---

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 September 30,
2009

[ ] 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.)

18/F., 318 Hennessy Road, W Square, 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 ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

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- 2 -

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 November 1, 2009.

PART I - FINANCIAL INFORMATION

|Item 1. Unaudited Consolidated Financial
      Statements.                                                   
|-------------------------------------------------------------------------------------------------------------
|Consolidated Balance Sheets as at September 30, 2009 and March 31,
      2009                                
|Consolidated Statements of Operations and Comprehensive
      Loss for the three and six months ended        
|September 30, 2009 and 2008                                                                                  
|Consolidated Statements of Changes in Shareholders
      Equity and Comprehensive Loss for the three and six
|months ended September 30, 2009                                                                              
|Consolidated Statements of Cash Flows for the six months
      ended September 30, 2009 and 2008             
|Notes to 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.                                                                                   
|Item 1A. 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.                                                                                            

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- 3 -

Item 1. Financial Statements.

LIGHTSCAPE TECHNOLOGIES INC. AND SUBISIDIARIES INTERIM
CONSOLIDATED FINANCIAL STATEMENTSFOR THE THREE AND SIX MONTHS ENDED
SEPTEMBER 30, 2009 UNAUDITED

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

|                                                                                |  | September 30, |  |  | March 31,  | 
|------------------------------------------------------------------------------- |  | ------------- |  |  | ---------- | 
|                                                                                |  | 2009          |  |  | 2009       | 
|                                                                                |  | (Unaudited)   |  |  |            | 
|                                                                                |  | $             |  |  | $          | 
|ASSETS                                                                          |  |               |  |  |            | 
|Current assets:                                                                 |  |               |  |  |            | 
|Cash and cash
      equivalents                                                 |  | 224,042       |  |  | 342,729    | 
|Accounts receivable, net of
      allowance for doubtful accounts of            |  |               |  |  |            | 
|$561,254 on
      September 30, 2009 and $415,383 on March 31, 2009             |  | 1,695,800     |  |  | 1,213,334  | 
|Costs and estimated earnings in
      excess of billings on uncompleted         |  |               |  |  |            | 
|contracts                                                                       |  | 428,044       |  |  | 673,312    | 
|Prepaid expenses and other
      current assets                                 |  | 1,966,740     |  |  | 1,041,616  | 
|Inventories 
      LED                                                         |  | 1,264,975     |  |  | 1,264,975  | 
|Inventories  others , including
      valuation allowance of $162,801 on       |  | -             |  |  | -          | 
|September 30,
      2009 and $162,782 on March 31, 2009                         |  |               |  |  |            | 
|Current assets of discontinued
      operations                                 |  | 3,205,952     |  |  | 12,435,386 | 
|                                                                                |  |               |  |  |            | 
|Total current assets                                                            |  | 8,785,553     |  |  | 16,971,352 | 
|                                                                                |  |               |  |  |            | 
|Intangible assets, net                                                          |  | 6,615         |  |  | 82,431     | 
|Goodwill                                                                        |  | 776,378       |  |  | 776,378    | 
|Plant and equipment, net                                                        |  | 345,499       |  |  | 279,738    | 
|Out-of-home advertising equipment, net                                          |  | 1,985,000     |  |  | 1,824,421  | 
|Construction in progress  Out-of-home advertising
      equipment              |  | 266,250       |  |  | 266,250    | 
|Deferred cost                                                                   |  | 104,404       |  |  | 111,132    | 
|Accounts receivable, due after one year and net of
      allowance for doubtful |  |               |  |  |            | 
|accounts of $Nil on September 30, 2009 and
      $145,871 on March 31,          |  | -             |  |  | 200,889    | 
|2009                                                                            |  |               |  |  |            | 
|Prepaid expenses and other current assets 
      due after one year            |  | -             |  |  | 8,612      | 
|Net investment in sales-type leases of discontinued
      operations            |  | 20,438        |  |  | 36,359     | 
|                                                                                |  |               |  |  |            | 
|                                                                                |  | 3,504,584     |  |  | 3,586,210  | 
|                                                                                |  |               |  |  |            | 
|TOTAL ASSETS                                                                    |  | 12,290,137    |  |  | 20,557,562 | 
|                                                                                |  |               |  |  |            | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                            |  |               |  |  |            | 
|Current liabilities:                                                            |  |               |  |  |            | 
|Short-term bank borrowings                                                      |  | 456,694       |  |  | -          | 
|Secured loan                                                                    |  | 257,069       |  |  | -          | 
|Trade payables                                                                  |  | 877,560       |  |  | 358,939    | 
|Amount due to a
      director                                                  |  | 592,589       |  |  | 745,501    | 
|Accrued expenses and other
      current liabilities                            |  | 1,632,821     |  |  | 747,395    | 
|Obligations
      under capital leases  current portion                        |  | 11,799        |  |  | -          | 
|Income tax payable                                                              |  | -             |  |  | -          | 
|Current
      liabilities of discontinued operations                            |  | 1,200,549     |  |  | 1,170,508  | 
|                                                                                |  |               |  |  |            | 
|Total current liabilities                                                       |  | 5,029,081     |  |  | 3,022,343  | 

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- 5 -

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

|                                                            |  | September 30, |   |  | March 31,   |  
|----------------------------------------------------------- |  | ------------- | - |  | ----------- | -
|                                                            |  | 2009          |   |  | 2009        |  
|                                                            |  | (Unaudited)   |   |  |             |  
|                                                            |  | $             |   |  | $           |  
|                                                            |  |               |   |  |             |  
|Non-current liabilities:                                    |  |               |   |  |             |  
|Obligations under capital leases  non-current portion      |  | 47,199        |   |  | -           |  
|                                                            |  |               |   |  |             |  
|Total non-current liabilities                               |  | 47,199        |   |  | -           |  
|                                                            |  |               |   |  |             |  
|Total liabilities                                           |  | 5,076,280     |   |  | 3,022,343   |  
|                                                            |  |               |   |  |             |  
|COMMITMENTS (see Note 12)                                   |  |               |   |  |             |  
|                                                            |  |               |   |  |             |  
|Shareholders equity:                                       |  |               |   |  |             |  
|Common stock                                                |  |               |   |  |             |  
|Authorized:                                                 |  |               |   |  |             |  
|800,000,000 common shares, par value $0.001 per share       |  |               |   |  |             |  
|100,000,000 preferred shares, par value $0.001 per share    |  |               |   |  |             |  
|Issued and outstanding:                                     |  |               |   |  |             |  
|55,876,410 common shares at September 30, 2009 and at March |  |               |   |  |             |  
|31, 2009                                                    |  | 55,876        |   |  | 55,876      |  
|Additional paid-in capital                                  |  | 34,140,708    |   |  | 34,140,708  |  
|Common stock warrants                                       |  | 344,673       |   |  | 344,673     |  
|Other reserves                                              |  | 28,944        |   |  | 28,944      |  
|Accumulated other
      comprehensive income                |  | 1,079,143     |   |  | 1,077,353   |  
|Accumulated deficit                                         |  | (28,435,851   | ) |  | (19,219,220 | )
|Total shareholders equity                                  |  | 7,213,493     |   |  | 16,428,335  |  
|Noncontrolling interest                                     |  | 364           |   |  | 1,106,884   |  
|Total Equity                                                |  | 7,213,857     |   |  | 17,535,219  |  
|                                                            |  |               |   |  |             |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                  |  | 12,290,137    |   |  | 20,557,562  |  

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

---

- 6 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES                                 
|------------------------------------------------------------------------------
|                                                                              
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      LOSS (UNAUDITED)
|Expressed in US
      dollars (except for number of common shares)            

|                                                                     |  | Three Months Ended |   |  | Six Months Ended |  
|-------------------------------------------------------------------- |  | ------------------ | - |  | ---------------- | -
|                                                                     |  | September 30,      |   |  | September 30,    |  
|                                                                     |  | 2009               |   |  | 2008             |  
|                                                                     |  | $                  |   |  | $                |  
|Revenues:                                                            |  |                    |   |  |                  |  
|Advertising revenue                                                  |  | 260,026            |   |  | -                |  
|LED solutions revenue                                                |  | 1,010,314          |   |  | 270,709          |  
|Other revenue                                                        |  | -                  |   |  | 11,715           |  
|                                                                     |  |                    |   |  |                  |  
|Total net revenues                                                   |  | 1,270,340          |   |  | 282,424          |  
|                                                                     |  |                    |   |  |                  |  
|Cost of revenues:                                                    |  |                    |   |  |                  |  
|Cost of sales of Advertising
      revenue (i)                       |  | 53,884             |   |  | -                |  
|Cost of sales of LED solutions revenue                               |  | 888,822            |   |  | 169,046          |  
|Costs of Other revenue                                               |  | -                  |   |  | 189              |  
|                                                                     |  |                    |   |  |                  |  
|Total cost of revenues                                               |  | 942,706            |   |  | 169,235          |  
|                                                                     |  |                    |   |  |                  |  
|Gross profit                                                         |  | 327,634            |   |  | 113,189          |  
|                                                                     |  |                    |   |  |                  |  
|Bad debts                                                            |  | (36,584            | ) |  | -                |  
|Amortization                                                         |  | (38,219            | ) |  | (53,855          | )
|Depreciation                                                         |  | (40,110            | ) |  | (26,680          | )
|Loss on disposal of property, plant and equipment                    |  | (539               | ) |  | -                |  
|Selling and marketing expenses                                       |  | (143,376           | ) |  | (35,159          | )
|General and administrative expenses                                  |  | (631,840           | ) |  | (653,773         | )
|                                                                     |  |                    |   |  |                  |  
|Loss from operations                                                 |  | (563,034           | ) |  | (656,278         | )
|Interest expense, net of interest income                             |  | (48,123            | ) |  | (6,902           | )
|Other income                                                         |  | 4,217              |   |  | 13,645           |  
|                                                                     |  |                    |   |  |                  |  
|Loss from continuing operations before income tax and                |  | (606,940           | ) |  | (649,535         | )
|noncontrolling interests                                             |  |                    |   |  |                  |  
|Income tax provision                                                 |  | -                  |   |  | 206,977          |  
|                                                                     |  |                    |   |  |                  |  
|Net loss from continuing operations before noncontrolling            |  | (606,940           | ) |  | (442,558         | )
|interests                                                            |  |                    |   |  |                  |  
|Less: net income attributable to the noncontrolling
      interests  |  | -                  |   |  | -                |  
|                                                                     |  |                    |   |  |                  |  
|Net loss from continuing operations attributable to
      Lightscape |  | (606,940           | ) |  | (442,558         | )
|Technologies Inc.                                                    |  |                    |   |  |                  |  
|                                                                     |  |                    |   |  |                  |  
|Discontinued operations                                              |  |                    |   |  |                  |  
|Net (loss) from discontinued operations, net
      of income taxes   |  | (116,658           | ) |  | (296,773         | )
|Gain on disposal of
      discontinued component                     |  | 54,172             |   |  | -                |  
|Impairment loss on subsidiary held for sale                          |  | (8,835,266         | ) |  | -                |  
|Noncontrolling interest share
      of related impairment loss       |  | 1,042,496          |   |  |                  |  
|                                                                     |  |                    |   |  |                  |  
|Net (loss) from discontinued
      operations                        |  | (7,855,256         | ) |  | (296,773         | )

