED
modules and video screens) and other operating costs. If the costs of raw
materials or other costs of sales and distribution of our products and services
increase, and we are unable to entirely offset these increases by raising prices
of our products and services, our profit margins and financial condition could
be adversely affected.

We operate in a highly-competitive industry and our failure
to compete effectively may adversely affect our ability to generate revenue.

Management
is aware of similar products and services which compete directly with our LED
outdoor advertising and LED systems, and some of the companies developing and
offering these similar products and services have greater financial, technical
and marketing resources, larger LED outdoor advertising and LED system
distribution networks, and greater brand name recognition than we do. These
companies may develop products and services superior to those of our company.
Such competition will potentially affect our chances of achieving profitability
in the future.

This
may place us at a disadvantage in responding to our competitors pricing
strategies, technological advances, marketing campaigns, alliances and other
initiatives. Some of our competitors conduct more extensive promotional
activities and offer lower prices to customers than we do, which could allow
them to gain greater market share or prevent us from increasing our market
share. In the future, we may need to decrease our prices if our competitors
continue to lower their prices. Our competitors may be able to respond more
quickly to new or changing opportunities, technologies and customer
requirements. Further, to the extent our competitors are able to attract and
retain customers based on product and/or price advantages, our business and
ability to grow could be adversely affected in a material manner. To be
successful, we must establish and strengthen our brand awareness, effectively
differentiate our product and service lines from those of our competitors and
build our strategic partnerships. To achieve this we may have to substantially
increase marketing activities and expenses in order to compete effectively.

---

- 38 -

Our failure to maintain existing relationships or to obtain
new relationships with companies that allow us to access desirable locations
where we plan to operate our LED outdoor advertising billboards could harm our
growth potential and our ability to increase our revenues.

Our
ability to generate future revenues from LED outdoor advertising sales depends
largely upon our ability to secure desirable locations for the installation and
operation of our large-scale outdoor LED billboards. This, in turn, requires
that we develop and maintain joint venture, strategic and/or other business
relationships with property owners and developers which own the targeted
locations suitable to place our LED billboards. If we are unable to maintain our
existing relationships or to form new relationships with property owners and
developers, our ability to install and operate LED outdoor billboards would be
negatively impacted. In turn, advertisers may not find advertising on our LED
outdoor advertising attractive and may not wish to purchase advertising time
slots on our network, which would have a material negative impact on our ability
to grow future revenues.

If we are unable to attract advertisers to advertise on the
LED outdoor advertising network we are building, we will be unable to generate
advertising fees, which could negatively affect our ability to grow
revenues.

The
fees we can charge advertisers for time slots on our LED billboard network
depends on the size and quality of our LED billboard network and the demand by
advertisers for advertising time on our network. Advertisers will choose to
advertise on our LED network in part based on the size of our network and the
desirability of the locations where we operate our LED outdoor billboards. If we
fail to maintain or to increase the number of locations and LED billboards in
our network, advertisers may be unwilling to purchase time on our network which
could negatively affect our ability to grow our revenues in the future.

We may be subject to government actions based on the content
displayed on and the locations of the LED billboards in the LED outdoor
advertising network we are building in China.

In
China, The Outdoor Advertising Registration Administrative Regulations stipulate
that outdoor advertisements in China must be registered with the local State
Administration for Industry and Commerce (SAIC), before dissemination.
Advertising distributors are required to submit a registration application form
and other supporting documents for registration, including the content of the
proposed outdoor advertisement. Our company, our subsidiaries and/or our joint
venture company have obtained or are in the process of obtaining such Outdoor
Advertising Registration Certificates for the advertisements displayed and
intended to be displayed on our LED outdoor advertising billboards. However, we
may be subject to government action if advertisements shown on our outdoor LED
network are in violation of relevant PRC advertising laws and regulations or
that the advertisements broadcast on our network have not received required
approval from the relevant local supervisory bodies.

In
addition, the placement and installation of LED billboards in China is subject
to municipal zoning laws and governmental approvals. Our company, our
subsidiaries and/or our joint venture company have obtained or are in the
process of obtaining such municipal government approvals for each of our LED
outdoor advertising billboards currently installed or planned to be installed in
the PRC. If our existing or future LED billboards are installed in violation of
municipal zoning laws or without the required government approvals and are
required to be removed, it would diminish the attractiveness of our LED outdoor
advertising network for advertisers and adversely affect our ability to sell
advertising space on our network which would in turn adversely affect our
ability to grow future revenues.

