UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB  (Mark One) xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedDecember 31, 2006 [
        ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to __________ Commission file number000-30299 GLOBAL INNOVATIVE SYSTEMS INC.(Exact name of small business issuer as specified in its charter)  Nevada
        
        98-0217653(State or other jurisdiction of incorporation or organization)
        
        (IRS Employer Identification No.)  16/F., Hang Seng Mongkok Building, 677 Nathan Road, Mongkok, Kowloon, Hong Kong(Address of principal executive offices)  (852) 2546-1808(Issuers telephone number)  N/A(Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.     YesxNo o APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 37,451,410 common shares issued and outstanding as of February 10, 2007. Transitional Small Business Disclosure Format (Check one):
        Yes [
        ]
        Nox Indicate by check mark whether the registrant is a shell company (as defined in Rule 2b-2 of the Exchange Act). Yes [
        ]
        Nox          - 2 -     GLOBAL INNOVATIVE SYSTEMS INC.  PART I - FINANCIAL INFORMATION  Item1.Unaudited Condensed Consolidated Financial Statements.  Unaudited Condensed Consolidated Balance Sheets as at December 31, 2006 and March 31, 2006  Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2006 and 2005  Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2006 and 2005  Notes to Unaudited Condensed Consolidated Financial Statements  Item 2. Managements Discussion and Analysis or Plan of Operation.  Item 3. Controls and Procedures.  PART II - OTHER INFORMATION  Item 1. Legal Proceedings.  Item 6. Exhibits.                      - 3 -   Item 1. Financial Statements.        GLOBAL INNOVATIVE SYSTEMS INC. INTERIM CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2006 UNAUDITED                             - 4 -   GLOBAL INNOVATIVE SYSTEMS INC.  CONDENSED CONSOLIDATED BALANCE SHEETS
Expressed in US dollars  December 31,
        March 31,2006
        2006(Unaudited)$
        $ASSETSCurrent assets:Cash and cash equivalents
        267,292
        158,832Restricted deposits
        228,558
        224,092Other investments
        31,516
        31,516Trade receivables, net of allowance for doubtful accounts
        3,934,373
        1,312,775of $244,191 on December 31, 2006 and $210,096 on March 31, 2006Net investment in sales-type leases
        199,799
        174,828Prepaid expenses and other current assets
        855,012
        1,314,014Amount due from a director of a subsidiary
        771,207
        -Amount due from a shareholder
        -
        160,243Amount due from a related company
        -
        385,527Inventories
        2,189,890
        3,532,602Total current assets
        8,477,647
        7,294,429Intangible assets
        3,950,898
        3,669,275Goodwill
        6,160,250
        4,086,888Investment in corporate joint ventures
        9,563
        839Investments  restricted
        701,830
        679,396Equipment, net
        3,661,266
        3,714,367Construction in progress
        2,541,611
        1,937,360Net investment in sales-type leases
        375,418
        515,76517,400,836
        14,603,890TOTAL ASSETS
        25,878,483
        21,898,319LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Short-term borrowings
        899,743
        2,077,878Trade payables
        3,381,297
        2,093,053Amount due to a director
        1,455,053
        3,375,283Amounts due to directors of a subsidiary
        1,180,126
        1,028,178Amount due to a minority shareholder of a subsidiary
        517,962
        517,962Amounts due to shareholders
        106,900
        64,420Amounts due to related companies
        85,810
        26,992Accrued expenses and other current liabilities
        1,485,348
        943,522Current portion of obligations under capital leases
        740
        740Income tax payable
        416,514
        177,899Total current liabilities
        9,529,493
        10,305,927Non-current liabilities:Obligations under capital leases
        1,234
        1,851        - 5 -    GLOBAL INNOVATIVE SYSTEMS INC.  CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
Expressed in US dollars  December 31,
        March 31,2006
        2006(Unaudited)$
        $Total non-current liabilities
        1,234
        1,851Total liabilities
        9,530,727
        10,307,778Minority interest
        1,501,412
        2,633,652Shareholders' equity:Common stockAuthorized:800,000,000 common shares, par value $0.001 per share100,000,000 preferred shares, par value $0.001 per shareIssued and outstanding:34,812,642 common shares at December 31, 2006 and30,535,719 common shares at March 31, 2006
        34,813
        30,535Common stock warrants
        -
        573,692Additional paid-in capital
        19,461,417
        14,667,387Other reserves
        28,687
        -Accumulated other comprehensive loss
        (12,762)
        (40,339)Accumulated deficit
        (4,665,811)
        (6,274,386)Total shareholders' equity
        14,846,344
        8,956,889TOTAL LIABILITIES ANDSHAREHOLDERS' EQUITY
        25,878,483
        21,898,319  See notes to unaudited condensed consolidated financial statements.               - 6 -   GLOBAL INNOVATIVE SYSTEMS INC.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Expressed in US dollars  Three Months Ended
December 31,
        Nine Months Ended
December 31,2006
        2005
        2006
        2005$
        $
        $
        $Revenues:Sale of energy saving products
        84,950
        1,510,307
        482,596
        2,307,840Sale of lighting source products
        870,008
        -
        3,825,098
        -Sale of lighting design solutions
        1,928,020
        -
        1,928,020
        -Rental income
        -
        1,404
        1,285
        3,332Commission and service income
        -
        21,525
        28,278
        836,883Contract revenue
        358,281
        -
        5,471,374
        -Sales-type lease income
        1,947
        4,263
        10,498
        13,350Total net revenues
        3,243,206
        1,537,499
        11,747,149
        3,161,405Cost of revenues:Sale of energy saving products
        (30,603)
        (1,232,556)
        (405,964)
        (1,849,887)Sale of lighting source products
        (443,719)
        -
        (1,923,546)
        -Sale of lighting design solutions
        (687,045)
        -
        (687,045)
        -Rental income
        -
        (803)
        (632)
        (1,750)Commission and service income
        (5,182)
        (826)
        (9,036)
        (21,132)Contract cost
        (146,242)
        -
        (3,476,466)
        -Total cost of revenues
        (1,312,791)
        (1,234,185)
        (6,502,689)
        (1,872,769)Gross profit
        1,930,415
        303,314
        5,244,460
        1,288,636Amortization of intangible assets
        (180,131)
        (123,406)
        (507,508)
        (371,864)Selling and marketing expenses
        (185,379)
        (133,481)
        (521,490)
        (462,719)General and administrative expenses
        (736,715)
        (298,970)
        (2,421,217)
        (1,054,508)Profit/(loss) from operations
        828,190
        (252,543)
        1,794,245
        (600,455)Interest expense
        (80,130)
        (39,024)
        (247,019)
        (99,831)Interest income
        1,208
        4,212
        4,467
        16,127Other income
        8,184
        (1)
        424,630
        4Equity share of the result of corporate joint venture
        -
        -
        64,710
        -Profit/(loss) before income tax and minority interests
        757,452
        (287,356)
        2,041,033
        (684,155)Income tax
        (63,611)
        -
        (266,415)
        (127,255)Net profit/(loss)
        693,841
        (287,356)
        1,774,618
        (811,410)Minority interests
        20,184
        -
        (166,043)
        -Net profit/(loss) attributable to shareholders of the Company
        714,025
        (287,356)
        1,608,575
        (811,410)Basic and diluted income/(loss) per share
        0.02
        (0.01)
        0.05
        (0.04)Weighted average number of commonshares outstanding, basic and diluted
        34,799,599
        19,929,489
        32,991,551
        19,735,708 See notes to unaudited condensed consolidated financial statements.          - 7 -   GLOBAL INNOVATIVE SYSTEMS INC.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Expressed in US dollars  Nine Months Ended
December 31,2006
        2005$
        $Cash flows from operating activities:Net profit/(loss)
        1,608,575
        (811,410)Adjustment to reconcile net profit/(loss) toNet cash used in operating activities:Amortization of intangible assets
        507,508
        371,864Depreciation expense
        316,011
        64,071Equity share of the result of corporate joint venture
        (64,710)
        -Write-off of equipment
        -
        5,227Write-off of bad debts
        210,846
        -Minority interest
        166,043
        -Appropriate to reserves
        28,687
        -Changes in operating assets and liabilities, net of acquisitions:Trade receivables
        (1,804,166)
        246,999Net investment in sales-type leases
        115,376
        (13,952)Prepaid expenses and other current assets
        459,002
        (708,688)Inventories
        1,342,712
        (549,069)Trade payables
        420,635
        391,760Amounts due from related companies
        385,913
        -Accrued expenses and other current liabilities
        547,659
        (81,014)Income tax payable
        238,615
        127,256Net cash from/(used in) operating activities
        4,478,706
        (956,956)Cash flows from investing activities:Purchase of equipment
        (262,910)
        (63,267)Construction in progress
        (604,251)
        -Cash paid for incorporation of a joint venture
        (10,283)
        -Cash paid for acquisition of a subsidiary
        (1,459)
        -Increase in restricted deposits
        (4,466)
        (2,323)Net cash used in investing activities
        (883,369)
        (65,590)               - 8 -   GLOBAL INNOVATIVE SYSTEMS INC.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
Expressed in US dollars  Nine Months Ended
December 31,2006
        2005$
        $Cash flows from financing activities:Repayment of short-term borrowings and short-term debts
        (1,178,135)
        (166,617)Repayment of capital lease obligations
        (617)
        (52,019)Net proceeds from issuance of share capital and common stock warrants
        -
        1,320,828Advances from directors of a subsidiary
        151,948
        -Advance to a director of a subsidiary
        (771,207)
        -Advance from a shareholder
        238,093
        25,853Advance to a shareholder
        (35,370)
        -Advance from a related company
        1,863,753
        (75,653)Repayment to a related company
        (1,834,498)
        (129,283)Advance from a director
        1,983,468
        1,303,558Repayment to a director
        (3,903,839)
        (1,173,662)Net cash (used in)/provided by financing activities
        (3,486,404)
        1,053,005Effect of foreign exchange rates change
        (473)
        -Net increase in cash and cash equivalents
        108,460
        30,459Cash and cash equivalents at beginning of the period
        158,832
        32,694Cash and cash equivalents at end of the period
        267,292
        63,153Supplemental disclosure of cash flows informationOther non-cash items:Deposit paid on acquisition of Beijing Illumination (Hong Kong) Limited
        -
        (1,928,020)Payment of deposit by director
        -
        1,928,020Cash paid for:Interest expenses
        247,019
        99,831  See notes to unaudited condensed consolidated financial statements.             - 9 -   GLOBAL INNOVATIVE SYSTEMS INC.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED)  NOTE 1.  BASIS OF PRESENTATION  The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules of the Securities and Exchange Commission.  Accordingly, certain information and disclosures, normally included in annual financial statements, have been condensed or omitted pursuant to those rules and regulations.  In the opinion of the management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly present the financial position, results of operations and cash flows with respect to the interim unaudited consolidated financial statements have been included.  The results from operations for the three and nine months ended December 31, 2006 are not necessarily indicative of the results for the entire fiscal year.  The management recommends that these unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated March 31, 2006 financial statements and notes thereto of the Company and its subsidiaries included in the Companys annual report on Form 10-KSB filed July 14, 2006.  NOTE 2.  ORGANIZATION AND NATURE OF OPERATIONS  Global Innovative Systems Inc., and its subsidiaries (collectively referred to as the Company) is principally engaged as a developer, manufacturer and integrator of energy saving products and technologies and the provision of consulting and customer training services.  In addition, the Company engaged in the manufacture and distribution of lighting source products as well as the provision of LED lighting effect services following the acquisitions of Beijing Illumination (Hong Kong) Limited and the formation of Lightscape Technologies (Macau) Limited.  The principal subsidiaries / corporate joint ventures of the Company as of December 31, 2006 include the following:  Date of
        Place of
        Percentage ofName of subsidiary / corporate joint venture
        incorporation
        incorporation
        effective ownershipTech Team Holdings Limited (TTHL)
        February 15, 2002
        The Cayman Islands
        100Tech Team Investment Limited (TTIL)
        March 24, 2000
        The British Virgin
        100IslandsTech Team Development (Zhuhai) Limited
        August 23, 2002
        The People's Republic
        100(TT (Zhuhai))
        
        of ChinaTech Team Development Limited (TTDL)
        October 22, 1999
        Hong Kong
        100Tech Team Engineering Limited (TTEL)
        August 23, 2000
        Hong Kong
        100Grandplex Development Limited (GDL)
        January 18, 1999
        Hong Kong
        100Tech Team China Limited (TTCL)
        May 22, 2002
        The British Virgin Island
        100Tomi Fuji Energy Management
        March 10, 2004
        Hong Kong
        100         - 10 -    Services Consultants Limited (TFEMS)Beijing Illumination (Hong Kong) Limited (Beijing Illumination)
        October 11, 2002
        Hong Kong
        76.8Beijing Aihua New Enterprise Lighting
        July 26, 1999
        The People's Republic
        76.8Appliance Company Limited (Beijing Aihua)
        
