UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended ~~June~~September 30, 2009

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

For the transition period from __________to __________

Commission file number 000-30299

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

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

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

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

N/A
(Former name, former address and former fiscal year, if changed since last report)

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

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

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 55,876,410 shares of common stock issued and outstanding as of ~~August~~November 1, 2009.

PART I - FINANCIAL INFORMATION

Item 1.	Unaudited Consolidated Financial Statements.
	Consolidated Balance Sheets as at June 30, 2009 and March 31, 2009
	Consolidated Statements of Operations and Comprehensive Loss for the three months ended June 30, 2009 and 2008
	Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Loss for the three months ended June 30, 2009
	Consolidated Statements of Cash Flows for the three months ended June 30, 2009 and 2008
	Notes to Unaudited Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.
Item 4T.	Controls and Procedures.
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.
Item 1A.	Risk Factors.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3.	Defaults Upon Senior Securities.
Item 4.	Submission of Matters to a Vote of Security Holders.
Item 5.	Other Information.
Item 6.	Exhibits.

Item 1. Unaudited Consolidated Financial Statements.

Consolidated Balance Sheets as at September 30, 2009 and March 31, 2009

Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended

September 30, 2009 and 2008

Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Loss for the three and six

months ended September 30, 2009

Consolidated Statements of Cash Flows for the six months ended September 30, 2009 and 2008

Notes to Unaudited Consolidated Financial Statements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Item 4T. Controls and Procedures.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

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

Item 3. Defaults Upon Senior Securities.

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

Item 5. Other Information.

Item 6. Exhibits.

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Item 1. Financial Statements.

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Expressed in US dollars

	June 30,	March 31,
	September 30,	March 31,
	2009	2009
	(Unaudited)
	$	$
ASSETS
Current assets:
Cash and cash equivalents	~~149~~224,~~549~~042	~~381~~342,~~643~~729
Accounts receivable, net of allowance for doubtful accounts of
$1,433,816 on June 30, 2009 and $1,287,843 on March 31, 2009	2,880,353	2,239,228
$561,254 on September 30, 2009 and $415,383 on March 31, 2009	1,695,800	1,213,334
Costs and estimated earnings in excess of billings on uncompleted
contracts	~~821~~428,~~349~~044	673,~~313~~312
Prepaid expenses and other current assets	21,~~202~~966,~~946~~740	1,~~817~~041,~~215~~616
Inventories – LED	1,264,975	1,264,975
Inventories – others (see Note 5) , including valuation allowance of	2,251,938	2,274,552
Inventories – others , including valuation allowance of $162,801 on	-	-
$162,800 on June 30, 2009 and $162,782 on March 31, 2009
September 30, 2009 and $162,782 on March 31, 2009
Current assets of discontinued operations	~~516~~3,~~034~~205,952	~~591~~12,~~921~~435,386
Total current assets	108,~~087~~785,~~144~~553	916,~~242~~971,~~847~~352
Intangible assets, net	~~849~~6,~~059~~615	~~969~~82,~~282~~431
Goodwill	4776,~~476,574~~378	4776,~~476,574~~378
Plant and equipment, net	2345,~~459,567~~499	2279,~~529,141~~738
Out-of-home advertising equipment, net	21,~~209~~985,~~077~~000	21,~~213~~824,~~808~~421
Construction in progress – Out-of-home advertising equipment	266,250	266,250
Deferred cost	~~115~~104,~~518~~404	111,132
Accounts receivable, due after one year and net of allowance for doubtful
accounts of $Nil on June 30, 2009 and $145,871 on March 31, 2009	72,956	200,890
accounts of $Nil on September 30, 2009 and $145,871 on March 31,	-	200,889
Prepaid expenses and other current assets – due after one year	511,337	511,277
2009
Net investment in sales-type leases of discontinued operations	20,439	36,359
Prepaid expenses and other current assets – due after one year	-	8,612
	10,980,777	11,314,713
Net investment in sales-type leases of discontinued operations	20,438	36,359
TOTAL ASSETS	21,067,921	20,557,560
	3,504,584	3,586,210
TOTAL ASSETS	12,290,137	20,557,562
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term bank borrowings	~~699~~456,~~369~~694	~~55,266~~-
Secured loan	~~137~~257,~~524~~069	-
Trade payables	~~821~~877,~~787~~560	~~689~~358,~~945~~939
Amount due to a director	~~658~~592,~~496~~589	745,501
Accrued expenses and other current liabilities	1,~~543~~632,~~779~~821	1747,~~284,239~~395
Obligations under capital leases – current portion	311,~~037~~799	~~2,904~~-
Income tax payable	~~10,521~~-	~~10,062~~-
Current liabilities of discontinued operations	~~216~~1,~~142~~200,549	~~166~~1,~~953~~170,508
Total current liabilities	45,~~090~~029,~~655~~081	23,~~954~~022,~~870~~343
Non-current liabilities:
Obligations under capital leases – non-current portion	5,050	5,313
Secured loan – non-current portion	137,523	-

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Long-term bank borrowings	50,488	62,158
Total non-current liabilities	193,061	67,471
Total liabilities	4,283,716	3,022,341

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

Expressed in US dollars

	June 30,		March 31,
	September 30,		March 31,
	2009		2009
	(Unaudited)
	$		$
COMMITMENTS (see Note 17)
Non-current liabilities:
Obligations under capital leases – non-current portion	47,199		-
Total non-current liabilities	47,199		-
Total liabilities	5,076,280		3,022,343
COMMITMENTS (see Note 12)
Shareholders’ equity:
Common stock
Authorized:
800,000,000 common shares, par value $0.001 per share
100,000,000 preferred shares, par value $0.001 per share
Issued and outstanding:
55,876,410 common shares at June 30, 2009 and at March 31,
55,876,410 common shares at September 30, 2009 and at March
2009	55,876		55,876
31, 2009	55,876		55,876
Additional paid-in capital	34,140,708		34,140,708
Common stock warrants (see Note 20)	344,673		344,673
Common stock warrants	344,673		344,673
Other reserves	28,944		28,944
Accumulated other comprehensive income	1,~~115~~079,~~400~~143		1,077,~~354~~353
Accumulated deficit	(1928,~~973~~435,~~655~~851	)	(19,219,220	)
Total shareholders’ equity	157,~~711~~213,~~946~~493		16,428,335
Noncontrolling interest	~~1,072,259~~364		1,106,884
Total Equity	167,~~784~~213,~~205~~857		17,535,219
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	2112,~~067~~290,~~921~~137		20,557,~~560~~562

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

Expressed in US dollars (except for number of common shares)

	Three Months Ended				Six Months Ended
	June 30,
	September 30,				September 30,
	2009		2008		2009		2008
	$		$		$		$
Revenues:
Advertising revenue	~~188~~260,~~625~~026		-		448,651		-
LED solutions revenue	~~855~~1,~~433~~010,314		~~652~~270,~~949~~709		1,784,319		923,658
Other revenue	~~446,594~~-		~~905~~11,~~758~~715		-		22,667
Total net revenues	1,~~490~~270,~~652~~340		1282,~~558,707~~424		2,232,970		946,325
Cost of revenues:
Cost of sales of Advertising revenue	(39,272	)	-
Cost of sales of Advertising revenue (i)	53,884		-		93,156		-
Cost of sales of LED solutions revenue	~~(640~~888,~~648~~822	)	~~(507~~169,~~635~~046	)	1,529,470		676,681
Costs of Other revenue (i)	(373,870	)	(619,333	)
Costs of Other revenue	-		189		-		378
Total cost of revenues	(1942,~~053,790~~706	)	(1169,~~126,968~~235	)	1,622,626		677,059
Gross profit	~~436~~327,~~862~~634		~~431~~113,~~739~~189		610,344		269,266
Bad debts	-(36,584	)	~~(85,640~~-	)	(36,584	)	-
Amortization	(~~120~~38,~~844~~219	)	(~~205~~53,~~653~~855	)	(76,438	)	(125,546	)
Depreciation	(7740,~~087~~110	)	(4226,~~495~~680	)	(79,645	)	(62,690	)
Selling and marketing expenses	(238,393	)	(163,975	)
Loss on disposal of property, plant and equipment	(539	)	-		(539	)	-
General and administrative expenses	(835,427	)	(936,794	)
Selling and marketing expenses	(143,376	)	(35,159	)	(310,521	)	(97,885	)
Loss from operations	(834,889	)	(1,002,818	)
General and administrative expenses	(631,840	)	(653,773	)	(1,349,094	)	(1,459,972	)
Interest expense	(1,951	)	(300	)
Loss from operations	(563,034	)	(656,278	)	(1,242,477	)	(1,476,827	)
Interest income	159		326
Interest expense, net of interest income	(48,123	)	(6,902	)	(47,964	)	(6,953	)
Other income	624,~~829~~217		113,~~441~~645		23,332		13,645
Other expenses	(15,055	)	-
Loss from continuing operations before income tax and	(606,940	)	(649,535	)	(1,267,109	)	(1,470,135	)
Loss from continuing operations before income tax and noncontrolling interests	(788,907	)	(1,001,351	)
noncontrolling interests
Income tax provision	(3-	)	-206,977		-		206,977
Net loss from continuing operations before noncontrolling interests	(788,910	)	(1,001,351	)
Net loss from continuing operations before noncontrolling	(606,940	)	(442,558	)	(1,267,109	)	(1,263,158	)
Less: net income attributable to the noncontrolling interests	34,625		21,436
interests
Net loss from continuing operations attributable to Lightscape Technologies Inc.	(754,285	)	(979,915	)
Less: net income attributable to the noncontrolling interests	-		-		-		-
Discontinued operations
Net loss from continuing operations attributable to Lightscape	(606,940	)	(442,558	)	(1,267,109	)	(1,263,158	)
Net (loss) from discontinued operations, net of income taxes	(150	)	(13,946	)
Technologies Inc.
(Loss) on discontinued operations	(150	)	(13,946	)
Discontinued operations
Net loss attributable to Lightscape Technologies Inc.	(754,435	)	(993,861	)
Net (loss) from discontinued operations, net of income taxes	(116,658	)	(296,773	)	(210,922	)	(470,034	)
Other comprehensive income
Gain on disposal of discontinued component	54,172		-		54,172		-
Foreign currency translation adjustment arising during the period	38,046		153,294
Impairment loss on subsidiary held for sale	(8,835,266	)	-		(8,835,266	)	-
Noncontrolling interest share of related impairment loss	1,042,496				1,042,496
Net (loss) from discontinued operations	(7,855,256	)	(296,773	)	(7,949,520	)	(470,034	)

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Comprehensive loss	(716,389	)	(840,567	)
Loss per share
- Basic and diluted
Continuing operations	(0.01	)	(0.02	)
Discontinued operations	(0.00	)	(0.00	)
Total	(0.01	)	(0.02	)
Weighted average number of common shares outstanding
- Basic and diluted	55,876,410		55,876,410

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (continued)

Expressed in US dollars (except for number of common shares)

(i) Includes depreciation of plant and equipment of $84,899 for the three months ended June 30, 2009 and $65,591 for the three months ended June 30, 2008.

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2009		2008		2009		2008
	$		$		$		$

Net loss attributable to Lightscape Technologies Inc.	(8,462,196	)	(739,331	)	(9,216,629	)	(1,733,192	)

Other comprehensive income
Foreign currency translation adjustment arising during the	(36,257	)	(33,374	)	1,789		119,920
period
Comprehensive loss	(8,498,453	)	(772,705	)	(9,214,840	)	(1,613,272	)

Loss per share
- Basic and diluted
Continuing operations	(0.01	)	(0.01	)	(0.02	)	(0.02	)
Discontinued operations	(0.14	)	-		(0.14	)	(0.01	)
Total	(0.15	)	(0.01	)	(0.16	)	(0.03	)

Weighted average number of common shares outstanding
- Basic and diluted	55,876,410		55,876,410		55,876,410		55,876,410

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

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

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

						Total Accumulated Other Comprehensive Income And							~~Total Accumulated Other Comprehensive Income And~~
	Common Shares	~~Common Shares~~				Accumulated Deficit							~~Accumulated Deficit~~
						Accumulated		Total					~~Accumulated~~			~~Total~~
						Other		Accumulated					~~Other~~			~~Accumulated~~
						Comprehensive		Comprehensive					~~Comprehensive~~			~~Comprehensive~~
						Income - Foreign		(Loss) Income					~~Income - Foreign~~			~~(Loss) Income~~
			Common	Additional		Currency		~~Common~~And	Non-		~~Additional~~		~~Currency~~			~~And~~
			Stock	Paid-In	Other	Translation	Accumulated	~~Stock~~Accumulated	controlling		~~Paid-In~~		~~Translation~~	~~Accumulated~~		~~Accumulated~~		~~Non-~~
	Number	~~Number~~Amount Warrants		Capital	~~Amount~~Reserves	Adjustment	Deficit	~~Warrants~~Deficit	interest	Total	~~Capital~~	~~Other~~	~~Adjustment~~	~~Deficit~~		~~Deficit~~		~~controlling~~		~~Total~~
												Reserves						interest
Balance at
Balance at
March 31, 2009	55,876,410	55,876	344,673	34,140,708	28,944	1,077,354	(19,219,220)	(18,141,866)	1,106,884	17,535,219
March 31, 2009		55,876,410			55,876			344,673			34,140,708	28,944	1,077,354	(19,219,220	)	(18,141,866	)	1,106,884		17,535,219
Foreign currency
Foreign
translation
currency
adjustment
translation																		-
	-	-	-	-	-	38,046	-	38,046	-	38,046
adjustment		-			-			-			-	-	38,046	-		38,046				38,046
Net loss	-	-	-	-	-	-	(754,435)	(754,435)	-	(754,435)
Net loss		-			-			-			-	-	-	(754,435	)	(754,435	)			(754,435	)
Noncontrolling
Noncontrolling
interest	-	-	-	-	-	-	-	-	(34,625)	(34,625)
interest																		(34,625	)	(34,625	)
Balance at
Balance at
June 30, 2009
June 30, 2009		55,876,410			55,876			344,673			34,140,708	28,944	1,115,400	(19,973,655	)	(18,858,255	)	1,072,259		16,784,205
(Unaudited)	55,876,410	55,876	344,673	34,140,708	28,944	1,115,400	(19,973,655)	(18,858,255)	1,072,259	16,784,205
Foreign currency
translation
adjustment	-	-	-	-	-	(36,257)	-	(36,257)	-	(36,257)
Net loss	-	-	-	-	-	-	(8,462,196)	(8,462,196)	-	(8,462,196)
Noncontrolling
interest	-	-	-	-	-	-	-	-	(29,398)	(29,398)
Noncontrolling
interest share of
discontinued
operations loss									(1,042,497)	(1,042,497)
Balance at
September 30, 2009
(Unaudited)	55,876,410	55,876	344,673	34,140,708	28,944	1,079,143	(28,435,851)	(27,330,902)	364	7,213,857