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|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES                                             
|------------------------------------------------------------------------------------------
|                                                                                          
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      LOSS (UNAUDITED) (continued)
|Expressed in US
      dollars (except for number of common shares)                        

|                                                                 |  | Three Months Ended |   |  | Six Months Ended |  
|---------------------------------------------------------------- |  | ------------------ | - |  | ---------------- | -
|                                                                 |  | September 30,      |   |  | September 30,    |  
|                                                                 |  | 2009               |   |  | 2008             |  
|                                                                 |  | $                  |   |  | $                |  
|                                                                 |  |                    |   |  |                  |  
|Net loss attributable to Lightscape
      Technologies Inc.      |  | (8,462,196         | ) |  | (739,331         | )
|                                                                 |  |                    |   |  |                  |  
|Other comprehensive income                                       |  |                    |   |  |                  |  
|Foreign currency translation adjustment
      arising during the |  | (36,257            | ) |  | (33,374          | )
|period                                                           |  |                    |   |  |                  |  
|Comprehensive loss                                               |  | (8,498,453         | ) |  | (772,705         | )
|                                                                 |  |                    |   |  |                  |  
|Loss per share                                                   |  |                    |   |  |                  |  
|- Basic and diluted                                              |  |                    |   |  |                  |  
|Continuing operations                                            |  | (0.01              | ) |  | (0.01            | )
|Discontinued operations                                          |  | (0.14              | ) |  | -                |  
|Total                                                            |  | (0.15              | ) |  | (0.01            | )
|                                                                 |  |                    |   |  |                  |  
|Weighted average number of common shares outstanding             |  |                    |   |  |                  |  
|- Basic and diluted                                              |  | 55,876,410         |   |  | 55,876,410       |  

(i) Includes depreciation of plant and equipment of $53,884 and
$93,156 for the three months ended September 30, 2009 and 2008, respectively,
and $Nil and $Nil for the six months ended September 30, 2009 and 2008,
respectively.

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

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- 8 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES                                                  
|-----------------------------------------------------------------------------------------------
|                                                                                               
|CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
      AND COMPREHENSIVE LOSS FOR THE
|THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED)                                      
|Expressed in US
      dollars (except for number of common shares)                             

|                   |               |                 |         |            |                     | Total Accumulated Other Comprehensive
      Income And |              |              
|------------------ | ------------- | --------------- | ------- | ---------- | ------------------- | ------------------------------------------------------ | ------------ | -------------
|                   | Common Shares |                 |         |            | Accumulated Deficit |                                                        |             
|                   |               |                 |         |            |                     |                                                        |              |              
|                   |               |                 |         |            |                     | Accumulated                                            |              | Total        
|                   |               |                 |         |            |                     | Other                                                  |              | Accumulated  
|                   |               |                 |         |            |                     | Comprehensive                                          |              | Comprehensive
|                   |               |                 |         |            |                     | Income - Foreign                                       |              | (Loss) Income
|                   |               |                 | Common  | Additional |                     | Currency                                               |              | And          
|                   |               |                 | Stock   | Paid-In    | Other               | Translation                                            | Accumulated  | Accumulated  
|                   | Number        | Amount Warrants | Capital | Reserves   | Adjustment          | Deficit                                                | Deficit      | interest     
|                   |               |                 |         |            |                     |                                                        |              |              
|Balance at         |               |                 |         |            |                     |                                                        |              |              
|March 31, 2009     | 55,876,410    | 55,876          | 344,673 | 34,140,708 | 28,944              | 1,077,354                                              | (19,219,220) | (18,141,866) 
|                   |               |                 |         |            |                     |                                                        |              |              
|Foreign currency   |               |                 |         |            |                     |                                                        |              |              
|translation        |               |                 |         |            |                     |                                                        |              |              
|adjustment         |               |                 |         |            |                     |                                                        |              |              
|                   | -             | -               | -       | -          | -                   | 38,046                                                 | -            | 38,046       
|Net loss           | -             | -               | -       | -          | -                   | -                                                      | (754,435)    | (754,435)    
|Noncontrolling     |               |                 |         |            |                     |                                                        |              |              
|interest           | -             | -               | -       | -          | -                   | -                                                      | -            | -            
|                   |               |                 |         |            |                     |                                                        |              |              
|Balance at         |               |                 |         |            |                     |                                                        |              |              
|June 30, 2009      |               |                 |         |            |                     |                                                        |              |              
|(Unaudited)        | 55,876,410    | 55,876          | 344,673 | 34,140,708 | 28,944              | 1,115,400                                              | (19,973,655) | (18,858,255) 
|                   |               |                 |         |            |                     |                                                        |              |              
|Foreign currency   |               |                 |         |            |                     |                                                        |              |              
|translation        |               |                 |         |            |                     |                                                        |              |              
|adjustment         | -             | -               | -       | -          | -                   | (36,257)                                               | -            | (36,257)     
|Net loss           | -             | -               | -       | -          | -                   | -                                                      | (8,462,196)  | (8,462,196)  
|Noncontrolling     |               |                 |         |            |                     |                                                        |              |              
|interest           | -             | -               | -       | -          | -                   | -                                                      | -            | -            
|Noncontrolling     |               |                 |         |            |                     |                                                        |              |              
|interest share of  |               |                 |         |            |                     |                                                        |              |              
|discontinued       |               |                 |         |            |                     |                                                        |              |              
|operations loss    |               |                 |         |            |                     |                                                        |              |              
|                   |               |                 |         |            |                     |                                                        |              |              
|Balance at         |               |                 |         |            |                     |                                                        |              |              
|September 30, 2009 |               |                 |         |            |                     |                                                        |              |              
|(Unaudited)        | 55,876,410    | 55,876          | 344,673 | 34,140,708 | 28,944              | 1,079,143                                              | (28,435,851) | (27,330,902) 

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

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- 9 -

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

|                                                                                     |  | Six Months          |  
|------------------------------------------------------------------------------------ |  | ------------------- | -
|                                                                                     |  | Ended September 30, |  
|                                                                                     |  | 2009                |  
|                                                                                     |  | $                   |  
|Cash flows from operating activities:                                                |  |                     |  
|Net loss                                                                             |  | (9,216,629          | )
|Net income (loss) from
      discontinued operations, net of income taxes            |  | (7,949,520          | )
|Net loss from continuing operations                                                  |  | (1,267,109          | )
|                                                                                     |  |                     |  
|Adjustment to reconcile net loss from continuing operations
      to                 |  |                     |  
|net cash (used in) continuing operating
      activities:                            |  |                     |  
|Amortization of intangible
      assets                                              |  | 76,436              |  
|Cost of sales 
      amortization of deferred cost                                  |  | 11,113              |  
|Depreciation expense                                                                 |  | 161,688             |  
|Bad debts
      expense                                                              |  | 36,584              |  
|Net income attributable to the
      noncontrolling interest                         |  | -                   |  
|Loss on disposal
      of property, plant and equipment                              |  | 539                 |  
|Changes in operating assets and liabilities, net of
      acquisitions:              |  |                     |  
|Decrease (increase) in
      operating assets:                                       |  |                     |  
|Accounts receivable, net of
      allowance for doubtful debts                       |  | (281,575            | )
|Costs and
      estimated earnings in excess of billings on uncompleted contracts    |  | 245,269             |  
|Prepaid expenses and other
      current assets                                      |  | 158,657             |  
|Inventories                                                                          |  | -                   |  
|Increase (decrease) in operating liabilities:                                        |  |                     |  
|Trade payables                                                                       |  | 330,863             |  
|Accrued expenses and other
      current liabilities                                 |  | 306,219             |  
|Income tax
      payable                                                             |  | -                   |  
|                                                                                     |  |                     |  
|Net cash (used in) continuing operating
      activities                             |  | (221,316            | )
|Net cash provided by (used in) discontinued operating
      activities               |  | (256,937            | )
|Net cash (used in) operating activities                                              |  | (478,253            | )
|                                                                                     |  |                     |  
|Cash flows from investing activities:                                                |  |                     |  
|Purchase of plant and equipment                                                      |  | (106,134            | )
|Purchase of out-of-home advertising
      equipment                                  |  | (324,599            | )
|Purchase of intangible asset                                                         |  | (622                | )
|Purchase of a subsidiary                                                             |  | -                   |  
|Disposal of a subsidiary                                                             |  | (1,047              | )
|Addition to deferred cost                                                            |  | (4,385              | )
|                                                                                     |  |                     |  
|Net cash provided by (used in) investing
      activities of continuing operations   |  | (436,787            | )
|Net cash provided by (used in) investing activities of
      discontinued operations |  | 292                 |  
|Net cash (used in) investing activities                                              |  | (436,495            | )

---

- 10 -

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

|                                                                           |  | Six Months          |  
|-------------------------------------------------------------------------- |  | ------------------- | -
|                                                                           |  | Ended September 30, |  
|                                                                           |  | 2009                |  
|                                                                           |  | $                   |  
|                                                                           |  |                     |  
|Cash flows from financing activities:                                      |  |                     |  
|Inception of bank loan                                                     |  | 771,208             |  
|Repayment of bank loans                                                    |  | (314,514            | )
|Inception of secured loan                                                  |  | 257,070             |  
|Inception of capital lease obligation                                      |  | 58,997              |  
|Repayment of capital lease obligations                                     |  | -                   |  
|Advance from (repayment to) a director                                     |  | (152,912            | )
|                                                                           |  |                     |  
|Net cash provided by financing activities
      of continuing operations   |  | 619,849             |  
|Net cash provided by financing activities of discontinued
      operations |  | 256,102             |  
|Net cash provided by financing activities                                  |  | 875,951             |  
|                                                                           |  |                     |  
|Effect of foreign exchange rate changes                                    |  | 421                 |  
|                                                                           |  |                     |  
|Net decrease in cash and cash equivalents                                  |  | (38,376             | )
|Cash and cash equivalents at beginning of the period                       |  | 390,199             |  
|                                                                           |  |                     |  
|Cash and cash equivalents at end of the period (a)                         |  | 351,823             |  
|                                                                           |  |                     |  
|Supplemental disclosure of cash flows information                          |  |                     |  
|Interest expense
      paid                                                |  | 51,441              |  

(a) Includes $127,780 and $36,209 of cash that is included on
the balance sheet with Current assets from discontinued operations as of
September 30, 2009 and September 30, 2008, respectively.