        of ChinaTomi Fuji Energy Pte. Limited (TFEPL)
        December 17, 2004
        Singapore
        80Powerland Technology Limited (PTL)
        September 8, 2005
        The British Virgin Island
        100Lightscape Technologies (Macau) Limited (Lightscape Macau)
        February 6, 2006
        Macau
        100Pro Shing Construction Team Macau Limited (Pro Shing)
        June 19, 2006
        Macau
        80  The unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As shown in the unaudited condensed consolidated financial statements, the Company has a net working capital deficit of $1,051,846 as of December 31, 2006. The continuation of the Company is dependent upon the continuing financial support of its directors and shareholders, and obtaining long-term financing, as well as achieving and maintaining a profitable level of operations through successful product development and sales.  Management recognizes that the Companys continuation as a going concern is dependent upon its ability to generate sufficient cash flow to allow the Company to satisfy its obligations on a timely basis.  The Company commenced discussions which included negotiating credit arrangements with certain bankers, and raising new financing sufficient to develop products and sales.  Upon successful completion of the discussions, management has determined the Company will be better positioned to fund its current obligations and obtain new financing (refer to Note 21).  NOTE 3.  ACQUISITIONS OF BUSINESS  Acquisition of Interest in Beijing Illumination  Pursuant to a Sale and Purchase Agreement dated September 27, 2005 (as amended by a letter agreement dated October 3, 2005) by and among the Company, Glory Goal Investments Limited (Glory Goal) and Ko Yin, the Company acquired 26.0% of the shares of Beijing Illumination on February 27, 2006. As consideration for the 26.0% interest in Beijing Illumination, the Company issued to Glory Goal 1,750,000 common shares of the Company and paid to Glory Goal $1,928,021 (approximately HK$15,000,000) in cash.  Pursuant to an Option Deed Agreement dated September 27, 2005 (as amended by a letter agreement dated October 3, 2005) and pursuant to a Supplemental Deed Agreement dated February 22, 2006, both by and among the Company, Admire Fame Investments Limited (Admire Fame), Gain Huge Investments Limited (Gain Huge), Splendid Fortune Investments Limited (Splendid Fortune) and Ko Yin, the Company acquired an additional 30.8% of the shares of Beijing Illumination on February 27, 2006 in exchange for the issuance of an aggregate 8,856,230 common shares of the Company to Admire Fame, Gain Huge and Splendid Fortune.        - 11 -   Following the closing of the acquisition of interests in Beijing Illumination on February 27, 2006, the Company expanded its business into the manufacturing and sale of lighting and specialty lighting source products.  $Shares allotted (based on market value on February 27, 2006)
        7,954,672Cash consideration
        1,928,021Professional fees paid on acquisition
        120,272Total consideration
        10,002,965  Acquisition of Additional Interest in Beijing Illumination  Pursuant to a Purchase Agreement dated March 29, 2006 by and among the Company and Aeneas, the Company acquired 5.0% of the shares of Beijing Illumination on June 29, 2006 in exchange for the issuance of 1,250,000 common shares of the Company to Aeneas.  Pursuant to a Purchase Agreement dated April 3, 2006 by and among the Company and Aeneas, the Company acquired an additional 15.0% of the shares of Beijing Illumination on June 29, 2006 in exchange for the issuance of 1,826,923 common shares of the Company to Aeneas.  In aggregate, the Company owns 960 of the 1,250 issued and outstanding ordinary shares of Beijing Illumination, representing approximately 76.8% of the shares of Beijing Illumination as of December 31, 2006.  $Shares allotted (based on market value on June 29, 2006)
        3,384,615Total consideration
        3,384,615The purchase price has been allocated based on the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition.  The following represents the allocation of the purchase price:Net assets in Beijing Illumination at date of acquisition:$Other investment
        31,516Property, plant and equipment
        3,345,249Construction in progress
        1,942,550Inventories
        1,904,917Trade receivables
        1,811,550Prepayment and other receivables
        409,414Tax recoverable
        12,009Bank balances and cash
        129,099Trade payables
        (714,815)Accrued expenses and other payables
        (562,637)Taxation payable
        (78,199)Loan from a shareholder
        (517,962)Loan from directors
        (911,207)Short-term bank loans
        (308,978)Minority shareholders interests
        (1,506,261)Net assets attributable to existing shareholdings
        (3,687,744)Net assets
        1,298,501Intangible assets:-      Completed technology  AHP
        294,479        - 12 -    -      Completed technology  HID
        296,232-      Trademark
        144,036-      Customer lists and relationships
        11,630-      Distributor list
        42,753Total intangible assets
        789,130Goodwill
        1,296,984Total consideration
        3,384,615  The following table sets forth the unaudited pro forma results of operations of the Company as if the acquisition of the 76.8% interest in Beijing Illumination had occurred at the beginning of the fiscal year.  These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition occurred as of the beginning of the periods presented or that not be obtained in the future.  Unaudited Pro Forma ResultsTwelve months ended
March 31, 2006
$Revenue
        6,712,976Net loss attributable to shareholders of the Company
        (3,312,923)  Acquisition of Additional Interest in Lightscape Macau  Pursuant to a Transfer of Shareholders Rights Agreement and an Authorization letter, the Company, through its wholly-owned subsidiary TTDL, obtained the beneficial interest in 49.6% of the registered share capital of Lightscape Macau. The above arrangements made were solely implemented to facilitate a rapid transfer of ownership of Lightscape Macau before the legal title changes.  Pursuant to a Sale and Purchase Agreement dated September 29, 2006 by and among the Company, Albert Yee Tat Chan and Luminous LED Technologies Limited (the Vendors) and Michelle Siu Kwan Lam and Joseph Sui Kei Lam (the Guarantors), the Company acquired legally 49.6% of the registered share capital of Lightscape Macau from Albert Yee Tat Chan as registered owner and Luminous LED Technologies Limited as beneficial owner in consideration for the payment of MOP12,400 and the issuance of 1,200,000 common shares by the Company to Albert Yee Tat Chan (the Consideration Shares). In aggregate, the Company owns 100% of the registered share capital of Lightscape Macau as of September 29, 2006.  Immediately upon the completion of the Sale and Purchase Agreement, the Considerations Shares were delivered to an escrow agent pursuant to an Escrow Agreement dated September 29, 2006 among the Company, the Vendors and Clark Wilson LLP as the escrow agent.  Pursuant to the terms and conditions of the Sale and Purchase Agreement and the Escrow Agreement, all of the Consideration Shares shall be released to the Vendors upon the determination that the net profit of Lightscape Macau and its subsidiaries is not less than HK$20,000,000 over the period October 1, 2006 to September 30, 2007.  If the net profit of Lightscape Macau and its subsidiaries is less than HK$20,000,000, the percentage of the Consideration Shares equalling to the percentage of the shortfall from HK$20,000,000 shall be released by the escrow agent not to the Vendors but to the Company for cancellation, with the balance of the Consideration
Shares to be released to the Vendors; if there is no net profit for Lightscape Macau and its subsidiaries, all of the Consideration Shares shall be released to the Company for cancellation and the Company will be absolutely released from the obligation to deliver the Consideration Shares.  In consideration of the Sale and Purchase Agreement, each of the Vendors and the Guarantors irrevocably and unconditionally guaranteed jointly and severally to the Company that the Net Profit for the Guarantee Period as shown in the audited consolidated financial statements of Lightscape Macau and its subsidiaries ending such date shall not be less than the Guaranteed Net Profit. If the Net Profit is less than the Guaranteed Net Profit, then the Vendors and the Guarantors shall jointly and severally pay to the Company       - 13 -   in cash within fourteen (14) calendar days after the delivery of the audited consolidated financial statements of Lightscape Macau and its subsidiaries aforesaid an amount calculated as follows:  Amount payable to the Company = (Guaranteed Net Profit  Net Profit) X 40%  Following the closing of the acquisition of interests in Lightscape Macau on September 30, 2006, the Company expanded its business into the provision of full service lighting designed solutions including interior set design and fabrication, computer-controlled special effects, intelligent lighting, laser and multimedia technologies.  $Shares allotted (based on market value on October 2, 2006)
        840,000Cash consideration
        1,590Total consideration
        841,590  The purchase price has been allocated based on the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition.  The following represents the allocation of the purchase price:  Net assets in Lightscape Macau at date of acquisition:$Accounts receivable
        1,028,278Bank balances and cash
        135Accounts payable
        (867,609)Amount due to related companies
        (29,177)Amount due to a director
        (141)Net assets
        131,486Equity share of profits before acquisition
        (64,651)Capital contributed by the Company before acquisition
        (1,623)Goodwill
        776,378Total consideration
        841,590  At the date of acquisition of Lightscape Macau, management made its best estimate of the allocations of the fair value assigned to intangibles and has categorized the value of $776,378 attributed to goodwill for the acquisition. A final analysis and determination will be made during fiscal year 2006/07.  NOTE 4.  SUMMARY OF PRINCIPAL ACCOUNTING POLICIES  Basis of Presentation  The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.  Principle of Consolidation  The unaudited condensed consolidated financial statements include the financial statements of the Company and its majority-owned subsidiaries except for Xianghe Aihua New Enterprise Lighting Equipment Company Ltd., which is classified as other investment.  All significant intercompany transactions and balances are eliminated on consolidation.  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.        - 14 -   Cash and Cash Equivalents  Cash and cash equivalents consist of cash on hand and demand deposits which are unrestricted as to withdrawal and use, and which have maturities of three months or less when purchased.  Investment in Corporate Joint Venture  Corporate joint venture refers to a corporation owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. The Company accounts for its investment in corporate joint venture using the equity method of accounting.  Investments - Restricted  The Company classifies investments in mutual funds as available-for-sale securities and carries them at market value. The unrealized holding gains and losses on these securities are excluded from earnings and are reported as a separate component of other comprehensive income or loss until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis and are reflected in unaudited condensed consolidated statement of operations.  The Company assesses declines in the value of individual investments to determine whether such decline is other-than-temporary and thus the investment is impaired. This assessment is made by considering available evidence including changes in general market conditions, specific industry and individual company data in which the guaranteed mutual funds are invested in, the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the individual company in which the guaranteed mutual funds are invested in, and the Companys intent and ability to hold the investment.  Other Investment  Other investment is stated at cost less accumulated impairment loss. It represents the investment in Xianghe Aihua New Enterprise Lighting Equipment Company Ltd. (Xianghe Aihua), an indirect 51% owned subsidiary of Beijing Illumination which is, in turn, an indirect 76.8% owned subsidiary of the Company.  The control of Xianghe Aihua does not reside with the Company and the Company does not have significant influence on it. The Company is unable to obtain any updated financial statements of Xianghe Aihua. As a consequence, the results of Xianghe Aihua were not included in the unaudited condensed consolidated financial statements of the Company.  Trade Receivables and Allowance for Doubtful Accounts  In regards to the Companys allowance for doubtful accounts, the Company periodically records a provision for doubtful accounts based on an evaluation of the collectibility of accounts receivable by assessing, among other factors, the customers willingness or ability to pay, repayment history, general economic conditions, and the ongoing relationship with the Company's customers.  The total amount of this provision is determined by first identifying the receivables of customers that are considered to be a higher credit risk based on their current overdue accounts, difficulties in collecting from these customers in the past and their overall financial condition.  For each of these customers, the Company estimates the extent to which the customer will be able to meet its financial obligations, and the Company records an allowance that reduces its accounts receivable for that customer to the amount
that is reasonably believed will be collected.  Additional allowances may be required in the future if the financial condition of the Company's customers or general economic conditions deteriorate, thereby reducing net income.        - 15 -   Inventories  Inventories are stated at the lower of cost or market value. Cost is determined on the first-in, first-out basis. Write-down of potentially obsolete or slow-moving inventory is recorded based on managements analysis of inventory levels and the Company's assessment of estimated obsolescence based upon assumptions about future demand and market conditions. Further write-down of the value may be required in the future if there is rapid technological and structural change in the industry. This may reduce the results of operations of the Company.  Goodwill  The Company accounted for acquisitions of business in accordance with SFAS No. 141 Business Combinations, which resulted in the recognition of goodwill. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations accounted for under the purchase method. Goodwill is not subject to amortization but will be subject to periodic evaluation for impairment. Goodwill is stated in the unaudited condensed consolidated balance sheet at cost less accumulated impairment loss.  Intangible Assets  The Company acquired certain intangible assets through the acquisition of TFEMS in January 2005.  These intangible assets are comprised of trademark, customer lists and relationships, and unfulfilled purchase orders.  The Company also acquired certain intangible assets through the acquisition of Beijing Illumination in February 2006 and in June 2006.  These intangible assets consisted of completed technology for the production of Aihua Ultra-High Pressure Mercury (AHP) lamps and HID lamps, trademark, a customer base and a distributor base. The acquired trademarks were determined to have an indefinite useful life which are not subject to amortization, unless and until their useful life are determined no longer to be indefinite.  The Company tests for impairment of trademarks annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired.  The completed technologies for the production of AHP and HID, distributor base, customer lists and relationships and unfulfilled purchase orders are subject to amortization over their respective economic useful life and reviewed for impairment if the carrying amount of these intangible assets are not recoverable and their carrying amount exceeds their fair market value.  After an impairment loss is recognized, the adjusted carrying amount of the intangible assets shall be their new accounting basis.  The estimation of the useful life of the trademarks, completed technologies for the production of AHP and HID, distributor base, customer lists and relationships will be affected by factors such as change in demand, unanticipated competition and other economic factors including stability of industry, change in technology, legislative action that results in an uncertain or an adverse change in the regulatory environment and changes in distribution channels and business climate.  If impairment loss is recognized, the results of operations and the financial condition of the Company will be adversely affected.  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.       - 16 -    Equipment and Construction in Progress  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 yearsOffice equipment
