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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

(Mark One)

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

For the fiscal year ended March 31, 2007

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

For the transition period from [    ] to
[    ]

Commission file number 000-30299

LIGHTSCAPE TECHNOLOGIES
INC.(Name of small business issuer in its charter)

|Nevada                                                               | 98-0217653                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|3/F., 80 Gloucester Road                                             |                                     
|Wanchai, Hong Kong                                                   | 0000000                             
|(Address of principal executive offices)                             | (Zip Code)                          

Issuers telephone number (852) 2546-1808

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Nil                 | Nil                                      

Securities registered pursuant to Section 12(g) of the Act:

Common Shares, par value $0.001(Title of class)

Check whether the issuer is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act. [   ]

Note  Checking the box above will not relieve any registrant
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act
from their obligations under those Sections.

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

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Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no disclosure will
be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]

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

State issuers revenues for its most recent fiscal year.
$13,629,406

The aggregate market value of the voting and non-voting common
equity held by non-affiliates as of June 15, 2007 was 12,608,244 common
shares @ $0.55(1)= $6,934,534

(1) Closing price for the common stock as reported by
the quotation service operated by the OTC Bulletin Board on June 15, 2007.

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuers
classes of equity stock, as of the latest practicable date.

37,451,410common shares issued and
  outstanding as of June 15, 2007.

Transitional Small Business Disclosure Format (Check one): Yes
[   ]; No [X].

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PART I

ITEM 1.       
DESCRIPTION OF BUSINESS.

Forward Looking Statements

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

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

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

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

COMPANY OVERVIEW

We were incorporated under the laws of the State of Nevada
under the name Legacy Bodysentials Inc. on September 14, 1995. On September
25, 1996, we changed our name to Legacy Minerals Inc. and on May 18, 1998, we
changed our name to Global Commonwealth Inc. On November 12, 1999, we changed
our name to Global Innovative Systems Inc. and on April 23, 2007, we changed
our name to Lightscape Technologies Inc.

We are a holding company owning subsidiaries engaged in three
main business activities: (1) light emitting diode (LED) lighting solutions, (2)
lighting source products and (3) energy-savings solutions. During the fiscal
year ended March 31, 2007, approximately 58% of our revenue was derived from our
LED lighting solutions business, 38% from our lighting source products business
and 4% from our energy-savings solutions business.

LED Lighting Solutions Business

During 2006, we entered into the LED lighting solutions
business through two acquisitions of Lightscape Technologies (Macau) Limited. On
February 6, 2006, we incorporated Lightscape Macau as a joint venture company.
Initially, we held 50.4% of the issued and outstanding shares of Lightscape
Macau after the commencement of the joint venture. On September 29, 2006,
however, we acquired the remaining 49.6% of the issued and outstanding shares of
Lightscape Macau in consideration for the payment of $1,550 (MOP12,400) and the
issuance of 1,200,000 common shares by our company.

Immediately upon the acquisition of the remaining 49.6%
interest, the 1,200,000 common shares were delivered to an escrow agent pursuant
to an Escrow Agreement dated September 29, 2006. The escrowed shares will be
held and released to the vendors so long as the consolidated net profit of
Lightscape Macau is not less than $2,564,103 (HK$20,000,000) during the period
from October 1, 2006 to September 30, 2007. If the consolidated net profit of
Lightscape Macau is less than $2,564,103 (HK$20,000,000) during this period, a
percentage of the common shares

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currently held in escrow equal to the percentage of the
shortfall in net profit will be released by the escrow agent for immediate
cancellation by our company, with the balance of the common shares to be
released to the vendors. If Lightscape Macau fails to generate any consolidated
net profit during the period, all of the escrowed shares will be released by the
escrow agent for immediate cancellation by our company.

Lightscape Macau operates in three principal lines of business:
LED Lighting Systems, OEM (Original Equipment Manufacturer) and Licensing, and
LED Rentals.

LED Lighting Systems

Lightscape Macau provides creative design, integration,
installation and digital control of intelligent LED-based lighting systems. Our
LED lighting systems use semiconductor devices, known as light emitting diodes,
as the primary light source. Our system designs typically consist of various LED
lighting hardware components sourced from third parties, including individual
LED fixtures of various sizes, intensities and color capabilities, LED flood
lights, spotlights, string lights, cove lights, light tubes and light tiles, LED
video walls, submersible LED lights, laser lights and related support hardware
and accessories.

These LED-based lighting hardware components are integrated,
installed and then driven by our proprietary digital control software AI-One
Multimedia and Video Show Control System. Our AI-One product is a user-friendly,
PC-based software system for the authoring, control and playback of intricate,
large-scale lighting and audio effects. This product has the ability to
simultaneously control up to four high resolution LED video walls, an unlimited
number of LMX channels, DMX universes, 0-10v analog channels, and RS-232
devices. The softwares graphical user interface and digital control
capabilities simplifies the process of creating and playing elaborate lighting,
video and multimedia effects through LED lighting systems which may contain
thousands of individual lighting addresses.

Our LED lighting systems are designed for both interior and
exterior applications, and our sales and marketing strategy targets clients
demanding high-performance color lighting systems. Demand for our LED lighting
systems is primarily based on our end-user clients desire to add programmable
dynamic lighting effects to their properties in order to attract and retain
customers, and/or to differentiate and accentuate architectural elements. Demand
is also driven by clients desire for reliable, low-maintenance and
energy-efficient lighting design solutions.

The primary end-user markets for our LED lighting systems
include hospitality (casinos, hotels, nightclubs), entertainment (concert halls,
theaters, television studios), retail (shopping centers, digital signage),
high-end residential (condominiums), architectural (public landmarks, fountains,
office buildings), and special exhibits (conventions, trade show booths). The
geographical target markets for our LED lighting systems include Macau, Hong
Kong, China and Singapore.

Our LED lighting systems are typically specified within a
design plan developed by architects or lighting designers engaged by the owner
of an end-user project. Our sales personnel work with the architects and
lighting designers on the lighting design process to incorporate our LED
lighting systems. Our LED lighting systems are then typically purchased by
general contractors or electrical contractors engaged by the owner of an
end-user project, or by the project owner directly. During installation of the
LED lighting system, we provide on-site supervision to ensure that the lighting
hardware is properly installed and operational. We also typically provide client
training services in the use of our AI-One software, and collaborate with
clients in using our AI-One software to create customized lighting and
multimedia effects for playback on the installed LED lighting system.

Our LED lighting systems are sold primarily by our internal
sales team through established relationships with architects, lighting designers
and real estate development owners. A core component of our sales teams
approach is a focus on design creativity, including the professional production
of videos for each potential client with animated renderings of the artistic
vision for the clients lighting systems and the types of creative lighting
effects that may be achieved.

OEM and Licensing

We offer OEM and licensing of our core proprietary AI-One
digital control software product. Our OEM business primarily targets LED
manufacturers and LED lighting system designers which use our AI-One software
system to

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create and control lighting effects for their own LED lighting
systems, typically sold under their own brand name. We also license our AI-One
software system, primarily to owners of end-user projects which have installed
or rented our LED lighting systems. Our OEM and licensing sales are primarily
made by our internal sales team and our geographical target markets include
Macau, Hong Kong, China and Singapore.

LED Rentals

We provide rentals of LED-based hardware. The main products we
rent include LED panels and LED video walls. Complementary products we rent
include individual LED fixtures of various sizes, intensities and color
capabilities, LED flood lights and spotlights. Demand for LED hardware rentals
is primarily based on clients desire to cost-effectively meet their short-term
need for dynamic lighting and video effects in order to deliver advertising,
messaging and/or dramatic lighting effects.

The primary markets for LED lighting rentals include corporate
events (conventions, conferences, trade shows, special exhibits), advertising
companies (indoor and outdoor digital signage), television and film productions,
government (special events), and live performances (theatre productions, music
concerts). Our LED rental sales are primarily made by our internal sales team
and our geographical target markets currently include Macau and Hong Kong.

Lighting Source Products Business

Our company entered into the lighting source products business
  through several transactions that culminated in our company acquiring 76.8%
  of the issued and outstanding common shares of Beijing Illumination (Hong Kong)
  Limited through the issuance of 13,683,153 shares and cash payment of $1,928,021.
  As a result, Beijing Illumination is now a majority-owned subsidiary of our
  company. Following the acquisition of a majority interest in Beijing Illumination
  on February 27, 2006, our company expanded our business into the manufacturing
  and sale of lighting and specialty lighting source products.

Beijing Illumination is an investment holding company which is
engaged in the manufacture, sale, research and development of lighting products.
Beijing Illumination, through its wholly-owned subsidiary Beijing Aihua New
Enterprise Lighting Appliance Company Ltd., manufactures and sells the following
four main categories of high-intensity discharge (HID) related lighting
products: (1) metal halide lamps; (2) high-pressure sodium lamps; (3) xenon
lamps; and (4) special application HID lamps. In addition to HID lamps, Beijing
Illumination has expanded its product mix into ultra high-pressure mercury
lamps.

Compared to conventional incandescent and fluorescent lamps,
HID lamps produce a much larger quantity of light in a relatively small package.
Customer demand for Beijing Illuminations products is primarily driven by the
ability of HID lamps to generally offer superior efficiency, luminosity,
reliability and versatility with the additional benefit of low energy
consumption in comparison with conventional incandescent or fluorescent
lamps.

Beijing Illuminations HID lamps are used within a wide variety
of industrial, governmental, commercial and residential applications. Metal
halide lamps are used primarily for indoor and outdoor lighting of factories,
warehouses, industrial plants, airports, sports stadiums, supermarkets, shopping
centers, underground parkades and residential buildings. Main applications for
high-pressure sodium lamps include street lighting, subway systems courtyard
lighting and general outdoor lighting. Xenon lamps are used within the
manufacturing of automobile headlights. Special application HID lamps consist
primarily of multi-color lamps which are used in specialized applications such
as aquariums, hydroponics, outdoor decorative lighting of buildings, bridges and
other large architectural structures, and indoor decorative lighting for
theatres and other entertainment venues. The primary applications for ultra
high-pressure mercury lamps are as key components within light-weight digital
crystal projectors and rear projection televisions.

Beijing Illuminations internal sales team and sales agents
sell its lighting products through a variety of sales channels including
manufacturers, wholesalers, distributors, contractors, and directly to
end-users. The primary geographical markets for Beijing Illuminations products
are China, Hong Kong, Macau, Singapore, India and the United States.

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Energy-Savings Solutions Business

On January 13, 2005, we closed a share exchange agreement dated
January 7, 2005, whereby we acquired all of the issued and outstanding ordinary
shares of Tech Team Holdings Limited in exchange for the issuance, by our
company, of 13,000,000 shares of our common stock to the former shareholders of
Tech Team. As a result of the share exchange transaction, Tech Team became a
wholly-owned subsidiary of our company as of January 13, 2005. As the former
shareholders of Tech Team held 68.3% of our shares as of the acquisition date,
and because the business of Tech Team represented the only business operations
of our company, the acquisition of Tech Team was deemed to be a reverse
acquisition for accounting purposes. As of January 13, 2005, we commenced the
business of selling energy-saving products through Tech Team, our wholly-owned
operating subsidiary.

Tech Team is a developer, manufacturer and integrator of
energy-saving products and technologies, and a provider of energy management
consulting services. Tech Teams primary product is the Eco-Pro® Energy Saver, a
proprietary system which reduces energy consumed by lighting and other
electrical equipment and acts as a protective buffer against voltage surges and
other distortions. The technology can be applied to a broad range of commercial,
industrial, civil and residential applications, including commercial buildings,
office buildings, factories, industrial plants and street lighting.

In addition, Tech Team is a value added reseller of
complementary energy-efficiency products which can be integrated and installed
with the Eco-Pro Energy Saver system to further condition the power flow and
enhance energy-savings rates for clients. These complementary products include
voltage stabilizers, high-performance T5 lighting systems, active harmonic
filters, transient voltage surge suppressors and power factor correction
systems.

Tech Team also provides energy management consulting services.
These services include energy audits, design of customized energy management
solutions, product integration and system installation, customer training and
after-sales service support.

Customer demand for Tech Teams energy management products and
services is primarily driven by cost-savings. Cost-savings result from the use
of Tech Teams energy management products and services from energy conservation
and energy efficiency. Energy conservation is the reduction of electricity
consumption by reducing waste. This results in direct cost savings on monthly
power bills for customers. Energy efficiency is the reduction or elimination of
distortions, disturbances, and pollution in the flow of electricity within a
customers electrical systems. This results primarily in indirect cost savings
through decreased production losses, prolonged lifespan of equipment and reduced
maintenance costs. Tech Teams products address the demand for both energy
conservation and energy efficiency.

The market for Tech Teams energy-saving products and services
is primarily focused on medium-to-large-scale users of electrical energy across
a wide range of sectors and industries. Industrial markets include manufacturing
facilities, chemical plants, refineries, industrial parks and warehouses.
Commercial markets include office buildings, hotels, shopping centers,
racetracks, golf courses, casinos, stadiums, large restaurants, cinemas,
theatres, theme parks, supermarkets and retail chains. Municipal markets include
airports, train stations, subway stations, water treatment plants, police
stations and street lighting. Institutional markets include hospitals,
sanitariums and universities. Residential markets include large residential
estates, condominium complexes and apartment buildings.

Tech Teams geographical target markets are primarily large
commercial and industrial customers in Hong Kong, China, Macau and Singapore.
Marketing, sales and distribution of Tech Teams products are accomplished
through the following two main channels:

- Direct Marketing: Tech Team markets and sells products directly to
  customers and potential customers through an internal team of sales
  professionals. These personnel target large customers in Hong Kong, China and
  Macau.
- Distributorships: Tech Team markets and sells products in Hong Kong,
  China, Macau and Singapore through non-exclusive distributorship agreements.
  Tech Team currently has distributorship agreements within these regions with
  five private companies and one quasi-governmental organization. The Hong Kong
  Productivity Council has endorsed Tec Teams products, and the council
  introduces Tech Teams energy management

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solutions to its affiliates and members
via seminars and exhibitions. Tech Team has also signed a Marketing and Sales
Cooperation Agreement with Shanghai ISSON Power Quality Co. Ltd., a subsidiary
of the Baoshan Steel Group. This is an institute which develops and promotes
energy efficiency solutions for entities throughout China. The distributorship
agreements enable Tech Team to access the distributors existing clientele and
relationship network, which allows for market penetration with minimal overhead
expenses. In the year ended March 31, 2007, approximately 50% of total sales
revenue from the energy-savings solutions business was derived from sales
through distributorship agreements.

Tech Team utilizes the following three types of sales
agreements: service contracts, direct sales contracts and trading contracts. For
service contracts, the revenue from consulting services is recognized when the
services have been provided and completed. This method is used to recognize
revenue for service contracts because such services are provided within a short
period of time and because Tech Teams obligations are met upon completion and
fulfilment in accordance with the service contracts. Revenue from direct sales
is obtained from sales of hardware or sales-type leases. Such sales are
recognized when the product is delivered and installed and all outstanding
obligations of Tech Team pursuant to the sales contract are completed. Revenue
from trading contracts is also obtained from hardware sales but represents sales
to distributors and agents and is recognized when the product is delivered and
title is transferred. In general, Tech Team recognizes revenue when it is
realized or realizable and earned. Tech Team considers revenue realized or
realizable and earned when it has persuasive evidence of an arrangement, the
product has been delivered and installed or the services have been provided to
the customer, the sale price is fixed or determinable, and collectively is
reasonably assured.

COMPETITION

Each of our operating businesses faces intense competitive
pressures within its respective markets. Such competition may come from domestic
and international operators. While our businesses are managed with the objective
of achieving sustainable growth over the long-term through developing and
strengthening competitive advantages, many factors, including market and
technology changes, may erode competitive advantages or prevent their
strengthening. Accordingly, future operating results will depend to some degree
on whether our operating subsidiaries are successful in protecting or enhancing
their competitive advantages.

LED Lighting Solutions Business

Lightscape Macaus intelligent LED lighting systems and OEM
software compete with lighting products utilizing traditional lighting
technology provided by many vendors. In the high performance color lighting
markets in which we have primarily competed to date, competition has largely
been fragmented among a number of small manufacturers of LED systems and
designers of LED-based lighting solutions. However, we are increasingly
experiencing competition from larger, more established companies, including
those in the general lighting industry such as Koninklijke Philips Electronics
NV. These companies have global marketing capabilities and substantially greater
resources to devote to research and development and other aspects of the
development, manufacture, marketing, design and installation of LED lighting
systems than we do.

Lighting Source Products Business

There are currently about 6 to 8 manufacturers of electric arc
tubes of metal halide lamps and approximately 30 manufacturers of electric arc
tubes of high-pressure sodium lamps in the People's Republic of China. Beijing
Illumination is the first and only domestic manufacturer in the People's
Republic of China equipped with the production facilities for ultra high
pressure mercury lamps.

Energy-Savings Solutions Business

Tech Teams primary competitors are other energy management
services companies providing similar products in its target market. There are
approximately 50 companies that do business in Tech Teams target market which
are engaged in the sales of energy saving products. Our management, however, is
not aware of any competitor doing business in Tech Teams target market that
offers an entire product line comparable to Tech Teams products. Most energy
management companies sell a single product or single brand. The single-product
approach has generated

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savings for specific conservation issues, such as reducing
energy consumption of chillers or lighting fixtures, but has produced
inconsistent results in overall energy consumption for electricity consumers.
Similarly, this single-product approach often addresses one issue while creating
new ones. For example, use of single products may inadvertently create new
energy efficiency problems such as distortions and disturbances that can damage
customer equipment.

RAW MATERIALS AND PRINCIPAL SUPPLIERS

Approximately 97% of our total raw materials and supplies are
  sourced for use within our Lighting Source Products Business and 3% for use
  within our Energy-Savings Solutions Business.

LED Lighting Solutions Business

Merryspender was the major supplier of components to our LED
Lighting Solutions Business.

Energy-Savings Solutions Business

Tech Teams principal supplier of component parts is Guilin
Electrical Equipment Scientific Research Institute. Under a 10-year Original
Equipment Manufacturer Agreement dated June 1, 2000, Guilin Electrical Equipment
Scientific Research Institute manufactures component parts used by Tech Team to
assemble and create trademarked Eco-Pro Energy Saver products. Tech Team has
established its own product assembly facility in Zhuhai, Peoples Republic of
China, where the component parts are assembled into finished products. Tech Team
relies on Guilin Electrical Equipment Scientific Research Institute for the
manufacture of its component parts, and a sudden change in the business affairs
of this entity would have a material effect on Tech Team. The principal
components of Tech Teams energy-saving products are magnetic steel coils,
computer chips, circuit boards, transformers and miscellaneous electrical
circuitry and components. The prices for these components are subject to market
forces largely beyond Tech Teams control. The prices for these components have
varied significantly in the past and may vary significantly in the future.

Products Suppliers

Our company also sources finished goods from external vendors
on a case-by-case basis. Excel Plus International Ltd., a non-affiliate of our
company, supplied us with finished goods that accounted for more than 10% of the
total goods purchased by our company during the years ended March 31, 2007 and
March 31, 2006 respectively.

SIGNIFICANT CUSTOMERS

Over 58% of our revenue was contributed from contract revenue
and sales of lighting design solutions to two customers, Galaxy StarWorld Hotel
and Casino and Strong Base Electronic-optic Technology Corp., during the year
ended March 31, 2007.

COMPLIANCE WITH ENVIRONMENTAL LAWS

To our knowledge, neither the production nor the sale of our
products constitute activities or generate materials, in a material manner, that
requires compliance with federal, state or local environmental laws in any
jurisdictions of our operation.

GOVERNMENT REGULATION

Neither our company nor our companys products or services are
regulated by the government of any of our markets and no permits specific to our
industry are required in order for our company to operate or to sell our
products and services. Our company is not subject to any legislation specific to
our industry, company or products and services.

RESEARCH AND DEVELOPMENT

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The estimated amount our company spent on research and development
  activities among all of our subsidiaries was insignificant during the years
  ended March 31, 2007 and March 31, 2006.

Lightscape Macau

Lightscape Macau maintains a team of approximately 10 software
engineers engaged in customized architectural lighting design applications. This
team develops high-end digital software controllers which integrate the control
of lighting, electrical and mechanical devices within our LED lighting systems.
Lightscape Macau also has a team of 5 product engineers involved in developing
customized, innovative LED lighting products such as LED lighting tubes to
enhance lighting distances and customized LED lighting fixtures.

Beijing Illumination

Beijing Illumination has engaged in a joint venture with
U.S.-based R&D house eeLe Laboratories (LLC) for collaborative research and
development of new lighting source products, such as front and rear projection
display systems and fiber optic lighting.

Tech Team

Tech Teams research and development efforts are focused on
enhancing the Eco-Pro Energy Saver products including: (i) periodic re-design of
products and incorporation of new technologies to improve performance and
manufacturability; (ii) design of new product lines for additional specialized
applications; and (iii) expansion and adaptation of existing products to
accommodate the requirements of larger and smaller electricity consumers.
Research and development efforts are conducted in-house, as well as through an
agreement with Guilin Electrical Equipment Scientific Research Institute, a
leading governmental research institute in China under the Ministry of
Mechanical Industry.

INTELLECTUAL PROPERTY

Patent Applications

In China, our company, through our indirect wholly-owned
subsidiary, Grandplex Development Limited, has applied for a patent of the
underlying technology used in the Eco-Pro Energy Saver products, which patent is
currently pending. The patent application, Application No. 02106678.7, for an
energy saving device has successfully undergone preliminary examination and the
application has been published in No. 37, Vol. 19 of the Chinese Patent Gazette
for Invention. The patent is now undergoing examination by the Patent Office of
the Peoples Republic of China. In Hong Kong, Tech Team has applied for a patent
based on the patent application in China. This patent (Application No.
04101357.1) is also pending, and its approval rests on the prior approval of the
patent application in China. Tech Team has also recently filed the initial
patent application form for a United States patent covering the technology
underlying the Eco-Pro Energy Saver.

Trademarks

Our software product AI-One Multimedia and Video Show Control
System is sold under the non-registered trademark name AI-One.

The Eco-Pro name and logo are registered trademarks in China,
Hong Kong, Macau, Thailand and the 25 nations of the European Community
Union.

Domain Names

We own and operate the following duly registered internet
domain names: www.lightscapetech.com.hk, www.gistt.com and www.techteam.com.hk.
The information contained in our websites does not form part of this annual
report. Our company does not make available, on or through our websites, our
annual report on Form 10-

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KSB, quarterly reports on Form 10-QSB, current reports on Form
8-K, and amendments to those reports after they are electronically filed or
furnished to the Securities and Exchange Commission.

Additionally, any document filed by us, including this annual
report on Form 10-KSB, may be viewed at the Securities and Exchange Commissions
public reference room, 100 F Street NE, Washington, D.C. 20549. Please call the
Securities and Exchange Commission at 1-800-732-0330 for further information
about its public reference room. These Securities and Exchange Commission
filings are also available to the public at the Securities and Exchange
Commissions website at www.sec.gov.

Certifications

Our company, through our indirect wholly-owned subsidiaries
Grandplex Development and Tech Team Development Limited, holds ISO 9001:2000
certification for the sales and maintenance service of electrical energy-saving
equipment. This is an internationally-recognized standard denoting quality
management systems. The ISO 9001:2000 re-certification audit was conducted in
May 2006, and the certification was renewed to February 2008. The Eco-Pro Energy
Saver product has received certification for technical performance as an energy
saving product from the China Certification Center for Energy Conservation
Product. It has also received certification of safety compliance with
International Electrotechnical Commission standards for electrical equipment.
Various independent product tests have been completed and additional
non-critical industry and governmental certifications related to the Eco-Pro
Energy Saver product have been obtained, primarily within mainland China.

EMPLOYEES

As of March 31, 2007, Bondy Tan was the sole employee of
Lightscape Technologies. Mr. Tan is the President and Chief Executive Officer of
Lightscape Technologies. On a consolidated basis among all of our subsidiaries,
our company has a total of 239 employees.

As of March 31, 2007, Lightscape (Macau), our wholly-owned
subsidiary, had 9 employees, of which 1 was senior management, 2 were
managerial, administrative, finance and accounting staff, 2 were engineers and
technicians engaged in research and development, 2 were engaged in sales and
marketing , and 2 were engaged in manufacturing and other operational
activities.

As of March 31, 2007, Beijing Illumination, our majority-owned
subsidiary, had 203 employees, of which 2 were senior management, 7 were
managerial, administrative, finance and accounting staff, 6 were engineers and
technicians engaged in research and development, 8 were engaged in sales and
marketing , and 180 were engaged in manufacturing and other operational
activities.

As of March 31, 2007, Tech Team, our wholly-owned subsidiary,
had 21 employees, of which all were full-time employees. Of these employees, 5
were managerial, administrative, finance and accounting staff, 4 were engineers
and technicians engaged in engineering, consulting and training service, 3 were
engaged in sales and marketing, and 8 were engaged in manufacturing and other
operational activities.

Of those employees, none are covered by collective bargaining
agreements. We plan to hire a Chief Financial Officer before the end of the
second quarter of our 2008 fiscal year.