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

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- 11 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

Lightscape Technologies Inc. (Lightscape or the Company)
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 Group) is principally engaged in two business activities:
(i) light-emitting diode (LED) out-of-home (OOH) advertising, and (ii) LED
solutions.

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Principle of Consolidation and Basis of Presentation

The accompanying consolidated financial statements of the Group
are stated in United States dollars and 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 September 30, 2009 and for the three and six months ended September 30, 2009
and 2008 have been prepared in accordance with generally accepted accounting
principles 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 financial statements include all adjustments considered necessary
to make the financial statements not misleading. The results of operations for
the three and six months ended September 30, 2009 are not necessarily indicative
of the results for the full fiscal year ending March 31, 2010. The unaudited
consolidated interim financial statements should be read in conjunction with the
Groups audited consolidated financial statements and notes thereto for the year
ended March 31, 2009 as reported in Form 10-K.

Certain of the September 30, 2008 and March 31, 2009
comparative figures have been reclassified to conform to the current period
presentation. These reclassifications had no impact on previously reported
financial position, results of operations or cash flows. (See Note 10.)

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.

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 onetime 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 September 30, 2009 and March 31, 2009, the allowance for
doubtful accounts was approximately $561,254 and $415,383, respectively.

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- 12 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
(continued)

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 accounts for acquisitions of business in accordance
with Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) 805 Business Combinations, which results in the
recognition of goodwill when the purchase price exceeds the fair value of net
assets acquired. 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.

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.

The estimation of the useful lives of the trademarks, completed
technologies for the production of AHP and HID, distributor base, customer lists
and relationships are 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.

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.

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- 13 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
(continued)

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                                                
|Out-of-home advertising equipment | 10 - 12 years                                                

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

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.

Advertising LED related Out-of-Home advertising
revenue from advertising services, net of agency rebates and commissions, is
recognized ratably over the period in which the advertisement is displayed.
Prepayments for the advertising services are deferred and recognized as revenue
when the advertising services are rendered.

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.
Revenues for LED solutions activities provided on a supply and build basis and
for consultancy services for which the revenue generation process lasts for
several months are recognized on the percentage-of-completion method, measured
either by the ratio of costs incurred up to a given date to estimated total
costs for each contract, or by an assessment from a quantity surveyor as
appointed by our customers.

Contract costs include all direct material, direct labor,
subcontracting 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.

---

- 14 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
(continued)

Revenue Recognition (continued)

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.

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.

Accounting for Uncertainty in Income Taxes

In June 2006, the FASB issued ASC 740 Income Taxes (ASC
740). ASC 740 is intended to clarify the accounting for uncertainty in income
taxes recognized in a companys financial statements and prescribes the
recognition and measurement of a tax position taken or expected to be taken in a
tax return. ASC 740 also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition.

Under ASC 740, it is a two-step process for valuation of a tax
position. Step one is to determine whether it is more-likely-than-not that a tax
position will be sustained upon examination, including the resolution of any
related appeals or litigation based on the technical merits of that position.
Step two is to measure a tax position that meets the more-likely-than-not
threshold to determine the amount of benefit to be recognized in the financial
statements. A tax position is measured at the largest amount of benefit that is
greater than 50% likely of being realized upon ultimate settlement.

Tax positions that previously failed to meet the
more-likely-than-not recognition threshold should be recognized in the first
subsequent period in which the threshold is met. Previously recognized tax
positions that no longer meet the more-likely-than-not criteria should be
de-recognized in the first subsequent financial reporting period in which the
threshold is no longer met.

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.

---

- 15 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
(continued)

Foreign Currency Translation (continued)

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 currency translation
adjustment in accumulated other comprehensive income, a component of
stockholders equity.

Segment Information

The Companys segment reporting is prepared in accordance with
ASC 280 Segment Reporting (ASC 280). The management approach required by ASC
280 requires that the internal reporting structure used by management for making
operating decisions and assessing performance be used as the source for
presenting the Groups reportable segments.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade
receivables, short-term debt 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 ASC 718 Compensation - Stock Compensation
(ASC 718) using the modified prospective method. Under ASC 718, 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
ASC 718, 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.

Basic and Diluted Earnings (Loss) per Share

The Company reports basic earnings per share in accordance with
ASC 260 Earnings Per Share (ASC 260). 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 instruments, options, warrants and other
common stock equivalents were converted or exercised. Dilution is computed by
applying the treasury stock method. Under this method, common stock equivalents
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.

---

- 16 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
(continued)

Fair Value Disclosure

Effective April 1, 2008, the Company adopted ASC 820 Fair
Value Measurements and Disclosures (ASC 820). ASC 820 clarifies the
definition of fair value, prescribes methods for measuring fair value and
establishes a fair value hierarchy to classify the inputs used in measuring fair
value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets
for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets
and liabilities in active markets, quoted prices for identical or similar assets
and liabilities in markets that are not active, inputs other then quoted prices
that are observable, and inputs derived from or corroborated by observable
market data.

Level 3-Inputs are unobservable inputs which reflect the
reporting entity's own assumptions on what assumptions the market participants
would use in pricing the asset or liability based on the best available
information.

The adoption of ASC 820 did not have a material impact on our
fair value measurements as the Company does not have any balance sheet
components deemed financial assets or liabilities.

Recent Accounting Pronouncements

In June 2009, the FASB issued new accounting guidance which
amends the consolidation guidance regarding variable interest entities. The
amendments will affect the overall consolidation analysis under the current
accounting guidance. The new accounting guidance is effective for fiscal years
beginning after November 15, 2009. The management does not expect the adoption
of the new accounting guidance to have a material impact on the Companys
financial condition or results of operations.

In August 2009, the FASB issued new accounting guidance for the
fair value measurement of liabilities when a quoted price in an active market is
not available. The new accounting guidance is effective for reporting periods
beginning after August 28, 2009. The management does not expect the adoption of
the new accounting guidance to have a material impact on the Companys financial
condition or results of operations.

In October 2009, the FASB issued new accounting guidance that
amends the revenue recognition for multiple-element arrangements and expands the
disclosure requirements in respect of such arrangements. The new guidance amends
the criteria for separating consideration in multiple-deliverable arrangements,
establishes a selling price hierarchy for determining the selling price of a
deliverable, eliminates the residual method of allocation, and requires the
application of relative selling price method in allocating the arrangement
consideration to all deliverables. The new accounting guidance is effective for
fiscal years beginning after June 15, 2010. The management does not expect the
adoption of the new accounting guidance to have a material impact on the
Companys financial condition or results of operations.

---

- 17 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
(continued)

Recent Accounting Pronouncements (continued)

In June 2009, the FASB issued new accounting guidance which
limits the circumstances in which a financial asset should be derecognized when
the transferor has not transferred the entire financial asset by taking into
consideration the transferors continuing involvement. The standard requires
that a transferor recognize and initially measure at fair value all assets
obtained (including a transferors beneficial interest) and liabilities incurred
as a result of a transfer of financial assets accounted for as a sale. The
concept of a qualifying special-purpose entity is removed from ASC 860 along
with the exception from applying ASC 810 Consolidation. The standard is
effective for the first annual reporting period that begins after November 15,
2009, for interim periods within the first annual reporting period, and for
interim and annual reporting periods thereafter. Earlier application is
prohibited. The management does not expect the new guidance included in ASC 860
to have a material impact on the Companys consolidated financial statements.

In June 2009, the FASB issued ASC 105 Generally Accepted
Accounting Principles (ASC 105). ASC 105 establishes the FASB Accounting
Standards Codification as the source of authoritative generally accepted
accounting principles for nongovernmental entities. ASC 105 is effective for
interim and annual periods ending after September 15, 2009, and is not expected
to have a material impact on the Companys consolidated financial statements.

In June 2009, the SEC issued Staff Accounting Bulletin No. 112
(SAB 112). SAB 112 revises or rescinds portions of the interpretative guidance
included in the codification of SABs in order to make the interpretive guidance
consistent with current generally accepted accounting principles. The management
does not expect the adoption of SAB 112 to have a material impact on the
Companys consolidated financial statements.

