**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**Form
      10-Q**




**x**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934****For
                the Quarterly Period Ended June 30, 2007****or****o**
            **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 333-131857**




**LIGHTSPACE
      CORPORATION**


(Exact
      name of registrant as specified in its charter)




**Delaware**
            
            **04-3572975**(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)**529
                Main Street, Ste 330, Boston, MA**
            
            **02129**(Address
                of principal executive offices)
            
            (Zip
                Code)




Registrant’s
      telephone number, including area code: **(617)
      868-1700**


(Former
      name, former address and former fiscal year, if changed since last report):
      Not
      Applicable


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 o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):




Large
                accelerated filer
            o
            Accelerated
                filer
            
            o
            
            Non-accelerated
                filer
            
            x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x




Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.




**Class**
            
            **Outstanding
                at July 17, 2007**Common
                Stock, par value $0.0001
            
            15,282,495
                shares








**LIGHTSPACE
      CORPORATION**


**FORM
      10 - Q**


**FOR
      THE THREE AND SIX MONTHS ENDED JUNE 30, 2007**


**INDEX**





**PAGE****PART
                I -
                FINANCIAL INFORMATION**Item
                  1 - Unaudited Consolidated Financial StatementsConsolidated
                  Statements of Financial Position as of June 30, 2007 and December
                  31, 2006
              
              3Consolidated
                  Statements of Operations for the Three and Six MonthsEnded
                  June 30, 2007 and 2006
              
              4Consolidated
                  Statement of Changes in Stockholders’ Equity for the Six MonthsEnded
                  June 30, 2007 and the Year ended December 31, 2006
              
              5Consolidated
                  Statements of Cash Flows for the Six Months Ended June 30, 2007
                  and 2006
              
              6Notes
                  to Unaudited Consolidated Financial Statements
              
              7Item
                  2 - Management's Discussion and Analysis of Financial Condition
                  and
                  Results of Operations
              
              15Item
                  3 - Quantitative and Qualitative Disclosures about Market
                  Risk
              
              22Item
                  4 - Controls and Procedures
              
              22**PART
                  II - OTHER INFORMATION**Item
                  1 - Legal Proceedings
              
              23Item
                  2 - Unregistered Sales of Equity Securities and Use of
                  Proceeds
              
              23Item
                  3 - Defaults upon Senior Securities
              
              23Item
                  4 - Submission of Matters to a Vote of Security Holders
              
              24Item
                  5 - Other Information
              
              24Item
                  6 - Exhibits
              
              24Signatures
              
              25




2





**1.
      PART I - FINANCIAL INFORMATION**





**Item
      1. Unaudited Consolidated Financial Statements**





**CONSOLIDATED
                  STATEMENTS OF FINANCIAL POSITION****June
                  30,**
              
              **December
                  31,****2007**
              
              **2006****ASSETS**Current
                  AssetsCash
                  and cash equivalents
              
              $
              2,437,012
              
              $
              879,987Accounts
                  receivable
              
              
              43,233
              
              
              52,678Inventory
              
              
              458,069
              
              
              354,234Other
                  current assets
              
              
              2,505
              
              
              4,250Total
                  current assets
              
              
              2,940,819
              
              
              1,291,149Property
                  and Equipment - Net
              
              
              120,049
              
              
              82,298Other
                  assets
              
              
              173,217
              
              
              196,822Total
                  Assets
              
              $
              3,234,085
              
              $
              1,570,269**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  LiabilitiesNotes
                  payable
              
              $
              237,381
              
              $
              237,381Accounts
                  payable
              
              
              457,168
              
              
              695,852Accrued
                  interest
              
              
              30,289
              
              
              12,955Accrued
                  expenses
              
              
              423,983
              
              
              200,709Deferred
                  revenue
              
              
              81,984
              
              
              126,363Total
                  current liabilities
              
              
              1,230,805
              
              
              1,273,260Long-term
                  Debt
              
              
              950,000
              
              
              -Stockholders'
                  EquityCommon
                stock,
                $0.0001 par value; authorized 75,000,000 shares;15,282,495
                    and 10,593,111 shares issued and outstandingat
                  June 30, 2007 and December 31, 2006, respectively
              
              
              1,528
              
              
              1,059Additional
                  paid-in capital
              
              
              14,094,525
              
              
              10,607,585Retained
                  earning (deficit)
              
              
              (13,042,773
              )
              
              (10,311,635
              )Total
                  stockholders' equity
              
              
              1,053,280
              
              
              297,009Total
                  Liabilities and Stockholders' Equity
              
              $
              3,234,085
              
              $
              1,570,269
 See
          notes
          to unaudited consolidated financial statements
  3


**LIGHTSPACE
                  CORPORATION****CONSOLIDATED
                  STATEMENTS OF OPERATIONS****Three
                  Months Ended June 30,**
              
              **Six
                  Months Ended June 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**RevenuesProduct
                  sales
              
              $
              484,600
              
              $
              183,738
              
              $
              801,134
              
              $
              208,643Other
              
              
              22,095
              
              
              9,200
              
              
              39,520
              
              
              19,859Total
                  revenues
              
              
              506,695
              
              
              192,938
              
              
              840,654
              
              
              228,502Product
                  Cost
              
              
              353,605
              
              
              262,183
              
              
              624,870
              
              
              349,404Gross
                  Margin
              
              
              153,090
              
              
              (69,245
              )
              
              215,784
              
              
              (120,902
              )Operating
                  ExpensesResearch
                  and development
              
              
              1,541,691
              
              
              270,442
              
              
              1,791,739
              
              
              496,782Selling
                  and marketing
              
              
              358,481
              
              
              278,589
              
              
              659,424
              
              
              491,222General
                  and administrative
              
              
              242,042
              
              
              181,724
              
              
              474,385
              
              
              453,917Total
                  operating expenses
              
              
              2,142,214
              
              
              730,755
              
              
              2,925,548
              
              
              1,441,921Operating
                  Loss
              
              
              (1,989,124
              )
              
              (800,000
              )
              
              (2,709,764
              )
              
              (1,562,823
              )Other
                  Income (Expense)Net
                  gain on debt and equity conversion
              
              
              -
              
              
              402,298
              
              
              -
              
              
              402,298Interest
                  expense - net
              
              
              (9,524
              )
              
              (74,859
              )
              
              (21,374
              )
              
              (225,828
              )Total
                  other income (expense)
              
              
              (9,524
              )
              
              327,439
              
              
              (21,374
              )
              
              176,470Loss
                  Before Provision For Income Taxes
              
              
              (1,998,648
              )
              
              (472,561
              )
              
              (2,731,138
              )
              
              (1,386,353
              )Provision
                  For Income Taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  Loss
              
              $
              (1,998,648
              )
              $
              (472,561
              )
              $
              (2,731,138
              )
              $
              (1,386,353
              )Basic
                  and Diluted Net Loss Per Share
              
              $
              (0.15
              )
              $
              (0.11
              )
              $
              (0.22
              )
              $
              (0.54
              )Weighted
                  Average Common Shares Outstanding
              
              
              13,719,367
              
              
              4,187,801
              
              
              12,156,239
              
              
              2,582,492
 See
          notes
          to unaudited consolidated financial statements


4


**LIGHTSPACE
                  CORPORATION****CONSOLIDATED
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY****Series
                  A Convertible****Preferred
                  Stock**
              
              **Common
                  Stock**
              
              **Additional**
              
              **Retained**
              
              **Stockholders'****Shares**
              
              
              
              **Shares**
              
              
              
              **Paid-In**
              
              **Earnings**
              
              **Equity****Issued**
              
              **Amount**
              
              **Issued**
              
              **Amount**
              
              **Capital**
              
              **(Deficit)**
              
              **(Deficit)****Balance
                  December 31, 2005**
              
              
              133,732
              
              
              13
              
              
              977,182
              
              
              98
              
              
              2,092,612
              
              
              (7,603,215
              )
              
              (5,510,492
              )Conversion
                  of notes payable
              
              
              
              
              
              
              
              
              1,544,865
              
              
              154
              
              
              2,724,622
              
              
              
              
              
              2,724,776Conversion
                  of senior notes
              
              
              
              
              
              
              
              
              3,110,585
              
              
              311
              
              
              2,488,160
              
              
              
              
              
              2,488,471Conversion
                  of preferred stock
              
              
              (133,732
              )
              
              (13
              )
              
              160,479
              
              
              16
              
              
              85,586
              
              
              
              
              
              85,589Issuance
                  of common warrants
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              264,345
              
              
              
              
              
              264,345Expenses
                  of private placement
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (499,595
              )
              
              
              
              
              (499,595
              )Public
                  sale of equity securities
              
              
              
              
              4,800,000
              
              
              480
              
              
              3,839,520
              
              
              
              
              
              3,840,000Expenses
                  of public offering
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (468,157
              )
              
              
              
              
              (468,157
              )Stock
                  option compensation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              80,492
              
              
              
              
              
              80,492Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,708,420
              )
              
              (2,708,420
              )**Balance
                  December 31, 2006**
              
              
              -
              
              
              -
              
              
              10,593,111
              
              
              1,059
              
              
              10,607,585
              
              
              (10,311,635
              )
              
              297,009Stock
                  option compensation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              47,409
              
              
              
              
              