        3 - 4 yearsFurniture and fixtures
        3 - 4 yearsLeasehold improvements
        shorter of 4 years or the remaining terms of the leasesMotor vehicles
        5 - 7 yearsEnergy savers
        10 yearsFactory machinery and equipment
        10 - 16 years  Energy savers are electronic devices sold by the Company that assist in regulating the consumption of electricity by certain equipment thereby resulting in energy savings. The Company retains a number of these devices as demonstration units for marketing and promotion purposes.  Construction in progress is stated at cost which comprises all direct costs incurred in relation to their construction.  The cost of construction in progress will not be amortized until they are put into use and are transferred to a specific category of plant and equipment when the construction is completed.  Expenditures for repairs, maintenance and minor renewals and betterments are expensed.  Net Investment in Sales - Type Leases  At the time a sales-type lease is consummated, the Company records the gross finance receivable, less unearned income.  Unearned income is recognized as lease income using the interest method over the term of the lease and is included as financing revenue in the Company's consolidated statements of operations.  The Company reviews minimum lease payments receivable considered at risk on a periodic basis.  The review primarily consists of an analysis based upon current information available about the client as well as the current economic environment, value of leased assets net of repossession cost and prior history.  Impairment is measured using the fair value of the leased assets when foreclosure is probable.  Using this information, the Company determines the expected cash flow for the receivable and calculates a recommended estimate of the potential loss and the probability of loss.  For those accounts in
which the loss is probable, the Company records a specific reserve.  Revenue Recognition  The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned 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 collectibility is reasonably assured.  In addition to the aforementioned general policy, the following are specific revenue recognition policies for each major category of revenue.  Sale of energy saving products- The Company sells its products directly to end users with installation (Direct Sales Contracts) and through distributors (Trading Contracts).  Direct Sales Contracts revenue from hardware sales or sales-type leases is recognized when the product is delivered to the customer and related installation is completed when there are no unfulfilled Company obligations that affect the customer's final acceptance of the arrangement and when all other revenue recognition criteria are met.  Revenue from Trading Contracts is recognized when the product is delivered and title is transferred and when all other revenue recognition criteria are met.        - 17 -   Sale of lighting source products-The Company sells its products directly to end users and through distributors. Revenue is recognized when the product is delivered to the customer and all other revenue recognition criteria are met.  Sale of lighting design 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.  Contract revenue from lighting design solutions- Revenue is primarily recognized on the percentage of completion method for long-term construction contracts not yet completed, measured by the percentage of total costs incurred to date to estimate total costs at completion for each contract. This method is utilized because management considers the cost-to-cost method the best method available to measure progress on these contracts. Revenues and estimated total costs at completion are adjusted monthly as additional information becomes available and based upon the Company's internal tracking systems. Because of the inherent uncertainties in estimating revenue and costs, it is reasonably possible that the estimates used will change within the near term.  Contract costs include all direct material and labor costs and those other indirect costs related to contract performance including, but not limited to, indirect labor, subcontract costs and supplies. General and administrative costs are charged to expense as incurred.  The Company has contracts that may extend over more than one year; therefore, revisions in cost and profit estimates during the course of the work are reflected in the accounting period in which the facts, which require the revisions, become known.  Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.  The Company does not record any income from claims until the claims have been received or awarded.  In accordance with construction industry practice, the Company reports in current assets and liabilities those amounts relating to construction contracts realizable and payable over a period in excess of one year.  Fees for the management of certain contracts are recognized when services are provided.  Rental Income -Revenue from rentals and operating leases without any acceptance provisions is recognized on a straight-line basis over the term of the rental or lease.  Commission and Services Income:  -
        Revenue from consultancy services related to energy - saving feasibility study is recognized when granted.  Services are considered granted when the Company delivers its assessment to its customer and the customer signs the acceptance report.  -
        Commissions earned from customer marketing services, where the Company is acting as an agent for petroleum distribution companies, are recorded upon notification by the petroleum distribution companies for the amount earned, which is based on a pre-determined amount, per unit of gasoline sold to referred customers.  Sales-type lease income- Represents finance income attributable to sales-type leases and is recognized over the term of the lease, using the effective interest method.  Income Taxes  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases as well as       - 18 -   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.  Foreign Currency Translation  The functional currency of the Company is in 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 condensed consolidated statements of operations as a component of current period earnings.  The Company changed its reporting currency from HKD to United States dollars (USD) during the year ended March 31, 2006. However, HKD is pegged to USD and hence there is no translation adjustment impact on the Companys unaudited condensed consolidated financial statements.  Segment Information  The Companys segment reporting is prepared in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information.  The management approach required by SFAS 131 designates that the internal reporting structure that is used by management for making operating decisions and assessing performance should be used as the source for presenting the Companys reportable segments.  Concentration of Credit Risk  Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, trade receivables, deposits for goods and net investment in sales-type leases. The Company places its cash with financial institutions with high-credit ratings and quality.  The Company conducts credit evaluation of customers and generally does not require collateral or other security from its customers. 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.  Other than the two largest customers who accounted for approximately 46% and 16% of the Companys total revenue for the nine-month period ended December 31, 2006, no single external customer exceeded 10% of the Companys total revenue for the nine-month period ended December 31, 2006.  The Company relies on supplies from numerous vendors. For the quarter ended December 31, 2006, the Company had one vendor that accounted for more than 21% of total supply purchases for the period.  The Companys business, assets and operations is currently focused on the sale of specialty lighting source products, lighting design solutions, and electrical energy-saving products in China and Macau, and accordingly, is affected to a significant degree by any economic, political and legal developments in China and Macau.  Fair Value of Financial Instruments  The carrying amounts of cash and cash equivalents, trade receivables, short-term borrowings 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 value as the interest rates approximate those which would have been available for loans of similar remaining maturity at the respective period ends.        - 19 -   Comprehensive Income  Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company reports its comprehensive income (loss) in the unaudited condensed consolidated statement of shareholders' equity (deficit).  Net Profit / (Loss) per Share  Basic net profit / (loss) per share is based on the weighted average number of shares of common stock outstanding for the period.  The effects of warrants have not been included in the net profit / (loss) per share computation for the nine month period ended December 31, 2005 as their effect would have been anti-dilutive.  Recent Accounting Pronouncements  In February 2006, FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments. SFAS No. 155 amends SFAS No 133, Accounting for Derivative Instruments and Hedging Activities, and SFAF No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SFAS No. 155, permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of
subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for all financial instruments acquired or issued after the beginning of the Companys first fiscal year that begins after September 15, 2006. The Companys management has not evaluated the impact of this pronouncement on the Companys financial statements.  In March 2006 FASB issued SFAS 156 Accounting for Servicing of Financial Assets this Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement:  - Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract.  - Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.  - Permits an entity to choose 'Amortization method' or Fair value measurement method for each class of separately recognized servicing assets and servicing liabilities.  At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entity's exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value.  - Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities. An entity should adopt this Statement as of the beginning of its first fiscal year that begins after September 15, 2006.        - 20 -   The Companys management believes that this statement will not have a significant impact on the Companys financial statements.  In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48) which prescribes a recognition threshold and measurement attribute, as well as criteria for subsequently recognizing, derecognizing and measuring uncertain tax positions for financial statement purposes. FIN 48 also requires expanded disclosure with respect to the uncertainty in income tax assets and liabilities. FIN 48 is effective for fiscal years beginning after December 15, 2006, which will be the Companys fiscal 2008, and is required to be recognized as a change in accounting principle through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The adoption of FIN 48 is not expected to have a material impact on the Companys consolidated results of operations or financial position.  In June 2006, the Financial Accounting Standards Board (FASB) ratified the provisions of Emerging Issues Task Force (EITF) Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation). EITF Issue No. 06-3 requires that the presentation of taxes within revenue-producing transactions between a seller and a customer, including but not limited to sales, use, value added, and some excise taxes, should be on either a gross (included in revenue and cost) or a net (excluded from revenue) basis. In addition, for any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes in interim and annual financial statements for each period for which an income statement is presented if those amounts are significant. The disclosure of
those taxes can be done on an aggregate basis. EITF Issue No. 06-3 is effective for fiscal years beginning after December 15, 2006, which will be the Companys fiscal 2008. The adoption of EITF Issue No. 06-3 is not expected to have a material impact on the Companys consolidated results of operations or financial position.  In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No.108 (SAB No. 108), Considering the Effects of Prior Year Misstatements when Quantifying Current Year Misstatements.  SAB No. 108 requires analysis of misstatements using both an income statement (rollover) approach and a balance sheet (iron curtain) approach in assessing materiality and provides for a one-time cumulative effect transition adjustment.  SAB No. 108 is effective for the fiscal year beginning November 15, 2006.  The Company is reviewing SAB No. 108 to determine what effect, if any, its adoption will have on the Companys financial statement presentation and disclosures.  In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157 (SFAS 157), Fair Value Measurements, which is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years.  SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements.  The Company is reviewing SFAS No. 157 to determine what effect, if any, its adoption will have on the Companys financial statement presentation and disclosures.  In September 2006, FASB issued Statement of Financial Accounting Standards No. 158 (SFAS 158), Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106, and 132 (R), which is effective for fiscal years beginning after December 15, 2006.  SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization.  SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with
limited exceptions.  The Company is reviewing SFAS No. 158 to determine what effect, if any, its adoption will have on the Companys financial statement presentation and disclosures.        - 21 -   NOTE 5.  NET INVESTMENT IN SALES-TYPE LEASES  Net investment in sales-type leases is for leases that relate to the Company's hardware sales and are generally for terms ranging from three to five years.  Interest rates range from 2.5% to 5% and the leases are secured by the respective leased assets.  The details of net investment in sales-type leases are as follows:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Total minimum lease payments to be received
        601,230
        