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 September 30, 2009 and March 31, 2009 are summarized
as follows:

September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)$
    
    
    $Cumulative costs incurred on uncompleted
      contracts
    
    2,260,081
    
    
    761,574Cumulative estimated earnings to date
    
    589,043
    
    
    377,4202,849,124
    
    
    1,138,994Less: Billings to date
    
    2,421,080
    
    
    465,681428,044
    
    
    673,313


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- 18 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the
      following:September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)Presented in current assets:
    
    $
    
    
    $Trade deposits
    
    33,237
    
    
    51,291Rental, utilities and other deposits
    
    211,028
    
    
    358,466Prepaid expenses
    
    412,644
    
    
    293,460Other receivables
    
    145,226
    
    
    293,794Contract surety bond refundable deposit
    
    44,605
    
    
    44,605Other receivable regarding disposal of a
      subsidiary
    
    1,120,000
    
    
    -1,966,740
    
    
    1,041,616


NOTE 5. OUT-OF-HOME ADVERTISING EQUIPMENT, NET

OOH advertising equipment consists of the following:

September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)$
    
    
    $OOH advertising LED display
    
    2,077,792
    
    
      1,837,741OOH advertising visual, audio and related equipment
    
    -
    
    
      -Total
    
    2,077,792
    
    
      1,837,741Less: Accumulated depreciation
    
    (92,792
    )
    
      (13,320
    )OOH advertising equipment, net
    
    1,985,000
    
    
      1,824,421


NOTE 6. CONSTRUCTION IN PROGRESS - OUT-OF-HOME ADVERTISING
EQUIPMENT

OOH construction in progress consists of the following:

September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)$
    
    
    $Cost incurred related to construction of an
      OOHadvertising LED display in China
    
    266,250
    
    
    266,250


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- 19 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 7. OBLIGATIONS UNDER CAPITAL LEASES

September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)$
    
    
    $Total minimum lease payments, with $9,440
      representing
    
    58,998
    
    
    -interestLess: Current portion of obligations under
      capital leases
    
    (11,799
    )
    
    -Long-term portion of obligations under capital leases
    
    47,199
    
    
    -


The following is a summary of future minimum lease payments
under capital leases as of September 30, 2009:

Twelve months ending September 30,
    
    $2010
    
    11,7992011
    
    11,7992012
    
    11,7992013
    
    11,8002014
    
    11,80058,997


The Company entered into capital lease arrangements for leasing
a motor vehicle used in its operations. The lease is for a term of five years.
For the six months ended September 30, 2009, the capital lease arrangement was
on an interest bearing basis. The lease is on a fixed repayment basis and
requires no contingent rental payments. The interest expense incurred on this
capital lease was $181 and $Nil for the six months ended September 30, 2009 and
2008, respectively, of which the capital lease arrangement for 2008 was on a
non-interest bearing basis.

The capital lease obligations in respect of leasing a second
hand truck used in its operations for a term of five years, has been assumed by
the third party purchaser upon disposal of a subsidiary as mentioned in Note
10.

NOTE 8. 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.

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- 20 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 9. INCOME TAX

The Company accounts for income taxes pursuant to Accounting
Standards Codification 740, Income Taxes (ASC 740). Under this accounting
standard, deferred tax assets and liabilities are determined with reference to
temporary differences between the bases of certain assets and liabilities for
income tax and financial reporting purposes. The deferred tax assets and
liabilities are classified according to the financial statement classification
of the assets and liabilities generating the differences, and a valuation
allowance is to be maintained with respect to deferred tax assets.

The Company establishes a valuation allowance based upon the
potential likelihood of realization of the deferred tax asset and taking into
consideration the Companys financial position and results of operations for the
current period. Future realization of the deferred tax benefit depends on the
existence of sufficient taxable income within the carryforward period under the
Federal tax laws local tax laws of its overseas subsidiaries..

Changes in circumstances, such as the Company generating
taxable income, could cause a change in judgment about the realizability of the
related deferred tax asset. Any change in the valuation allowance will be
included in income in the year of the change in estimate

ASC 740 Income Taxes defines a criterion that an individual
income tax position must meet for any part of the benefit of that position to be
recognized in an enterprises financial statements and provides guidance on
measurement, derecognition, classification, accounting for interest and
penalties, accounting in interim periods, disclosure and transition.

The Company recognizes that virtually all tax positions in the
jurisdictions in which it operates are not free of some degree of uncertainty
due to tax law and policy changes by the state. However, the Company cannot
reasonably quantify political risk factors and thus must depend on guidance
issued by current state officials.

Based on all known facts and circumstances and current tax law,
the Company believes that the total amount of unrecognized tax benefits as of
September 30, 2009 is not material to its results of operations, financial
condition or cash flows. The Company also believes that the total amount of
unrecognized tax benefits as of September 30, 2009, if recognized, would not
have a material effect on its effective tax rate. The Company further believes
that there are no tax positions for which it is reasonably possible, based on
current tax law and policy to which we are subject, that the unrecognized tax
benefits will significantly increase or decrease over the next 12 months
producing, individually or in the aggregate, a material effect on the Companys
results of operations, financial position or cash flows.

Since there is a net operating loss, no income tax is provided
for the six months ended September 30, 2009, while a tax credit was recorded for
the six months ended September 30, 2008 upon issuance of a tax assessment
confirming no income tax for the previous year in Lightscape Technologies
(Macau) Limited, our Macau subsidiary.

NOTE 10. DISCONTINUED OPERATIONS

The Company accounts for its discontinued operations under the
provisions of ASC 205-20 Presentation of Financial Statements  Discontinued
Operations (ASC 205-20). Accordingly, the results of operations and the
related charges for discontinued operations have been classified as Net profit
from discontinued operations, net of income taxes on the accompanying
Consolidated Statements of Operations and Comprehensive Loss. Assets and
liabilities of the discontinued operations have been reclassified and reflected
on the accompanying Consolidated Balance Sheets as Current assets of
discontinued operations and Current liabilities of discontinued operations.
For comparative purposes, all prior periods presented have been reclassified to
reflect the reclassifications on a consistent basis.

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- 21 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 10. DISCONTINUED OPERATIONS (continued)

Energy-Savings Solutions Business

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 out-of-home 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 ASC 205-20.

Golden Cypress Limited

In order to more effectively utilize the financial and other
resources, and to focus our business on the LED out-of-home advertising
business, on August 31, 2009, the Company disposed of 100% of the outstanding
capital stock of Golden Cypress Limited (Golden Cypress) to a third party
investor (the Purchaser), at a consideration of $1,120,000. Golden Cypress is
a company incorporated in the British Virgin Islands, which operates an LED
solutions business in Asia.

The purchase price will be paid in cash by the Purchaser within
12 months on or before August 31, 2010.

Gain on disposal of Golden Cypress is determined as
follows:

|                                                         |  | $         |  
|-------------------------------------------------------- |  | --------- | -
|                                                         |  |           |  
|Cash and cash equivalents                                |  | 1,047     |  
|Accounts receivable                                      |  | 448,952   |  
|Prepaid expenses and other current assets                |  | 824,795   |  
|Plant and equipment, net                                 |  | 64,864    |  
|Out-of-home advertising equipment, net                   |  | 394,415   |  
|Short-term bank borrowings                               |  | (56,993   | )
|Long-term bank borrowings                                |  | (46,818   | )
|Secured loan  current portion                           |  | (138,658  | )
|Secured loan  non-current portion                       |  | (138,658  | )
|Obligations under capital leases  current portion       |  | (3,037    | )
|Obligations under capital leases  current
      portion |  | (5,117    | )
|Trade payables                                           |  | (138,264  | )
|Accrued expenses and other current
      liabilities     |  | (131,676  | )
|Income tax payable                                       |  | (9,024    | )
|Net assets                                               |  | 1,065,828 |  
|Total consideration                                      |  | 1,120,000 |  
|                                                         |  |           |  
|Gain on disposal of a subsidiary                         |  | 54,172    |  

Results of operation of Golden Cypress for the three months and
six months ended September 30, 2009 have been included as discontinued
operations in the Consolidated Statements of Operations and Comprehensive Loss
of the Company.

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- 22 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 10. DISCONTINUED OPERATIONS (continued)

Lighting Source Products Business

In September 2009, the Companys board of directors authorized
management to begin the process to sell all the rights and assets of the
lighting source products business, namely the operational subsidiary Beijing
Aihua New Enterprise Lighting Appliance Co. Limited Beijing Aihua). Beijing
Aihua researches, develops, manufactures and sells high-intensity discharge
lighting products including metal halide lamps and high-pressure sodium lamps.
The Companys decision to discontinue operations in the lighting source products
business was intended to more effectively utilize the Companys financial and
human resources by focusing on the LED out-of-home advertising and LED solutions
businesses which management considers to have more promising potential for
revenue and margin growth. Pursuant to a sales and purchase agreement (the
S&P Agreement) dated November 20, 2009 between Beijing Illumination (Hong
Kong) Limited (Beijing Illumination) and Zhejiang Zhong Jun Investment
Management Co. Ltd. (Zhejiang Zhong Jun), the Company, through its subsidiary
Beijing Illumination, agreed to sell to Zhejiang Zhong Jun its 100% equity
interest at a consideration of $1,140,751 (or RMB7,800,000) in Beijing Aihua. Of
the total consideration of $1,140,751, $219,375 (or RMB1,500,000) had been
received in cash on November 20, 2009. The S&P Agreement is expected to
close by the end of December 2009, by which date the balance of consideration of
$921,376 (or RMB6,300,000) will be due and payable.

Upon signing of the S&P Agreement, Beijing Aihua becomes a
held for sale subsidiary, of which its related assets and liabilities are to
be reclassified as current assets and currents liabilities respectively under
the category of discontinued operations. With reference to the carrying value of
Beijing Aihua as of September 30, 2009, management decided to account for
related impairment loss on pending for sale subsidiary as follows:

|As of September 30, 2009                    |  | $          |  
|------------------------------------------- |  | ---------- | -
|                                            |  |            |  
|Net tangible assets                         |  |            |  
|Cash and cash equivalent                    |  | 127,780    |  
|Trade receivables                           |  | 473,547    |  
|Prepayment and other current asset          |  | 947,679    |  
|Inventory                                   |  | 2,320,852  |  
|Plant and equipment, net                    |  | 1,997,888  |  
|Other receivable  non-current portion      |  | 511,876    |  
|Other payables                              |  | (831,855   | )
|                                            |  | 5,547,767  |  
|Intangible asset                            |  |            |  
|Other intangible asset                      |  | 728,054    |  
|Net asset value                             |  | 6,275,821  |  
|Consideration                               |  | (1,140,751 | )
|Impairment loss on subsidiary held for sale |  | 5,135,070  |  
|Impairment of goodwill                      |  | 3,700,196  |  
|Total loss                                  |  | 8,835,266  |  

The loss included in discontinued operations could be adjusted
in the near tem if experience differs from the current estimates.