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Expressed in US dollars

	Three Months
	Six Months
	Ended June 30,
	Ended September 30,
	2009		2008
	$		$
Cash flows from continuing operating activities:
Cash flows from operating activities:
Net loss	(~~754~~9,~~435~~216,629	)	(~~993~~1,~~861~~733,192	)
Net loss from discontinued operations, net of income taxes	(150	)	(13,946	)
Net income (loss) from discontinued operations, net of income taxes	(7,949,520	)	(470,034	)
Net loss from continuing operations	(~~754~~1,~~285~~267,109	)	(~~979~~1,~~915~~263,158	)
Adjustment to reconcile net loss from continuing operations to
net cash (used in) generated from continuing operating activities:
net cash (used in) continuing operating activities:
Amortization of intangible assets	~~120~~76,~~844~~436		~~205~~125,~~653~~662
Depreciation expense	161,985		108,086
Cost of sales – amortization of deferred cost	11,113		-
Bad debts expense	-		-
Depreciation expense	161,688		62,690
Net income attributable to the noncontrolling interest	(34,625	)	(21,436	)
Bad debts expense	36,584		-
Net income attributable to the noncontrolling interest	-		-
Loss on disposal of property, plant and equipment	539		-
Changes in operating assets and liabilities, net of acquisitions:
Decrease (increase) in operating assets:
Accounts receivable, net of allowance for doubtful debts	(~~491~~281,~~307~~575	)	1,~~011~~743,~~736~~153
Costs and estimated earnings in excess of billings on uncompleted contracts	~~(148~~245,~~036~~269	)	~~(25~~576,~~225~~696	)
Prepaid expenses and other current assets	~~(368~~158,~~346~~657	)	56(1,~~071~~312,827	)
Inventories	~~22,898~~-		(~~112~~44,~~240~~163	)
Increase (decrease) in operating liabilities:
Trade payables	~~210~~330,~~442~~863		(~~398~~1,~~070~~623,784	)
Accrued expenses and other current liabilities	~~388~~306,~~748~~219		~~171~~(669,~~955~~085	)
Income tax payable	-		22(191,~~704~~269	)
Net cash provided by (used in) continuing operating activities	(891,681	)	39,319
Net cash (used in) continuing operating activities	(221,316	)	(2,596,085	)
Net cash provided by (used in) discontinued operating activities	(8256,~~370~~937	)	33327,~~388~~110
Net cash (used in) provided by operating activities	(900,051	)	72,707
Net cash (used in) operating activities	(478,253	)	(2,268,975	)
Cash flows from investing activities:
Purchase of plant and equipment	(38106,~~560~~134	)	(27,~~814~~406	)
Purchase of out-of-home advertising equipment	(~~110~~324,~~254~~599	)	-
Purchase of intangible asset	(622	)	-
Purchase of a subsidiary	-		21,184
Disposal of a subsidiary	(1,047	)	-
Addition to deferred cost	(4,385	)	-
Net cash (used in) investing activities of continuing operations	(153,821	)	(2,814	)
Net cash provided by (used in) investing activities of continuing operations	(436,787	)	13,778
Net cash provided by investing activities of discontinued operations	-		-
Net cash provided by (used in) investing activities of discontinued operations	292		(32,030	)
Net cash (used in) investing activities	(~~153~~436,~~821~~495	)	(218,~~814~~252	)

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)

Expressed in US dollars

	Three Months
	Six Months
	Ended June 30,
	Ended September 30,
	2009		2008
	$		$
Cash flows from financing activities:
Inception of bank loan	771,208		-400,896
Repayment of bank loans	(~~143~~314,~~998~~514	)	-
Inception of secured loan	~~271~~257,~~428~~070		-
Repayment of capital lease obligations	(499	)	(443	)
Inception of capital lease obligation	58,997		-
Advance from (repayment to) a director	(87,006	)	488,432
Repayment of capital lease obligations	-		(869	)
Net cash provided by financing activities of continuing operations	811,133		487,989
Advance from (repayment to) a director	(152,912	)	552,699
Net cash (used in) financing activities of discontinued operations	-		(11	)
Net cash provided by financing activities of continuing operations	619,849		952,726
Net cash provided by financing activities	811,133		487,978
Net cash provided by financing activities of discontinued operations	256,102		7,528
Effect of foreign exchange rate changes	2,090		(61,645	)
Net cash provided by financing activities	875,951		960,254
Net decrease in cash and cash equivalents	(240,649	)	496,226
Effect of foreign exchange rate changes	421		(63,486	)
Cash and cash equivalents at beginning of the period	390,198		3,978,500
Net decrease in cash and cash equivalents	(38,376	)	(1,390,459	)
Cash and cash equivalents at end of the period (a)	149,549		4,474,726
Cash and cash equivalents at beginning of the period	390,199		3,978,500
Cash and cash equivalents at end of the period (a)	351,823		2,588,041
Supplemental disclosure of cash flows information
Interest expense paid	151,~~951~~441		~~301~~7,343
Income taxes paid	6,429		19,280

(a) Includes $~~Nil~~127,780 and $3536,~~790~~209 of cash that is included on ~~the~~ the balance sheet with Current assets from discontinued operations as of September ~~June~~ 30, 2009 and ~~June~~September 30, 2008, respectively.

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

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

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Principle of Consolidation and Basis of Presentation

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

The accompanying unaudited consolidated financial statements as of ~~June~~September 30, 2009 and for the three and six months ended ~~June~~September 30, 2009 and 2008 have been prepared in accordance with generally accepted accounting principles and with the instructions to Form 10-Q and Regulation S-X applicable to smaller reporting companies. In the opinion of management, these unaudited consolidated financial statements include all adjustments considered necessary to make the financial statements not misleading. The results of operations for the three and six months ended ~~June~~ September 30, 2009 are not necessarily indicative of the results for the full fiscal year ending March 31, 2010. The unaudited consolidated interim financial statements should be read in conjunction with the Group’s audited consolidated financial statements and notes thereto for the year ended March 31, 2009 as reported in Form 10-K.

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

Use of Estimates

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

~~Cash~~Accounts Receivables and ~~Cash~~Allowance ~~Equivalents~~for Doubtful Accounts

~~Cash~~The Company performs certain credit evaluation procedures and does ~~cash~~not ~~equivalents~~require ~~consist~~collateral offor ~~cash~~financial oninstruments ~~hand~~subject ~~and~~to ~~demand~~credit risk. ~~deposits~~The ~~which~~Company ~~are~~believes ~~unrestricted~~that ascredit torisk ~~withdrawal~~is ~~and~~limited ~~use,~~because the Company routinely assesses the financial strength of its customers and, ~~which~~based ~~have~~upon factors ~~maturities~~surrounding the credit risk of ~~three~~its ~~months~~customers, orestablishes ~~less~~an ~~when~~allowance ~~purchased~~for uncollectible accounts receivable. ~~Cash~~As ~~and~~a ~~cash~~consequence, ~~equivalents~~the asCompany believes that ofits ~~June~~accounts ~~30,~~receivable ~~2009~~credit risk exposure beyond such allowances is limited. The Company recognizes an allowance for doubtful accounts to ensure accounts receivable are not overstated due to uncollectibility and ~~March~~are 31maintained for all customers based on a variety of factors, ~~2009~~including the length of ~~$149~~time the receivables are past due,~~549~~ significant onetime events and ~~$381~~historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation,~~643,~~ ~~respectively~~such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further ~~consist~~adjusted. As of ~~cash~~September on30, ~~hand~~2009 and ~~current~~March ~~accounts~~31, ~~and~~2009, ~~savings~~the ~~accounts~~allowance ~~with~~for ~~respective~~doubtful ~~banks,~~accounts ~~without~~was ~~any~~approximately ~~time~~$561,254 orand ~~demand~~$415,383, ~~deposits~~respectively.

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Accounts Receivables and Allowance for Doubtful Accounts

The Company performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk of its customers, establishes an allowance for uncollectible accounts receivable. As a consequence, the Company believes that its accounts receivable credit risk exposure beyond such allowances is limited. The Company recognizes an allowance for doubtful accounts to ensure accounts receivable are not overstated due to uncollectibility and are maintained for all customers based on a variety of factors, including the length of time the receivables are past due, significant onetime events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. As of June 30, 2009 and March 31, 2009, the allowance for doubtful accounts was approximately $1,433,816 and $1,287,843, respectively.

Inventories

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

Goodwill

~~Prior~~The ~~to April 1, 2009, the~~ Company ~~accounted~~accounts for acquisitions of business in accordance with ~~SFAS~~Financial ~~No.~~Accounting ~~141~~Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”, which results in the recognition of goodwill when the purchase price exceeds the fair value of net assets acquired. ~~As of April 1, 2009, the Company accounts for business acquisitions in accordance with SFAS No. 141R “Business Combinations”, which is a revision of SFAS No. 141.~~ Goodwill is not subject to amortization but will be subject to periodic evaluation for impairment. Goodwill is stated in the ~~consolidated~~ consolidated balance sheet at cost less accumulated impairment loss ~~(see Note 9)~~.

Intangible Assets

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

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

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

Impairment of Long-Lived Assets

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Impairment of Long-Lived Assets

Plant and Equipment and Construction in Progress

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

Testing equipment	4 years
Office equipment	3 - 4 years
Furniture and fixtures	3 - 4 years
Leasehold improvements	shorter of 4 years or the remaining terms of the leases
Motor vehicles	5 - 7 years
Moulds	3 years
Factory machinery and equipment	10 - 16 years
Out-of-home advertising equipment	10 - 12 years

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

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

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

Deferred Costs

Deferred costs relates to costs which enable OOH advertising LED display and equipment to operate and commence its income generating activities. However, the costs cannot be capitalized because they are not directly related to bringing the equipment to its existing condition and location. Examples are license fee for OOH advertising and prepaid rental. The costs incurred are initially recorded as a deferred cost within the non-current assets section of the balance sheet, and the deferred costs are subsequently recorded as a cost of sales when the Company recognizes revenue for the related OOH advertising revenue, in accordance with the matching principle.

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Net Investment in Sales - Type Leases

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

Revenue Recognition

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

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

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

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

~~The~~- ~~asset,~~14 “Costs and estimated earnings in excess of billings on uncompleted contracts” represents revenues recognized in excess of amounts billed on these contracts. The liability “Billings in excess of costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized on these contracts.-

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

~~Regarding~~The ~~sales of lighting source products~~asset, ~~the~~“Costs ~~Company~~and ~~sells its~~estimated ~~products~~earnings ~~directly~~in toexcess ~~end~~of ~~users~~billings on ~~and~~uncompleted ~~through~~contracts” ~~distributors.~~represents ~~Revenue~~revenues is recognized ~~when~~in ~~the~~excess ~~product~~of ~~is delivered to the customer and all other revenue~~amounts ~~recognition~~billed ~~criteria~~on ~~are~~these ~~met~~contracts. ~~Revenue~~The ~~from~~liability ~~rentals~~“Billings ~~and~~in ~~operating~~excess ~~leases without any acceptance provisions is recognized on a straight-line basis over the term~~ of ~~the~~costs ~~rental or lease. Revenue regarding commission~~ and ~~service income is~~ ~~recognized~~estimated ~~when~~earnings ~~services~~on ~~are~~uncompleted ~~rendered.~~contracts” ~~Revenue~~represents ~~from~~billings ~~sales-type~~in ~~leases~~excess isof revenues recognized ~~over~~on ~~the~~these ~~term of the lease, using the effective interest method~~contracts.

The following table summarizes operating revenue and related cost of sales regarding other revenue as included in the consolidated statements of operations and comprehensive loss:

	Three Months Ended
	June 30,
	2009		2008
	$		$
Other revenue
Lighting source products	446,594		894,806
Commission and service income	-		10,952
Total net revenues	446,594		905,758
Cost of sales of other revenue:
Cost of sales of Lighting source products	(328,243	)	(553,553	)
Cost of sales of Lighting source products – depreciation	(45,627	)	(65,591	)
Cost of commission and service income	-		(189	)
Total cost of revenues	(373,870	)	(619,333	)

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.

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Accounting for Uncertainty in Income Taxes

In June 2006, the ~~Financial Accounting Standards Board (“~~FASB”) issued ~~Interpretation~~ASC ~~No.~~740 ~~48,~~ “~~Accounting for Uncertainty in~~ Income Taxes ~~- an Interpretation of FASB Statement No. 109~~” (“~~FIN 48~~ASC 740”). ~~FIN~~ASC 48740 is intended to clarify the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return. ~~FIN~~ASC 48740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Under ~~FIN~~ASC 48740, it is a two-step process for valuation of a tax position. Step one is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. Step two is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

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

Foreign Currency Translation

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Foreign Currency Translation (continued)

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

Segment Information

The Company’s segment reporting is prepared in accordance with ~~SFAS~~ASC ~~No.~~280 ~~131,~~ “~~Disclosures~~Segment ~~about Segments of an Enterprise and Related Information~~Reporting” (“~~SFAS~~ASC ~~131~~280”). The management approach required by ~~SFAS~~ASC 280 ~~131~~ requires that the internal reporting structure used by management for making ~~operating~~ operating decisions and assessing performance be used as the source for presenting the Group’s reportable segments.

Fair Value of Financial Instruments

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Comprehensive Income

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

Stock-based Payment

The Company adopted ~~SFAS~~ASC ~~No.~~718 ~~123R,~~ “~~Share~~Compensation -~~Based~~ ~~Payment”~~Stock Compensation” (“~~SFAS 123R~~ASC 718”) using the modified prospective method. Under ~~SFAS~~ASC ~~123R~~718, equity instruments issued to employees for their services are measured at the grant-date fair value and recognized in the statement of operations over the service period.

The Company accounts for stock options and stock issued to non-employees for goods or services in accordance with the fair value method of ~~SFAS~~ASC ~~123R~~718, which recognizes the value of such services at the fair value of the equity instrument or of the goods or services, whichever is more readily determinable.