Rapid technological changes in our industry could render our
products non-competitive or obsolete and consequently affect our ability to
generate revenues.

Currently,
we derive a majority of our revenues from the sale of LED systems and lighting
source products. We expect to derive a greater proportion of future revenues
from our LED outdoor advertising business. Each of these industries in which we
are active are characterized by rapid technological change, new products and
services, new sales channels, evolving industry standards and changing client
preferences. Our success will depend, in part, upon our ability to make timely
and cost-effective enhancements and additions to our technology and to introduce
new products and services that meet customer demands. We expect new products and
services to be developed and introduced by other companies that compete with our
products and services. The proliferation of new LED products and

---

- 39 -

services in our markets may reduce demand for our LED products
and services. In addition, the rapid technological advancements in HID lighting
products may render our current lighting source products obsolete. There can be
no assurance that we will be successful in responding to these or other
technological changes, to evolving industry standards or to new products and
services offered by our current and future competitors. In addition, we may not
have access to sufficient capital for our research and development needs in
order to develop new products and services.

We could lose our competitive advantages if we are not able
to protect our proprietary technology and intellectual property rights against
infringement, and any related litigation could be time-consuming and costly.

Our
success and ability to compete depends in part on our proprietary technology
incorporated in our products and solutions, such as our Multimedia and Video
Show Control System used for the authoring, control and playback of content on
our LED advertising billboards and LED systems. If any of our competitors copy
or otherwise gain access to our proprietary technology or develop similar
technologies independently, we would not be able to compete as effectively. We
consider our patents and trademarks invaluable to our ability to continue to
develop and maintain the goodwill and recognition associated with our brands.
The measures we take to protect the proprietary technology, and other
intellectual property rights, which presently are based upon a combination of
patent, trademark and trade secret laws, may not be adequate to prevent their
unauthorized use. Further, the laws of foreign countries may provide inadequate
protection of such intellectual property rights. We may need to bring legal
claims to enforce or protect such intellectual property rights. Any litigation,
whether successful or unsuccessful, could result in substantial costs and a
diversion of corporate resources. In addition, notwithstanding any rights we
have secured to our intellectual property, other persons may bring claims
against us claiming that we have infringed on their intellectual property
rights, including claims that our intellectual property rights are not valid.
Any claims against us, with or without merit, could be time-consuming and costly
to defend or litigate, divert our attention and resources, result in the loss of
goodwill associated with our trademarks or require us to make changes to our
technologies.

We may not be able to hire and retain qualified personnel to
support our growth and if we are unable to retain or hire such personnel in the
future, our ability to improve our products and implement our business
objectives could be adversely effected.

To
continue our growth, we will need to recruit additional senior management
personnel, including persons with financial and sales experience. In addition,
we must hire, train and retain a number of other skilled personnel, including
persons with experience in LED system design, creative lighting design,
development of intelligent LED control software, electrical engineering and
operations. Intense competition for these personnel could cause our compensation
costs to increase significantly, which could have a material adverse effect on
our results of operations. Our future success and ability to grow our business
will depend in part on the continued service of these individuals and our
ability to identify, hire and retain additional qualified personnel. If we are
unable to attract and retain qualified employees, we may be unable to meet our
business and financial goals.

We
are highly dependent on our senior management to manage our business and
operations. In particular, we rely substantially on our chief executive officer,
Mr. Bondy Tan, to manage our operations. In addition, we also rely on design,
engineering, sales and marketing personnel with technical and industry knowledge
to market, sell and install our products and services. We do not maintain key
man life insurance on any of our senior management or key personnel. The loss of
any one of them, in particular Mr. Tan, would have a material adverse effect on
our business and operations. Competition for senior management personnel is
intense and the pool of suitable candidates is limited. We may be unable to
locate a suitable replacement for any senior management personnel that we lose.
In addition, if any member of our senior management joins a competitor or forms
a competing company, they may compete with us for customers, business partners
and other key professionals and staff members of our company.

Our company is subject to sales channel risk due to a
concentration of sales to a limited number of customers and any significant
interruption from these customers may have a material adverse effect on our
company.

Approximately
14.8% of our revenue was contributed from one customer for the three months
ended June 30, 2008. If this or any of our customers ceased doing business with
our company, we would

---

- 40 -

require time to find other customers. If we lose these
customers or are unable to generate recurring revenues from these customers,
there would be a negative impact on our overall performance. We have not entered
into long-term supply contracts with any of these major customers. Therefore,
there can be no assurance that we will maintain or improve the relationships
with these customers, or that we will be able to continue to supply these
customers at current levels or at all. If we cannot maintain long-term
relationships with our major customers, the loss of a significant portion of our
sales to them could have an adverse effect on our business, financial condition
and results of operations.