SUBSIDIARIES

The names of our wholly-owned and majority-owned subsidiaries,
their dates of incorporation and the jurisdictions in which they are
incorporated are as follows:

Name
    Jurisdiction
    Date IncorporatedTech Team Holdings Limited
    Territory of the Cayman Islands
    February 15, 2002


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Tech Team Investment Limited(1)
    British Virgin Islands
    March 24, 2000Grandplex Development Limited(2)
    Hong Kong
    January 18, 1999Tech Team Development Limited(2)
    Hong Kong
    October 22, 1999Luminous Lighting Technology (Asia) Limited(2)
    Hong Kong
    August 23, 2000Tech Team (China) Limited(2)
    British Virgin Islands
    May 22, 2002Tomi Fuji Energy Management Services Consultants
      Limited(2)
    Hong Kong
    March 10, 2004Powerland Technology Limited(2)
    British Virgin Islands
    September 8, 2005Lightscape Technologies (Macau) Limited(2)
    Macau
    February 6, 2006Tomi Fuji Energy Pte. Ltd.(3)
    Singapore
    December 17, 2004Tech Team Development (Zhuhai) Limited(4)
    The Peoples Republic of China
    August 23, 2002Beijing Illumination (Hong Kong) Limited(5)
    Hong Kong
    October 11, 2002Beijing Aihua New Enterprise
    The Peoples Republic of
    July 26, 1999Lighting Appliance Company Ltd.(6)
    ChinaPro Shing Construction Team Macau Limited(7)
    Macau
    June 19, 2006


|(1) | Wholly-owned subsidiary of Tech Team Holdings Limited.                                          
|--- | ------------------------------------------------------------------------------------------------
|    |                                                                                                 
|(2) | Wholly-owned subsidiary of Tech Team Investment Limited.                                        
|    |                                                                                                 
|(3) | 80% majority-owned subsidiary of Tomi Fuji Energy Management Services
      Consultants Limited.
|    |                                                                                                 
|(4) | Wholly-owned subsidiary of Tech Team (China) Limited.                                           
|    |                                                                                                 
|(5) | 76.8% majority-owned subsidiary of Powerland Technology
      Limited.                          
|    |                                                                                                 
|(6) | Wholly-owned subsidiary of Beijing Illumination (Hong
      Kong) Limited.                      
|    |                                                                                                 
|(7) | 80% majority-owned joint venture of Tech Team Investment
      Limited.                         

RISK FACTORS

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

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

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- 12 -

Risks Related to Our Business

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

Our business plan calls for expenses and working capital
necessary to continue the development of our products and expand our position in
our markets. However, there is no assurance that actual cash requirements will
not exceed our estimates. We may need to raise additional funds to:

- support our planned rapid growth;

- develop new or enhanced services and
technologies;

- increase our marketing efforts;

- acquire complementary businesses or
technologies; and/or

- respond to competitive pressures or
unanticipated requirements.

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

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

Management is aware of similar products which compete directly
with our products and some of the companies developing these similar products
have greater financial, technical and marketing resources, larger distribution
networks, and generate greater revenue and have greater name recognition than
us. These companies may develop products superior to those of our company. Such
competition will potentially affect our chances of achieving profitability in
the future.

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

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

Currently, we derive a majority of our revenues from the sale
of lighting design solutions and lighting source products, and a minor portion
of our current and expected future revenues from the sale of energy-saving
products.

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- 13 -

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

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

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

We hold no patents on our products and may not be able to
protect our proprietary technology.

Although we have not obtained patent protection for any of our
products, we have sought to protect our proprietary technology through a
combination of trademark and trade secret laws and other forms of intellectual
property protection. There can be no assurance that our operations do not or
will not violate the intellectual property rights of others, that they would be
upheld if challenged or that we, would, in such an event, not be prevented from
using such companys intellectual property rights, any of which could have a
material adverse effect on our business, financial condition and results of
operations.

In addition, our failure to obtain licenses required from third
parties for other technology and intellectual property could delay or prevent
the development, manufacture or sale of our products. Although we rely, in part,
on contractual provisions to protect our trade secrets and proprietary know-how,
there is no assurance that these agreements will not be breached, that we would
have adequate remedies for any breach or that our trade secrets will not
otherwise become known or be independently developed by competitors. Although no
lawsuits against us regarding infringement of any existing patents or other
intellectual property rights are pending, nor have any claims been asserted,
there can be no assurance that such infringement claims will not be asserted by
third parties in the future. There also can be no assurance in the event of such
claims of infringement that we will be able to obtain licenses on reasonable
terms.

Our involvement in any intellectual property dispute or action
to protect trade secrets and know-how, including actions brought by us, could
result in a material adverse effect on our business. Adverse determinations in
litigation in which we may become involved could subject us to liabilities to
third parties, require us to grant licenses to or seek licenses from third
parties and prevent us from manufacturing and selling our products. Any of these
situations could have a material adverse effect on our business, financial
condition and results of operations.

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- 14 -

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

To continue our growth, we will need to recruit additional
senior management personnel, including persons with financial and sales
experience. In addition, we must hire, train and retain a number of other
skilled personnel, including persons with experience in creative lighting system
design, development of intelligent lighting control software, electrical
engineering, manufacturing and energy management consulting. We have encountered
competition for these personnel. We may not be able to find or retain qualified
personnel, which would have a material adverse impact on our business.

Our growth could be impaired if we are not able to develop
and maintain the relationships we need to implement our international strategy.

Our growth will depend, in large part, on the success of our
international strategy. We have limited experience in marketing and selling our
products outside of Hong Kong, China and Macau. We will depend on partnerships
and/or joint ventures in international markets to help us build our
international operations and sales. We depend upon each of our international
partners to provide marketing and relationship building expertise, and a base of
existing customers. If we are unable to develop and maintain these
relationships, or to develop additional relationships in other countries, our
ability to penetrate, and successfully compete in foreign markets would be
materially affected in an adverse manner. To fully implement our international
strategy, we will need to expand our current relationships with international
partners. These partners may not agree to expand these relationships.

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

Over 40% of our revenue was contributed from sales of lighting
design solutions with one customer for the year ended March 31, 2007. If the
customer ceased their business with our company, we would require time to find
other customers. If we lose this customer or are unable to generate recurring
revenues from this customer, there will be a negative impact on our overall
performance.

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

Our company currently relies on several vendors, one of which
accounts for more than 16% of our purchases for the year ended March 31, 2007.
If this vendor terminates its relationship with our company or if our companys
supply from a vendor is interrupted or terminated for any reason, we may not
have sufficient time to replace the supply of products from the remaining
vendors. Any such interruption would negatively impact our ability to sell and
distribute our products.

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

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

- fluctuations in currency exchange
rates;

- difficulties in staffing and managing
foreign operations;

- changes in regulatory requirements,
tariffs and other trade barriers;

- potential adverse tax consequences;
and

- inadequate protection for
intellectual property rights.

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

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- 15 -

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

Our business is currently focused on the sale of specialty
lighting products and services, and electrical energy-saving products and
services in Greater China. Accordingly, our business, results of operations and
financial conditions are affected to a significant degree by any economic,
political and legal developments in China.

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

Chinas current and future economic, political and social
conditions, as well as government policies could have an adverse effect on our
companys overall financial condition and ability to generate revenues and
profits.

We expect that a substantial portion of our business, assets
and operations of our company will be located and conducted in China. The
economy of China differs from the economies of most developed countries in many
respects, including:

- government involvement;

- level of development;

- growth rate;

- control of foreign exchange; and

- allocation of resources.

While Chinas economy has experienced significant growth in the
past twenty years, growth has been uneven, both geographically and among various
sectors of the economy. The Chinese government has implemented various measures
to encourage economic growth and guide the allocation of resources. Some of
these measures benefit the overall economy of China, but may also have a
negative effect on us. For example, our operating results and financial
condition may be adversely affected by government control over capital
investments or changes in tax regulations applicable to us. If there are any
changes in any policies by the Chinese government and our business is negatively
affected as a result, then our financial results, including our ability to
generate revenues and profits, will also be negatively affected.

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

Our company may enter sales transaction denominated in Chinese
Renminbi. The Peoples Republic of China State Administration for Foreign
Exchange, under the authority of the Peoples Bank of China, controls the
conversion of Renminbi into foreign currencies. The principal regulation
governing foreign currency exchange in China is the Foreign Currency
Administration Rules (1996), as amended. Under the Rules, once various
procedural requirements are met, Renminbi is convertible for current account
transactions, including trade and services, but not

---

- 16 -

for capital account transactions, including direct investment,
loan or investment in securities outside China, unless the prior approval of the
State Administration of Foreign Exchange of the Peoples Republic of China is
obtained. Although the Chinese government regulations now allow greater
convertibility of Renminbi for current account transactions, significant
restrictions still remain.

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

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

Our companys success relies on the ability of our agents
and distributors to sell our products and services, and on our ability to
effectively monitor the activities of such persons and the failure to establish
and maintain productivity from our agents and distributors may have a material
adverse effect on our operations.

Our company relies on agents and distributors to earn revenue
by means of selling our products and services directly to end users. Our use of
external distributors requires an effective and efficient monitoring system to
ensure our success in delivering products and services to customers. Our company
monitors the activities of our agents and distributors but there can be no
assurance that our monitoring efforts are successful in achieving a productive
and efficient distribution network. Failure to establish and maintain high
levels of productivity and efficiency from our distribution network may have a
material adverse effect on our operations.

New or changing government policies or regulations related
to the specialty lighting industry or the energy savings industry in our markets
may have an adverse effect on our operations and may require our company to
modify our business plan.

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

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

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

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- 17 -

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

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

A drop in the retail price of electrical energy may have a
negative effect on our business.

A customers decision to purchase Tech Teams energy saving
products and services is primarily driven by the payback on the investment
resulting from the increased energy savings. Although management believes that
current retail energy prices support a reasonable return on investment for Tech
Teams energy saving products, there can be no assurances that future retail
pricing of electrical energy will remain at such levels.

Risks Related to Our Common Stock

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

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

- actual or anticipated variations in
our quarterly operating results,

- announcements of new services,
products, acquisitions or strategic relationships by us or our competitors,

- trends or conditions in the energy
management services industry,

- changes in accounting treatments or
principles,

- changes in earnings estimates by
securities analysts and in analyst recommendations,

- changes in market valuations of other
energy management services companies, and

- general political, economic and
market conditions.

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

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

Our certificate of incorporation authorizes the issuance of
800,000,000 shares of common stock and 100,000,000 shares of preferred stock.
Our board of directors has the authority to issue additional shares up to the
authorized

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- 18 -

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

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

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

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

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

The National Association of Securities Dealers Inc., or
NASD, has adopted sales practice requirements, which may limit a stockholders
ability to buy and sell our shares.

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

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

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- 19 -

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

ITEM 2.       
DESCRIPTION OF PROPERTY.

Our principal office is located at 3/F., 80 Gloucester Road,
  Wanchai, Hong Kong. The 4,110 square feet office space serves as the base of
  operations for our corporate, managerial, accounting, financial, administrative,
  sales and marketing functions, and includes a showroom for our LED lighting
  products and services. Our company has leased the office premises for the period
  from December 18, 2006 to December 17, 2008. The monthly fixed rent is $11,754,
  plus a monthly service charge of $2,007. Upon expiration of the lease, we intend
  to renew our lease, or move to a larger office space in Hong Kong if additional
  space is required.

Our company, through Tech Team Development (Zhuhai), also
leases a facility at 1st Floor, Block B, Cui Wei Industrial Building,
668 Cui Xei Road West, Zhuhai, Guangdong, the Peoples Republic of China.
Zhuhai, a Special Economic Zone, is located in Guangdong Province in southern
China. The 6,086 square feet space serves as a base for research, development
and assembly of the Eco-Pro Energy Saver line of products, as well as sales and
marketing activity within China. Our company, through our indirect wholly-owned
subsidiary, Tech Team Development (Zhuhai), has leased the facility for the
period from July 1, 2005 to June 30, 2007. The monthly fixed rent is $1,493,
plus a monthly service charge of $208. A renewal agreement, under similar terms
as the prior lease agreement, is currently being negotiated.

Our company, through Tech Team Development (Zhuhai), has leased
staff quarters located at Room 209-210, 2nd Floor, Cui Wei Complex
Building, 668 Cui Xei Road West, Zhuhai, Guangdong, the People's Republic of
China, at a monthly cost of $105 for the period from August 6, 2005 to August 5,
2007.

Our company, through Beijing Aihua, has leased a facility at
1st to 4th floor, No. 7 Shuang-qiao Xili Chaoyang
District, Beijing, the Peoples Republic of China. The 34,183 square feet space
serves as the base for manufacturing, research and development of lighting and
speciality lighting source products, as well as sales and marketing activity
within China. The term of the lease is for the period from 2004 to 2010. The
monthly fixed rent is $8,033, plus a monthly service charge of $309.

ITEM 3.        LEGAL
PROCEEDINGS.

Our company received a notice of payment dated February 12,
2007 demanding the settlement of outstanding tax payable amounting to $6,440
within 10 days from the date of the notice. This notice was related to our
companys failure to pay the tax payable according to the instalment arrangement
that was agreed with Hong Kong Inland Revenue Department (HKIRD). If our
company is unable to settle the payable, the instalment arrangement will be
cancelled. Further, the HKIRD will take recovery actions and/or legal
proceedings against our company to recover the whole outstanding amount of
$256,167 without further notice.

Our company issued two checks for a total amount of $23,508 to
  one Mr. Chin Wui Leong as requested for services that had been provided by his
  company. We were informed later by our internal auditor that making payment
  to an individual employee instead of making out the checks in the name of the
  company was not the correct procedure and accordingly we had informed Mr. Chin
  Wui Leong to return both checks for cancellation. However, both checks were
  banked without informing our company. Court judgment was entered against our
  company and we had settled the amount in full plus costs.

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- 20 -

One Mr. Ho Tai-Kwan had instituted legal proceedings against
  our company demanding settlement of $321,337. This was a commercial dispute
  and our company had instituted legal proceedings for a counter-claim against
  Mr. Ho Tai-Kwan demanding settlement of $545,381 being a deficit payment to
  make up guaranteed net profit as per an agreement signed on October 4, 2004.

Other than the above, we know of no material, active, or
pending legal proceeding against our company, nor are we involved as a plaintiff
in any material proceeding or pending litigation where such claim or action
involves damages for more than 10% of our current assets as of June 15, 2007.
There are no proceedings in which any of our companys directors, officers, or
affiliates, or any registered or beneficial shareholders, is an adverse party or
has a material interest adverse to our companys interest.

ITEM 4.       
SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II

ITEM 5.        MARKET FOR
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS PURCHASES OF
EQUITY SECURITIES.

Our stock is listed for quotation on the Over-the-Counter
Bulletin Board under the trading symbol LTSC and the CUSIP number is 53227B
101. Pacific Stock Transfer Company is the registrar and transfer agent for our
common shares. Their address is 500 E. Warm Springs Road, Suite 240, Las Vegas,
Nevada, Telephone: 702.361.3033, Facsimile: 702.433.1979. Our common shares
initially began trading on the OTC Bulletin Board on April 17, 2001 under the
trading symbol GBIS. The following table sets forth, for the periods
indicated, the high and low closing prices for each quarter within the last two
fiscal years ended March 31, 2007 and the interim period ended June 15, 2007 as
reported by the quotation service operated by the OTC Bulletin Board. All
quotations for the OTC Bulletin Board reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions.

Quarter Ended
      High
      LowMarch 31, 2007
    $1.01
    $0.75December 31, 2006
    0.90
    0.33September 30, 2006
    1.10
    0.65June 30, 2006
    1.20
    0.70March 31, 2006
    0.85
    0.40December 31, 2005
    0.80
    0.35September 30, 2005
    1.50
    0.65June 30, 2005
    2.65
    1.25


On June 15, 2007, the closing price for the common stock as
reported by the quotation service operated by the OTC Bulletin Board was $0.55.

As of June 15, 2007, there were 163 holders of record of our
common stock. As of such date, 37,451,410 common shares were issued and
outstanding.

Dividend Policy

We have not declared or paid any cash dividends since
inception. Although there are no restrictions that limit our ability to pay
dividends on our common shares, we intend to retain future earnings, if any, for
use in the operation and expansion of our business and do not intend to pay any
cash dividends in the foreseeable future.

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- 21 -

Equity Compensation Plan Information

We currently do not have any stock option or equity
compensation plans or arrangements.

Recent Sales of Unregistered Securities

We did not issue any equity securities that were not registered
under the Securities Act of 1933 during the fiscal year ended March 31, 2007
that were not otherwise disclosed in a quarterly report on Form 10-QSB or in a
current report on Form 8-K.

ITEM 6.       
MANAGEMENTS DISCUSSION AND ANALYSIS.

The following is a discussion and analysis of our companys
results of operation and the factors that could affect our future financial
condition and results of operation. This discussion and analysis should be read
in conjunction with our consolidated financial statements and the notes thereto
included elsewhere in this annual report. Our companys audited consolidated
financial statements are prepared in accordance with United States generally
accepted accounting principles. All references to dollar amounts in this section
are in United States dollars unless expressly stated otherwise. Please see the
Note on Forward-Looking Statements and Risk Factors for a list of our risk
factors.

SELECTED FINANCIAL DATA

Five Years Consolidated Balance Sheets

March 31,2007
      
      
      2006
      
      
      2005
      
      
      2004
      
      
      2003Total current assets
      
      13,091,065
      
      
      7,294,429
      
      
      2,484,694
      
      
      677,568
      
      
      799,199Total non-current assets
      
      15,490,982
      
      
      14,603,890
      
      
      5,305,976
      
      
      1,324,525
      
      
      1,212,867Total current liabilities
      
      (7,253,763
      )
      
      (10,305,927
      )
      
      (4,389,581
      )
      
      (3,235,769
      )
      
      (1,414,630
      )Total non-current liabilities
      
      (153,994
      )
      
      (1,851
      )
      
      (2,468
      )
      
      (60,462
      )
      
      (720,997
      )Minority interest
      
      (1,865,916
      )
      
      (2,633,652
      )
      
      (364
      )
      
      -
      
      
      -Total shareholders' equity/(deficit)
      
      19,308,374
      
      
      8,956,889
      
      
      3,398,257
      
      
      (1,294,138
      )
      
      (123,561
      )


Five Years Consolidated Statements Of Operations

Year ended March 31,2007
      
      
      2006
      
      
      2005
      
      
      2004
      
      
      2003Total net revenues
      
      13,629,406
      
      
      1,521,232
      
      
      2,603,865
      
      
      392,092
      
      
      274,544Total cost of revenues
      
      (8,004,379
      )
      
      (1,144,608
      )
      
      (1,035,939
      )
      
      (272,902
      )
      
      (143,424
      )Management fee income from a related
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      61,697companyAmortization of intangible assets
      
      (818,872
      )
      
      (528,923
      )
      
      (125,874
      )
      
      -
      
      
      -Impairment loss on intangible assets
      
      -
      
      
      (1,928,021
      )
      
      -
      
      
      -
      
      
      -


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Selling and marketing expenses
    
    (678,762
    )
    
    (659,901
    )
    
    (576,268
    )
    
    (150,193
    )
    
    (171,766
    )General and administrative expenses
    
    (3,198,404
    )
    
    (1,769,430
    )
    
    (1,140,670
    )
    
    (957,472
    )
    
    (827,831
    )Research and development expenses
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (20,112
    )Profit/(loss) from operations
    
    928,989
    
    
    (4,509,651
    )
    
    (274,886
    )
    
    (988,475
    )
    
    (826,892
    )Interest expense
    
    (469,031
    )
    
    (141,363
    )
    
    (136,088
    )
    
    (195,274
    )
    
    (98,906
    )Interest income
    
    11,193
    
    
    17,843
    
    
    14,420
    
    
    2,931
    
    
    1,641Gain on disposal of investments
    
    720
    
    
    -
    
    
    -
    
    
    11,253
    
    
    4,773Gain on dilution of interest in a subsidiary
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    2,851Other income
    
    1,345,608
    
    
    898,959
    
    
    2,818
    
    
    8,385
    
    
    8,350Equity share of the result of Joint Venture
    
    64,710
    
    
    (780
    )
    
    -
    
    
    -
    
    
    -Profit/(loss) before income tax
    
    1,882,189
    
    
    (3,734,992
    )
    
    (393,736
    )
    
    (1,161,180
    )
    
    (908,183
    )Income tax
    
    (271,751
    )
    
    (45,508
    )
    
    (136,246
    )
    
    -
    
    
    18,236Minority interests
    
    (530,547
    )
    
    59,361
    
    
    -
    
    
    5,457
    
    
    16,650Net profit/(loss)
    
    1,079,891
    
    
    (3,721,139
    )
    
    (529,982
    )
    
    (1,155,723
    )
    
    (873,297
    )


COMPANY OVERVIEW

We were incorporated under the laws of the State of Nevada
under the name Legacy Bodysentials Inc. on September 14, 1995. On September
25, 1996, we changed our name to Legacy Minerals Inc. and on May 18, 1998, we
changed our name to Global Commonwealth Inc. On November 12, 1999, we changed
our name to Global Innovative Systems Inc. and on April 20, 2007, we changed
our name to Lightscape Technologies Inc.

We are a holding company owning subsidiaries engaged in three
main business activities: (1) LED lighting solutions, (2) lighting source
products and (3) energy-savings solutions. During the fiscal year ended March
31, 2007, approximately 58% of our revenue was derived from our LED lighting
solutions business, 38% from our lighting source products business and 4% from
our energy-savings solutions business.

LED Lighting Solutions Business

Lightscape Macau operates in three principal lines of business:
LED Lighting Systems, OEM and Licensing, and LED Rentals. Lightscape Macau
provides creative design, integration, installation and digital control of
intelligent LED-based lighting systems, OEM and licensing of our core
proprietary AI-One digital control software product, and rentals of LED lighting
hardware.

Lighting Source Products Business

Beijing Illumination is an investment holding company engaged
in the research, development, manufacture and sale of lighting products. Beijing
Illumination, through its wholly-owned subsidiary Beijing Aihua New Enterprise
Lighting Appliance Company Ltd., manufactures and sells the following four main
categories of high-intensity discharge (HID) related lighting products: (1)
metal halide lamps; (2) high-pressure sodium lamps; (3) xenon lamps; and (4)
special application HID lamps. In addition to HID lamps, Beijing Illumination
has expanded its product mix into ultra high-pressure mercury lamps.

Energy-Savings Solutions Business

Tech Team is a developer, manufacturer and integrator of
energy-saving products and technologies, and a provider of energy management
consulting services. Tech Teams primary product is the Eco-Pro® Energy Saver, a
proprietary system which reduces energy consumed by lighting and other
electrical equipment and acts as a protective buffer against voltage surges and
other distortions.

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- 23 -

Material Trends and Uncertainties

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

Following the acquisition of Lightscape Macau, our company
diversified our business into the sale of specialty lighting services, including
LED lighting systems, OEM and licensing of our proprietary intelligent lighting
control software, and LED rentals. Following the acquisition of Beijing
Illumination, our company diversified our business into the sale of specialty
lighting source products. Our business strategy is focused on growing the sales
of our specialty lighting services and lighting source products businesses. The
future performance of these business segments may materially affect the future
performance of our company. Our company continues to develop, manufacture and
sell energy-saving products and technologies, and we are reviewing our marketing
strategy related to the promotion of our energy-saving products. Our company has
identified this trend as one that is reasonably likely to materially affect the
comparison of historical operating results reported herein to either past period
results or to future operating results.

Summary of Key Results

Total net revenue for the year ended March 31, 2007 was
$13,629,406, which represents a 796% increase from the total net revenue of
$1,521,232 for the year ended March 31, 2006.

Operating expenses, including selling and marketing expenses
and general and administrative expenses, for the year ended March 31, 2007 were
$3,877,166, which represents a 60% increase in operating expenses of $2,429,331
for the year ended March 31, 2006.

Interest expense for the year ended March 31, 2007 was
$469,031, which represents a 232% increase from $141,363 for the year ended
March 31, 2006.

Profit before income tax and minority interest for the year
ended March 31, 2007 was $1,882,189 compared to a loss of $3,734,992 for the
year ended March 31, 2006.

Net income for the year ended March 31, 2007 was $1,079,891
compared to a loss of $3,721,139 for the year ended March 31, 2006.

Basic earnings per share for the year ended March 31, 2007 was
$0.03 compared to a basic loss per share of $0.18 for the year ended March 31,
2006. Fully diluted earnings per share for the year ended March 31, 2007 was
$0.02 compared to a loss per share of $0.18 on a fully diluted basis for the
year ended March 31, 2006.

Other income for the year ended March 31, 2007 was $1,345,608
compared to other income of $898,959 for the year ended March 31, 2006.

Results of Operations  Fiscal Year Ended March 31, 2007

Our companys profit before taxes and minority interest for the
year ended March 31, 2007 was $1,882,189, as compared to a loss before taxes and
minority interest of $3,734,992 for the year ended March 31, 2006. The increase
in profit is primarily attributable to the increase in revenues from the
provision of lighting design solutions by Lightscape Macau and the sale of
lighting source products by subsidiary Beijing Illumination.

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- 24 -

Revenues and Cost of Revenues

Total net revenue for the year ended March 31, 2007 was
$13,629,406, which represents a 796% increase over the total net revenue of
$1,521,232 for the year ended March 31, 2006. The increase in net revenues is
primarily attributable to the sale and contract revenue from the provision of
lighting design solutions by Lightscape Macau and the sale of lighting source
products derived from Beijing Illumination, which subsidiaries were acquired
during the year ended March 31, 2007.

Specifically, contract revenue and sale of lighting design
solutions derived from Lightscape Macau were $5,471,374 and $2,410,025 for the
year ended March 31, 2007, respectively, compared to nil for the year ended
March 31, 2006. Sales of lighting source products derived from Beijing
Illumination were $5,210,646 for the year ended March 31, 2007 compared to nil
for the year ended March 31, 2006. Sales of hardware products related to our
energy-saving systems decreased $862,788, or 64%, to $493,154 for the year ended
March 31, 2007 from $1,355,942 during the year ended March 31, 2006. The
decrease in revenues from the sale of energy-saving hardware systems was due
primarily to the change in business strategy from the sale of energy-saving
products to the sale of LED lighting design solutions and specialty lighting
products. Our company expanded our operations in the business segments of the
provision of LED lighting design solutions, as well as manufacturing and sales
of lighting source products, during the year ended March 31, 2007. As a result
of the increased sales within of our specialty lighting segments, we are
reviewing our marketing strategy related to the promotion of our energy-saving
products.

Cost of revenues for the year ended March 31, 2007 was
$8,004,379, which represents an increase of $6,859,771 as compared with cost of
revenues of $1,144,608 for the year ended March 31, 2006. The increase in the
cost of revenues during the year ended March 31, 2007 was directly associated
with the corresponding increase in contract costs for lighting design solutions
provided by Lightscape Macau, and in the sales of lighting source products by
Beijing Illumination.