Basic and Diluted Earnings (Loss) per Share

The Company reports basic earnings per share in accordance with ~~SFAS~~ASC ~~No.~~260 ~~128,~~ “Earnings Per Share” (“ASC 260”). Basic earnings per share is computed ~~using~~ using the weighted average number of shares outstanding during the periods presented. The weighted average number of shares of the Company represents the common stock outstanding during the period. Diluted earnings per share is based on the assumption that if there is no anti-dilutive effect on the basic earnings ~~per~~ per share, all dilutive convertible ~~notes~~instruments, options, warrants and ~~warrants~~other common stock equivalents were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, ~~options~~common ~~and~~stock ~~warrants~~ equivalents are assumed to be exercised at the beginning of the year (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Fair Value Disclosure

Effective April 1, 2008, the Company adopted ~~SFAS~~ASC ~~No.~~820 ~~157,~~ “Fair Value Measurements and Disclosures” (“~~SFAS~~ASC ~~No. 157~~820”). ~~SFAS~~ASC ~~No.~~820 ~~157~~ clarifies the definition of fair value, prescribes methods for measuring fair value and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

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

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

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

The adoption of ~~SFAS~~ASC ~~No.~~820 ~~157~~ did not have a material impact on ~~our~~ our fair value measurements as the Company does not have any balance sheet components deemed financial assets or liabilities.

Advertising Expense

Advertising costs are expensed as incurred. Advertising expense for the three months ended June 30, 2009 and 2008 was approximately $3,342 and $17,270, respectively.

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements

In ~~April~~June 2009, the FASB issued ~~FASB~~new ~~Staff~~accounting ~~Position~~guidance ~~(“FSP”) SFAS~~which ~~No.~~amends ~~141(R)-1,~~the ~~“Accounting~~consolidation ~~for~~guidance ~~Assets~~regarding ~~Acquired~~variable ~~and~~interest ~~Liabilities Assumed in a Business Combination That Arise from Contingencies~~entities.” ~~(“FSP SFAS 141R-1”). FSP~~The ~~SFAS~~amendments ~~141(R)-1~~will ~~amends~~affect ~~and~~the ~~clarifies~~overall ~~SFAS~~consolidation ~~141(R)~~analysis tounder ~~address~~the ~~application issues on~~current ~~initial recognition and measurement, subsequent measurement and~~ accounting, ~~and disclosure of assets and liabilities arising from contingencies in a business combination~~guidance. ~~FSP~~The ~~SFAS~~new ~~141(R)-1~~accounting guidance is effective for ~~assets~~fiscal ~~and liabilities arising~~years ~~from contingencies in business combinations for which the acquisition date is on or after the~~ beginning ~~of the first annual reporting period beginning on or~~ after ~~December~~November 15, ~~2008~~2009. The ~~Company~~management does not expect the adoption of ~~FSP~~the ~~SFAS 141(R)-1~~new accounting guidance to have a material impact on ~~its~~the ~~consolidated~~ Company’s financial ~~statements~~condition or results of operations.

In ~~April~~August 2009, the ~~SEC~~FASB issued ~~Staff~~new ~~Accounting~~accounting ~~Bulletin~~guidance ~~No.~~for ~~111~~the ~~(“SAB~~fair ~~111”).~~value ~~SAB~~measurement ~~111~~of ~~amends~~liabilities ~~and~~when ~~replaces~~a ~~SAB~~quoted ~~Topic~~price ~~5.M.~~ in ~~the~~an ~~SAB~~active ~~Series entitled~~market ~~“Other Than Temporary Impairment of Certain Investments in Debt and~~is ~~Equity~~not ~~Securities~~available.” ~~SAB~~The ~~111~~new ~~maintains~~accounting ~~the~~guidance ~~SEC~~is ~~staff’s~~effective ~~previous~~for ~~views~~reporting ~~related to~~periods ~~equity~~beginning ~~securities~~after ~~and~~August ~~amends~~28, ~~Topic 5~~2009.M. ~~to exclude debt securities from its scope.~~ The ~~Company~~management does not expect the ~~implementation~~adoption of the ~~SAB~~new ~~111~~accounting guidance to have a material impact on ~~its~~the ~~consolidated~~Company’s financial condition ~~statements~~or results of operations.

In ~~May~~October 2009, the FASB issued ~~SFAS~~new ~~No.~~accounting ~~165, “Subsequent Events” (“SFAS 165”) to provide~~ guidance ~~on when a subsequent event should be recognized~~that inamends the ~~financial~~revenue ~~statements.~~recognition ~~Subsequent~~for ~~events~~multiple-element ~~that~~arrangements ~~provide~~and ~~additional~~expands ~~evidence~~the ~~about~~disclosure ~~conditions~~requirements ~~that~~in ~~existed~~respect ~~at the date~~ of ~~the~~such ~~balance sheet should be recognized at the balance sheet date~~arrangements. ~~Subsequent~~The ~~events~~new ~~that~~guidance ~~provide evidence~~amends ~~about conditions that arose after~~ the ~~balance~~criteria ~~sheet~~for ~~date~~separating ~~but~~consideration ~~before~~in ~~financial statements~~multiple-deliverable ~~are issued~~arrangements, ~~or are available to be issued, are not required to be~~ ~~recognized.~~establishes ~~The~~a ~~date~~selling ~~through~~price ~~which~~hierarchy ~~subsequent~~for ~~events~~determining ~~have been evaluated must be disclosed as well as whether it is~~ the ~~date~~selling ~~the~~price ~~financial~~of ~~statements were issued~~a ordeliverable, ~~the~~eliminates ~~date~~ the ~~financial~~residual ~~statements~~method ~~were~~of ~~available~~allocation, toand berequires ~~issued. For~~the ~~nonrecognized~~application ~~subsequent~~of ~~events~~relative ~~which~~selling ~~should~~price bemethod ~~disclosed~~in toallocating ~~keep~~ the ~~financial~~arrangement ~~statements~~consideration ~~from~~to ~~being~~all ~~misleading, the nature of the event and an estimate of its financial effect, or a statement that such an estimate cannot be made, should be disclosed~~deliverables. The ~~standard~~new accounting guidance is effective for fiscal ~~interim~~years orbeginning ~~annual periods ending~~ after June 15, ~~2009~~2010. ~~This~~The ~~pronouncement~~management ~~was~~does ~~adopted~~not byexpect the ~~Company effective June 30,~~ ~~2009, and the~~ adoption of ~~this~~the new ~~standard~~accounting ~~did~~guidance ~~not~~to have a material ~~effect~~impact on the ~~its~~Company’s ~~consolidated~~ financial ~~position,~~condition or results of operations ~~or cash flows~~. ~~The Company has evaluated subsequent events through August 19, 2009, the date the consolidated financial statements were issued.~~

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 limits the circumstances in which a financial asset should be derecognized when the transferor has not transferred the entire financial asset by taking into consideration the transferor’s continuing involvement. The standard requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. The concept of a qualifying special-~~purpose~~ ~~entity~~17 is removed from SFAS 140 along with the exception from applying FASB Interpretation Number (“FIN”) 46(R). The standard is effective for the first annual reporting period that begins after November 15, 2009, for interim periods within the first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company does not expect SFAS 166 to have a material impact on its consolidated financial statements. -

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 2. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

In June 2009, the FASB issued ~~SFAS~~new ~~No.~~accounting ~~167,~~guidance ~~“Amendments to FASB~~which ~~Interpretation~~limits ~~No.~~the ~~46(R)”~~circumstances ~~(“SFAS~~in ~~167”).~~which ~~The~~a ~~standard~~financial ~~amends~~asset ~~FIN~~should ~~46(R)~~be toderecognized ~~require~~when athe ~~company~~transferor tohas ~~analyze~~not ~~whether~~transferred ~~its~~the ~~interest~~entire infinancial aasset ~~variable~~by ~~interest~~taking ~~entity (“VIE”)~~into ~~gives~~consideration itthe atransferor’s ~~controlling~~continuing ~~financial interest~~involvement. AThe ~~company~~standard ~~must~~requires that ~~assess~~a ~~whether~~transferor itrecognize ~~has an~~and ~~implicit~~initially ~~financial~~measure ~~responsibility~~at tofair ~~ensure~~value ~~that~~all ~~the~~assets obtained ~~VIE~~(including ~~operates~~a astransferor’s ~~designed when~~beneficial ~~determining~~interest) ~~whether~~and itliabilities ~~has~~incurred as ~~the~~a ~~power~~result toof ~~direct~~a ~~the~~transfer ~~activities~~ of ~~the~~financial ~~VIE that~~assets ~~significantly~~accounted ~~impact~~for ~~its~~as ~~economic~~a ~~performance~~sale. ~~Ongoing~~The concept ~~reassessments~~ of ~~whether~~ a ~~company~~qualifying isspecial-purpose ~~the~~entity ~~primary beneficiary~~ is ~~also~~removed ~~required~~from byASC ~~the~~860 ~~standard.~~along ~~SFAS~~with ~~167 amends~~ the ~~criteria~~exception tofrom ~~qualify~~applying asASC a810 ~~primary beneficiary as well as how to determine the existence of a VIE~~“Consolidation”. The standard ~~also eliminates certain exceptions that were available under FIN 46(R). SFAS 167~~ is effective asfor of the ~~beginning~~ ~~of each reporting entity’s~~ first annual reporting period that begins after November 15, 2009, for interim periods within ~~that~~the first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. ~~Comparative~~The ~~disclosures~~management ~~will~~does benot ~~required~~expect ~~for periods after~~ the ~~effective~~new ~~date.~~guidance ~~The~~included ~~Company~~in ~~does~~ASC ~~not expect SFAS 167~~ 860 to have a material impact on ~~its~~the Company’s consolidated financial statements.

In June 2009, the FASB issued ~~SFAS~~ASC ~~No.~~105 ~~168,~~ “~~The FASB Accounting Standards Codification and the Hierarchy of~~ Generally Accepted Accounting Principles ~~— a replacement of FASB Statement No. 162~~” (“~~SFAS~~ASC ~~168~~105”). ~~SFAS~~ ~~168~~ASC 105 establishes the FASB Accounting Standards Codification as the source of authoritative generally accepted accounting principles for nongovernmental entities. ~~SFAS~~ASC ~~168~~105 is effective for interim and annual periods ending after September 15, 2009, and is not expected to have a material impact on the Company’s consolidated financial statements.

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

NOTE 3. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS

Costs and estimated earnings in excess of billings on uncompleted contracts as of ~~June~~September 30, 2009 and March 31, 2009 are summarized as as follows:

	June 30,	March 31,
	September 30,	March 31,
	2009	2009
	(Unaudited)
	$	$
Cumulative costs incurred on uncompleted contracts	12,~~381~~260,~~034~~081	761,574
Cumulative estimated earnings to date	~~517~~589,~~179~~043	377,420
	1,898,213	1,138,994
	2,849,124	1,138,994
Less: Billings to date	12,~~076~~421,~~864~~080	465,681
	821,349	673,313
	428,044	673,313

- 2018 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

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

	June 30,	March 31,
	2009	2009
	(Unaudited)
Presented in current assets:	$	$
Trade deposits	51,291	51,291
Rental, utilities and other deposits	340,483	380,365
Prepaid expenses	305,658	397,495
Other receivables	949,572	432,182
Contract surety bond refundable deposit	44,605	44,605
Other receivable regarding disposal of property, plant and equipment	511,337	511,277
	2,202,946	1,817,215
Presented in noncurrent assets:
Other receivables	511,337	511,277

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

NOTE 5. INVENTORIES

Inventories – others by major category are summarized as follows:

	June 30,	March 31,
	2009	2009
	(Unaudited)
	$	$
Raw materials	267,504	290,338
Work in progress	1,193,322	1,195,181
Finished goods	791,112	789,033
	2,251,938	2,274,552

Inventories – LED by major category are summarized as follows:

- 21 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 6. PLANT AND EQUIPMENT, NET

Plant and equipment consist of the following:

	June 30,		March 31,
	2009		2009
	(Unaudited)
	$		$
Testing equipment	381		382
Office equipment	588,790		577,273
Furniture and fixtures	29,904		29,633
Leasehold improvements	377,850		339,018
Motor vehicles	66,543		66,153
Factory machinery and equipment	3,060,122		3,059,764
Total	4,123,590		4,072,223
Less: Accumulated depreciation	(1,664,023	)	(1,543,082	)
Plant and equipment, net	2,459,567		2,529,141

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

	June 30,		March 31,
	2009		2009
	(Unaudited)
	$		$
Motor vehicle	14,990		14,335
Less: Accumulated depreciation	(7,745	)	(6,690	)
Equipment, net held under capital leases	7,245		7,645

NOTE 7. OUT-OF-HOME ADVERTISING EQUIPMENT, NET

OOH advertising equipment consists of the following:

	June 30,		March 31,
	September 30,		March 31,
	2009		2009
	(Unaudited)
	$		$
OOH advertising LED display	2,~~024~~077,~~745~~792		1,~~991~~837,~~995~~741
OOH advertising visual, audio and related equipment	~~249,064~~-		~~238,189~~-
Total	2,~~273~~077,~~809~~792		21,~~230~~837,~~184~~741
Less: Accumulated depreciation	(6492,~~732~~792	)	(1613,~~376~~320	)
OOH advertising equipment, net	21,~~209~~985,~~077~~000		21,~~213~~824,~~808~~421

-NOTE 226. CONSTRUCTION IN PROGRESS - OUT-OF-HOME ADVERTISING EQUIPMENT

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 8. CONSTRUCTION IN PROGRESS - OUT-OF-HOME ADVERTISING EQUIPMENT

OOH construction in progress consists of the following:

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

~~NOTE~~- 9.19 ~~GOODWILL AND INTANGIBLE ASSETS, NET~~-

Goodwill was recognized upon to the acquisition of equity interests in Beijing Illumination (Hong Kong) Limited (“Beijing Illumination”) and Lightscape Technologies (Macau) Limited (“Lightscape Macau”) and represents the costs of the investments over the estimated fair value of the underlying net assets acquired.