Our growth could be impaired if we do not successfully
handle certain risks associated with international business.

There
are risks inherent in doing business in international markets, including:

- fluctuations in currency exchange rates;
- difficulties in staffing and managing foreign operations;
- changes in regulatory requirements, tariffs and other trade barriers;
- potential adverse tax consequences; and
- inadequate protection for intellectual property rights.

One
or more of these factors may make it difficult for us to fully implement our
international business strategies and may have a material adverse effect on our
current or future international operations.

We derive a substantial portion of our revenues from sales
in the PRC and any downturn in the Chinese economy could have a material adverse
effect on our business and financial condition.

A
substantial portion of our revenues are generated from sales in the PRC. We
anticipate that revenues from sales of our products and services in the PRC will
continue to represent a substantial proportion of our total revenues in the near
future. Any significant decline in the condition of the PRC economy could, among
other things, adversely affect consumer buying power and discourage the purchase
of our products and services, which in turn would have a material adverse effect
on our revenues and profitability.

Any changes in the political and economic policies of, or
any new regulations implemented by, the Chinese government could affect, or even
restrict, the operation of our business and our ability to generate revenues.

Our
business is currently focused on the sale of LED outdoor advertising and LED
products and services in China. Accordingly, our business, results of operations
and financial condition are affected to a significant degree by any economic,
political and legal developments in China.

Since
the late 1970s, the Chinese government has been reforming its economic system.
Although we believe that economic reform and the macroeconomic measures adopted
by the Chinese government has had and will continue to have a positive effect on
the economic development in China, there can be no assurance that the economic
reform strategy will not from time to time be modified or revised. Some
modifications or revisions, if any, could have a material adverse effect on the
overall economic growth of China and the development of specialty lighting
products and services in China. Any such changes would have a material adverse
effect on our business. Furthermore, there is no guarantee that the Chinese
government will not impose other economic or regulatory controls that would have
a material adverse effect on our business. Any changes in the political,
economic and social conditions in China, adjustments in policies by the Chinese
government or changes in laws and regulations on the sale of LED outdoor
advertising or LED products and services could affect the manner in which we
operate our business and restrict or prohibit transactions initiated or
conducted by our company. Any such changes or new regulations could affect our
ability to develop and sell our products and therefore affect our ability to
generate revenues.

---

- 41 -

Our company is subject to foreign exchange rate risk,
particularly fluctuations in the exchange rate between Chinese Renminbi and
United States dollars.

Our
company may enter sales transactions denominated in Chinese Renminbi. The PRC
State Administration for Foreign Exchange, under the authority of the Peoples
Bank of China, controls the conversion of Renminbi into foreign currencies. The
principal regulation governing foreign currency exchange in China is the Foreign
Currency Administration Rules (1996), as amended. Under the Rules, once various
procedural requirements are met, Renminbi is convertible for current account
transactions, including trade and services, but not for capital account
transactions, including direct investment, loan or investment in securities
outside China, unless the prior approval of the State Administration of Foreign
Exchange of the PRC is obtained. Although the Chinese government regulations now
allow greater convertibility of Renminbi for current account transactions,
significant restrictions still remain.

The
value of the Renminbi is subject to changes in Chinas central government
policies and to international economic and political developments affecting
supply and demand in the China Foreign Exchange Trading System market. Since
1994, the conversion of Renminbi into foreign currencies, including United
States dollars, has been based on rates set by the Peoples Bank of China, which
are set daily based on the previous days interbank foreign exchange market
rates and current exchange rates on the world financial markets. Since 1994, the
official exchange rate generally has been stable, but the Chinese government
recently announced that it will no longer measure its currency exclusively to
the United States dollar but will switch to a managed floating exchange rate
based on market supply and demand with reference to a basket of currencies yet
to be named by the Peoples Bank of China, which will likely increase the
volatility of Renminbi as compared to United States dollars.

Our
company has experienced minimal foreign exchange gains and losses to date due to
the relative stability of the Renminbi. We do not know what affect, if any, the
decoupling of the Renminbi from the United States dollar will have on our
financial statements and results of operations. We do not currently engage in
hedging activities to reduce our exposure to exchange rate fluctuation.

New or changing government policies or regulations related
to the LED outdoor advertising or LED products and services industries in our
markets may have an adverse effect on our operations and may require our company
to modify our business plan.