              47,409Private
                  placement of equity securities
              
              
              
              
              4,689,384
              
              $
              469
              
              $
              3,751,038
              
              
              
              
              
              3,751,507Expenses
                  of private placement
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (311,507
              )
              
              
              
              
              (311,507
              )Net
                  loss for six months
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (2,731,138
              )
              
              (2,731,138
              )**Balance
                  June 30, 2007**
              
              
              -
              
              $
              -
              
              
              15,282,495
              
              $
              1,528
              
              $
              14,094,525
              
              $
              (13,042,773
              )
              $
              1,053,280
 
 See
      notes to unaudited consolidated financial
      statements




5


**CONSOLIDATED
                  STATEMENTS OF CASH FLOWS****Six
                  Months Ended June 30,****2007**
              
              **2006**Cash
                  Flows (Uses) from Operating Activities:Net
                  loss
              
              $
              (2,731,138
              )
              $
              (1,386,353
              )Adjustments
                  to reconcile net loss to cash usedin
                  operating activities:Depreciation
                  and amortization
              
              
              20,400
              
              
              17,754Amortization
                  of fair value of stock warrants
              
              
              23,610
              
              
              -Debt
                  and preferred stock conversion adjustments:Fair
                  value of common stock warrants issued
              
              
              -
              
              
              350,018Fair
                  value of common stock issued
              
              
              -
              
              
              264,345Non-cash
                  gain on debt conversion
              
              
              -
              
              
              (890,765
              )Provision
                  for stock option compensation
              
              
              47,409
              
              
              -R&D
                  acquisition
              
              
              950,000
              
              
              -Other
                  changes in assets and liabilities:Accounts
                  receivable
              
              
              9,445
              
              
              (82,232
              )Inventory
              
              
              (103,835
              )
              
              (88,511
              )Other
                  current assets
              
              
              1,744
              
              
              (16,087
              )Other
                  assets
              
              
              -
              
              
              (127,355
              )Accounts
                  payable and accrued expenses
              
              
              1,920
              
              
              705,326Deferred
                  revenue
              
              
              (44,379
              )
              
              132,844Net
                  cash (used) in operating activities
              
              
              (1,824,824
              )
              
              (1,121,016
              )Cash
                  Flows (Uses) From Investing Activities:Purchases
                  of property and equipment
              
              
              (58,151
              )
              
              (22,983
              )Net
                  cash (used) in investing activities
              
              
              (58,151
              )
              
              (22,983
              )Cash
                  Flows (Uses) From Financing Activities:Proceeds
                  from notes payable
              
              
              -
              
              
              1,520,000Proceeds
                  from sale of common stock
              
              
              3,751,507
              
              
              -Expense
                  of private placement
              
              
              (311,507
              )
              
              (499,595
              )Net
                  cash provided from financing activities
              
              
              3,440,000
              
              
              1,020,405Net
                  Increase (Decrease) in Cash and Cash Equivalents
              
              
              1,557,025
              
              
              (123,594
              )Cash
                  and Cash Equivalents - beginning of period
              
              
              879,987
              
              
              123,951Cash
                  and Cash Equivalents - end of period
              
              $
              2,437,012
              
              $
              357See
                  notes to unaudited consolidated financial statementsNon-cash
                  financing activities:Issuance
                  of notes payable
              
              $
              950,000
              
              $
              -





6


**LIGHTSPACE
          CORPORATION**
 **NOTES
          TO** **UNAUDITED
          CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
          30, 2007**
 **1.
      NATURE OF THE BUSINESS AND OPERATIONS**





Lightspace
      Corporation (the “Company”), incorporated in August 2001 as a Delaware
      corporation, provides interactive lighting entertainment products to numerous
      industries including retail stores, family entertainment centers, theme parks,
      fashion shows, nightclubs, special events, stage lighting and sound, health
      clubs and architectural lighting and design.





The
      Company is subject to certain risks common to technology-based companies in
      similar stages of development. Principal risks to the Company include
      uncertainty of growth in market acceptance for the Company’s products;
      dependence on advances in interactive digital environments; history of losses
      since inception; ability to remain competitive in response to new technologies;
      costs to defend, as well as risks of losing, patent and intellectual property
      rights; reliance on limited number of suppliers; reliance on outsourced
      manufacture of the Company’s products for quality control and product
      availability; ability to increase production capacity to meet demand for the
      Company’s products; concentration of the Company’s operations in a limited
      number of facilities; uncertainty of demand for the Company’s products in
      certain markets; ability to manage growth effectively; dependence on key members
      of the Company’s management; limited experience in conducting operations
      internationally; and ability to obtain adequate capital to fund future
      operations.




The
      Company has incurred net operating
      losses and negative operating cash flows since inception. As of June 30, 2007,
      the Company had an accumulated retained earnings deficit of $13,042,773. The
      Company has funded its operations through June 30, 2007 through the issuance
      of
      private and public placements of equity securities, borrowings from stockholders
      and others, and sales of Lightspace products. The Company’s long-term success is
      dependent on obtaining sufficient capital to fund its operations and development
      of its products, bringing such products to the worldwide market, and obtaining
      sufficient sales volume to be profitable.





**2.
      BASIS OF PRESENTATION**





The
      consolidated financial statements include the accounts of Lightspace Emagipix
      Corporation, a wholly-owned subsidiary organized as of March 29, 2007. All
      intercompany transactions have been eliminated in the
      consolidation.




The
      consolidated financial statements have been prepared on a going concern basis,
      which contemplates the realization of assets and the satisfaction of liabilities
      in the ordinary course of business. The Company has incurred a net loss from
      operations of $2,731,138 for the six month period ended June 30, 2007. Further,
      the Company has accumulated net losses from operations of $13,042,773 at that
      date. These factors, among others, indicate that there is substantial
      uncertainty that the Company will continue as a going
      concern. The financial statements do not include any adjustments related to
      the
      recovery of assets and classification of liabilities that might be necessary
      should the Company be unable to continue as a going concern.




The
      consolidated statement of financial position as of June 30, 2007, the
      consolidated statements of operations and cash flows for the three months and/or
      six months ended June 30, 2007 and 2006, and the consolidated statement of
      changes in stockholders’ equity for the period from January 1, 2007 through June
      30, 2007 are unaudited. These unaudited interim financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America and in accordance with the instructions for Form 10-Q.
      Such financial statements do not include all of the information and disclosures
      required for audited financial statements. In the opinion of the Company’s
      management, the unaudited interim consolidated financial statements have been
      prepared on the same basis as the Company’s audited financial statements and
      include all adjustments necessary for the fair presentation of the Company’s
      financial position, results of its operations, cash flows, and changes in
      stockholders’ equity for the periods presented. The results of operations for
      the interim periods are not necessarily indicative of the results that can
      be
      expected for any other interim period or any fiscal year.




7


**LIGHTSPACE
        CORPORATION**
 **NOTES
        TO** **UNAUDITED
        CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**


**3.
      RECOGNITION OF SALES**





The
      Company recognizes revenue from the sale of its entertainment systems when
      all
      of the following conditions have been met: (1) evidence exists of an
      arrangement with the customer, typically consisting of a purchase order or
      contract; (2) the Company’s products have been delivered and risk of loss
      has passed to the customer; (3) the Company has completed all of the necessary
      terms of the contract possibly including but not limited to, installation of
      the
      product and training; (4) the amount of revenue to which the Company is
      entitled is fixed or determinable; and (5) the Company believes it is
      probable that it will be able to collect the amount due from the customer.
      To
      the extent that one or more of these conditions has not been satisfied, the
      Company defers recognition of revenue. Revenue from maintenance contracts is
      recorded on a straight-line basis over the term of the contract. The estimated
      costs of warranty obligations and other allowances are recognized at the time
      of
      revenue recognition based upon contract terms and prior claims experience.
      An
      allowance for uncollectible receivables is established by a charge to
      operations, when in the opinion of the Company, it is probable that the amount
      due to the Company will not be collected.





**4.
      TECHNOLOGY ACQUISITION AND PRIVATE PLACEMENT OF SECURITIES**





On
      March 29, 2007, Lightspace Emagipix
      Corporation (“LEC”), a newly formed, wholly-owned subsidiary of Lightspace
      Corporation, entered into an agreement with Illumination Design Works, Inc.
      to
      acquire the assets related to the in-process development technology emagipix,
      an
      interactive lighting technology that utilizes electroluminescent sheets. The
      purchase price for the emagipix technology consisted of an initial cash payment
      of $45,000 a cash payment of $255,000 and the issuance of a $950,000 convertible
      term secured non-recourse note to Illumination Design Works, Inc. upon the
      closing of the technology purchase.





On
      April
      30, 2007, LEC completed the acquisition of the emagipix technology. In
      connection with the acquisition, the developer of the emagipix technology,
      David
      Hoch, (a former officer and co-founder of Lightspace Corporation and the
      principal owner of Illumination Design Works, Inc.), re-commenced employment
      with Lightspace. Upon employment with Lightspace as Chief Scientist, the Company
      granted Mr. Hoch options to purchase 250,000 shares of common stock at an
      exercise price of $0.80 per share.