Changes to goodwill during the three months ended June 30, 2009 and the year ended March 31, 2009 are as follows:

	June 30,	March 31,
	2009	2009
	(Unaudited)
	$	$
Balance at the beginning of the period	4,476,574	4,476,574
Impairment losses recognized	-	-
Balance at the end of the period	4,476,574	4,476,574

Impairment Losses on Goodwill for Investment in Beijing Illumination

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

Intangible Assets

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

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 97. ~~GOODWILL~~OBLIGATIONS ~~AND~~UNDER ~~INTANGIBLE~~CAPITAL ~~ASSETS, NET (continued)~~LEASES

Intangible Assets (continued)

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

	June 30, 2009				March 31, 2009
		Accumulated				Accumulated
		amortization				amortization
		and				and
	Cost	impairment		Net	Cost	impairment		Net
	$	$		$	$	$		$
Subject to amortization
Completed technology – AHP	1,172,616	(1,172,616	)	-	1,172,616	(1,167,011	)	5,605
Completed technology – HID	1,214,012	(996,631	)	217,381	1,214,012	(920,755	)	293,257
Software and license (i)	651,429	(606,596	)	44,833	650,807	(560,805	)	82,431
Customer lists and relationships	45,797	(25,161	)	20,636	45,797	(24,017	)	21,780
Distributors list	179,351	(179,351	)	-	179,351	(179,351	)	-
Total	3,263,205	(2,980,355	)	282,850	3,262,583	(2,851,939	)	403,073
Not subject to amortization
Trademark	566,209	-		566,209	566,209	-		566,209
Total	3,829,414	(2,980,355	)	849,059	3,828,792	(2,851,939	)	969,282

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

(i) including an addition of $622 during the three months ended June 30, 2009.

Twelve months ending September 30,		$
2010		11,799
2011		11,799
2012		11,799
2013		11,800
2014		11,800
		58,997

~~Amortization~~The ~~expenses~~Company ~~charged~~entered tointo ~~net~~capital ~~loss~~lease ~~from~~arrangements for leasing a motor vehicle used in its operations. The lease is for a term of five years. For the ~~three~~six months ended ~~June~~September 30, 2009, ~~and~~the ~~2008~~capital ~~were~~lease ~~approximately~~arrangement ~~$120,844~~was on an interest bearing basis. The lease is on a fixed repayment basis and ~~$205,700~~requires ~~respectively~~no contingent rental payments. ~~Anticipated~~The ~~amortization~~interest expense incurred on this capital lease was $181 and $Nil for ~~each~~the six months ended September 30, 2009 and 2008, respectively, of which the ~~following~~ ~~five~~capital ~~years~~lease isarrangement asfor ~~follows:~~2008 was on a non-interest bearing basis.

Twelve months ending June 30,		$
2010		262,768
2011		8,030
2012		5,156
2013		4,580
2014		2,316
		282,850

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

NOTE 108. ~~BANK~~OTHER ~~BORROWINGS~~RESERVES

Bank borrowings include two term loans each borrowed from DBS Bank and OCBC Bank, respectively, by Media AV, with principal of Singapore Dollars (“SGD”) SGD100,000, SGD50,000, SGD50,000 and SGD70,000, or $68,761, $34,381, $34,381 and $48,133, respectively. The commencement dates are April 3, 2007, June 27, 2008, February 1, 2007 and February 19, 2009, respectively. The loans are repayable by 36, 24, 60 and 48 monthly installments, and incur interest at an annual rate of 12.5%, 12.5%, 13.12% and 13.38%, respectively. These loans are secured by a deed of guarantee and indemnity by a director of Media AV.

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LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 10. BANK BORROWINGS (continued)

On April 2, 2009, the Company, through its wholly-owned subsidiary Lightscape Technologies (Greater China) Limited (“LTGC”), obtained an installment loan of $771,208 (HKD6,000,000) from DBS Bank (Hong Kong) Limited (“DBS Bank”) under the Special Loan Guarantee Scheme of The Government of the Hong Kong Special Administrative Region (“HKSAR Government”). The loan is repayable over 12 equal monthly installments, at an interest rate of 2% per annum over the prime lending rate, which is currently 5.25%, from May 12, 2009 to April 12, 2010. The installment loan is secured by a Special Loan Guarantee issued by the HKSAR Government for an amount equal to 70% of the loan, a Guarantee and Indemnity for an unlimited amount duly executed by a director of the Company and a director of LTGC, and a Guarantee and Indemnity for an unlimited amount duly executed by Tech Team Investment Limited, the immediate holding company of LTGC. As of June 30, 2009, 2 of 12 installments have been repaid to DBS Bank on the respective monthly due dates.

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

Twelve months ending June 30,		$
2010		699,369
2011		23,095
2012		19,186
2013		8,207
2014		-
		749,857

NOTE 11. OBLIGATIONS UNDER CAPITAL LEASES

	June 30,	March 31,
	2009	2009
	(Unaudited)
	$	$
Total minimum lease payments, with $nil representing interest	8,087	8,217
Less: Current portion of obligations under capital leases	3,037	(2,904	)
Long-term portion of obligations under capital leases	5,050	5,313

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

Twelve months ending June 30,		$
2010		3,037
2011		3,037
2012		2,013
2013		-
		8,087

The Company entered into capital lease arrangements for leasing a second hand truck used in its operations. The lease is for a term of five years. For the three months ended June 30, 2009, the capital lease arrangement was on an interest bearing basis. The leases are on a fixed repayment basis and require no contingent rental payments. The interest expenses incurred on these capital leases were $178 and $nil for the three months ended June 30, 2009 and 2008, respectively.

- 25 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 12. OTHER RESERVES

The other reserves represent the statutory surplus reserve of the Company’s subsidiaries in the People’s Republic of China (“PRC”).

Statutory Surplus Reserve

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

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

~~NOTE~~- ~~13.~~20 ~~FOREIGN CURRENCY TRANSACTION LOSS~~-

Foreign currency transaction losses of $6,313 and $27,885 for the three months ended June 30, 2009 and 2008, respectively, were included in determining net losses.

NOTE 14. INCOME TAX

As of June 30, 2009 and March 31, 2009, the components of deferred tax assets and liabilities were as follows:

	At June 30,		At March 31,
	2009		2009
	(Unaudited)
	$		$
Deferred tax assets
- tax losses	2,722,116		2,383,469
- valuation allowance	(2,402,447	)	(2,207,858	)
Net deferred tax assets	319,669		175,611
Deferred tax liabilities
- Tax depreciation allowance in excess of book	(319,669	)	(175,611	)
depreciation and amortization
Net deferred tax	-		-

For the operating loss carry forwards of approximately $12,510,855 as of June 30, 2009, $1,123,292, $211,696, $298,181, $1,355,338 and $1,038,053 will expire in 2010, 2011, 2012, 2013 and 2014, respectively, and the remainder of $8,484,295 will be carried forward indefinitely.

- 26 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER ~~JUNE~~ 30, 2009

NOTE 149. INCOME TAX ~~(continued)~~

AsThe atCompany ~~June~~accounts ~~30,~~for ~~2009,~~income ~~upon~~taxes ~~confirmation~~pursuant ofto ~~additional~~Accounting ~~depreciation~~Standards ~~allowance~~Codification ~~regarding~~740, ~~capital~~Income ~~expenditure~~Taxes on(ASC ~~OOH~~740). ~~LED~~Under ~~display,~~this ~~the~~accounting ~~Company~~standard, ~~had~~deferred ~~accumulated~~tax ~~net~~assets ~~operating~~and ~~loss~~liabilities ~~carryforwards~~are ~~for~~determined ~~Hong~~with ~~Kong~~reference ~~income~~to ~~tax~~temporary ~~purposes~~differences ofbetween ~~approximately~~the ~~$7,975,549~~bases ~~that~~of ~~are~~certain ~~available~~assets toand ~~offset~~liabilities ~~future~~for ~~taxable~~ income. ~~The~~tax ~~Company~~and ~~also~~financial ~~has~~reporting ~~accumulated~~purposes. ~~net~~The ~~operating~~deferred ~~loss carryforwards for Singapore income~~ tax ~~purposes~~assets ~~of approximately $508,747 that~~and liabilities are ~~available~~classified according to ~~offset~~the ~~future~~financial ~~taxable~~statement ~~income. Realization~~ classification of the ~~net~~assets ~~operating loss~~and ~~carryforwards~~liabilities isgenerating ~~dependent~~the ~~upon future profitable operations. Accordingly~~differences, ~~management~~ ~~has~~and ~~adjusted~~a ~~the~~ valuation allowance ~~during~~is ~~the~~to ~~three~~be ~~months~~maintained ~~ended June~~with ~~30,~~respect ~~2009~~ to ~~reduce the~~ deferred tax ~~asset associated with the net operating loss carryforwards to $319,669 at June 30, 2009~~assets.

~~Additionally,~~The asCompany ofestablishes ~~June~~a ~~30,~~valuation ~~2009,~~allowance based upon ~~expiry of certain net~~the ~~operating~~potential ~~loss~~likelihood ~~and~~of ~~adjustment~~realization ~~in respect~~ of ~~agreeing~~the ~~with~~deferred ~~agreed~~ tax ~~losses~~asset ~~per Tax~~and ~~Authority~~taking ofinto consideration ~~China,~~ the Company’s ~~had~~financial ~~accumulated~~position ~~net~~and ~~operating~~results ~~loss carryforwards~~of operations for ~~Chinese~~the current ~~tax purposes of approximately $605,046~~period. ~~Realization~~Future realization of the ~~Chinese~~deferred tax ~~net~~benefit ~~operating~~depends ~~loss carryforwards is dependent~~ on ~~future~~the ~~profitable~~existence ~~operations,~~of assufficient ~~well~~taxable asincome awithin ~~maximum~~the ~~five-year~~ carryforward period~~. Accordingly,~~ ~~management~~under ~~has adjusted valuation allowance to reduce~~ the ~~deferred~~ ~~tax~~Federal ~~associated with the net operating loss carryforwards to zero at June 30, 2009. These~~ tax ~~losses~~laws ~~yield~~local ~~deferred~~ tax ~~assets~~laws of ~~approximately~~its ~~$151,262~~overseas ~~as of June 30, 2009~~subsidiaries. .

~~The~~Changes ~~components~~in ofcircumstances, ~~profit~~such ~~(loss)~~as ~~before~~the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax ~~and~~asset. Any change in the valuation allowance will be ~~noncontrolling~~included ~~interests~~in ~~are~~income asin ~~follows:~~the year of the change in estimate

	Three Months Ended June 30,
	2009		2008
	$		$
Hong Kong	(632,095	)	(912,071	)
Macau	(2,383	)	(42,375	)
Singapore	79,062		(46,905	)
United States	(93,657	)	-
Mainland, the PRC	(28,554	)	-
	(677,627	)	(1,001,351	)

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

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

Tech Team Holdings Limited (“TTHL”) is a tax-exempted company incorporated in the Cayman Islands.

Under the current BVI law, Tech Team (China) Limited’s, Tech Team Investment Limited’s and Powerland Technology Limited’s income are not subject to taxation.

Lightscape Technologies Inc. and Tomi Fuji Energy Pte. Limited also had no assessable profits earned or had tax losses brought forward to offset current period assessable profit during the periods presented.

No provision for PRC income tax has been made as Tech Team Development (Zhuhai) Limited (“TT (Zhuhai)”) had no assessable profits earned during the three months ended June 30, 2009 and 2008. Preferential tax treatment has been agreed with the relevant tax authorities and TT(Zhuhai) is exempted from PRC income tax in the first two profitable years and is subject to half of the standard statutory tax rate of 15% in the subsequent three years. However, as TT (Zhuhai) derived no taxable profits since its commencement of operations, this preferential tax treatment has expired and it is required to pay a tax rate of 25% from January 1, 2008 onward.

- 27 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 14. INCOME TAX (continued)

Pursuant to the relevant laws and regulations in the PRC, Beijing Aihua New Enterprise Lighting Appliance Company Limited (“Beijing Aihua”) is exempted from PRC enterprise income tax for two years starting from its first profitable year from January 2004 to December 2005. After it became a wholly foreign owned enterprise, Beijing Aihua is required to pay an effective tax rate of 12%, a 50% reduction from its normal tax rate of 24%, from January 2006 to December 2008. From January 1, 2009 onward, Beijing Aihua is required to pay a normal 25% tax rate.

Beijing Illumination is a Hong Kong company which is subject to a tax on profits of 16.5% from April 1, 2008 onward.

Lightscape Macau is a company incorporated in Macau Special Administrative Region, which is subject to progressive tax rates to a maximum rate of 12%.

Media AV International PTE Limited is a company incorporated in Singapore, which is subject to an 18% tax rate on its normal chargeable income. Effective from year of assessment 2008 (financial year ended March 31, 2009), a partial tax exemption is given to companies on “normal chargeable income’ (excluding Singapore franked dividends) of up to SGD300,000, as follows: 75% of the first SGD10,000 of normal chargeable income, or at an effective tax rate of 4.5%; and 50% of the next SGD290,000 of normal chargeable income, or at an effective tax rate of 9%.

Other companies are dormant and had no assessable profits earned during the periods presented.

Income tax expense (credit) for the three months ended June 30, 2009 and 2008 represents the provision for income tax in the following jurisdictions:

	Three Months Ended June 30,
	2009	2008
	$	$
Current taxes:
Hong Kong	-	-
Macau	-	-
Singapore	-	-
Mainland, PRC	3	-
	3	-

FIN 48 clarifies the application of SFAS No. 109, “Accounting for Income Taxes”, by defining a criterion that an individual income tax position must meet for any part of the benefit of that position to be recognized in an enterprise’s financial statements and provides guidance on measurement, derecognition, classification, accounting for interest and penalties, accounting in interim periods, disclosure and transition.

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

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

-Since 28there -is a net operating loss, no income tax is provided for the six months ended September 30, 2009, while a tax credit was recorded for the six months ended September 30, 2008 upon issuance of a tax assessment confirming no income tax for the previous year in Lightscape Technologies (Macau) Limited, our Macau subsidiary.