Our
management oversees trends in our market industries by accessing available
market information, including updated governmental policies and regulations
related to such industries from time to time, particularly the LED outdoor
advertising industry in China. Both short and long-term changes in governmental
policies or regulations affecting the LED outdoor advertising or LED products
and services industries may trigger our company to take appropriate measures to
re-position our company to achieve our business plan or alter the business plan
as a whole. We cannot assure that our company will be able to adapt to changing
policies and regulations efficiently in order to maintain the currently
anticipated level of business, results of operations or financial condition.

If LED-based hardware does not achieve greater market
acceptance, prospects for our growth and profitability may be limited.

Our
companys future success depends on increased market acceptance of LED-based
hardware. Potential customers for LED-based hardware may be reluctant to adopt
LED video and lighting hardware as an alternative to traditional light source
technology because of its higher initial cost and relatively low light output in
comparison with the most powerful traditional lighting sources, or because of
perceived risks relating to LED technologys novelty, complexity, reliability
and quality, usefulness and cost-effectiveness when compared to other lighting
sources available in the market. These factors could adversely affect demand for
our companys LED outdoor advertising billboards and/or our LED systems. If
acceptance of LED-based hardware does not continue to grow, opportunities to
increase our revenues and operate profitably may be limited.

If advances in LED technology do not continue, we may be
unable to increase our penetration of our existing markets or expand into new
markets.

Our
company does not design or manufacture LEDs or individual LED modules. Our
ability to continue penetrating our existing markets and to expand into new
markets depends on continued

---

- 42 -

advancements in the design and manufacture by others of LEDs
and LED modules. In the LED outdoor billboard advertising and high-performance
LED color lighting markets that we currently serve, we rely on continued
improvements in the brightness, efficiency and initial cost of color LEDs. The
continued development of LED technologies depends on other companies research
and is out of our control. If advancements in LED technologies occur at a slower
pace than we anticipate, or fail to occur at all, we may be unable to penetrate
additional markets, our revenues would be significantly reduced, and our future
prospects for success may be harmed.

If we fail to develop and maintain an effective system of
internal controls, we may not be able to accurately report our financial results
or prevent fraud; as a result, current and potential shareholders could lose
confidence in our financial reports, which could harm our business and the
trading price of our common stock.

Effective
internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002
requires us to evaluate and report on our internal controls over financial
reporting beginning with our annual report on Form 10-KSB for the fiscal year
ended March 31, 2008. The process of strengthening our internal controls and
complying with Section 404 is expensive and time consuming, and requires
significant management attention. We cannot be certain that the measures we
undertake will ensure that we will maintain adequate controls over our financial
processes and reporting in the future. Furthermore, if we are able to rapidly
grow our business, the internal controls that we will need will become more
complex, and significantly more resources will be required to ensure our
internal controls remain effective. Failure to implement required controls, or
difficulties encountered in their implementation, could harm our operating
results or cause us to fail to meet our reporting obligations. If we or our
auditors discover a material weakness in our internal controls, the disclosure
of that fact, even if the weakness is quickly remedied, could diminish
investors confidence in our financial statements and harm our stock price. In
addition, non-compliance with Section 404 could subject us to sanctions by the
Securities and Exchange Commission, lawsuits, delisting by SROs and/or an
assignment of higher risks by investors, which would further reduce our stock
price.

Most of our assets and all of our directors and officers are
outside the United States, with the result that it may be difficult for
investors to enforce within the United States any judgments obtained against us
or any of our directors or officers.

Although
we are organized under the laws of the State of Nevada, our principal executive
office is located in Hong Kong. Outside the United States, it may be difficult
for investors to enforce judgments against us obtained in the United States in
any such actions, including actions predicated upon civil liability provisions
of federal securities laws. In addition, all of our officers and directors
reside outside the United States, and nearly all of the assets of these persons
and our assets are located outside of the United States. As a result, it may not
be possible for investors to affect service of process within the United States
upon such persons or to enforce against us or such persons judgments predicated
upon the liability provisions of the United States securities laws. There is
substantial doubt as to the enforceability against us or any of our directors
and officers located outside the United States in original actions or in actions
of enforcement of judgments of United States courts or liabilities predicated on
the civil liability provisions of United States federal securities laws.

Risks Related to Our Industry

The LED outdoor advertising and LED products and services
industries in the PRC may face increasing competition from both domestic and
foreign companies, as well as increasing industry consolidation, which may
affect our market share and profit margin.