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- 23 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 10. DISCONTINUED OPERATIONS (continued)

Lighting Source Products Business (continued)

Upon impairment of goodwill, the balance of goodwill as of
September 30, 2009 is as follows

|                                     |  | $          |  
|------------------------------------ |  | ---------- | -
|                                     |  |            |  
|Goodwill before impairment           |  | 4,476,574  |  
|Impairment relating to Beijing Aihua |  | (3,700,196 | )
|                                     |  | 776,378    |  

Results of Discontinued Operations

Revenues and net profit (loss) from discontinued operations of
the Golden Cypress and energy savings business, as included in others, and
lighting source product business of Beijing Aihua are as follows:

|                                               |  | Three Months        |   |  | Six Months          |  
|---------------------------------------------- |  | ------------------- | - |  | ------------------- | -
|                                               |  | Ended September 30, |   |  | Ended September 30, |  
|                                               |  | 2009                |   |  | 2008                |  
|                                               |  | $                   |   |  | $                   |  
|Operating revenue  Beijing Aihua              |  | 372,069             |   |  | 322,455             |  
|Operating revenue - others                     |  | 60,206              |   |  | 480,471             |  
|                                               |  | 432,275             |   |  | 802,926             |  
|                                               |  |                     |   |  |                     |  
|Pre-tax profit (loss) from discontinued        |  |                     |   |  |                     |  
|operations                                     |  |                     |   |  |                     |  
|Beijing Aihua                                  |  | (7,992,065          | ) |  | (363,493            | )
|Others                                         |  | 136,809             |   |  | 25,273              |  
|                                               |  | (7,855,256          | ) |  | (338,220            | )
|                                               |  |                     |   |  |                     |  
|Income tax credit                              |  | -                   |   |  | 41,447              |  
|Net profit (loss) from discontinued operations |  | (7,855,256          | ) |  | 296,773             |  

NOTE 11. CONCENTRATION OF CREDIT RISK

As of September 30, 2009 and March 31, 2009, the Company has a
credit risk exposure of uninsured cash in banks of $143,199 and $51,707
(including cash of discontinued operations of $127,780 and $41,204
respectively), respectively. The Company does not require collateral or other
securities to support financial instruments that are subject to credit risk.

Subsequent to the measures taken by the Hong Kong Monetary
Authority on October 14, 2008 to use the Exchange Fund to guarantee the
repayment of all customer deposits held in Authorised Financial Institutions in
Hong Kong, following the principles of the existing Deposit Protection Scheme,
assurance is made to depositors that their money is fully protected. Hence, as
of September 30, 2009 cash of $208,624 (including cash of discontinued
operations of $Nil) out of a total of $351,823 (including cash of discontinued
operations of $Nil) of the Companys cash held with banks in Hong Kong is now
subject to no credit risk.

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- 24 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 11. CONCENTRATION OF CREDIT RISK (continued)

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 six months ended September 30, 2009, two customers
accounted for approximately 30.9% and 20.6%, respectively, of the Companys
total revenues. As of September 30, 2009, there are two customers whose account
receivables to the Company accounted for 20.5% and 16.4%, respectively, of total
accounts receivable.

The Company relies on supplies from numerous vendors. For the
six months ended September 30, 2009, two vendors accounted for approximately
11.4% and 11.5%, respectively, of total supply purchases.

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

NOTE 12. COMMITMENTS

Leases

The Company has operating lease agreements principally for its
office facilities and factory buildings. Such leases have remaining terms of
approximately 0.25 to 2.05 years. The following is a summary of future minimum
lease payments under operating leases as of September 30, 2009. Rental expense
was $372,257 and $108,389 for the six months ended September 30, 2009 and 2008,
respectively.

Twelve months ending September 30,

$2010
    
    819,4912011
    
    442,326Thereafter
    
    -1,261,817


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. No such royalty payment was accounted for or paid during the
six months ended September 30, 2009.

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- 25 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 13. 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 represents cash advances from him
and are unsecured, non-interest bearing and have no fixed repayment terms. The
balances related to such advances are as follows:

September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)$
    
    
    $Amount due to a director:Mr. Bondy Tan
    
    592,589
    
    
    745,501


NOTE 14. SEGMENT INFORMATION

The Company is engaged in continuing operations within two main
business segments: (i) LED out-of-home advertising and (ii) LED solutions. 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.

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- 26 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 14. SEGMENT INFORMATION (continued)

|                                                            |  | Three Months        |   |  | Six Months          |  
|----------------------------------------------------------- |  | ------------------- | - |  | ------------------- | -
|                                                            |  | Ended September 30, |   |  | Ended September 30, |  
|                                                            |  | 2009                |   |  | 2008                |  
|                                                            |  | $                   |   |  | $                   |  
|Segment revenues from external customers:                   |  |                     |   |  |                     |  
|Advertising                                                 |  | 260,026             |   |  | -                   |  
|LED solutions                                               |  | 1,010,314           |   |  | 270,709             |  
|Other                                                       |  | -                   |   |  | 11,716              |  
|                                                            |  | 1,270,340           |   |  | 282,425             |  
|                                                            |  |                     |   |  |                     |  
|Operating profit (losses):                                  |  |                     |   |  |                     |  
|Advertising                                                 |  | 206,141             |   |  | -                   |  
|LED solutions                                               |  | (813,081            | ) |  | (661,125            | )
|Other                                                       |  | -                   |   |  | 11,590              |  
|Loss from continuing operations before
      income tax and |  |                     |   |  |                     |  
|noncontrolling interest                                     |  | (606,940            | ) |  | (649,535            | )

September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)$
    
    
    $Segment assets:Advertising
    
    2,355,656
    
    
    3,856,166LED solutions
    
      6,708,092
    
    
    4,229,6539,063,748
    
    
    8,085,819Assets of discontinued operations
    
    3,226,389
    
    
    12,471,74312,290,137
    
    
    20,557,562Capital expenditures:Advertising
    
    324,599
    
    
    1,168,290LED solutions
    
    106,756
    
    
    649,597Other
    
    -
    
    
    -431,355
    
    
      1,817,887


Geographical Information:

Three Months
    
    
    Six MonthsEnded September 30,
    
    
    Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008$
    
    
    $
    
    
    $
    
    
    $Total sales:Mainland, the PRC
    
    155,624
    
    
    17,085
    
    
    371,478
    
    
    28,476Hong Kong
    
    1,114,716
    
    
    260,846
    
    
    1,861,492
    
    
    895,384Singapore
    
    -
    
    
    4,493
    
    
    -
    
    
    22,4651,270,340
    
    
    282,424
    
    
    2,232,971
    
    
    946,325


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- 27 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 14. SEGMENT INFORMATION (continued)

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

September 30,
    
    
    March 31,2009
    
    
    2009(Unaudited)$
    
    
    $Hong Kong
    
    1,394,481
    
    
    1,168,672Mainland, the PRC
    
    2,089,665
    
    
    2,171,6783,484,146
    
    
    3,340,350


Two customer accounts for 29.2% and 23.7%% of operating revenue
of the LED solutions segment for the six months ended September 30, 2009
respectively, and one customer accounted for 37.4% of operating revenue of the
LED solutions segment for the six months ended September 30, 2008.

NOTE 15. SECURED LOAN

On July 13, 2009, the Company obtained a secured loan of
$257,069 from a third party financial institution. The loan has a maturity of
four months and is to be repaid on November 12, 2009 at an interest rate of 3%
per month. It is secured by a joint and several guarantee from two directors of
subsidiaries of the Company. Upon agreement of both parties, principal will be
repaid in four monthly installments beginning on December 12, 2009.

The following is a summary of future repayments related to the
secured loan:

Twelve months ending September 30,
    
    $2010
    
    257,069


The liability in respect of the secured loan, as borrowed by
the Company on May 13, 2009 under a working capital facility of $271,428 from a
third party financial institution has been assumed by the third party purchaser
upon disposal of a subsidiary as mentioned in Note 10.

NOTE 16. POST BALANCE SHEET EVENT

Post balance sheet events up to November 23, 2009, the date of issuance  of the financial statements, have been reviewed and included as necessary in  the financial statements.

---

- 28 -

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.

Use of Certain Defined Terms

In this quarterly report and
unless otherwise specified, all dollar amounts are expressed in United States
dollars, all references to common shares refer to the common shares in our
capital stock and 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 23, 2007, we changed our name to Lightscape Technologies
Inc. The name change became effective with the OTC Bulletin Board at the
opening for trading on April 23, 2007 under the new stock symbol LTSC.

We are a holding company for
subsidiaries engaged in two main business activities: (i) light-emitting diode
(LED) out-of-home advertising and (ii) LED solutions. During the six months
ended September 30, 2009, approximately 20% of our revenue was derived from our
LED out-of-home advertising business and 80% from our LED solutions
business.

LED Out-of-Home Advertising Business

We design, install and operate
LED out-of-home advertising billboards. We are building and expanding our LED
out-of-home advertising network (i) through billboard installations which we
complete and operate independently, and (ii) through installations which we
complete and operate through partnerships and/or joint ventures with major
property owners and developers in Asia. We generate revenue by selling
advertising space on our LED out-of-home media network to advertisers. We have
established and are continuing to establish advertising sales channels for our
LED out-of-home advertising network by forming strategic partnerships with
advertising agencies and other media industry partners.

We signed a joint venture
agreement on February 12, 2008 as part of our efforts to build an LED
out-of-home advertising network in the Peoples Republic of China (the PRC or
China). We entered this joint venture agreement with Beijing Xintong Media
& Cultural Development Co. Ltd. (BX). Pursuant to the terms of the joint
venture agreement, (i) the joint venture company will be named Beijing Xintong
New Vision Media Advertising Co. Ltd. (BXNV), (ii) our company agreed to
contribute to BXNV cash and an LED billboard for the joint ventures

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- 29 -

initial installation within ninety business days of signing the
agreement, and (iii) in exchange for these contributions, our company will
obtain 50.1% ownership of BXNV, with the remaining 49.9% to be held by BX. The
joint venture formation process is ongoing. Certain details of the joint venture
arrangement are being finalized, including the process of completing the
transfer of the 50.1% share ownership in BXNV from BX to our company (or one of
our subsidiaries), and other minor strategic and operational details. Management
does not believe that there are any material risks to our ultimate receipt of
50.1% ownership of BXNV as originally contemplated by the terms of the joint
venture agreement signed on February 12, 2008. Post-formation, we intend to
account for our 50.1% interest in the joint venture as a subsidiary in our
consolidated financial statements. As such, we will consolidate all profit and
loss, assets and liability items and eliminate the future minority shareholding
portion held by BX, in this case 49.9%, as a minority interest. We expect the
joint venture agreement to close before the end of December 2009.

