---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 000-30299

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

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

18/F., W Square, 318 Hennessy Road, Wanchai, Hong Kong(Address of principal executive offices)

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

**3/F., 80 Gloucester Road, Wanchai, Hong Kong**
  (Former name, former address and former
fiscal year, if changed since last report)

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

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

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



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- 2 -

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

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- 3 -

|PART I - FINANCIAL
      INFORMATION                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                        
|Item
      1. Unaudited Consolidated Financial Statements.                                                                                              
|                                                                                                                                                        
|Consolidated
      Balance Sheets as at September 30, 2008 and March 31, 2008                                                                           
|                                                                                                                                                        
|Consolidated
      Statements of Operations for the three months and six months ended
      September 30, 2008 and 2007                                 
|                                                                                                                                                        
|Consolidated
      Statements of Shareholders Equity and Comprehensive Income (Loss) for the
      three months and six months ended September 30, 2008
|                                                                                                                                                        
|Consolidated
      Statements of Cash Flows for the six months ended September 30, 2008 and
      2007                                                  
|                                                                                                                                                        
|Notes
      to Unaudited Consolidated Financial Statements                                                                                              
|                                                                                                                                                        
|Item
      2. Managements Discussion and Analysis of Financial Condition and Results
      of Operations.                                              
|                                                                                                                                                        
|Item
      3. Quantitative and Qualitative Disclosures About Market Risk.                                                                               
|                                                                                                                                                        
|Item
      4T. Controls and Procedures.                                                                                                                 
|                                                                                                                                                        
|PART
      II - OTHER INFORMATION                                                                                                                       
|                                                                                                                                                        
|Item
      1. Legal Proceedings.                                                                                                                        
|                                                                                                                                                        
|Item
      1A. Risk Factors.                                                                                                                            
|                                                                                                                                                        
|Item
      2. Unregistered Sales of Equity Securities and Use of Proceeds.                                                                              
|                                                                                                                                                        
|Item
      3. Defaults Upon Senior Securities.                                                                                                          
|                                                                                                                                                        
|Item
      4. Submission of Matters to a Vote of Security Holders.                                                                                      
|                                                                                                                                                        
|Item
      5. Other Information.                                                                                                                        
|                                                                                                                                                        
|Item
      6. Exhibits.                                                                                                                                 

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- 4 -

Item 1. Financial Statements.





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

---

- 5 -

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

|                                                                        |  | September 30, |  |  | March 31,  | 
|----------------------------------------------------------------------- |  | ------------- |  |  | ---------- | 
|                                                                        |  | 2008          |  |  | 2008       | 
|                                                                        |  | (Unaudited)   |  |  | (Audited)  | 
|                                                                        |  | $             |  |  | $          | 
|ASSETS                                                                  |  |               |  |  |            | 
|Current assets:                                                         |  |               |  |  |            | 
|Cash and cash
      equivalents                                         |  | 2,551,832     |  |  | 3,976,565  | 
|Accounts receivable, net of
      allowance for doubtful accounts       |  |               |  |  |            | 
|of
      $1,013,905 on September 30, 2008 and $817,790 on March 31,     |  |               |  |  |            | 
|2008                                                                    |  | 2,920,145     |  |  | 4,438,207  | 
|Costs and
      estimated earnings in excess of billings on uncompleted |  |               |  |  |            | 
|Contracts                                                               |  | 62,339        |  |  | 639,035    | 
|Prepaid expenses
      and other current assets                         |  | 3,027,950     |  |  | 1,742,031  | 
|Inventories                                                             |  | 4,196,215     |  |  | 3,903,798  | 
|Current assets
      of discontinued operations                         |  | 673,666       |  |  | 699,847    | 
|                                                                        |  |               |  |  |            | 
|Total current assets                                                    |  | 13,432,147    |  |  | 15,399,483 | 
|                                                                        |  |               |  |  |            | 
|Intangible assets, net                                                  |  | 1,331,187     |  |  | 1,700,114  | 
|Goodwill                                                                |  | 4,476,574     |  |  | 4,476,574  | 
|Plant and equipment, net                                                |  | 4,537,075     |  |  | 4,650,398  | 
|Net investment in sales-type leases of discontinued
      operations    |  | 74,521        |  |  | 126,521    | 
|                                                                        |  |               |  |  |            | 
|                                                                        |  | 10,419,357    |  |  | 10,953,607 | 
|                                                                        |  |               |  |  |            | 
|TOTAL ASSETS                                                            |  | 23,851,504    |  |  | 26,353,090 | 
|                                                                        |  |               |  |  |            | 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                    |  |               |  |  |            | 
|Current liabilities:                                                    |  |               |  |  |            | 
|Bank loans  current portion                                            |  | 49,721        |  |  | -          | 
|Secured loan                                                            |  | 400,896       |  |  | -          | 
|Trade payables                                                          |  | 682,543       |  |  | 2,413,203  | 
|Amount due to a
      director                                          |  | 552,699       |  |  | -          | 
|Amount due to a director of a
      subsidiary                          |  | 150,823       |  |  | -          | 
|Accrued expenses
      and other current liabilities                    |  | 748,491       |  |  | 763,797    | 
|Obligations under capital leases
       current portion                |  | 12,046        |  |  | 1,774      | 
|Income tax
      payable                                                |  | 185,659       |  |  | 366,281    | 
|Current liabilities of
      discontinued operations                    |  | 289,319       |  |  | 364,191    | 
|                                                                        |  |               |  |  |            | 
|Total current liabilities                                               |  | 3,072,197     |  |  | 3,909,246  | 
|                                                                        |  |               |  |  |            | 
|Non-current liabilities:                                                |  |               |  |  |            | 
|Bank loans 
      long-term portion                                    |  | 47,701        |  |  | -          | 
|Obligations under capital leases
       non-current portion            |  | 4,582         |  |  | 5,469      | 
|                                                                        |  |               |  |  |            | 
|Total non-current liabilities                                           |  | 52,283        |  |  | 5,469      | 
|                                                                        |  |               |  |  |            | 
|Total liabilities                                                       |  | 3,124,480     |  |  | 3,914,715  | 

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- 6 -

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

|                                                          |  | September 30, |   |  | March 31,   |  
|--------------------------------------------------------- |  | ------------- | - |  | ----------- | -
|                                                          |  | 2008          |   |  | 2008        |  
|                                                          |  | (Unaudited)   |   |  | (Audited)   |  
|                                                          |  | $             |   |  | $           |  
|                                                          |  |               |   |  |             |  
|Minority interest                                         |  | 1,323,623     |   |  | 1,421,702   |  
|                                                          |  |               |   |  |             |  
|COMMITMENTS (see Note 19)                                 |  |               |   |  |             |  
|                                                          |  |               |   |  |             |  
|Shareholders' equity:                                     |  |               |   |  |             |  
|Preferred stock, par value of $0.001 each;                |  |               |   |  |             |  
|100,000,000 shares authorized, none issued or outstanding |  |               |   |  |             |  
|                                                          |  |               |   |  |             |  
|Common stock                                              |  |               |   |  |             |  
|Authorized:                                               |  |               |   |  |             |  
|800,000,000 common shares, par value $0.001 per share     |  |               |   |  |             |  
|Issued and
      outstanding:                             |  |               |   |  |             |  
|55,876,410 common shares at September 30, 2008 and at     |  |               |   |  |             |  
|March 31, 2008                                            |  | 55,876        |   |  | 55,876      |  
|Additional paid-in capital                                |  | 34,140,708    |   |  | 34,140,708  |  
|Common stock warrants (see Note 22)                       |  | 344,673       |   |  | 344,673     |  
|Statutory surplus reserves                                |  | 28,944        |   |  | 28,944      |  
|Accumulated other comprehensive income                    |  | 1,202,362     |   |  | 1,082,442   |  
|Accumulated deficit                                       |  | (16,369,162   | ) |  | (14,635,970 | )
|                                                          |  |               |   |  |             |  
|Total shareholders' equity                                |  | 19,403,401    |   |  | 21,016,673  |  
|                                                          |  |               |   |  |             |  
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                |  | 23,851,504    |   |  | 26,353,090  |  

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

---

- 7 -

|LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES               
|------------------------------------------------------------
|                                                            
|CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)           
|Expressed in US
      dollars (except for per share amounts)

|                                                             | Three Months Ended |   | Six Months Ended |  
|------------------------------------------------------------ | ------------------ | - | ---------------- | -
|                                                             | September 30,      |   | September 30,    |  
|                                                             | 2008               |   | 2007             |  
|                                                             | $                  |   | $                |  
|Revenues:                                                    |                    |   |                  |  
|Advertising revenue                                          | -                  |   | -                |  
|LED solutions revenue                                        | 749,920            |   | 23,242           |  
|Other revenue                                                | 334,171            |   | 433,964          |  
|                                                             |                    |   |                  |  
|Total net revenues                                           | 1,084,091          |   | 457,206          |  
|                                                             |                    |   |                  |  
|Cost of revenues:                                            |                    |   |                  |  
|Cost of sales of Advertising revenue                         | -                  |   | -                |  
|Cost of sales of LED solutions revenue                       | (488,368           | ) | (19,070          | )
|Contract costs of Other revenue                              | (242,572           | ) | (288,739         | )
|                                                             |                    |   |                  |  
|Total cost of revenues                                       | (730,940           | ) | (307,809         | )
|                                                             |                    |   |                  |  
|Gross profit                                                 | 353,151            |   | 149,397          |  
|Bad debts                                                    | (161,313           | ) | -                |  
|Amortization                                                 | (187,701           | ) | (187,400         | )
|Depreciation                                                 | (52,124            | ) | (64,456          | )
|Selling and marketing expenses                               | (122,322           | ) | (162,449         | )
|General and administrative expenses                          | (890,398           | ) | (832,002         | )
|                                                             |                    |   |                  |  
|Loss from operations                                         | (1,060,707         | ) | (1,096,910       | )
|Interest expense                                             | (9,954             | ) | (39,592          | )
|Interest income                                              | 283                |   | 11,152           |  
|Gain on redemption of redeemable convertible
      notes and |                    |   |                  |  
|options                                                      | -                  |   | 194,968          |  
|Other income                                                 | 13,645             |   | (7,294           | )
|                                                             |                    |   |                  |  
|Loss from continuing operations before income
      tax and  |                    |   |                  |  
|minority interests                                           | (1,056,733         | ) | (937,676         | )
|Income taxes                                                 | 206,977            |   | -                |  
|                                                             |                    |   |                  |  
|Net loss from continuing operations before
      minority    |                    |   |                  |  
|interests                                                    | (849,756           | ) | (937,676         | )
|Minority interests                                           | 76,645             |   | 22,727           |  
|                                                             |                    |   |                  |  
|Net loss from continuing operations                          | (773,111           | ) | (914,949         | )
|                                                             |                    |   |                  |  
|Discontinued operations                                      |                    |   |                  |  
|Net profit (loss) from discontinued operations,
      net of |                    |   |                  |  
|income taxes                                                 | 33,780             |   | (77,713          | )
|                                                             |                    |   |                  |  
|Net loss attributable to common shareholders                 | (739,331           | ) | (992,662         | )
|                                                             |                    |   |                  |  
|Loss per share                                               |                    |   |                  |  
|- Basic and diluted                                          |                    |   |                  |  