The
specialty lighting industry, including the provision of LED outdoor advertising
billboards, LED lighting systems, LED screen rental services, and advanced
lighting products, in the PRC is highly competitive. Our products and services
are targeted primarily at property owners and developers, a market in which we
face increasing competition. In addition, there is an increasing trend of
consolidation throughout the industry. We believe that our ability to maintain
our market share and grow our operations within this landscape of changing and
increasing competition is largely dependant upon our ability to distinguish the
quality of our products and services.

---

- 43 -

In
addition, prior to the entry of the PRC into the World Trade Organization
(WTO), high barriers to entry existed for many potential competitors in our
business through the use of tariffs and restrictive import licensing and
distribution practices. The admission of the PRC to the WTO has lowered some of
the tariffs and other barriers to entry so we can expect that competition will
increase.

We
cannot assure you that our current or potential competitors will not develop
products or services of a comparable or superior quality to ours, or adapt more
quickly than we do to evolving consumer preferences or market trends. In
addition, our competitors may merge or form alliances to achieve a scale of
operations or sales network which would make it difficult for us to compete.
Increased competition may also lead to price wars or negative brand advertising,
which may adversely affect our market share and profit margin. We cannot assure
you that we will be able to compete effectively with our current or potential
competitors.

Risks Related to Our Common Stock

A decline in the price of our common stock could affect our
ability to raise further working capital and adversely impact our operations.

A
prolonged decline in the price of our common stock could result in a reduction
in the liquidity of our common stock and a reduction in our ability to raise
capital. Because our operations have been primarily financed through the sale of
equity securities, a decline in the price of our common stock could be
especially detrimental to our liquidity and our continued operations. Any
reduction in our ability to raise equity capital in the future would force us to
reallocate funds from other planned uses and would have a negative effect on our
business plans and operations, including our ability to develop new products and
continue our current operations. If the stock price declines, there can be no
assurance that we will be able to raise additional capital or generate funds
from operations sufficient to meet our obligations. We believe the following
factors could cause the market price of our common stock to continue to
fluctuate widely and could cause our common stock to trade at a price below the
price at which you purchase your shares:

- actual or anticipated variations in our quarterly operating results;
- announcements of new services, products, acquisitions or strategic
  relationships by us or our competitors;
- trends or conditions in the energy management services industry;
- changes in accounting treatments or principles;
- changes in earnings estimates by securities analysts and in analyst
  recommendations;
- changes in market valuations of other energy management services companies;
  and
- general political, economic and market conditions.

The
market price for our common stock may also be affected by our ability to meet or
exceed expectations of analysts or investors. Any failure to meet these
expectations, even if minor, could have a material adverse affect the market
price of our common stock.

If we issue additional shares in the future, it will result
in the dilution of our existing stockholders.

Our
certificate of incorporation authorizes the issuance of 800,000,000 shares of
common stock and 100,000,000 shares of preferred stock. Our board of directors
has the authority to issue additional shares up to the authorized capital stated
in the certificate of incorporation. Our board of directors may choose to issue
some or all of such shares to acquire one or more businesses or to provide
additional financing in the future. The issuance of any such shares will result
in a reduction of the book value or market price of the outstanding shares of
our common stock. If we issue any such additional shares, such issuance also
will cause a reduction in the proportionate ownership and voting power of all
other stockholders. Further, any such issuance may result in a change of control
of our corporation.

---

- 44 -

If a market for our common stock does not develop, stockholders may be unable to sell their shares.

There is currently a limited market for our common stock, which trades through the OTC Bulletin Board. Trading of stock through the OTC Bulletin Board is frequently thin and highly volatile. There is no assurance that a
sufficient market will develop in the stock, in which case it could be difficult for stockholders to sell their stock.

The market price for our common stock may be volatile and subject to wide fluctuations, which may adversely affect the price at which you can sell our shares.

The market price for our common stock may be volatile and subject to wide fluctuations in response to factors including the following:

- actual or anticipated fluctuations in our quarterly operations results;
- changes in financial estimates by securities research analysts;
- conditions in foreign or domestic specialty lighting markets;
- changes in the economic performance or market valuations of other specialty
    lighting companies;
- announcements by us or our competitors of new products, acquisitions, strategic
    partnerships, joint ventures or capital commitments;
- addition or departure of key personnel;
- fluctuations of exchange rates between the Renminbi and the U.S. dollar;
- intellectual property litigation; and
- general economic or political conditions in the PRC.

In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may
also materially and adversely affect the market price of our stock.