Our company acquired certain intangible assets through the
acquisitions of Tomi Fuji Energy Management Services and Beijing Illumination.
These intangible assets are comprised of completed technology for the production
of AHP and HID lamps, trademarks, a customer base and a distributors list.
Amortization of intangible assets incurred for the year ended March 31, 2007 was
$818,872 as compared to $528,923 for the year ended March 31, 2006.

Operating Expenses

Operating expenses for the year ended March 31, 2007 were
$3,877,166, which represents a 60% increase over the operating expenses of
$2,429,331 for the year ended March 31, 2006. Selling and marketing expenses as
well as general and administrative expenses constitute the major components of
our companys operating expenses.

Selling and marketing expenses for the year ended March 31,
2007 increased approximately 3% to $678,762 from $659,901 for the year ended
March 31, 2006. The decrease in operating expenses was a net effect of (1) the
decrease in salaries of sales personnel of Tech Team Development and (2) the
incorporation of selling and marketing expenses from acquired subsidiaries
Lightscape Macau and Beijing Illumination. Our company anticipates that selling
and marketing expenses will increase in the future as our companys sales of
specialty lighting services and lighting source products expand.

General and administrative expenses increased 81% during the
year ended March 31, 2007 to $3,198,404 from $1,769,430 for the year ended March
31, 2006. The increase was mainly due to increased salaries, rental fees, legal
and professional fees incurred as a result of the overall expansion of our
companys business and operations, including the acquisitions of Lightscape
Macau and Beijing Illumination. Our company anticipates that general and
administrative costs will increase in the future as our companys overall
operations continue to expand.

Interest expense increased to $469,031 for the year ended March
  31, 2007 as compared to $141,363 for the year ended March 31, 2006. The increase
  of 232%, or $327,668, was primarily due to the issuance of convertible notes
  during the year ended March 31, 2007.

Other Income

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- 25 -

Other income for the year ended March 31, 2007 was $1,345,608
  compared to other income of $898,959 for the year ended March 31, 2006. Other
  income consists primarily of consulting income, write back of amounts due to
  shareholders and waiver of amount due to a former minority shareholder of a
  subsidiary of $303,327, $147,246 and $613,918 respectively.

Liquidity and Capital Resources

Our companys principal cash requirements are for operating
expenses, including staff costs, funding costs of inventory and accounts
receivable, and net investment in sales-type leases.

As of March 31, 2007, our company had a net working capital
surplus of $5,837,302 compared with a deficit of $3,011,498 as of March 31,
2006, representing an increase in working capital of $8,848,800. The cash and
cash equivalents of our company increased to $4,117,107 as at March 31, 2007 as
compared to $158,832 as of March 31, 2006. The increase is primarily
attributable to the closing of a convertible note financing transaction on
January 23, 2007 whereby we issued sixty $100,000 redeemable convertible notes
for an aggregate principal amount of $6,000,000 to three investors. As of March
31, 2007, our company had no total credit facilities granted.

The ability of our company to meet our financial commitments is
primarily dependent upon the continued extension of credit by our creditors, the
continued financial support of our directors and shareholders, the continued
issuance of equity to new shareholders, and our ability to achieve and maintain
profitable operations. On January 23, 2007, we raised $6,000,000 in a
convertible debt financing transaction following the entry into subscription
agreements with three investors consisting of Investec Bank (UK) Limited, Full
Moon Resources Limited and LP Asset Management Limited. Pursuant to the terms
and conditions of the subscription agreements, we agreed to issue 60 $100,000
redeemable convertible notes in an aggregate principal amount of $6,000,000 to
the three investors, which convertible notes carry an annual interest rate of
10% and mature on December 31, 2009. Each note is convertible from the date of
issuance until December 30, 2009 into common shares at the rate of one common
share for every $0.55 of principal converted (subject to adjustment as described
in the subscription agreements).

Pursuant to the terms and conditions of the subscription
agreements, we granted two options to each investor, the first option of which
is exercisable at any time during the period from April 1, 2007 to June 30,
2008. The first option entitles the holder to subscribe for additional $100,000
redeemable convertible notes of our company in the aggregate principal amount of
up to $6,000,000. The second option, which is exercisable on July 1, 2008,
January 1, 2009 and July 1, 2009, or as otherwise described in the subscription
agreements, entitles the holder to subscribe for additional $100,000 redeemable
convertible notes of our company in the aggregate principal amount of up to
$6,000,000. The conversion price of the notes underlying the first option are
convertible at $0.55 per share if converted on or before June 30, 2007 and at
$0.66 per share if converted after June 30, 2007. The conversion price of the
notes underlying the second option is subject to a formula as set out in the
subscription agreements.

On January 23, 2007, we closed the convertible note financing
transaction and raised the $6,000,000 which we intend to use for general
corporate purposes. Pursuant to the terms and conditions of the subscription
agreements, we issued the 60 $100,000 redeemable convertible notes in an
aggregate principal amount of $6,000,000 to the three investors. Each note bears
a fixed rate of interest at 10% per annum, payable quarterly, calculated on a
360 day year on the principal amount outstanding. Unless previously converted or
redeemed, each note will be redeemed by our company on the maturity date of
December 31, 2009 at a final redemption amount, calculated in accordance with a
formula set out in the note, together with all interest thereon. The notes are
convertible into common shares at the rate of one common share per each $0.55 of
principal converted (subject to adjustment as described in the subscription
agreements). In addition, we issued two options to each of the three investors
to purchase additional redeemable convertible notes of our company in the
aggregate amount of $12,000,000.

Management believes that our companys cash and cash
equivalents, cash provided by operating activities, if any, and our unused
credit facilities will be sufficient to meet our working capital requirements
for the next twelve months. The issuance of additional equity securities by our
company in connection with the potential conversion of the redeemable
convertible notes may result in a significant dilution in the equity interests
of our current shareholders.

Cash Flow Related to Operating Activities

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- 26 -

Operating activities provided cash of $1,973,283 for the year
  ended March 31, 2007 as compared to cash used of $1,473,721 for the year ended
  March 31, 2006. The net cash provided by operating activities was mainly due
  to a decrease in inventories, an increase in accrued expenses and other current
  liabilities and an increase in the net profit generated during the year ended
  March 31, 2007.

Cash Flow Related to Investing Activities

Net cash used in investing activities amounted to $430,037
during the year ended March 31, 2007 as compared with investing activities using
$26,971 during the year ended March 31, 2006. The increase in cash used in
investing activities is attributable primarily to increased purchases of factory
equipment, and increases in construction in progress (including website
development and implementation of an enterprise resource planning system) during
the year ended March 31, 2007 as compared to the year ended March 31, 2006.

Cash Flow Related to Financing Activities

Financing activities provided cash of $2,406,110 for the year
  ended March 31, 2007 as compared to financing activities providing cash of $1,631,772
  for the year ended March 31, 2006. The increase in net cash provided by financing
  activities was mainly due to the closing of a convertible note financing transaction
  on January 23, 2007 whereby we issued 60 $100,000 redeemable convertible notes
  in an aggregate principal amount of $6,000,000 to three investors.

Capital Expenditures

Our company incurred capital expenditures of $1,358,330 during
the year ended March 31, 2007 and $38,110 for the year ended March 31, 2006. The
increase in capital expenditures for the year ended March 31, 2007 as compared
to March 31, 2006 was mainly attributable to the purchase of equipment. As of
March 31, 2007, our company did not have any material commitments for capital
expenditures and management does not anticipate that our company will spend
additional material amounts on capital expenditures in the near future.

Off-Balance Sheet Arrangements

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

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements and accompanying notes
are prepared in accordance with United States generally accepted accounting
principles. Preparing financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenue, and expenses. These estimates and assumptions are affected by
management's application of accounting policies. We believe that understanding
the basis and nature of the estimates and assumptions involved with the
following aspects of our consolidated financial statements is critical to an
understanding of our operating results and financial position.

Principle of Consolidation

The consolidated financial statements include the accounts of
our company and its major subsidiaries, except for Xianghe Aihua New Enterprise
Lighting Equipment Company Ltd., which is classified as other investment. All
significant inter-company balances and transactions are eliminated in
consolidation.

Trade Receivables and Allowance for Doubtful Accounts

In regards to our companys allowance for doubtful accounts,
our company periodically records a provision for doubtful accounts based on an
evaluation of the collectibility of accounts receivable by assessing, among
other factors, the customers willingness or ability to pay, repayment history,
general economic conditions, and the

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- 27 -

ongoing relationship with our company's customers. The total
amount of this provision is determined by first identifying the receivables of
customers that are considered to be a higher credit risk based on their current
overdue accounts, difficulties in collecting from these customers in the past
and their overall financial condition. For each of these customers, our company
estimates the extent to which the customer will be able to meet its financial
obligations, and our company records an allowance that reduces its accounts
receivable for that customer to the amount that is reasonably believed will be
collected. Additional allowances may be required in the future if the financial
condition of our company's customers or general economic conditions deteriorate,
thereby reducing net income.

Inventories

Inventories are stated at the lower of cost or market value
with cost is determined on the first-in, first-out basis. In assessing the
ultimate realization of inventories, the management makes judgments as to future
demand requirements compared to current or committed inventory levels and market
conditions. Further write-down of the value may be required in the future if
there is rapid technological and structural change in the industry.

Goodwill

Goodwill represents the excess of the purchase price over the
fair value of net assets acquired in business combinations accounted for under
the purchase method in accordance with SFAS No. 141 Business Combinations.
Goodwill is not subject to amortization but will be subject to periodic
evaluation for impairment.

Intangible Assets

Our company acquired certain intangible assets through the
acquisition of TFEMS in January 2005. These intangible assets are comprised of
trademark, customer lists and relationships, and unfulfilled purchase orders.
Our company also acquired certain intangible assets through the acquisition of
Beijing Illumination in February 2006 and in June 2006. These intangible assets
consisted of completed technology for the production of Aihua Ultra-High
Pressure Mercury (AHP) lamps and HID lamps, trademark, a customer base and a
distributor base. The acquired trademarks were determined to have an indefinite
useful life which are not subject to amortization, unless and until their useful
life are determined no longer to be indefinite.

Our company tests for impairment of trademarks annually, or
more frequently if events or changes in circumstances indicate that the asset
might be impaired. The completed technologies for the production of AHP and HID,
distributor base, customer lists and relationships and unfulfilled purchase
orders are subject to amortization over their respective economic useful life
and reviewed for impairment if the carrying amount of these intangible assets
are not recoverable and their carrying amount exceeds their fair market value.
After an impairment loss is recognized, the adjusted carrying amount of the
intangible assets shall be their new accounting basis.

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

Software and licence is recognized as intangible assets at cost
less accumulated amortization which is amortized over 3 years.

Plant and equipment and Construction in Progress

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

|Testing equipment      | 4 years    
|---------------------- | -----------
|Office equipment       | 3 - 4 years
|Furniture and fixtures | 3 - 4 years

---

- 28 -

|Leasehold improvements          | shorter of 4 years or the remaining terms of
      the leases
|------------------------------- | -------------------------------------------------------------
|Motor vehicles                  | 5 - 7 years                                                  
|Energy savers                   | 10 years                                                     
|Factory machinery and equipment | 10 - 16 years                                                

Construction in progress is stated at cost less any impairment
losses, and is not depreciated. Cost comprises the direct costs of construction.
Construction in progress is reclassified to the appropriate category of fixed
assets when completed and ready for use.

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

Revenue Recognition

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

Sale of energy saving products  Our company sells its
products directly to end users with installation (Direct Sales Contracts) and
through distributors (Trading Contracts). Direct Sales Contracts revenue from
hardware sales or sales-type leases is recognized when the product is delivered
to the customer and related installation is completed when there are no
unfulfilled company obligations that affect the customer's final acceptance of
the arrangement and when all other revenue recognition criteria are met. Revenue
from Trading Contracts is recognized when the product is delivered and title is
transferred and when all other revenue recognition criteria are met.

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

Sale of lighting design solutionsOur company
  sells its products directly to end users and through distributors. Revenue is
  recognized when the product is delivered to the customer and all other revenue
  recognition criteria are met.

Contract revenue from lighting design solutions -
Revenue is primarily recognized on the percentage of completion method for
long-term construction contracts not yet completed, measured by the percentage
of total costs incurred to date to estimate total costs at completion for each
contract. This method is utilized because management considers the cost-to-cost
method the best method available to measure progress on these contracts.
Revenues and estimated total costs at completion are adjusted monthly as
additional information becomes available and based upon our company's internal
tracking systems. Because of the inherent uncertainties in estimating revenue
and costs, it is reasonably possible that the estimates used will change within
the near term.

Contract costs include all direct material and labor costs and
those other indirect costs related to contract performance including, but not
limited to, indirect labor, subcontract costs and supplies. General and
administrative costs are charged to expense as incurred.

Our company has contracts that may extend over more than one
year; therefore, revisions in cost and profit estimates during the course of the
work are reflected in the accounting period in which the facts, which require
the revisions, become known.

Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined.

Our company does not record any income from claims until the
claims have been received or awarded.

In accordance with construction industry practice, our company
reports in current assets and liabilities those amounts relating to construction
contracts realizable and payable over a period in excess of one year.

---

- 29 -

Fees for the management of certain contracts are recognized
when services are provided.

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

Commission and Services Income:

|- | Revenue from consultancy services related to energy -
      saving feasibility study is recognized when granted. Services are
      considered granted when our company delivers its assessment to its
      customer and the customer signs the acceptance report.                                                                                 
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                     
|- | Commissions earned from customer marketing services,
      where our company is acting as an agent for petroleum distribution
      companies, are recorded upon notification by the petroleum distribution
      companies for the amount earned, which is based on a pre-determined
      amount, per unit of gasoline sold to referred customers.

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

Basic and Diluted Earning (Loss) per Share

Our company reports basic earning (loss) per share in
accordance with SFAS No. 128, Earnings Per Share. Basic earning (loss) per
share is computed using the weighted average number of shares outstanding during
the periods presented. The weighted average number of shares of our company
represents the common stock outstanding during the year.

Diluted earning (loss) per share is based on the assumption
that all dilutive convertible notes and options were converted or exercised.
Dilution is computed by applying the treasury stock method. Under this method,
options are assumed to be exercised at the beginning of the year (or at the time
of issuance, if later), and as if funds obtained thereby were used to purchase
common stock at the average market price during the year.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2006, FASB issued SFAS No. 155, Accounting for
Certain Hybrid Financial Instruments. SFAS No. 155 amends SFAS No 133,
Accounting for Derivative Instruments and Hedging Activities, and SFAF No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. SFAS No. 155, permits fair value remeasurement
for any hybrid financial instrument that contains an embedded derivative that
otherwise would require bifurcation, clarifies which interest-only strips and
principal-only strips are not subject to the requirements of SFAS No. 133,
establishes a requirement to evaluate interest in securitized financial assets
to identify interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation,
clarifies that concentrations of credit risk in the form of subordination are
not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition
on the qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another derivative
financial instrument. This statement is effective for all financial instruments
acquired or issued after the beginning of our companys first fiscal year that
begins after September 15, 2006. Our companys management has not evaluated the
impact of this pronouncement on our companys financial statements.

In March 2006 FASB issued SFAS 156 Accounting for Servicing of
Financial Assets this Statement amends FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
with respect to the accounting for separately recognized servicing assets and
servicing liabilities. This Statement:

- Requires an entity to recognize a servicing asset or
servicing liability each time it undertakes an obligation to service a financial
asset by entering into a servicing contract.

---

- 30 -

- Requires all separately recognized servicing assets and
servicing liabilities to be initially measured at fair value, if
practicable.

- Permits an entity to choose 'Amortization method' or Fair
value measurement method for each class of separately recognized servicing
assets and servicing liabilities.

At its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities with recognized
servicing rights, without calling into question the treatment of other
available-for-sale securities under Statement 115, provided that the
available-for-sale securities are identified in some manner as offsetting the
entity's exposure to changes in fair value of servicing assets or servicing
liabilities that a servicer elects to subsequently measure at fair value.

- Requires separate presentation of servicing assets and
servicing liabilities subsequently measured at fair value in the statement of
financial position and additional disclosures for all separately recognized
servicing assets and servicing liabilities. An entity should adopt this
Statement as of the beginning of its first fiscal year that begins after
September 15, 2006.

Our companys management believes that this statement will not
have a significant impact on our companys financial statements.

In June 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109 (FIN 48) which prescribes a recognition threshold and
measurement attribute, as well as criteria for subsequently recognizing,
derecognizing and measuring uncertain tax positions for financial statement
purposes. FIN 48 also requires expanded disclosure with respect to the
uncertainty in income tax assets and liabilities. FIN 48 is effective for fiscal
years beginning after December 15, 2006, which will be our companys fiscal
2008, and is required to be recognized as a change in accounting principle
through a cumulative-effect adjustment to retained earnings as of the beginning
of the year of adoption. The adoption of FIN 48 is not expected to have a
material impact on our companys consolidated results of operations or financial
position.

In June 2006, the Financial Accounting Standards Board (FASB)
ratified the provisions of Emerging Issues Task Force (EITF) Issue No. 06-3,
How Taxes Collected from Customers and Remitted to Governmental Authorities
Should Be Presented in the Income Statement (That Is, Gross versus Net
Presentation). EITF Issue No. 06-3 requires that the presentation of taxes
within revenue-producing transactions between a seller and a customer, including
but not limited to sales, use, value added, and some excise taxes, should be on
either a gross (included in revenue and cost) or a net (excluded from revenue)
basis. In addition, for any such taxes that are reported on a gross basis, a
company should disclose the amounts of those taxes in interim and annual
financial statements for each period for which an income statement is presented
if those amounts are significant. The disclosure of those taxes can be done on
an aggregate basis. EITF Issue No. 06-3 is effective for fiscal years beginning
after December 15, 2006, which will be our companys fiscal 2008. The adoption
of EITF Issue No. 06-3 is not expected to have a material impact on our
companys consolidated results of operations or financial position.

In September 2006, the Securities and Exchange Commission
issued Staff Accounting Bulletin No.108 (SAB No. 108), Considering the
Effects of Prior Year Misstatements when Quantifying Current Year
Misstatements. SAB No. 108 requires analysis of misstatements using both an
income statement (rollover) approach and a balance sheet (iron curtain) approach
in assessing materiality and provides for a one-time cumulative effect
transition adjustment. SAB No. 108 is effective for the fiscal year beginning
November 15, 2006. Our company is reviewing SAB No. 108 to determine what
effect, if any, its adoption will have on our companys financial statement
presentation and disclosures.

In September 2006, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No. 157 (SFAS
157), Fair Value Measurements, which is effective for fiscal years beginning
after November 15, 2007 and for interim periods within those years. SFAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. Our company is reviewing SFAS No. 157 to determine what
effect, if any, its adoption will have on our companys financial statement
presentation and disclosures.

---

- 31 -

In September 2006, FASB issued Statement of Financial
Accounting Standards No. 158 (SFAS 158), Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements
No. 87, 88, 106, and 132 (R), which is effective for fiscal years beginning
after December 15, 2006. SFAS 158 requires an employer to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. SFAS 158
also requires an employer to measure the funded status of a plan as of the date
of its year-end statement of financial position, with limited exceptions. Our
company is reviewing SFAS No. 158 to determine what effect, if any, its adoption
will have on our companys financial statement presentation and disclosures.

In February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities (SFAS No. 159). SFAS No.
159 permits entities to choose to measure many financial assets and financial
liabilities at fair value. Unrealized gains and losses on items for which the
fair value option has been elected will be reported in earnings. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. Our company is
currently evaluating the impact of SFAS No. 159 on our consolidated financial
position and results of operations.

Contractual Obligations

Operating leases include commitments for office space of
$309,632 and factory buildings of $381,204. Our companys principal business
office is located at 3/F., 80 Gloucester Road, Wanchai, Hong Kong. The 4,110
square feet office space serves as the base of our corporate, managerial,
accounting, financial, administrative, sales and marketing functions, including
a showroom for our LED lighting design products and solutions. The monthly fixed
rent is $11,754 plus a monthly service charge of $2,007. Our company also leases
an office at Rooms 1108-9, 11th Floor, Tower II, Enterprise Square, 9 Sheung
Yuet Road, Kowloon Bay, Kowloon, Hong Kong. The 4,058 square feet office space
serves as the base of the corporate, accounting, sales and marketing functions
of Beijing Illumination. Our company also leases a facility at 1st Floor, Block
B, Cui Wei Industrial Building, 668 Cui Xei Road West, Zhuhai, Guangdong, the
Peoples Republic of China. It serves as a base for research, development and
assembly of the Eco-Pro Energy Saver line of products, as well as sales and
marketing activity within China. Our company also leases a facility at 1st to
4th floor, No. 7 Shuang-qiao Xili Chaoyang District, Beijing, the Peoples
Republic of China. It serves as the base for manufacturing, research and
development of the lighting and specialty lighting source products, as well as
sales and marketing activity within China. The obligations of these leases are
set out as follows:

Obligations by YearLess Than
      
      
      2-3
      
      
      4-5
      
      
      AfterContractual Obligations(1)
      
      Total
      
      
      One
        Year
      
      
      Years
      
      
      Years
      
      
      5
        YearsOperating Leases
      $
      690,836
      
      
      299,022
      
      
      319,513
      
      
      72,301
      
      
      -


Our company has entered into a capital lease arrangement for
leasing equipment used in our operations. The contractual obligations as of
March 31, 2007 were:

Obligations by YearLess Than
      
      
      
      
      
      4-5
      
      
      AfterContractual Obligations(1)
      
      Total
      
      
      One
        Year
      
      
      2-3
        Years
      
      
      Years
      
      
      5
        YearsCapital Lease Obligations
      $
      8,721
      
      
      1,774
      
      
      6,947
      
      
      -
      
      
      -Total Contractual Obligations
      $
      699,557
      
      
      300,796
      
      
      326,460
      
      
      72,301
      
      
      -


---

- 32 -

(1)There have been no material changes to the
contractual obligations of our company subsequent to March 31, 2007.

ITEM 7.        FINANCIAL
STATEMENTS.

The following consolidated financial statements and the notes
thereto are filed as part of this annual report:

|Report of Independent Registered Public Accounting Firm,
      dated July 6, 2007;                                                
|----------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                  
|Report
      of Independent Registered Public Accounting Firm, dated July 14, 2006;                                               
|                                                                                                                                  
|Consolidated
      balance sheets as of March 31, 2007 and 2006;                                                                  
|                                                                                                                                  
|Consolidated statements of income (operations) for the years
      ended March 31, 2007 and 2006;                                 
|                                                                                                                                  
|Consolidated statements of shareholders’ equity and
      comprehensive income (loss) for the years ended March 31, 2007 and 2006;
|                                                                                                                                  
|Consolidated
      statements of cash flows for the years ended March 31, 2007 and 2006; and                                      
|                                                                                                                                  
|Notes
      to Consolidated Financial Statements.                                                                                 

---

- 33 -







LIGHTSCAPE TECHNOLOGIES INC.



CONSOLIDATED FINANCIAL STATEMENTS

For the years ended March 31,
  2007 and 2006(Stated in U.S. Dollars) 
  and 
  Reports of Independent Registered Public Accounting Firms







---

- 34 -

LIGHTSCAPE TECHNOLOGIES INC.

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH
31, 2007 AND 2006 AND REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS



|CONTENTS                                                                              | PAGE(S)
|------------------------------------------------------------------------------------- | -------
|                                                                                      |        
|REPORTS
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS                       | 35-36  
|                                                                                      |        
|CONSOLIDATED
      BALANCE SHEETS                                                     | 37-38  
|                                                                                      |        
|CONSOLIDATED STATEMENTS OF INCOME (OPERATIONS)                                        | 39     
|                                                                                      |        
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
      COMPREHENSIVE INCOME (LOSS) | 40     
|                                                                                      |        
|CONSOLIDATED
      STATEMENTS OF CASH FLOWS                                           | 41-42  
|                                                                                      |        
|NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS                                      | 43-65  

---

- 35 -

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Shareholders
  Lightscape Technologies Inc.
  (Formerly known as Global Innovative Systems Inc.)

I have audited the accompanying consolidated balance sheet
  of Lightscape Technologies Inc. (formerly known as Global Innovative Systems
  Inc.) and subsidiaries as of March 31, 2007, and the related consolidated statements
  of income, stockholders’ equity and comprehensive income, and cash flows
  for the year then ended. These consolidated financial statements are the responsibility
  of the company’s management. My responsibility is to express an opinion
  on these consolidated financial statements based on my audit.

I conducted my audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States of America). Those
  standards require that I plan and perform the audit to obtain reasonable assurance
  about whether the consolidated financial statements are free of material misstatement.
  The company is not required to have, nor was I engaged to perform, an audit
  of its internal control over financial reporting. My audit included consideration
  of internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose
  of expressing an opinion on the effectiveness of the company’s internal
  control over financial reporting. Accordingly, I express no such opinion. An
  audit also includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the consolidated financial statements, assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. I believe that my audit provides
  a reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred
  to the above present fairly, in all material respects, the financial position
  of Lightscape Technologies Inc. (formerly known as Global Innovative Systems
  Inc.) and subsidiaries as of March 31, 2007, and the results of its operations
  and its cash flows for the year then ended in conformity with accounting principles
  generally accepted in the United States of America.

Yu and Associates CPA Corporation

El Monte, California
  United States of America
  July 6, 2007

---

- 36 -

Report of Independent Registered Public Accounting Firm



To the Board of Directors and shareholders of Global
Innovative Systems Inc.

We have audited the accompanying consolidated balance sheet of
Global Innovative Systems Inc. as of March 31, 2006 and the related consolidated
statement of operations, shareholders equity and cash flows for the year ended
March 31, 2006. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. The audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the consolidated financial
  position of Global Innovative Systems Inc. as of March 31, 2006 and the results
  of its consolidated operations and cash flows for the year ended March 31, 2006,
  in conformity with generally accepted accounting principles in the United States
  of America.