---

- 8 -

|Continuing operations                                      | (0.01      | ) | (0.02      | ) | (0.03      | ) | (0.06      | )
|---------------------------------------------------------- | ---------- | - | ---------- | - | ---------- | - | ---------- | -
|Discontinued operations                                    | 0.00       |   | 0.00       |   | 0.00       |   | 0.00       |  
|Total                                                      | (0.01      | ) | (0.02      | ) | (0.03      | ) | (0.06      | )
|                                                           |            |   |            |   |            |   |            |  
|Weighted average number of common shares
      outstanding |            |   |            |   |            |   |            |  
|- Basic and diluted                                        | 55,876,410 |   | 40,320,975 |   | 55,876,410 |   | 38,894,033 |  

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

---

- 9 -

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

|                 |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  | Total
      Comprehensive (Loss) Income |  |  |                  |  
|---------------- | ------------------- |  |  | ------ |  |  | -------- |  |  | ---------- |  |  | ------------------- |  |  | --------------------------------------- |  |  | ---------------- | -
|                 |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  | Accumulated Other Comprehensive         |  |  |                  |  
|                 | Common
      Shares |  |  |        |  |  |          |  |  |            |  |  | (Loss)
      Income |  |  |                                         |  |  |                  |  
|                 |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|                 |                     |  |  |        |  |  | Common   |  |  | Additional |  |  | Statutory           |  |  | Unrealized                              |  |  | Foreign Currency |  
|                 |                     |  |  |        |  |  | Stock    |  |  | Paid-In    |  |  | Surplus             |  |  | Loss on                                 |  |  | Translation      |  
|                 | Number              |  |  | Amount |  |  | Warrants |  |  | Capital    |  |  | Reserves            |  |  | Investments                             |  |  | Adjustment       |  
|                 |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|Balance at       |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|April 1, 2008    | 55,876,410          |  |  | 55,876 |  |  | 344,673  |  |  | 34,140,708 |  |  | 28,944              |  |  | -                                       |  |  | 1,082,442        |  
|                 |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|Foreign currency |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|translation      |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|adjustment       | -                   |  |  | -      |  |  | -        |  |  | -          |  |  | -                   |  |  | -                                       |  |  | 153,294          |  
|Net loss         | -                   |  |  | -      |  |  | -        |  |  | -          |  |  | -                   |  |  | -                                       |  |  | -                |  
|                 |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|Balance at       |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|June 30, 2008    | 55,876,410          |  |  | 55,876 |  |  | 344,673  |  |  | 34,140,708 |  |  | 28,944              |  |  | -                                       |  |  | 1,235,736        |  
|                 |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|Foreign currency |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|translation      |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|adjustment       | -                   |  |  | -      |  |  | -        |  |  | -          |  |  | -                   |  |  | -                                       |  |  | (33,374          | )
|Net loss         | -                   |  |  | -      |  |  | -        |  |  | -          |  |  | -                   |  |  | -                                       |  |  | -                |  
|                 |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|Balance at       |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|September 30,    |                     |  |  |        |  |  |          |  |  |            |  |  |                     |  |  |                                         |  |  |                  |  
|2008             | 55,876,410          |  |  | 55,876 |  |  | 344,673  |  |  | 34,140,708 |  |  | 28,944              |  |  | -                                       |  |  | 1,202,362        |  

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

---

- 10 -

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

|                                                                                  | Six Months          |  
|--------------------------------------------------------------------------------- | ------------------- | -
|                                                                                  | Ended September 30, |  
|                                                                                  | 2008                |  
|                                                                                  | $                   |  
|Cash flows from continuing operating activities:                                  |                     |  
|Net loss                                                                          | (1,753,026          | )
|                                                                                  |                     |  
|Adjustment to reconcile net loss from continuing operations
      to              |                     |  
|net cash (used in) generated from continuing
      operating activities:          |                     |  
|Amortization of intangible assets                                                 | 393,354             |  
|Depreciation expense                                                              | 253,928             |  
|Gain on redemption of redeemable
      convertible notes and options              | -                   |  
|Minority interest                                                                 | (98,081             | )
|Changes in operating assets and liabilities, net of acquisitions:                 |                     |  
|Decrease (increase) in operating
      assets:                                    |                     |  
|Accounts receivable, net of allowance
      for doubtful debts                    | 2,006,812           |  
|Costs and estimated
      earnings in excess of billings on uncompleted contracts | 576,696             |  
|Prepaid expenses and other current
      assets                                   | (1,392,296          | )
|Inventories                                                                       | (292,417            | )
|Increase (decrease) in operating liabilities:                                     |                     |  
|Trade payables                                                                    | (1,739,157          | )
|Accrued expenses and other current
      liabilities                              | (183,076            | )
|Income tax payable                                                                | (193,346            | )
|                                                                                  |                     |  
|Net cash (used in) continuing operating activities                                | (2,420,609          | )
|Net cash provided by (used in) discontinued operating activities                  | 151,634             |  
|Net cash (used in) operating activities                                           | (2,268,975          | )
|                                                                                  |                     |  
|Cash flows from investing activities:                                             |                     |  
|Purchase of plant and equipment                                                   | (39,436             | )
|Purchase of a subsidiary                                                          | 21,184              |  
|Increase in construction in progress                                              | -                   |  
|                                                                                  |                     |  
|Net cash (used in) investing activities of continuing operations                  | (18,252             | )
|Net cash provided by investing activities of
      discontinued operations        | -                   |  
|Net cash (used in) investing activities                                           | (18,252             | )

---

- 11 -

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

|                                                                                   | Six Months          |  
|---------------------------------------------------------------------------------- | ------------------- | -
|                                                                                   | Ended September 30, |  
|                                                                                   | 2008                |  
|                                                                                   | $                   |  
|                                                                                   |                     |  
|Cash flows from financing activities:                                              |                     |  
|Proceed from short-term borrowings                                                 | 400,896             |  
|Repayment of capital lease obligations                                             | (1,659              | )
|Net proceeds from issuance of share capital                                        | -                   |  
|Early redemption of redeemable convertible
      notes                             | -                   |  
|Advance from a director                                                            | 552,699             |  
|Advance from a director of a subsidiary                                            | 8,329               |  
|                                                                                   |                     |  
|Net cash provided by (used in) financing activities
      of continuing operations | 960,265             |  
|Net cash (used in) financing activities of discontinued operations                 | (11                 | )
|Net cash provided by (used in) financing activities                                | 960,254             |  
|                                                                                   |                     |  
|Effect of foreign exchange rate changes                                            | (63,486             | )
|                                                                                   |                     |  
|Net decrease in cash and cash equivalents                                          | (1,390,459          | )
|Cash and cash equivalents at beginning of the period                               | 3,978,500           |  
|                                                                                   |                     |  
|Cash and cash equivalents at end of the period (a)                                 | 2,588,041           |  
|                                                                                   |                     |  
|Supplemental disclosure of cash flows information                                  |                     |  
|Interest expense paid                                                              | 10,254              |  
|Income taxes paid                                                                  | -                   |  

(a) Includes $36,209 and $990 of cash that is included on the
balance sheet with Current assets from discontinued operations as of September
30, 2008 and 2007, respectively.

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

---

- 12 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

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

NOTE 2. ACQUISITION OF A SUBSIDIARY

Pursuant to a Sale and Purchase Agreement dated July 1, 2008
between Tech Team Investment Limited (Tech Team Investment), a wholly-owned
subsidiary of the Company, and Mr. Yeung Wang Lung (the Vendor), sole
shareholder of Golden Cypress Limited (Golden Cypress), the Company acquired
100% equity interest of Golden Cypress at a consideration of $128,535 (or
HK$1,000,000). Golden Cypress is a company incorporated in the British Virgin
Islands, which holds 100% equity interest in Media AV International Pte Limited
(Media AV), a company incorporated in Singapore. Media AV operates an LED
solutions business, including rentals and permanent installations, in
Singapore.

The purchase price has been allocated as follows based on the
estimated fair values of the assets acquired and liabilities assumed as of the
date of acquisition:

|                                                                                   |  | $        |  
|---------------------------------------------------------------------------------- |  | -------- | -
|                                                                                   |  |          |  
|Cash and cash equivalents                                                          |  | 21,184   |  
|Accounts receivable                                                                |  | 459,494  |  
|Prepaid expenses and other current assets                                          |  | 23,252   |  
|Plant and equipment, net                                                           |  | 80,323   |  
|Short-term borrowings                                                              |  | (112,772 | )
|Trade payables                                                                     |  | (8,916   | )
|Amount due to a director                                                           |  | (149,517 | )
|Accrued expenses and other current liabilities                                     |  | (83,524  | )
|Obligations under capital leases                                                   |  | (11,588  | )
|Other tax payable                                                                  |  | (13,351  | )
|                                                                                   |  |          |  
|Net assets                                                                         |  | 204,585  |  
|Excess of net assets over purchase
      consideration allocated against plant and |  |          |  
|equipment                                                                          |  | (76,050  | )
|Net assets after excess allocation                                                 |  | 128,535  |  
|                                                                                   |  |          |  
|Total consideration                                                                |  | 128,535  |  

Total consideration of $128,535 was prepaid on December 10,
2007 and included in prepaid expenses and other current assets in previous
periods.