        727,431Less: Unearned income
        (26,013)
        
        (36,838)Net investment in sales-type leases
        575,217
        
        690,593Current portion
        (199,799)
        
        (174,828)Net investment in sales-type leases, less current portion
        375,418
        
        515,765  Contracted maturities of the sales-type leases as of December 31, 2006 are as follows:  Twelve months ending December 31,
        
        $2007
        
        199,7992008
        
        164,9572009
        
        127,0182010
        
        83,443575,217 NOTE 6.  PREPAID EXPENSES AND OTHER CURRENT ASSETS  Prepaid expenses and other current assets consist of the following:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Trade deposits
        180,441
        
        634,681Rental, utilities and other deposits
        87,397
        
        73,942Prepaid expenses
        168,257
        
        334,225Tax recoverable
        -
        
        31,945Staff advances
        80,732
        
        73,915Other receivable (1)
        299,625
        
        123,591Others
        38,560
        
        41,715855,012
        
        1,314,014  (1)Included in Other receivable is an amount recoverable from a director of $60,382 as at December 31, 2006.  NOTE 7.  INVENTORIES  Inventories by major categories are summarized as follows:       - 22 -    December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Raw materials
        728,026
        
        519,621Work in progress
        528,858
        
        954,310Finished goods
        933,006
        
        2,058,6712,189,890
        
        3,532,602  NOTE 8.  EQUIPMENT, NET  Equipment, net consists of the following:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Testing equipment
        83,715
        
        83,715Office equipment
        494,220
        
        479,265Furniture and fixtures
        40,969
        
        97,317Leasehold improvements
        197,835
        
        30,247Motor vehicles
        84,802
        
        99,632Energy savers
        364,270
        
        360,723Factory machinery and equipment
        3,792,095
        
        3,667,055Total
        5,057,906
        
        4,817,954Less: Accumulated depreciation
        (1,396,640)
        
        (1,103,587)Equipment, net
        3,661,266
        
        3,714,367  Equipment, net held under capital leases are summarized as follows:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Office equipment
        3,702
        
        3,702Less: Accumulated depreciation
        (3,702)
        
        (1,028)Equipment, net held under capital leases
        -
        
        2,674  Equipment, net leased under operating leases to customers is summarized as follows:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Energy savers
        -
        
        18,953Less: Accumulated depreciation
        -
        
        (8,845)Equipment, net leased under operating leases to customers
        -
        
        10,108        - 23 -    NOTE 9.  CONSTRUCTION IN PROGRESS  Construction in progress consists of the following: December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Production facilities for Xenon lights
        1,067,083
        
        1,064,062Production facilities for AHP lamps
        494,294
        
        453,183Others
        339,158
        
        420,115Website development
        192,802
        
        -Implementation of ERP system
        448,274
        
        -2,541,611
        
        1,937,360  NOTE 10.  INTANGIBLE ASSETS  Intangible assets arise from the acquisitions of interests in TFEMS and Beijing Illumination as stated in Note 3 above.  Acquired intangible assets consist of the following:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Completed technology  AHP
        1,172,616
        
        878,137Completed technology  HID
        1,214,012
        
        917,780Trademark
        1,957,211
        
        1,813,175Customer lists and relationships
        2,513,921
        
        2,502,291Distributors list
        179,350
        
        136,597Unfulfilled purchase orders
        4,113
        
        4,113Total
        7,041,223
        
        6,252,093Less: Accumulated amortization
- completed technology - AHP
- completed technology - HID
- customer lists and relationships
- distributors list
- unfulfilled purchase orders
Impairment loss on trademark
Impairment loss on customer lists and relationships
        (125,574)
(228,233)
(759,315)
(45,069)
(4,113)
(771,209)
(1,156,812)
        
        (10,454)
(19,120)
(617,316)
(3,794)
(4,113)
(771,209)
(1,156,812)Total
        3,950,898
        