NOTE 10. DISCONTINUED OPERATIONS

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

- 21 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 1510. DISCONTINUED OPERATIONS (continued)

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

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

~~The~~Remaining ~~Company~~assets ~~accounts~~of ~~for~~the ~~its~~energy ~~discontinued~~savings ~~operations~~segment ~~under~~include ~~the~~only ~~provisions~~certain ofreceivables ~~SFAS~~and ~~No.~~lease ~~144,~~receivables ~~“Accounting~~less ~~for~~unearned ~~the~~interests ~~Impairment or Disposal of~~under ~~Long~~sales-~~Lived~~type ~~Assets” (“SFAS 144”)~~leases. ~~Accordingly,~~Except for the ~~results~~collection of ~~operations~~these ~~and~~receivables, the Company ~~related~~will ~~charges~~no ~~for~~longer ~~discontinued operations~~ have ~~been~~any ~~classified~~significant ascontinuing ~~“(Loss)~~involvement ~~from discontinued~~in ~~operations, net of income taxes” on~~ the ~~accompanying Consolidated~~energy-savings ~~Statements of Operations~~segment. ~~Assets~~Therefore, ~~and~~the ~~liabilities~~energy ofsavings ~~the~~segment ~~discontinued~~has ~~operations have~~ been ~~reclassified~~classified ~~and reflected on the accompanying Consolidated Balance Sheets~~ as ~~“Current assets of discontinued operations” and “Current liabilities~~ of discontinued operations”. ~~For~~in ~~comparative~~accordance ~~purposes,~~with ~~all~~ASC ~~prior periods presented have been restated to reflect the reclassifications on a consistent basis~~205-20.

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

~~Remaining~~In ~~assets~~order ofto ~~the~~more ~~energy~~effectively ~~savings~~utilize ~~segment~~the ~~include~~financial ~~only~~and other ~~certain~~resources, ~~receivables~~ and ~~lease~~to ~~receivables~~focus ~~less~~our ~~unearned~~business ~~interests~~on ~~under sales~~the LED out-~~type~~of-home ~~leases.~~advertising business, ~~Except~~on ~~for~~August 31, 2009, the ~~collection~~Company disposed of ~~these~~100% ~~receivables,~~of the ~~Company~~outstanding ~~will~~capital nostock ~~longer~~of ~~have~~Golden ~~any~~Cypress ~~significant~~Limited ~~continuing~~(“Golden ~~involvement~~Cypress”) into ~~the~~a ~~energy-savings~~third party ~~segment.~~investor ~~Therefore~~(“the Purchaser”), ~~the~~at ~~energy~~a ~~savings~~consideration ~~segment~~of ~~has~~$1,120,000. ~~been~~Golden ~~classified~~Cypress asis ~~discontinued~~a ~~operations~~company incorporated in ~~accordance~~the ~~with~~British ~~SFAS~~Virgin ~~144.~~Islands, which operates an LED solutions business in Asia.

~~Furthermore,~~The ~~the~~purchase ~~Company~~price ~~has~~will ~~determined~~be topaid ~~dispose of construction~~ in ~~progress~~cash ~~that~~by ~~was to be used for~~ the ~~production~~Purchaser ~~of a proposed~~within ~~product~~12 ~~line~~months ~~of its lighting source business. This asset has been stated at fair value less costs to sell and is included with current assets of discontinued operations~~ on ~~the~~or ~~accompanying~~before ~~Consolidated~~August ~~Balance~~31, ~~Sheets~~2010.

~~Revenues~~Gain ~~and~~on ~~net profit (loss) from discontinued operations of the energy savings business and~~ disposal of ~~construction~~Golden inCypress ~~progress~~ is determined as follows:

	Three Months Ended June 30,
	$
	2009		2008
Cash and cash equivalents	1,047
	$		$
Accounts receivable	448,952
Operating revenue	5,063		1,494
Prepaid expenses and other current assets	824,795
Pre-tax (loss) from discontinued operations	(150	)	(13,946	)
Plant and equipment, net	64,864
Income tax credit (expense)	-		-
Out-of-home advertising equipment, net	394,415
Net (loss) from discontinued operations	(150	)	(13,946	)
Short-term bank borrowings	(56,993	)
Long-term bank borrowings	(46,818	)
Secured loan – current portion	(138,658	)
Secured loan – non-current portion	(138,658	)
Obligations under capital leases – current portion	(3,037	)
Obligations under capital leases – current portion	(5,117	)
Trade payables	(138,264	)
Accrued expenses and other current liabilities	(131,676	)
Income tax payable	(9,024	)
Net assets	1,065,828
Total consideration	1,120,000
Gain on disposal of a subsidiary	54,172

-Results 29of -operation of Golden Cypress for the three months and six months ended September 30, 2009 have been included as discontinued operations in the Consolidated Statements of Operations and Comprehensive Loss of the Company.

- 22 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 1610. ~~CONCENTRATION~~DISCONTINUED OFOPERATIONS ~~CREDIT RISK~~(continued)

AsLighting ofSource ~~June~~Products 30, 2009 and March 31, 2009, the Company has a credit risk exposure of uninsured cash in banks of $58,933 and $51,707 (including cash of discontinued operations of $8,555), respectively. The Company does not require collateral or other securities to support financial instruments that are subject to credit risk.Business

~~Subsequent~~In September 2009, the Company’s board of directors authorized management to begin the ~~measures~~process ~~taken~~to bysell all the ~~Hong~~rights ~~Kong~~and ~~Monetary~~assets of the ~~Authority~~lighting onsource ~~October~~products 14business, ~~2008~~namely tothe ~~use~~operational ~~the~~subsidiary ~~Exchange~~Beijing Aihua ~~Fund~~New toEnterprise ~~guarantee~~Lighting ~~the~~Appliance Co. Limited “Beijing Aihua”). Beijing ~~repayment~~Aihua ofresearches, ~~all~~develops, ~~customer~~manufactures ~~deposits~~and ~~held~~sells inhigh-intensity ~~Authorised~~discharge lighting ~~Financial~~products ~~Institutions~~including metal halide lamps and high-pressure sodium lamps. The Company’s decision to discontinue operations in the lighting source products ~~Hong~~business ~~Kong,~~was ~~following~~intended to more effectively utilize the ~~principles~~Company’s offinancial and human resources by focusing on the ~~existing~~LED ~~Deposit~~out-of-home ~~Protection~~advertising ~~Scheme,~~and LED solutions ~~assurance~~businesses iswhich ~~made~~management considers to ~~depositors~~have ~~that~~more ~~their~~promising ~~money~~potential isfor revenue ~~fully~~and ~~protected~~margin growth. ~~Hence,~~Pursuant asto a sales and purchase agreement (the of“S&P ~~June~~Agreement”) 30dated November 20, 2009 ~~cash~~between ofBeijing ~~$60,450~~Illumination (~~including~~Hong Kong) ~~cash~~Limited of(“Beijing ~~discontinued~~Illumination”) ~~operations~~and ofZhejiang Zhong Jun Investment ~~$Nil~~Management Co. Ltd. (“Zhejiang Zhong Jun”), ~~out~~the ofCompany, through its subsidiary Beijing Illumination, agreed to sell to Zhejiang Zhong Jun its 100% equity interest at a ~~total~~consideration of $601,~~450~~140,751 (~~including~~or ~~cash~~RMB7,800,000) ofin ~~discontinued~~Beijing ~~operations~~Aihua. ofOf the total consideration of $~~Nil~~1,140,751, $219,375 (or RMB1,500,000) ofhad ~~the~~been received ~~Company’s~~in cash ~~held~~on ~~with~~November ~~banks~~20, in2009. ~~Hong~~The ~~Kong~~S&P Agreement is ~~now~~expected ~~subject~~ to close noby the end of December 2009, by which date the balance of consideration of ~~credit~~$921,376 ~~risk~~(or RMB6,300,000) will be due and payable.

OnUpon ~~October~~signing ~~16,~~of ~~2008,~~ the ~~Singapore~~S&P ~~government~~Agreement, ~~announced~~Beijing Aihua becomes a ~~guarantee~~held onfor ~~deposits~~sale subsidiary, of ~~individual~~which ~~and~~its ~~non-bank~~related ~~customers~~assets inand ~~banks,~~liabilities ~~financial~~are to ~~companies~~be ~~and~~reclassified ~~merchant~~as ~~banks~~current inassets ~~Singapore~~and ~~until~~currents ~~year-end~~liabilities ~~2010.~~respectively ~~The guarantee is~~under ~~backed~~the bycategory ~~$100~~of ~~billion~~discontinued ~~(SGD~~operations. ~~$150~~With ~~billion)~~reference ofto ~~Singapore~~the ~~government~~carrying ~~reserves.~~value of ~~Hence,~~Beijing Aihua as of ~~June~~September 30, 2009, ~~all~~management ofdecided ~~the~~to ~~Company’s~~account ~~cash held with banks in~~for ~~Singapore~~related ~~amounting~~impairment toloss ~~$7,129~~on ispending ~~now~~for ~~subject~~sale tosubsidiary noas ~~credit risk.~~follows:

As of September 30, 2009	$

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

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

- 23 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 10. DISCONTINUED OPERATIONS (continued)

Lighting Source Products Business (continued)

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

	$

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

Results of Discontinued Operations

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

	Three Months				Six Months
	Ended September 30,				Ended September 30,
	2009		2008		2009		2008
	$		$		$		$
Operating revenue – Beijing Aihua	372,069		322,455		818,663		1,217,262
Operating revenue - others	60,206		480,471		146,697		481,965
	432,275		802,926		965,360		1,699,227

Pre-tax profit (loss) from discontinued
operations
Beijing Aihua	(7,992,065	)	(363,493	)	(8,179,055	)	(522,808	)
Others	136,809		25,273		229,535		11,327
	(7,855,256	)	(338,220	)	(7,949,520	)	(511,481	)

Income tax credit	-		41,447		-		41,447
Net profit (loss) from discontinued operations	(7,855,256	)	296,773		(7,949,520	)	(470,034	)

NOTE 11. CONCENTRATION OF CREDIT RISK

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

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

- 24 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 11. CONCENTRATION OF CREDIT RISK (continued)

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

For the ~~three~~six months ended ~~June~~September 30, 2009, ~~one~~two ~~customer~~customers accounted for approximately 2130.39% and 20.6%, respectively, of the Company’s total revenues. As of ~~June~~ September 30, 2009, there isare ~~one~~two ~~customer~~customers whose account receivables ~~receivable~~ to the Company accounted for 1520.25% and 16.4%, respectively, of total accounts receivable.

The Company relies on supplies from numerous vendors. For the ~~three~~six months ended ~~June~~September 30, 2009, ~~one~~two ~~vendor~~vendors accounted for approximately 11.4% 18and 11.5%, respectively, of total supply purchases.

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

NOTE 1712. COMMITMENTS

Leases

The Company has operating lease agreements principally for its office facilities and factory buildings. Such leases have remaining terms of approximately 0.25 to 2.05 years. The following is a summary of future minimum lease payments under operating leases as of ~~June~~September 30, 2009. Rental expense ~~was~~ was $86372,~~835~~257 and $65108,~~630~~389 for the ~~three~~six months ended ~~June~~September 30, 2009 and 2008, respectively.

Twelve months ending June 30,		$
2010		827,297
2011		586,103
Thereafter		34,695
		1,448,095

Twelve months ending September 30,

- 30 -

		$
2010		819,491
2011		442,326
Thereafter		-
		1,261,817

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2009

NOTE 17. COMMITMENTS (continued)

Royalties

Pursuant to a supplier agreement (the “Agreement”) dated March 8, 2006, entered into between Beijing Illumination and an independent third party, the independent third party appointed Beijing Illumination as a non-exclusive licensed OEM manufacturer with rights to make and distribute certain products worldwide. Beijing Illumination shall pay to the independent third party, during the term of the Agreement, 7% of gross revenues of certain products sold to customers or distributors other than this independent third party. Such royalty payments shall survive for five years after the termination of the Agreement. No such royalty payment was accounted for or paid during the ~~three~~six months ended ~~June~~September 30, 2009.

~~NOTE~~- ~~18.~~25 ~~RELATED PARTY BALANCES AND TRANSACTIONS~~-

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009

NOTE 13. RELATED PARTY BALANCES AND TRANSACTIONS

Related Party Transactions

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

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

Related Party Balances

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

	June 30,	March 31,
	September 30,	March 31,
	2009	2009
	(Unaudited)
	$	$
Amount due to a director:
Mr. Bondy Tan	~~658~~592,~~496~~589	745,501

NOTE 1914. SEGMENT INFORMATION

The Company is engaged in ~~three~~continuing ~~main~~operations within two main business segments: (i) LED out-of-home advertising, and (ii) LED solutions ~~and (iii) others including lighting source products~~. These represent the Company’s reportable segments.

The accounting policies of the operating segments are the same as those described in the Summary of Principal Accounting Policies (see Note 2). The Company evaluates performance based on profit or loss from operations, excluding corporate, general and administrative expenses.

- 3126 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 1914. SEGMENT INFORMATION (continued)

	Three Months Ended June 30,
	Three Months				Six Months
	2009		2008
	Ended September 30,				Ended September 30,
	$		$
	2009		2008		2009		2008
Segment revenues from external customers:
	$		$		$		$
Advertising	188,625		-
Segment revenues from external customers:
LED solutions	855,433		663,901
Advertising	260,026		-		448,651		-
Other	446,594		894,806
LED solutions	1,010,314		270,709		1,784,319		923,658
	1,490,652		1,558,707
Other	-		11,716		-		22,667
Operating profit (losses):
	1,270,340		282,425		2,232,970		946,325
Advertising	(30,596	)	-
Operating profit (losses):
LED solutions	(498,142	)	(908,963	)
Advertising	206,141		-		175,545		-
Other	(260,169	)	(92,388	)
LED solutions	(813,081	)	(661,125	)	(1,442,654	)	(1,492,488	)
Loss from continuing operations before income tax and noncontrolling interest	(788,907	)	(1,001,351	)
Other	-		11,590		-		22,353
Loss from continuing operations before income tax and
noncontrolling interest	(606,940	)	(649,535	)	(1,267,109	)	(1,470,135	)

	June 30,	March 31,
	September 30,	March 31,
	2009	2009
	(Unaudited)
	$	$
Segment assets:
Advertising	32,~~855~~355,~~821~~656	3,856,166
LED solutions	56,~~893~~708,~~097~~092	74,~~476~~229,~~596~~653
Other	10,782,532	8,605,133
	9,063,748	8,085,819
	20,531,450	19,937,895
Assets of discontinued operations	3,226,389	12,471,743
Assets of discontinued operations	536,471	619,665
	12,290,137	20,557,562
	21,067,921	20,557,560
Capital expenditures:
Advertising	~~110~~324,~~254~~599	1,~~575~~168,~~671~~290
LED solutions	39106,~~182~~756	~~738~~649,~~186~~597
Other	-	~~3,521~~-
	149,436	2,317,378
	431,355	1,817,887

Geographical Information:

	Three Months Ended June 30,
	Three Months		Six Months
	2009	2008
	Ended September 30,		Ended September 30,
	$	$
	2009	2008	2009	2008
Total sales:
	$	$	$	$
Mainland, the PRC	508,556	645,646
Total sales:
Hong Kong	759,629	650,751
Mainland, the PRC	155,624	17,085	371,478	28,476
Singapore	81,428	-
Hong Kong	1,114,716	260,846	1,861,492	895,384
India	102,689	26,001
Singapore	-	4,493	-	22,465
Mexico	-	230,407
	1,270,340	282,424	2,232,971	946,325
USA	22,118	-
Others	16,232	5,901
	1,490,652	1,558,706

- 3227 -

LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS ~~JUNE~~ SEPTEMBER 30, 2009

NOTE 1914. SEGMENT INFORMATION (continued)

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

	June 30,	March 31,
	September 30,	March 31,
	2009	2009
	(Unaudited)
	$	$
Hong Kong	51,~~622~~394,~~617~~481	51,~~707~~168,~~921~~672
Singapore	549,151	560,958
Mainland, the PRC	2,089,665	2,171,678
Mainland, the PRC	4,204,277	4,297,309
	3,484,146	3,340,350
	10,376,045	10,566,188

~~One~~Two customer accounts for 2129.32% and 1423.87%% of operating revenue of the LED solutions segment for the ~~three~~six months ended ~~June~~September 30, 2009 ~~and 2008~~ respectively, ~~while~~and ~~none~~one ofcustomer ~~the~~accounted ~~customers of the other segments accounts~~ for ~~more~~ ~~than 10~~37.4% of operating revenue of the LED solutions segment for the ~~three~~six months ended ~~June~~September 30, ~~2009 and~~ 2008.