Trading of our stock may be restricted by the Securities and Exchange Commissions penny stock regulations which may limit a stockholders ability to buy and sell our stock.

The Securities and Exchange Commission has adopted regulations which generally define penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers
and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared
by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customers confirmation. In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements may have the effect of

---

- 45 -

reducing the level of trading activity in the secondary market
for the stock that is subject to these penny stock rules. Consequently, these
penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of, our common stock.

The Financial Industry Regulatory Authority, or FINRA, has
adopted sales practice requirements, which may limit a stockholders ability to
buy and sell our shares.

In
addition to the penny stock rules described above, FINRA has adopted rules
requiring that in recommending an investment to a customer, a broker-dealer must
have reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low-priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customers financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low-priced securities
will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may limit our shareholders ability to buy and sell our
stock and which may have an adverse effect on the market for our shares.

Potential sales of a substantial number of shares of our
common stock into the public market by selling stockholders may result in
significant downward pressure on the price of our common stock and could affect
the ability of our stockholders to realize any current trading price of our
common stock.

We
granted registration rights to the holders of shares of our common stock (and
holders of warrants to purchase shares of our common stock) issued pursuant to a
capital-raising transaction which we closed on March 17, 2008. Pursuant to our
registration rights agreement, our company filed a Form S-1 registration
statement with the Securities and Exchange Commission on July 21, 2008 for the
registration of 8,750,000 shares of our common stock. If and when the
registration statement covering these shares of our common stock is declared
effective by the Securities and Exchange Commission, the selling stockholders
may be reselling up to approximately 15.7% of the issued and outstanding shares
of our common stock. As a result of such registration statement, a substantial
number of our shares of common stock which have been issued may be available for
immediate resale, which could have an adverse effect on the price of our common
stock. As a result of any such decrease in price of our common stock, our
current stockholders and purchasers who acquire shares from the selling
stockholders may lose some or all of their investment.

If we are late in filing any of our quarterly reports during
the next two reporting periods, or if we are late multiple times in filing any
of our annual or quarterly reports during the next two years, our common stock
may become ineligible for quotation on the OTC Bulletin Board, which would
negatively affect the market for our shares and our ability to obtain additional
financing.

Companies
trading on the OTC Bulletin Board, such as us, must have a class of securities
registered under Section 12 of the Exchange Act, as amended, and must be current
in their reports under Section 13, in order to maintain price quotation
privileges on the OTC Bulletin Board. More specifically, Rule 6530 of the NASD
Manual Marketplace Rules, which determines eligibility of issuers quoted on the
OTC Bulletin Board, requires an issuer to be current in its filings with the
Securities and Exchange Commission. Pursuant to Rule 6530(e), as it is currently
in effect, if we file our reports late with the Commission three times in a
two-year period or our securities are removed from the OTC Bulletin Board twice
in a two-year period for failure to file reports, then we will be ineligible for
quotation on the OTC Bulletin Board.

We
have been late in filing our quarterly and annual reports on two occasions in
the past two years: our quarterly report for the period ending September 30,
2006 and our annual report for the period ending March 31, 2007. As a result, if
we are late in filing our quarterly report for the period ending June 30, 2008
or our quarterly report for the period ending September 30, 2008, we would have
been late in filing our reports three times in a two-year period and we may
become ineligible for quotation on the OTC Bulletin Board. In addition, if we
are late multiple times in filing any of our annual or quarterly reports during
the next two years, we may become ineligible for quotation on the OTC Bulletin
Board. If our common stock becomes ineligible for quotation on the OTC Bulletin
Board, it would negatively affect the

---

- 46 -

market for our common stock and it may become more difficult
for us to obtain additional equity financing as shares of our common stock would
be less attractive to potential investors.

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

None.