The
      $950,000 convertible term secured non-recourse note bears interest at 5% per
      annum, payable yearly, and is due and payable on April 30, 2011. The note is
      secured by a pledge of 67% of the stock of LEC. The principal of the note is
      convertible at any time up and until April 30, 2011, at the option of the
      holder, into the common stock of Lightspace Corporation at a conversion price
      of
      $0.80 per share, the fair market value of the Company’s common stock at April
      30, 2007. Upon the occurrence of certain defined events of default by the
      noteholder, Lightspace has the right to convert the note to common stock at
      the
      lower of the conversion price of $0.80 or current market price of the common
      stock.





The
      Company estimates that the cost to complete the development of the emagipix
      technology will be between $1.5 million and $2.0 million. The Company further
      expects that the technology will be commercially available within three years.
      The Company accounted for the acquisition of the emagipix technology as the
      acquisition of in process research and development and recorded a charge to
      operations in the June 30, 2007 quarter of $1,306,612, which included legal
      fees
      incurred in connection with the acquisition.





On
      April
      30, 2007 the Company closed a private placement of its equity units. The Company
      sold 586,173 units at the offering price of $6.40 per unit, resulting in
      aggregate proceeds to the Company of $3,751,507. After estimated expenses of
      the
      offering of $311,507, the net proceeds to the Company were approximately
      $3,440,000. Each equity unit consists of: (1) eight shares of common stock;
      (2) eight warrants to purchase a total of eight shares of common stock at
      an exercise price of $1.00 per warrant; (3) two warrants to purchase a
      total of two shares of common stock at an exercise price of $1.25 per warrant;
      and (4) two warrants to purchase a total of two shares of common stock at
      an exercise price of $1.63 per warrant. The sale of 586,173 units resulted
      in
      the issuance of: (1) 4,689,384 shares of common stock; (2) 4,689,384 warrants
      to
      purchase a total of 4,689,384 shares of common stock at an exercise price of
      $1.00 per warrant;


8
 **LIGHTSPACE
        CORPORATION**
 **NOTES
        TO** **UNAUDITED
        CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007**





**4.
      TECHNOLOGY ACQUISITION AND PRIVATE PLACEMENT OF SECURITIES -
      Continued**





(3)
      1,172,346 warrants to purchase a total of 1,172,346 shares of common stock
      at an
      exercise price of $1.25 per warrant; and (4) 1,172,346 warrants to purchase
      a
      total of 1,172,346 shares of common stock at an exercise price of $1.63 per
      warrant. The warrants are exercisable at the option of the holder at any time
      up
      until April 30, 2012, at which date the warrants expire. In the event of a
      division of the Company’s common stock, the warrants will be adjusted
      proportionately. The warrants have been classified permanently within
      stockholders’ equity, as upon exercise, the warrant holder can only receive the
      specified number of common shares. The Company has entered into a Registration
      Rights Agreement with the purchasers of the units, whereby Lightspace has agreed
      to file a registration statement, within 45 days of the closing, to register
      for
      resale the shares of common stock, warrants and shares of common stock issuable
      upon exercise of the warrants, included in the units issued in the private
      placement to investors and the financial advisor.





In
      connection with the sale of the equity units, Lightspace paid Griffin
      Securities, Inc., the financial advisor for the private placement, a fee in
      the
      amount of $187,575 and issued to Griffin Securities a purchase warrant
      exercisable for 58,617 units, in the same form sold in the private placement,
      at
      an exercise price of $6.40 per unit.




The
      Company used a portion of the net proceeds from the private placement to
      complete the acquisition of the emagipix technology by the payment of the cash
      purchase price of $300,000. The balance of the net proceeds will be used for
      general working capital purposes.




As
      a
      result of the private placement, issued and outstanding shares of the Company’s
      common stock at June 30, 2007 increased to 15,282,495 from 10,593,111 at March
      31, 2007. Additionally, issued and outstanding common stock warrants at June
      30,
      2007 were 23,634,205, exercisable at prices that range from $0.80 to $7.50.
      At
      March 31, 2007, the Company had issued and outstanding common stock warrants
      in
      the aggregate amount of 15,427,789, exercisable at prices that range from $0.80
      to $7.50.





**5.
      LOSS PER SHARE**





Basic
      and diluted net loss per common share is calculated by dividing the net loss
      by
      the weighted average number of common shares outstanding during the period.
      Diluted net loss per share is the same as basic net loss per share, since the
      effects of potentially dilutive securities are excluded from the calculation
      for
      all periods presented as their inclusion would be anti-dilutive. Dilutive
      securities consist of common stock options, common stock warrants and
      convertible debt.





The
      following potentially dilutive securities were excluded from the calculation
      of
      diluted loss per share because their inclusion would be
      anti-dilutive:


**Three
                  Months Ended June 30,**
              
              **Six
                  Months Ended June 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Common
                  stock options
              
              
              1,718,685
              
              
              58,080
              
              
              1,718,685
              
              
              58,080Common
                  stock warrants
              
              
              23,634,205
              
              
              6,187,789
              
              
              23,634,205
              
              
              6,187,789Convertible
                  debt
              
              
              1,187,500
              
              
              -
              
              
              1,187,500
              
              
              -Total
              
              
              26,540,390
              
              
              6,245,869
              
              
              26,540,390
              
              
              6,245,869
  9
 **LIGHTSPACE
            CORPORATION** NOTES
              TOUNAUDITED
              CONSOLIDATED FINANCIAL STATEMENTS
 **JUNE
              30,**





**6.
      STOCK OPTION BASED COMPENSATION**





Statement
      of Financial Accounting Standards No. 123(R), *Share-Based
      Payment,* addresses
      accounting for stock-based compensation arrangements, including stock options
      and shares issued to employees and directors under various stock-based
      compensation arrangements. This statement requires that the Company use the
      fair
      value method, rather than the intrinsic-value method, to determine compensation
      expense for all stock-based arrangements. Under the fair value method,
      stock-based compensation expense is determined at the measurement date, which
      is
      generally the date of grant, as the aggregate amount by which the expected
      fair
      value of the equity security at the date of acquisition exceeds the exercise
      price to be paid. The resulting compensation expense, if any, is recognized
      for
      financial reporting over the term of vesting or performance. This statement
      was
      first effective for the Company on January 1, 2006 for all prospective stock
      option and share grants of stock-based compensation awards and modifications
      to
      all prior grants, and will have the effect of increasing the Company’s
      compensation costs recognized in operations from historical levels for all
      stock-based compensation awards and modifications of prior awards
      granted.





For
      all periods prior to January 1, 2006, the Company accounted for stock-based
      compensation arrangements with employees and directors utilizing the
      intrinsic-value method. Under this method, stock-based compensation expense
      was
      determined at the measurement date, which again is generally the date of grant,
      as the aggregate amount by which the current market value of the equity security
      exceeds the exercise price to be paid. The resulting compensation expense,
      if
      any, was recognized for financial reporting over the term of vesting or
      performance. The Company has historically granted stock-based compensation
      awards to employees and directors at an exercise price equal to the current
      market value of the Company’s equity security at the date of grant. Accordingly,
      no compensation expense has been recognized or will be recognized in the
      financial statements for stock-based compensation arrangements with employees
      and directors for grants prior to January 1, 2006.





In
      June 2006, the Company’s stockholders and Board of Directors approved
      adoption of the 2006 Stock Incentive Plan (the “2006 Stock Plan”), pursuant to
      which up to 2,118,622 incentive stock options and/or nonqualified stock options
      may be granted to directors, officers, key employees and consultants. In 2006
      and the six months ended June 30, 2007, under the 2006 Stock Plan, the Company
      granted to officers and key employees, before cancellations, 1,836,810 and
      525,000 options respectively, to purchase 1,836,810 and 525,000 shares of common
      stock at an exercise price of $0.80 per option. The options vest ratably over
      a
      three year period and expire in periods from five to ten years. Under the
      provisions of Statement of Financial Accounting Standards No. 123(R),
      Share-Based Payment, the Company determined the total stock-based compensation
      expense for these option grants was $483,000 and $137,000, utilizing the
      following assumptions: volatility - 57% and 53%; estimated option exercise
      period - 2 to 3 years; risk free interest rate - 5.14% to 5.17%, and 4.54%
      to
      4.78%; and expected total forfeitures related these option grants of 6.9% in
      both periods.




The
      provision for stock-based compensation for common stock options granted under
      the 2006 Stock Plan for the six month period ended June 30, 2007 was $47,409.
      The Company did not record a tax benefit related to the provision for
      stock-based compensation due to the Company’s net operating loss carryforwards;
      accordingly, the net loss for the six month period ended June 30, 2007 was
      increased by $47,409.





**7.
      INVENTORY**




At
      June
      30, 2007 and December 31, 2006, inventory consisted of raw materials of $219,385
      and $274,570, and finished products of $238,684 and $79,664, respectively.
      Included in raw materials at June 30, 2007 and December 31, 2006 are $129,688
      and $202,810 of advance payments to suppliers for the purchase of component
      parts, respectively.




10
 **LIGHTSPACE
          CORPORATION** NOTES
            TOUNAUDITED
            CONSOLIDATED FINANCIAL STATEMENTS
 **JUNE
            30,**





**8.
      COMMON STOCK**





On
      April 30, 2007 the stockholders of the Company approved resolutions to
      increase the authorized shares of the Company's $0.0001 par value common stock
      to 75,000,000 authorized shares from 30,000,000 authorized shares to provide
      for
      the issuance of the equity units in the private placement that closed as of
      April 30, 2007 and for other corporate purposes.