NOTE 2015. ~~WARRANTS~~SECURED LOAN

InOn ~~connection~~July ~~with~~13, 2009, the ~~placement~~Company ofobtained ~~9,375,000~~a ~~shares~~secured ~~completed~~loan of on$257,069 ~~March~~from ~~17,~~a ~~2008,~~third ~~the~~party ~~Company~~financial ~~issued~~institution. ~~warrants~~The toloan ~~Roth~~has ~~Capital~~a ~~Partners,~~maturity ~~LLC,~~of ~~the~~four ~~placement~~months ~~agent,~~and is to ~~purchase~~be uprepaid toon ~~656~~November 12,~~250~~ ~~shares~~2009 ofat ~~the~~an ~~Company’s~~interest ~~common stock~~rate ~~(representing~~of 73% per ofmonth. ~~the~~It ~~shares~~is ~~placed)~~secured asby ~~compensation~~a ~~for~~joint ~~its~~and ~~placement~~several guarantee from two directors of ~~services.~~subsidiaries ~~The~~of ~~warrants~~the ~~have~~Company. aUpon ~~term~~agreement of ~~five~~both ~~years~~parties, ~~are~~principal ~~exercisable~~will ~~immediately~~be ~~upon~~repaid ~~issuance~~in ~~and~~four ~~have~~monthly aninstallments ~~exercise~~beginning ~~price~~on ofDecember ~~$0.80~~12, ~~per share~~2009.

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

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

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

NOTE 21. SECURED LOAN

On May 13, 2009, the Company obtained a secured loan under a working capital facility of $271,428 from a third party financial institution. The loan is repayable over 24 equal monthly installments, at an interest rate of 9.17% effective per annum from the date of drawdown. It is secured by a joint and several guarantee from two directors of subsidiaries of the Company and a banker’s guarantee of $67,857 for a period of 27 months from the date of drawdown.

- 33 -

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

Twelve months ending June 30,		$
Twelve months ending September 30,		$
2010		~~137~~257,~~524~~069
2011		137,523
		275,047

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

NOTE 16. POST BALANCE SHEET EVENT

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

- 28 -

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

FORWARD-LOOKING STATEMENTS

Forward-Looking Statements

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

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

Use of Certain Defined Terms

In this quarterly report and unless otherwise specified, all dollar amounts are expressed in United States dollars, all references to “common shares” refer to the common shares in our capital stock and the terms “we”, “us” and “our” refer to Lightscape Technologies Inc. and our subsidiaries.

Company Overview

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

We are a holding company for subsidiaries engaged in ~~three~~two main business activities: (i) light-emitting diode (“LED”) out-of-home advertising, and (ii) LED solutions ~~and (iii) other lighting source products~~. During the ~~three~~six months ended ~~June~~September 30, 2009, approximately 1320% of our revenue was derived from our LED out-of-home advertising business, 57and 80% from our LED solutions business ~~and 30% from other business~~.

LED Out-of-Home Advertising Business

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

- We 34signed a joint venture agreement on February 12, 2008 as part of our efforts to build an LED out-of-home advertising network in the People’s Republic of China (the “PRC” or “China”). We entered this joint venture agreement with Beijing Xintong Media & Cultural Development Co. Ltd. (“BX”). Pursuant to the terms of the joint venture agreement, (i) the joint venture company will be named Beijing Xintong New Vision Media Advertising Co. Ltd. (“BXNV”), (ii) our company agreed to contribute to BXNV cash and an LED billboard for the joint venture’s

~~sales channels for our LED out~~-~~of-home~~ ~~advertising~~29 ~~network by forming strategic partnerships with advertising agencies and other media industry partners.~~-

We signed a joint venture agreement on February 12, 2008 as part of our efforts to build an LED out-of-home advertising network in the People’s Republic of China (the “PRC” or “China”). We entered this joint venture agreement with Beijing Xintong Media & Cultural Development Co. Ltd. (“BX”). Pursuant to the terms of the joint venture agreement, (i) the joint venture company will be named Beijing Xintong New Vision Media Advertising Co. Ltd. (“BXNV”), (ii) our company agreed to contribute to BXNV cash and an LED billboard for the joint venture’s initial installation within ninety business days of signing the agreement, and (iii) in exchange for these contributions, our company will obtain 50.1% ownership of BXNV, with the remaining 49.9% to be held by BX. The joint venture formation process is ongoing. Certain details of the joint venture arrangement are being finalized, including the process of completing the transfer of the 50.1% share ownership in BXNV from BX to our company (or one of our subsidiaries), and other minor strategic and operational details. Management does not believe that there are any material risks to our ultimate receipt of 50.1% ownership of BXNV as originally contemplated by the terms of the joint venture agreement signed on February 12, 2008. Post-formation, we intend to account for our 50.1% interest in the joint venture as a subsidiary in our consolidated financial statements. As such, we will consolidate all profit and loss, assets and liability items and eliminate the future minority shareholding portion held by BX, in this case 49.9%, as a minority interest. We expect the joint venture agreement to close before the end of December 2009.

In addition to the pending joint venture agreement, our company has expanded its out-of-home advertising network relationship with the New World Group by working directly with New World Department Store China (“NWDSC”) ~~properties throughout mainland China. The first phase of the network build-out with NWDSC is expected~~ to ~~include~~install ~~the installation~~and ofoperate an LED ~~billboard~~billboards at ~~each of nine sites across four cities in~~NWDSC ~~China~~properties ~~and~~throughout ismainland ~~expected to be completed by September 2009~~China.

LED Solutions Business

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

~~Other~~Reclassification ~~Business~~of Disposed Subsidiary and Subsidiary Held for Sale as Discontinued Operations

~~Through~~A ~~our~~subsidiary ~~76.8%~~which ~~ownership~~has been disposed of or classified as held for sale during the three or six months ended ~~Beijing~~September ~~Illumination~~30, we2009 ~~research,~~is ~~develop,~~to ~~manufacture~~be included in discontinued operations if it meets any of the quantitative thresholds in accordance with ASC 280 “Segment Reporting” paragraph 18-24, and ~~sell~~ASC ~~lighting~~205-20 ~~source~~“Presentation of Financial Statements – ~~products~~Discontinued Operations”. Our disposal of Golden Cypress Limited and our pending sale of Beijing ~~Illumination~~Aihua New Enterprise Lighting Appliance Co. Limited during the three months ended September 30, ~~through~~2009 ~~its~~each ~~wholly~~met certain of the quantitative tests and other criteria of ASC 280 and ASC 205-~~owned~~20. ~~subsidiary~~As ~~Beijing~~a result, the operating ~~Aihua~~results, ~~manufactures~~assets and ~~sells~~liabilities ~~HID~~of ~~lighting~~Golden ~~products~~Cypress ~~including~~and ~~metal~~Beijing ~~halide~~Aihua ~~lamps~~have been ~~and~~reclassified ~~high-pressure~~as ~~sodium~~discontinued ~~lamps~~operations, with corresponding reclassification of 2008 comparative figures.

Application of Critical Accounting Policies

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

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

Revenue Recognition

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

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

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

~~American~~ASC ~~Institute of~~960 ~~Certified~~addresses Public Accountants (“AICPA”) Accounting Research Bulletin (“ARB”) No. 45, “Long-Term Construction-Type Contracts, (1955)” and AICPA Statement of Position (“SOP”) 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts, (1981)” address revenue recognition for long-term construction-type contracts. Since most of our company’s LED solution revenue relates to construction contracts, which by their nature are long-term, the underlying accounting principle known as matching — expenses follow revenues — would be violated if the revenue from the contract were recognized upon contract execution or sale of the services.

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

~~SOP~~ASC ~~81-1~~960 requires that the PC method be used in lieu of the CC method when all of the following are present: (1) reasonably reliable estimates can be made of revenue and costs; (2) the construction contract specifies the parties’ rights as to the goods, consideration to be paid and received, and the resulting terms of payment or settlement; (3) the contract purchaser has the ability and expectation to perform all contractual duties; and (4) the contract contractor has the same ability and expectation to perform.

~~SOP~~ASC ~~81-1~~960 states, “Contract costs generally include direct costs, such as materials, direct labor, and subcontracts and indirect costs identifiable with or allocable to the contracts.”

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

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

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included in revenues when realization is probable and the amount can be reliably estimated. We generally provide a one-year warranty for workmanship under our contracts. Warranty claims historically have been inconsequential.

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

~~Other – This includes sales of lighting source products, rental income, commission and service income and sales~~-~~type~~ ~~lease~~31 income. Regarding sales of lighting source products, our company sells its products directly to end users and through distributors. Revenue is recognized when the product is delivered to the customer and all other revenue recognition criteria are met. Revenue from rentals and operating leases without any acceptance provisions is recognized on a straight-line basis over the term of the rental or lease. Revenue regarding commission and service income is recognized when services are rendered. Revenue from sales-type leases is recognized over the term of the lease, using the effective interest method.

Foreign Currency Translation

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

Impairment of Long-Lived Assets

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

Accounts Receivables and Allowance for Doubtful Accounts

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

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deterioration in the customer’s operating results or financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted.

Material Trends and Uncertainties

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

We are building an LED out-of-home advertising network in the PRC, Hong Kong and other areas of Asia. Following the acquisition of Lightscape Technologies (Macau) Limited (“Lightscape Macau”) in 2006, our company entered the LED solutions business, which includes the design, supply and building of LED systems, OEM and licensing of our proprietary intelligent lighting control software, and rental of LED hardware. Our current business strategy is focused on (i) building and expanding our LED out-of-home advertising network through installations we complete and operate independently, through existing partnerships and by establishing new partnerships with major property owners and developers in Asia, (ii) establishing advertising sales channels for our LED out-of-home advertising network by forming strategic partnerships with advertising agencies and other media industry partners and (iii) growing sales from our LED solutions business, primarily our LED systems segment, through design, supply and build contracts with high-end real estate developments in China, Hong Kong, Singapore and other areas of Asia. The future performance of these specific business segments may materially affect the future performance of our company. Our company continues to develop, manufacture and sell lighting source products. However, we are reviewing our plans and strategic options related to this business unit.

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company entered the LED solutions business, which includes the design, supply and building of LED systems, OEM and licensing of our proprietary intelligent lighting control software, and rental of LED hardware. Our current business strategy is focused on (i) building and expanding our LED out-of-home advertising network through installations we complete and operate independently, through existing partnerships and by establishing new partnerships with major property owners and developers in Asia, (ii) establishing advertising sales channels for our LED out-of-home advertising network by forming strategic partnerships with advertising agencies and other media industry partners and (iii) growing sales from our LED solutions business, primarily our LED systems segment, through design, supply and build contracts with high-end real estate developments in China, Hong Kong, Singapore and other areas of Asia. The future performance of these specific business segments may materially affect the future performance of our company.

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

1.	Beijing Illumination will have received all regulatory consents and approvals for the legal transfer of ownership of the shares as contemplated in the Sale and Purchase Agreement; and

2.	No breach of any warranty by Beijing Illumination or by Zhejiang Zhong Jun will have occurred since the effective date of the Sale and Purchase Agreement.

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

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

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Summary of Key Results

Total net revenue from continuing operations for the ~~three~~ six months ended ~~June~~September 30, 2009 was $12,~~490~~232,~~652~~970, which represents a 4136% ~~decrease~~increase from the total net revenue from continuing operations of $1946,~~558,707~~325 for the ~~three~~six months ended ~~June~~September 30, 2008.

Net loss from continuing operations for the ~~three~~six months ended ~~June~~September 30, 2009 was $~~754~~1,~~435~~267,109 compared to a net loss of $~~993~~1,~~861~~263,158 for the ~~three~~ six months ended ~~June~~September 30, 2008.

~~Basic~~Net ~~and fully diluted~~ loss ~~per~~from discontinued ~~share~~operations for the ~~three~~six months ended ~~June~~September 30, 2009 was $~~0.01~~7,949,520 compared to a ~~basic~~net ~~and fully diluted~~ loss ~~per share~~ of $~~0.02~~470,034 for the ~~three~~six months ended ~~June~~September 30, 2008.

- Basic 38and -fully diluted loss per share from continuing operations for the six months ended September 30, 2009 was $0.02 compared to a basic and fully diluted loss per share from continuing operations of $0.02 for the six months ended September 30, 2008.

Results of Operations – Three Months Ended ~~June~~September 30, 2009

Our net loss from continuing operations for the three months ended ~~June~~September 30, 2009 was $~~754~~606,~~435~~940, or $0.01 per fully diluted share, compared to a net loss of $~~993~~442,~~861~~558, or $0.01 per fully diluted share, for the three months ended ~~June~~September 30, 2008,. orThe aincrease ~~reduction~~ in net loss from continuing operations is primarily attributable to a one-time income tax credit of $~~239~~206,~~426~~977 during the three months ended September 30, 2008 with no such tax credit during the three months ended September 30, 2009.