        3,669,275  Amortization expenses charged to net income from operations for the nine months ended December 31, 2006 and 2005 were $507,508 and $371,864, respectively.  Anticipated amortization expense on intangible assets for each of the next five years is as follows:  Twelve months ending December 31,
        
        $2007
        
        720,5242008
        
        720,5242009
        
        675,4552010
        
        247,3682011 and thereafter
        
        401,0252,764,896        - 24 -   NOTE 11.  INVESTMENT IN CORPORATE JOINT VENTURES  On June 19, 2006, the Company incorporated a joint venture company named Pro Shing.  TTIL, a wholly-owned subsidiary of the Company, holds 80% of the share capital of Pro Shing and Proficiency Macau Construction Company Limited, a Macau based construction company, holds the remaining 20% of the share capital of Pro Shing.  Financial statements of Pro Shing are summarized as follows:  Balance Sheet
        December 31,2006$Current assetsAmounts due from related companies
        12,853Total current assets
        12,853Current liabilitiesAccrued expenses and other current liabilities
        (900)Total current liabilities
        (900)Total net assets
        11,953Shareholders equity:Common stock
        12,853Accumulated deficit
        (900)Total shareholders equity
        11,953  Profit and loss account Three Months Ended December31, 2006
$General and administrative expenses
        -Loss for the period
        -  As Pro Shing is dormant and insignificant to the Company, it has not been consolidated.  NOTE 12.  SHORT-TERM BORROWINGS  The Company's short-term borrowings consist of the following:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Bank loans
        
        899,743
        
        1,370,872Bank overdrafts
        
        -
        
        707,006899,743
        
        2,077,878Weighted average interest rate on borrowings at end of quarter
        
        7.75%
        
        7.82%        - 25 -    Bank credit facilities
        
        899,743
        
        2,037,662Utilized
        
        (899,743)
        
        (2,045,803)Bank credit facilities utilized / (overutilized)
        
        -
        
        (8,141)  Interest rates are generally based on the bank's best lending rate plus certain percentage and the credit lines are normally subject to periodic review.  In accordance with certain bank covenants, TTHL needs to maintain a net worth of not less than $1,092,545 from July 2003 onwards and to release the existing floating charge on all assets of TTDL; however, these financial covenants have not been fulfilled by TTHL.  Other than the aforesaid requirements, there are no other significant covenants or other financial restrictions relating to the Companys short-term borrowings that the Company did not comply with.  As of December 31, 2006, the above facilities are secured by the following:  (a)
        All assets of TTDL amounting to $3,834,207 as of December 31, 2006; (b)
        Investments of the Company of $701,830; (c)
        Cash deposits of the Company of $228,558; (d)
        A subordination agreement from a director of the Company to subordinate the advance of $16,710 to TTDL; (e)
        Joint and several personal guarantee from two directors of the Company and a director of one of the subsidiaries of the Company; (f)
        A personal guarantee from an independent third party of $899,743; (g)
        A letter of undertaking from TTDL in pledging 5% of its export bills proceeds; (h)
        Net investment in sales-type leases and all proceeds associated with certain Direct Sales Contracts of the Company amounting to approximately $195,212; (i)
        Cross Corporate Guarantee for $3,856,041 amongst TTHL, TTDL and GDL.  Other than the investments and restricted cash deposits, there is no restriction on the use of the assets collateralized for the above facilities and bank loans.  NOTE 13.  OBLIGATIONS UNDER CAPITAL LEASES  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Total minimum lease payments
        1,974
        
        2,591Less: Amounts representing interests
        -
        
        -Present value of minimum lease payments
        1,974
        
        2,591Less: Current portion of obligations under capital leases
        (740)
        
        (740)Long-term portion of obligations under capital leases
        1,234
        
        1,851  The following is a summary of future minimum lease payments under capital leases as of December 31, 2006:  Twelve months ending December 31,
        $2007
        7402008
        7402009
        494 1,974         - 26 -    The Company entered into capital lease arrangements for leasing equipment used in its operations. The lease is for a term of 3 years. For the nine months ended December 31, 2006, the capital lease arrangement was on a non-interest bearing basis. The leases are on a fixed repayment basis and no arrangement entered into includes contingent rental payments.  The interest expenses incurred on these capital leases were nil and $2,886 for the nine months ended December 31, 2006 and 2005, respectively.  NOTE 14.  OTHER RESERVES  The other reserves represent the statutory surplus reserve of the Companys subsidiaries in the 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 its net income, after offsetting any prior years losses, to the statutory surplus reserve.  When the balance of such reserve reaches 50% of the Companys 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.  NOTE 15.  FOREIGN CURRENCY TRANSACTION GAIN OR LOSS  Aggregate foreign currency transaction loss of $11,995 and of $4,533 for the nine months ended December 31, 2006 and 2005 were included in determining net profit / (loss), for the respective periods.  NOTE 16.  INCOME TAX  The components of profit / (loss) before income tax and minority interests are as follows:  Three Months Ended December 31,
        
        Nine Months Ended December 31,2006
        2005
        
        2006
        2005$
        $
        
        $
        $Hong Kong
        809,411
        (278,330)
        
        261,076
        (585,036)Macau
        (183,467)
        -
        
        1,660,419
        -Mainland, the Peoples Republic of China (PRC)
        131,508
        (9,026)
        
        119,538
        (99,119)757,452
        (287,356)
        
        2,041,033
        (684,155)  Taxes laws applicable to the Company are as follows:  -
        TTHL is a tax-exempted company incorporated in the Cayman Islands. -
        Under the current BVI law, TTCs, TTILs and PTLs income are not subject to taxation. -
        Global Innovative Systems Inc. and TFEPL also had no assessable profits earned during the periods presented.       - 27 -   
        No provision for PRC income tax has been made as TT(Zhuhai) had no assessable profits earned during the nine months ended December 31, 2006 and 2005.  Preferential tax treatment has been agreed with the relevant tax authorities and TT(Zhuhai) is exempted from PRC income tax in the first two profitable years and is subject to half of the standard statutory tax rate of 15% in the subsequent three years. 
        Pursuant to the relevant laws and regulations in the PRC, Beijing Aihua is exempted from PRC enterprise income tax for two years starting from its first profit-making year i.e. 2004 after it became a wholly foreign owned enterprise and followed by a 50% reduction for the next three years. 
        Lightscape Macau is a company incorporated in Macau Special Administrative Region, which is subjected to progressive tax rate charging at a rate of 12% in maximum. 
        Other companies are dormant and had no assessable profits earned during the periods presented.  Income tax expense for the nine months ended December 31, 2006 and 2005 represents the provision for income tax in the following jurisdictions:  Three Months Ended December 31,
        
        Nine Months Ended December 31,2006
        2005
        
        2006
        2005$
        $
        
        $
        $Hong Kong
        (7,537)
        -
        
        10,299
        127,255Macau
        70,529
        -
        
        206,977
        -Mainland, PRC
        619
        -
        
        49,139
        -63,611
        -
        
        266,415
        127,255  NOTE 17.  COMMITMENTS  The Company as Lessor  Energy saver rental income earned was $1,285 and $3,332 for the nine months ended December 31, 2006 and 2005, respectively.  The Company as Lessee  The Company has operating lease agreements principally for its office facilities. Such leases have remaining terms of 2.5 months to 4 years. The following is a summary of future minimum lease payments under operating leases as of December 31, 2006. Rental expense was $125,761 and $80,722 for the nine month periods ended December 31, 2006 and 2005, respectively.  Twelve months ending December 31,  $2007
        152,1242008
        96,4012009
        96,4012010
        96,401441,327  Royalties  Pursuant to a supplier agreement (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       - 28 -   and 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 termination of the Agreement.  NOTE 18.  RELATED PARTY BALANCES AND TRANSACTIONS  Related Party Transactions  TFCL, a shareholder of the Company, paid certain expenses totaling $91,646 on behalf of the Company and the Company repaid $329,739 during the nine months ended December 31, 2006.  A director of the Company advanced loans of $1,983,609 to the Company during the nine months ended December 31, 2006. The loans are non-interest bearing and payable on demand. In addition, the Company repaid to a director $3,903,839 for the nine months ended December 31, 2006. As of December 31, 2006, the Company had amount recoverable from this director of $60,382 as included in other receivable.  As of December 31, 2006, net investment in sales-type leases amounting to approximately $421,238 was collateralized for credit facilities granted to a shareholder of the Company.  During the nine months ended December 31, 2006, the Company paid office rent of $34,704 to a third party which was beneficially owned by the family members of a director of a subsidiary.  The Company incurred interest expense of $nil payable to a shareholder of the Company for the nine months ended December 31, 2006.  Pursuant to the terms of the agreements in relation to the acquisition of interest in TFEMS as mentioned in Note 3 above, a beneficial owner of TFCL has guaranteed to pay the shortfall to the Company should the net profit of TFEMS for the period from the date of acquisition to June 30, 2005 (the guaranteed period) fall below a warranted sum. The profits for the guaranteed period fell short of $604,546 and the Company is currently pursuing the guarantor for the enforcement of this guarantee.  A director of the Company is also the independent non-executive director of Galaxy Entertainment Group Limited, the owner of Galaxy StarWorld Hotel in Macau. Lightscape Macau, a wholly-owned subsidiary of the Company, received a Letter of Award amounting to approximately $4,485,861 for the design, supply, installation, testing and commissioning of tailor-made lighting solutions for the outside facade wall of the Galaxy StarWorld Hotel in Macau during the nine months ended December 31, 2006.  In consideration of the Sale and Purchase Agreement for the acquisition of additional interest in Lightscape Macau (as described in Note 3), each of the Vendors and the Guarantors irrevocably and unconditionally guaranteed jointly and severally to the Company that the Net Profit for the Guarantee Period as shown in the audited consolidated financial statements of Lightscape Macau and its subsidiaries ending such date shall not be less than the Guaranteed Net Profit. If the Net Profit is less than the Guaranteed Net Profit, then the Vendors and the Guarantors shall jointly and severally pay to the Company in cash within fourteen (14) calendar days after the delivery of the audited consolidated financial statements of Lightscape Macau and its subsidiaries aforesaid an amount calculated as follows:  Amount payable to the Company = (Guaranteed Net Profit  Net Profit) X 40%  The Company advanced a loan of $771,207 to a director of a subsidiary during the nine months ended December 31, 2006. The loan is unsecured, interest bearing at 0.5% per month and wholly payable on or before May 14, 2007.  Related Party Balances  As of December 31, 2006, the amounts due from/to related companies, directors and shareholders represent cash advances to or from them and are unsecured and have no fixed repayment terms. Except for an amount       - 29 -   of $771,207 due from a director of a subsidiary, Mr. Shan Li Gang, carrying interest at 0.5% per month and which is wholly repayable on or before May 14, 2007; an amount of $526,448 due to a director of a subsidiary, Mr. Ko Yin, carrying interest at 9.6% per annum; and an amount of $517,962 due to a shareholder of the Company, Aeneas Portfolio Company LP, carrying interest at 20% per annum, amounts due from/to related parties are non-interest bearing.  The balances related to such advances are as follows:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Amount due from a director of a subsidiaryShan Li Gang
        771,207
        
        -Amount due from a shareholderTFCL
        -
        
        160,243Amount due from a related companyLightscape Macau
        -
        
        385,527Lightscape Macau had been 100% acquired by the Company see Note 3.Amount due to a directorBondy Tan
        1,455,053
        
        3,375,283Amounts due to directors of a subsidiaryKo Yin
        1,140,281
        
        988,333Lam So Ying
        39,845
        
        39,8451,180,126
        
        1,028,178Amount due to a minority shareholder of a subsidiaryAeneas Portfolio Company LP (Aeneas)
        517,962
        
        517,962Amounts due to shareholdersDavid Yu
        64,420
        
        64,420TFCL
        42,480
        
        -106,900
        
        64,420Amounts due to related companiesPalun Development Limited
        46,272
        
        26,992Luminous LED Technologies Ltd. (Luminous LED)
        29,255
        
        -Pro Shing
        10,283
        
        -85,810
        
        26,992  Palun Development Limited is beneficially owned by the family members of a director of a subsidiary.  Luminous LED is an ex-shareholder of Lightscape Macau.  NOTE 19.  SEGMENT INFORMATION  (i) The Company operates in three segments, namely energy savings, sales of lighting source products and the provision for full service lighting design solutions.  The Company is engaged as a developer, manufacturer and integrator of energy saving products and technologies and provision of consulting and customer training services related to such products.  In addition, the Company has expanded its business into the manufacturing and sale of lighting and specialty lighting source products.  The acquisition of       - 30 -   Lightscape Macau expanded the business of the Company to provide full service lighting design solutions including interior set design and fabrication, computer-controlled special effects, intelligent lighting, laser and multimedia technologies.  The accounting policies of the operating segments are the same as those described in the Summary of Principal Accounting Policies (see Note 4). The Company evaluates performance based on profit or loss from operations, excluding corporate, general and administrative expenses.  Three Months
Ended
December 31,
        Three Months
Ended
December 31,
        Nine Months
Ended
December 31,
        Nine Months
Ended
December 31,2006
(Unaudited)
$
        2005
(Unaudited)
$
        2006
(Unaudited)
$
        2005
(Unaudited)
$Net revenues:Energy saving business
        86,897
        1,537,499
        522,657
        3,161,405Lighting source business
        870,008
        -
        3,825,098
        -Lighting design solutions
        2,286,301
        -
        7,399,394
        -3,243,206
        1,537,499
        11,747,149
        3,161,405Interest expenses:Energy saving business
        22,232
        39,024
        98,652
        99,831Lighting source business
        8,723
        -
        99,192
        -Lighting design solutions
        49,175
        -
        49,175
        -80,130
        39,024
        247,019
        99,831Amortization of intangible assets:Energy saving business
        46,286
        123,406
        138,856
        371,864Lighting source business
        133,845
        -
        368,652
        -180,131
        123,406
        507,508
        371,864Depreciation:Energy saving business
        15,690
        22,256
        50,585
        64,071Lighting source business
        95,047
        -
        265,426
        -110,737
        22,256
        316,011
        64,071Other income:Energy saving business
        (27,495)
        (1)
        18,646
        4Lighting source business
        35,679
        -
        405,984
        -8,184
        (1)
        424,630
        4Income tax expenses:Energy saving business
        (7,537)
        -
        10,299
        127,255Lighting source business
        619
        -
        49,139
        -Lighting design solutions
        70,529
        -
        206,977
        -63,611
        -
        266,415
        127,255        - 31 -   (ii) Geographical Information: Three Months
Ended
December 31,
        Three Months Ended December 31,
        Nine Months
Ended
December 31,
        Nine Months Ended December 31,2006
(Unaudited)
$
        2005
(Unaudited)
$
        2006
(Unaudited)
$
        2005
(Unaudited)
$Total sales:Mainland, the PRC
        2,662,936
        