As
      a
      result of the private placement, issued and outstanding shares of the Company’s
      common stock at June 30, 2007 increased to 15,282,495 from 10,593,111 at March
      31, 2007. Additionally, issued and outstanding common stock warrants at June
      30,
      2007 increased to 23,634,205 from 15,427,789 at March 31, 2007. The stock
      warrants are exercisable at prices that range from $0.80 to $7.50.





**9.
      STOCK INCENTIVE PLANS**





In
      September 2005, the Company’s stockholders and Board of Directors approved the
      2005 Stock Incentive Plan (the “2005 Stock Plan”). The 2005 Plan provides that
      the Board of Directors may grant up to 72,080 incentive stock options and/or
      nonqualified stock options to directors, officers, key employees and
      consultants .
      The
      2005 Stock Plan provides that the exercise price of each option must be at
      least
      equal to the fair market value of the common stock at the date such option
      is
      granted. Options expire in ten years or less from the date of grant and vest
      over a period not to exceed four years. At June 30, 2007, the Company has
      reserved 51,530 shares of common stock for issuance under the 2005 Stock Plan.
      Concurrent with the approval and adoption of the 2006 Stock Incentive Plan
      in
      June of 2006, no additional options can be granted under the 2005 Stock Plan.




In
      June 2006, the Company’s stockholders and Board of Directors approved
      adoption of the 2006 Stock Incentive Plan (the “2006 Stock Plan”), pursuant to
      which up to 2,118,622 incentive stock options and/or nonqualified stock options
      may be granted to directors, officers, key employees and consultants. The 2006
      Stock Plan provides that the exercise price of each option must be at least
      equal to the fair market value of


the
      common stock at the date such option is granted. Options expire in ten years
      or
      less from the date of grant and vest over a period not to exceed four years.
      As
      of June 30, 2007 the Company has reserved 2,118,622 shares of common stock
      for
      issuance under the 2006 Stock Plan.




Combined
      information with respect to stock options issued under the 2005 and 2006 Stock
      Plans for the six month period ended June 30, 2007 is summarized as
      follows:


**June
                  30, 2007****Weighted****Number
                  of**
              
              **Average****Shares**
              
              **Exercise
                  Price**Options
                  outstanding January 1, 2007
              
              
              1,820,490
              
              $
              0.80Options
                  granted
              
              
              525,000
              
              
              0.80Options
                  exercised
              
              
              -
              
              
              -Options
                  cancelled
              
              
              (626,805
              )
              
              (0.80
              )Options
                  outstanding June 30, 2007
              
              
              1,718,685
              
              $
              0.80Options
                  exercisable at June 30, 2007
              
              
              32,015
              
              $
              0.83Weighted
                  average fair value of 2007 options granted
              
              
              
              
              $
              0.28Weighted
                  average contractual life (years) options outstanding
              
              
              9
                  1/3Options
                  available for grant at June 30, 2007
              
              
              451,467


11
 
 **LIGHTSPACE CORPORATION** NOTES
        TOUNAUDITED
        CONSOLIDATED FINANCIAL STATEMENTS
 **JUNE
        30,**





**10.
      STOCK WARRANTS**





Issued
      and outstanding warrants to purchase common stock of the Company are as
      follows:




**Exercise**
              
              **June
                  30,**
              
              
              **December
                  31,****Type
                  of Warrant**
              
              **Date
                  Issued**
              
              **Price**
              
              **2007**
              
              
              **2006**$0.80
                  exchange warrant
              
              April
                  27, 2006
              
              $0.80
              
              361,252
              
              
              361,252$1.00
                  exchange warrant
              
              April
                  27, 2006
              
              $1.00
              
              276,370
              
              
              276,370$3.00
                  exchange warrant
              
              April
                  27, 2006
              
              $3.00
              
              649,892
              
              
              649,892$7.50
                  exchange warrant
              
              April
                  27, 2006
              
              $7.50
              
              234,398
              
              
              234,398$0.80
                  unit warrant
              
              April
                  30, 2007
              
              $0.80
              
              468,936
              
              
              -$0.96
                  unit warrant
              
              November
                  2, 2006
              
              $0.96
              
              816,000
              
              
              816,000$1.00
                  unit warrant
              
              2006
                  and April 30, 2007
              
              $1.00
              
              13,884,905
              
              
              8,726,585$1.25
                  unit warrant
              
              2006
                  and April 30, 2007
              
              $1.25
              
              3,471,226
              
              
              2,181,646$1.63
                  unit warrant
              
              2006
                  and April 30, 2007
              
              $1.63
              
              3,471,226
              
              
              2,181,646Total
                  common stock warrants outstanding
              
              
              
              23,634,205
              
              
              15,427,789





On
      April
      27, 2006 in connection with the conversion and exchange under the Securityholder
      Debt and Equity Conversion and Exchange Agreement, the Company issued 1,160,660
      exchange warrants to purchase a total of 1,160,660 shares of common stock at
      exercise prices ranging from $1.00 to $7.50 per warrant. The exchange warrants
      are exercisable at the option of the holder at any time up until April 30,
      2011,
      at which date the warrants expire. In the event of a division of the Company’s
      common stock, the warrants will be adjusted proportionately. The value of the
      warrants at April 27, 2006 was determined to be $138,449 under the fair value
      computation method utilizing a 4.89% risk free interest rate assumption, 59%
      volatility factor and an expected life of three years. The $138,449 has been
      charged to operations as debt conversion expense and as an increase to
      additional paid-in-capital.





Additionally,
      in connection with the securityholder conversion and exchange, $237,381 in
      principal amount of existing notes held by the former CEO were converted into
      a
      $237,381 contingent promissory note. The


Company
      issued to the former CEO 361,252 exchange warrants to purchase a total of
      361,252 shares of common stock at an exercise price of $0.80 per warrant. The
      warrants expire on April 30, 2011, unless the terms for payment of the
      contingent promissory note are not met, in which case the warrants will expire
      on June 30, 2009. The value of the warrants at April 27, 2006 was determined
      to
      be $125,896 under the fair value computation method utilizing a 4.89% risk
      free
      interest rate assumption, 59% volatility factor and an expected life of three
      years. The $125,896 has been classified as deferred financing costs, chargeable
      to operations as additional interest expense over three years, and as an
      increase to additional paid-in-capital. The exchange warrants have been
      classified permanently within stockholders’ equity, as upon exercise, the
      warrant holder can only receive the specified number of shares of common
      stock.





On
      May 3, 2006, the Company and noteholders holding $2,400,000 in principal amount
      of senior secured notes agreed to convert $2,488,471 of senior secured note
      principal and accrued interest, at a conversion price of $6.40 per unit, into
      388,821 units plus fractional shares and warrants. The units that the Company
      issued to the senior secured note holders are comprised of: (1) 3,110,585 shares
      of common stock; (2) 3,110,585 unit warrants to purchase a total of 3,110,585
      shares of common stock at an exercise price of $1.00 per warrant; (3) 777,646
      unit warrants to purchase a total of 777,646 shares of common stock at an
      exercise price of $1.25 per warrant; and (4) 777,646 unit warrants to purchase
      a
      total of 777,646 shares of common stock at an exercise price of $1.63 per
      warrant. The unit warrants are exercisable at the option of the holder at any
      time up until April 30, 2011, at which date the warrants expire. In the event
      of
      a division of the Company’s common stock, the warrants will be adjusted
      proportionately. No value has been assigned to the unit warrants issued in
      connection with the conversion. The unit warrants have been classified
      permanently within stockholders’ equity, as upon exercise, the warrant holder
      can only receive the specified number of shares of common stock.




12
 **LIGHTSPACE
          CORPORATION** NOTES
            TOUNAUDITED
            CONSOLIDATED FINANCIAL STATEMENTS
 **JUNE
            30,**





**10.
      STOCK WARRANTS - Continued**





On
      November 2, 2006 the Company closed the initial public offering period for
      the
      sale of its securities. The Company sold 600,000 units at an offering price
      of
      $6.40 per unit, resulting in aggregate proceeds to the Company of $3,840,000.
      The sale of 600,000 units, including warrants issued to the underwriter as
      compensation, resulted in the issuance of: (1) 4,800,000 shares of common stock;
      (2) 816,000 unit warrants to purchase a total of 816,000 shares of common stock
      at an exercise price of $0.96 per warrant (pursuant to the unit warrants issued
      to the underwriter); (3) 5,616,000 unit warrants to purchase a total of
      5,616,000 shares of common stock at an exercise price of $1.00 per warrant;
      (4)
      1,404,000 unit warrants to purchase a total of 1,404,000 shares of common stock
      at an exercise price of $1.25 per warrant; and (5) 1,404,000 unit warrants
      to
      purchase a total of 1,404,000 shares of common stock at an exercise price of
      $1.63 per warrant. The
      unit warrants are exercisable at the option of the holder at any time up until
      April 30, 2011, at which date the warrants expire. In the event of a division
      of
      the Company’s common stock, the warrants will be adjusted proportionately. No
      value has been assigned to the unit warrants issued in connection with the
      sale
      of units. The unit warrants have been classified permanently within
      stockholders’ equity, as upon exercise, the warrant holder can only receive the
      specified number of shares of common stock.