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

Revenues and Cost of Revenues

Total net revenue from continuing operations for the three months ended ~~June~~September 30, 2009 was $1,~~490~~270,~~652~~340, representing a 4350% ~~decrease~~increase from the total net revenue of $1282,~~558,707~~424 for the three months ended ~~June~~September 30, 2008. The ~~decrease~~ increase in net revenues is ~~primarily~~ attributable to ~~the~~increased ~~decrease~~sales inacross ~~revenue from~~both our ~~non~~LED out-~~core~~of-home ~~businesses,~~advertising business ~~primarily~~and our ~~HID~~LED ~~lighting~~solutions ~~products~~ business.

Specifically, revenue related to our LED out-of-home advertising business was $~~188~~260,~~625~~026 for the three months ended ~~June~~September 30, 2009 as compared to $nil during the three months ended ~~June~~ September 30, 2008. The gross profit margin on our LED out-of-home advertising business was 79.2% for the three months ended ~~June~~September 30, 2009. Our LED out-of-home ~~advertising~~ advertising business is expected to contribute increased revenues in the foreseeable future as we ramp up several key LED billboard installations which were completed during the three months ended ~~June~~September 30, 2009 and are expected to begin generating advertising revenue in the near future. Our company has formed strategic partnerships with Ogilvy & Mather Group, a major advertising agency in Hong Kong, and LIME, a diversified media conglomerate, to sell advertising space on our LED billboards. We are also in the process of negotiating strategic partnership agreements and contracts with other advertising agencies and advertisers for the sales of advertising space on the LED billboard network.

Revenue related to our LED solutions business increased to $~~855~~1,~~433~~010,314 for the three months ended ~~June~~ September 30, 2009 from $~~652~~270,~~949~~709 during the three months ended ~~June~~September 30, 2008, or an ~~increase~~ increase of 31273%. The increase in revenues was due primarily to the completion of more LED solutions contracts during the three months ended ~~June~~September 30, 2009 as compared to a smaller number of contracts completed during the three months ~~ended June 30,~~ ~~2008. The gross profit margin on our LED solutions business was 25.1% for the three months~~ ended ~~June 30, 2009. Our LED solutions business is expected to contribute increased revenues in the foreseeable future as several key projects are expected to be completed in the near future.~~

Sales from our other business, which includes our HID lighting products business, were $446,594 for the three months ended June 30, 2009 compared to $905,758 for the three months ended June 30, 2008, representing a decrease of 51%. The decrease in revenues from our other businesses was due primarily to a decrease in revenue from sales of HID lighting products by our subsidiary Beijing Illumination. The decrease in sales by Beijing Illumination was due primarily to the scaling back of overall operations, including reducing production lines, production shifts and personnel, in order to focus on our company’s core LED out-~~of-home~~ ~~advertising and~~34 LED solutions businesses. The gross profit margin on our other business was 16.3% for the three months ended June 30, 2009. We are currently reviewing our plans and strategic options related to our HID lighting products business.-

~~Total~~September ~~cost of revenues for the three months ended June~~ 30, ~~2009 was $1~~2008,~~053,790,~~ ~~which~~and ~~represents~~the aacceleration ~~decrease~~ of 6% ascertain ~~compared~~major contracts totowards ~~total~~technical ~~cost~~completion. ofThe ~~revenues~~gross ofprofit ~~$1,126,968~~margin ~~for~~on ~~the~~our ~~three months~~LED ~~ended~~solutions ~~June~~business ~~30,~~was ~~2008.~~12% ~~The~~for ~~decrease in~~ the ~~total cost of revenues during the~~ three months ended ~~June~~September 30, 2009. ~~was due in part to the 4% decrease in sales revenues,~~Our ~~but also decreased due to improved cost control related to our~~ LED solutions ~~business,~~ ~~namely supplies of LED modules and video screens, and a higher proportion of revenue from the LED out-of-home advertising~~ business, ~~which generally~~is ~~provides~~expected ~~for~~to acontribute ~~higher~~increased ~~profit~~revenues ~~margin than our LED solutions or other business. The lower costs of supplies are a result of general technological improvements and economies of scale~~ in the ~~manufacture of LED hardware by our~~ ~~OEM~~foreseeable ~~suppliers,~~future ~~and~~as ~~our~~several ~~ability~~key toprojects ~~secure~~are ~~supply~~expected ~~contracts on more favorable terms. As a result, our overall gross profit margin improved~~ to ~~29.3%~~be ~~for~~completed ~~the three~~in ~~months ended June 30, 2009 as compared to 27.7% for~~ the ~~three months ended~~ ~~June~~near ~~30, 2008~~future.

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

Operating Expenses

- Operating 39expenses -from continuing operations for the three months ended September 30, 2009 were $890,668, which represents a 16% increase in operating expenses from $769,467 for the three months ended September 30, 2008. Selling and marketing expenses, general and administrative expenses constitute the main components of our operating expenses.

~~Operating~~Selling ~~expenses~~and marketing expenses for the three months ended ~~June~~September 30, 2009 ~~were~~increased ~~$1,271,751,~~approximately ~~which represents an 11~~308% ~~decrease in~~to ~~operating~~$143,376 ~~expenses~~ from $135,~~434,557~~159 for the three months ended ~~June~~September 30, 2008. The ~~Selling~~increase corresponds to the 350% increase in total net revenues and ~~marketing~~was ~~expenses,~~mainly due ~~general~~to increased costs incurred in order to build up our project pipeline of LED solutions contracts, and ~~administrative~~to ~~expenses~~establish our sales network for our LED out-of-home advertising business. Our company anticipates that selling and marketing ~~amortization~~expenses ofwill ~~intangible~~remain ~~assets~~steady ~~constitute~~or increase in the ~~main~~future ~~components~~to ofsupport our company’s ~~operating~~further ~~expenses.~~expansion in our core LED out-of-home advertising and LED solutions businesses, however, such increases are expected to be limited as a result of a company-wide cost-cutting initiative implemented throughout 2009.

~~Selling~~General and ~~marketing expenses~~administrative ~~for~~expenses decreased by 3% during the three months ended ~~June~~September 30, 2009 ~~increased approximately 45%~~ to $~~238~~631,~~393~~ 840 from $~~163~~653,~~975~~773 for the three months ended ~~June~~September 30, 2008. The decrease ~~increase~~ was mainly due to ~~increased~~the ~~costs~~cost ~~incurred~~savings inachieved ~~order~~as toa ~~build~~result ~~up our project pipeline~~ of ~~LED~~the ~~solutions~~company-wide ~~contracts,~~cost-cutting ~~and~~initiative toimplemented ~~establish~~throughout ~~our sales network for our LED out-of-home advertising business~~2009. Our company anticipates that ~~selling~~general and ~~marketing expenses~~administrative costs will remain steady or increase in the foreseeable future toas ~~support~~ our company’s ~~further~~ ~~expansion~~operations incontinue ~~our~~to ~~core LED out-of-home advertising and LED solutions businesses~~expand, however, such increases are expected to continue to be limited as a result of a company-wide cost-cutting initiative ~~implemented in January 2009~~.

~~General~~Results ~~and~~of ~~administrative expenses~~Operations ~~decreased~~– bySix ~~11%~~Months ~~during~~Ended ~~the~~September ~~three months ended June~~ 30, ~~2009 to~~ ~~$835,427 from $936,794 for the three months ended June 30, 2008. The decrease was mainly due to the cost savings achieved as a result of the company-wide cost-cutting initiative implemented in January~~ 2009. Our company anticipates that general and administrative costs will remain steady or increase in the foreseeable future as our company’s operations continue to expand, however, such increases are expected to continue to be limited as a result of a company-wide cost-cutting initiative.

Our ~~company~~net ~~acquired~~loss ~~certain intangible~~from ~~assets through the acquisitions of TFEMS and Beijing Illumination.~~continuing ~~These~~operations ~~intangible assets are comprised of completed technology~~ for the ~~production of~~six ~~AHP lamps, trademarks, a customer base and a distributors list. Amortization of intangible assets incurred for the three~~ months ended ~~June~~September 30, 2009 was $~~120~~1,~~844~~267,109, asor ~~compared to~~ $~~205,653~~0.02 per ~~for~~fully ~~the~~diluted ~~three months ended June 30~~share, ~~2008.~~compared ~~The decrease was due~~ to ~~the~~a ~~carrying~~net ~~value~~loss of ~~intangible assets as of March 31~~$1, ~~2009 being lower than as of March 31~~263,158, ~~2008~~or as$0.02 ~~a result of full amortization of~~per ~~certain~~fully ofdiluted ~~the~~share, ~~assets~~for ~~during~~ the ~~year~~six months ended ~~March~~September 3130, ~~2009~~2008.

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

Revenues and Cost of Revenues

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

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

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

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

Operating Expenses

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

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

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

Liquidity and Capital Resources

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

As- of36 June 30, 2009, our company had a net working capital surplus of $5,996,489 compared to a surplus of $6,287,977 as of March 31, 2009, representing a decrease in working capital of $291,488. The cash and cash equivalents of our company attributable to continuing operations decreased to $149,549 as at June 30, 2009 as compared to $381,643 as of March 31, 2009. Cash attributable to discontinued operations totaled $nil as of June 30, 2009 and $8,555 as of March 31, 2009. -

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

Cash Flow Related to Operating Activities

~~Operating~~Continuing ~~activities~~operating activities used cash of $~~900~~221,~~051~~316 for the ~~three~~six months ended ~~June~~September 30, 2009 as compared to continuing operating activities ~~providing~~using cash of $722,~~707~~596,085 for the ~~three~~six months ended ~~June~~September 30, 2008. The ~~increase~~decrease in cash used in ~~operating~~continuing operating activities was mainly due to anincreases ~~increase~~ in ~~accounts~~trade ~~receivable.~~payables ~~Our~~and ~~accounts~~accrued ~~receivable balance increased as we made no~~expenses. ~~significant~~Discontinued ~~collections~~operating ofactivities ~~accounts~~used ~~receivable~~cash ~~while adding to our accounts receivable balance near the completion stage~~ of ~~LED~~$256,937 ~~solutions projects~~ during the ~~three~~six months ended ~~June~~September 30, 2009, as compared to ~~the~~discontinued ~~collection~~operating ~~of accounts~~activities ~~receivable~~generating cash of ~~approximately~~ $~~570~~327,~~000~~110 during the ~~three~~six months ended ~~June~~September 30, 2008.

Cash Flow Related to Investing Activities

Net cash used in investing activities of continuing operations amounted to $~~153~~436,~~821~~787 during the ~~three~~six months ended ~~June~~September 30, 2009 as compared to investing activities ~~using~~of continuing operations generating cash of $213,~~814~~778 during the ~~three~~six months ended ~~June~~September 30, 2008. The increase in cash used in investing activities isof continuing operations is attributable primarily to our company’s purchase of ~~LED~~digital out-of-home ~~advertising~~ advertising displays. ~~and~~Net ~~purchases~~cash provided by investing activities of ~~plant~~discontinued operations ~~and~~was ~~equipment~~$292 during the six months ended September 30, 2009 as compared to ~~support~~investing ~~our~~activities ~~growing~~of ~~LED~~discontinued operations using cash of $32,030 during ~~solutions~~the ~~business~~six inmonths ~~Singapore~~ended September 30, 2008.

- Our 40company incurred capital expenditures of $430,733 during the six months ended September 30, 2009 and $7,406 for the six months ended September 30, 2008. The increase in capital expenditures for the six months ended September 30, 2009 as compared to September 30, 2008 was mainly attributable to increased purchases of digital out-of-home advertising equipment. As of September 30, 2009, our company did not have any material commitments for capital expenditures and management does not anticipate that our company will spend additional material amounts on capital expenditures in the near future.

Our company incurred capital expenditures of $148,814 during the three months ended June 30, 2009 and $2,814 for the three months ended June 30, 2008. The increase in capital expenditures for the three months ended June 30, 2009 as compared to June 30, 2008 was mainly attributable to increased purchases of LED out-of-home advertising equipment. As of June 30, 2009, our company did not have any material commitments for capital expenditures and management does not anticipate that our company will spend additional material amounts on capital expenditures in the near future.

Cash Flow Related to Financing Activities

Financing activities ~~generated~~of continuing operations generated cash of $~~811~~619,~~133~~849 for the ~~three~~six months ended September ~~June~~ 30, 2009 as compared to financing activities of continuing operations generating cash of $~~487~~952,~~978~~726 for the ~~three~~six months ended ~~June~~ September 30, 2008. The decrease ~~increase~~ in net cash flow generated by financing activities ~~was~~of continuing operations was mainly due to ~~our~~the ~~company~~repayment ~~obtaining~~of bank loans and the repayment of an advance from a director of our company during the six months ended September 30, 2009 compared to ~~fund~~no such repayments during the six months ended September 30, 2008. Financing activities of discontinued operations generated cash of $256,102 during the six months ended September 30, 2009 as compared to financing activities of discontinued operations generating cash of $7,528 for the six months ended September 30, 2008.