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, the recurring
losses and negative cash flows from operations of the Company raises substantial
doubt about its ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

BDO McCabe Lo Limited

Hong Kong, July 14, 2006

---

- 37 -

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

|                                                                                                                             |  | March 31,  |  |  | March 31,  | 
|---------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  |  | ---------- | 
|                                                                                                                             |  | 2007       |  |  | 2006       | 
|                                                                                                                             |  | $          |  |  | $          | 
|ASSETS                                                                                                                       |  |            |  |  |            | 
|Current assets:                                                                                                              |  |            |  |  |            | 
|Cash and cash
      equivalents                                                                                              |  | 4,117,107  |  |  | 158,832    | 
|Restricted deposits                                                                                                          |  | -          |  |  | 224,092    | 
|Other investments,
      net of write-off amount 
             of $31,516 on March 31, 2007 and $nil
      on March 31, 2006 |  | -          |  |  | 31,516     | 
|Trade receivables, net of
      allowance for doubtful accounts                                                              |  | 4,823,265  |  |  | 1,312,775  | 
|of $413,082 on
      March 31, 2007 and $210,096 on March 31, 2006                                                           |  |            |  |  |            | 
|Net investment in sales-type leases
      – current portion                                                                  |  | 196,501    |  |  | 174,828    | 
|Prepaid expenses
      and other current assets                                                                              |  | 2,246,172  |  |  | 1,314,014  | 
|Amount due from a shareholder                                                                                                |  | -          |  |  | 160,243    | 
|Amount due from
      a related company                                                                                      |  | -          |  |  | 385,527    | 
|Inventories                                                                                                                  |  | 1,708,020  |  |  | 3,532,602  | 
|                                                                                                                             |  |            |  |  |            | 
|Total current assets                                                                                                         |  | 13,091,065 |  |  | 7,294,429  | 
|                                                                                                                             |  |            |  |  |            | 
|Intangible assets                                                                                                            |  | 4,280,612  |  |  | 3,669,275  | 
|Goodwill                                                                                                                     |  | 5,003,437  |  |  | 4,086,888  | 
|Investment in corporate joint venture                                                                                        |  | -          |  |  | 839        | 
|Investments  restricted                                                                                                     |  | -          |  |  | 679,396    | 
|Plant and equipment, net                                                                                                     |  | 4,162,554  |  |  | 3,714,367  | 
|Construction in progress                                                                                                     |  | 1,715,141  |  |  | 1,937,360  | 
|Net investment in sales-type leases – non-current portion                                                                    |  | 329,238    |  |  | 515,765    | 
|                                                                                                                             |  |            |  |  |            | 
|                                                                                                                             |  | 15,490,982 |  |  | 14,603,890 | 
|                                                                                                                             |  |            |  |  |            | 
|TOTAL ASSETS                                                                                                                 |  | 28,582,047 |  |  | 21,898,319 | 
|                                                                                                                             |  |            |  |  |            | 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                         |  |            |  |  |            | 
|                                                                                                                             |  |            |  |  |            | 
|Current liabilities:                                                                                                         |  |            |  |  |            | 
|Short-term
      borrowings                                                                                                  |  | 3,678      |  |  | 2,077,878  | 
|Options                                                                                                                      |  | 2,619,000  |  |  | -          | 
|Trade payables                                                                                                               |  | 2,973,388  |  |  | 2,093,053  | 
|Amount due to a director                                                                                                     |  | 39,846     |  |  | 3,375,283  | 
|Amounts due to
      directors of a subsidiary                                                                               |  | -          |  |  | 1,028,178  | 
|Amount due to a former minority
      shareholder of a subsidiary                                                            |  | -          |  |  | 517,962    | 
|Amounts due to
      shareholders                                                                                            |  | 46,546     |  |  | 64,420     | 
|Amount due to a related company                                                                                              |  | -          |  |  | 26,992     | 
|Accrued expenses
      and other current liabilities                                                                         |  | 1,172,812  |  |  | 943,522    | 
|Obligations under capital leases
      – current portion                                                                     |  | 1,774      |  |  | 740        | 
|Income tax
      payable                                                                                                     |  | 396,719    |  |  | 177,899    | 
|                                                                                                                             |  |            |  |  |            | 
|Total current liabilities                                                                                                    |  | 7,253,763  |  |  | 10,305,927 | 
|                                                                                                                             |  |            |  |  |            | 
|Non-current liabilities:                                                                                                     |  |            |  |  |            | 
|Obligations under capital leases
      – non-current portion                                                                 |  | 6,947      |  |  | 1,851      | 
|Redeemable convertible
      notes (see Note 11)                                                                             |  | 147,047    |  |  | -          | 
|                                                                                                                             |  |            |  |  |            | 
|Total non-current liabilities                                                                                                |  | 153,994    |  |  | 1,851      | 
|                                                                                                                             |  |            |  |  |            | 
|Total liabilities                                                                                                            |  | 7,407,757  |  |  | 10,307,778 | 
|Minority interest                                                                                                            |  | 1,865,916  |  |  | 2,633,652  | 

---

- 38 -

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

|                                                            |  | March 31,  |   |  | March 31,  |  
|----------------------------------------------------------- |  | ---------- | - |  | ---------- | -
|                                                            |  | 2007       |   |  | 2006       |  
|                                                            |  | $          |   |  | $          |  
|COMMITMENTS AND CONTINGENCIES (see Notes 17
      and 18)   |  |            |   |  |            |  
|                                                            |  |            |   |  |            |  
|Shareholders' equity:                                       |  |            |   |  |            |  
|Common stock                                                |  |            |   |  |            |  
|Authorized:                                                 |  |            |   |  |            |  
|800,000,000
      common shares, par value $0.001 per share |  |            |   |  |            |  
|100,000,000 preferred shares, par value $0.001 per share    |  |            |   |  |            |  
|Issued and outstanding:                                     |  |            |   |  |            |  
|37,451,410 common shares at March 31, 2007 and              |  |            |   |  |            |  
|30,535,719
      common shares at March 31, 2006            |  | 37,451     |   |  | 30,535     |  
|Common stock warrants                                       |  | -          |   |  | 573,692    |  
|Additional paid-in capital                                  |  | 24,139,333 |   |  | 14,667,387 |  
|Other reserves                                              |  | 28,944     |   |  | -          |  
|Accumulated other comprehensive income (loss)               |  | 322,541    |   |  | (40,339    | )
|Accumulated deficit                                         |  | (5,219,895 | ) |  | (6,274,386 | )
|                                                            |  |            |   |  |            |  
|Total shareholders' equity                                  |  | 19,308,374 |   |  | 8,956,889  |  
|                                                            |  |            |   |  |            |  
|TOTAL LIABILITIES AND                                       |  |            |   |  |            |  
|SHAREHOLDERS' EQUITY                                        |  | 28,582,047 |   |  | 21,898,319 |  

See notes to consolidated financial statements.

---

- 39 -

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

|                                                                |  | Twelve Months Ended |  
|--------------------------------------------------------------- |  | ------------------- | -
|                                                                |  | March 31,           |  
|                                                                |  | 2007                |  
|                                                                |  | $                   |  
|Revenues:                                                       |  |                     |  
|Sale of energy saving solutions                                 |  | 493,154             |  
|Sale of lighting source products                                |  | 5,210,646           |  
|Sale and contract revenue of lighting design solutions          |  | 7,881,399           |  
|Rental income                                                   |  | 1,285               |  
|Commission and service income                                   |  | 28,278              |  
|Sales-type lease income                                         |  | 14,644              |  
|                                                                |  |                     |  
|Total net revenues                                              |  | 13,629,406          |  
|                                                                |  |                     |  
|Cost of revenues:                                               |  |                     |  
|Sale of energy saving solutions                                 |  | (405,568            | )
|Sale of lighting source products                                |  | (3,177,833          | )
|Sale of and contract revenue of lighting design
      solutions |  | (4,406,475          | )
|Rental income                                                   |  | (632                | )
|Commission and service income                                   |  | (13,871             | )
|                                                                |  |                     |  
|Total cost of revenues                                          |  | (8,004,379          | )
|                                                                |  |                     |  
|Gross profit                                                    |  | 5,625,027           |  
|                                                                |  |                     |  
|Amortization of intangible assets                               |  | (818,872            | )
|Impairment loss on intangible assets                            |  | -                   |  
|Selling and marketing expenses                                  |  | (678,762            | )
|General and administrative expenses                             |  | (3,198,404          | )
|                                                                |  |                     |  
|Profit (loss) from operations                                   |  | 928,989             |  
|Interest expense                                                |  | (469,031            | )
|Interest income                                                 |  | 11,193              |  
|Other income                                                    |  | 1,345,608           |  
|Gain on disposal of investments                                 |  | 720                 |  
|Equity share of the result of joint venture                     |  | 64,710              |  
|                                                                |  |                     |  
|Profit (loss) before income tax and minority interests          |  | 1,882,189           |  
|Income tax                                                      |  | (271,751            | )
|                                                                |  |                     |  
|Net profit (loss)                                               |  | 1,610,438           |  
|Minority interests                                              |  | (530,547            | )
|                                                                |  |                     |  
|Net profit (loss) attributable to shareholders of the Company   |  | 1,079,891           |  
|                                                                |  |                     |  
|Earning (loss) per share                                        |  |                     |  
|- Basic                                                         |  | 0.03                |  
|- Diluted                                                       |  | 0.02                |  
|                                                                |  |                     |  
|Weighted average number of common                               |  |                     |  
|shares outstanding                                              |  |                     |  
|- Basic                                                         |  | 33,440,587          |  
|- Diluted                                                       |  | 44,349,677          |  

See notes to consolidated financial statements.

---

- 40 -

|LIGHTSCAPE TECHNOLOGIES INC.                                                         
|-------------------------------------------------------------------------------------
|                                                                                     
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE
      INCOME (LOSS)
|Expressed in US
      dollars (except for number of common shares)                   

|                                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  | Accumulated other    |   |  |             |   |  |             |  
|------------------------------- | ------------- |  |  | ------ |  |  | ---------- | - |  | ---------- | - |  | ---------- |  |  | -------------------- | - |  | ----------- | - |  | ----------- | -
|                                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  | comprehensive income |   |  |             |   |  |             |  
|                                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  | (loss)               |   |  |             |   |  |             |  
|                                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  | Foreign     |   |  |             |  
|                                | Common Shares |  |  | Common |  |  | Additional |   |  |            |   |  | Unrealized |  |  | Currency             |   |  |             |   |  | Total       |  
|                                | Number        |  |  | Amount |  |  | Stock      |   |  | Paid-In    |   |  | Other      |  |  | Loss on              |   |  | Translation |   |  | Accumulated |  
|                                |               |  |  |        |  |  | Warrants   |   |  | Capital    |   |  | Reserves   |  |  | Investments          |   |  | Adjustment  |   |  | Deficit     |  
|                                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|                                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|Balance at April 1, 2005        | 19,033,096    |  |  | 19,033 |  |  | -          |   |  | 5,977,080  |   |  | -          |  |  | (45,809              | ) |  | 1,200       |   |  | (2,553,247  | )
|Issuance of shares in           |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|private placements              | 896,393       |  |  | 896    |  |  | -          |   |  | 1,319,933  |   |  | -          |  |  | -                    |   |  | -           |   |  | -           |  
|Issuance of shares for the      |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|acquisition of a                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|subsidiary                      | 10,606,230    |  |  | 10,606 |  |  | -          |   |  | 7,944,066  |   |  | -          |  |  | -                    |   |  | -           |   |  | -           |  
|Common stock warrants           |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|                                | -             |  |  | -      |  |  | 573,692    |   |  | (573,692   | ) |  | -          |  |  | -                    |   |  | -           |   |  | -           |  
|Foreign currency                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|translation adjustment          | -             |  |  | -      |  |  | -          |   |  | -          |   |  | -          |  |  | -                    |   |  | (4,942      | ) |  | -           |  
|Net loss                        | -             |  |  | -      |  |  | -          |   |  | -          |   |  | -          |  |  | -                    |   |  | -           |   |  | (3,721,139  | )
|Other comprehensive             |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|gain:                           |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|Unrealized gain on              |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|investments                     | -             |  |  | -      |  |  | -          |   |  | -          |   |  | -          |  |  | 9,212                |   |  | -           |   |  | -           |  
|Balance at March 31,            |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|2006                            | 30,535,719    |  |  | 30,535 |  |  | 573,692    |   |  | 14,667,387 |   |  | -          |  |  | (36,597              | ) |  | (3,742      | ) |  | (6,274,386  | )
|Issuance of shares for the      |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|acquisition of additional       |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|interests in Beijing            |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|Illumination                    | 3,076,923     |  |  | 3,077  |  |  | -          |   |  | 3,381,538  |   |  | -          |  |  | -                    |   |  | -           |   |  | -           |  
|Issuance of shares for the      |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|acquisition of additional       |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|interests in Lightscape         |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|Macau                           | 1,200,000     |  |  | 1,200  |  |  | -          |   |  | 838,800    |   |  | -          |  |  | -                    |   |  | -           |   |  | -           |  
|Issuance of shares for the      |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|capitalisation of balance       |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|due to a director               | 2,638,768     |  |  | 2,639  |  |  | -          |   |  | 1,448,716  |   |  | -          |  |  | -                    |   |  | -           |   |  | -           |  
|Issuance of redeemable          |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|convertible notes (see Note 11) | -             |  |  | -      |  |  | -          |   |  | 3,229,200  |   |  | -          |  |  | -                    |   |  | -           |   |  | -           |  
|Expiry of stock warrants        | -             |  |  | -      |  |  | (573,692   | ) |  | 573,692    |   |  | -          |  |  | -                    |   |  | -           |   |  | -           |  
|Foreign currency                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|translation adjustment          | -             |  |  | -      |  |  | -          |   |  | -          |   |  | -          |  |  | -                    |   |  | 329,827     |   |  | -           |  
|Net profit                      | -             |  |  | -      |  |  | -          |   |  | -          |   |  | -          |  |  | -                    |   |  | -           |   |  | 1,079,891   |  
|Transfer                        | -             |  |  | -      |  |  | -          |   |  | -          |   |  | 28,944     |  |  | -                    |   |  | (3,544      | ) |  | (25,400     | )
|Disposal of investment          | -             |  |  | -      |  |  | -          |   |  | -          |   |  | -          |  |  | 36,597               |   |  | -           |   |  | -           |  
|                                |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|Balance at March 31,            |               |  |  |        |  |  |            |   |  |            |   |  |            |  |  |                      |   |  |             |   |  |             |  
|2007                            | 37,451,410    |  |  | 37,451 |  |  | -          |   |  | 24,139,333 |   |  | 28,944     |  |  | -                    |   |  | 322,541     |   |  | (5,219,895  | )

See notes to consolidated financial statements.

---

- 41 -

|LIGHTSCAPE TECHNOLOGIES INC.         
|-------------------------------------
|                                     
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|Expressed in US
      dollars        

|                                                                            |  | Twelve Months Ended |  
|--------------------------------------------------------------------------- |  | ------------------- | -
|                                                                            |  | March 31,           |  
|                                                                            |  | 2007                |  
|                                                                            |  | $                   |  
|Cash flows from operating activities:                                       |  |                     |  
|Net profit (loss)                                                           |  | 1,610,438           |  
|Adjustment to reconcile net profit (loss) to                                |  |                     |  
|net cash used in operating activities:                                      |  |                     |  
|Amortization of intangible assets                                           |  | 818,872             |  
|Impairment loss
      on intangible assets                                  |  | -                   |  
|Depreciation expense                                                        |  | 495,493             |  
|Tax paid                                                                    |  | -                   |  
|Loss on disposal of investments                                             |  | 35,923              |  
|Loss on disposal
      of plant and equipment                               |  | 445                 |  
|Equity share of the result of corporate
      joint venture                 |  | (64,710             | )
|Gain on changes
      in fair value of embedded options                     |  | (151,800            | )
|Write back of amounts due to shareholders                                   |  | (147,246            | )
|Waiver of amount due to a former
      minority shareholder of a subsidiary |  | (517,962            | )
|Write-off of plant and equipment                                            |  | -                   |  
|Write-off of bad debts                                                      |  | 202,986             |  
|Changes in operating assets and liabilities, net of acquisitions:           |  |                     |  
|Trade receivables                                                           |  | (2,685,198          | )
|Net investment in sales-type leases                                         |  | 164,854             |  
|Prepaid expenses and other current
      assets                             |  | (841,335            | )
|Discount on redeemable convertible
      notes                              |  | 147,047             |  
|Inventories                                                                 |  | 1,824,582           |  
|Trade payables                                                              |  | 12,726              |  
|Amount due from a related company                                           |  | 329,358             |  
|Accrued expenses and other current
      liabilities                        |  | 519,990             |  
|Income tax payable                                                          |  | 218,820             |  
|                                                                            |  |                     |  
|Net cash generated from (used in) operating activities                      |  | 1,973,283           |  
|                                                                            |  |                     |  
|Cash flows from investing activities:                                       |  |                     |  
|Purchase of plant and equipment and intangible assets                       |  | (1,358,330          | )
|Proceed from sales of plant and equipment                                   |  | 4,214               |  
|Increase in construction in progress                                        |  | -                   |  
|Proceed from sales of investments                                           |  | 711,729             |  
|Cash paid for acquisition of a joint venture                                |  | (10,283             | )
|Net cash inflow from acquisition of subsidiaries                            |  | (1,459              | )
|Advance from a shareholder                                                  |  | -                   |  
|Repayment to shareholders                                                   |  | -                   |  
|Decrease (increase) in restricted deposits                                  |  | 224,092             |  
|                                                                            |  |                     |  
|Cash used in investing activities                                           |  | (430,037            | )

---

- 42 -

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

|                                                                                 |  | Twelve Months Ended |  
|-------------------------------------------------------------------------------- |  | ------------------- | -
|                                                                                 |  | March 31,           |  
|                                                                                 |  | 2007                |  
|                                                                                 |  | $                   |  
|Cash flows from financing activities:                                            |  |                     |  
|Proceeds from short-term borrowings and short-term debts                         |  | -                   |  
|Repayment of short-term borrowings and long-term
      debts                     |  | (2,074,200          | )
|Repayment of capital lease obligations                                           |  | (2,739              | )
|Net proceeds from issuance of share capital
      and common stock warrants      |  | -                   |  
|Net proceeds from the issuance of redeemable convertible notes                   |  | 5,909,177           |  
|Advances from directors of a subsidiary                                          |  | 168,480             |  
|Advance from a shareholder                                                       |  | 336,647             |  
|Repayment to a shareholder                                                       |  | (47,032             | )
|Advance from a director                                                          |  | 3,194,518           |  
|Repayment to a director                                                          |  | (5,078,741          | )
|                                                                                 |  |                     |  
|Net cash provided by financing activities                                        |  | 2,406,110           |  
|                                                                                 |  |                     |  
|Effect of foreign exchange rates change                                          |  | 8,919               |  
|Net increase in cash and cash equivalents                                        |  | 3,949,356           |  
|Cash and cash equivalents at beginning of the year                               |  | 158,832             |  
|                                                                                 |  |                     |  
|Cash and cash equivalents at end of the year                                     |  | 4,117,107           |  
|                                                                                 |  |                     |  
|Supplemental disclosure of cash flows information                                |  |                     |  
|Cash paid for:                                                                   |  |                     |  
|Bank interest expenses                                                           |  | 423                 |  
|Interest on capital lease obligations                                            |  | 3,278               |  
|                                                                                 |  |                     |  
|Supplemental schedules of non-cash investing and financing
      activities      |  |                     |  
|Capital lease obligations incurred                                               |  | 8,869               |  
|Amount due to a director capitalized                                             |  | 1,451,355           |  
|Cash consideration on acquisition of a subsidiary                                |  | -                   |  
|Payment of cash consideration on acquisition of a subsidiary
      by a director |  | -                   |  

See notes to consolidated financial statements.

---

- 43 -

|LIGHTSCAPE TECHNOLOGIES INC.              
|------------------------------------------
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|FOR THE YEAR ENDED
      MARCH 31, 2007   

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

Lightscape Technologies Inc., and its subsidiaries
(collectively referred to as the Company) is principally engaged in (i) the
provision of LED lighting products and services through wholly-owned subsidiary
Lightscape Technologies (Macau) Limited, (ii) the manufacture and distribution
of lighting source products through majority-owned subsidiary Beijing
Illumination (Hong Kong) Limited, and (iii) the development, manufacture and
distribution of energy saving products and technologies and the provision of
consulting and customer training services through wholly-owned subsidiary Tech
Team Holdings Limited.

The principal subsidiaries / corporate joint ventures of the
Company as of March 31, 2007 include the following:

|Name of subsidiary / corporate joint
      venture                                      | Date of incorporation | Place of incorporation         | Percentage of effective
      ownership
|--------------------------------------------------------------------------------------- | --------------------- | ------------------------------ | ---------------------------------------
|                                                                                        |                       |                                |                                        
|Tech Team Holdings Limited
      (TTHL)                                               | February 15, 2002     | The Cayman Islands             | 100                                    
|                                                                                        |                       |                                |                                        
|Tech Team Investment Limited
      (TTIL)                                             | March 24, 2000        | The British Virgin Islands     | 100                                    
|                                                                                        |                       |                                |                                        
|Tech Team Development
      (Zhuhai) Limited (TT (Zhuhai))                            | August 23, 2002       | The People's Republic of China | 100                                    
|                                                                                        |                       |                                |                                        
|Tech Team Development Limited
      (TTDL)                                            | October 22, 1999      | Hong Kong                      | 100                                    
|                                                                                        |                       |                                |                                        
|Luminous Lighting Technology
      (Asia) Limited (LLTL)                              | August 23, 2000       | Hong Kong                      | 100                                    
|                                                                                        |                       |                                |                                        
|Grandplex Development Limited
      (GDL)                                             | January 18, 1999      | Hong Kong                      | 100                                    
|                                                                                        |                       |                                |                                        
|Tech Team (China) Limited
      (TTCL)                                                | May 22, 2002          | The British Virgin Islands     | 100                                    
|                                                                                        |                       |                                |                                        
|Tomi Fuji Energy Management
      Services Consultants Limited (TFEMS)                | March 10, 2004        | Hong Kong                      | 100                                    
|                                                                                        |                       |                                |                                        
|Beijing Illumination (Hong
      Kong) Limited (Beijing Illumination)                 | October 11, 2002      | Hong Kong                      | 76.8                                   
|                                                                                        |                       |                                |                                        
|Beijing Aihua New Enterprise
      Lighting Appliance Company Limited (Beijing Aihua) | July 26, 1999         | The People's Republic of China | 76.8                                   
|                                                                                        |                       |                                |                                        
|Tomi Fuji Energy Pte. Limited
      (TFEPL)                                           | December 17, 2004     | Singapore                      | 80                                     
|                                                                                        |                       |                                |                                        
|Powerland Technology Limited
      (PTL)                                              | September 8, 2005     | The British Virgin Islands     | 100                                    
|                                                                                        |                       |                                |                                        
|Lightscape Technologies
      (Macau) Limited (Lightscape Macau)                      | February 6, 2006      | Macau                          | 100                                    
|                                                                                        |                       |                                |                                        
|Pro Shing Construction Team
      Macau Limited (Pro Shing)                           | June 19, 2006         | Macau                          | 80                                     

---

- 44 -

The audited consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities and commitments in the normal course of
business.

NOTE 2. ACQUISITIONS OF BUSINESS

Acquisition of Interest in Beijing Illumination

Pursuant to a Sale and Purchase Agreement dated September 27,
2005 (as amended by a letter agreement dated October 3, 2005) by and among the
Company, Glory Goal Investments Limited (Glory Goal) and Ko Yin, the Company
acquired 26.0% of the shares of Beijing Illumination on February 27, 2006. As
consideration for the 26.0% interest in Beijing Illumination, the Company issued
to Glory Goal 1,750,000 common shares of the Company and paid to Glory Goal
$1,928,021 (approximately HK$15,000,000) in cash.

Pursuant to an Option Deed Agreement dated September 27, 2005
(as amended by a letter agreement dated October 3, 2005) and pursuant to a
Supplemental Deed Agreement dated February 22, 2006, both by and among the
Company, Admire Fame Investments Limited (Admire Fame), Gain Huge Investments
Limited (Gain Huge), Splendid Fortune Investments Limited (Splendid Fortune)
and Ko Yin, the Company acquired an additional 30.8% of the shares of Beijing
Illumination on February 27, 2006 in exchange for the issuance of an aggregate
of 8,856,230 common shares of the Company to Admire Fame, Gain Huge and Splendid
Fortune.

Following the closing of the acquisition of interests in
Beijing Illumination on February 27, 2006, the Company expanded its business
into the manufacturing and sale of lighting and specialty lighting source
products.

|                                                                   |  | $          | 
|------------------------------------------------------------------ |  | ---------- | 
|Shares allotted (based on market value on
      February 27, 2006) |  | 7,954,672  | 
|Cash consideration                                                 |  | 1,928,021  | 
|Professional fees paid on acquisition                              |  | 120,272    | 
|Total consideration                                                |  | 10,002,965 | 

Acquisition of Additional Interest in Beijing Illumination

Pursuant to a Purchase Agreement dated March 29, 2006 by and
among the Company and Aeneas, the Company acquired a further 5.0% of the shares
of Beijing Illumination on June 29, 2006 in exchange for the issuance of
1,250,000 common shares of the Company to Aeneas.

Pursuant to a Purchase Agreement dated April 3, 2006 by and
among the Company and Aeneas, the Company acquired an additional 15.0% of the
shares of Beijing Illumination on June 29, 2006 in exchange for the issuance of
1,826,923 common shares of the Company to Aeneas.