On April
      30,
      2007 the Company closed the offering period for the private sale of equity
      units. The Company sold 586,173 units at the offering price of $6.40 per unit,
      resulting in aggregate proceeds to the Company of $3,751,507. The sale of
      586,173 units and the issuance to the financial advisor of a unit purchase
      warrant exercisable for 58,617 units identical to the units sold in the private
      placement resulted in the issuance of: (1) 4,689,384 shares of common stock;
      (2)
      468,936 unit warrants to purchase a total of 468,936 shares of common stock
      at
      an exercise price of $0.80 per warrant (3) 5,158,320 unit warrants to purchase
      a
      total of 5,158,320 shares of common stock at an exercise price of $1.00 per
      warrant; (4) 1,289,580 unit warrants to purchase a total of 1,289,580 shares
      of
      common stock at an exercise price of $1.25 per warrant; and (5) 1,289,580 unit
      warrants to purchase a total of 1,289,580 shares of common stock at an exercise
      price of $1.63 per warrant. The unit warrants are exercisable at the option
      of
      the holder at any time up until April 30, 2012, at which date the warrants
      expire. In the event of a division of the Company’s common stock, the warrants
      will be adjusted proportionately. The warrants have been classified permanently
      within stockholders’ equity, as upon exercise, the warrant holder can only
      receive the specified number of common shares. The Company has entered into
      a
      Registration Rights Agreement with the purchasers of the units, whereby the
      Company has agreed to file a registration statement to register for resale
      the
      shares of common stock, warrants and shares of common stock issuable upon
      exercise of the unit warrants, included in the units issued in the private
      placement to investors and the financial advisor.





At
      June
      30, 2007 and December 31, 2006, the weighted average exercise price of the
      common stock warrants outstanding was $1.24 and $1.30, respectively. At June
      30,
      2007, the common stock warrants have an average remaining life of approximately
      four and one-quarter years.





**11.
      INCOME TAXES**





The
      Company has recorded no provisions or benefits for income taxes for any period
      presented due to the net operating losses incurred and the uncertainty as to
      the
      recovery of such net operating losses and other deferred tax assets as a
      reduction of possible future taxable income, if any.





At
      June
      30, 2007 and December 31, 2006, the Company had operating loss carryforwards
      of
      approximately $5,664,000 and $3,384,000, respectively, available to offset
      future taxable income for United States federal and state income tax purposes.
      At June 30, 2007 and December 31, 2006, approximately $4,231,000 and $1,846,000
      of the operating loss carryforwards were restricted as to yearly usage, as
      discussed hereafter. The United States federal tax operating loss carryforwards
      expire commencing in 2021 through 2027. The state tax operating loss
      carryforwards expire commencing in 2007 through 2011.





The
      Company’s ability to use the operating loss carryforwards and tax credit
      carryforwards to offset future taxable income is subject to restrictions enacted
      in the United States Internal Revenue Code of 1986. These restrictions severely
      limit the future use of the loss carryforwards if certain ownership changes
      described in




13
 **LIGHTSPACE
          CORPORATION** NOTES
            TOUNAUDITED
            CONSOLIDATED FINANCIAL STATEMENTS
 **JUNE
            30,**





**11.
      INCOME TAXES - Continued**





the
      code
      occur. The common stock ownership changes occurring as a result of the
      securityholder debt and equity conversion on April 27, 2006, the conversion
      of
      senior secured notes on May 3, 2006, the public offering of equity securities
      on
      November 2, 2006 and the private placement on April 30, 2007 have resulted
      in
      reductions and in limitations in the use of the operating loss and tax credit
      carryforwards. The value of the operating loss carryforwards on April 27, 2006
      was reduced to $1,845,580 and limited to approximately $92,000 per year. On
      April 30, 2007, subsequent carryforwards became restricted to approximately
      $351,000 per year. The Company has approximately $1,433,000 of carryforwards
      that have no usage restrictions and can therefore be used without limitation.
      Due to these restrictions, in future years, the Company may be required to
      pay
      income taxes even though significant operating loss and tax credit carryforwards
      exist.





**12.
      SEGMENT INFORMATION**





The
      Company conducts its operations and manages its business in one segment, the
      manufacture of hardware and development of software for interactive lighting
      entertainment. Revenues, denominated in U.S. dollars, by geographical region
      are
      as follows:


**Three
                  Months Ended June 30,**
              
              **Six
                  Months Ended June 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**United
                  States
              
              $
              308,133
              
              $
              192,892
              
              $
              524,677
              
              $
              228,502Europe
              
              
              177,906
              
              
              -
              
              
              204,695
              
              
              -Asia
              
              
              20,657
              
              
              -
              
              
              45,947
              
              
              -South
                  America
              
              
              -
              
              
              -
              
              
              42,417
              
              
              -Canada
              
              
              -
              
              
              -
              
              
              22,918
              
              
              -Total
              
              $
              506,696
              
              $
              192,892
              
              $
              840,654
              
              $
              228,502


14


**Item 2.
      Management’s Discussion of Financial Condition and Results of Operations**





The
      following discussion of the financial condition and results of operations of
      the
      Company should be read in conjunction with the unaudited financial statements
      and the related notes thereto included elsewhere in this Form 10-Q. Except
      for
      the historical information contained herein, the following discussion, as well
      as other information in this report, contains forward-looking statements within
      the meaning of Section 27A of the Securities Act of 1933, as amended, and
      Section 21E of the Securities Exchange Act of 1934, as amended, and is
      subject to the “safe harbor” created by those sections. Some of the
      forward-looking statements can be identified by the use of forward-looking
      terms
      such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seek,”
“intends,” “plans,” “estimates,” “anticipates” or other comparable terms.
      Forward-looking statements involve inherent risks and uncertainties. A number
      of
      important factors could cause actual results to differ materially from those
      in
      the forward-looking statements. Management urges you to consider the risks
      and
      uncertainties described in “Risk Factors” in this report and in the Company’s Annual
      Report on Form 10K for the year ended December 31, 2006. Management undertakes
      no obligation to update forward-looking statements to reflect events or
      circumstances after the date of this report. Management cautions readers not
      to
      place undue reliance upon any such forward-looking statements, which speak
      only
      as of the date made.




**Overview**





Lightspace
      provides interactive lighting entertainment products to family entertainment
      centers, retail
      stores, theme parks, fashion shows, nightclubs, special events, stage lighting
      and sound providers, health clubs and architectural lighting and design. Our
      current product lines include: (a) Lightspace Play, an interactive 36 tile
      gaming platform for children and adult recreation; (b) Lightspace Dance, an
      interactive floor, generally in sizes of 86 tiles and larger, that displays
      customizable lights and effects; and (c) Lightspace Design, an interactive
      tile
      system that displays customizable lights and video effects that can be mounted
      on any flat surface.





During
      the first quarter of 2007, we completed and introduced a new generation of
      our
      interactive tile with added software enhancements. The new interactive tile
      and
      enhanced software, in addition to increased product reliability and reduced
      manufacturing cost, is significantly more illuminative and is now available
      in
      clear plastic in addition to the traditional off white.





On
      April
      30, 2007, we completed the acquisition of the in process development emagipix
      technology from Illumination Design Works, Inc. emagipix technology is an
      interactive lighting technology that utilizes electroluminescent sheets. The
      purchase price for the emagipix technology consisted of a cash payment of
      $300,000 and the issuance of a $950,000 convertible term secured non-recourse
      note. In connection with the acquisition, the developer of the emagipix
      technology (a former officer and co-founder of Lightspace Corporation and the
      principal owner of Illumination Design Works, Inc.), re-commenced employment
      with Lightspace. Lightspace accounted for the acquisition of the emagipix
      technology as the acquisition of in process research and development and
      recorded a charge to operations in the June 30, 2007 quarter of the $1,250,000
      purchase price and $56,612 in related legal expenses.





On
      April
      11, 2007, Lightspace commenced the private placement of up to 600,000 equity
      units at an offering price of $6.40 per unit. Each equity unit consists of:
      (1) eight shares of common stock; (2) eight warrants to purchase a
      total of eight shares of common stock at an exercise price of $1.00 per warrant;
      (3) two warrants to purchase a total of two shares of common stock at an
      exercise price of $1.25 per warrant; and (4) two warrants to purchase a
      total of two shares of common stock at an exercise price of $1.63 per warrant.
      On April 30, 2007 we closed the offering period for our equity units. Lightspace
      sold 586,173 units at the offering price of $6.40 per unit, resulting in
      aggregate proceeds of $3,751,507. After expenses of the offering of $311,507,
      the net proceeds to Lightspace were approximately $3,440,000.




15





**Results
      of Operations for the Three and Six Months Ended June 30, 2007 and
      200** **6**





**Revenue
      and Operating Results**




For
      the
      three months ended June 30, 2007, revenue was $506,695, an increase of $313,757
      from revenue of $192,938 recorded in the quarter ended June 30, 2006. The net
      loss for the quarter ended June 30, 2007 was $1,998,648, as compared to a net
      loss for the quarter ended June 30, 2006 of $472,561. The net loss for the
      three
      and six months ended June 30, 2007, includes a charge to research and
      development operating expense of $1,306,612 related to the in-process
      development of the emagipix technology.