In accordance with Statement of Financial Accounting Standards
(SFAS) No. 141, the excess of net assets over the purchase consideration has
been allocated on a pro rata basis to all acquired assets except financial
assets. Net book value of plant and equipment immediately after the allocation
was $4,273.

Results of operation of Golden Cypress for the three months
ended September 30, 2008 have been included in the Consolidated Statements of
Operations of the Company for three months ended September 30, 2008.

---

- 13 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Principle of Consolidation and Basis of Presentation

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

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

Use of Estimates

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

Cash and Cash Equivalents

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

---

- 14 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Accounts Receivables and Allowance for Doubtful Accounts

The Company performs certain credit evaluation procedures and
does not require collateral for financial instruments subject to credit risk.
The Company believes that credit risk is limited because the Company routinely
assesses the financial strength of its customers and, based upon factors
surrounding the credit risk of its customers, establishes an allowance for
uncollectible accounts receivable. As a consequence, the Company believes that
its accounts receivable credit risk exposure beyond such allowances is limited.
The Company recognizes an allowance for doubtful accounts to ensure accounts
receivable are not overstated due to uncollectibility and are maintained for all
customers based on a variety of factors, including the length of time the
receivables are past due, significant one-time events and historical experience.
An additional reserve for individual accounts is recorded when the Company
becomes aware of a customer's inability to meet its financial obligation, such
as in the case of bankruptcy filings or deterioration in the customer's
operating results or financial position. If circumstances related to customers
change, estimates of the recoverability of receivables would be further
adjusted. As of September 30, 2008 and March 31, 2008, the allowance for
doubtful accounts was approximately $1,013,905 and $817,800, respectively.

Inventories

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

Goodwill

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

Intangible Assets

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

---

- 15 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Intangible Assets (continued)

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

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

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

Impairment of Long-Lived Assets

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

Plant and Equipment and Construction in Progress

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

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

---

- 16 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Plant and Equipment and Construction in Progress (continued)

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

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

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

Net Investment in Sales - Type Leases

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

Revenue Recognition

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

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

LED solutions - The Company sells its products directly
to end users and through distributors. Revenue is recognized when the product is
delivered to the customer and all other revenue recognition criteria are met.
Revenues for LED solutions activities provided on a supply and build basis and
for consultancy services for which the revenue generation process lasts for
several months are recognized on the percentage-of-completion method, measured
either by the ratio of costs incurred up to a given date to estimated total
costs for each contract, or by an assessment from a quantity surveyor as
appointed by our customers.

---

- 17 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

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

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

Others This includes sales of lighting source
products, rental income, commission and service income and sales-type lease
income.

Regarding sales 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. 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. Revenue regarding commission and service income is
recognized when services are rendered. Revenue from sales-type leases is
recognized over the term of the lease, using the effective interest method.

Income Taxes

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

---

- 18 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Foreign Currency Translation

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

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

Segment Information

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

Fair Value of Financial Instruments

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

Comprehensive Income

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

Stock-based Payment

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

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

---

- 19 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Basic and Diluted Earnings (Loss) per Share

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

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

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board
(FASB) issued SFAS No. 141 (revised 2007) (SFAS 141R), Business
Combinations, which replaces SFAS 141. SFAS 141R retains the purchase method of
accounting for acquisitions, but requires a number of changes, including changes
in the way assets and liabilities are recognized in purchase accounting. It also
changes the recognition of assets acquired and liabilities assumed arising from
contingencies, requires the capitalization of in-process research and
development at fair value, and requires the expensing of acquisition-related
costs as incurred. SFAS 141R is effective for fiscal years beginning on or after
December 15, 2008 and will apply prospectively to business combinations
completed on or after that date. The Companys management believes that this
statement will impact the Company in the event of any future acquisition.

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

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

---

- 20 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

In May 2008, the FASB issued FASB Staff Position (FSP)
Accounting Principles Board Opinions (APB) 14-1, Accounting for Convertible
Debt Instruments that May be Settled in Cash upon Conversion (Including Partial
Cash Settlement)(FSP APB 14-1 or the FSP). The FSP requires cash
settled convertible debt to be bifurcated into debt and equity components and
accounted for separately at issuance. The value assigned to the debt component
would be the estimated fair value, as of the issuance date, of a similar bond
without the conversion feature. The difference between the bond cash proceeds
and this estimated fair value would be recorded as a debt discount and amortized
to interest expense over the life of the bond. The equity component of the
convertible debt securities would be included in the paid-in-capital section of
stockholders equity on the Companys consolidated balance sheets and the
initial carrying values of these debt securities would be correspondingly
reduced. Management does not expect that the application of this standard will
have any significant effect on the Companys financial statements.

In October 2008, the FASB issued FASB FSP SFAS 157-3,
Determining the Fair Value of a Financial Asset When the Market for That Asset
Is Not Active (FSP 157-3). FSP 157-3 clarifies the application of SFAS No.
157, Fair Value Measurements in a market that is not active and provides an
example to illustrate key considerations in determining the fair value of a
financial asset when the market for that financial asset is not active. FSP
157-3 is effective upon issuance, including for prior periods for which
financial statements have not been issued. Revisions resulting from a change in
the valuation technique or its application should be accounted for as a change
in accounting estimate following the guidance in SFAS No. 154, Accounting
Changes and Error Corrections. However, the disclosure provisions in SFAS No.
154 for a change in accounting estimate are not required for revisions resulting
from a change in valuation technique or its application. Management does not
expect that the application of this standard will have any significant effect on
the Companys financial statements.

NOTE 4. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS
ON UNCOMPLETED CONTRACTS

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

|                                                         |  | September 30, |  |  | March 31, | 
|-------------------------------------------------------- |  | ------------- |  |  | --------- | 
|                                                         |  | 2008          |  |  | 2008      | 
|                                                         |  | (Unaudited)   |  |  | (Audited) | 
|                                                         |  | $             |  |  | $         | 
|Cumulative costs incurred on uncompleted
      contracts |  | 106,758       |  |  | 1,575,574 | 
|Cumulative estimated earnings to date                    |  | 14,064        |  |  | 1,071,896 | 
|                                                         |  | 120,822       |  |  | 2,647,470 | 
|Less: Billings to date                                   |  | 58,483        |  |  | 2,008,435 | 
|                                                         |  | 62,339        |  |  | 639,035   | 

---

- 21 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the
following:

|                                     |  | September 30, |  |  | March 31, | 
|------------------------------------ |  | ------------- |  |  | --------- | 
|                                     |  | 2008          |  |  | 2008      | 
|                                     |  | (Unaudited)   |  |  | (Audited) | 
|                                     |  | $             |  |  | $         | 
|Trade deposits                       |  | -             |  |  | 1,546     | 
|Rental, utilities and other deposits |  | 562,680       |  |  | 393,373   | 
|Prepaid expenses                     |  | 1,414,300     |  |  | 863,092   | 
|Other receivables                    |  | 1,048,872     |  |  | 465,216   | 
|Others                               |  | 2,098         |  |  | 18,804    | 
|                                     |  | 3,027,950     |  |  | 1,742,031 | 

NOTE 6. INVENTORIES

Inventories by major category are summarized as follows:

|                 |  | September 30, |  |  | March 31, | 
|---------------- |  | ------------- |  |  | --------- | 
|                 |  | 2008          |  |  | 2008      | 
|                 |  | (Unaudited)   |  |  | (Audited) | 
|                 |  | $             |  |  | $         | 
|Raw materials    |  | 779,961       |  |  | 700,302   | 
|Work in progress |  | 694,837       |  |  | 589,119   | 
|Finished goods   |  | 2,721,417     |  |  | 2,614,377 | 
|                 |  | 4,196,215     |  |  | 3,903,798 | 

NOTE 7. PLANT AND EQUIPMENT, NET

Plant and equipment consist of the following:

|                                |  | September 30, |   |  | March 31,  |  
|------------------------------- |  | ------------- | - |  | ---------- | -
|                                |  | 2008          |   |  | 2008       |  
|                                |  | (Unaudited)   |   |  | (Audited)  |  
|                                |  | $             |   |  | $          |  
|Testing equipment               |  | 121           |   |  | -          |  
|Office equipment                |  | 381,352       |   |  | 666,009    |  
|Furniture and fixtures          |  | 16,485        |   |  | 16,428     |  
|Leasehold improvements          |  | 328,244       |   |  | 323,900    |  
|Motor vehicles                  |  | 57,672        |   |  | 56,405     |  
|Factory machinery and equipment |  | 5,580,068     |   |  | 5,349,055  |  
|Total                           |  | 6,363,942     |   |  | 6,411,797  |  
|Less: Accumulated depreciation  |  | (1,826,867    | ) |  | (1,761,399 | )
|Plant and equipment, net        |  | 4,537,075     |   |  | 4,650,398  |  

---

- 22 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 7. PLANT AND EQUIPMENT, NET (continued)

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

|                                         |  | September 30, |   |  | March 31, |  
|---------------------------------------- |  | ------------- | - |  | --------- | -
|                                         |  | 2008          |   |  | 2008      |  
|                                         |  | (Unaudited)   |   |  | (Audited) |  
|                                         |  | $             |   |  | $         |  
|Office equipment                         |  | 8,869         |   |  | 8,869     |  
|Less: Accumulated depreciation           |  | (4,927        | ) |  | (3,449    | )
|Equipment, net held under capital leases |  | 3,942         |   |  | 5,420     |  

NOTE 8. CONSTRUCTION IN PROGRESS

Construction in progress consists of the following:

|                                                              |  | September 30, |   |  | March 31, |  
|------------------------------------------------------------- |  | ------------- | - |  | --------- | -
|                                                              |  | 2008          |   |  | 2008      |  
|                                                              |  | (Unaudited)   |   |  | (Audited) |  
|                                                              |  | $             |   |  | $         |  
|Production facilities for Xenon lights                        |  | 1,249,413     |   |  | 1,221,978 |  
|Loss on write-down of production facilities held-for-sale     |  | (937,060      | ) |  | (916,484  | )
|Transferred to current assets of
      discontinued operation |  | (312,353      | ) |  | (305,494  | )
|Construction in progress, net                                 |  | -             |   |  | -         |  

NOTE 9. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill was recognized upon to the acquisition of equity
interests in Beijing Illumination (Hong Kong) Limited (Beijing Illumination)
and Lightscape Technologies (Macau) Limited (Lightscape Macau) and represents
the costs of the investments over the estimated fair value of the underlying net
assets acquired. Changes to goodwill during the six months ended September 30,
2008 and the year ended March 31, 2008 are as follows:

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

Impairment Losses on Goodwill for Investment in Beijing
Illumination

The write-down of goodwill of $526,863 was based on the
discounted cash flows analysis as conducted by the management (discounted cash
flows analysis) regarding Beijing Illumination for the year ended March 31,
2008.