In addition to the pending joint
venture agreement, our company has expanded its out-of-home advertising network
relationship with the New World Group by working directly with New World
Department Store China (NWDSC) to install and operate LED billboards at NWDSC
properties throughout mainland China.

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.

Reclassification of Disposed Subsidiary and Subsidiary
Held for Sale as Discontinued Operations

A subsidiary which has been
disposed of or classified as held for sale during the three or six months ended
September 30, 2009 is to be included in discontinued operations if it meets any
of the quantitative thresholds in accordance with ASC 280 Segment Reporting
paragraph 18-24, and ASC 205-20 Presentation of Financial Statements 
Discontinued Operations. Our disposal of Golden Cypress Limited and our pending
sale of Beijing Aihua New Enterprise Lighting Appliance Co. Limited during the
three months ended September 30, 2009 each met certain of the quantitative tests
and other criteria of ASC 280 and ASC 205-20. As a result, the operating
results, assets and liabilities of Golden Cypress and Beijing Aihua have been
reclassified as discontinued operations, with corresponding reclassification of
2008 comparative figures.

Application of Critical Accounting Policies

Our discussion and analysis of
our financial condition and results of operations are based on our consolidated
financial statements, which have been prepared in accordance with U.S. GAAP. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses. We evaluate, on an on-going basis, our estimates for reasonableness as
changes occur in our business environment. We base our estimates on experience
and various other assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

Critical accounting policies are
defined as those that are reflective of significant judgments, estimates and
uncertainties, and potentially result in materially different results under
different assumptions and conditions. We believe the following are our critical
accounting policies:

Revenue Recognition

Our 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.

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- 30 -

Advertising LED out-of-home advertising revenue from
advertising services, net of agency rebates and commissions, is recognized
ratably over the period in which the advertisement is displayed. Prepayments for
the advertising services are deferred and recognized as revenue when the
advertising services are rendered.

LED solutions Our 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.
Revenues for LED solutions activities provided on a supply and build basis and
for consultancy services for which the revenue generation process lasts for
several months are recognized on the percentage-of-completion (PC) method.

ASC 960 addresses revenue recognition for
long-term construction-type contracts. Since most of our companys LED solution
revenue relates to construction contracts, which by their nature are long-term,
the underlying accounting principle known as matching  expenses follow revenues
 would be violated if the revenue from the contract were recognized upon
contract execution or sale of the services.

There are two acceptable methods of revenue
recognition under the preceding pronouncements for construction contractors.These are not alternative methods, however, from which contractors are
free to choose regardless of the circumstances. One is the
PC method and the other is the completed contract (CC) method. Under the PC
method, the construction contractor recognizes revenue over the life of the
construction contract based on the degree of completion. For example, 50%
completion means recognition of one-half of revenues, costs, and income. Under
the CC method, all revenues, costs, and income are recognized only at completion
of the construction project, ordinarily at the end of the construction contract.The PC method is preferred and should be used whenever the conditions for
its use are satisfied.

ASC 960 requires that the PC method be used
in lieu of the CC method when all of the following are present: (1) reasonably
reliable estimates can be made of revenue and costs; (2) the construction
contract specifies the parties rights as to the goods, consideration to be paid
and received, and the resulting terms of payment or settlement; (3) the contract
purchaser has the ability and expectation to perform all contractual duties; and
(4) the contract contractor has the same ability and expectation to
perform.

ASC 960 states, Contract costs generally include direct costs,
such as materials, direct labor, and subcontracts and indirect costs
identifiable with or allocable to the contracts.

Our company always seeks to use the fairest approximation of
the PC method. LED solutions projects for which our clients can provide their
quantity surveyors certificate (QC certificate) allow us to use the
certificate as a basis that is applied consistently for estimation and accrual
of revenue and related costs. In the absence of a QC certificate, our company
will calculate a projects PC based on the ratio of incurred costs to estimated
final costs.

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. We generally provide a one-year warranty for workmanship under our
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.

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- 31 -

Foreign Currency Translation

The functional currency of our
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 our 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.

Impairment of Long-Lived Assets

Our 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 our company expects to hold and use is based on the
estimated fair value of the assets. Therefore, future changes in our companys
strategy and other changes in our 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.

Accounts Receivables and Allowance for Doubtful Accounts

Our company performs certain
credit evaluation procedures and does not require collateral for financial
instruments subject to credit risk. We believe that credit risk is limited
because our company routinely assesses the financial strength of our customers
and, based upon factors surrounding the credit risk of our customers, we
establish an allowance for estimated uncollectible accounts receivable. As a
consequence, we believe that our accounts receivable credit risk exposure beyond
such allowances is limited. We recognize 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 our
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.

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. We attempt 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
out-of-home advertising network in the PRC, Hong Kong and other areas of Asia.
Following the acquisition of Lightscape Technologies (Macau) Limited
(Lightscape Macau) in 2006, our

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company entered the LED solutions business, which includes the
design, supply and building 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 out-of-home
advertising network through installations we complete and operate independently,
through existing partnerships and by establishing new partnerships with major
property owners and developers in Asia, (ii) establishing advertising sales
channels for our LED out-of-home advertising network by forming strategic
partnerships with advertising agencies and other media industry partners 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.

In September 2009, our board of
directors authorized management to begin the process to sell all the rights and
assets of our lighting source products business, namely our operational
subsidiary Beijing Aihua. Beijing Aihua researches, develops, manufactures and
sells HID lighting products including metal halide lamps and high-pressure
sodium lamps. Our companys decision to discontinue operations in the lighting
source products business was intended to more effectively utilize our financial
and human resources by focusing on our LED out-of-home advertising and LED
solutions businesses which we consider to have more promising potential for
revenue and margin growth. As of September 30, 2009, we classified these assets
as assets held for sale and included the results of the lighting source products
business in discontinued operations. On November 20, 2009, our 76.8%
majority-owned subsidiary, Beijing Illumination (Hong Kong) Limited, entered
into a Sale and Purchase Agreement with Zhejiang Zhong Jun Investment Management
Co. Limited. Pursuant to the terms and conditions of the Sale and Purchase
Agreement, Beijing Illumination agreed to sell its 100% ownership of the
registered share capital of its subsidiary company Beijing Aihua to Zhejiang
Zhong Jun in consideration for payments totaling RMB7,800,000 (approximately
US$1,141,352). Of this amount, a deposit of RMB1,500,000 (approximately
US$219,491) shall be paid by Zhejiang Zhong Jun to Beijing Illumination within
three days of the signing of the Sale and Purchase Agreement. This cash deposit
was paid by Zhejiang Zhong Jun to Beijing Illumination on November 20, 2009. The
remaining RMB6,300,000 (approximately US$921,861) shall be paid by Zhejiang
Zhong Jun to Beijing Illumination within three days of the closing of the Sale
and Purchase Agreement. The closing of the Sale and Purchase Agreement is
subject to the satisfaction of conditions precedent to closing as set out in the
Sale and Purchase Agreement including the following:

|1. | Beijing Illumination will have received all regulatory
      consents and approvals for the legal transfer of ownership of the shares
      as contemplated in the Sale and Purchase Agreement; and
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                    
|2. | No breach of any warranty by Beijing Illumination or by
      Zhejiang Zhong Jun will have occurred since the effective date of the Sale
      and Purchase Agreement.                             

Due to conditions precedent to closing as set out in the Sale
and Purchase Agreement, and the risk that these conditions precedent will not be
satisfied, there is no assurance that our company will complete the transactions
contemplated in the Sale and Purchase Agreement.

Recent disruptions in financial
markets and challenging economic conditions may adversely affect our business.
Firstly, we depend to a large extent on outside capital over the near-term to
fund our capital needs. Disruptions in financial markets have reduced the
general availability of both equity capital and debt financing. 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 or withstand adverse
operating results. Secondly, the disruptions in the financial markets and
challenging economic conditions have reduced spending by businesses. Our
operating results in one or more segments may be adversely affected by these
slowing economic conditions and spending patterns. If global economic and market
conditions remain uncertain or persist, spread, or deteriorate further, we may
experience material impacts on our business, operating results, and financial
condition. Lastly, in times of economic slowdown, the number of our customers
who default on payments owed to us may increase. We could experience longer
payment cycles, increased collection costs and higher bad debt expenses.
Additionally, to the degree that the ongoing turmoil in the credit markets makes
it more difficult for some customers to obtain financing, those customers
ability to pay could be adversely impacted, which in turn could have a material
adverse impact on our business, operating results, and financial condition.

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- 33 -

Summary of Key Results

Total net revenue from continuing
operations for the six months ended September 30, 2009 was $2,232,970, which
represents a 136% increase from the total net revenue from continuing operations
of $946,325 for the six months ended September 30, 2008.

Net loss from continuing
operations for the six months ended September 30, 2009 was $1,267,109 compared
to a net loss of $1,263,158 for the six months ended September 30, 2008.

Net loss from discontinued
operations for the six months ended September 30, 2009 was $7,949,520 compared
to a net loss of $470,034 for the six months ended September 30, 2008

Basic and fully diluted loss per
share from continuing operations for the six months ended September 30, 2009 was
$0.02 compared to a basic and fully diluted loss per share from continuing
operations of $0.02 for the six months ended September 30, 2008.

Results of Operations  Three Months Ended September 30,
2009

Our net loss from continuing
operations for the three months ended September 30, 2009 was $606,940, or $0.01
per fully diluted share, compared to a net loss of $442,558, or $0.01 per fully
diluted share, for the three months ended September 30, 2008. The increase in
net loss from continuing operations is primarily attributable to a one-time
income tax credit of $206,977 during the three months ended September 30, 2008
with no such tax credit during the three months ended September 30, 2009.