        77,910
        4,507,807
        1,457,069Hong Kong
        61,735
        
        1,459,589
        121,861
        1,704,336India
        32,465
        
        -
        255,579
        -Singapore
        -
        
        -
        925,450
        -United States
        30,528
        
        -
        52,735
        -Macau
        358,281
        
        -
        5,471,374
        -Others
        97,261
        
        -
        412,343
        -3,243,206
        
        1,537,499
        11,747,149
        3,161,405  (iii) The location of the Companys long-lived assets excluding restricted investments is as follows:  December 31,
2006
(Unaudited)
$
        
        March 31,
2006

$Hong Kong
        10,793,713
        
        8,450,664Macau
        9,563
        
        839Mainland, the PRC
        5,091,073
        
        5,472,99115,894,349
        
        13,924,494  NOTE 20.  SHARE CAPITAL AND WARRANTS  Share Capital  Pursuant to a Purchase Agreement dated March 29, 2006 by and among the Company and Aeneas, the Company acquired 5.0% of the shares of Beijing Illumination on June 29, 2006 in exchange for the issuance of 1,250,000 common shares of the Company to Aeneas.  Pursuant to a Purchase Agreement dated April 3, 2006 by and among the Company and Aeneas, the Company acquired an additional 15.0% of the shares of Beijing Illumination on June 29, 2006 in exchange for the issuance of 1,826,923 common shares of the Company to Aeneas.  Pursuant to a Sale and Purchase Agreement dated September 29, 2006 by and among the Company, Albert Yee Tat Chan and Luminous LED Technologies Limited (the Vendors) and Michelle Siu Kwan Lam and Joseph Sui Kei Lam (the Guarantors), the Company acquired 49.6% of the registered share capital of Lightscape Macau from Albert Yee Tat Chan as registered owner and Luminous LED Technologies Limited as beneficial owner in consideration for the payment of MOP12,400 and the issuance of 1,200,000 common shares by the Company to Albert Yee Tat Chan (the Consideration Shares). In aggregate, the Company owns 100% of the registered share capital of Lightscape Macau as of September 30, 2006.  Immediately upon the completion of the Sale and Purchase Agreement, the Considerations Shares were delivered to an escrow agent pursuant to an Escrow Agreement dated September 29, 2006 among the Company, the Vendors and Clark Wilson LLP as the escrow agent.  Pursuant to the terms and conditions of the Sale and Purchase Agreement and the Escrow Agreement, all of the Consideration Shares shall be released to the Vendors upon the determination that the net profit of Lightscape Macau and its subsidiaries is not less than HK$20,000,000 over the period October 1, 2006 to September 30, 2007.  If the net profit of       - 32 -   Lightscape Macau and its subsidiaries is less than HK$20,000,000, the percentage of the Consideration Shares equal to the percentage of the shortfall from HK$20,000,000 shall be released by the escrow agent not to the Vendors but to the Company for cancellation, with the balance of the Consideration Shares to be released to the Vendors; if there is no net profit for Lightscape Macau and its subsidiaries, all of the Consideration Shares shall be released to the Company for cancellation and the Company will be absolutely released from the obligation to deliver the Consideration Shares.  In consideration of the Sale and Purchase Agreement, each of the Vendors and the Guarantors irrevocably and unconditionally guaranteed jointly and severally to the Company that the Net Profit for the Guarantee Period as shown in the audited consolidated financial statements of Lightscape Macau and its subsidiaries ending such date shall not be less than the Guaranteed Net Profit. If the Net Profit is less than the Guaranteed Net Profit, then the Vendors and the Guarantors shall jointly and severally pay to the Company in cash within fourteen (14) calendar days after the delivery of the audited consolidated financial statements of Lightscape Macau and its subsidiaries aforesaid an amount calculated as follows:  Amount payable to the Company = (Guaranteed Net Profit  Net Profit) X 40%  Warrants  All outstanding common stock warrants expired unexercised during the period May 17, 2006 through May 27, 2006 and the remaining balances were transferred to additional paid-in capital.  NOTE 21. SUBSEQUENT EVENTS  As of January 16, 2007, Bondy Tan, an executive officer and a director of the Company, had advanced an aggregate amount of US$1,451,323 to the Company through an oral, unsecured and non-interest bearing loan agreement which had no fixed terms for repayment.  On January 18, 2007, the Company entered into and closed a debt settlement transaction pursuant to a subscription agreement with Bondy Tan, whereby the Company issued 2,638,768 common shares to Mr. Tan in consideration for the cancellation of debt owed by the Company to Mr. Tan in the amount of US$1,451,323.  The Company issued the common shares to Mr. Tan on the basis of one common share for each US$0.55 of the loan outstanding. The Company issued the securities to one non U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S or Section 4(2) promulgated under the Securities Act of 1933.  On January 18, 2007, the Company entered into subscription agreements with three investors consisting of Investec Bank (UK) Limited, Full Moon Resources Limited and LP Asset Management Limited, in addition to the persons set out in Schedule 1 to each of the subscription agreements.  Pursuant to the terms and conditions of the subscription agreements, the Company agreed to issue 60 $100,000 redeemable convertible notes in an aggregate principal amount of US$6,000,000 to the three investors, which carry an annual interest rate of 10% and mature on December 31, 2009.  Each note is convertible from the date of issuance until December 30, 2009 into common shares at the rate of one common share for every $0.55 of principal converted (subject to adjustment as described in the subscription agreements).  Pursuant to the terms and conditions of the subscription agreements, the Company agreed to grant two options to each investor, the first option of which is exercisable at the at any time during the period from April 1, 2007 to June 30, 2008.  The first option entitles the holder to subscribe for additional US$100,000 redeemable convertible notes of the Company in the aggregate principal amount of up to US$6,000,000.  The second option, which is exercisable on July 1, 2008, January 1, 2009 and July 1, 2009, or as otherwise described in the subscription agreements, entitles the holder to subscribe for additional US$100,000 redeemable convertible notes of the Company in the aggregate principal amount of up to US$6,000,000.  The conversion price of the notes underlying the first option are convertible at US$0.55 per share if converted on or before June 30, 2007 and at US$0.66 per share if converted after June 30,
2007.  The conversion price of the notes underlying the second option are subject to a formula as set out in the subscription agreements.        - 33 -   On January 23, 2007, the Company closed the convertible note financing transaction.  Pursuant to the terms and conditions of the subscription agreements, the Company issued the 60 US$100,000 redeemable convertible notes in an aggregate principal amount of US$6,000,000 to the three investors. Each note bears a fixed rate of interest at 10% per annum, payable quarterly, calculated on a 360 day year on the principal amount outstanding.  Unless previously converted or redeemed, each note will be redeemed by the Company on the maturity date of December 31, 2009 at a final redemption amount, calculated in accordance with a formula set out in the note, together with all interest thereon. The notes are convertible into common shares at the rate of one common share per each $0.55 of principal converted (subject to adjustment as described in the subscription agreements).  In addition, the Company issued two options to
each of the three investors to purchase additional redeemable convertible notes of the Company in the aggregate amount of US$12,000,000.  The Company issued the notes, the common shares issuable upon conversion of the notes, and the options in an offshore transaction to non U.S. persons (as that term is defined in Regulation S under the Securities Act of 1933) relying on Section 4(2) or Regulation S promulgated under the Securities Act of 1933.        - 34 -     Item2.Managements Discussion and Analysis or Plan of Operation.  FORWARD-LOOKING STATEMENTS  Forward-Looking Statements  This quarterly report contains forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, intends, expects, plans, anticipates, believes, estimates, predicts, potential, or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors, which may cause our or our industrys actual results, levels of
activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.  In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to common shares refer to the common shares in our capital stock. Our financial statements are prepared in accordance with United States generally accepted accounting principles.  As used in this quarterly report and unless otherwise indicated, the terms we, us and our refer to Global Innovative Systems 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.  Following the sale of Energy Medicine Developments in September 2003, our company was a development stage company whose business purpose was to identify and complete a merger or acquisition of a business or business opportunity.  Energy Saving Products and Technologies Business  On January 13, 2005, we closed a share exchange agreement dated January 7, 2005, whereby we acquired all of the issued and outstanding ordinary shares of Tech Team Holdings Limited in exchange for the issuance, by our company, of 13,000,000 shares of our common stock to the former shareholders of Tech Team.  As a result of the share exchange transaction, Tech Team became a wholly-owned subsidiary of our company as of January 13, 2005.  As the former shareholders of Tech Team held 68.3% of our shares as of the acquisition date, and because the business of Tech Team represented the only business operations of our company, the acquisition of Tech Team was deemed to be a reverse acquisition for accounting purposes.  As of January 13, 2005, we commenced the business of selling energy-saving products through Tech Team, our wholly-owed operating subsidiary.  Tech Team is a developer, manufacturer and integrator of energy-saving products and technologies.  Tech Teams primary product is the Eco-Pro® Energy Saver, a proprietary system which reduces energy consumed by lighting and other electrical equipment and acts as a protective buffer against voltage surges and other distortions.  The technology can be applied to a broad range of commercial, industrial, civil and       - 35 -   residential applications, including commercial buildings, office buildings, factories, industrial plants and street lighting.  In addition, Tech Team distributes complementary energy-efficiency products which can be integrated with the Eco-Pro Energy Saver system.  Tech Team also provides consulting and customer training services which enables Tech Team to offer comprehensive energy management solutions to prospective clients.  Following the acquisition of a majority interest in Beijing Illumination and the formation of a joint venture involving Lightscape Macau, our company commenced the business of offering specialty lighting products and services.  During the three months ended December 31, 2006, approximately 3% of our revenues were derived from our energy saving products and technologies business.  Lighting Source Products Business  Our company entered into the lighting source products business through several transactions that culminated in our company acquiring 76.8% of the issued and outstanding common shares of Beijing Illumination (Hong Kong) Limited.  As a result, Beijing Illumination is now a majority-owned subsidiary of our company.  Following the acquisition of a majority interest in Beijing Illumination on February 27, 2006, our company expanded our business into the manufacturing and sale of lighting and specialty lighting source products.  Beijing Illumination is an investment holding company which is engaged in the manufacture, sale, research and development of lighting equipment.  Beijing Illumination, through its wholly-owned subsidiary Beijing Aihua, manufactures and sells the following three main categories of HID related lighting products: (1) metal halide lamps; (2) high-pressure sodium lamps; and (3) special
application HID lamps. Besides HID lamps, Beijing Illumination has expanded its product mix into ultra high-pressure mercury lamps, which are classified as specialty lighting source products and are key components for modern light-weight digital crystal projectors.  During the three months ended December 31, 2006, approximately 28% of our revenues were derived from our lighting source products business.  Lighting Design Solutions Business  During 2006, we entered into the lighting design solutions business through two acquisitions of Lightscape Technologies (Macau) Limited.  On February 6, 2006, we incorporated a joint venture company named Lightscape Technologies (Macau) Limited.  Initially, we held 50.4% of the issued and outstanding shares of Lightscape Macau after the commencement of the joint venture.  On September 29, 2006, however, we acquired the remaining 49.6% of the issued and outstanding shares of Lightscape Macau in consideration for the payment of MOP12,400 and the issuance of 1,200,000 common shares by our company.  Immediately upon the acquisition of the remaining 49.6% interest, the 1,200,000 common shares were delivered to an escrow agent pursuant to an Escrow Agreement dated September 29, 2006.  The escrowed shares will be held and released to the vendors so long as the net profit of Lightscape Macau and its subsidiaries is not less than HK$20,000,000 during the period from October 1, 2006 to September 30, 2007.  If the net profit of Lightscape Macau and its subsidiaries is less than HK$20,000,000 during this period, a percentage of the common shares currently held in escrow equal to the percentage of the shortfall in net profit will be released by the escrow agent for immediate cancellation by our company, with the balance of the common shares to be released to the vendors. If Lightscape Macau fails to generate any net profit during the period, all of the escrowed shares will be released by the escrow agent for
immediate cancellation by our company.  Lightscape Macau is a full service design and production company specializing in computer-aided interior set design and fabrication, special effects lighting, intelligent lighting, laser lighting and multimedia technologies.  Lightscape Macau provides innovative turnkey designs and solutions for target clients including casinos, trade shows, conventions, motion pictures and video productions, concerts and special events, as well as theaters, disco clubs and shopping malls.  During the three months ended December 31, 2006, approximately 69% of our revenues were derived from our lighting design solutions business.        - 36 -   Material Trends and Uncertainties  Periodic changes occur in our companys industry and business that make it reasonably likely that aspects of our future operating results will be materially different from our historical operating results.  Sometimes these matters have not occurred, but their existence is sufficient to raise doubt regarding the likelihood that historical operating results are an accurate gauge of future performance.  Our company attempts to identify and describe these trends, events, and uncertainties to assist investors in assessing the likely future performance of our company.  Investors should understand that these matters typically are new, sometimes unforeseen, and often are fluid in nature.  Moreover, the matters described below are not the only issues that may result in variances between past and future performance nor are they necessarily the only material trends, events, and uncertainties that will affect our
company.  As a result, investors are encouraged to use this and other information to judge for themselves the likelihood that past performance will be indicative of future performance.  The trends, events, and uncertainties set out in the remainder of this section have been identified by our company as those we believe are reasonably likely to materially affect the comparison of historical operating results reported herein to either past period results or to future operating results.  Following the acquisitions of Beijing Illumination and Lightscape Macau, our company diversified our business into the sale of specialty lighting products and services, including lighting source products, LED lighting and the provision of lighting design solutions. The future performance of these business segments may materially affect the future performance of our company.  Our company continues to develop, manufacture and sell energy-saving products and technologies, and we are reviewing our marketing strategy related to the promotion of our energy-saving products.  Summary of Key Results  Total net revenue for the nine months ended December 31, 2006 was $11,747,149, which represents a 272% increase over the total net revenue of $3,161,405 for the nine months ended December 31, 2005.  Operating expenses including selling and marketing expenses and general and administrative expenses for the nine months ended December 31, 2006 were $2,942,707, which represents a 94% increase in operating expenses of $1,517,227 for the nine months ended December 31, 2005.  Interest expense for the nine months ended December 31, 2006 was $247,019, which represents a 147% increase over $99,831 for the nine months ended December 31, 2005.  Profit before income tax and minority interest for the nine months ended December 31, 2006 was $2,041,033 compared to a loss of $684,155 for the nine months ended December 31, 2005.  Results of Operations  Three Months Ended December 31, 2006  Our companys profit before tax and minority interest for the three months ended December 31, 2006 was $757,452, as compared to a loss before tax and minority interest of $287,356 for the three months ended December 31, 2005. The increase in profit during the three months ended December 31, 2006 is primarily attributable to the increase in revenues from the sale of lighting source products by recently-acquired subsidiary Beijing Illumination, and by the increase in revenues from the provision of lighting design solutions by Lightscape Macau.  Revenues and Cost of Revenues  Total net revenues for the three months ended December 31, 2006was $3,243,206, which represents a 111% increase over the total net revenue of $1,537,499 for the three months ended December 31, 2005. The increase in net revenues was primarily attributable to the sale of lighting source products derived from Beijing Illumination and the sale and contract revenue from the provision of lighting design solutions by       - 37 -   Lightscape Macau, which subsidiaries were recently acquired, during the three months ended December 31, 2006.  Specifically, sale of hardware products related to our energy-saving systems decreased $1,425,357 or 94% to $84,950 for the three months ended December 31, 2006 from $1,510,307 during the three months ended December 31, 2005. The decrease in revenues from the sale of energy-saving hardware systems was due primarily to the recent change in business focus from the sale of energy-saving products to the sale of specialty lighting products and the provision of lighting design solutions services. Sales of lighting source products derived from Beijing Illumination were $870,008 for the three months ended December 31, 2006 compared to nil for the three months ended December 31, 2005. Contract revenue and sale of lighting design solutions derived from Lightscape Macau were $358,281 and $1,928,020 for the three months ended December 31, 2006, respectively, compared to nil for the three months ended December 31,