In aggregate, the Company owns 960 of the 1,250 issued and
outstanding ordinary shares of Beijing Illumination, representing approximately
76.8% of the shares of Beijing Illumination as of March 31, 2007.

|                                                               |  | $         | 
|-------------------------------------------------------------- |  | --------- | 
|Shares allotted (based on market value on
      June 29, 2006) |  | 3,384,615 | 
|Total consideration                                            |  | 3,384,615 | 

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

Net assets in Beijing Illumination at date of acquisition:

|                                       |  | $         | 
|-------------------------------------- |  | --------- | 
|Other
      investment                 |  | 31,516    | 
|Property, plant
      and equipment    |  | 3,345,249 | 
|Construction
      in progress         |  | 1,942,550 | 
|Inventories                            |  | 1,904,917 | 
|Trade
      receivables                |  | 1,811,550 | 
|Prepayment
      and other receivables |  | 409,414   | 
|Tax
      recoverable                  |  | 12,009    | 

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- 45 -

|Bank balances and cash                            |  | 129,099    |  
|------------------------------------------------- |  | ---------- | -
|Trade
      payables                              |  | (714,815   | )
|Accrued expenses and other payables               |  | (562,637   | )
|Taxation
      payable                            |  | (78,199    | )
|Loan from a shareholder                           |  | (517,962   | )
|Loan from
      directors                         |  | (911,207   | )
|Short-term bank loans                             |  | (308,978   | )
|Minority
      shareholders interests            |  | (1,506,261 | )
|Net assets attributable to existing shareholdings |  | (3,687,744 | )
|                                                  |  |            |  
|Net assets                                        |  | 1,298,501  |  
|                                                  |  |            |  
|Intangible assets:                                |  |            |  
|-    Completed technology  AHP                   |  | 294,479    |  
|-    Completed technology 
      HID             |  | 296,232    |  
|-    Trademark                                    |  | 144,036    |  
|-    Customer lists and
      relationships       |  | 11,630     |  
|-    Distributor list                             |  | 42,753     |  
|Total intangible assets                           |  | 789,130    |  
|Goodwill                                          |  | 1,296,984  |  
|Total consideration                               |  | 3,384,615  |  

Acquisition of Additional Interest in Lightscape Macau

Pursuant to a Transfer of Shareholders Rights Agreement and an
Authorization letter, the Company, through its wholly-owned subsidiary TTDL,
obtained the beneficial interest in 49.6% of the registered share capital of
Lightscape Macau. The above arrangements made were solely implemented to
facilitate a rapid transfer of ownership of Lightscape Macau before the legal
title changes.

Pursuant to a Sale and Purchase Agreement dated September 29,
2006 by and among the Company, Albert Yee Tat Chan and Luminous LED Technologies
Limited (the Vendors) and Michelle Siu Kwan Lam and Joseph Sui Kei Lam (the
Guarantors), the Company acquired legally 49.6% of the registered share
capital of Lightscape Macau from Albert Yee Tat Chan as registered owner and
Luminous LED Technologies Limited as beneficial owner in consideration for the
payment of USD1,550 (MOP12,400) and the issuance of 1,200,000 common shares by
the Company to Albert Yee Tat Chan (the Consideration Shares). In aggregate,
the Company owns 100% of the registered share capital of Lightscape Macau as of
September 29, 2006.

Immediately upon the completion of the Sale and Purchase
Agreement, the Consideration Shares were delivered to an escrow agent pursuant
to an Escrow Agreement dated September 29, 2006 among the Company, the Vendors
and Clark Wilson LLP as the escrow agent. Pursuant to the terms and conditions
of the Sale and Purchase Agreement and the Escrow Agreement, all of the
Consideration Shares shall be released to the Vendors upon the determination
that the net profit of Lightscape Macau and its subsidiaries is not less than
HK$20,000,000 over the period October 1, 2006 to September 30, 2007. If the net
profit of Lightscape Macau and its subsidiaries is less than HK$20,000,000, the
percentage of the Consideration Shares equalling to the percentage of the
shortfall from HK$20,000,000 shall be released by the escrow agent not to the
Vendors but to the Company for cancellation, with the balance of the
Consideration Shares to be released to the Vendors; if there is no net profit

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- 46 -

for Lightscape Macau and its subsidiaries, all of the
Consideration Shares shall be released to the Company for cancellation and the
Company will be absolutely released from the obligation to deliver the
Consideration Shares.

In consideration of the Sale and Purchase Agreement, each of
the Vendors and the Guarantors irrevocably and unconditionally guaranteed
jointly and severally to the Company that the Net Profit for the Guarantee
Period as shown in the audited consolidated financial statements of Lightscape
Macau and its subsidiaries ending such date shall not be less than the
Guaranteed Net Profit. If the Net Profit is less than the Guaranteed Net Profit,
then the Vendors and the Guarantors shall jointly and severally pay to the
Company in cash within fourteen (14) calendar days after the delivery of the
audited consolidated financial statements of Lightscape Macau and its
subsidiaries aforesaid an amount calculated as follows:

Amount payable to the Company = (Guaranteed Net Profit  Net
Profit) X 40%

Following the closing of the acquisition of interests in
Lightscape Macau on September 30, 2006, the Company expanded its business into
the provision of full service lighting designed solutions including interior set
design and fabrication, computer-controlled special effects, intelligent
lighting, laser and multimedia technologies.

|                                                                 |  | $       | 
|---------------------------------------------------------------- |  | ------- | 
|Shares allotted (based on market value on
      October 2, 2006) |  | 840,000 | 
|Cash consideration                                               |  | 1,590   | 
|Total consideration                                              |  | 841,590 | 

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

Net assets in Lightscape Macau at date of acquisition:

|                                                            |  | $         |  
|----------------------------------------------------------- |  | --------- | -
|Accounts receivable                                         |  | 1,028,278 |  
|Bank
      balances and cash                                |  | 135       |  
|Accounts payable                                            |  | (867,609  | )
|Amount due
      to related companies                       |  | (29,177   | )
|Amount due to a director                                    |  | (141      | )
|                                                            |  |           |  
|Net assets                                                  |  | 131,486   |  
|Equity share of profits before acquisition                  |  | (64,651   | )
|Capital contributed by the Company before
      acquisition |  | (1,623    | )
|Goodwill                                                    |  | 776,378   |  
|Total consideration                                         |  | 841,590   |  

At the date of acquisition of Lightscape Macau, management made
its best estimate of the allocations of the fair value assigned to intangibles
and has categorized the value of $776,378 attributed to goodwill for the
acquisition.

NOTE 3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial
statements of the Company have been prepared in accordance with generally
accepted accounting principles in the United States of America.

Principle of Consolidation

The consolidated financial statements include the financial
statements of the Company and its majority-owned subsidiaries except for Xianghe
Aihua New Enterprise Lighting Equipment Company Ltd., which is classified as
other investment. All significant intercompany transactions and balances are
eliminated on consolidation.

Use of Estimates

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- 47 -

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

Cash and Cash Equivalents

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

Investment in Corporate Joint Venture

Corporate joint venture refers to a corporation owned and
operated by a small group of businesses as a separate and specific business or
project for the mutual benefit of the members of the group. The purpose of a
corporate joint venture frequently is to share risks and rewards in developing a
new market, product or technology; to combine complementary technological
knowledge; or to pool resources in developing production or other facilities.
The Company accounts for its investment in corporate joint venture using the
equity method of accounting.

Investments - Restricted

The Company classifies investments in mutual funds as
available-for-sale securities and carries them at market value. The unrealized
holding gains and losses on these securities are excluded from earnings and are
reported as a separate component of other comprehensive income or loss until
realized. Realized gains and losses from the sale of available-for-sale
securities are determined on a specific identification basis and are reflected
in unaudited condensed consolidated statement of operations.

The Company assesses declines in the value of individual
investments to determine whether such decline is other-than-temporary and thus
the investment is impaired. This assessment is made by considering available
evidence including changes in general market conditions, specific industry and
individual company data in which the guaranteed mutual funds are invested in,
the length of time and the extent to which the market value has been less than
cost, the financial condition and near-term prospects of the individual company
in which the guaranteed mutual funds are invested in, and the Companys intent
and ability to hold the investment.

Other Investment

Other investment is stated at cost less accumulated impairment
loss. It represents the investment in Xianghe Aihua New Enterprise Lighting
Equipment Company Ltd. (Xianghe Aihua), an indirect 51% owned subsidiary of
Beijing Illumination which is, in turn, an indirect 76.8% owned subsidiary of
the Company. The control of Xianghe Aihua does not reside with the Company and
the Company does not have significant influence on it. The Company is unable to
obtain any updated financial statements of Xianghe Aihua. As a consequence, the
results of Xianghe Aihua were not included in the consolidated financial
statements of the Company.

Trade Receivables and Allowance for Doubtful Accounts

In regards to the Companys allowance for doubtful accounts,
the Company periodically records a provision for doubtful accounts based on an
evaluation of the collectibility of accounts receivable by assessing, among
other factors, the customers willingness or ability to pay, repayment history,
general economic conditions, and the ongoing relationship with the Company's
customers. The total amount of this provision is determined by first identifying
the receivables of customers that are considered to be a higher credit risk
based on their current overdue accounts, difficulties in collecting from these
customers in the past and their overall financial condition. For each of these
customers, the Company estimates the extent to which the customer will be able
to meet its financial obligations, and the Company records an allowance that
reduces its accounts receivable for that customer to the amount that is
reasonably believed will be collected. Additional allowances may be required in
the future if the financial condition of the Company's customers or general
economic conditions deteriorate, thereby reducing net income.

Inventories

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- 48 -

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

Goodwill

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

Intangible Assets

The Company acquired certain intangible assets through the
acquisition of TFEMS in January 2005. These intangible assets are comprised of
trademark, customer lists and relationships, and unfulfilled purchase orders.
The Company also acquired certain intangible assets through the acquisition of
Beijing Illumination in February 2006 and in June 2006. These intangible assets
consisted of completed technology for the production of Aihua Ultra-High
Pressure Mercury (AHP) lamps and HID lamps, trademark, a customer base and a
distributor base. The acquired trademarks were determined to have an indefinite
useful life which are not subject to amortization, unless and until their useful
life are determined no longer to be indefinite.

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

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

Software and licence is recognized as intangible assets at cost
less accumulated amortization which is amortized over 3 years.

Impairment of Long-Lived Assets

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

Plant and equipment and Construction in Progress

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

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- 49 -

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

Energy savers are electronic devices sold by the Company that
assist in regulating the consumption of electricity by certain equipment thereby
resulting in energy savings. The Company retains a number of these devices as
demonstration units for marketing and promotion purposes.

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

The cost of construction in progress will not be amortized
until they are put into use and are transferred to a specific category of plant
and equipment when the construction is completed.

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

Net Investment in Sales - Type Leases

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

Revenue Recognition

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

Sale of energy saving products - The Company sells its
products directly to end users with installation (Direct Sales Contracts) and
through distributors (Trading Contracts). Direct Sales Contracts revenue from
hardware sales or sales-type leases is recognized when the product is delivered
to the customer and related installation is completed when there are no
unfulfilled Company obligations that affect the customer's final acceptance of
the arrangement and when all other revenue recognition criteria are met. Revenue
from Trading Contracts is recognized when the product is delivered and title is
transferred and when all other revenue recognition criteria are met.

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

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

Contract revenue from lighting design solutions -
Revenue is primarily recognized on the percentage of completion method for
long-term construction contracts not yet completed, measured by the percentage
of total costs incurred to date to estimate total costs at completion for each
contract. This method is utilized because management considers the cost-to-cost
method the best method available to measure progress on these contracts.

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- 50 -

Revenues and estimated total costs at completion are adjusted
monthly as additional information becomes available and based upon the Company's
internal tracking systems. Because of the inherent uncertainties in estimating
revenue and costs, it is reasonably possible that the estimates used will change
within the near term.

Contract costs include all direct material and labor costs and
those other indirect costs related to contract performance including, but not
limited to, indirect labor, subcontract costs and supplies. General and
administrative costs are charged to expense as incurred.

The Company has contracts that may extend over more than one
year; therefore, revisions in cost and profit estimates during the course of the
work are reflected in the accounting period in which the facts, which require
the revisions, become known.

Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined.

The Company does not record any income from claims until the
claims have been received or awarded.

In accordance with construction industry practice, the Company
reports in current assets and liabilities those amounts relating to construction
contracts realizable and payable over a period in excess of one year.

Fees for the management of certain contracts are recognized
when services are provided.

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

Commission and Services Income:

|- | Revenue from consultancy services related to energy -
      saving feasibility study is recognized when granted. Services are
      considered granted when the Company delivers its assessment to its
      customer and the customer signs the acceptance report.                                                                                 
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                     
|- | Commissions earned from customer marketing services,
      where the Company is acting as an agent for petroleum distribution
      companies, are recorded upon notification by the petroleum distribution
      companies for the amount earned, which is based on a pre-determined
      amount, per unit of gasoline sold to referred customers.

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

Income Taxes

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

Foreign Currency Translation

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

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- 51 -

The Company changed its reporting currency from HKD to United
States dollars (USD) during the year ended March 31, 2006. However, HKD is
pegged to USD and hence there is no translation adjustment impact on the
Companys consolidated financial statements.

Segment Information

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

Concentration of Credit Risk

Financial instruments that potentially expose the Company to
concentrations of credit risk consist primarily of cash, trade receivables,
deposits for goods and net investment in sales-type leases. The Company places
its cash with financial institutions with high-credit ratings and quality.

The Company conducts credit evaluation of customers and
generally does not require collateral or other security from its customers. The
Company establishes an allowance for doubtful accounts primarily based upon the
age of the receivables and factors surrounding the credit risk of specific
customers.

Other than the two largest customers who accounted for approximately
  40% and 18% of the Company’s total revenue for the year ended March 31,
  2007, no other single external customer exceeded 10% of the Company’s
  total revenue for the year ended March 31, 2007.

The Company relies on supplies from numerous vendors. For the
  year ended March 31, 2007, the Company had two vendors that accounted for approximately
  16% and 13% of total supply purchases for the year.

The Companys business, assets and operations is currently
focused on the sale of specialty lighting source products, sales and contract
revenue from lighting design solutions, and sales of electrical energy-saving
products in China and Macau, and accordingly, is affected to a significant
degree by any economic, political and legal developments in China and Macau.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, trade
receivables, short-term borrowings, convertible notes and trade payables
approximate their fair values due to the short-term maturity of these
instruments. The fair value of long-term debts, and capital lease obligations
approximate their carrying value as the interest rates approximate those which
would have been available for loans of similar remaining maturity at the
respective period ends.

Comprehensive Income

Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and distributions to
owners. The Company reports its comprehensive income (loss) in the consolidated
statement of shareholders' equity.

Basic and Diluted Earning (Loss) per Share

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

Diluted earning (loss) per share is based on the assumption
that all dilutive convertible notes and options were converted or exercised.
Dilution is computed by applying the treasury stock method. Under this method,
options are assumed to be exercised at the beginning of the year (or at the time
of issuance, if later), and as if funds obtained thereby were used to purchase
common stock at the average market price during the year. Additional shares of
10,909,090 shares in the calculation of the diluted earning (loss) per share of
the Company represents the dilutive effect of conversion options granted.

---

- 52 -

Recent Accounting Pronouncements

In February 2006, FASB issued SFAS No. 155, Accounting for
Certain Hybrid Financial Instruments. SFAS No. 155 amends SFAS No 133,
Accounting for Derivative Instruments and Hedging Activities, and SFAF No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. SFAS No. 155, permits fair value remeasurement
for any hybrid financial instrument that contains an embedded derivative that
otherwise would require bifurcation, clarifies which interest-only strips and
principal-only strips are not subject to the requirements of SFAS No. 133,
establishes a requirement to evaluate interest in securitized financial assets
to identify interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation,
clarifies that concentrations of credit risk in the form of subordination are
not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition
on the qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another derivative
financial instrument. This statement is effective for all financial instruments
acquired or issued after the beginning of the Companys first fiscal year that
begins after September 15, 2006. The Companys management has not evaluated the
impact of this pronouncement on the Companys financial statements.

In March 2006 FASB issued SFAS 156 Accounting for Servicing of
Financial Assets this Statement amends FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
with respect to the accounting for separately recognized servicing assets and
servicing liabilities. This Statement:

- Requires an entity to recognize a servicing asset or
servicing liability each time it undertakes an obligation to service a financial
asset by entering into a servicing contract.

- Requires all separately recognized servicing assets and
servicing liabilities to be initially measured at fair value, if
practicable.

- Permits an entity to choose 'Amortization method' or Fair
value measurement method for each class of separately recognized servicing
assets and servicing liabilities.

At its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities with recognized
servicing rights, without calling into question the treatment of other
available-for-sale securities under Statement 115, provided that the
available-for-sale securities are identified in some manner as offsetting the
entity's exposure to changes in fair value of servicing assets or servicing
liabilities that a servicer elects to subsequently measure at fair value.

- Requires separate presentation of servicing assets and
servicing liabilities subsequently measured at fair value in the statement of
financial position and additional disclosures for all separately recognized
servicing assets and servicing liabilities. An entity should adopt this
Statement as of the beginning of its first fiscal year that begins after
September 15, 2006.

The Companys management believes that this statement will not
have a significant impact on the Companys financial statements.

In June 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109 (FIN 48) which prescribes a recognition threshold and
measurement attribute, as well as criteria for subsequently recognizing,
derecognizing and measuring uncertain tax positions for financial statement
purposes. FIN 48 also requires expanded disclosure with respect to the
uncertainty in income tax assets and liabilities. FIN 48 is effective for fiscal
years beginning after December 15, 2006, which will be the Companys fiscal
2008, and is required to be recognized as a change in accounting principle
through a cumulative-effect adjustment to retained earnings as of the beginning
of the year of adoption. The adoption of FIN 48 is not expected to have a
material impact on the Companys consolidated results of operations or financial
position.

In June 2006, the Financial Accounting Standards Board (FASB)
ratified the provisions of Emerging Issues Task Force (EITF) Issue No. 06-3,
How Taxes Collected from Customers and Remitted to Governmental Authorities
Should Be Presented in the Income Statement (That Is, Gross versus Net
Presentation). EITF Issue No. 06-3 requires that the presentation of taxes
within revenue-producing transactions between a seller and a

---

- 53 -

customer, including but not limited to sales, use, value added,
and some excise taxes, should be on either a gross (included in revenue and
cost) or a net (excluded from revenue) basis. In addition, for any such taxes
that are reported on a gross basis, a company should disclose the amounts of
those taxes in interim and annual financial statements for each period for which
an income statement is presented if those amounts are significant. The
disclosure of those taxes can be done on an aggregate basis. EITF Issue No. 06-3
is effective for fiscal years beginning after December 15, 2006, which will be
the Companys fiscal 2008. The adoption of EITF Issue No. 06-3 is not expected
to have a material impact on the Companys consolidated results of operations or
financial position.

In September 2006, the Securities and Exchange Commission issued
  Staff Accounting Bulletin No.108 (SAB No. 108), Considering
  the Effects of Prior Year Misstatements when Quantifying Current Year Misstatements.
  SAB No. 108 requires analysis of misstatements using both an income statement
  (rollover) approach and a balance sheet (iron curtain) approach in assessing
  materiality and provides for a one-time cumulative effect transition adjustment.
  SAB No. 108 is effective for the fiscal year beginning November 15, 2006. The
  Company is reviewing SAB No. 108 to determine what effect, if any, its adoption
  will have on the Companys financial statement presentation and disclosures.

In September 2006, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No. 157 (SFAS
157), Fair Value Measurements, which is effective for fiscal years beginning
after November 15, 2007 and for interim periods within those years. SFAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. The Company is reviewing SFAS No. 157 to determine what
effect, if any, its adoption will have on the Companys financial statement
presentation and disclosures.

In September 2006, FASB issued Statement of Financial
Accounting Standards No. 158 (SFAS 158), Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements
No. 87, 88, 106, and 132 (R), which is effective for fiscal years beginning
after December 15, 2006. SFAS 158 requires an employer to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. SFAS 158
also requires an employer to measure the funded status of a plan as of the date
of its year-end statement of financial position, with limited exceptions. The
Company is reviewing SFAS No. 158 to determine what effect, if any, its adoption
will have on the Companys financial statement presentation and disclosures.

In February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities (SFAS No. 159). SFAS No.
159 permits entities to choose to measure many financial assets and financial
liabilities at fair value. Unrealized gains and losses on items for which the
fair value option has been elected will be reported in earnings. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. The Company is
currently evaluating the impact of SFAS No. 159 on its consolidated financial
position and results of operations.

NOTE 4. NET INVESTMENT IN SALES-TYPE LEASES

Net investment in sales-type leases is for leases that relate
to the Company's hardware sales and are generally for terms ranging from three
to five years. Interest rates range from 2.5% to 5% and the leases are secured
by the respective leased assets.

The details of net investment in sales-type leases are as
follows:

|                                                                |  | March 31, |   |  | March 31, |  
|--------------------------------------------------------------- |  | --------- | - |  | --------- | -
|                                                                |  | 2007      |   |  | 2006      |  
|                                                                |  | $         |   |  | $         |  
|Total minimum lease payments to be received                     |  | 540,318   |   |  | 727,431   |  
|Less: Unearned income                                           |  | (14,579   | ) |  | (36,838   | )
|Net investment in sales-type leases                             |  | 525,739   |   |  | 690,593   |  
|Current portion                                                 |  | (196,501  | ) |  | (174,828  | )
|Net investment in sales-type leases, less
      current portion |  | 329,238   |   |  | 515,765   |  

---

- 54 -

Contracted maturities of the sales-type leases as of March 31,
2007 are as follows:

|Twelve months ending March 31, |  | $       | 
|------------------------------ |  | ------- | 
|2008                           |  | 196,501 | 
|2009                           |  | 152,950 | 
|2010                           |  | 126,119 | 
|2011                           |  | 50,169  | 
|                               |  | 525,739 | 

NOTE 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the
following:

|                                     |  | March 31, |  |  | March 31, | 
|------------------------------------ |  | --------- |  |  | --------- | 
|                                     |  | 2007      |  |  | 2006      | 
|                                     |  | $         |  |  | $         | 
|Trade deposits                       |  | 950,190   |  |  | 634,681   | 
|Rental, utilities and other deposits |  | 192,460   |  |  | 73,942    | 
|Deferred notes issuance costs        |  | 90,823    |  |  | -         | 
|Prepaid expenses                     |  | 424,109   |  |  | 334,225   | 
|Tax recoverable                      |  | -         |  |  | 31,945    | 
|Staff advances                       |  | 18,507    |  |  | 73,915    | 
|Other receivable                     |  | 561,716   |  |  | 123,591   | 
|Others                               |  | 8,367     |  |  | 41,715    | 
|                                     |  |           |  |  |           | 
|                                     |  | 2,246,172 |  |  | 1,314,014 | 

NOTE 6. INVENTORIES

Inventories by major categories are summarized as follows:

|                 |  | March 31, |  |  | March 31, | 
|---------------- |  | --------- |  |  | --------- | 
|                 |  | 2007      |  |  | 2006      | 
|                 |  | $         |  |  | $         | 
|Raw materials    |  | 860,098   |  |  | 519,621   | 
|Work in progress |  | 542,491   |  |  | 954,310   | 
|Finished goods   |  | 305,431   |  |  | 2,058,671 | 
|                 |  | 1,708,020 |  |  | 3,532,602 | 

NOTE 7. PLANT AND EQUIPMENT, NET

Plant and equipment, net consists of the following:

|                                |  | March 31,  |   |  | March 31,  |  
|------------------------------- |  | ---------- | - |  | ---------- | -
|                                |  | 2007       |   |  | 2006       |  
|                                |  | $          |   |  | $          |  
|Testing equipment               |  | 606        |   |  | 83,715     |  
|Office equipment                |  | 524,442    |   |  | 479,265    |  
|Furniture and fixtures          |  | 15,412     |   |  | 97,317     |  
|Leasehold improvements          |  | 321,899    |   |  | 30,247     |  
|Motor vehicles                  |  | 87,233     |   |  | 99,632     |  
|Energy savers                   |  | 370,372    |   |  | 360,723    |  
|Mould                           |  | 18,431     |   |  | -          |  
|Factory machinery and equipment |  | 4,258,482  |   |  | 3,667,055  |  
|Total                           |  | 5,596,877  |   |  | 4,817,954  |  
|Less: Accumulated depreciation  |  | (1,434,323 | ) |  | (1,103,587 | )

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- 55 -

|Plant and equipment, net |  | 4,162,554 |  |  | 3,714,367 | 
|------------------------ |  | --------- |  |  | --------- | 

Equipment, net held under capital leases are summarized as
follows:

|                                         |  | March 31, |   |  | March 31, |  
|---------------------------------------- |  | --------- | - |  | --------- | -
|                                         |  | 2007      |   |  | 2006      |  
|                                         |  | $         |   |  | $         |  
|Office equipment                         |  | 12,571    |   |  | 3,702     |  
|Less: Accumulated depreciation           |  | (3,276    | ) |  | (1,028    | )
|Equipment, net held under capital leases |  | 9,295     |   |  | 2,674     |  

Equipment, net leased under operating leases to customers is
summarized as follows:

|                                                          |  | March 31, |   |  | March 31, |  
|--------------------------------------------------------- |  | --------- | - |  | --------- | -
|                                                          |  | 2007      |   |  | 2006      |  
|                                                          |  | $         |   |  | $         |  
|Energy savers                                             |  | 18,953    |   |  | 18,953    |  
|Less: Accumulated depreciation                            |  | (10,740   | ) |  | (8,845    | )
|                                                          |  |           |   |  |           |  
|Equipment, net leased under operating leases to customers |  | 8,213     |   |  | 10,108    |  

NOTE 8. CONSTRUCTION IN PROGRESS

Construction in progress consists of the following:

|                                       |  | March 31, |  |  | March 31, | 
|-------------------------------------- |  | --------- |  |  | --------- | 
|                                       |  | 2007      |  |  | 2006      | 
|                                       |  | $         |  |  | $         | 
|Production facilities for Xenon lights |  | 1,111,215 |  |  | 1,064,062 | 
|Production facilities for AHP lamps    |  | 545,723   |  |  | 453,183   | 
|Others                                 |  | 58,203    |  |  | 420,115   | 
|                                       |  | 1,715,141 |  |  | 1,937,360 | 

NOTE 9. INTANGIBLE ASSETS

Intangible assets arise from the acquisitions of interests in
TFEMS and Beijing Illumination as stated in Note 2 above.