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

Exhibits required by Item 601 of Regulation S-K

|Exhibit Number | Description                                                                                                                                                                                                                                                         
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                     
|(2)            | Plan of
      Purchase, Sale, Reorganization, Arrangement, Liquidation or Succession                                                                                                                                                                                
|               |                                                                                                                                                                                                                                                                     
|2.1            | Share Exchange Agreement dated January 7, 2005, among
      Global Innovative Systems Inc., Tech Team Holdings Limited, Bondy Tan and
      the Selling Shareholders (incorporated by reference from our Current
      Report on Form 8-K filed on January 18, 2005)
|               |                                                                                                                                                                                                                                                                     
|(3)            | (i) Articles of Incorporation; and (ii) Bylaws                                                                                                                                                                                                                      
|               |                                                                                                                                                                                                                                                                     
|3.1            | Charter (incorporated by reference from our Registration
      Statement on Form 10-SB filed on April 11, 2000)                                                                                                                                                     
|               |                                                                                                                                                                                                                                                                     
|3.2            | Articles of Incorporation (incorporated by reference from
      our Registration Statement on Form 10-SB filed on April 11, 2000)                                                                                                                                   
|               |                                                                                                                                                                                                                                                                     
|3.3            | Bylaws (incorporated by reference from our Registration
      Statement on Form 10-SB filed on April 11, 2000)                                                                                                                                                      
|               |                                                                                                                                                                                                                                                                     
|3.4            | Certificate of Reverse Stock Split filed with the Nevada
      Secretary of State on November 12, 2003 (incorporated by reference from
      our Current Report on Form 8-K filed on December 17, 2003)                                                             
|               |                                                                                                                                                                                                                                                                     
|3.5            | Certificate of Amendment to Articles of Incorporation
      filed with the Secretary of State of Nevada on March 3, 2004 (incorporated
      by reference from our Quarterly Report on Form 10- QSB filed on May 15,
      2004)                                    
|               |                                                                                                                                                                                                                                                                     
|3.6            | Certificate of Change filed with the Secretary of State
      of Nevada on December 23, 2004 (incorporated by reference from our Current
      Report on Form 8-K filed on January 6, 2005)                                                                         
|               |                                                                                                                                                                                                                                                                     
|3.7            | Articles of Merger filed with the Secretary of State of
      Nevada on April 17, 2007 effective April 20, 2007 (incorporated by
      reference from our Current Report on Form 8-K filed on April 23, 2007)                                                       
|               |                                                                                                                                                                                                                                                                     
|(10)           | Material Contracts                                                                                                                                                                                                                                                  

---

- 47 -

|Exhibit Number | Description                                                                                                                                                                                                                                                                                                       
|-------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                                                                   
|10.1           | Management Contract between Tech Team Holdings Limited /
      Tech Team Development Limited and Bondy Tan (incorporated by reference
      from our Current Report on Form 8-K filed on January 18, 2005)                                                                                                        
|               |                                                                                                                                                                                                                                                                                                                   
|10.2           | Sale and Purchase Agreement between Tech Team Development
      Limited, Albert Yee Tat Chan, Luminous LED Technologies Limited, Michelle
      Siu Kwan Lam and Joseph Sui Kei Lam, dated September 29, 2006
      (incorporated by reference from our Current Report on Form 8-K filed on
      October 5, 2006)
|               |                                                                                                                                                                                                                                                                                                                   
|10.3           | Cancellation Deed between Tech Team Investment Limited,
      Woo Yuen Yu, Michelle Siu Kwan Lam, Joseph Sui Kei Lam and Lightscape
      Holding Ltd., dated September 29, 2006 (incorporated by reference from our
      Current Report on Form 8-K filed on October 5, 2006)                                   
|               |                                                                                                                                                                                                                                                                                                                   
|10.4           | OEM Agreement between Lightscape Technologies (Macau)
      Limited and Strong Base Electronic-optic Technology Corp., dated October
      23, 2006 (incorporated by reference from our Current Report on Form 8-K
      filed on October 31, 2006)                                                               
|               |                                                                                                                                                                                                                                                                                                                   
|10.5           | Subscription Agreement between Global Innovative Systems
      Inc. and Bondy Tan, dated January 18, 2007 (incorporated by reference from
      our Quarterly Report on Form 10-QSB filed on February 20, 2007)                                                                                                   
|               |                                                                                                                                                                                                                                                                                                                   
|10.6           | Subscription Agreement between Global Innovative Systems
      Inc., Investec Bank (UK) Limited and the persons set out in Schedule 1 to
      the Subscription Agreement, dated January 18, 2007 (incorporated by
      reference from our Quarterly Report on Form 10-QSB filed on February 20,
      2007)     
|               |                                                                                                                                                                                                                                                                                                                   
|10.7           | Note issued by Global Innovative Systems Inc. to Investec
      Bank (UK) Limited dated January 23, 2007 (incorporated by reference from
      our Quarterly Report on Form 10-QSB filed on February 20, 2007)                                                                                                    
|               |                                                                                                                                                                                                                                                                                                                   
|10.8           | Subscription Agreement between Global Innovative Systems
      Inc., Full Moon Resources Limited and the persons set out in Schedule 1 to
      the Subscription Agreement, dated January 18, 2007 (incorporated by
      reference from our Quarterly Report on Form 10-QSB filed on February 20,
      2007)    
|               |                                                                                                                                                                                                                                                                                                                   
|10.9           | Note issued by Global Innovative Systems Inc. to Full
      Moon Resources Limited dated January 23, 2007 (incorporated by reference
      from our Quarterly Report on Form 10-QSB filed on February 20, 2007)                                                                                                   
|               |                                                                                                                                                                                                                                                                                                                   
|10.10          | Subscription Agreement between Global Innovative Systems
      Inc., LP Asset Management Limited and the persons set out in Schedule 1 to
      the Subscription Agreement, dated January 18, 2007 (incorporated by
      reference from our Quarterly Report on Form 10-QSB filed on February 20,
      2007)    
|               |                                                                                                                                                                                                                                                                                                                   
|10.11          | Note issued by Global Innovative Systems Inc. to LP Asset
      Management Limited dated January 23, 2007 (incorporated by reference from
      our Quarterly Report on Form 10-QSB filed on February 20, 2007)                                                                                                   
|               |                                                                                                                                                                                                                                                                                                                   
|10.12          | Redemption Agreement between Lightscape Technologies
      Inc., Investec Bank (UK) Limited, Full Moon Resources Limited, LP Asset
      Management Limited and Bondy Tan, dated July 10, 2007 (incorporated by
      reference from our Current Report on Form 8-K filed on August 22, 2007)                     
|               |                                                                                                                                                                                                                                                                                                                   
|10.13          | Form of Subscription Agreement dated August 21, 2007
      (incorporated by reference from our Current Report on Form 8-K filed on
      August 22, 2007)                                                                                                                                                         