2005. Our company expanded our operations in the business segments of manufacturing and sales of lighting source products, as well as the provision of specialty lighting design solutions during the three months ended December 31, 2006. As a result of the increased sales within of our specialty lighting products segment, we are reviewing our marketing strategy related to the promotion of our energy-saving products.  Cost of revenues for the three months ended December 31, 2006 was $1,312,791, which represents an increase of $78,606 as compared with cost of revenues of $1,234,185 for the three months ended December 31, 2005. The increase in the cost of revenues during the three months ended December 31, 2006 was directly associated with the corresponding increase in the sales of lighting source products, and the increase in contract costs for lighting design solutions provided by Lightscape Macau.  Our company acquired certain intangible assets through the acquisitions of Tomi Fuji Energy Management Services and Beijing Illumination.  These intangible assets are comprised of completed technology for the production of AHP and HID lamps, trademarks, a customer base and a distributors list.  Amortization of intangible assets incurred for the three months ended December 31, 2006 was $180,131 as compared to $123,406 for the three months ended December 31, 2005.  Operating Expenses  Operating expenses for the three months ended December 31, 2006 were $922,094 which represents a 113% increase over the operating expenses of $432,451 for the three months ended December 31, 2005. Selling and marketing expenses as well as general and administrative expenses constitute the major components of our company's operating expenses.  Selling and marketing expenses for the three months ended December 31, 2006 increased approximately 39% to $185,379 from $133,481 for the three months ended December 31, 2005. The increase was a net effect of (1) the decrease in salaries of sales personnel of Tech Team Development and (2) the incorporation of selling and marketing expenses from Beijing Illumination.  General and administrative expenses increased 146% during the three months ended December 31, 2006 to $736,715 from $298,970 for the three months ended December 31, 2005. The increase was mainly due to increased salaries, rental fees and consultancy fees incurred as a result of the expansion of our companys operations, including the acquisitions of Beijing Illumination and Lightscape Macau.  Our company anticipates that these costs will increase in the future as our companys operations continue to expand.  Interest expense increased to $80,130 for the three months ended December 31, 2006 as compared to $39,024 for the three months ended December 31, 2005. The increase reflects an increase in interest bearing debt as a result of the acquisition of Beijing Illumination and general interest rate increases in Hong Kong.        - 38 -   Results of Operations  Nine Months Ended December 31, 2006  Our companys profit before tax and minority interest for the nine months ended December 31, 2006 was $2,041,033, as compared to a loss before tax and minority interest of $684,155 for the nine months ended December 31, 2005.  Revenues and Cost of Revenues  Total net revenues for the nine months ended December 31, 2006was $11,747,149, which represents a 272% increase over the total net revenue of $3,161,405 for the nine months ended December 31, 2005. The increase in net revenues was primarily attributable to the sale of lighting source products derived from Beijing Illumination and the sale and contract revenue from the provision of lighting design solutions by Lightscape Macau, which subsidiaries were recently acquired, during the nine months ended December 31, 2006.  Specifically, sale of hardware products related to our energy-saving systems decreased $1,825,244 or 79% to $482,596 during the nine months ended December 31, 2006 from $2,307,840 during the nine months ended December 31, 2005. The decrease in revenues from the sale of energy-saving hardware systems was due primarily to the recent change in business focus from the sale of energy-saving products to the sale of specialty lighting products and the provision of lighting design solutions services. Sales of lighting source products derived from Beijing Illumination were $3,825,098 for the nine months ended December 31, 2006 compared to nil for the nine months ended December 31, 2005, representing 33% of our companys total revenue for the nine months ended December 31, 2006. Contract revenue and sale of lighting design solutions derived from Lightscape Macau were $5,471,374 and $1,928,020 for the nine
months ended December 31, 2006, respectively, compared to nil for the nine months ended December 31, 2005. Aggregate revenue of $7,399,394 derived from Lightscape Macau represents 63% of our companys total revenue during the nine months ended December 31, 2006. Our company expanded our operations within the new business segments of manufacturing and sales of lighting source products and lighting design solutions, as well as the provision of specialty lighting effects during the nine months ended December 31, 2006. The decrease in revenues from the sale of energy-saving hardware systems was due primarily to the recent change in business focus from the sale of energy-saving products to the sale of specialty lighting products and services. Sales of lighting source products derived from our recently acquired subsidiary Beijing Illumination and contract revenue derived from Lightscape Macau represented 33% and 63% of our companys total revenue for the nine months ended December
31, 2006. Our company expanded our operations into the new business segments of manufacturing and sales of lighting source products, as well as the provision of specialty lighting design solutions during the nine months ended December 31, 2006. As a result of the increased sales of our specialty lighting products segment, we are reviewing our marketing strategy related to the promotion of our energy-saving products.  Cost of revenues for the nine months ended December 31, 2006 was $6,502,689, which represents an increase of $4,629,920 as compared with cost of revenues of $1,872,769 for the nine months ended December 31, 2005. The increase in the cost of revenues during the nine months ended December 31, 2006 was directly associated with the corresponding increase in the sales of lighting source products, and the increase in sale and contract costs for lighting design solutions provided by Lightscape Macau.  Our company acquired certain intangible assets through the acquisitions of Tomi Fuji Energy Management Services and Beijing Illumination.  These intangible assets are comprised of completed technology for the production of AHP and HID lamps, trademarks, a customer base and a distributors list.  Amortization of intangible assets incurred for the nine months ended December 31, 2006 was $507,508 as compared to $371,864 for the nine months ended December 31, 2005.  Operating Expenses  Operating expenses for the nine months ended December 31, 2006 were $2,942,707 which represents a 94% increase over the operating expenses of $1,517,227 for the nine months ended December 31, 2005.       - 39 -   Selling and marketing expenses as well as general and administrative expenses constitute the major components of our company's operating expenses.  Selling and marketing expenses for the nine months ended December 31, 2006 increased approximately 13% to $521,490 from $462,719 for the nine months ended December 31, 2005. The increase was a net effect of (1) the decrease in salaries of sales personnel of Tech Team Development and the overall decrease in advertising expenses associated with marketing campaigns and promotional activities during the period and (2) the incorporation of selling and marketing expenses from Beijing Illumination.  General and administrative expenses increased 130% during the nine months ended December 31, 2006 to $2,421,217 from $1,054,508 for the nine months ended December 31, 2005. The increase was mainly due to increased salaries, rental fees and consultancy fees incurred as a result of the expansion of our companys operations, including the acquisitions of Beijing Illumination and Lightscape Macau.  Our company anticipates that these costs will increase in the future as our companys operations continue to expand.  Interest expense increased to $247,019 for the nine months ended December 31, 2006 as compared to $99,831 for the nine months ended December 31, 2005. The increase reflects an increase in interest bearing debt as a result of the acquisition of Beijing Illumination and the general interest rate increases in Hong Kong.  Liquidity and Capital Resources  Our companys principal cash requirements are for operating expenses, including staff costs, funding costs of inventory and accounts receivable, and net investment in sales-type leases.  As of December 31, 2006, our company had a net working capital deficit of $1,051,846 compared with a deficit of $3,011,498 as of March 31, 2006, representing a decrease in the deficit of $1,959,652. The cash and cash equivalents of our company increased to $267,292 as of December 31, 2006 as compared to $158,832 as of March 31, 2006. As of December 31, 2006, our company had total credit facilities of $899,743 and had utilized $899,743 on the same date.  The ability of our company to meet our financial commitments is primarily dependent upon the continued extension of credit by our creditors, the continued financial support of our directors and shareholders, the continued issuance of equity to new shareholders, and our ability to achieve and maintain profitable operations. On January 23, 2007, we raised $6,000,000 in a convertible debt financing transaction following the entry into subscription agreements with three investors consisting of Investec Bank (UK) Limited, Full Moon Resources Limited and LP Asset Management Limited. Pursuant to the terms and conditions of the subscription agreements, we agreed to issue 60 $100,000 redeemable convertible notes in an aggregate principal amount of $6,000,000 to the three investors, which convertible notes carry an annual interest rate of 10% and mature on December 31, 2009.  Each note is convertible from the date of
issuance until December 30, 2009 into common shares at the rate of one common share for every $0.55 of principal converted (subject to adjustment as described in the subscription agreements).  Pursuant to the terms and conditions of the subscription agreements, we granted two options to each investor, the first option of which is exercisable at any time during the period from April 1, 2007 to June 30, 2008.  The first option entitles the holder to subscribe for additional $100,000 redeemable convertible notes of our company in the aggregate principal amount of up to $6,000,000.  The second option, which is exercisable on July 1, 2008, January 1, 2009 and July 1, 2009, or as otherwise described in the subscription agreements, entitles the holder to subscribe for additional $100,000 redeemable convertible notes of our company in the aggregate principal amount of up to $6,000,000.  The conversion price of the notes underlying the first option are convertible at $0.55 per share if converted on or before June 30, 2007 and at $0.66 per share if converted after June 30, 2007.  The conversion price of the
notes underlying the second option are subject to a formula as set out in the subscription agreements.        - 40 -   On January 23, 2007, we closed the convertible note financing transaction and raised the $6,000,000 which we intend to use for general corporate purposes.  Pursuant to the terms and conditions of the subscription agreements, we issued the 60 $100,000 redeemable convertible notes in an aggregate principal amount of $6,000,000 to the three investors. Each note bears a fixed rate of interest at 10% per annum, payable quarterly, calculated on a 360 day year on the principal amount outstanding.  Unless previously converted or redeemed, each note will be redeemed by our company on the maturity date of December 31, 2009 at a final redemption amount, calculated in accordance with a formula set out in the note, together with all interest thereon. The notes are convertible into common shares at the rate of one common share per each $0.55 of principal converted (subject to adjustment as described in the subscription
agreements).  In addition, we issued two options to each of the three investors to purchase additional redeemable convertible notes of our company in the aggregate amount of $12,000,000.  Management believes that our companys cash and cash equivalents, cash provided by operating activities, if any, and our unused credit facilities will be sufficient to meet our working capital requirements for the next twelve months. The issuance of additional equity securities by our company in connection with the potential conversion of the redeemable convertible notes may result in a significant dilution in the equity interests of our current shareholders.  Cash Flow Related to Operating Activities  Operating activities provided cash of $4,478,706 for the nine months ended December 31, 2006 as compared to cash used of $956,956 for the nine months ended December 31, 2005. The net cash provided by operating activities was mainly due to a decrease in inventories, an increase in accrued expenses and other current liabilities and an increase in the net profit generated during the nine months ended December 31, 2006.  Cash Flow Related to Investing Activities  Net cash used in investing activities amounted to $883,369 during the nine months ended December 31, 2006 as compared with investing activities using $65,590 during the nine months ended December 31, 2005. The increase in cash used in investing activities is attributable primarily to increased purchases of factory equipment, and increases in construction in progress (including website development and implementation of an enterprise resource planning system) during the nine months ended December 31, 2006 as compared to the nine months ended December 31, 2005.  Cash Flow Related to Financing Activities  Financing activities used cash of $3,486,404 for the nine months ended December 31, 2006 as compared to financing activities providing cash of $1,053,005 for the nine months ended December 31, 2005. The net cash used in financing activities was mainly due to the repayment of a directors advance in the amount of $3,903,839, repayment of short-term borrowings amounting to $1,178,135, repayment of amounts owing to a related company totaling $1,834,498 and an advance to a director of a subsidiary of $771,027 during the nine months ended December 31, 2006.  Capital Expenditures  Our company incurred capital expenditures of $867,162 during the nine months ended December 31, 2006 and $63,267 for the nine months ended December 31, 2005.  The increase in capital expenditures for the nine months ended December 31, 2006 as compared to December 31, 2005 was mainly attributable to the purchase of equipment and increases in construction in progress.  As of December 31, 2006, 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.        - 41 -   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.  Contractual Obligations  Operating leases include commitments for office space of $54,987.  Our companys principal business office is located at 16/F., Hang Seng Mongkok Building, 677 Nathan Road, Mongkok, Kowloon, Hong Kong.  The 3,652 square feet office space serves as the base of our corporate, managerial, accounting, financial, administrative, sales and marketing functions.  The monthly fixed rent is $4,694 plus a monthly service charge of $1,596.  Our company also leases an office at Rooms 1108-9, 11th Floor, Tower II, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong.  The 4,058 square feet office space serves as the base of the corporate, accounting, sales and marketing functions of Beijing Illumination.  Our company also leases a facility at 1st Floor, Block B, Cui Wei Industrial Building, 668 Cui Xei Road West, Zhuhai, Guangdong, the Peoples Republic of China.  It serves as a base for
research, development and assembly of the Eco-Pro Energy Saver line of products, as well as sales and marketing activity within China.  Our company also leases a facility at 1st to 4th floor, No. 7 Shuang-qiao Xili Chaoyang District, Beijing, the Peoples Republic of China.  It serves as the base for manufacturing, research and development of the lighting and specialty lighting source products, as well as sales and marketing activity within China.  The obligations of these leases are set out as follows:  Obligations by PeriodContractual Obligations(1)
        