Acquired intangible assets consist of the following:

|                                 |  | March 31, |  |  | March 31, | 
|-------------------------------- |  | --------- |  |  | --------- | 
|                                 |  | 2007      |  |  | 2006      | 
|                                 |  | $         |  |  | $         | 
|Completed technology  AHP       |  | 1,172,616 |  |  | 878,137   | 
|Completed technology  HID       |  | 1,214,012 |  |  | 917,780   | 
|Trademark                        |  | 1,957,212 |  |  | 1,813,175 | 
|Software and licence             |  | 641,077   |  |  | -         | 
|Customer lists and relationships |  | 2,513,921 |  |  | 2,502,291 | 
|Distributors list                |  | 179,351   |  |  | 136,597   | 
|Unfulfilled purchase orders      |  | 4,113     |  |  | 4,113     | 
|                                 |  |           |  |  |           | 
|Total                            |  | 7,682,302 |  |  | 6,252,093 | 

---

- 56 -

|Less: Accumulated amortization                            |  |            |   |  |            |  
|--------------------------------------------------------- |  | ---------- | - |  | ---------- | -
|- completed technology - AHP                              |  | (167,454   | ) |  | (10,454    | )
|- completed technology - HID                              |  | (304,109   | ) |  | (19,120    | )
|- software and licence                                    |  | (131,232   | ) |  | -          |  
|- customer lists and
      relationships                  |  | (806,746   | ) |  | (617,316   | )
|- distributors list                                       |  | (60,015    | ) |  | (3,794     | )
|- unfulfilled purchase orders                             |  | (4,113     | ) |  | (4,113     | )
|Impairment loss on trademark                              |  | (771,209   | ) |  | (771,209   | )
|Impairment loss on customer lists and
      relationships |  | (1,156,812 | ) |  | (1,156,812 | )
|Total                                                     |  | 4,280,612  |   |  | 3,669,275  |  

Amortization expenses charged to net income from operations for
the year ended March 31, 2007 and 2006 were $818,872 and $528,923 respectively.
Anticipated amortization expense on intangible assets for each of the next five
years is as follows:

|Twelve months ending March 31, |  | $         | 
|------------------------------ |  | --------- | 
|2008                           |  | 934,216   | 
|2009                           |  | 933,985   | 
|2010                           |  | 696,310   | 
|2011                           |  | 172,097   | 
|2012 and thereafter            |  | 358,000   | 
|                               |  | 3,094,608 | 

NOTE 10. SHORT-TERM BORROWINGS

The Company's short-term borrowings consist of the following:

|                                                            |  | March 31, |  |  | March 31,  |  
|----------------------------------------------------------- |  | --------- |  |  | ---------- | -
|                                                            |  | 2007      |  |  | 2006       |  
|                                                            |  | $         |  |  | $          |  
|Bank loans                                                  |  | -         |  |  | 1,370,872  |  
|Bank overdrafts                                             |  | 3,678     |  |  | 707,006    |  
|                                                            |  |           |  |  |            |  
|                                                            |  | 3,678     |  |  | 2,077,878  |  
|                                                            |  |           |  |  |            |  
|Weighted average interest rate on borrowings at end of year |  | nil%      |  |  | 7.82%      |  
|                                                            |  |           |  |  |            |  
|At end of year:                                             |  |           |  |  |            |  
|Bank credit facilities                                      |  | -         |  |  | 2,037,662  |  
|Utilized                                                    |  | -         |  |  | (2,045,803 | )
|Bank credit facilities utilized /
      (overutilized)      |  | -         |  |  | (8,141     | )

NOTE 11. REDEEMABLE CONVERIBLE NOTES

On January 23, 2007, pursuant to the terms and conditions of
the subscription agreements, the Company issued 60 $100,000 redeemable
convertible notes in an aggregate principal amount of $6,000,000 to three
investors consisting of Investec Bank (UK) Limited, Full Moon Resources Limited
and LP Asset Management Limited.

Each note bears a fixed rate of interest at 10% per annum,
payable quarterly, calculated on a 360 day year on the principal amount
outstanding. Unless previously converted or redeemed, each note will be redeemed
by the Company on the maturity date of December 31, 2009 at a final redemption
amount, calculated in accordance with a formula set out in the note, together
with all interest thereon. The notes are convertible into common shares at the
rate of one common share per each $0.55 of principal converted (subject to
adjustment as described in the subscription agreements).

---

- 57 -

In addition, pursuant to the terms and conditions of the
subscription agreements, the Company granted two options to each investor to
purchase additional redeemable convertible notes of our company in the aggregate
amount of $12,000,000, the first option of which is exercisable at any time
during the period from April 1, 2007 to June 30, 2008. The first option entitles
the holder to subscribe for additional $100,000 redeemable convertible notes of
the Company in the aggregate principal amount of up to $6,000,000. The second
option, which is exercisable on July 1, 2008, January 1, 2009 and July 1, 2009,
or as otherwise described in the subscription agreements, entitles the holder to
subscribe for additional $100,000 redeemable convertible notes of the Company in
the aggregate principal amount of up to $6,000,000. The conversion price of the
notes underlying the first option are convertible at $0.55 per share if
converted on or before June 30, 2007 and at $0.66 per share if converted after
June 30, 2007. The conversion price of the notes underlying the second option is
subject to a formula as set out in the subscription agreements.

The notes were discounted for the fair value of options,
pursuant to APB 14 Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants. The notes were further discounted for the intrinsic value of
the beneficial conversion feature, pursuant to EITF 98-5 Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios. The discount is being amortized over the life of
the notes. Through March 31, 2007, $258,714 was amortized and recorded as part
of interest expenses.

The fair value of the first option was determined using the
Black-Scholes option pricing model, using the following assumptions:

|Expected volatility     | 130.30%                   
|----------------------- | --------------------------
|Expected term in years  | 1.25 years                
|Risk-free interest rate | 4.89%                     
|Exercise price          | $0.55                     
|Stock price             | $.76 (at January 23, 2007)

Expected volatilities are calculated using the historical
prices of the Companys common stock. The expected term of first option is based
on the term of the exercisable periods. The risk-free interest rates are based
on the U.S. Treasury Note rate with terms comparable with the first option.

The fair value of second option is not determinable due to the
  high dependence on the future performance and future number of shares of the
  Company caused no reasonable basis for the valuation of the second option.

|                                                 |  | March 31,  |   |  | March 31, | 
|------------------------------------------------ |  | ---------- | - |  | --------- | 
|                                                 |  | 2007       |   |  | 2006      | 
|                                                 |  | $          |   |  | $         | 
|Face value of redeemable convertible notes       |  | 6,000,000  |   |  | -         | 
|Estimated value of embedded options              |  | (2,770,800 | ) |  | -         | 
|Intrinsic value of beneficial conversion feature |  | (3,229,200 | ) |  | -         | 
|Amortization of discount                         |  | 147,047    |   |  | -         | 
|                                                 |  | 147,047    |   |  | -         | 

NOTE 12. OBLIGATIONS UNDER CAPITAL LEASES

|                                                                |  | March 31, |   |  | March 31, |  
|--------------------------------------------------------------- |  | --------- | - |  | --------- | -
|                                                                |  | 2007      |   |  | 2006      |  
|                                                                |  | $         |   |  | $         |  
|Total minimum lease payments                                    |  | 8,721     |   |  | 2,591     |  
|Less: Amounts representing interests                            |  | -         |   |  | -         |  
|                                                                |  |           |   |  |           |  
|Present value of minimum lease payments                         |  | 8,721     |   |  | 2,591     |  
|Less: Current portion of obligations under
      capital leases |  | (1,774    | ) |  | (740      | )
|                                                                |  |           |   |  |           |  
|Long-term portion of obligations under
      capital leases     |  | 6,947     |   |  | 1,851     |  

The following is a summary of future minimum lease payments
under capital leases as of March 31, 2007:

|Twelve months ending March 31, |  | $     | 
|------------------------------ |  | ----- | 
|2008                           |  | 1,774 | 
|2009                           |  | 3,548 | 
|2010                           |  | 3,399 | 
|                               |  | 8,721 | 

The Company entered into capital lease arrangements for leasing
equipment used in its operations. The lease is for a term of 5 years. For the
year ended March 31, 2007, the capital lease arrangement was on a non-interest
bearing

---

- 58 -

basis. The leases are on a fixed repayment basis and no
arrangement entered into includes contingent rental payments.

The interest expenses incurred on these capital leases were
$nil and $3,615 for the year ended March 31, 2007 and 2006, respectively.

NOTE 13. OTHER RESERVES

The other reserves represent the statutory surplus reserve of
the Companys subsidiaries in the PRC.

Statutory Surplus Reserve

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

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

NOTE 14. OTHER INCOME

Year Ended March 31,2007
      
      
      2006$
      
      
      $Consulting income
      
      303,327
      
      
      -Gain on fair value changes in options
      
      151,800
      
      
      -Write back of amounts due to shareholders
      
      147,246
      
      
      -Income from assignment of sales contract forenergy savers
      
      -
      
      
      781,140Reversal of provision for doubtful debts
      
      -
      
      
      116,128Waiver of amount due to a former minorityshareholder of a subsidiary
      
      613,918
      
      
      -Others
      
      129,317
      
      
      1,6911,345,608
      
      
      898,959


NOTE 15. FOREIGN CURRENCY TRANSACTION GAIN OR LOSS

Aggregate foreign currency transaction gain/(loss) of $39,845
and of $(2,148) for the year ended March 31, 2007 and 2006 were included in
determining net profit / (loss), for the respective periods.

NOTE 16. INCOME TAX

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

Year Ended March 31,2007
      
      
      2006$
      
      
      $Hong Kong
      
      (2,294,735
      )
      
      (3,567,574
      )Macau
      
      3,323,301
      
      
      -Mainland, the Peoples Republic of
        China (PRC)
      
      853,623
      
      
      (167,418
      )1,882,189
      
      
      (3,734,992
      )


Taxes laws applicable to the Company are as follows:

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- 59 -

|- | TTHL is a tax-exempted company incorporated in the Cayman
      Islands.                                                                                                                                                                                                                                                                                                                                                               
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | Under the current BVI law, TTCs, TTILs and PTLs income
      are not subject to taxation.                                                                                                                                                                                                                                                                                                                                           
|- | Lightscape Technologies Inc. and TFEPL also had no
      assessable profits earned or had tax losses brought forward to set off
      current year assessable profit during the periods presented.                                                                                                                                                                                                                                     
|- | No provision for PRC income tax has been made as
      TT(Zhuhai) had no assessable profits earned during the year ended March
      31, 2007 and 2006. Preferential tax treatment has been agreed with the
      relevant tax authorities and TT(Zhuhai) is exempted from PRC income tax in
      the first two profitable years and is subject to half of the standard
      statutory tax rate of 15% in the subsequent three years.
|- | Pursuant to the relevant laws and regulations in the PRC,
      Beijing Aihua is exempted from PRC enterprise income tax for two years
      starting from its first profit-making year i.e. 2004 after it became a
      wholly foreign owned enterprise and followed by a 50% reduction for the
      next three years.                                                                                                              
|- | Beijing Illumination is a Hong Kong company which is
      subject to a profits tax rate of 17.5%.                                                                                                                                                                                                                                                                                                                                     
|- | Lightscape Macau is a company incorporated in Macau
      Special Administrative Region, which is subjected to progressive tax rate
      charging at a rate of 12% in maximum.                                                                                                                                                                                                                                                        
|- | Other companies are dormant and had no assessable profits
      earned during the periods presented.                                                                                                                                                                                                                                                                                                                                   

Income tax expense for the year ended March 31, 2007 and 2006
represents the provision for income tax in the following jurisdictions:

Year Ended March 31,2007
      
      
      2006$
      
      
      $Current taxes:Hong Kong
      
      27,944
      
      
      -Macau
      
      206,977
      
      
      -Mainland, PRC
      
      36,830
      
      
      45,508271,751
      
      
      45,508


A reconciliation of income tax expense to the amount computed
by applying the Hong Kong statutory tax rate to the profit/(loss) before income
tax in the consolidated statements of operations is as follows:

Year Ended March 31,2007
      
      
      2006$
      
      
      $Profit/(loss) before income tax
      
      1,882,189
      
      
      (3,734,992
      )Tax at Hong Kong profits tax rate of 17.5%
        (2006: 17.5%)
      
      329,383
      
      
      (653,623
      )Tax effect of expenses not deductible for tax purposes
      
      288,020
      
      
      472,297Tax effect of income not taxable for tax
        purposes
      
      (366,308
      )
      
      (2,951
      )Utilization of tax losses previously not recognised
      
      -
      
      
      49,586Adjustment of previous years tax loss
        as disallowable item
      
      -
      
      
      3,236Change in valuation allowance
      
      98,222
      
      
      142,078Effect of the different income tax rate in
        other tax jurisdictions
      
      (77,566
      )
      
      35,503Income tax overprovided in previous year
      
      -
      
      
      (618
      )Income tax expense
      
      271,751
      
      
      45,508


Deferred income taxes arose from the following:

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- 60 -

At March 31,2007
      
      
      2006$
      
      
      $Deferred tax assets- tax losses
      
      641,097
      
      
      495,635- other temporary difference
      
      -
      
      
      23,599- valuation allowance
      
      (528,330
      )
      
      (451,707
      )Net deferred tax assets
      
      112,767
      
      
      67,527Deferred tax liabilities- Book depreciation and amortisation in
        excess of tax
      
      (112,767
      )
      
      (67,527
      )Net deferred tax
      
      -
      
      
      -


For the operating loss carry forwards of approximately
$3,639,599 as of March 31, 2007, $198,308, $180,645, $144,944 and $99,373 will
expire in 2008, 2009, 2010 and 2011 respectively, and the remainder will be
carried forward indefinitely.

NOTE 17. COMMITMENTS

The Company as Lessor

Energy saver rental income earned was $1,285 and $3,856 for the
year ended March 31, 2007 and 2006, respectively.

The Company as Lessee

The Company has operating lease agreements principally for its
office facilities and factory buildings. Such leases have remaining terms of 3
months to 3 years and 9 months. The following is a summary of future minimum
lease payments under operating leases as of March 31, 2007. Rental expense was
$139,372 and $130,850 for the year ended March 31, 2007 and 2006, respectively.

Twelve months ending March 31,

|     |  | $       | 
|---- |  | ------- | 
|2008 |  | 299,022 | 
|2009 |  | 223,112 | 
|2010 |  | 96,401  | 
|2011 |  | 72,301  | 
|     |  | 690,836 | 

Royalties

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

**NOTE 18. CONTINGENT LIABILITIES**

The Company received a notice of payment dated February 12,
  2007 demanding the settlement of outstanding tax payable amounting to $6,440
  within 10 days from the date of the notice. This notice was related to the Company’s
  failure to pay the tax payable according to the instalment arrangement that
  was agreed with Hong Kong Inland Revenue Department (“HKIRD”). If
  the Company is unable to settle the payable, the instalment arrangement will
  be cancelled. Further, the HKIRD will take recovery actions and/or legal proceedings
  against the Company to recover the whole outstanding amount of $256,167 without
  further notice.

One subsidiary company issued two checks for a total amount
  of $23,508 to one Mr. Chin Wui Leong as requested for services that had been
  provided by his company. The subsidiary company was informed later by internal
  auditor that making payment to an individual employee instead of making out
  the checks in the name of the Company was not the correct procedure and accordingly
  the Company had informed Mr. Chin Wui Leong to return both checks for cancellation.
  However, both checks were banked without informing the Company. Court judgment
  was entered against the Company and the Company had settled the amount in full
  plus costs.

One Mr. Ho Tai-Kwan had instituted legal proceedings against
  the Company demanding settlement of $321,337. This was a commercial dispute
  and our company had instituted legal proceedings for a counter-claim against
  Mr. Ho Tai-Kwan demanding settlement of $545,381 being a deficit payment to
  make up guaranteed net profit as per an agreement signed on October 4, 2004.

Other than the above, the Company knows of no material, active,
  or pending legal proceeding against the Company, nor is the Company involved
  as a plaintiff in any material proceeding or pending litigation where such claim
  or action involves damages for more than 10% of the Company’s current
  assets up to the date of this report. There are no proceedings in which any
  of the Company’s directors, officers, or affiliates, or any registered
  or beneficial shareholders, is an adverse party or has a material interest adverse
  to the Company’s interest.

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- 61 -

NOTE 19. RELATED PARTY BALANCES AND TRANSACTIONS

Related Party Transactions

TFCL, a shareholder of the Company, paid certain expenses totalling
  $91,646 on behalf of the Company and the Company repaid $336,647 during the
  year ended March 31, 2007.

A director of the Company advanced loans of $208,572 to the Company
  during the year ended March 31, 2007. The loans are non-interest bearing and
  payable on demand. As of March 31, 2007, the Company had amount recoverable
  from this director of $60,383 as included in other receivable.

During the year ended March 31, 2007, the Company entered into
  and closed a debt settlement transaction pursuant to a subscription agreement
  with Bondy Tan, a director and executive officer of the Company, whereby the
  Company issued 2,638,768 common shares to Mr. Tan in consideration for the cancellation
  of debt owed by the Company to Mr. Tan in the amount of $1,451,323.

Pursuant to the terms of the agreements in relation to the
acquisition of interest in TFEMS as mentioned in Note 2 above, a beneficial
owner of TFCL has guaranteed to pay the shortfall to the Company should the net
profit of TFEMS for the period from the date of acquisition to June 30, 2005
(the guaranteed period) fall below a warranted sum. The profits for the
guaranteed period fell short by $604,546 and the Company is currently pursuing
the guarantor for the enforcement of this guarantee.

A director of the Company is also the independent non-executive
director of Galaxy Entertainment Group Limited, the owner of Galaxy StarWorld
Hotel in Macau. Lightscape Macau, a wholly-owned subsidiary of the Company,
received a Letter of Award amounting to approximately $4,485,861 for the design,
supply, installation, testing and commissioning of tailor-made lighting
solutions for the outside facade wall of the Galaxy StarWorld Hotel in Macau
during the year ended March 31, 2007.

In consideration of the Sale and Purchase Agreement for the
acquisition of additional interest in Lightscape Macau (as described in Note 2),
each of the Vendors and the Guarantors irrevocably and unconditionally
guaranteed jointly and severally to the Company that the Net Profit for the
Guarantee Period as shown in the audited consolidated financial statements of
Lightscape Macau and its subsidiaries ending such date shall not be less than
the Guaranteed Net Profit. If the Net Profit is less than the Guaranteed Net
Profit, then the Vendors and the Guarantors shall jointly and severally pay to
the Company in cash within fourteen (14) calendar days after the delivery of the
audited consolidated financial statements of Lightscape Macau and its
subsidiaries aforesaid an amount calculated as follows:

Amount payable to the Company = (Guaranteed Net Profit  Net
Profit) X 40%

Related Party Balances

As of March 31, 2007, the amounts due from/to related
companies, directors and shareholders represent cash advances to or from them
and are unsecured, non-interest bearing and have no fixed repayment terms. The
balances related to such advances are as follows:

|                                                                         |  | March 31, |  |  | March 31, | 
|------------------------------------------------------------------------ |  | --------- |  |  | --------- | 
|                                                                         |  | 2007      |  |  | 2006      | 
|                                                                         |  | $         |  |  | $         | 
|                                                                         |  |           |  |  |           | 
|Amount due from a shareholder                                            |  |           |  |  |           | 
|TFCL                                                                     |  | -         |  |  | 160,243   | 
|                                                                         |  |           |  |  |           | 
|Amount due from a related company                                        |  |           |  |  |           | 
|Lightscape Macau                                                         |  | -         |  |  | 385,527   | 
|                                                                         |  |           |  |  |           | 
|Lightscape Macau had been 100% acquired by
      the Company see Note 2. |  |           |  |  |           | 
|                                                                         |  |           |  |  |           | 
|Amount due to a director                                                 |  |           |  |  |           | 
|Bondy Tan                                                                |  | 39,846    |  |  | 3,375,283 | 
|                                                                         |  |           |  |  |           | 
|Amounts due to directors of a subsidiary                                 |  |           |  |  |           | 
|Ko Yin                                                                   |  | -         |  |  | 988,333   | 
|Lam So Ying                                                              |  | -         |  |  | 39,845    | 
|                                                                         |  | -         |  |  | 1,028,178 | 
|                                                                         |  |           |  |  |           | 
|Amount due to a former minority
      shareholder of a subsidiary        |  |           |  |  |           | 
|Aeneas Portfolio Company LP (Aeneas)                                   |  | -         |  |  | 517,962   | 

---

- 62 -

|Amounts due to shareholders     |  |        |  |  |        | 
|------------------------------- |  | ------ |  |  | ------ | 
|David Yu                        |  | -      |  |  | 64,420 | 
|TFCL                            |  | 46,546 |  |  | -      | 
|                                |  | 46,546 |  |  | 64,420 | 
|                                |  |        |  |  |        | 
|Amount due to a related company |  |        |  |  |        | 
|Palun Development Limited       |  | -      |  |  | 26,992 | 

Palun Development Limited is beneficially owned by the family
members of a director of a subsidiary.

NOTE 20. SEGMENT INFORMATION

The Company is a holding company owning subsidiaries
principally engaged in (i) the provision of LED lighting products and services
(Lighting design solutions) through Lightscape Macau, (ii) the manufacture and
distribution of lighting source products (Lighting source business) through
Beijing Illumination, and (iii) the development, manufacture and distribution of
energy saving products and technologies and the provision of consulting and
customer training services (Energy saving business) through TTHL.

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

Information for the Lighting design solutions, Lighting source
business and Energy saving business is disclosed under FAS 131, Disclosures
about Segments of an Enterprise and Related Information as below:

Year
    
    
    YearEnded
    
    
    EndedMarch 31,
    
    
    March 31,2007
    
    
    2006$
    
    
    $Net revenues:Energy saving business
    
    537,361
    
    
    1,423,616Lighting source business
    
    5,210,646
    
    
    97,616Lighting design solutions
    
    7,881,399
    
    
    -13,629,406
    
    
    1,521,232Interest income:Energy saving business
    
    5,795
    
    
    17,843Lighting design solutions
    
    5,398
    
    
    -11,193
    
    
    17,843Interest expenses:Energy saving business
    
    381,420
    
    
    128,420Lighting source business
    
    38,436
    
    
    12,943Lighting design solutions
    
    49,175
    
    
    -469,031
    
    
    141,363Amortization of intangible
      assets:Energy saving business
    
    316,374
    
    
    495,269Lighting source business
    
    502,498
    
    
    33,654818,872
    
    
    528,923Depreciation:Energy saving business
    
    74,561
    
    
    82,835


---

- 63 -

Lighting source business
    
    420,420
    
    
    1,073Lighting design solutions
    
    512
    
    
    -495,493
    
    
    83,908Other income:Energy saving business
    
    328,046
    
    
    898,959Lighting source business
    
    1,017,562
    
    
    -1,345,608
    
    
    898,959Segment profit/(loss):Energy saving business
    
    (1,814,099
    )
    
    3,477,102Lighting source business
    
    437,384
    
    
    257,890Lighting design solutions
    
    3,258,910
    
    
    -1,882,189
    
    
    (3,734,992
    )Income tax expenses:Energy saving business
    
    -
    
    
    45,508Lighting source business
    
    64,774
    
    
    -Lighting design solutions
    
    206,977
    
    
    -271,751
    
    
    45,508Segment assets:Energy saving business
    
    7,602,314
    
    
    6,237,744Lighting source business
    
    16,781,711
    
    
    15,660,575Lighting design solutions
    
    4,198,022
    
    
    -28,582,047
    
    
    21,898,319Expenditure for segment
      assets:Energy saving business
    
    786,993
    
    
    35,304Lighting source business
    
    552,906
    
    
    2,806Lighting design solutions
    
    18,431
    
    
    -1,358,330
    
    
    38,110


(ii) Geographical Information:

Year
      
      
      YearEnded
      
      
      EndedMarch 31,
      
      
      March 31,2007
      
      
      2006$
      
      
      $Total sales:Mainland, the PRC
      
      7,049,271
      
      
      1,097,439Hong Kong
      
      1,108,761
      
      
      421,017Macau
      
      5,471,374
      
      
      -Others
      
      -
      
      
      2,77613,629,406
      
      
      1,521,232


---

- 64 -

No reconciliation is required as there is no unallocated amount
relating to corporate operations which is not included in the segment
information.

(iii) The location of the Companys long-lived assets excluding
restricted investments is as follows:

March 31,
    
    
    March 31,2007
    
    
    2006$
    
    
    $Hong Kong
    
    10,069,185
    
    
    8,450,664Macau
    
    -
    
    
    839Mainland, the PRC
    
    5,421,797
    
    
    5,472,99115,490,982
    
    
    13,924,494


NOTE 21. SHARE CAPITAL, OPTIONS AND WARRANTS

Share Capital

Pursuant to a Purchase Agreement dated March 29, 2006 by and
among the Company and Aeneas, the Company acquired 5.0% of the shares of Beijing
Illumination on June 29, 2006 in exchange for the issuance of 1,250,000 common
shares of the Company to Aeneas.

Pursuant to a Purchase Agreement dated April 3, 2006 by and
among the Company and Aeneas, the Company acquired an additional 15.0% of the
shares of Beijing Illumination on June 29, 2006 in exchange for the issuance of
1,826,923 common shares of the Company to Aeneas.

Pursuant to a Sale and Purchase Agreement dated September 29,
2006 by and among the Company, Albert Yee Tat Chan and Luminous LED Technologies
Limited (the Vendors) and Michelle Siu Kwan Lam and Joseph Sui Kei Lam (the
Guarantors), the Company acquired 49.6% of the registered share capital of
Lightscape Macau from Albert Yee Tat Chan as registered owner and Luminous LED
Technologies Limited as beneficial owner in consideration for the payment of
MOP12,400 and the issuance of 1,200,000 common shares by the Company to Albert
Yee Tat Chan (the Consideration Shares). In aggregate, the Company owns 100%
of the registered share capital of Lightscape Macau as of September 29, 2006.

Immediately upon the completion of the Sale and Purchase
Agreement, the Considerations Shares were delivered to an escrow agent pursuant
to an Escrow Agreement dated September 29, 2006 among the Company, the Vendors
and Clark Wilson LLP as the escrow agent. Pursuant to the terms and conditions
of the Sale and Purchase Agreement and the Escrow Agreement, all of the
Consideration Shares shall be released to the Vendors upon the determination
that the net profit of Lightscape Macau and its subsidiaries is not less than
HK$20,000,000 over the period October 1, 2006 to September 30, 2007. If the net
profit of Lightscape Macau and its subsidiaries is less than HK$20,000,000, the
percentage of the Consideration Shares equal to the percentage of the shortfall
from HK$20,000,000 shall be released by the escrow agent not to the Vendors but
to the Company for cancellation, with the balance of the Consideration Shares to
be released to the Vendors; if there is no net profit for Lightscape Macau and
its subsidiaries, all of the Consideration Shares shall be released to the
Company for cancellation and the Company will be absolutely released from the
obligation to deliver the Consideration Shares.