Management had assessed the basis to ascertain the amount of
impairment losses on goodwill and intangible assets. The discounted cash flows
analysis was carried out on the basis of fair value, which is defined as the
price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date.

---

- 23 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 9. GOODWILL AND INTANGIBLE ASSETS, NET(continued)

Impairment Losses on Goodwill for Investment in Beijing
Illumination (continued)

Management takes full responsibility for valuing the assets and
the liabilities of the acquired entity, and had carefully reviewed the
reasonableness of the basis of valuation, valuation assumptions and valuation
methodology, in particular the use of the income approach, which is also known
as the discounted cash flow method (DCF). The fair value of goodwill and
intangible assets were determined by applying a discount rate (the cost of
capital) in the DCF model to determine the net present value of our acquired
subsidiarys future expected cash flows.

Intangible Assets

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

September
        30, 2008
      
      March
        31, 2008Accumulated
      
      
      
      
      
      Accumulatedamortization
      
      
      
      
      
      amortizationand
      
      
      
      
      
      andCost
      
      impairment
      
      Net
      
      Cost
      
      impairment
      
      Net$
      
      $
      
      $
      
      $
      
      $
      
      $Subject to amortizationCompleted technology  AHP
      1,172,616
      
      (1,083,252
      )
      89,364
      
      1,172,616
      
      (999,494
      )
      173,122Completed technology  HID
      1,214,012
      
      (769,003
      )
      445,009
      
      1,214,012
      
      (617,252
      )
      596,760Software and license (i)
      647,077
      
      (452,335
      )
      194,742
      
      641,077
      
      (345,101
      )
      295,976Customer lists and relationships
      45,797
      
      (21,729
      )
      24,068
      
      45,797
      
      (19,437
      )
      26,360Distributors list
      179,351
      
      (167,557
      )
      11,794
      
      179,351
      
      (137,665
      )
      41,686Total
      3,258,853
      
      (2,493,875
      )
      764,977
      
      3,252,853
      
      (2,118,949
      )
      1,133,904Not subject to amortizationTrademark
      566,210
      
      -
      
      566,210
      
      566,210
      
      -
      
      566,210Total
      3,825,063
      
      (2,493,875
      )
      1,331,187
      
      3,819,063
      
      (2,118,949
      )
      1,700,114


(i) including an addition of $6,000 during the three months
ended September 30, 2008

Amortization expenses charged to net loss from operations for
the six months ended September 30, 2008 and 2007 were approximately $393,354 and
$374,626 respectively. Anticipated amortization expense on intangible assets for
each of the following years is as follows:

|Twelve months ending September 30, |  | $       | 
|---------------------------------- |  | ------- | 
|2009                               |  | 599,923 | 
|2010                               |  | 165,054 | 
|                                   |  | 764,977 | 

---

- 24 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 10. SECURED LOAN

The loan commenced on September 29, 2008 with a non-bank
financial institution at a principal amount of $400,896 (or HK$3,118,970) with a
maturity date of 60 days (November 28, 2008) at an annual interest rate of 10%.
The loan is secured by accounts receivable of Lightscape Macau.

NOTE 11. BANK BORROWINGS

Bank borrowings relate to two term loans and one term loan
borrowed from DBS Bank and OCBC Bank, respectively, by Media AV, with principal
of Singapore Dollars (SGD) SGD100,000, SGD50,000 and SGD50,000, respectively.
The commencement dates are April 3, 2007, June 27, 2008 and February 1, 2007
respectively. The loans are repayable by 36, 24 and 60 monthly installments, and
incur interest at an annual rate of 12.5%, 12.5% and 13.12% respectively. These
loans are secured by a deed of guarantee and indemnity by a director of Media
AV.

The following is a summary of future repayments related to bank
borrowings for the next five years:

|Twelve months ending September 30, |  | $      | 
|---------------------------------- |  | ------ | 
|2009                               |  | 49,721 | 
|2010                               |  | 35,812 | 
|2011                               |  | 8,201  | 
|2012                               |  | 3,688  | 
|2013                               |  | -      | 
|                                   |  | 97,422 | 

NOTE 12. OBLIGATIONS UNDER CAPITAL LEASES

|                                                                    |  | September 30, |   |  | March 31, |  
|------------------------------------------------------------------- |  | ------------- | - |  | --------- | -
|                                                                    |  | 2008          |   |  | 2008      |  
|                                                                    |  | (Unaudited)   |   |  | (Audited) |  
|                                                                    |  | $             |   |  | $         |  
|Total minimum lease payments, with $nil
      representing interest |  | 16,628        |   |  | 7,243     |  
|Less: Current portion of obligations under capital leases           |  | (12,046       | ) |  | (1,774    | )
|Long-term portion of obligations under
      capital leases         |  | 4,582         |   |  | 5,469     |  

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

|Twelve months ending September 30, |  | $      | 
|---------------------------------- |  | ------ | 
|2009                               |  | 12,046 | 
|2010                               |  | 1,774  | 
|2011                               |  | 1,774  | 
|2012                               |  | 1,034  | 
|                                   |  | 16,628 | 

The Company entered into capital lease arrangements for leasing
equipment used in its operations. The lease is for a term of five years. For the
six months ended September 30, 2008, the capital lease arrangement was on a
non-interest bearing basis. The leases are on a fixed repayment basis and
require no contingent rental payments. The interest expenses incurred on these
capital leases were $nil and $nil for the six months ended September 30, 2008
and 2007, respectively.

---

- 25 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 13. OTHER RESERVES

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

Statutory Surplus Reserve

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

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

NOTE 14. TOTAL COMPREHENSIVE LOSS

|                                                          | Three Months        |   | Six Months Ended |  
|--------------------------------------------------------- | ------------------- | - | ---------------- | -
|                                                          | Ended September 30, |   | September 30,    |  
|                                                          | 2008                |   | 2007             |  
|                                                          | (Unaudited)         |   | (Unaudited)      |  
|                                                          | $                   |   | $                |  
|Net loss attributable to common shareholders
      of the |                     |   |                  |  
|Company                                                   | (739,331            | ) | (992,662         | )
|Foreign currency translation adjustments                  | (33,374             | ) | (1,940           | )
|                                                          |                     |   |                  |  
|Total comprehensive loss                                  | (772,705            | ) | (994,602         | )

NOTE 15. FOREIGN CURRENCY TRANSACTION LOSS

Foreign currency transaction losses of $26,748 and of $21,803
for the six months ended September 30, 2008 and 2007, respectively, were
included in determining net losses.

---

- 26 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 16. INCOME TAX

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

|                                                                     |  | At September 30, |   |  | At March 31, |  
|-------------------------------------------------------------------- |  | ---------------- | - |  | ------------ | -
|                                                                     |  | 2008             |   |  | 2008         |  
|                                                                     |  | $                |   |  | $            |  
|                                                                     |  |                  |   |  |              |  
|Deferred tax assets                                                  |  |                  |   |  |              |  
|- tax losses                                                         |  | 1,172,413        |   |  | 961,976      |  
|- valuation allowance as of March 31, 2008                           |  | (877,511         | ) |  | (877,511     | )
|- valuation allowance increased during the six months ended          |  | (210,437         | ) |  | -            |  
|September 30, 2008                                                   |  |                  |   |  |              |  
|-Total valuation allowance at September 30, 2008                     |  | (1,087,948       | ) |  | (877,511     | )
|Net deferred tax assets                                              |  | 84,465           |   |  | 84,465       |  
|                                                                     |  |                  |   |  |              |  
|Deferred tax liabilities                                             |  |                  |   |  |              |  
|- Financial statements depreciation and amortization in
      excess |  | (84,465          | ) |  | (84,465      | )
|of tax                                                               |  |                  |   |  |              |  
|Net deferred tax                                                     |  | -                |   |  | -            |  

For the operating loss carry forwards of approximately
$6,583,489 as of September 30, 2008, it will be carried forward indefinitely.

As at September 30, 2008, the Company had accumulated net
operating loss carryforwards for Hong Kong income tax purposes of approximately
$5,502,071 that are available to offset future taxable income. Realization of
the net operating loss carryforwards is dependent upon future profitable
operations. Accordingly, management has increased the valuation allowance by
$144,772 during the six months ended September 30, 2008 to reduce the deferred
tax asset associated with the net operating loss carryforwards to $84,465 at
September 30, 2008.

Additionally, as of September 30, 2008, the Company had
accumulated net operating loss carryforwards for Chinese tax purposes of
approximately $1,081,418. Realization of the Chinese tax net operating loss
carryforwards is dependent on future profitable operations, as well as a maximum
five-year carryforward period. Accordingly, management has recorded a valuation
allowance to reduce the deferred tax associated with the net operating loss
carryforwards to zero at September 30, 2008. These tax losses yield deferred tax
assets of approximately $264,571, as of September 30, 2008. The valuation
allowance has increased approximately $65,665 from March 31, 2008 to September
30, 2008.