        Total
        
        Less ThanOne Year
        
        2-3 Years
        
        4-5 Years
        
        After5 YearsOperating Leases
        $
        441,327
        
        152,124
        
        192,802
        
        96,401
        
        -  Our company has entered into a capital lease arrangement for leasing equipment used in our operations.  The contractual obligations as of December 31, 2006 were:  Obligations  by  PeriodContractual  Obligations(1)
        
        Total
        
        Less ThanOne Year
        
        2-3 Years
        
        4-5 Years
        
        After5 YearsCapital Lease Obligations
        $
        1,974
        
        740
        
        1,234
        $
        -
        $
        -Total Contractual Obligations
        $
        1,974
        
        740
        
        1,234
        $
        -
        $
        -  (1)There have been no material changes to the contractual obligations of our company subsequent to December 31, 2006.  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 any 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.        - 42 -   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  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 necessary to continue the development of our products and expand our position in the market.  However, there is no assurance that actual cash requirements will not exceed our estimates.  We may need to raise additional funds to:  - support our planned rapid growth;  - develop new or enhanced services and technologies;  - increase our marketing efforts;  - acquire complementary businesses or technologies; and/or  - respond to competitive pressures or unanticipated requirements.  We depend to a large extent on outside capital over the near-term to fund our capital needs.  Such outside capital may be obtained from additional debt or equity financing.  We do not currently have any arrangement for financing and there is no assurance that capital will be available to meet our continuing development costs or, if the capital is available, that it will be on terms acceptable to us.  The issuance of additional equity securities by us would result in a dilution in the equity interests of our current stockholders.  Obtaining commercial loans, assuming those loans would be available, will 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.  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 which compete directly with our products and some of the companies developing these similar products have greater financial, technical and marketing resources, larger distribution networks, and generate greater revenue and have greater name recognition than us.  These companies may develop products 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, global expansion, 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 the convenience of one-stop shopping or because of international operations or arrangements, 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 line from those of our competitors and build our       - 43 -   international partnerships.  To achieve this we may have to substantially increase marketing and research and development in order to compete effectively.  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 lighting design solutions and lighting source products, and a minor portion of our current and expected future revenues from the sale of energy-saving products.  Both the electrical energy-saving industry and the specialty lighting products and services industry 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 electrical energy-saving technology may reduce demand for our Eco-Pro Energy
Saver brand.  In addition, the rapid technological advancements in HID lighting products may render our current specialty lighting products obsolete.  There can be no assurance that we will be successful in responding to these or other technological changes, to evolving industry standards or to new products and services offered by our current and future competitors.  In addition, we may not have access to sufficient capital for our research and development needs in order to develop new products and services.  We could lose our competitive advantages if we are not able to protect our proprietary technology and intellectual property rights against infringement, and any related litigation could be time-consuming and costly.  Our success and ability to compete depends in part on our proprietary technology incorporated in our products.  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 registered 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 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 hold no patents on our products and may not be able to protect our proprietary technology.  Although we have not obtained patent protection for any of our products, we have sought to protect our proprietary technology through a combination of trademark and trade secret laws and other forms of intellectual property protection.  We have filed patent applications in China, Hong Kong and the United States and have patents pending for the Eco-Pro Energy Saver product as an energy saving device.  There is no assurance that these patents will be granted.  We own trademark registrations for the name and logo for Eco-Pro in China, Hong Kong, Macau, Thailand and the European Community.  There can be no assurance that our operations do not or will not violate the intellectual property rights of others, that they would be upheld if challenged or that we, would, in such an event, not be prevented from using such companys intellectual property rights, any of which could have a material adverse effect on our business, financial condition and results of operations. In addition, our failure to obtain licenses required from third parties for other technology and intellectual property could delay or prevent the development, manufacture or sale of our products.  Although we rely,       - 44 -   in part, on contractual provisions to protect our trade secrets and proprietary know-how, there is no assurance that these agreements will not be breached, that we would have adequate remedies for any breach or that our trade secrets will not otherwise become known or be independently developed by competitors.  Although no lawsuits against us regarding infringement of any existing patents or other intellectual property rights are pending, nor have any claims been asserted, there can be no assurance that such infringement claims will not be asserted by third parties in the future.  There also can be no assurance in the event of such claims of infringement that we will be able to obtain licenses on reasonable terms.  Our involvement in any intellectual property dispute or action to protect trade secrets and know-how, including actions brought by us, could result in a material adverse effect on our business.  Adverse determinations in litigation in which we may become involved could subject us to liabilities to third parties, require us to grant licenses to or seek licenses from third parties and prevent us from manufacturing and selling our products.  Any of these situations could have a material adverse effect on our business, financial condition and results of operations.  We may not be able to hire and retain qualified personnel to support our growth and if we are unable to retain or hire such personnel in the future, our ability to improve our products and implement our business objectives could be adversely effected.  To continue our growth, we will need to recruit additional senior management personnel, including persons with financial and sales experience.  In addition, we must hire, train and retain a number of other skilled personnel, including persons with experience in engineering, energy management consulting and lighting system design and manufacturing.  We have encountered competition for these personnel.  We may not be able to find or retain qualified personnel, which would have a material adverse impact on our business.  Our growth could be impaired if we are not able to develop and maintain the relationships we need to implement our international strategy.  Our growth will depend, in large part, on the success of our international strategy.  We have limited experience in marketing and selling our products outside of Hong Kong, China and Macau.  We will depend on partnerships and/or joint ventures in international markets to help us build our international operations and sales.  We depend upon each of our international partners to provide marketing and relationship building expertise, and a base of existing customers.  If we are unable to develop and maintain these relationships, or to develop additional relationships in other countries, our ability to penetrate, and successfully compete in foreign markets would be materially affected in an adverse manner.  To fully implement our international strategy, we will need to expand our current relationships with international partners.  These partners may not agree to expand these relationships.  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.  Over 58% of our revenue was contributed from sales of lighting design solutions with one customer for the quarter ended December 31, 2006. If the customer ceased their business with our company or if our company failed to fulfill its requirements or the contract was terminated for any reason, we would require time to find other customers. If we lose this customer, there will be a negative impact on our overall performance.  Our company is subject to supply channel risk due to a concentration of supply lines with a limited number of vendors and any significant interruption from these vendors may have a material adverse effect on our company.  Our company currently relies on several vendors, one of which accounts for more than 21% of our purchases for the quarter ended December 31, 2006.  If this vendor terminates its relationship with our company or if our companys supply from a vendor is interrupted or terminated for any reason, we may not       - 45 -   have sufficient time to replace the supply of products from the remaining vendors.  Any such interruption would negatively impact our ability to sell and distribute our products.  Our growth could be impaired if we do not successfully handle certain risks associated with international business.  There are risks inherent in doing business in international markets, including:  - fluctuations in currency exchange rates;  - difficulties in staffing and managing foreign operations;  - changes in regulatory requirements, tariffs and other trade barriers;  - potential adverse tax consequences; and  - inadequate protection for intellectual property rights.  One or more of these factors may make it difficult for us to fully implement our international business strategies and may have a material adverse effect on our current or future international operations.  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 electrical energy-saving products and specialty lighting products in China.  Accordingly, our business, results of operations and financial conditions 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 have 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 electrical energy-saving products 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 electrical energy-saving products 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.  Chinas current and future economic, political and social conditions, as well as government policies could have an adverse effect on our companys overall financial condition and ability to generate revenues and profits.  We expect that a substantial portion of our business, assets and operations of our company will be located and conducted in China.  The economy of China differs from the economies of most developed countries in many respects, including:  - government involvement;  - level of development;  - growth rate;       - 46 -    - control of foreign exchange; and  - allocation of resources.  While Chinas economy has experienced significant growth in the past twenty years, growth has been uneven, both geographically and among various sectors of the economy.  The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources.  Some of these measures benefit the overall economy of China, but may also have a negative effect on us.  For example, our operating results and financial condition may be adversely affected by government control over capital investments or changes in tax regulations applicable to us.  If there are any changes in any policies by the Chinese government and our business is negatively affected as a result, then our financial results, including our ability to generate revenues and profits, will also be negatively affected.  Our company is subject to foreign exchange rate risk, particularly fluctuations in the exchange rate between Chinese Renminbi and United States dollars.  Our company may enter sales transaction denominated in Chinese Renminbi.  The Peoples Republic of China State Administration for Foreign Exchange, under the authority of the Peoples Bank of China, controls the conversion of Renminbi into foreign currencies.  The principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules (1996), as amended.  Under the Rules, once various procedural requirements are met, Renminbi is convertible for current account transactions, including trade and services, but not for capital account transactions, including direct investment, loan or investment in securities outside China, unless the prior approval of the State Administration of Foreign Exchange of the Peoples Republic of China is obtained.  Although the Chinese government regulations now allow greater convertibility of Renminbi for current account
transactions, significant restrictions still remain.  The value of the Renminbi is subject to changes in Chinas central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.  Since 1994, the conversion of Renminbi into foreign currencies, including United States dollars, has been based on rates set by the Peoples Bank of China, which are set daily based on the previous days interbank foreign exchange market rates and current exchange rates on the world financial markets. Since 1994, the official exchange rate generally has been stable, but the Chinese government recently announced that it will no longer peg its currency exclusively to the United States dollar but will switch to a managed floating exchange rate based on market supply and demand with reference to a basket of currencies yet to be named by the Peoples Bank of China, which
will likely increase the volatility of Renminbi as compared to United States dollars.  Our company has experienced minimal foreign exchange gains and losses to date due to the relative stability of the Renminbi.  We do not know what affect, if any, the decoupling of the Renminbi from the United States dollar will have on our financial statements and results of operations.  We do not currently engage in hedging activities to reduce our exposure to exchange rate fluctuation. Our companys success largely relies on the ability of our agents and distributors to sell our products, and on our ability to effectively monitor the activities of such persons and the failure to establish and maintain productivity from our agents and distributors may have a material adverse effect on our operations.  Our company relies on agents and distributors to earn revenue by means of selling our products directly to end users with installation (Direct Sales Contracts) and through distributors (Trading Contracts), with a majority of revenues generated by the latter.  The current over-dependence on external distributors requires an effective and efficient monitoring system to ensure our success in delivering products to customers.  Our company monitors the activities of our agents and distributors but there can be no assurance that our monitoring efforts are successful in achieving a productive and efficient distribution network.  Failure to establish and maintain high levels of productivity and efficiency from our distribution network may have a material adverse effect on our operations.       - 47 -    The future success of our company is largely dependent upon our ability to obtain or generate sufficient cash flow and the failure to obtain sustainable levels of cash flow will have a material adverse effect on our operating results.  Our company generally extends a 120-day credit period to customers within our hardware sales trading contracts.  For direct sales contracts with installation, our company offers financing terms of up to 60 months to new customers.  Our company, however, is required to pay our vendors for the cost of supplies and hardware in accordance with credit terms ranging from cash on delivery to payment within 30 days.  Such financing arrangements create a time lag between the payment for inventory and the collection of revenue from sales contracts, which has placed working capital restraints on our company.  Our company has established relationships with several financial institutions to provide financing options directly to our customers for the purchase of our equipment which may assist in alleviating these working capital restraints on our company.  There can be no assurance, however, that any financial institutions
will agree to provide such a financing option, and if our company is unable to arrange such financing options for our customers, the working capital restraints on our company would be expected to continue, which could have a material adverse effect on the financial condition and operations of our company.  New or changing government policies or regulations related to the energy savings industry or the specialty lighting industry in our markets may have an adverse effect on our operations and may further 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.  Both short and long-term changes in governmental policies or regulations affecting the energy savings industry and/or the specialty lighting products industry 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.  Risks Related to Our Industry  A drop in the retail price of electrical energy may have a negative effect on our business.  A customers decision to purchase our companys energy saving products is primarily driven by the payback on the investment resulting from the increased energy savings.  Although management believes that current retail energy prices support a reasonable return on investment for our energy saving products, there can be no assurances that future retail pricing of electrical energy will remain at such levels.  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 can 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,       - 48 -    - 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 materially adversely 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 do 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 Over-the-Counter Bulletin Board quotation system.  Trading of stock through the Over-the-Counter 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.  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       - 49 -   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.  The National Association of Securities Dealers Inc., or NASD, 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, the NASD 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, the NASD believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers.  The NASD 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.  Most of our assets and all of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.  Although we are organized under the laws of the State of Nevada, our principal executive office is located in Hong Kong.  Outside the United States, it may be difficult for investors to enforce judgments against us obtained in the United States in any such actions, including actions predicated upon civil liability provisions of federal securities laws.  In addition, all of our officers and directors reside outside the United States, and nearly all of the assets of these persons and our assets are located outside of the United States.  As a result, it may not be possible for investors to effect 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.  Item3.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 December 31, 2006, 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 companys management, including our companys Chief Executive Officer.  Based upon that evaluation, our companys Chief Executive Officer concluded that our companys 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 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.       - 50 -    PART II-OTHER INFORMATION  Item1.Legal Proceedings.  Our company received a notice of payment dated February 12, 2007 demanding the settlement of outstanding tax payable amounting to $6,440 within 10 days from the date of the notice. This notice was related to our companys failure to pay the tax payable according to the installment arrangement that was agreed with Hong Kong Inland Revenue Department (HKIRD). If our company is unable to settle the payable, the installment arrangement will be cancelled. Further, the HKIRD will take recovery actions and/or legal proceedings against our company to recover the whole outstanding amount of $256,167 without further notice.  Other than the above, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation that involves a claim for damages which exceeds 10% of our current assets as of December 31, 2006. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.  Item6.Exhibits  Exhibits required by Item 601 of Regulation S-B  Exhibit Number
        Description(2)
        Plan of Purchase, Sale, Reorganization, Arrangement, Liquidation or Succession2.1
        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) Bylaws3.1
        Charter (incorporated by reference from our Registration Statement on Form 10-SB filed on April 11, 2000).3.2
        Articles of Incorporation (incorporated by reference from our Registration Statement on Form 10-SB filed on April 11, 2000).3.3
        Bylaws (incorporated by reference from our Registration Statement on Form 10-SB filed on April 11, 2000).3.4
        Certificate of Reverse Stock Split filed with the Nevada Secretary of State on November 12, 2003 (incorporated by reference from our Current Report on Form 8-K filed on December 17, 2003).3.5
        Certificate of Amendment to Articles of Incorporation filed with the Secretary of State of Nevada on March 3, 2004 (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 15, 2004)3.6
        Certificate of Change filed with the Secretary of State of Nevada on December 23, 2004 (incorporated by reference from our Current Report on Form 8-K filed on January 6, 2005)(10)
        Material Contracts10.1
        Sales Agreement dated March 31, 2004, between Tech Team Development Limited and K. Wah Concrete Co. Ltd. (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)10.2
        Assignment Agreement dated February 11, 2004, between Tech Team Development Limited and Southern Cross Technologies Limited (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)         - 51 -    10.3
        Assignment Agreement dated February 11, 2004, between Grandplex Development Limited and Scnider Limited (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)10.4
        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)10.5
        Management Contract between Tech Team Development Limited and Victor Chang (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)10.6
        Management Contract between Grandplex Development Limited and Ronny Lau (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)10.7
        Management Contract between Tech Team Development Limited and Mandy Kee (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)10.8
        Management Contract between Tech Team Development Limited and Raymond Ho (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)10.9
        Proposal on Sales and Marketing Services to Tech Team Development Ltd. (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)10.10
        Sales Agreement dated February 7, 2005, between Tomi Fuji Energy Management Services Consultants Limited and Versatech Group Limited (incorporated by reference from our Quarterly Report on Form 10-QSB filed on February 14, 2005)10.11
        Subscription Agreements of the following private placements that were issued to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933) in offshore transactions relying on Regulation S and/or Section 4(2) of the Securities Act of 1933 (incorporated by reference from our Annual Report on Form 10-KSB filed on July 18, 2005):Name
        Date ofAgreement
        Numberof Units
        GrossProceedsVolitans Limited
        May 17, 2005
        133,333
        $200,000Sin Mei Yan
        May 27, 2005
        200,000
        $300,000Philip Yu-Hong Wong
        May 27, 2005
        106,393
        $159,590Siu Hung Chan
        May 27, 2005
        100,000
        $150,000Ho Sum Yeung
        May 27, 2005
        100,000
        $150,000Forever Success CompanyLimited
        May 27, 2005
        100,000
        $150,000Chun Hok Yeung
        May 27, 2005
        66,667
        $100,000Yin Mee Ho
        May 27, 2005
        50,000
        $75,000Each unit consists of one share and one share purchase warrant exercisable for a period of twelve months at an exercise price of $2.0010.12
        Subscription Agreements of the following private placements that were issued to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933) in offshore transactions relying on Regulation S and/or Section 4(2) of the Securities Act of 1933(incorporated by reference from our Annual Report on Form 10-KSB filed on July 18, 2005):Name
        Date ofAgreement
        Numberof Units
        GrossProceeds        - 52 -    Ronald Chong
        May 17, 2005
        12,000
        $18,000Ronco FamilyHoldings Limited
        May 17, 2005
        8,000
        $12,000Allan Watt
        May 26, 2005
        10,000
        $15,000Thomas N. Bell
        May 26, 2005
        10,000
        $15,000Each unit consists of one share and one share purchase warrant exercisable for a period of twelve months at an exercise price of $2.0010.13
        Sales Agreement dated September 8, 2005, between Tomi Fuji Energy Management Services Consultants Limited and Geopower Corporation (incorporated by reference from our Quarterly Report on Form 10-QSB filed on August 22, 2005)10.14
        Addendum to Sales Agreement dated September 16, 2005, between Tomi Fuji Energy Management Services Consultants Limited and Geopower Corporation (incorporated by reference from our Quarterly Report on Form 10-QSB filed on August 22, 2005)10.15
        Assignment Agreement dated September 16, 2005, between Tomi Fuji Energy Management Services Consultants Limited and GD Inet Electric Construction Co. Ltd. (incorporated by reference from our Quarterly Report on Form 10-QSB filed on August 22, 2005)10.16
        Sale and Purchase Agreement dated September 27, 2005, between Glory Goal Investments Limited, Global Innovative Systems Inc., and Ko Yin (incorporated by reference from our Current Report on Form 8-K filed on October 3, 2005)10.17
        Option Deed dated September 27, 2005, between Admire Fame Invests Limited, Gain Huge Investments Limited, Splendid Fortune Investments Limited, Global Innovative Systems Inc. and Ko Yin (incorporated by reference from our Current Report on Form 8-K filed on October 3, 2005)10.18
        Amendment to Sale and Purchase Agreement and Option Deed dated October 3, 2005, between Glory Goal Investments Limited, Admire Fame Investments Limited, Gain Huge Investments Limited, Splendid Fortune Investments Limited, Ko Yin and Global Innovative Systems Inc. (incorporated by reference from our Current Report on Form 8-K filed on October 3, 2005)10.19
        Supplemental Deed Agreement dated February 22, 2006 between Admire Fame Investments Limited, Gain Huge Investments Limited, Splendid Fortune Investments Limited, Ko Yin and Global Innovative Systems Inc. (incorporated by reference from our Current Report on Form 8-K filed on February 28, 2006)10.20
        Sale and Purchase Agreement dated March 30, 2006 between Tech Team Investment Limited, Woo Yuen Yu, Michelle Siu Kwan Lam and Joseph Sui Kei Lam (incorporated by reference from our Current Report on Form 8-K filed on April 4, 2006)10.21
        Purchase Agreement between Global Innovative Systems Inc. and Aeneas Portfolio Company LP, dated March 29, 2006 (incorporated by reference from our Current Report on Form 8-K filed on July 5, 2006)10.22
        Purchase Agreement between Global Innovative Systems Inc. and Aeneas Portfolio Company LP, dated April 3, 2006 (incorporated by reference from our Current Report on Form 8-K filed on July 5, 2006)10.23
        Amendment Agreement between Global Innovative Systems Inc. and Aeneas Portfolio Company LP dated June 21, 2006 to Purchase Agreement between Global Innovative Systems Inc. and Aeneas Portfolio Company LP, dated March 29, 2006 (incorporated by reference from our Current Report on Form 8-K filed on July 5, 2006)         - 53 -    10.24
        Amendment Agreement between Global Innovative Systems Inc. and Aeneas Portfolio Company LP dated June 21, 2006 to Purchase Agreement between Global Innovative Systems Inc. and Aeneas Portfolio Company LP, dated April 3, 2006 (incorporated by reference from our Current Report on Form 8-K filed on July 5, 2006)10.25
        Sale and Purchase Agreement between Tech Team Development Limited, Albert Yee Tat Chan, Luminous LED Technologies Limited, Michelle Siu Kwan Lam and Joseph Sui Kei Lam, dated September 29, 2006 (incorporated by reference from our Current Report on Form 8-K filed on October 5, 2006)10.26
        Cancellation Deed between Tech Team Investment Limited, Woo Yuen Yu, Michelle Siu Kwan Lam, Joseph Sui Kei Lam and Lightscape Holding Ltd., dated September 29, 2006 (incorporated by reference from our Current Report on Form 8-K filed on October 5, 2006)10.27
        OEM Agreement between Lightscape Technologies (Macau) Limited and Strong Base Electronic-optic Technology Corp., dated October 23, 2006 (incorporated by reference from our Current Report on Form 8-K filed on October 31, 2006)10.28*
        Subscription Agreement between Global Innovative Systems Inc. and Bondy Tan, dated January 18, 200710.29*
        Subscription Agreement between Global Innovative Systems Inc., Investec Bank (UK) Limited and the persons set out in Schedule 1 to the Subscription Agreement, dated January 18, 200710.30*
        Note issued by Global Innovative Systems Inc. to Investec Bank (UK) Limited dated January 23, 200710.31*
        Subscription Agreement between Global Innovative Systems Inc., Full Moon Resources Limited and the persons set out in Schedule 1 to the Subscription Agreement, dated January 18, 200710.32*
        Note issued by Global Innovative Systems Inc. to Full Moon Resources Limited dated January 23, 200710.33*
        Subscription Agreement between Global Innovative Systems Inc., LP Asset Management Limited and the persons set out in Schedule 1 to the Subscription Agreement, dated January 18, 200710.34*
        Note issued by Global Innovative Systems Inc. to LP Asset Management Limited dated January 23, 2007(14)
        Code of Ethics14.1
        Code of Ethics (incorporated by reference from our Annual Report on Form 10-KSB filed on December 30, 2004)(31)
        Rule 13a-14(a)/15d-14(a) Certifications31.1*
        Certification of Principal Executive Officer and Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(32)
        Section 1350 Certifications32.1*
        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  SIGNATURES  In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  GLOBAL INNOVATIVE SYSTEMS INC.  By:  /s/ Bondy Tan Bondy Tan President, Secretary and Treasurer and Chief Executive Officer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)  Date: February 20, 2007   CW1076379.1