In consideration of the Sale and Purchase Agreement, each of
the Vendors and the Guarantors irrevocably and unconditionally guaranteed
jointly and severally to the Company that the Net Profit for the Guarantee
Period as shown in the audited consolidated financial statements of Lightscape
Macau and its subsidiaries ending such date shall not be less than the
Guaranteed Net Profit. If the Net Profit is less than the Guaranteed Net Profit,
then the Vendors and the Guarantors shall jointly and severally pay to the
Company in cash within fourteen (14) calendar days after the delivery of the
audited consolidated financial statements of Lightscape Macau and its
subsidiaries aforesaid an amount calculated as follows:

Amount payable to the Company = (Guaranteed Net Profit  Net
Profit) X 40%

As of January 16, 2007, Bondy Tan, an executive officer and a
director of the Company, had advanced an aggregate amount of US$1,451,323 to the
Company through an oral, unsecured and non-interest bearing loan agreement which
had no fixed terms for repayment. On January 18, 2007, the Company entered into
and closed a debt settlement transaction pursuant to a subscription agreement
with Bondy Tan, whereby the Company issued

---

- 65 -

2,638,768 common shares to Mr. Tan in consideration for the
cancellation of debt owed by the Company to Mr. Tan in the amount of
US$1,451,323. The Company issued the common shares to Mr. Tan on the basis of
one common share for each US$0.55 of the loan outstanding. The Company issued
the securities to one non U.S. person (as that term is defined in Regulation S
of the Securities Act of 1933) in an offshore transaction relying on Regulation
S or Section 4(2) promulgated under the Securities Act of 1933.

On January 18, 2007, the Company entered into subscription
agreements with three investors consisting of Investec Bank (UK) Limited, Full
Moon Resources Limited and LP Asset Management Limited, in addition to the
persons set out in Schedule 1 to each of the subscription agreements. Pursuant
to the terms and conditions of the subscription agreements, the Company agreed
to issue 60 $100,000 redeemable convertible notes in an aggregate principal
amount of US$6,000,000 to the three investors, which carry an annual interest
rate of 10% and mature on December 31, 2009. Each note is convertible from the
date of issuance until December 30, 2009 into common shares at the rate of one
common share for every $0.55 of principal converted (subject to adjustment as
described in the subscription agreements).

Options

Pursuant to the terms and conditions of the subscription
agreements, the Company agreed to grant two options to each investor, the first
option of which is exercisable at the at any time during the period from April
1, 2007 to June 30, 2008. The first option entitles the holder to subscribe for
additional US$100,000 redeemable convertible notes of the Company in the
aggregate principal amount of up to US$6,000,000. The second option, which is
exercisable on July 1, 2008, January 1, 2009 and July 1, 2009, or as otherwise
described in the subscription agreements, entitles the holder to subscribe for
additional US$100,000 redeemable convertible notes of the Company in the
aggregate principal amount of up to US$6,000,000. The conversion price of the
notes underlying the first option are convertible at US$0.55 per share if
converted on or before June 30, 2007 and at US$0.66 per share if converted after
June 30, 2007. The conversion price of the notes underlying the second option is
subject to a formula as set out in the subscription agreements.

On January 23, 2007, the Company closed the convertible note
financing transaction. Pursuant to the terms and conditions of the subscription
agreements, the Company issued the 60 US$100,000 redeemable convertible notes in
an aggregate principal amount of US$6,000,000 to the three investors. Each note
bears a fixed rate of interest at 10% per annum, payable quarterly, calculated
on a 360 day year on the principal amount outstanding. Unless previously
converted or redeemed, each note will be redeemed by the Company on the maturity
date of December 31, 2009 at a final redemption amount, calculated in accordance
with a formula set out in the note, together with all interest thereon. The
notes are convertible into common shares at the rate of one common share per
each $0.55 of principal converted (subject to adjustment as described in the
subscription agreements). In addition, the Company issued two options to each of
the three investors to purchase additional redeemable convertible notes of the
Company in the aggregate amount of US$12,000,000. The Company issued the notes,
the common shares issuable upon conversion of the notes, and the options in an
offshore transaction to non U.S. persons (as that term is defined in Regulation
S under the Securities Act of 1933) relying on Section 4(2) or Regulation S
promulgated under the Securities Act of 1933.

Warrants

All outstanding common stock warrants expired unexercised
during the period May 17, 2006 through May 27, 2006 and the remaining balances
were transferred to additional paid-in capital.

---

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ITEM 8.        CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 8A.      CONTROLS AND
PROCEDURES.

As required by Rule 13a-15 under the Securities Exchange Act of
1934, as of the end of the period covered by this annual report, being March 31,
2007, we have carried out an evaluation of the effectiveness of the design and
operation of our companys disclosure controls and procedures. This evaluation
was carried out under the supervision and with the participation of our
companys management, including our companys Chief Executive Officer. Based
upon that evaluation, our companys Chief Executive Officer concluded that our
companys disclosure controls and procedures are effective as at the end of the
period covered by this report. There have been no significant changes in our
internal controls over financial reporting that occurred during our most recent
fiscal quarter that have materially affected, or are reasonably likely to
materially affect our internal controls over financial reporting.

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

ITEM 8B.      OTHER INFORMATION

None.

PART III

ITEM 9.        DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
COMPLIANCE WITH SECTION 16(A) OF THEEXCHANGE ACT.

Directors and Executive Officers, Promoters and Control
Persons

All directors of our company hold office until the next annual
meeting of the stockholders or until their successors have been elected and
qualified. The executive officers of our company are appointed by our board of
directors and hold office until their death, resignation or removal from office.
Our directors, executive officers and the executive officers of our operating
subsidiaries, as well as the positions held, age and duration of appointment for
such persons are as follows:

Name
      Position Held with our Company and/or our
        Operating Companies
      AgeBondy Tan
    Director, President, Secretary,
      Treasurer and Chief Executive Officer of our company from January 13,
      2005, and President and Chief Executive Officer of Tech Team and
      Tech Team Development
    40Richard Wong(1)
    Director of our company from
      January 13, 2005
    56Charles Ming
    Director of our company from
      January 13, 2005
    72Charles Cheung
    Director of our company from
      January 13, 2005
    71Edmand Yuk Man Wong
    Director of our company from
      June 5, 2006
    50Kwok Tin Tang(1)
    Director of our company from
      June 5, 2006
    56


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(1)Members of the Audit Committee.

Business Experience

The following is a brief account of the education and business
experience of each director and executive officer during at least the past five
years, indicating each persons principal occupation during the period, and the
name and principal business of the organization by which he or she was
employed.

BONDY TAN

Bondy Tan is a director and the President, Secretary, Treasurer
and Chief Executive Officer of our company and is the President and Chief
Executive Officer of Tech Team and Tech Team Development. From October 1999 to
present, Mr. Tan has served as the Chief Executive Officer and a director of
Tech Team Development. Mr. Tan incorporated Tech Team Development and has led
its development and growth over the past five years. From February 2002 to
present, Mr. Tan has served as the Chief Executive Officer and a director of
Tech Team. In these roles, Mr. Tan is responsible for the overall management and
strategic planning for Tech Team and its subsidiaries. Mr. Tans experience
includes an additional 10 years of marketing management and business development
roles in China and Hong Kong. His former positions include Marketing & Sales
Coordinator for Sony (Hong Kong), where he was responsible for advertising,
promotion and sales activities for Sony in China and Hong Kong. Mr. Tan also
held several roles with Caltex, a wholly-owned subsidiary of Chevron-Texaco
Corporation, in China and Hong Kong. In these positions, Mr. Tan rebuilt
Caltexs corporate image, developed brand awareness in China, led the formation
of two joint venture projects and managed the operation of 51 service stations
in Hong Kong. Mr. Tan holds a Bachelor of Commerce, with a major in company law,
from Murdoch University in Australia, and a Bachelor of Business, with a major
in marketing, from Edith Cowan University in Australia.

RICHARD WONG

Richard Wong is a director of our company. From 1997 to
present, Mr. Wong has served as a consultant with Asian Fund Consultants and
Cyril Fung Associates. In these positions, Mr. Wong provides capital-raising,
strategic planning and corporate development services to Asian companies in a
variety of industries including financial services, environmental technology,
energy and information technology. Mr. Wongs experience includes an additional
15 years of finance, investment management, capital raising and consulting roles
in the Asia Pacific region. His former positions include Regional Representative
for State Street Bank of Boston in Singapore, where he was responsible for
promoting mutual funds, commercial banking services and global custodian
services in Asian markets. Mr. Wong also served as Managing Director for a
wholly-owned subsidiary of Union Bank of Switzerland in Hong Kong, where he
established a China private equity fund. Mr. Wong holds a Bachelor of Arts
degree from Princeton University, as well as a Juris Doctor degree from Cornell
Law School.

CHARLES MING

Charles Ming is a director of our company. From 1989 to
present, Mr. Ming has served as owner and director of Charles Ming &
Associates Ltd., an architectural and project development consulting company
based in Hong Kong. In this role as principle, Mr. Ming provides overall
strategic direction and planning, management leadership and relationship
development. Mr. Mings experience includes an additional 10 years of financial
and corporate development experience within the gaming and mining businesses. He
has previously served as Chairman of Gold Rush Gaming & Mining Corp. and as
a Director of Great Canadian Casino Corp., both public companies. Mr. Ming also
currently serves as a Director of Magnum dOr Resources Inc., a U.S. public
company with a class of securities subject to the requirements of section 15(d)
of the Securities Exchange Act. Mr. Ming is a qualified architect within Hong
Kong, Australia, Great Britain and Canada.

CHARLES CHEUNG

Dr. Charles Cheung Wai Bun, Justice of Peace (J.P.) is a
director of our company. Dr. Cheung is also Group Chief Executive and Executive
Deputy Chairman of Mission Hills Group which is engaged in luxurious property
development, golfing resort and hotel business in Mainland, China. He is also an
independent Non-executive Director and Chairman of Audit Committee of five
publicly listed companies in Hong Kong, K. Wah International Holdings Limited,
Galaxy Entertainment Group Limited, Pioneer Global Group Limited, Prime
Investments Holdings Limited and Shanghai Electric Group Company Limited which
is one of the largest state-owned corporations in China. Dr. Cheung is also a
Senior Adviser to the Metropolitan Bank & Trust Company, the largest

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- 68 -

commercial bank in the Philippines. He has over 30 years
experience in the senior management of companies in various industries including
over 22 years experience of banking business in senior management positions. He
holds an honorary doctorate degree, a master degree and a bachelor of science
degree in business administration from New York University. He was a former
director and adviser of the Tung Wah Group of Hospitals, the largest charitable
organization in Hong Kong. Dr. Cheung was a member of a number of government
committees of the Hong Kong Government. He was re-appointed by the Hong Kong
Government as a member of the Estate Agents Authority in November 2004. Dr.
Cheung was awarded Listed Company Non-Executive Director Award at the Hong Kong
Directors of the Years Awards 2002.

EDMAND YUK MAN WONG

Edmand Yuk Man Wong is a non-executive director of our company.
Mr. Wong has held various senior positions in communications departments of
government agencies, the Hong Kong Jockey Club, a major international non-profit
charity, and two of the top post-secondary educational institutions in Hong
Kong. Within these roles over the past 25 years, Mr. Wong was responsible for
public relations strategy, corporate branding, and publicity. Mr. Wong holds a
Bachelor of Arts degree in Political Science from the University of British
Columbia.

KWOK TIN TANG

Kwok Tin Tang is a non-executive director of our company. Mr.
Tang is an associate member of The Hong Kong Institute of Company Secretaries.
For the past 20 years, Mr. Tang has operated as the General Manager of Martin
Tang Accountants which provides accounting, company secretarial and business
consultancy services to companies in Hong Kong.

Family Relationships

There are no family relationships among our directors or
officers.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:

|1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                
|2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                
|3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
|   |                                                                                                                                                                                                                                                                                                                                
|4. | being found by a court of competent jurisdiction (in a
      civil action), the Commission or the Commodity Futures Trading Commission
      to have violated a federal or state securities or commodities law, and the
      judgment has not been reversed, suspended, or
vacated.                                           

Code of Ethics

Effective October 29, 2004, our companys board of directors
adopted a Code of Business Conduct and Ethics that applies to, among other
persons, our companys President and Chief Executive Officer as well as the
individuals performing the functions of our Chief Financial Officer, Secretary
and Controller. As adopted, our Code of Business Conduct and Ethics sets forth
written standards that are designed to deter wrongdoing and to promote:

|1. | honest and ethical conduct, including the ethical
      handling of actual or apparent conflicts of interest between personal and
      professional relationships;                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                              
|2. | full, fair, accurate, timely, and understandable
      disclosure in reports and documents that we file with, or submit to, the
      Securities and Exchange Commission and in other public communications made
      by us;

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- 69 -

|3. | compliance with applicable governmental laws, rules and
      regulations;                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                  
|4. | the prompt internal reporting of violations of the Code
      of Business Conduct and Ethics to an appropriate person or persons
      identified in the Code of Business Conduct and Ethics; and
|   |                                                                                                                                                                                                  
|5. | accountability for adherence to the Code of Business
      Conduct and Ethics.                                                                                                                   

Our Code of Business Conduct and Ethics requires, among other
things, that all of our companys personnel shall be accorded full access to our
President and Chief Executive Officer with respect to any matter which may arise
relating to the Code of Business Conduct and Ethics. Further, all of our
companys personnel are to be accorded full access to our companys board of
directors if any such matter involves an alleged breach of the Code of Business
Conduct and Ethics by our President and Chief Executive Officer.

In addition, our Code of Business Conduct and Ethics emphasizes
that all employees, and particularly managers and/or supervisors, have a
responsibility for maintaining financial integrity within our company,
consistent with generally accepted accounting principles, and federal,
provincial and state securities laws. Any employee who becomes aware of any
incidents involving financial or accounting manipulation or other
irregularities, whether by witnessing the incident or being told of it, must
report it to his or her immediate supervisor or to our companys President and
Chief Executive Officer. If the incident involves an alleged breach of the Code
of Business Conduct and Ethics by the President and Chief Executive Officer, the
incident must be reported to any member of our board of directors. Any failure
to report such inappropriate or irregular conduct of others is to be treated as
a severe disciplinary matter. It is against our company policy to retaliate
against any individual who reports in good faith the violation or potential
violation of our companys Code of Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics is filed as Exhibit
14.1 to this annual report. We will provide a copy of the Code of Business
Conduct and Ethics to any person without charge, upon request. Requests can be
sent to: Lightscape Technologies Inc., 3/F., 80 Gloucester Road, Wanchai, Hong
Kong.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers and directors and persons who own more
than 10% of our common stock, to file reports regarding ownership of, and
transactions in, our securities with the Securities and Exchange Commission and
to provide us with copies of those filings. Based solely on our review of Forms
3, 4 and 5 (and amendments thereto) furnished to us during or in respect of the
fiscal year ended March 31, 2007, we are not aware of any director, executive
officer or beneficial owner of more than 10% of the outstanding common stock who
or which has not timely filed reports required by Section 16(a) of the Exchange
Act during or in respect of such fiscal year, except Initial Statement of
Beneficial Ownership of Securities on Form 3 that was not filed by Aeneas
Capital Management, LP, which became a shareholder holding more than 10% of our
common stock on June 29, 2006. Aeneas Capital Management, LP corrected this
omission by filing a Form 3 with the Securities and Exchange Commission on
October 17, 2006.

Nomination Procedures For Appointment of Directors

As of June 15, 2007, we did not effect any material changes to
the procedures by which our shareholders may recommend nominees to our board of
directors. Our board of directors has determined that it is in the best position
to evaluate our companys requirements as well as the qualifications of each
candidate when the board considers a nominee for a position on our board of
directors. If shareholders wish to recommend candidates directly to our board,
they may do so by sending communications to the President of the company at the
address on the cover of this annual report.

Audit Committee

We have a standing Audit Committee which currently consists of
Richard Wong and Kwok Tin Tang, both of whom are non-employee directors of our
company. Both members of the Audit Committee are independent as defined by
Nasdaq Marketplace Rule 4200(a)(15). The Audit Committee was established in
accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of 1934.
The Audit Committee is directed to review the scope, cost and results of the
independent audit of our books and records, the results of the annual audit with
management and the adequacy of our accounting, financial and operating controls;
to recommend annually to the board of directors the selection of the independent
registered accountants; to consider proposals made by the independent registered

---

- 70 -

accountants for consulting work; and to report to the board of
directors, when so requested, on any accounting or financial matters. The board
of directors adopted its charter for the Audit Committee on June 6, 2006 and was
formed on June 6, 2006.

Audit Committee Financial Expert

Our board of directors has determined that our company has one
audit committee financial expert serving on the audit committee, which person is
Richard Wong. Our board of directors has also determined that Richard Wong is
independent, as that term is defined by Nasdaq Marketplace Rule 4200(a)(15).

ITEM 10.        EXECUTIVE
COMPENSATION.

Summary Compensation Table

The particulars of compensation paid to the following persons:

|(a) | our principal executive officer;                                                                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                     
|(b) | each of our two most highly compensated executive
      officers who were serving as executive officers at the end of the year
      ended March 31, 2007; and                                                                      
|    |                                                                                                                                                                                                                                     
|(c) | up to two additional individuals for whom disclosure
      would have been provided under (b) but for the fact that the individual
      was not serving as our executive officer at the end of the year ended
      March 31, 2007,

who we will collectively refer to as our named executive
officers, of our company for the years ended March 31, 2007 and 2006, are set
out in the following summary compensation table, except that no disclosure is
provided for any named executive officer, other than our principal executive
officer, whose total compensation does not exceed $100,000 for the respective
fiscal year:

Name and Principal
      Position
    Year
    Salary ($)
    Bonus ($)
    Stock Awards ($)
    Option Awards ($)
    Non- Equity Incentive
      Plan Compensa- tion ($)
    Change in Pension Value
      and Nonqualified Deferred Compensation Earnings ($)
    Other Annual Compen-
      sation ($)
    Total ($)Bondy Tan President, Secretary,
      Treasurer and CEO
    2007 2006
    154,242 107,692
    - -
    - -
    - -
    - -
    - -
    - -
    154,242 107,692


Employment Agreements with our Named Executive Officers

Bondy Tan, as Chief Executive Officer of Tech Team, our
wholly-owned operating subsidiary, was paid a salary of $154,242 and $107,692
for our fiscal years ended March 31, 2007 and 2006, respectively. Other than
Bondy Tan, there were no executive officers of any of our wholly-owned
subsidiaries serving as of March 31, 2007, and no executive officers who served
as such during the fiscal years 2007, 2006 and 2005, whose total salary and
bonus exceeded $100,000 per year. Other than the employment agreement with Bondy
Tan, no individual has entered into any employment agreements with our company
or our wholly-owned or majority owned subsidiaries. There were no compensatory
plans or arrangements with any executive officer of our company or any of our
subsidiaries for payments to be made to an executive officer following the
retirement, resignation or termination of any executive officers employment or
from a change in control of our company or a change in such officers
responsibilities following a change of control.

Our wholly-owned subsidiaries do not maintain, and did not
maintain at any time during their most recently completed fiscal years, any
long-term compensation plans. As such, there were no long-term compensation plan
awards or payouts to any of the executive officers of our wholly-owned
subsidiaries during any of their three most recently completed fiscal years
ended 2007, 2006 and 2005.

---

- 71 -

Our compensation program for our executive officers is
administered and reviewed by our board of directors. Historically, executive
compensation consists of a combination of base salary and bonuses. Individual
compensation levels are designed to reflect individual responsibilities,
performance and experience, as well as the performance of our company. The
determination of discretionary bonuses is based on various factors, including
implementation of our business plan, acquisition of assets, development of
corporate opportunities and completion of financing.

Stock Option Grants to our Named Executive Officers

Our company does not have a stock option plan and our company
did not grant any stock options to any named executive officers during the year
ended March 31, 2007.

Outstanding Equity Awards at Fiscal Year End

There were no outstanding equity awards granted to any named
executive officer as of March 31, 2007.

Aggregate Option Exercises in 2006 by Executive Officers

There were no options outstanding, and hence no options
exercised, by any named executive officers during the year ended March 31, 2007.

Compensation of the Companys Directors

Directors may be paid their expenses for attending each board
of directors meeting and may be paid a fixed sum for attendance at each meeting
of the directors or a stated salary as director. No payment precludes any
director from serving our company in any other capacity and being compensated
for the service. Members of special or standing committees may be allowed like
reimbursement and compensation for attending committee meetings. The following
table summarizes compensation paid to all of our directors during the year ended
March 31, 2007:

Name
      Fees 
        Earned or Paid in Cash
      ($)
      Stock 
        Awards ($)
      Option 
        Awards ($)
      Non- 
        Qualified Deferred
      Compensation Earnings ($)
      Non-Equity 
        Incentive Plan
      Compensation ($)
      All Other 
        Compensation ($)
      Total 
        ($)Bondy Tan
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilRichard Wong
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilCharles Ming
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilCharles Cheung
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilCarrie Cheng
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilEdmand Yuk Man Wong
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    NilKwok Tin Tang
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil


ITEM 11.        SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.

The following table sets forth, as of June 15, 2007, certain
information with respect to the beneficial ownership of our companys common
stock by each stockholder known by us to be the beneficial owner of more than 5%
of our common stock and by each of our current directors and executive officers
and the directors and executive officers of our operating subsidiaries. Each
person has sole voting and investment power with respect to the shares of common
stock, except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated.

---

- 72 -

Name and Address of Beneficial Owner
      Position Held
      Amount and Nature of Beneficial
      Owner
      Percent of Class (1)Kwok, Chiu Fai Room 1512, Yuk Ping House, Long Ping
      Estate, Yuen Long, New Territories, Hong Kong
    N/A
    3,124,913 (2)
    8.3%Ho, Tai Kwan Flat D, 3/F, Tower 3, 19 Homantin Hill
      Road, Kowloon, Hong Kong
    N/A
    3,124,913 (3)
    8.3%Thomas R. Grossman 105 South Bedford Road, Suite
      310, Mt. Kisco, NY 10549
    N/A
    4,824,951 (4)
    13.2%Aeneas Capital Management, LP 105 South Bedford Road,
      Suite 310, Mt. Kisco, NY 10549
    N/A
    4,824,951 (4)
    13.2%Aeneas Portfolio Company, LP c/o Walkers SPV Limited
      Georgetown, Grand Cayman Cayman Islands, BWI
    N/A
    3,785,367 (4)
    10.4%Investec Bank (UK) Limited 2 Gresham Street London
      EC2V 7QP United Kingdom
    N/A
    6,363,636 (5)
    14.5%LP Asset Management 2nd Floor, Abbott Building Road
      Town, Tortola British Virgin Islands
    N/A
    2,727,273 (6)
    6.8%Ko, Yin 1108-9, 11/F, Tower 2, Enterprise Square, 9
      Sheung Yuet Road, Kowloon Bay, Kowloon
    Director of Beijing Illumination (Hong
      Kong) Limited
    10,606,230 (7)
    28.3%Bondy Tan Flat E, 39/F., Tower 2, Kornville, 38 Yau
      Man Street, Quarry Bay, Hong Kong
    Director, President and Chief Executive
      Officer of our company and President and Chief Executive Officer
      of Tech Team and Tech Team Development
    7,224,546 (8)
    19.3%Richard Wong Flat 3A, 71 Lyttelton Road, Mid-
      Levels, Hong Kong
    Director of our company
    Nil
    NilCharles Ming Unit 707, New World Tower, Tower 1,
      16-18 Queens Rd., Central, Hong Kong
    Director of our company
    729,146 (9)
    1.9%


---

- 73 -

Name and Address of Beneficial Owner
      Position Held
      Amount and Nature of Beneficial
      Owner
      Percent of Class (1)Charles Cheung A2, 6/F Evergreen Villa, 43 Stubbs
      Road, Hong Kong
    Director of our company
    1,458,293 (10)
    3.9%Carrie Cheng House 30, Phase I, Marina Cove, Sai
      Kung, Hong Kong
    Director of our company
    Nil
    NilEdmand Yuk Man Wong Community College of City
      University, 6/F., Mong Man-wai Building, Kowloon Tong,
      Kowloon, Hong Kong
      Director of our company
      Nil
      NilKwok Tin Tang Room B, Block A, 1/F., Hoi Tao
      Building, 11 Belchers Street, Sai Wan, Hong Kong
    Director of our company
    Nil
    NilDirectors and Executive Officers as a Group
      (four persons)
    
    20,018,215
    53.5%


|(1) | Based on 37,451,410 shares of common stock issued and
      outstanding as of June 15, 2007. Except as otherwise indicated, we believe
      that the beneficial owners of the common stock listed above, based on
      information furnished by such owners, have sole investment and voting
      power with respect to such shares, subject to community property laws
      where applicable. Beneficial ownership is determined in accordance with
      the rules of the Securities and Exchange Commission and generally includes
      voting or investment power with respect to securities. Shares of common
      stock subject to convertible or derivative securities currently
      convertible or exercisable or convertible or exercisable within 60 days
      are deemed outstanding for purposes of computing the percentage ownership
      of the person holding such securities, but are not deemed outstanding for
      purposes of computing the percentage ownership of any other
  person.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | Kwok, Chiu Fai indirectly beneficially owns 3,124,913
      shares of our company held by Tomi Fuji Corporation Limited. Kwok, Chiu
      Fai directly owns 50% of the issued and outstanding shares of Tomi Fuji
      Corporation Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | Ho, Tai Kwan indirectly beneficially owns 3,124,913
      shares of our company held by Tomi Fuji Corporation Limited. Ho, Tai Kwan
      owns all of the issued and outstanding shares of Forward Trade Limited, a
      company which directly owns 50% of the issued and outstanding shares of
      Tomi Fuji Corporation Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(4) | As disclosed in a Schedule 13G filed on October 17, 2006,
      Thomas R. Grossman, Aeneas Capital Management, LP, Aeneas Portfolio
      Company, LP and Aeneas Separate Account Ltd. share voting power over
      shares of our common stock. Mr. Grossman and Aeneas Capital Management, LP
      share power to vote or to direct the vote over 4,824,951 shares of common
      stock, 3,785,367 shares of which are directly held by Aeneas Portfolio
      Company, LP and 1,039,584 shares of which are directly held by Aeneas
      Separate Account Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(5) | Investec Bank (UK) Limited holds 35 $100,000 redeemable
      and convertible promissory notes due on December 31, 2009. The notes bear
      interest at 10% per annum and are convertible from the date of issuance on
      January 23, 2007 until maturity at $0.55 per share, subject to adjustment
      as set out in the notes. If Investec Bank (UK) Limited elected to convert
      the entire principal amount of the notes, it would be entitled to
      6,363,636 shares of our common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(6) | LP Asset Management holds 15 $100,000 redeemable and
      convertible promissory notes due on December 31, 2009. The notes bear
      interest at 10% per annum and are convertible from the date of issuance on
      January 23, 2007 until maturity at $0.55 per share, subject to adjustment
      as set out in the notes. If LP Asset Management elected to convert the
      entire principal amount of the notes, it would be entitled to 2,727,273
      shares of our common stock..                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(7) | Ko, Yin indirectly beneficially owns 4,945,687 shares of
      our company held Admire Fame Investments Limited, a company which he
      solely owns. Ko, Yin indirectly beneficially owns 2,875,399 shares of our
      company held by Gain Huge Investments Limited, a company which he solely
      owns. Ko, Yin indirectly beneficially owns 1,750,000 shares
  of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

---

- 74 -

|     | our company held by Glory Goal Investments Limited, a
      company which he solely owns. Ko, Yin indirectly beneficially owns
      1,035,144 shares of our company held by Splendid Fortune Investments
      Limited, a company which he solely owns.                                                                                                                                                                                                                                                                        
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(8)  | Bondy Tan directly beneficially owns 2,888,768 shares of
      our company. Bondy Tan indirectly beneficially owns 2,730,685 shares of
      our company held by Glory Hill Holdings Limited, a company which he solely
      owns. Bondy Tan indirectly beneficially owns 1,033,501 shares of our
      company held by Full Scope Group Limited, a company which he solely owns.
      Bondy Tan indirectly beneficially owns 571,592 shares of our company held
      by Excel Means Limited, a company which he solely owns.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(9)  | Charles Ming indirectly beneficially owns 729,146 shares
      of our company held by Sure Vantage Enterprise Limited. Charles Ming owns
      50% of the issued and outstanding shares of Sure Vantage Enterprise
      Limited.                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10) | Charles Cheung indirectly beneficially owns 1,458,293
      shares of our company held by Leisure Assets Limited, a company which he
      solely owns.                                                                                                                                                                                                                                                                                                                                                                         

Equity Plan Compensation Information

Our company does not currently have an equity compensation
plan.