Revenue
      for the three months ended June 30, 2007 was comprised of revenue from the
      sale
      of products, $484,600, and other revenue of $22,095, as represented by deferred
      maintenance revenue, sales of miscellaneous parts and other services. In this
      period, there were 11 Lightspace Play new installation sites and one Lightspace
      Dance new installation site, representing 734 interactive tiles. Revenue for
      the
      three months ended June 30, 2006 was comprised of revenue from the sale of
      products, $183,738, and other revenue of $9,200, as represented by deferred
      maintenance revenue, sales of miscellaneous parts and other services. In the
      three months ended June 30, 2006, there were three Lightspace Play new
      installation sites and three Lightspace Design new installation sites,
      representing 242 interactive tiles.





For
      the
      three months ended June 30, 2007, sales of Lightspace products were made to
      customers in the United States - $308,133; Europe - $177,906; and Asia -
      $20,657. During this period, one customer accounted for over 50% of revenues,
      and two customers accounted for approximately 12% each. These three customers
      were new to the Company and aggregated $372,000. For the three months ended
      June
      30, 2006, sales of Lightspace products were made entirely to customers in the
      United States - $192,892. During the 2006 period, five Lightspace customers
      accounted for approximately 95% of revenues, with two customers comprising
      approximately 27% and 24% of revenues. Sales to these five customers aggregated
      $183,738 in the 2006 three-month period.





For
      the
      six months ended June 30, 2007, revenue was $840,654, an increase of $612,152
      from revenue of $228,502 recorded in the six months ended June 30, 2006. The
      net
      loss for the six months ended June 30, 2007 was $2,731,138, as compared to
      a net
      loss for the six months ended June 30, 2006 of $1,386,353. The revenue for
      the
      six months ended June 30, 2007 was comprised of revenue from the sale of
      products, $801,134, and other revenue of $39,520, as represented by deferred
      maintenance revenue, sales of miscellaneous parts and other services. In the
      six
      months ended June 30, 2007, there were 23 Lightspace Play new installation
      sites, one Lightspace Dance new installation site and one Lightspace Design
      new
      installation site, representing 1,243 interactive tiles. The revenue for the
      six
      months ended June 30, 2006 was comprised of revenue from the sale of products,
      $208,643, and other revenue of $19,859, as represented by deferred maintenance
      revenue, sales of miscellaneous parts and other services. In the six months
      ended June 30, 2006, there were four Lightspace Play new installation sites
      and
      three Lightspace Design new installation sites, representing 314 interactive
      tiles.





For
      the
      six months ended June 30, 2007, sales of Lightspace products were made to
      customers in the United States - $524,677; Europe - $204,695; Asia - $45,947;
      South America - $42,417; and Canada - $22,918. During this period, one new
      Lightspace customer accounted for over 30% of revenues. For the six months
      ended
      June 30, 2006, sales of Lightspace products were made entirely to customers
      in
      the United States - $228,502. During this period, six Lightspace customers
      accounted for 94% of revenues. Each of these customers accounted for over 10%
      individually, with the top two customers comprising 43% of total revenues.
      Sales
      to these customers aggregated $214,161 in the 2006 six-month period.





Our
      product backlog at June 30, 2007 was $135,307, representing 190 interactive
      tiles. We expect that this backlog will be shipped and installed in the
      September 2007 quarter. Product backlog at December 31, 2006 was $208,134,
      representing 343 interactive tiles. Cancellation of a signed contract or order
      included in product backlog requires the consent of Lightspace.




16




**Net
      Loss**





The
      net
      loss for the three months ended June 30, 2007 was $1,998,648 as compared to
      a
      net loss of $472,561 in the three months ended June 30, 2006. The net loss
      for
      the six months ended June 30, 2007 was $2,731,138 as compared to a net loss
      of
      $1,386,353 in the six months ended June 30, 2006. Impacting the 2007 periods,
      in
      addition to the preceding discussion, was a charge in the amount of $1,306,612
      related to the acquisition of the emagipix technology.





**Product
      Cost and Gross Margin**





For
      the
      quarters ended June 30, 2007 and 2006, Lightspace recorded gross margins of
      $153,090, or 30%, and a negative $69,245, or negative 36%, respectively. For
      the
      six months ended June 30, 2007 and 2006, Lightspace recorded gross margins
      of
      $215,784, or 26%, and a negative $120,902, or negative 53%, respectively Product
      cost includes the direct cost of materials, associated freight charges, and
      the
      allocated per unit cost of the contractor's manufacturing labor, overhead and
      profit associated with products sold. For the most part, these costs are
      variable and increase or decrease with volume. Product cost also includes our
      personnel and related expenses assigned to manufacturing and customer service.
      These latter costs tend to be a fixed cost that decreases on a per unit basis
      as
      volume increases.


**Operating
      Expenses**




For
      the
      three months ended June 30, 2007, research and development spending was
      $1,541,691 compared to $270,442 for the three month period ended June 30, 2006.
      The $1,271,249 difference is primarily related to the acquisition of the
      Emagipix technology, a charge to operations in April 2007 of $1,306,612.
      Research and development spending was $1,791,739 for the six months ended June
      30, 2007 as compared to $496,782 for the six months ended June 30, 2006.
      Research and development spending for 2007 has focused primarily on hardware
      and
      software enhancements for our current generation of tile as well as expenditures
      on the development of the next generation of our interactive tiles.




Selling
      and marketing expenditures were $358,481 for the three months ended June 30,
      2007 as compared to $278,589 for the three months ended June 30, 2006, an
      increase of $79,892, or 29%. Selling and marketing expenditures were $659,424
      for the six months ended June 30, 2007 as compared to $491,222 for the six
      months ended June 30, 2006, an increase of $168,202, or 34%. The increased
      expenditures were a result of added sales and customer service staff and
      increased spending for trade shows, advertising, print publications, and
      employee travel expenses. We anticipate that additional sales staff will be
      added in the second half of 2007.





Administrative
      expenses were $242,042 for the three months ended June 30, 2007 as compared
      to
      $181,724 for the three months ended June 30, 2006, an increase of $60,318,
      or
      33%. Administrative expenses were $474,385 for the six months ended June 30,
      2007 as compared to $453,917 for the six months ended June 30, 2006, an increase
      of $20,468, or 5%. Increases in 2007 can be attributed primarily to
      administrative expenses incurred in the April 30, 2007 private
      placement.





**Interest
      Expense**




Net
      interest expense was $9,524 for the three months ended June 30, 2007 as compared
      to $74,859 for the three months ended June 30, 2006, a decrease of $65,335,
      or
      87%. Net interest expense was $21,374 for the six months ended June 30, 2007
      as
      compared to $225,828 for the six months ended June 30, 2006. Increases in net
      interest expense include approximately $7,900 in accrued interest from the
      $950,000 note related to the emagipix technology purchase. The overall decreases
      in net interest expense are due to the conversion to common stock on April
      27,
      2006 of $2,701,853 in principal amount of convertible and demand notes, and
      the
      conversion to common stock on May 3, 2006 of $2,488,471 in principal amount
      and
      accrued interest of bridge notes, as discussed in overview above.





17


**Income
      Taxes**





The
      Company has recorded no provisions or benefits for income taxes for any period
      presented due to the net operating losses incurred and the uncertainty as to
      the
      recovery of such net operating losses and other deferred tax assets as a
      reduction of possible future taxable income, if any.





At
      June
      30, 2007 and December 31, 2006, the Company had operating loss carryforwards
      of
      approximately $5,664,000 and $3,384,000, respectively, available to offset
      future taxable income for United States federal and state income tax purposes.
      At June 30, 2007 and December 31, 2006, approximately $4,231,000 and $1,846,000
      of the operating loss carryforwards were restricted as to yearly usage. The
      common stock ownership changes occurring as a result of the securityholder
      debt
      and equity conversion on April 27, 2006, the conversion of senior secured notes
      on May 3, 2006, the public offering of equity securities on November 2, 206
      and
      the private placement on April 30, 2007 have resulted in reductions and in
      limitations in the use of the operating loss and tax credit carryforwards.
      The
      value of the operating loss carryforwards on April 27, 2006 was reduced to
      approximately $1,846,000 and limited to approximately $92,000 per year. On
      April
      30, 2007, subsequent carryforwards became restricted to approximately $351,000
      per year. The Company has approximately $1,433,000 of carryforwards that have
      no
      usage restrictions and can therefore be used without limitation. We have
      provided a valuation allowance equal to the full amount of the deferred tax
      asset related to the operating loss carryforwards, tax credits and other items
      deductible against future taxable income, if any, and will continue to fully
      reserve the deferred tax asset until it can be ascertained that all or a portion
      of the asset will be realized.





**Liquidity,
      Capital Resources and Cash Flow**





Lightspace
      has incurred net operating losses and negative operating cash flows since
      inception. At December 31, 2006 and June 30, 2007, we had an accumulated
      retained deficit of $10,311,635 and $13,042,773, respectively. We expect to
      incur additional losses and negative operating cash flows through at least
      the
      December quarter of 2007. We will continue thereafter to incur losses and
      negative operating cash flows until our revenue growth reaches a level that
      is
      able to support our operating expenses.