---

- 27 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 16. INCOME TAX (continued)

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

|                  |  | Three Months        |   |  | Six Months          |  
|----------------- |  | ------------------- | - |  | ------------------- | -
|                  |  | Ended September 30, |   |  | Ended September 30, |  
|                  |  | 2008                |   |  | 2007                |  
|                  |  | $                   |   |  | $                   |  
|Hong Kong         |  | (758,494            | ) |  | (633,832            | )
|Macau             |  | (10,313             | ) |  | (168,481            | )
|Singapore         |  | 18,365              |   |  | -                   |  
|Mainland, the PRC |  | (306,291            | ) |  | (135,363            | )
|                  |  |                     |   |  |                     |  
|                  |  | (1,056,733          | ) |  | (937,676            | )

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

- Tech Team Holdings Limited (TTHL) is a tax-exempted company incorporated
  in the Cayman Islands.
- Under the current BVI law, Tech Team (China) Limiteds, Tech Team
  Investment Limiteds and Powerland Technology Limiteds income are not subject
  to taxation.
- Lightscape Technologies Inc. and Tomi Fuji Energy Pte. Limited also had no
  assessable profits earned or had tax losses brought forward to set off current
  period assessable profit during the periods presented.
- No provision for PRC income tax has been made as Tech Team Development
  (Zhuhai) Limited (TT (Zhuhai)) had no assessable profits earned during the
  three months ended September 30, 2008 and 2007. Preferential tax treatment has
  been agreed with the relevant tax authorities and TT(Zhuhai) is exempted from
  PRC income tax in the first two profitable years and is subject to half of the
  standard statutory tax rate of 15% in the subsequent three years. However, as
  TT (Zhuhai) derived no taxable profits since its commencement of operations,
  this preferential tax treatment has expired and it will be required to pay a
  tax rate of 25% from January 1, 2008 onward.
- Pursuant to the relevant laws and regulations in the PRC, Beijing Aihua
  New Enterprise Lighting Appliance Company Limited (Beijing Aihua) is
  exempted from PRC enterprise income tax for two years starting from its first
  profitable year from January 2004 to December 2005. After it became a wholly
  foreign owned enterprise, Beijing Aihua is required to pay an effective tax
  rate of 12%, a 50% reduction from its normal tax rate of 24%, from January
  2006 to December 2008. From January 1, 2009 onward, Beijing Aihua will be
  required to pay a normal 25% tax rate.
- Beijing Illumination is a Hong Kong company which is subject to a tax on
  profits of 16.5% from April 1, 2008 onward.
- Lightscape Macau is a company incorporated in Macau Special Administrative
  Region, which is subjected to progressive tax rates at a rate of 12% in
  maximum.
- Other companies are dormant and had no assessable profits earned during
  the periods presented.

---

- 28 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 16. INCOME TAX (continued)

Income tax expense (credit) for the three months and six months
ended September 30, 2008 and 2007 represents the provision for income tax in the
following jurisdictions:

|               |  | Three Months        |   |  | Six Months          | 
|-------------- |  | ------------------- | - |  | ------------------- | 
|               |  | Ended September 30, |   |  | Ended September 30, | 
|               |  | 2008                |   |  | 2007                | 
|               |  | $                   |   |  | $                   | 
|Current taxes: |  |                     |   |  |                     | 
|Hong Kong      |  | -                   |   |  | -                   | 
|Macau          |  | (206,977            | ) |  | -                   | 
|Singapore      |  | -                   |   |  | -                   | 
|Mainland, PRC  |  | -                   |   |  | -                   | 
|               |  |                     |   |  |                     | 
|               |  | (206,977            | ) |  | -                   | 

NOTE 17. DISCONTINUED OPERATIONS

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

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

Remaining assets of the energy savings segment include only
certain receivables and lease receivables less unearned interests under
sales-type leases. Except for the collection of these receivables, the Company
will no longer have any significant continuing involvement in the energy-savings
segment. Therefore, the energy savings segment has been classified as
discontinued operations in accordance with SFAS 144.

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

---

- 29 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 17. DISCONTINUED OPERATIONS (continued)

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

|                                               | Three Months        |   | Six Months          |  
|---------------------------------------------- | ------------------- | - | ------------------- | -
|                                               | Ended September 30, |   | Ended September 30, |  
|                                               | 2008                |   | 2007                |  
|                                               | $                   |   | $                   |  
|Operating revenue                              | 1,260               |   | 490                 |  
|                                               |                     |   |                     |  
|Pre-tax loss from discontinued operations      | (7,667              | ) | (77,713             | )
|Income tax credit                              | 41,447              |   | -                   |  
|                                               |                     |   |                     |  
|Net profit (loss) from discontinued operations | 33,780              |   | (77,713             | )

NOTE 18. CONCENTRATION OF CREDIT RISK

As of September 30, 2008 and March 31, 2008, the Company has a
credit risk exposure of uninsured cash in banks of $255,332 and $3,928,790
respectively. The Company does not require collateral or other securities to
support financial instruments that are subject to credit risk. Subsequent to the
measures taken by the Hong Kong Monetary Authority on October 14, 2008 to use
the Exchange Fund to guarantee the repayment of all customer deposits held in
Authorised Financial Institutions in Hong Kong, following the principles of the
existing Deposit Protection Scheme, assurance is made to depositors that their
money is fully protected. Hence, $2,296,500 out of a total of $2,551,832 of the
Companys cash held with banks in Hong Kong is now subject to no credit risk

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

For the six months ended September 30, 2008, one customer
accounted for approximately 17.3% of the Companys total revenues. As of
September 30, 2008, there is one customer whose account receivable to the
Company accounted for 27.5% of total accounts receivable.

The Company relies on supplies from numerous vendors. For the
six months ended September 30, 2008, one vendor accounted for approximately
14.8% of total supply purchases.

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

NOTE 19. COMMITMENTS

The Company has operating lease agreements principally for its
office facilities and factory buildings. Such leases have remaining terms of
approximately 1 to 3 years. The following is a summary of future minimum lease
payments under operating leases as of September 30, 2008. Rental expense was
$146,946 and $116,201 for the six months ended September 30, 2008 and 2007,
respectively.

---

- 30 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 19. COMMITMENTS (continued)

Twelve months ending September 30,

|           |  | $         | 
|---------- |  | --------- | 
|2009       |  | 423,752   | 
|2010       |  | 380,100   | 
|2011       |  | 271,502   | 
|Thereafter |  | -         | 
|           |  | 1,075,354 | 

Royalties

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

NOTE 20. RELATED PARTY BALANCES AND TRANSACTIONS

Related Party Transactions

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

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

---

- 31 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 20. RELATED PARTY BALANCES AND TRANSACTIONS
(continued)

Related Party Balances

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

|                                         |  | September 30, |  |  | March 31, | 
|---------------------------------------- |  | ------------- |  |  | --------- | 
|                                         |  | 2008          |  |  | 2008      | 
|                                         |  | $             |  |  | $         | 
|                                         |  |               |  |  |           | 
|Amount due to a director                 |  |               |  |  |           | 
|Mr. Bondy Tan                            |  | 552,699       |  |  | -         | 
|                                         |  |               |  |  |           | 
|Amount due to a director of a subsidiary |  |               |  |  |           | 
|Mr. Choong Yip Weng                      |  | 150,823       |  |  | -         | 

NOTE 21. SEGMENT INFORMATION

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

The accounting policies of the operating segments are the same
as those described in the Summary of Principal Accounting Policies (see Note 3).
The Company evaluates performance based on profit or loss from operations,
excluding corporate, general and administrative expenses.

|                                                      | Three Months        |   | Six Months          |  
|----------------------------------------------------- | ------------------- | - | ------------------- | -
|                                                      | Ended September 30, |   | Ended September 30, |  
|                                                      | 2008                |   | 2007                |  
|                                                      | $                   |   | $                   |  
|Segment revenues from external customers:             |                     |   |                     |  
|Advertising                                           | -                   |   | -                   |  
|LED solutions                                         | 749,920             |   | 23,242              |  
|Other                                                 | 334,171             |   | 433,964             |  
|                                                      | 1,084,091           |   | 457,206             |  
|                                                      |                     |   |                     |  
|Operating losses:                                     |                     |   |                     |  
|Advertising                                           | -                   |   | -                   |  
|LED solutions                                         | (604,111            | ) | (663,188            | )
|Other                                                 | (452,622            | ) | (274,488            | )
|                                                      |                     |   |                     |  
|Loss from continuing operations before income tax and |                     |   |                     |  
|minority interests                                    | (1,056,733          | ) | (937,676            | )

---

- 32 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 21. SEGMENT INFORMATION (continued)

|                                  | September 30, |  | March 31,  | 
|--------------------------------- | ------------- |  | ---------- | 
|                                  | 2008          |  | 2008       | 
|                                  | (Unaudited)   |  | (Audited)  | 
|                                  | $             |  | $          | 
|Segment assets:                   |               |  |            | 
|Advertising                       | 410,701       |  | -          | 
|LED solutions                     | 14,218,445    |  | 17,333,269 | 
|Other                             | 8,474,171     |  | 8,193,453  | 
|                                  | 23,103,317    |  | 25,526,722 | 
|Assets of discontinued operations | 748,187       |  | 826,368    | 
|                                  | 23,851,504    |  | 26,353,090 | 

Geographical Information:

Three Months
      
      Six MonthsEnded September 30,
      
      Ended September 30,2008
      
      2007
      
      2008
      
      2007$
      
      $
      
      $
      
      $Total sales:Mainland, the PRC
      188,137
      
      363,104
      
      833,783
      
      1,097,652Hong Kong
      282,425
      
      20,805
      
      933,176
      
      22,250Singapore
      479,211
      
      23,242
      
      479,211
      
      23,242India
      18,687
      
      26,598
      
      44,688
      
      44,362Mexico
      113,837
      
      -
      
      344,244
      
      -Others
      1,794
      
      23,457
      
      7,696
      
      84,5961,084,091
      
      457,206
      
      2,642,798
      
      1,272,102


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

|                  | September 30, |  | March 31,  | 
|----------------- | ------------- |  | ---------- | 
|                  | 2008          |  | 2008       | 
|                  | (Unaudited)   |  | (Audited)  | 
|                  | $             |  | $          | 
|                  |               |  |            | 
|Hong Kong         | 6,175,304     |  | 6,805,936  | 
|Singapore         | 31,763        |  | -          | 
|Mainland, the PRC | 4,212,290     |  | 4,147,671  | 
|                  | 10,419,357    |  | 10,953,607 | 

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- 33 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

NOTE 22. WARRANTS

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

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

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

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

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- 34 -

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

FORWARD-LOOKING STATEMENTS

Forward-Looking Statements

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

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

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

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

Company Overview

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

We
are a holding company owning subsidiaries engaged in three main business
activities: (i) light-emitting diode (LED) outdoor advertising, (ii) LED
solutions and (iii) other lighting source products. During the six months ended
September 30, 2008, approximately 0% of our revenue was derived from our LED
outdoor advertising business, 53% from our LED solutions business and 47% from
other business.