Our net loss from discontinued
  operations for the three months ended September 30, 2009 was $7,855,256, or
  $0.14 per fully diluted share, compared to a net loss of $296,773, or $nil per
  fully diluted share, for the three months ended September 30, 2008. The increase
  in net loss from discontinued operations is primarily attributable to the discontinuation
  of our lighting source products business during the three months ended September
  30, 2009. This resulted in a loss from these discontinued operations attributable
  to our company of $7,792,770, allocated between an impairment to goodwill of
  $3,700,196, an impairment to intangible assets of $728,054, and an expected
  loss on disposal of $4,407,016, which was offset by a noncontrolling interest
  share of the loss of $1,042,496.

Revenues and Cost of Revenues

Total net revenue from continuing
operations for the three months ended September 30, 2009 was $1,270,340,
representing a 350% increase from the total net revenue of $282,424 for the
three months ended September 30, 2008. The increase in net revenues is
attributable to increased sales across both our LED out-of-home advertising
business and our LED solutions business.

Specifically, revenue related to
our LED out-of-home advertising business was $260,026 for the three months ended
September 30, 2009 as compared to $nil during the three months ended September
30, 2008. The gross profit margin on our LED out-of-home advertising business
was 79% for the three months ended September 30, 2009. Our LED out-of-home
advertising business is expected to contribute increased revenues in the
foreseeable future as we ramp up several key LED billboard installations which
were completed during the three months ended September 30, 2009 and are expected
to begin generating advertising revenue in the near future. Our company has
formed strategic partnerships with Ogilvy & Mather Group, a major
advertising agency in Hong Kong, and LIME, a diversified media conglomerate, to
sell advertising space on our LED billboards. We are also in the process of
negotiating strategic partnership agreements and contracts with other
advertising agencies and advertisers for the sales of advertising space on the
LED billboard network.

Revenue related to our LED
solutions business increased to $1,010,314 for the three months ended September
30, 2009 from $270,709 during the three months ended September 30, 2008, or an
increase of 273%. The increase in revenues was due primarily to the completion
of more LED solutions contracts during the three months ended September 30, 2009
as compared to a smaller number of contracts completed during the three months
ended

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- 34 -

September 30, 2008, and the acceleration of certain major
contracts towards technical completion. The gross profit margin on our LED
solutions business was 12% for the three months ended September 30, 2009. Our
LED solutions business is expected to contribute increased revenues in the
foreseeable future as several key projects are expected to be completed in the
near future.

Total cost of revenues for the
three months ended September 30, 2009 was $942,706, which represents an increase
of 457% as compared to total cost of revenues of $169,235 for the three months
ended September 30, 2008. The increase in the total cost of revenues during the
three months ended September 30, 2009 was due primarily to the corresponding
350% increase in overall sales revenues. Our overall gross profit margin was 26%
for the three months ended September 30, 2009 as compared to 40% for the three
months ended September 30, 2008, due mainly to lower gross margins from our LED
solutions business.

Operating Expenses

Operating expenses from
continuing operations for the three months ended September 30, 2009 were
$890,668, which represents a 16% increase in operating expenses from $769,467
for the three months ended September 30, 2008. Selling and marketing expenses,
general and administrative expenses constitute the main components of our
operating expenses.

Selling and marketing expenses
for the three months ended September 30, 2009 increased approximately 308% to
$143,376 from $35,159 for the three months ended September 30, 2008. The
increase corresponds to the 350% increase in total net revenues and was mainly
due to increased costs incurred in order to build up our project pipeline of LED
solutions contracts, and to establish our sales network for our LED out-of-home
advertising business. Our company anticipates that selling and marketing
expenses will remain steady or increase in the future to support our companys
further expansion in our core LED out-of-home advertising and LED solutions
businesses, however, such increases are expected to be limited as a result of a
company-wide cost-cutting initiative implemented throughout 2009.

General and administrative
expenses decreased by 3% during the three months ended September 30, 2009 to
$631,840 from $653,773 for the three months ended September 30, 2008. The
decrease was mainly due to the cost savings achieved as a result of the
company-wide cost-cutting initiative implemented throughout 2009. Our company
anticipates that general and administrative costs will remain steady or increase
in the foreseeable future as our companys operations continue to expand,
however, such increases are expected to continue to be limited as a result of a
company-wide cost-cutting initiative.

Results of Operations  Six Months Ended September 30,
2009

Our net loss from continuing
operations for the six months ended September 30, 2009 was $1,267,109, or $0.02
per fully diluted share, compared to a net loss of $1,263,158, or $0.02 per
fully diluted share, for the six months ended September 30, 2008.

Our net loss from discontinued
  operations for the six months ended September 30, 2009 was $7,949,520, or $0.14
  per fully diluted share, compared to a net loss of $470,034, or $0.01 per fully
  diluted share, for the six months ended September 30, 2008. The increase in
  net loss from discontinued operations is primarily attributable to the discontinuation
  of our lighting source products business during the three months ended September
  30, 2009. This resulted in a loss from these discontinued operations attributable
  to our company of $7,792,770, allocated between an impairment to goodwill of
  $3,700,196, an impairment to intangible assets of $728,054, and an expected
  loss on disposal of $4,407,016, which was offset by a noncontrolling interest
  share of the loss of $1,042,496.

Revenues and Cost of Revenues

Total net revenue from continuing
operations for the six months ended September 30, 2009 was $2,232,970, which
represents a 136% increase from the total net revenue from continuing operations
of $946,325 for the six months ended September 30, 2008. The increase in net
revenues is primarily attributable to new sales from our LED out-of-home
advertising business and an increase in sales from our LED solutions
business.

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- 35 -

Specifically, revenue related to
our LED out-of-home advertising business was $448,651 for the six months ended
September 30, 2009 as compared to $nil during the six months ended September 30,
2008. The gross profit margin on our LED out-of-home advertising business was
79% for the six months ended September 30, 2009. Our LED out-of-home advertising
business is expected to contribute increased revenues in the foreseeable future
as we ramp up several key LED billboard installations which were completed
during the six months ended September 30, 2009 and are expected to begin
generating advertising revenue in the near future. Our company has formed
strategic partnerships with Ogilvy & Mather Group, a major advertising
agency in Hong Kong, and LIME, a diversified media conglomerate, to sell
advertising space on our LED billboards. We are also in the process of
negotiating strategic partnership agreements and contracts with other
advertising agencies and advertisers for the sales of advertising space on the
LED billboard network.

Revenue related to our LED
solutions business increased to $1,784,319 for the six months ended September
30, 2009 from $923,658 during the six months ended September 30, 2008, or an
increase of 93%. The increase in revenues was due primarily to the completion of
more LED solutions contracts during the six months ended September 30, 2009 as
compared to a smaller number of contracts completed during the six months ended
September 30, 2008, and the acceleration of certain major contracts towards
technical completion. The gross profit margin on our LED solutions business was
14% for the six months ended September 30, 2009. Our LED solutions business is
expected to contribute increased revenues in the foreseeable future as several
key projects are expected to be completed in the near future.

Total cost of revenues for the
six months ended September 30, 2009 was $1,622,626, which represents an increase
of 140% as compared to total cost of revenues of $677,059 for the six months
ended September 30, 2008. The increase in the total cost of revenues during the
six months ended September 30, 2009 was due primarily to the corresponding 136%
increase in overall sales revenues. Our overall gross profit margin was 27% for
the six months ended September 30, 2009 as compared to 28% for the six months
ended September 30, 2008.

Operating Expenses

Operating expenses from
continuing operations for the six months ended September 30, 2009 were
$1,852,818, which represents a 6% increase in operating expenses from $1,746,093
for the six months ended September 30, 2008. Selling and marketing expenses,
general and administrative expenses constitute the main components of our
operating expenses.

Selling and marketing expenses
for the six months ended September 30, 2009 increased approximately 217% to
$310,521 from $97,885 for the six months ended September 30, 2008. The increase
corresponds to the 136% increase in total net revenues and was mainly due to
increased costs incurred in order to build up our project pipeline of LED
solutions contracts, and to establish our sales network for our LED out-of-home
advertising business. Our company anticipates that selling and marketing
expenses will remain steady or increase in the future to support our companys
further expansion in our core LED out-of-home advertising and LED solutions
businesses, however, such increases are expected to be limited as a result of a
company-wide cost-cutting initiative implemented throughout 2009.

General and administrative
expenses decreased by 8% during the six months ended September 30, 2009 to
$1,349,094 from $1,459,972 for the six months ended September 30, 2008. The
decrease was mainly due to the cost savings achieved as a result of the
company-wide cost-cutting initiative implemented throughout 2009. Our company
anticipates that general and administrative costs will remain steady or increase
in the foreseeable future as our companys operations continue to expand,
however, such increases are expected to continue to be limited as a result of a
company-wide cost-cutting initiative.

Liquidity and Capital Resources

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

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- 36 -

As of September 30, 2009, our
company had an overall net working capital surplus of $3,756,473 compared to a
surplus of $12,842,489 as of March 31, 2009, representing a decrease in working
capital of $9,086,016. As of September 30, 2009, our company had a net working
capital surplus from continuing operations of $1,751,070 compared to a surplus
of $2,684,131 as of March 31, 2009, representing a decrease in working capital
of $933,061. The cash and cash equivalents of our company attributable to
continuing operations decreased to $224,042 as at September 30, 2009 as compared
to $342,729 as of March 31, 2009. Cash attributable to discontinued operations
totaled $127,780 as of September 30, 2009 and $47,470 as of March 31, 2009.

Cash Flow Related to Operating Activities

Continuing operating activities
used cash of $221,316 for the six months ended September 30, 2009 as compared to
continuing operating activities using cash of $2,596,085 for the six months
ended September 30, 2008. The decrease in cash used in continuing operating
activities was mainly due to increases in trade payables and accrued expenses.
Discontinued operating activities used cash of $256,937 during the six months
ended September 30, 2009 as compared to discontinued operating activities
generating cash of $327,110 during the six months ended September 30, 2008.

Cash Flow Related to Investing Activities

Net cash used in investing
activities of continuing operations amounted to $436,787 during the six months
ended September 30, 2009 as compared to investing activities of continuing
operations generating cash of $13,778 during the six months ended September 30,
2008. The increase in cash used in investing activities of continuing operations
is attributable primarily to our companys purchase of digital out-of-home
advertising displays. Net cash provided by investing activities of discontinued
operations was $292 during the six months ended September 30, 2009 as compared
to investing activities of discontinued operations using cash of $32,030 during
the six months ended September 30, 2008.