ITEM 12.        CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Except as set out below, no director, executive officer,
principal shareholder holding at least 5% of our common shares, or any family
member thereof, had any material interest, direct or indirect, in any
transaction, or proposed transactions, during the year ended March 31, 2007, in
which the amount involved in the transaction exceeded or exceeds the lesser of
$120,000 or one percent of the average of our total assets at year-end for the
last three completed fiscal years.

- TFCL, a shareholder of our company,
paid certain expenses totalling $91,646 on behalf of our company and our company
repaid $336,647 during the year ended March 31, 2007.

- A director of our company advanced
loans of $208,572 to our company during the year ended March 31, 2007. The loans
are non-interest bearing and payable on demand. As of March 31, 2007, our
company had amount recoverable from this director of $60,383 as included in
other receivable.

- During the year ended March 31, 2007,
our company entered into and closed a debt settlement transaction pursuant to a
subscription agreement with Bondy Tan, a director and executive officer of our
company, whereby our company issued 2,638,768 common shares to Mr. Tan in
consideration for the cancellation of debt owed by our company to Mr. Tan in the
amount of $1,451,323.

- Pursuant to the terms of the
agreements in relation to the acquisition of interest in TFEMS as mentioned in
Note 2 to the audited financial statements, a beneficial owner of TFCL has
guaranteed to pay the shortfall to our company should the net profit of TFEMS
for the period from the date of acquisition to June 30, 2005 (the guaranteed
period) fall below a warranted sum. The profits for the guaranteed period fell
short by $604,546 and our company is currently pursuing the guarantor for the
enforcement of this guarantee.

- A director of our company is also the
independent non-executive director of Galaxy Entertainment Group Limited, the
owner of Galaxy StarWorld Hotel in Macau. Lightscape Macau, a wholly-owned
subsidiary of our company, received a Letter of Award amounting to approximately
$4,485,861 for the design, supply, installation, testing and commissioning of
tailor-made lighting solutions for the outside facade wall of the Galaxy
StarWorld Hotel in Macau during the year ended March 31, 2007.

- In consideration of the Sale and
Purchase Agreement for the acquisition of additional interest in Lightscape
Macau (as described in Note 2 to the audited financial statements), each of the
Vendors and the Guarantors irrevocably and unconditionally guaranteed jointly
and severally to our company that the Net Profit for the Guarantee Period as
shown in the audited consolidated financial statements of Lightscape Macau and
its subsidiaries ending such date shall not be less than the Guaranteed Net
Profit. If the Net Profit is less than the Guaranteed Net Profit, then the
Vendors and the Guarantors shall jointly and severally pay to our company in
cash within fourteen (14) calendar days after the delivery of the audited

---

- 75 -

consolidated financial statements of
Lightscape Macau and its subsidiaries aforesaid an amount calculated as follows:

Amount payable to our company =
(Guaranteed Net Profit  Net Profit) X 40%

As of March 31, 2007, the amounts due from/to related
companies, directors and shareholders represent cash advances to or from them
and are unsecured, non-interest bearing and have no fixed repayment terms. The
balances related to such advances are as follows:

|                                                                         |  | March 31, |  |  | March 31, | 
|------------------------------------------------------------------------ |  | --------- |  |  | --------- | 
|                                                                         |  | 2007      |  |  | 2006      | 
|                                                                         |  | $         |  |  | $         | 
|                                                                         |  |           |  |  |           | 
|Amount due from a shareholder                                            |  |           |  |  |           | 
|TFCL                                                                     |  | -         |  |  | 160,243   | 
|                                                                         |  |           |  |  |           | 
|Amount due from a related
      company                                  |  |           |  |  |           | 
|Lightscape Macau                                                         |  | -         |  |  | 385,527   | 
|                                                                         |  |           |  |  |           | 
|Lightscape Macau had been 100% acquired by the Company see
      Note 2. |  |           |  |  |           | 
|                                                                         |  |           |  |  |           | 
|Amount due to a director                                                 |  |           |  |  |           | 
|Bondy Tan                                                                |  | 39,846    |  |  | 3,375,283 | 
|                                                                         |  |           |  |  |           | 
|Amounts due to directors of a
      subsidiary                           |  |           |  |  |           | 
|Ko Yin                                                                   |  | -         |  |  | 988,333   | 
|Lam So Ying                                                              |  | -         |  |  | 39,845    | 
|                                                                         |  | -         |  |  | 1,028,178 | 
|                                                                         |  |           |  |  |           | 
|Amount due to a former minority shareholder of a
      subsidiary        |  |           |  |  |           | 
|Aeneas Portfolio Company LP (Aeneas)                                   |  | -         |  |  | 517,962   | 
|                                                                         |  |           |  |  |           | 
|Amounts due to shareholders                                              |  |           |  |  |           | 
|David Yu                                                                 |  | -         |  |  | 64,420    | 
|TFCL                                                                     |  | 46,546    |  |  | -         | 
|                                                                         |  | 46,546    |  |  | 64,420    | 
|                                                                         |  |           |  |  |           | 
|Amount due to a related company                                          |  |           |  |  |           | 
|Palun Development Limited                                                |  | -         |  |  | 26,992    | 

Palun Development Limited is beneficially owned by the family
members of a director of a subsidiary.

CORPORATE GOVERNANCE

We currently act with 6 directors, consisting of Bondy Tan,
Richard Wong, Charles Ming, Charles Cheung, Edmand Yuk Man Wong and Kwok Tin
Tang. We have determined that Richard Wong and Kwok Tin Tang are independent
directors as defined by Nasdaq Marketplace Rule 4200(a)(15).

We currently act with a standing audit committee. We do not
have a standing compensation or nominating committee but our entire board of
directors acts as our compensation and nominating committee. If any shareholders
seek to nominate a director or bring any other business at any meeting of our
shareholders, the shareholder must comply with the procedures contained in our
bylaws and the shareholder must notify us in writing and such notice must be
delivered to or received by the President in accordance with Rule 14a-8 of the
Exchange Act. A shareholder may write to the President of our company at our
principal executive office, as set out on page one of this annual report, to
deliver the notices discussed above and for a copy of the relevant bylaw
provisions regarding the requirements for making stockholder proposals and
nominating director candidates. We do not believe that it is necessary to have a
standing compensation committee because we believe that the functions of such a
committee can be adequately performed by our board of directors.

---

- 76 -

Audit Committee

Our audit committee consists of Richard Wong and Kwok Tin Tang,
both of whom are non-employee directors of our company. Both members of the
Audit Committee are independent as defined by Nasdaq Marketplace Rule
4200(a)(15). The Audit Committee was established in accordance with Section
3(a)(58)(A) of the Securities and Exchange Act of 1934. The Audit Committee is
directed to review the scope, cost and results of the independent audit of our
books and records, the results of the annual audit with management and the
adequacy of our accounting, financial and operating controls; to recommend
annually to the board of directors the selection of the independent registered
accountants; to consider proposals made by the independent registered
accountants for consulting work; and to report to the board of directors, when
so requested, on any accounting or financial matters. The Audit Committee of the
board of directors was formed on June 6, 2007 and adopted its charter on June 6,
2006.

Transactions with Independent Directors

Other than as set out below or disclosed under the heading
Certain Relationships and Related Transactions, and Director Independence,
none of our independent directors entered into any transaction, relationship or
arrangement during the year ended March 31, 2007 that was considered by our
board of directors in determining whether the director maintained his or her
independence in accordance with Nasdaq Marketplace Rule 4200(a)(15).

ITEM 13.        EXHIBITS.

|Exhibit Number | Description                                                                                                                                                                                                                                                         
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                                                                                                                     
|(2)            | Plan of Purchase, Sale, Reorganization, Arrangement,
      Liquidation or Succession                                                                                                                                                                                
|               |                                                                                                                                                                                                                                                                     
|2.1            | Share Exchange Agreement dated January 7, 2005, among
      Global Innovative Systems Inc., Tech Team Holdings Limited, Bondy Tan and
      the Selling Shareholders (incorporated by reference from our Current
      Report on Form 8-K filed on January 18, 2005)
|               |                                                                                                                                                                                                                                                                     
|(3)            | (i) Articles of Incorporation; and (ii) Bylaws                                                                                                                                                                                                                      
|               |                                                                                                                                                                                                                                                                     
|3.1            | Charter (incorporated by reference from our Registration
      Statement on Form 10-SB filed on April 11, 2000).                                                                                                                                                    
|               |                                                                                                                                                                                                                                                                     
|3.2            | Articles of Incorporation (incorporated by reference from
      our Registration Statement on Form 10-SB filed on April 11, 2000).                                                                                                                                  
|               |                                                                                                                                                                                                                                                                     
|3.3            | Bylaws (incorporated by reference from our Registration
      Statement on Form 10-SB filed on April 11, 2000).                                                                                                                                                     
|               |                                                                                                                                                                                                                                                                     
|3.4            | Certificate of Reverse Stock Split filed with the Nevada
      Secretary of State on November 12, 2003 (incorporated by reference from
      our Current Report on Form 8-K filed on December 17, 2003).                                                            
|               |                                                                                                                                                                                                                                                                     
|3.5            | Certificate of Amendment to Articles of Incorporation
      filed with the Secretary of State of Nevada on March 3, 2004 (incorporated
      by reference from our Quarterly Report on Form 10- QSB filed on May 15,
      2004)                                    
|               |                                                                                                                                                                                                                                                                     
|3.6            | Certificate of Change filed with the Secretary of State
      of Nevada on December 23, 2004 (incorporated by reference from our Current
      Report on Form 8-K filed on January 6, 2005)                                                                         
|               |                                                                                                                                                                                                                                                                     
|3.7            | Articles of Merger filed with the Secretary of State of
      Nevada on April 17, 2007 effective April 20, 2007 (incorporated by
      reference from our Current Report on Form 8-K filed on April 23, 2007)                                                       
|               |                                                                                                                                                                                                                                                                     
|(10)           | Material Contracts                                                                                                                                                                                                                                                  
|               |                                                                                                                                                                                                                                                                     
|10.1           | Management Contract between Tech Team Holdings Limited /
      Tech Team Development Limited and Bondy Tan (incorporated by reference
      from our Current Report on Form 8-K filed on January 18, 2005)                                                          

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|10.2  | Form of subscription agreement of a private placement
      that was issued to 8 non-U.S. persons (as that term is defined in
      Regulation S of the Securities Act of 1933) in offshore transactions
      relying on Regulation S and/or Section 4(2) of the Securities Act of 1933
      (incorporated by reference from our Annual Report on Form 10-KSB filed on
      July 18, 2005) 
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.3  | Form of subscription agreement of a private placement
      that was issued to 4 non-U.S. persons (as that term is defined in
      Regulation S of the Securities Act of 1933) in offshore transactions
      relying on Regulation S and/or Section 4(2) of the Securities Act of
      1933(incorporated by reference from our Annual Report on Form 10-KSB filed
      on July 18, 2005)  
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.4  | Sales Agreement dated September 8, 2005, between Tomi
      Fuji Energy Management Services Consultants Limited and Geopower
      Corporation (incorporated by reference from our Quarterly Report on Form
      10-QSB filed on August 22, 2005)                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.5  | Addendum to Sales Agreement dated September 16, 2005,
      between Tomi Fuji Energy Management Services Consultants Limited and
      Geopower Corporation (incorporated by reference from our Quarterly Report
      on Form 10-QSB filed on August 22, 2005)                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.6  | Assignment Agreement dated September 16, 2005, between
      Tomi Fuji Energy Management Services Consultants Limited and GD Inet
      Electric Construction Co. Ltd. (incorporated by reference from our
      Quarterly Report on Form 10-QSB filed on August 22, 2005)                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.7  | Sale and Purchase Agreement dated September 27, 2005,
      between Glory Goal Investments Limited, Global Innovative Systems Inc.,
      and Ko Yin (incorporated by reference from our Current Report on Form 8-K
      filed on October 3, 2005)                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.8  | Option Deed dated September 27, 2005, between Admire Fame
      Invests Limited, Gain Huge Investments Limited, Splendid Fortune
      Investments Limited, Global Innovative Systems Inc. and Ko Yin
      (incorporated by reference from our Current Report on Form 8-K filed on
      October 3, 2005)                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.9  | Amendment to Sale and Purchase Agreement and Option Deed
      dated October 3, 2005, between Glory Goal Investments Limited, Admire Fame
      Investments Limited, Gain Huge Investments Limited, Splendid Fortune
      Investments Limited, Ko Yin and Global Innovative Systems Inc.
      (incorporated by reference from our Current Report on Form 8-K filed on
      October 3, 2005)
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.10 | Supplemental Deed Agreement dated February 22, 2006
      between Admire Fame Investments Limited, Gain Huge Investments Limited,
      Splendid Fortune Investments Limited, Ko Yin and Global Innovative Systems
      Inc. (incorporated by reference from our Current Report on Form 8- K filed
      on February 28, 2006)                                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.11 | Sale and Purchase Agreement dated March 30, 2006 between
      Tech Team Investment Limited, Woo Yuen Yu, Michelle Siu Kwan Lam and
      Joseph Sui Kei Lam (incorporated by reference from our Current Report on
      Form 8-K filed on April 4, 2006)                                                                                                                                     
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.12 | Purchase Agreement between Global Innovative Systems Inc.
      and Aeneas Portfolio Company LP, dated March 29, 2006 (incorporated by
      reference from our Current Report on Form 8-K filed on July 5,
  2006)                                                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.13 | Purchase Agreement between Global Innovative Systems Inc.
      and Aeneas Portfolio Company LP, dated April 3, 2006 (incorporated by
      reference from our Current Report on Form 8-K filed on July 5,
  2006)                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.14 | Amendment Agreement between Global Innovative Systems
      Inc. and Aeneas Portfolio Company LP dated June 21, 2006 to Purchase
      Agreement between Global Innovative Systems Inc. and Aeneas Portfolio
      Company LP, dated March 29, 2006 (incorporated by reference from our
      Current Report on Form 8-K filed on July 5, 2006)                                               
|      |                                                                                                                                                                                                                                                                                                                                                                                               
|10.15 | Amendment Agreement between Global Innovative Systems
      Inc. and Aeneas Portfolio Company LP dated June 21, 2006 to Purchase
      Agreement between Global Innovative Systems Inc. and Aeneas Portfolio
      Company LP, dated April 3, 2006 (incorporated by reference from our
      Current Report on Form 8-K filed on July 5,
2006)                                                

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|10.16 | Sale and Purchase
        Agreement between Tech Team Development Limited, Albert Yee Tat Chan,
        Luminous LED Technologies Limited, Michelle Siu Kwan Lam and Joseph Sui
        Kei Lam, dated September 29, 2006 (incorporated by reference from our
        Current Report on Form 8-K filed on October 5, 2006)
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                           
|10.17 | Cancellation
        Deed between Tech Team Investment Limited, Woo Yuen Yu, Michelle Siu Kwan
        Lam, Joseph Sui Kei Lam and Lightscape Holding Ltd., dated September 29,
        2006 (incorporated by reference from our Current Report on Form 8-K filed
        on October 5, 2006)                             
|      |                                                                                                                                                                                                                                                                                                                           
|10.18 | OEM Agreement
        between Lightscape Technologies (Macau) Limited and Strong Base Electronic-optic
        Technology Corp., dated October 23, 2006 (incorporated by reference from
        our Current Report on Form 8-K filed on October 31, 2006)                                                                 
|      |                                                                                                                                                                                                                                                                                                                           
|10.19 | Subscription
        Agreement between Global Innovative Systems Inc. and Bondy Tan, dated
        January 18, 2007                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                           
|10.20 | Subscription
        Agreement between Global Innovative Systems Inc., Investec Bank (UK) Limited
        and the persons set out in Schedule 1 to the Subscription Agreement, dated
        January 18, 2007                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                           
|10.21 | Note issued
        by Global Innovative Systems Inc. to Investec Bank (UK) Limited dated
        January 23, 2007                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                           
|10.22 | Subscription
        Agreement between Global Innovative Systems Inc., Full Moon Resources
        Limited and the persons set out in Schedule 1 to the Subscription Agreement,
        dated January 18, 2007                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                           
|10.23 | Note issued
        by Global Innovative Systems Inc. to Full Moon Resources Limited dated
        January 23, 2007                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                           
|10.24 | Subscription
        Agreement between Global Innovative Systems Inc., LP Asset Management
        Limited and the persons set out in Schedule 1 to the Subscription Agreement,
        dated January 18, 2007                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                           
|10.25 | Note issued
        by Global Innovative Systems Inc. to LP Asset Management Limited dated
        January 23, 2007                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                           
|(14)  | Code of Ethics                                                                                                                                                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                           
|14.1  | Code of Ethics
        (incorporated by reference from our Annual Report on Form 10-KSB filed
        on December 30, 2004)                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                           
|(31)  | Rule 13a-14(a)/15d-14(a)
        Certifications                                                                                                                                                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                           
|31.1* | Certification
        of Principal Executive Officer and Principal Financial Officer filed pursuant
        to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                           
|(32)  | Section 1350
        Certifications                                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                           
|32.1* | Certification
        of Principal Executive Officer and Principal Financial Officer pursuant
        to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                                                                                            

*Filed herewith

ITEM 14.        PRINCIPAL
ACCOUNTANT FEES AND SERVICES.

Fees Paid to Independent Accountant

On May 31, 2007, our company retained Yu and Associates CPA
Corporation to provide audit services during the fiscal year ended March 31,
2007. On December 9, 2006, our company retained Schwartz Levitsky Feldman LLP,
Chartered Accountants, to provide audit services during the fiscal year ended
March 31, 2007. On April 28, 2006, our company retained BDO McCabe Lo Limited,
an independent registered public accounting firm, to provide audit services
during the fiscal year ended March 31, 2006. On November 2, 2005, our company
retained Clancy and Co., P.L.L.C., certified public accountants, to provide
audit services during the fiscal year ended March 31, 2006. On

---

- 79 -

March 30, 2005, our company retained Deloitte Touche Tohmatsu,
an independent registered public accounting firm, to provide audit services
during our prior fiscal year ended March 31, 2005. Our company paid the
following fees to our independent accountants during the fiscal years ended
March 31, 2007 and March 31, 2006:

Fiscal year ended
      Fiscal year endedMarch 31, 2007
      March 31, 2006Audit Fees- Deloitte Touche Tohmatsu
      -
      $74,583- Clancy and Co., PLLC
      -
      $19,683- BDO McCabe Lo
      $63,354
      $120,000- Schwartz Levistsky Feldman LLP
      $51,050
      --Yu and Associates CPACorporation
      $170,000
      -Audit Related Services
      Nil
      NilTax Fees- Deloitte Touche Tohmatsu
      -
      -- Clancy and Co., PLLC
      -
      $10,500- BDO McCabe Lo
      -
      -- Schwartz Levistsky Feldman LLP-Yu and Associates CPA
      -
      -Corporation
      -
      -- GC Alliance Limited
      $3,342
      -All Other Fees- Deloitte Touche
        Tohmatsu
      $20,500
      NilTotal
      $308,246
      $224,766


Audit Fees.This category includes the fees for the
examination of our consolidated financial statements and our quarterly reviews
of interim financial statements. This category also includes advice on audit and
accounting matters that arose during or as a result of the audit or the review
of our interim financial statements, and the preparation of an annual
management letter on internal control matters.

The fees billed by Yu and Associates CPA Corporation for
professional services rendered for the audit of our annual financial statements
for the fiscal year ended March 31, 2007 were $170,000. For the fiscal year
ended March 31, 2007, Schwartz Levitsky Feldman LLP and BDO McCabe Lo billed our
company an aggregate fee of $114,404 for assurance or services relating to our
quarterly financial statements. Our audit fees for our prior fiscal year ended
March 31, 2006 were $214,266.

Audit Related Services.We did not incur any audit
related services billed by Yu and Associates CPA Corporation, Schwartz Levitsky
Feldman LLP and BDO McCabe Lo Limited during the fiscal year ended March 31,
2007. Our audit related services for our prior fiscal year ended March 31, 2006,
including the aggregate fees billed for assurance and related services relating
to the performance of the audit of our financial statements which are not
reported under the caption Audit Fees above, were Nil.

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- 80 -

Tax Fees.We incurred tax fees billed by GC Alliance
Limited of $3,342 during the fiscal year ended March 31, 2007. The aggregate
fees billed during our prior fiscal year ended March 31, 2006, for products and
services provided by our former auditors for tax compliance, tax advice and tax
planning, were $10,500.

All Other Fees. We did not incur any additional fees billed
  by Yu and Associates CPA Corporation, Schwartz Levitsky Feldman LLP and BDO
  McCabe Lo Limited or by Deloitte Touche Tohmatsu other than the fees listed
  above during the fiscal year ended March 31, 2007 and we did not incur any additional
  fees billed by our former auditors other than the fees listed above during our
  prior fiscal year ended March 31, 2006.

The Securities and Exchange Commission requires that, before Yu
and Associates CPA Corporation is engaged by us or our subsidiaries to render
any auditing or permitted non-audit related services, the engagement be:

- approved by our audit committee;
or

- entered into pursuant to pre-approval
policies and procedures established by the audit committee, provided the
policies and procedures are detailed as to the particular service, the audit
committee is informed of each service, and such policies and procedures do not
include delegation of the audit committees responsibilities to management.

Our audit committee pre-approved all services provided by our
independent accountant. Our audit committee does not have records of what
percentage of the above fees were pre-approved. All of the services and fees
described under the categories of Audit Related Fees, Tax Fees and All
Other Fees were reviewed and approved by our audit committee before or after
the respective services were rendered.

Our audit committee has considered the nature and amount of the
fees billed by Yu and Associates CPA Corporation and believes that the provision
of the services for activities unrelated to the audit is compatible with
maintaining the independence of Yu and Associates CPA Corporation.

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- 81 -

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

LIGHTSCAPE TECHNOLOGIES INC.

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

Date: July 16, 2007

In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|Signature                 |  | Title                                    | Date         
|------------------------- |  | ---------------------------------------- | -------------
|                          |  |                                          |              
|/s/ Bondy Tan             |  |                                          |              
|Bondy Tan                 |  | President, Secretary, Treasurer          | July 16, 2007
|                          |  | and Chief Executive Officer and Director |              
|                          |  | (Principal Executive Officer,            |              
|                          |  | Principal Financial Officer and          |              
|                          |  | Principal Accounting Officer)            |              
|                          |  |                                          |              
|*/s/ Richard Wong*        |  |                                          |              
|Richard Wong              |  | Director                                 | July 16, 2007
|                          |  |                                          |              
|*/s/ Charles Ming*        |  |                                          |              
|Charles Ming              |  | Director                                 | July 16, 2007
|                          |  |                                          |              
|*/s/ Charles Cheung*      |  |                                          |              
|Charles Cheung            |  | Director                                 | July 16, 2007
|                          |  |                                          |              
|*/s/ Edmand Yuk Man Wong* |  |                                          |              
|Edmand Yuk Man Wong       |  | Director                                 | July 16, 2007
|                          |  |                                          |              
|*/s/ Kwok Tin Tang*       |  |                                          |              
|Kwok Tin Tang             |  | Director                                 | July 16, 2007

---