LED Outdoor Advertising Business

We
design, install and operate LED outdoor advertising billboards. We anticipate
greater activity and revenues in the LED outdoor advertising business upon the
formal closing of a joint venture agreement we signed on February 12, 2008 to
build an LED outdoor advertising network in the Peoples Republic of China (the
PRC or China). We entered this joint venture agreement with Beijing Xintong
Media & Cultural Development Co. Ltd. (BX). Pursuant to the terms of the
joint venture agreement, (i) the joint venture company will be named Beijing
Xintong New Vision Media Advertising Co. Ltd. (BXNV), (ii) our company agreed
to contribute to BXNV cash and an LED billboard for the joint ventures initial
installation within ninety business days of signing the agreement, and (iii) in
exchange for these contributions, our company will obtain 50.1% ownership of
BXNV, with the remaining 49.9% to be held by BX.

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- 35 -

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

LED Solutions Business

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

Other Business

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

Critical Accounting Policies

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

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

Revenue Recognition

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

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

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- 36 -

LED solutions  Our company
sells its products directly to end users and through distributors. Revenue is
recognized when the product is delivered to the customer and all other revenue
recognition criteria are met. Revenues for LED solutions activities provided on
a supply and build basis and for consultancy services for which the revenue
generation process lasts for several months are recognized on the
percentage-of-completion (PC) method.

American Institute
of Certified Public Accountants (AICPA) Accounting Research Bulletin (ARB)
No. 45, Long-Term Construction-Type Contracts, (1955) and AICPA Statement of
Position (SOP) 81-1, Accounting for Performance of Construction-Type and
Certain Production-Type Contracts, (1981) address revenue recognition for
long-term construction-type contracts. Since most of our companys LED solution
revenue relates to construction contracts, which by their nature are long-term,
the underlying accounting principle known as matching  expenses follow revenues
 would be violated if the revenue from the contract were recognized upon
contract execution or sale of the services.

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

SOP 81-1 requires
that the PC method be used in lieu of the CC method when all of the following
are present: (1) Reasonably reliable estimates can be made of revenue and costs;
(2) The construction contract specifies the parties rights as to the goods,
consideration to be paid and received, and the resulting terms of payment or
settlement; (3) The contract purchaser has the ability and expectation to
perform all contractual duties; and (4) The contract contractor has the same
ability and expectation to perform.

SOP 81-1 states, Contract costs
generally include direct costs, such as materials, direct labor, and
subcontracts and indirect costs identifiable with or allocable to the
contracts.

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

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

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- 37 -

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

Other This includes sales of
lighting source products, rental income, commission and service income and
sales-type lease income. Regarding sales of lighting source products, our
company sells its products directly to end users and through distributors.
Revenue is recognized when the product is delivered to the customer and all
other revenue recognition criteria are met. 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. Revenue regarding commission and service
income is recognized when services are rendered. Revenue from sales-type leases
is recognized over the term of the lease, using the effective interest method.

Foreign Currency Translation

The
functional currency of our company is Hong Kong dollars (HKD). Transactions in
other currencies are recorded in HKD at the rates of exchange prevailing when
the transactions occur. Monetary assets and liabilities denominated in other
currencies are measured in HKD at rates of exchange in effect at the balance
sheet dates. Exchange gains and losses are recorded in the consolidated
statements of operations as a component of current period earnings. For
financial reporting purposes, the financial statements of our company which are
prepared using the functional currency have been translated into United States
dollars. Assets and liabilities are translated at the exchange rates at the
balance sheet dates and revenue and expenses are translated at the average
exchange rate for the period and stockholders equity is translated at
historical exchange rates. Any translation adjustments resulting from the
translation are included in foreign exchange adjustment in other comprehensive
income, a component of stockholders equity.

Impairment of Long-Lived Assets

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

Accounts Receivables and Allowance for Doubtful Accounts

Our
company performs certain credit evaluation procedures and does not require
collateral for financial instruments subject to credit risk. We believe that
credit risk is limited because our company routinely assesses the financial
strength of our customers and, based upon factors surrounding the credit risk of
our customers, we establish an allowance for uncollectible accounts receivable.
As a consequence, we believe that our accounts receivable credit risk exposure
beyond such allowances is limited. We recognize an allowance for doubtful
accounts to ensure accounts receivable are not overstated due to
uncollectibility and are maintained for all customers based on a variety of
factors, including the length of time the receivables are past due, significant
one-time events and historical experience. An additional reserve for individual
accounts is recorded when our company becomes aware of a customer's inability to
meet its financial obligation, such as in the case of bankruptcy filings or
deterioration in the customer's operating results or financial position. If
circumstances related to customers change, estimates of the recoverability of
receivables would be further adjusted.

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- 38 -

Material Trends and Uncertainties

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

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

Summary of Key Results

Total
net revenue for the six months ended September 30, 2008 was $2,642,798, which
represents a 108% increase from the total net revenue of $1,272,102 for the six
months ended September 30, 2007.

Operating
expenses, consisting of selling and marketing expenses and general and
administrative expenses, for the six months ended September 30, 2008 were
$2,113,489, which represents an 8% increase over operating expenses of
$1,948,558 for the six months ended September 30, 2007.

Basic
loss per share for the six months ended September 30, 2008 was $0.03 compared to
a basic loss per share of $0.06 for the six months ended September 30, 2007.
Fully diluted loss per share for the six months ended September 30, 2008 was
$0.03 compared to a loss per share of $0.06 on a fully diluted basis for the six
months ended September 30, 2007.

Results of Operations - Three Months Ended September 30,
2008

Our
net loss for the three months ended September 30, 2008 was $739,331 compared to
a net loss of $992,662 for the three months ended September 30, 2007, a decrease
of $253,331, or 26%. The decrease in net loss is primarily attributable to the
increase in revenue from LED solutions during the three months ended September
30, 2008 compared to the three months ended September 30, 2007 and an income tax
credit of $206,977 during the three months ended September 30, 2008.

Revenues and Cost of Revenues

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- 39 -

Total
net revenue for the three months ended September 30, 2008 was $1,084,091,
representing a 137% increase from the total net revenue of $457,206 for the
three months ended September 30, 2007. The increase in net revenues is primarily
attributable to the increase in revenue from LED solutions.

Specifically,
revenue related to our LED outdoor advertising business remained at $nil for the
three months ended September 30, 2008 as compared to $nil during the three
months ended September 30, 2007. Our LED outdoor advertising business is
expected to contribute increased revenues in the foreseeable future as we ramp
up several key LED billboard installations which were completed during the three
months ended September 30, 2008 and are expected to begin generating advertising
revenue in the near future. Our company has formed a strategic partnership with
Ogilvy & Mather Group, a major advertising agency in Hong Kong, to sell
advertising space on our LED billboards.

Revenue
related to our LED solutions business increased to $749,920 for the three months
ended September 30, 2008 from $23,242 during the three months ended September
30, 2007. The increase in revenues was due primarily to the completion of
several new LED solutions contracts during the three months ended September 30,
2008 as compared to a fewer number of contracts completed during the three
months ended September 30, 2007. Our LED solutions business is expected to
contribute increased revenues in the foreseeable future as several key projects
are expected to be initiated in the near future.

Sales
from our other business, which includes our lighting source products business,
were $334,171 for the three months ended September 30, 2008, compared to
$433,964 for the three months ended September 30, 2007, representing a decrease
of 23%. The decrease in revenues from our other businesses was due primarily to
a decrease in revenue from sales of lighting source products by our subsidiary
Beijing Illumination. The decrease in sales by Beijing Illumination was due
primarily to the effect of a change of local senior executives and internal
restructuring during the three months ended September 30, 2008 and in prior
periods. The purpose of the changes and restructuring was to reduce
manufacturing costs and foster Beijing Illuminations sales and marketing
network in China. We are currently reviewing our plans and strategic options
related to our lighting source products business.

Total
cost of revenues for the three months ended September 30, 2008 was $730,940,
which represents an increase of 137% as compared to total cost of revenues of
$307,809 for the three months ended September 30, 2007. The increase in the
total cost of revenues during the three months ended September 30, 2008 was a
direct correlation to the corresponding 137% increase in total sales revenues.

Amortization of Intangible Assets

Our
company acquired certain intangible assets through the acquisitions of Tomi Fuji
Energy Management Services Limited (TFEMS) and Beijing Illumination. These
intangible assets are comprised of completed technology for the production of
Aihua Ultra-High Pressure Mercury (AHP) and HID lamps, trademarks, a customer
base and a distributors list. Amortization of intangible assets incurred for the
three months ended September 30, 2008 was $187,701 as compared to $187,400 for
the three months ended September 30, 2007.

Operating Expenses

Operating
expenses for the three months ended September 30, 2008 were $1,174,033, which
represents an 18% increase in operating expenses over $994,451 for the three
months ended September 30, 2007. Selling and marketing expenses, general and
administrative expenses, and bad debts constitute the main components of our
operating expenses.

Selling
and marketing expenses for the three months ended September 30, 2008 decreased
approximately 25% to $122,322 from $162,449 for the three months ended September
30, 2007. The decrease was mainly due to decreased advertising expenses and
staff costs. Our company anticipates that selling and marketing expenses will
remain steady or increase in the future to support our companys further
expansion in our core LED outdoor advertising and LED solutions businesses.