During the ~~three~~six months ended ~~June~~September 30, 2009, our company, through Lightscape Technologies (Greater China) Limited (“LTGC”), obtained an installment loan of $771,208 (HKD6,000,000) from DBS Bank (Hong Kong) Limited (“DBS Bank”) under the Special Loan Guarantee Scheme of The Government of the Hong Kong Special Administrative Region (“HKSAR Government”). The loan is repayable over 12 equal monthly installments, at an interest rate of 2% per annum over the prime lending rate, which is currently 5.25%, from May 12, 2009 to April 12, 2010. The installment loan is secured by a Special Loan Guarantee issued by the HKSAR Government for an amount equal to 70% of the loan, a Guarantee and Indemnity for an unlimited amount duly executed by a director of our company and a director of LTGC, and a Guarantee and Indemnity for an unlimited amount duly executed by ~~Tech Team Investment Limited, the immediate holding company of LTGC. As of June 30, 2009, two out of twelve installments have been repaid to DBS Bank on the respective monthly due dates.~~

On- ~~May~~37 13, 2009, our company obtained a secured loan under a working capital facility of $271,428 from a third party financial institution. The loan is repayable over 24 equal monthly installments, at an interest rate of 9.17% effective per annum from the date of drawdown. It is secured by a joint and several guarantee from two directors of subsidiaries of our company and a banker’s guarantee of $67,857 for a period of 27 months from the date of drawdown.-

~~Management~~Tech ~~believes~~Team ~~that additional~~Investment ~~cash~~Limited, ~~may need to be raised in~~ the ~~next~~immediate ~~twelve~~holding ~~months~~company ~~to finance our existing operations and expansion~~ of ~~our LED out-of-home advertising and LED~~ ~~solutions businesses since we have not yet achieved sustainable positive cash flows~~LTGC. As ~~such,~~of weSeptember ~~may need to depend on outside capital over the near-term~~30, ~~including~~ ~~the next twelve months~~2009, tofive ~~fund~~out ~~our~~of ~~capital~~twelve ~~needs.~~installments ~~Such outside capital may be obtained from additional debt or equity financing. We do not currently~~ have ~~any~~been ~~arrangement for financing and there is no assurance that~~repaid ~~capital will be available~~ to ~~meet~~DBS ~~our~~Bank ~~continuing~~on ~~development costs or, if~~ the ~~capital~~ isrespective ~~available,~~monthly ~~that~~due ~~it will be on terms acceptable to us~~dates.

Management believes that additional cash may need to be raised in the next twelve months to finance our existing operations and expansion of our LED out-of-home advertising and LED solutions businesses since we have not yet achieved sustainable positive cash flows. However, management also expects to generate positive cash flow in the coming six months from the completion of projects which may substantially, if not fully, meet the cash needs of our company during the next twelve months. Management may consider outside capital over the near-term, including the next twelve months, if required to fund our capital needs. Such outside capital may be obtained from additional debt or equity financing. We do not currently have any arrangement for financing and there is no assurance that capital will be available to meet our continuing development costs or, if the capital is available, that it will be on terms acceptable to us.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 4T. Controls and Procedures.

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this quarterly report, being ~~June~~September 30, 2009, we have carried out an evaluation of ~~the~~ the effectiveness of the design and operation of our company’s disclosure ~~controls~~ controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer. Based upon that evaluation, our Chief Executive Officer concluded that ~~our~~ our disclosure controls and procedures are effective as at the end of the period covered by this report. There have been no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

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end of the period covered by this report. There have been no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

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

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

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We- ~~know~~38 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 30, 2009. There are no proceedings in which any of our company’s directors, officers, or affiliates, or any registered or beneficial shareholders, is an adverse party or has a material interest adverse to our company’s interest.-

We know of no material, active, or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation where such claim or action involves damages for more than 10% of our current assets as of September 30, 2009. There are no proceedings in which any of our company’s directors, officers, or affiliates, or any registered or beneficial shareholders, is an adverse party or has a material interest adverse to our company’s interest.

Item 1A. Risk Factors.

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

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

Risks Related to Our Business

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

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

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

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

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

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

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However, there is no assurance that actual cash requirements will not exceed our estimates. We may need to raise additional funds to:

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

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

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

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

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from our sales, or if we experience difficulties collecting our accounts receivable, we may not have sufficient cash flow to fund our operating costs and our profitability and results of operations could be adversely affected.

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

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

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

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

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vulnerable to increases in the price of raw materials (particularly of LED modules and video screens) and other operating costs. If the costs of raw materials or other costs of sales and distribution of our products and services increase, and we are unable to entirely offset these increases by raising prices of our products and services, our profit margins and financial condition could be adversely affected.

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

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

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

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

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

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

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

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

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

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other supporting documents for registration, including the content of the proposed out-of-home advertisement. Our company, our subsidiaries and/or our joint venture company have obtained or are in the process of obtaining such Outdoor Advertising Registration Certificates for the advertisements displayed and intended to be displayed on our LED out-of-home advertising billboards. However, we may be subject to government action if advertisements shown on our out-of-home LED network are in violation of relevant PRC advertising laws and regulations or that the advertisements broadcast on our network have not received required approval from the relevant local supervisory bodies.

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

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

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

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competitors. In addition, we may not have access to sufficient capital for our research and development needs in order to develop new products and services.

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

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

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

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

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

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

Approximately 2151.35% of our revenue was contributed from ~~one~~two ~~customer~~customers for the ~~three~~six months ended ~~June~~ September 30, 2009. If ~~this~~these two or any of our customers ceased doing business with our company, we would require time to find other customers. If we lose these customers or are unable to generate recurring revenues from these customers, there would be a negative impact on our overall performance. We have not entered into long-term supply contracts with any of these major customers. Therefore, there can be no assurance that we will maintain or improve the relationships with these customers, or that we will be able to continue to supply these customers at current levels or at all. If we cannot maintain long-term relationships with our major customers, the loss of a significant portion of our sales to them could have an adverse effect on our business, financial condition and results of operations.

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at all. If we cannot maintain long-term relationships with our major customers, the loss of a significant portion of our sales to them could have an adverse effect on our business, financial condition and results of operations.

Our company is subject to the credit risk of our customers, which could have a material adverse effect on our financial condition, results of operations and liquidity.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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the State Administration of Foreign Exchange of the PRC is obtained. Although the Chinese government regulations now allow greater convertibility of Renminbi for current account transactions, significant restrictions still remain.

The value of the Renminbi is subject to changes in China’s central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The Renminbi is moved to a managed floating exchange rate based on market supply and demand with reference to a basket of foreign currencies. The recent global financial crisis may lead to drastic and unanticipated fluctuations in the exchange rates of Renminbi and Singapore dollars, which may affect our company through either foreign exchange gains or losses to be accounted for in the statement of operations, and which may materially affect our operating results and financial position.

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

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

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

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

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

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

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

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal controls over financial reporting. The process of strengthening our internal controls and complying with Section 404 is expensive and time consuming, and requires significant management attention. We cannot be certain that the measures we undertake will ensure that we will maintain adequate controls over our financial processes and reporting in the future. Furthermore, if we are able to rapidly grow our business, the internal controls that we will need will become more complex, and significantly more resources will be required to ensure our internal controls remain effective. Failure to implement required controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If we or our auditors discover a material weakness in our internal controls, the disclosure of that fact, even if the weakness is quickly remedied, could diminish investors’ confidence in our financial statements and harm our stock price. In addition, non-compliance with Section 404 could subject us to sanctions by the Securities and Exchange Commission, lawsuits, delisting by SROs and/or an assignment of higher risks by investors, which would further reduce our stock price.

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and time consuming, and requires significant management attention. We cannot be certain that the measures we undertake will ensure that we will maintain adequate controls over our financial processes and reporting in the future. Furthermore, if we are able to rapidly grow our business, the internal controls that we will need will become more complex, and significantly more resources will be required to ensure our internal controls remain effective. Failure to implement required controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If we or our auditors discover a material weakness in our internal controls, the disclosure of that fact, even if the weakness is quickly remedied, could diminish investors’ confidence in our financial statements and harm our stock price. In addition, non-compliance with Section 404 could subject us to sanctions by the Securities and Exchange Commission, lawsuits, delisting by SROs and/or an assignment of higher risks by investors, which would further reduce our stock price.

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

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

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

- Our 49businesses -may be adversely affected by widespread regional, national or global health epidemics, such as pandemic flu. Such threats or epidemics may adversely impact our businesses by disrupting provision of services to our customers, and by causing customers to avoid public gathering places. If such health epidemics occur, we may experience material impacts on our business, operating results, and financial condition.

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

Risks Related to Our Industry

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

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

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

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

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negative brand advertising, which may adversely affect our market share and profit margin. We cannot assure you that we will be able to compete effectively with our current or potential competitors.

Risks Related to Our Common Stock

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Companies trading on the OTC Bulletin Board, such as us, must have a class of securities registered under Section 12 of the Exchange Act, as amended, and must be current in their reports under Section 13 in order to maintain price quotation privileges on the OTC Bulletin Board. More specifically, FINRA Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board, requires an issuer to be current in its filings with the Securities and Exchange Commission. Pursuant to Rule 6530(e), as it is currently in effect, if we file our reports late with the Securities and Exchange Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board twice in a two-year period for failure to file reports, then we will be ineligible for quotation on the OTC Bulletin Board. If we are late multiple times in filing any of our annual or quarterly reports during the next two years, we may become ineligible for quotation on the OTC Bulletin Board. If our common stock becomes ineligible for quotation on the OTC Bulletin Board, it would negatively affect the market for our common stock and it may become more difficult for us to obtain additional equity financing as shares of our common stock would be less attractive to potential investors.

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stock and it may become more difficult for us to obtain additional equity financing as shares of our common stock would be less attractive to potential investors.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibits required by Item 601 of Regulation S-K

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

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Exhibit Number	Description

(2)	Plan of Purchase, Sale, Reorganization, Arrangement, Liquidation or Succession

2.1	Share Exchange Agreement dated January 7, 2005, among Global Innovative Systems Inc., Tech Team Holdings Limited, Bondy Tan and the Selling Shareholders (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)

(3)	(i) Articles of Incorporation; and (ii) Bylaws

3.1	Charter (incorporated by reference from our Registration Statement on Form 10-SB filed on April 11, 2000)

3.2	Articles of Incorporation (incorporated by reference from our Registration Statement on Form 10-SB filed on April 11, 2000)

3.3	Certificate of Reverse Stock Split filed with the Nevada Secretary of State on November 12, 2003 (incorporated by reference from our Current Report on Form 8-K filed on December 17, 2003)

3.4	Certificate of Amendment to Articles of Incorporation filed with the Secretary of State of Nevada on March 3, 2004 (incorporated by reference from our Quarterly Report on Form 10- QSB filed on May 15, 2004)

3.5	Certificate of Change filed with the Secretary of State of Nevada on December 23, 2004 (incorporated by reference from our Current Report on Form 8-K filed on January 6, 2005)

3.6	Articles of Merger filed with the Secretary of State of Nevada on April 17, 2007 effective April 20, 2007 (incorporated by reference from our Current Report on Form 8-K filed on April 23, 2007)

3.7	Bylaws (incorporated by reference from our Current Report on Form 8-K filed on October 14, 2008)

(10)	Material Contracts

10.1	Management Contract between Tech Team Holdings Limited / Tech Team Development Limited and Bondy Tan (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)

10.2	Form of Subscription Agreement dated August 21, 2007 (incorporated by reference from our Current Report on Form 8-K filed on August 22, 2007)

10.3	Subscription Agreement between Lightscape Technologies Inc. and SMC Investment Management Limited dated December 11, 2007 (incorporated by reference from our Current Report on Form 8-K filed on December 14, 2007)

10.4	Joint Venture Agreement between Lightscape Technologies (Greater China) Limited, Beijing Xintong Media & Cultural Development Co. Ltd., Beijing New Vision Media Advertising Co. Ltd. and Miss Yao Po Chun dated February 12, 2008 (Translated from Chinese) (incorporated by reference from our Annual Report on Form 10-KSB filed on July 14, 2008)

Exhibit Number	Description
3.7	Bylaws (incorporated by reference from our Current Report on Form 8-K filed on October 14, 2008)
(10)	Material Contracts
10.1	Management Contract between Tech Team Holdings Limited / Tech Team Development Limited and Bondy Tan (incorporated by reference from our Current Report on Form 8-K filed on January 18, 2005)
10.2	Form of Subscription Agreement dated August 21, 2007 (incorporated by reference from our Current Report on Form 8-K filed on August 22, 2007)
10.3	Subscription Agreement between Lightscape Technologies Inc. and SMC Investment Management Limited dated December 11, 2007 (incorporated by reference from our Current Report on Form 8-K filed on December 14, 2007)
10.4	Joint Venture Agreement between Lightscape Technologies (Greater China) Limited, Beijing Xintong Media & Cultural Development Co. Ltd., Beijing New Vision Media Advertising Co. Ltd. and Miss Yao Po Chun dated February 12, 2008 (Translated from Chinese) (incorporated by reference from our Annual Report on Form 10-KSB filed on July 14, 2008)
10.5	Form of Securities Purchase Agreement, among Lightscape Technologies Inc. and the investors named therein dated March 9, 2008 (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2008)
10.6	Form of Registration Rights Agreement among Lightscape Technologies Inc. and the investors named therein dated March 9, 2008 (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2008)
10.7	Escrow Agreement among Lightscape Technologies Inc., Roth Capital Partners, LLC and Tri- State Title & Escrow, LLC, as escrow agent, dated March 9, 2008 (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2008)
10.8	Form of Placement Agent Warrant (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2008)
10.9	Agreement between Lightscape Technologies Inc. and Aaron Tibor Ratner dated April 18, 2008 (incorporated by reference from our Current Report on Form 8-K filed on December 5, 2008)
(14)	Code of Ethics
14.1	Code of Ethics (incorporated by reference from our Current Report on Form 8-K filed on January 6, 2009)
(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1*	Certification of Principal Executive Officer and Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)	Section 1350 Certifications

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Exhibit Number	Description

10.5	Form of Securities Purchase Agreement, among Lightscape Technologies Inc. and the investors named therein dated March 9, 2008 (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2008)

10.6	Form of Registration Rights Agreement among Lightscape Technologies Inc. and the investors named therein dated March 9, 2008 (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2008)

10.7	Escrow Agreement among Lightscape Technologies Inc., Roth Capital Partners, LLC and Tri- State Title & Escrow, LLC, as escrow agent, dated March 9, 2008 (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2008)

10.8	Form of Placement Agent Warrant (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2008)

10.9	Agreement between Lightscape Technologies Inc. and Aaron Tibor Ratner dated April 18, 2008 (incorporated by reference from our Current Report on Form 8-K filed on December 5, 2008)

10.10*	Sale and Purchase Agreement between Beijing Illumination (Hong Kong) Limited and Zhejiang Zhong Jun Investment Management Co. Limited, dated November 20, 2009 (Translated from Chinese).

(14)	Code of Ethics

14.1	Code of Ethics (incorporated by reference from our Current Report on Form 8-K filed on January 6, 2009)

(31)	Rule 13a-14(a)/15d-14(a) Certifications

31.1*	Certification of Principal Executive Officer and Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32)	Section 1350 Certifications

32.1*	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit Number	Description
32.1*	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*Filed herewith

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SIGNATURES

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

LIGHTSCAPE TECHNOLOGIES INC.

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

Date: ~~August~~November 1923, 2009

(Unaudited)

Finished goods

Filing Compare · LIGHTSCAPE TECHNOLOGIES INC.