Lightspace
      has funded its operations through June 30, 2007 through the private and public
      issuances of common stock and warrants, Series A Preferred Stock, borrowings
      from stockholders and others pursuant to convertible and demand notes, bridge
      notes and senior notes, and sales of Lightspace products.





On
      April
      30, 2007 the Company closed a private placement of its equity units. The Company
      sold 586,173 units at the offering price of $6.40 per unit, resulting in
      aggregate proceeds to the Company of $3,751,507. After estimated expenses of
      the
      offering of $311,507, the net proceeds to the Company were approximately
      $3,440,000. Each equity unit consists of: (1) eight shares of common stock;
      (2) eight warrants to purchase a total of eight shares of common stock at
      an exercise price of $1.00 per warrant; (3) two warrants to purchase a
      total of two shares of common stock at an exercise price of $1.25 per warrant;
      and (4) two warrants to purchase a total of two shares of common stock at
      an exercise price of $1.63 per warrant. The sale of 586,173 units resulted
      in
      the issuance of: (1) 4,689,384 shares of common stock; (2) 4,689,384 warrants
      to
      purchase a total of 4,689,384 shares of common stock at an exercise price of
      $1.00 per warrant; (3) 1,172,346 warrants to purchase a total of 1,172,346
      shares of common stock at an exercise price of $1.25 per warrant; and (4)
      1,172,346 warrants to purchase a total of 1,172,346 shares of common stock
      at an
      exercise price of $1.63 per warrant. The warrants are exercisable at the option
      of the holder at any time up until April 30, 2012, at which date the warrants
      expire. In the event of a division of the Company’s common stock, the warrants
      will be adjusted proportionately. The warrants have been classified permanently
      within stockholders’ equity, as upon exercise, the warrant holder can only
      receive the specified number of common shares. The Company has entered into
      a
      Registration Rights Agreement with the purchasers of the units, whereby
      Lightspace has agreed to file a registration statement, within 45 days of the
      closing, to register for resale the shares of common stock, warrants and shares
      of common stock issuable upon exercise of the warrants, included in the units
      issued in the private placement to investors and the financial
      advisor.




18




In
      connection with the sale of the equity units, Lightspace paid Griffin
      Securities, Inc., the financial advisor for the private placement, a fee in
      the
      amount of $187,575 and issued to Griffin Securities a purchase warrant
      exercisable for 58,617 units, in the same form sold in the private placement,
      at
      an exercise price of $6.40 per unit.





The
      Company used a portion of the net proceeds from the private placement to
      complete the acquisition of the emagipix technology by the payment of the
      balance of the cash purchase price of $255,000. The balance of the net proceeds
      will be used for general working capital purposes, including payment of the
      expenses of registering the private placement units for resale.





We
      believe that the proceeds from the April 30, 2007 private placement, together
      with anticipated revenues from sales of our products, will be sufficient to
      meet
      our liquidity requirements for the next 10 - 12 months. Our long-term success
      is
      dependent bringing our products to the worldwide market and obtaining sufficient
      sales volume to be profitable. To achieve these objectives, we may be required
      to raise additional capital through public or private financings or other
      arrangements. It can not be assured that such financings will be available
      on
      terms attractive to us, if at all. Such financings may be dilutive to
      stockholders and may contain restrictive covenants.





**Technology
      Acquisition**




On
      March
      29, 2007, Lightspace Emagipix Corporation (“LEC”), a newly formed wholly-owned
      subsidiary of Lightspace Corporation, entered into an agreement with
      Illumination Design Works, Inc. to acquire the assets related to the in-process
      development technology emagipix, an interactive lighting technology that
      utilizes electroluminescent sheets. The purchase price for the emagipix
      technology consisted of an initial cash payment of $45,000 and a cash payment
      of
      $255,000 and the issuance of a $950,000 convertible term secured non-recourse
      note to Illumination Design Works, Inc. upon the closing of the technology
      purchase.





On
      April
      30, 2007, LEC completed the acquisition of the emagipix technology. In
      connection with the acquisition, the developer of the emagipix technology,
      Mr.
      David Hoch, (a former officer and co-founder of Lightspace Corporation and
      the
      principal owner of Illumination Design Works, Inc.), re-commenced employment
      with Lightspace. Upon employment with Lightspace as Chief Scientist, the Company
      granted Mr. Hoch options to purchase 250,000 shares of common stock at an
      exercise price of $0.80 per share.





The
      $950,000 convertible term secured non-recourse note bears interest at 5% per
      annum, payable yearly, and is due and payable on April 30, 2011. The note is
      secured by a pledge of 67% of the stock of LEC. The principal of the note is
      convertible at any time up and until April 30, 2011, at the option of the
      holder, into the common stock of Lightspace Corporation at a conversion price
      of
      $0.80 per share, the fair market value of the Company’s common stock at April
      30, 2007. Upon the occurrence of certain defined events of default by the
      noteholder, Lightspace has the right to convert the note to common stock at
      the
      lower of the conversion price of $0.80 or current market price of the common
      stock.





The
      Company estimates that the cost to complete the development of the emagipix
      technology will be between $1.5 million and $2.0 million. The Company further
      expects that the technology will be commercially available within three years.
      Lightspace accounted for the acquisition of the emagipix technology as the
      acquisition of in process research and development and recorded a charge to
      operations in the June 30, 2007 quarter of $1,306,612, which included legal
      fees
      incurred in connection with the acquisition.





**Manufacturing
      Operations**





We
      currently contract for the production and assembly of interactive tiles from
      an
      independent manufacturing company and have had discussions with other contract
      manufacturers as secondary sources for the production and assembly of our
      interactive tiles. The current contract manufacturer is ISO certified and,
      to
      date, we have not experienced either quality or production difficulties. The
      production run is scheduled for a minimum of 200 interactive tiles per week,
      with the ability to increase the weekly production to 400 to 500 interactive
      tiles, as required.




19





**Deferred
      Revenue and Backlog**





Deferred
      revenue is represented by: (1) advance deposits received from customers for
      the
      future purchase and installation of a Lightspace system and (2) the balance
      of
      deferred maintenance revenue to be recognized as income over the remaining
      term
      of the maintenance contract. Our product backlog at June 30, 2007 and December
      31, 2006 was $135,307 (190 interactive tiles) and $208,134 (343 interactive
      tiles), respectively.





**Off-Balance
      Sheet Arrangements**





Lightspace
      has no off-balance sheet arrangements other than normal lease
      arrangements.





We
      lease
      our office and manufacturing space and certain office equipment under operating
      leases. Total rent expense for the three and six months ended June 30, 2007
      and
      2006 was $75,371, $151,530, $87,440 and $176,868, respectively.




Effective
      May 1, 2006, the Lightspace entered into a five-year lease for approximately
      16,000 square feet to be used for office and manufacturing operations. The
      terms
      of this new lease provide for average annual base rental payments of
      approximately $293,500 per year, plus an allocated percentage of the increase
      in
      the building operating costs over defined base year operating costs.





The
      table
      below sets forth our known contractual obligations as of December 31,
      2006


**Contractual
                  Obligation**
              
              **Payments
                  Due by Period****Total**
              
              **1
                  Year**
              
              **2-3
                  Years**
              
              **4-5
                  Years**
              
              **Thereafter**Facility
                  lease
              
              $
              1,408,123
              
              $
              259,976
              
              $
              657,867
              
              $
              490,280
              
              
              -Other
                  leases
              
              
              15,008
              
              
              15,008
              
              
              -
              
              
              -
              
              
              -Total
              
              $
              1,423,131
              
              $
              274,984
              
              $
              657,867
              
              $
              490,280
              
              
              -




**Recent
      Accounting Pronouncements**





In
      July 2006, the FASB issued FIN 48, which clarifies the accounting for
      uncertainty in income taxes recognized in an entity’s financial statements in
      accordance with SFAS No. 109, :Accounting for Income Taxes” and prescribes a
      recognition threshold and measurement attribute for financial statement
      disclosure of income tax positions taken or expected to be taken on an income
      tax return. Additionally, FIN 48 provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition. FIN 48 is effective for fiscal years beginning after
      December 15, 2006, with early adoption permitted. Lightspace adopted this
      interpretation on January 1, 2007. See Note 11, “Income Taxes” above for a
      discussion of its effect on the Company’s financial condition, its results of
      operations or liquidity.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
      defines fair value, establishes a framework for consistently measuring fair
      value under GAAP, end expands disclosures about fair value measurements. SFAS
      No. 157 is effective for the Company beginning January 1, 2008, and the
      provisions of SFAS No. 157 will be applied prospectively as of that date. We
      are
      currently evaluating whether the adoption of this statement will have a material
      effect on our financial condition, our results of operations or
      liquidity.