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- 40 -

General
and administrative expenses increased by 7% during the three months ended
September 30, 2008 to $890,398 from $832,002 for the three months ended
September 30, 2007. The increase was mainly due to increased staff and business
development costs for the three months ended September 30, 2008 to provide the
foundation to support our anticipated overall business growth, particularly our
LED outdoor advertising and LED solutions businesses. Our company anticipates
that general and administrative costs will continue to increase in the
foreseeable future as our companys operations continue to expand.

Bad
debt expenses increased to $161,313 during the three months ended September 30,
2008 from $nil for the three months ended September 30, 2007. The increase in
bad debts was due primarily to the increase in allowance for doubtful accounts
of Beijing Illumination. The allowance for doubtful accounts is our best
estimate of the amount of probable credit losses in our existing accounts
receivable. We determine the allowance based on our historical write-off
experience related to accounts receivable.

Income Taxes

We received an income tax credit of $206,977 during the three months ended
September 30, 2008 compared to $nil for the three months ended September 30,
2007. This tax credit was related to our operations in Macau and arose as a
result of the finalization of a Complementary Income Tax assessment as issued by
the Macao Finance Service Bureau for the 2007 assessment year, under which $nil
tax is payable as the assessable profits were below the statutory allowance
level. This tax credit is a one-time event and therefore is not of a recurring
nature.

Results of Operations - Six Months Ended September 30,
2008

Our
net loss for the six months ended September 30, 2008 was $1,733,192 compared to
a net loss of $2,312,634 for the six months ended September 30, 2007, a decrease
of $579,442 or 25%. The decrease in net loss is primarily attributable to the
increase in revenue from LED solutions during the six months ended September 30,
2008 compared to the six months ended September 30, 2007 and an income tax
credit of $206,977 during the six months ended September 30, 2008.

Revenues and Cost of Revenues

Total
net revenue for the six months ended September 30, 2008 was $2,642,798,
representing a 108% increase from the total net revenue of $1,272,102 for the
six months ended September 30, 2007. The increase in net revenues is primarily
attributable to the increase in revenue from LED solutions.

Specifically,
revenue related to our LED outdoor advertising business remained at $nil for the
six months ended September 30, 2008 as compared to from $nil during the six
months ended September 30, 2007. Our LED outdoor advertising business is
expected to contribute increased revenues in the foreseeable future as we ramp
up several key LED billboard installations which were completed during the six
months ended September 30, 2008 and are expected to begin generating advertising
revenue in the near future. Our company has formed a strategic partnership with
Ogilvy & Mather Group, a major advertising agency in Hong Kong, to sell
advertising space on our LED billboards.

Revenue
related to our LED solutions business increased to $1,402,869 for the six months
ended September 30, 2008 from $23,242 during the six months ended September 30,
2007. The increase in revenues was due primarily to the completion of several
new LED solutions contracts during the six months ended September 30, 2008 as
compared to a fewer number of contracts completed during the six months ended
September 30, 2007. Our LED solutions business is expected to contribute
increased revenues in the foreseeable future as several key projects are
expected to be initiated in the near future.

Sales
from our other business, which includes our lighting source products business,
were $1,239,929 for the six months ended September 30, 2008 compared to
$1,248,860 for the six months ended September 30, 2007, representing a decrease
of under 1%. We are currently reviewing our plans and strategic options related
to our lighting source products business.

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- 41 -

Total
cost of revenues for the six months ended September 30, 2008 was $1,857,908,
which represents an increase of 99% as compared to total cost of revenues of
$935,899 for the six months ended September 30, 2007. The increase in the total
cost of revenues during the six months ended September 30, 2008 was directly
associated with the 108% increase in sales revenues.

Amortization of Intangible Assets

Our
company acquired certain intangible assets through the acquisitions of TFEMS 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 six
months ended September 30, 2008 was $393,354 as compared to $374,626 for the six
months ended September 30, 2007.

Operating Expenses

Operating
expenses for the six months ended September 30, 2008 were $2,360,442, which
represents a 21% increase in operating expenses over $1,948,558 for the six
months ended September 30, 2007. Selling and marketing expenses, general and
administrative expenses, and bad debts constitute the main components of our
operating expenses.

Selling
and marketing expenses for the six months ended September 30, 2008 decreased
approximately 20% to $286,297 from $357,756 for the six months ended September
30, 2007. The decrease was mainly due to decreased advertising expenses and
staff costs. Our company anticipates that selling and marketing expenses will
remain steady or increase in the future to support our companys further
expansion in our core LED outdoor advertising and LED solutions businesses.

General
and administrative expenses increased by 15% during the six months ended
September 30, 2008 to $1,827,192 from $1,590,802 for the six months ended
September 30, 2007. The increase was mainly due to increased staff and business
development costs for the six months ended September 30, 2008 to provide the
foundation to support our anticipated overall business growth, particularly our
LED outdoor advertising and LED solutions businesses. Our company anticipates
that general and administrative costs will continue to increase in the
foreseeable future as our companys operations continue to expand.

Bad
debt expenses increased to $246,953 during the six months ended September 30,
2008 from $nil for the six months ended September 30, 2007. The increase in bad
debts was due primarily to the increase in allowance for doubtful accounts of
Beijing Illumination. The allowance for doubtful accounts is our best estimate
of the amount of probable credit losses in our existing accounts receivable. We
determine the allowance based on our historical write-off experience related to
accounts receivable.

Income Taxes

We received an income tax credit of $206,977 during the six months ended
September 30, 2008 compared to $nil for the six months ended September 30, 2007.
This tax credit was related to our operations in Macau and arose as a result of
the finalization of a Complementary Income Tax assessment as issued by the Macao
Finance Service Bureau for the 2007 assessment year, under which $nil tax is
payable as the assessable profits were below the statutory allowance level..
This tax credit is a one-time event and is therefore not of a recurring nature.

Liquidity and Capital Resources

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

As
of September 30, 2008, our company had a net working capital surplus of
$10,359,950 compared to a surplus of $11,490,237 as of March 31, 2008,
representing a decrease in working capital of

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$1,130,287. The cash and cash equivalents of our company
decreased to $2,588,041 as at September 30, 2008 as compared to $3,978,500 as of
March 31, 2008.

Cash Flow Related to Operating Activities

Operating
activities used cash of $2,268,975 for the six months ended September 30, 2008
as compared to operating activities using cash of $539,736 for the six months
ended September 30, 2007. The increase in cash used in operating activities was
mainly due to an increase in prepaid expenses, including prepaid cost of goods
sold, increase in other receivables and a decrease in trade payables.

Cash Flow Related to Investing Activities

Net
cash used in investing activities amounted to $18,252 during the six months
ended September 30, 2008 as compared to investing activities using cash of
$133,155 during the six months ended September 30, 2007. The decrease in cash
used in investing activities is attributable primarily to decreased purchases of
equipment during the six months ended September 30, 2008 as compared to the six
months ended September 30, 2007.

Our
company incurred capital expenditures of $39,436 during the six months ended
September 30, 2008 and $133,155 for the six months ended September 30, 2007. The
decrease in capital expenditures for the six months ended September 30, 2008 as
compared to September 30, 2007 was mainly attributable to decreased purchases of
equipment. As of September 30, 2008, our company did not have any material
commitments for capital expenditures and management does not anticipate that our
company will spend additional material amounts on capital expenditures in the
near future.

Cash Flow Related to Financing Activities

Financing
activities generated cash of $960,254 for the six months ended September 30,
2008 as compared to financing activities using cash of $1,547,387 for the six
months ended September 30, 2007. The increase in net cash flow generated by
financing activities was mainly due to proceeds of $400,896 from short-term
borrowings for the six months ended September 30, 2008 compared to $nil for the
six months ended September 30, 2007, and a decrease in convertible note
redemptions to $nil for the six months ended September 30, 2008 as compared to
$6,000,000 for the six months ended September 30, 2007.

During
the six months ended and as of September 30, 2008, our company had obtained a
short-term loan secured by accounts receivable of Lightscape Macau. This loan
commenced on September 29, 2008 with a non-bank financial institution at a
principal amount of $400,896 with a maturity date of 60 days at an annual
interest rate of 10%. This loan is repayable on the maturity date of November
28, 2008.

Management
believes that additional cash may be necessary in the foreseeable future to
finance our expanding LED outdoor advertising and LED solutions businesses. We
have not yet achieved sustainable positive cash flows. As such, we will 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.

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.

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Item 3. Quantitative and Qualitative Disclosures About
Market Risk.

Not applicable.

Item 4T. Controls and Procedures.

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

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

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

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

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

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

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Risks Related to Our Business

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

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

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

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

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

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

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

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

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changing business or economic conditions, withstand adverse
operating results, consummate desired acquisitions or compete effectively.

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

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

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

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

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

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

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

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

This
may place us at a disadvantage in responding to our competitors pricing
strategies, technological advances, marketing campaigns, alliances and other
initiatives. Some of our competitors conduct more extensive promotional
activities and offer lower prices to customers than we do, which could

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

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

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

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

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

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

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

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

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

Currently,
we derive a majority of our revenues from the sale of LED systems and lighting
source products. We expect to derive a greater proportion of future revenues
from our LED outdoor advertising business. Each of these industries in which we
are active are characterized by rapid technological change, new products and
services, new sales channels, evolving industry standards and changing client
preferences. Our success will depend, in part, upon our ability to make timely
and cost-effective enhancements and additions to our technology and to introduce
new products and services that meet customer demands. We expect new products and
services to be developed and introduced by other companies that compete with our
products and services. The proliferation of new LED products and services in our
markets may reduce demand for our LED products and services. In addition, the
rapid technological advancements in HID lighting products may render our current
lighting source products obsolete. There can be no assurance that we will be
successful in responding to these or other technological changes, to evolving
industry standards or to new products and services offered by our current and
future competitors. In addition, we may not have access to sufficient capital
for our research and development needs in order to develop new products and
services.