---

- 48 -

|Exhibit Number | Description                                                                                                                                                                                                                                                                                                                                                                                 
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.14          | Subscription
        Agreement between Lightscape Technologies Inc. and SMC Investment Management
        Limited dated December 11, 2007 (incorporated by reference from our Current
        Report on Form 8-K filed on December 14, 2007)                                                                                                                                                
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.15          | Joint Venture
        Agreement between Lightscape Technologies (Greater China) Limited, Beijing
        Xintong Media & Cultural Development Co. Ltd., Beijing New Vision
        Media Advertising Co. Ltd. and Miss Yao Po Chun dated February 12, 2008
        (Translated from Chinese)(incorporated by reference from our Annual
        Report on Form 10-KSB filed on July 14, 2008)
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.16          | Form of Securities
        Purchase Agreement, among Lightscape Technologies Inc. and the investors
        named therein dated March 9, 2008 (incorporated by reference from our
        Current Report on Form 8-K filed on March 10, 2008)                                                                                                                                               
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.17          | Form of Registration
        Rights Agreement among Lightscape Technologies Inc. and the investors
        named therein dated March 9, 2008 (incorporated by reference from our
        Current Report on Form 8-K filed on March 10, 2008)                                                                                                                                                
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.18          | Escrow Agreement
        among Lightscape Technologies Inc., Roth Capital Partners, LLC and Tri-
        State Title & Escrow, LLC, as escrow agent, dated March 9, 2008 (incorporated
        by reference from our Current Report on Form 8-K filed on March 10, 2008)                                                                                                                    
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.19          | Form of Placement
        Agent Warrant (incorporated by reference from our Current Report on Form
        8-K filed on March 10, 2008)                                                                                                                                                                                                                                                     
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|(14)           | Code of Ethics                                                                                                                                                                                                                                                                                                                                                                              
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|14.1           | Code of Ethics
        (incorporated by reference from our Annual Report on Form 10-KSB filed
        on December 30, 2004)                                                                                                                                                                                                                                                                 
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|(31)           | Rule 13a-14(a)/15d-14(a)
        Certifications                                                                                                                                                                                                                                                                                                                                             
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|31.1*          | Certification
        of Principal Executive Officer and Principal Financial Officer filed pursuant
        to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                               
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|(32)           | Section 1350
        Certifications                                                                                                                                                                                                                                                                                                                                                         
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|32.1*          | Certification
        of Principal Executive Officer and Principal Financial Officer pursuant
        to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                              

*Filed herewith

---

- 49 -

SIGNATURES

Pursuant to the requirements 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.

LIGHTSCAPE TECHNOLOGIES INC.



By: /s/ Bondy TanBondy Tan
President, Secretary and Treasurer and Chief Executive Officer and
Director (Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer)

Date: August 14, 2008

---