On
      February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an Amendment of FASB
      Statement No. 115.” This standard permits an entity to choose to measure many
      financial instruments and certain other items at fair value. Most of the
      provisions in SFAS No. 159 are elective; however, the amendment to SFAS No.
      115,
“Accounting for Certain Investments in Debt and Equity Securities,” applies to
      all entities with available-for-sale and trading securities. The fair value
      option established by SFAS No. 159 permits all entities to choose to measure
      eligible items at fair value at specified election dates. A business entity
      will
      report unrealized gains and losses on items for which the fair value option
      has
      been elected in earnings at each subsequent reporting date. The fair value
      option: (a) may be applied instrument by instrument, with a few exceptions,
      such
      as investments otherwise accounted for by the equity method; (b) is irrevocable
      (unless a new election date occurs); and (c) is applied only to entire
      instruments and not to portions of instruments. SFAS No. 159 is effective as
      of
      the beginning of an entity’s first fiscal year that begins after November 15,
      2007. Early adoption is permitted as of the beginning of the previous fiscal
      year provided that the entity makes that choice in the first 120 days of the
      fiscal year and also elects to apply the provisions of SFAS No. 157, “Fair Value
      Measurements”. Lightspace is currently evaluating whether the adoption of this
      statement will have a material effect on its financial condition, its results
      of
      operations or liquidity.


20




**Critical
      Accounting Policies and Estimates**





The
      financial statements of Lightspace are prepared in conformity with accounting
      principles generally accepted in the United States of America. These accounting
      principles require us to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and the disclosure of contingent assets and
      liabilities at the date of the financial statements. Lightspace is also required
      to make certain judgments that affect the reported amounts of revenues and
      expenses during the reporting period. On an on-going basis, we evaluate our
      estimates and the process under which those estimates are formulated. Lightspace
      develops its estimates based upon historical experience as well as assumptions
      that are considered to be reasonable under the circumstances. Actual results
      may
      differ from these estimates. We believe that the following critical accounting
      policies impact the more significant judgments and estimates used in the
      preparation of the financial statements:





*Revenue
      Recognition* .
      Lightspace recognizes revenue from the sale of its entertainment systems when
      all of the following conditions have been met: (1) evidence exists of an
      arrangement with the customer, typically consisting of a purchase order or
      contract; (2) our products have been delivered and risk of loss has passed
      to
      the customer; (3) we have completed all of the necessary terms of the contract
      possibly including but not limited to, installation of the product and training;
      (4) the amount of revenue to which we are entitled is fixed or determinable;
      and
      (5) we believe it is probable that we will be able to collect the amount due
      from the customer. To the extent that one or more of these conditions has not
      been satisfied, Lightspace defers recognition of revenue. Revenue from
      maintenance contracts is recorded on a straight-line basis over the term of
      the
      contract. An allowance for uncollectible receivables is established by a charge
      to operations, when in our opinion it is probable that the amount due to
      Lightspace will not be collected.





*Warranty
      Reserve* .
      Our products are warranted against defects for twelve months following the
      sale.
      Reserves for potential warranty claims are provided at the time of revenue
      recognition and are based on several factors including historical claims
      experience, current sales levels and Lightspace’s estimate of repair
      costs.





*Stock-Based
      Compensation* .
      Effective January 1, 2006, we adopted the provisions of Financial
      Accounting Standards No. 123(R), Share-Based Payment. This statement requires
      that the fair value of stock-based awards be measured at the grant date,
      recognized as compensation expense over the defined service period, and be
      adjusted for anticipated forfeitures. We estimate the fair value of each
      stock-based award on the date of grant using a stock option valuation model.
      The
      valuation model incorporates assumptions for stock price volatility, the
      expected exercise period, risk-free interest rate and dividend yield. Some
      of
      these assumptions are subjective and require the exercise of judgment.
      Additionally we must estimate the number of grants that may be forfeited. If
      actual experience differs significantly from our estimates, compensation expense
      that we record in future periods may differ materially from that recorded in
      the
      current period and that amount projected for future periods.




21


**Item 3.
      Quantitative and Qualitative Disclosures about Market Risk**





Market
      risk represents the risk of loss arising from adverse changes in interest
      rates and foreign exchange rates. We do not have any material exposure to
      interest rate risk. All of our products and services are denominated in U.S.
      dollars, as a result of which we are not exposed to foreign currency risk with
      respect to our accounts receivable. All materials and components that we buy
      for
      the manufacturing of our products are also priced in U.S. dollars. We also
      did
      not have any operations outside the United States. Accordingly, we do not have
      any material foreign currency risk at this time.





**Item 4.
      Controls and Procedures**




(a)
      Evaluation of disclosure controls and procedures.




We
      conducted an evaluation, under the supervision and with the participation of
      our
      Chief Executive Officer and Chief Financial Officer, of the effectiveness of
      the
      design and operation of our disclosure controls and procedures (as defined
      in
      Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
      amended (the “Exchange Act”)) as of the end of the period covered by this
      report. Based on this evaluation, our Chief Executive Officer and Chief
      Financial Officer concluded that our disclosure controls and procedures are
      effective, as of the end of the period covered by this report, to ensure that
      information required to be disclosed in our Exchange Act reports is recorded,
      processed, summarized and reported within the time periods specified in the
      Securities and Exchange Commission rules and forms, and that the information
      is
      accumulated and communicated to our management, including our Chief Executive
      Officer and Chief Financial Officer, as appropriate to allow timely decisions
      regarding required disclosure.





(b)
      Changes in internal control over financial reporting





No
      changes in our internal control over financial reporting occurred during the
      quarter ended June 30, 2007 that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial reporting.




22


**PART
      II - OTHER INFORMATION**


**Item
      1. Legal Proceedings**





None





**Item
      1A. Risk Factors**





There
      have been no material changes from the risk factors set forth on the Company’s
      Annual Report on Form 10-K for the year ended December 31, 2006 filed with
      the
      Securities and Exchange Commission on March 26, 2007. Lightspace’s management
      urges you to consider the risks and uncertainties described in “Risk Factors” in
      this Annual Report on Form 10-K for the year ended December 31,
      2006.





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


**Unregistered
      Sales of Equity Securities**





On April
      30,
      2007 we sold in a private placement 586,173 units, in the same form sold in
      our
      public offering, at the offering price of $6.40 per unit, resulting in aggregate
      proceeds to Lightspace of $3,751,507. After expenses of the offering of
      $311,507, the net proceeds to Lightspace were approximately $3,440,000. The
      sale
      of 586,173 units resulted in the issuance of: (1) 4,689,384 shares of common
      stock; (2) 4,689,384 warrants to purchase a total of 4,689,384 shares of common
      stock at an exercise price of $1.00 per warrant; (3) 1,172,346 warrants to
      purchase a total of 1,172,346 shares of common stock at an exercise price of
      $1.25 per warrant; and (4) 1,172,346 warrants to purchase a total of 1,172,346
      shares of common stock at an exercise price of $1.63 per warrant. The warrants
      are exercisable at the option of the holder at any time up until April 30,
      2012,
      at which date the warrants expire. In the event of a division of our common
      stock, the warrants will be adjusted proportionately. The warrants have been
      classified permanently within stockholders’ equity, as upon exercise, the
      warrant holder can only receive the specified number of common shares.
      Lightspace has entered into a Registration Rights Agreement with the purchasers
      of the units, whereby we have agreed to file a registration statement to
      register for resale the shares of common stock, warrants and shares of common
      stock issuable upon exercise of the warrants, included in the units issued
      in
      the private placement to investors and the financial advisor.





In
      connection with the sale of the equity units, Lightspace paid Griffin
      Securities, Inc., the financial advisor for the private placement, a fee in
      the
      amount of $187,575 and issued to Griffin Securities a purchase warrant
      exercisable for 58,617 units, in the same form sold in the private placement,
      at
      an exercise price of $6.40 per unit.





We
      used a
      portion of the net proceeds from the private placement to complete the
      acquisition of the emagipix technology by the payment of the balance of the
      cash
      purchase price of $300,000. The balance of the net proceeds will be used for
      general working capital purposes, including payment of the expenses of
      registering the private placement units for resale.





In
      the
      above transactions, Lightspace relied on Regulation D of the Securities and
      Exchange Commission for exemption from the registration requirements of the
      Securities Act.








**Item
      3. Defaults upon Senior Securities**





None




23


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





On
      April 30, 2007 the stockholders of the Lightspace, acting by written
      consent by holders of 5,585,856 shares of voting common stock, constituting
      52.7% of the issued and outstanding shares of voting common stock at that date,
      approved an amendment to the Certificate of Incorporation to increase the
      authorized shares of the Company's $0.0001 par value common stock to 75,000,000
      authorized shares from 30,000,000 authorized shares.





**Item
      5. Other Information**





None





**Item
      6. Exhibits**





The
      following is a complete list of exhibits filed with the Form 10-Q.


**Exhibit
                  No.**
              
              
              
              **Description**31.1
              
              *
              
              Certification
                  Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 - Gary
                  Florindo31.2
              
              *
              
              Certification
                  Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 - Louis P.
                  Nunes32.1
              
              *
              
              Certification
                  Pursuant to Section 906 of Sarbanes-Oxley Act of 2002*
                  Filed herewith
  24


**SIGNATURES**


In
      accordance with the requirements of the Securities Exchange Act of 1934, the
      Registrant caused this report to be signed on its behalf by the undersigned
      thereunto duly authorized.




LIGHTSPACE
                CORPORATIONDate: August
              13, 2007
            By:
            /s/ GARY
              FLORINDOGary
              FlorindoPresident,
                Chief Executive Officer and
              Sole
                Director




Date: August
              13, 2007
            By:
            /s/ LOUIS
              P.
              NUNESLouis
              P. NunesChief
                Financial Officer




25