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

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

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

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

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

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

Approximately
17.3% of our revenue was contributed from one customer for the six months ended
September 30, 2008. If this or any of our customers ceased doing business with
our company, we would require time to find other customers. If we lose these
customers or are unable to generate recurring revenues from these customers,
there would be a negative impact on our overall performance. We have not entered
into long-term supply contracts with any of these major customers. Therefore,
there can be no assurance that we will maintain or improve the relationships
with these customers, or that we will be able to continue to supply these
customers at current levels or at all. If we cannot maintain long-term
relationships with our major customers, the loss of a significant portion of our
sales to them could have an adverse effect on our business, financial condition
and results of operations.

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

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

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

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

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

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

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

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

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

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

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

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

Our
company has experienced moderate foreign exchange gains and losses to date due
to the relative stability of the Renminbi up to late July 2006. However, we are
not sure what effect, if any, the decoupling of the Renminbi from the United
States dollar from late July 2006 onward 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.

The
recent global financial crisis may lead to drastic and unanticipated
fluctuations in the exchange rates of Renminbi and Singapore dollars, which may
affect our company through either foreign

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exchange gains or losses to be accounted for in the statement
of operations, and which may materially affect our operating results and
financial position.

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

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

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

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

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

Our
company does not design or manufacture LEDs or individual LED modules. Our
ability to continue penetrating our existing markets and to expand into new
markets depends on continued advancements in the design and manufacture by
others of LEDs and LED modules. In the LED outdoor billboard advertising and
high-performance LED color lighting markets that we currently serve, we rely on
continued improvements in the brightness, efficiency and initial cost of color
LEDs. The continued development of LED technologies depends on other companies
research and is out of our control. If advancements in LED technologies occur at
a slower pace than we anticipate, or fail to occur at all, we may be unable to
penetrate additional markets, our revenues would be significantly reduced, and
our future prospects for success may be harmed.

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

Effective
internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002
requires us to evaluate and report on our internal controls over financial
reporting beginning with our annual report on Form 10-KSB for the fiscal year
ended March 31, 2008. The process of strengthening our internal controls and
complying with Section 404 is expensive and time consuming, and requires
significant management attention. We cannot be certain that the measures we
undertake will ensure that we will maintain adequate controls over our financial
processes and reporting in the future. Furthermore, if we are able to rapidly
grow our business, the internal controls that we will need will become more
complex, and significantly more resources will be required to ensure our
internal controls remain effective. Failure to implement required controls, or
difficulties

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encountered in their implementation, could harm our operating
results or cause us to fail to meet our reporting obligations. If we or our
auditors discover a material weakness in our internal controls, the disclosure
of that fact, even if the weakness is quickly remedied, could diminish
investors confidence in our financial statements and harm our stock price. In
addition, non-compliance with Section 404 could subject us to sanctions by the
Securities and Exchange Commission, lawsuits, delisting by SROs and/or an
assignment of higher risks by investors, which would further reduce our stock
price.

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

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

Risks Related to Our Industry

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

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

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

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

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- 52 -

Risks Related to Our Common Stock

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

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

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

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

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

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

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

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

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- 53 -

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

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

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

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

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

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

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- 54 -

securities. We believe that the penny stock rules discourage
investor interest in and limit the marketability of, our common stock.

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

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

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

We granted registration rights to the holders of shares of our common stock (and
holders of warrants to purchase shares of our common stock) issued pursuant to a
capital-raising transaction which we closed on March 17, 2008. Pursuant to our
registration rights agreement, our company filed a Form S-1 registration
statement with the Securities and Exchange Commission on July 21, 2008 for the
registration of 8,750,000 shares of our common stock. On July 28, 2008, the
registration statement covering these shares of our common stock was declared
effective by the Securities and Exchange Commission, enabling the selling
stockholders to resell up to approximately 15.7% of the issued and outstanding
shares of our common stock. As a result of such registration statement, a
substantial number of our shares of common stock which have been issued may be
available for immediate resale, which could have an adverse effect on the price
of our common stock. As a result of any such decrease in price of our common
stock, our current stockholders and purchasers who acquire shares from the
selling stockholders may lose some or all of their investment.

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

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

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

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

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

None.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibits required by Item 601 of Regulation S-K

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

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|Exhibit Number | Description                                                                                                                                                                                                                                                                                                   
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                                                               
|3.7            | Bylaws (incorporated by reference from our Current Report
      on Form 8-K filed on October 14, 2008)                                                                                                                                                                                                        
|               |                                                                                                                                                                                                                                                                                                               
|(10)           | Material Contracts                                                                                                                                                                                                                                                                                            
|               |                                                                                                                                                                                                                                                                                                               
|10.1           | Management Contract between Tech Team Holdings Limited /
      Tech Team Development Limited and Bondy Tan (incorporated by reference
      from our Current Report on Form 8-K filed on January 18, 2005)                                                                                                    
|               |                                                                                                                                                                                                                                                                                                               
|10.2           | 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)                                                           
|               |                                                                                                                                                                                                                                                                                                               
|10.3           | Subscription Agreement between Global Innovative Systems
      Inc. and Bondy Tan, dated January 18, 2007 (incorporated by reference from
      our Quarterly Report on Form 10-QSB filed on February 20, 2007)                                                                                               
|               |                                                                                                                                                                                                                                                                                                               
|10.4           | Subscription Agreement between Global Innovative Systems
      Inc., Investec Bank (UK) Limited and the persons set out in Schedule 1 to
      the Subscription Agreement, dated January 18, 2007 (incorporated by
      reference from our Quarterly Report on Form 10-QSB filed on February 20,
      2007) 
|               |                                                                                                                                                                                                                                                                                                               
|10.5           | Note issued by Global Innovative Systems Inc. to Investec
      Bank (UK) Limited dated January 23, 2007 (incorporated by reference from
      our Quarterly Report on Form 10-QSB filed on February 20, 2007)                                                                                                
|               |                                                                                                                                                                                                                                                                                                               
|10.6           | Subscription Agreement between Global Innovative Systems
      Inc., Full Moon Resources Limited and the persons set out in Schedule 1 to
      the Subscription Agreement, dated January 18, 2007 (incorporated by
      reference from our Quarterly Report on Form 10-QSB filed on February 20,
      2007)
|               |                                                                                                                                                                                                                                                                                                               
|10.7           | Note issued by Global Innovative Systems Inc. to Full
      Moon Resources Limited dated January 23, 2007 (incorporated by reference
      from our Quarterly Report on Form 10-QSB filed on February 20, 2007)                                                                                               
|               |                                                                                                                                                                                                                                                                                                               
|10.8           | Subscription Agreement between Global Innovative Systems
      Inc., LP Asset Management Limited and the persons set out in Schedule 1 to
      the Subscription Agreement, dated January 18, 2007 (incorporated by
      reference from our Quarterly Report on Form 10-QSB filed on February 20,
      2007)
|               |                                                                                                                                                                                                                                                                                                               
|10.9           | Note issued by Global Innovative Systems Inc. to LP Asset
      Management Limited dated January 23, 2007 (incorporated by reference from
      our Quarterly Report on Form 10-QSB filed on February 20, 2007)                                                                                               
|               |                                                                                                                                                                                                                                                                                                               
|10.10          | Redemption Agreement between Lightscape Technologies
      Inc., Investec Bank (UK) Limited, Full Moon Resources Limited, LP Asset
      Management Limited and Bondy Tan, dated July 10, 2007 (incorporated by
      reference from our Current Report on Form 8-K filed on August 22, 2007)                 
|               |                                                                                                                                                                                                                                                                                                               
|10.11          | Form of Subscription Agreement dated August 21, 2007
      (incorporated by reference from our Current Report on Form 8-K filed on
      August 22, 2007)                                                                                                                                                     

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- 57 -

|Exhibit Number | Description                                                                                                                                                                                                                                                                                                                                                                                 
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.12          | Subscription
        Agreement between Lightscape Technologies Inc. and SMC Investment Management
        Limited dated December 11, 2007 (incorporated by reference from our Current
        Report on Form 8-K filed on December 14, 2007)                                                                                                                                                
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.13          | Joint Venture
        Agreement between Lightscape Technologies (Greater China) Limited, Beijing
        Xintong Media & Cultural Development Co. Ltd., Beijing New Vision
        Media Advertising Co. Ltd. and Miss Yao Po Chun dated February 12, 2008
        (Translated from Chinese)(incorporated by reference from our Annual
        Report on Form 10-KSB filed on July 14, 2008)
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.14          | Form of Securities
        Purchase Agreement, among Lightscape Technologies Inc. and the investors
        named therein dated March 9, 2008 (incorporated by reference from our
        Current Report on Form 8-K filed on March 10, 2008)                                                                                                                                               
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.15          | Form of Registration
        Rights Agreement among Lightscape Technologies Inc. and the investors
        named therein dated March 9, 2008 (incorporated by reference from our
        Current Report on Form 8-K filed on March 10, 2008)                                                                                                                                                
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.16          | Escrow Agreement
        among Lightscape Technologies Inc., Roth Capital Partners, LLC and Tri-
        State Title & Escrow, LLC, as escrow agent, dated March 9, 2008 (incorporated
        by reference from our Current Report on Form 8-K filed on March 10, 2008)                                                                                                                    
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|10.17          | Form of Placement
        Agent Warrant (incorporated by reference from our Current Report on Form
        8-K filed on March 10, 2008)                                                                                                                                                                                                                                                     
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|(14)           | Code of Ethics                                                                                                                                                                                                                                                                                                                                                                              
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|14.1           | Code of Ethics
        (incorporated by reference from our Annual Report on Form 10-KSB filed
        on December 30, 2004)                                                                                                                                                                                                                                                                 
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|(31)           | Rule 13a-14(a)/15d-14(a)
        Certifications                                                                                                                                                                                                                                                                                                                                             
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|31.1*          | Certification
        of Principal Executive Officer and Principal Financial Officer filed pursuant
        to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                               
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|(32)           | Section 1350
        Certifications                                                                                                                                                                                                                                                                                                                                                         
|               |                                                                                                                                                                                                                                                                                                                                                                                             
|32.1*          | Certification
        of Principal Executive Officer and Principal Financial Officer pursuant
        to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                                                                              

*Filed herewith

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- 58 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

LIGHTSCAPE TECHNOLOGIES INC.





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

Date: November 13, 2008

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