Our company incurred capital
expenditures of $430,733 during the six months ended September 30, 2009 and
$7,406 for the six months ended September 30, 2008. The increase in capital
expenditures for the six months ended September 30, 2009 as compared to
September 30, 2008 was mainly attributable to increased purchases of digital
out-of-home advertising equipment. As of September 30, 2009, 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 of
continuing operations generated cash of $619,849 for the six months ended
September 30, 2009 as compared to financing activities of continuing operations
generating cash of $952,726 for the six months ended September 30, 2008. The
decrease in net cash flow generated by financing activities of continuing
operations was mainly due to the repayment of bank loans and the repayment of an
advance from a director of our company during the six months ended September 30,
2009 compared to no such repayments during the six months ended September 30,
2008. Financing activities of discontinued operations generated cash of $256,102
during the six months ended September 30, 2009 as compared to financing
activities of discontinued operations generating cash of $7,528 for the six
months ended September 30, 2008.

During the six months ended
September 30, 2009, our company, through Lightscape Technologies (Greater China)
Limited (LTGC), obtained an installment loan of $771,208 (HKD6,000,000) from
DBS Bank (Hong Kong) Limited (DBS Bank) under the Special Loan Guarantee
Scheme of The Government of the Hong Kong Special Administrative Region (HKSAR
Government). The loan is repayable over 12 equal monthly installments, at an
interest rate of 2% per annum over the prime lending rate, which is currently
5.25%, from May 12, 2009 to April 12, 2010. The installment loan is secured by a
Special Loan Guarantee issued by the HKSAR Government for an amount equal to 70%
of the loan, a Guarantee and Indemnity for an unlimited amount duly executed by
a director of our company and a director of LTGC, and a Guarantee and Indemnity
for an unlimited amount duly executed by

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- 37 -

Tech Team Investment Limited, the immediate holding company of
LTGC. As of September 30, 2009, five out of twelve installments have been repaid
to DBS Bank on the respective monthly due dates.

Management believes that
additional cash may need to be raised in the next twelve months to finance our
existing operations and expansion of our LED out-of-home advertising and LED
solutions businesses since we have not yet achieved sustainable positive cash
flows. However, management also expects to generate positive cash flow in the
coming six months from the completion of projects which may substantially, if
not fully, meet the cash needs of our company during the next twelve months.
Management may consider outside capital over the near-term, including the next
twelve months, if required 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.

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.

Item 3. Quantitative and Qualitative Disclosures About
Market Risk.

As a smaller reporting company,
  we are not required to provide this information.

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 September 30, 2009, 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 September 30, 2009 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.

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- 38 -

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 September
30, 2009. 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.

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 out-of-home advertising and LED systems in
the PRC. Some of these risks and uncertainties relate to our ability to:

- attract new customers and increase 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 out-of-home advertising network and to complete supply and
build contracts for LED systems.

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- 39 -

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. Disruptions in
financial markets and challenging economic conditions have affected and may
continue to affect our ability to raise capital. 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.

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. Accordingly, 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 and results of operations 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

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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 out-of-home
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 out-of-home 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.

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 out-of-home advertising billboards could harm
our growth potential and our ability to increase our revenues.

Our ability to generate future
revenues from LED out-of-home advertising sales depends largely upon our ability
to secure desirable locations for the installation and operation of our
large-scale out-of-home 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 out-of-home billboards would be
negatively impacted. In turn, advertisers may not find advertising on our LED
out-of-home billboards 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 out-of-home 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 out-of-home 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 out-of-home
advertising network we are building in China.

In China, The Outdoor Advertising
Registration Administrative Regulations stipulate that out-of-home
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

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other supporting documents for registration, including the
content of the proposed out-of-home 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 out-of-home
advertising billboards. However, we may be subject to government action if
advertisements shown on our out-of-home 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 out-of-home 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 out-of-home 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 solutions. We expect to derive a greater
proportion of future revenues from our LED out-of-home 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 services in our markets may reduce demand
for our LED products and services. 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.

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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 51.5% of our
revenue was contributed from two customers for the six months ended September
30, 2009. If these two or any of our customers ceased doing business with our
company, we would 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 company is subject to the credit risk of our customers,
which could have a material adverse effect on our financial condition, results
of operations and liquidity.

We are subject to the credit risk of our customers. Businesses
that are good credit risks at the time of sale may become bad credit risks over
time. In times of economic recession, the number of our customers who default on
payments owed to us tends to increase. If we fail to adequately assess and
monitor our credit risks, we could experience longer payment cycles, increased
collection costs and higher bad debt expenses. Additionally, to the degree that
the ongoing turmoil in the credit markets makes it more difficult for some
customers to obtain financing, those customers ability to pay could be
adversely impacted, which in turn could have a material adverse impact on our
business, operating results, and financial condition.

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.

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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.

The current economic environment has adversely affected
business spending patterns, which may have an adverse effect on our
business.

The disruptions in the financial
markets and challenging economic conditions have adversely affected the world
economy, and in particular, reduced spending by businesses. Our operating
results in one or more segments may be affected by these uncertain or changing
economic conditions and spending patterns. If our customers delay or cancel
spending on LED out-of-home advertising or LED solutions, that decision could
result in reductions in sales of our products and services, longer sales cycles
and increased price competition. There can be no assurances that government
responses to the disruptions in the financial and economic markets will restore
spending to previous levels. If global economic and market conditions remain
uncertain or persist, spread, or deteriorate further, we may experience material
impacts on our business, operating results, and financial condition.

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 out-of-home 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 out-of-home 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.

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

Our company may enter sales
transactions denominated in Chinese Renminbi and Singapore dollars. While
Singapore dollars are free from to exchange control, with free conversion of
currency, 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

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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. The Renminbi is moved to a managed
floating exchange rate based on market supply and demand with reference to a
basket of foreign currencies. The recent global financial crisis may lead to
drastic and unanticipated fluctuations in the exchange rates of Renminbi and
Singapore dollars, which may affect our company through either foreign exchange
gains or losses to be accounted for in the statement of operations, and which
may materially affect our operating results and financial position.

New or changing government policies or regulations related
to the LED out-of-home 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 out-of-home advertising industry in China.
Both short and long-term changes in governmental policies or regulations
affecting the LED out-of-home 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 out-of-home 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
advancements in the design and manufacture by others of LEDs and LED modules. In
the LED out-of-home 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. The process of
strengthening our internal controls and complying with Section 404 is expensive

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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, all of our directors and most of our
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 directors and most of our officers
reside outside the United States, and many 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.

The occurrence of a widespread health epidemic may adversely
affect our financial condition and results of operations.

Our businesses may be adversely
affected by widespread regional, national or global health epidemics, such as
pandemic flu. Such threats or epidemics may adversely impact our businesses by
disrupting provision of services to our customers, and by causing customers to
avoid public gathering places. If such health epidemics occur, we may experience
material impacts on our business, operating results, and financial
condition.

Risks Related to Our Industry

The LED out-of-home 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 out-of-home advertising billboards, LED lighting
systems and LED screen rental services, 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.

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

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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.

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.

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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 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.

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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.

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, FINRA Rule 6530, 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
Securities and Exchange 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. 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 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

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- 49 -

|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            | 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)                                                                                                                                                                     
|               |                                                                                                                                                                                                                                                                                                                                                                             
|3.4            | 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)                                                                                                                                            
|               |                                                                                                                                                                                                                                                                                                                                                                             
|3.5            | 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)                                                                                                                                                                                 
|               |                                                                                                                                                                                                                                                                                                                                                                             
|3.6            | 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)                                                                                                                                                               
|               |                                                                                                                                                                                                                                                                                                                                                                             
|3.7            | Bylaws (incorporated by reference from our Current Report
      on Form 8-K filed on October 14, 2008)                                                                                                                                                                                                                                                                      
|               |                                                                                                                                                                                                                                                                                                                                                                             
|(10)           | Material Contracts                                                                                                                                                                                                                                                                                                                                                          
|               |                                                                                                                                                                                                                                                                                                                                                                             
|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           | Form of Subscription Agreement dated August 21, 2007
      (incorporated by reference from our Current Report on Form 8-K filed on
      August 22, 2007)                                                                                                                                                                                                                   
|               |                                                                                                                                                                                                                                                                                                                                                                             
|10.3           | 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)                                                                                                                                      
|               |                                                                                                                                                                                                                                                                                                                                                                             
|10.4           | 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)

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- 50 -

|Exhibit Number | Description                                                                                                                                                                                                                                                       
|-------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                   
|10.5           | 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)                           
|               |                                                                                                                                                                                                                                                                   
|10.6           | 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)                            
|               |                                                                                                                                                                                                                                                                   
|10.7           | 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)
|               |                                                                                                                                                                                                                                                                   
|10.8           | Form of Placement Agent Warrant (incorporated by
    reference from our Current Report on Form 8-K filed on March 10, 2008)                                                                                                                                       
|               |                                                                                                                                                                                                                                                                   
|10.9           | Agreement between Lightscape Technologies Inc. and Aaron
      Tibor Ratner dated April 18, 2008 (incorporated by reference from our
      Current Report on Form 8-K filed on December 5, 2008)                                                                  
|               |                                                                                                                                                                                                                                                                   
|10.10*         | Sale and Purchase Agreement between Beijing Illumination
      (Hong Kong) Limited and Zhejiang Zhong Jun Investment Management Co.
      Limited, dated November 20, 2009 (Translated from Chinese).                                                             
|               |                                                                                                                                                                                                                                                                   
|(14)           | Code of Ethics                                                                                                                                                                                                                                                    
|               |                                                                                                                                                                                                                                                                   
|14.1           | Code of Ethics (incorporated by reference from our
      Current Report on Form 8-K filed on January 6, 2009)                                                                                                                                                     
|               |                                                                                                                                                                                                                                                                   
|(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

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- 51 -

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 TanPresident,
Secretary and Treasurer and Chief Executive Officer and Director
(Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer)

Date: November 23, 2009

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