LIGHT MANAGEMENT GROUP, INC.
3060 Mainway Drive, Suite 301
Burlington, Ontario L7M 1A3
--------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on July 27, 2001
-------------------------
July 5, 2001

To Our Shareholders:

You are cordially invited to attend the Annual Meeting of the Shareholders
of Light Management Group, Inc. (hereinafter referred to as the "Company"), to
be held on Friday, July 27, 2001 at 1:00 p.m. (EDT) at the Sheraton Hotel,
Capital Ballroom, 165 Courtland Street, Atlanta, Georgia 30303, for the
following purposes:

1. PROPOSAL NO. 1:To elect the Board of Directors, each to serve until the
next Annual Meeting of the shareholders or until their
respective successors are elected and qualify;

2. PROPOSAL NO. 2:To ratify and approve the selection by the Board of
Directors of Feldman Sherb & Co., P.C. as the Company's
independent accountants for the current year;

3. PROPOSAL NO. 3:To consider and vote upon an amendment to the Company's
Articles of Incorporation to increase the number of
shares of the Company's common stock authorized for
issuance from 100,000,000 to 200,000,000;

4. PROPOSAL NO. 4:To consider and vote upon a Stock Incentive Plan; and

5. PROPOSAL NO. 5:To consider and vote upon such other business as may
properly come before the meeting or any adjournment
thereof.

The complete text of these proposals and the reasons your directors have
proposed their adoption are contained in the Proxy Statement, and you are urged
to carefully study them. If you do not plan to attend the Annual Meeting, you
are respectfully requested to sign, date and return the accompanying Proxy
promptly.

FOR THE REASONS STATED HEREIN, YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "FOR" THE NOMINEES AND "FOR" THESE PROPOSALS. YOUR VOTE IS IMPORTANT NO
MATTER HOW MANY SHARES YOU OWN. TO BE SURE THAT YOUR SHARES WILL BE VOTED AT THE
MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY. THIS WILL NOT PREVENT YOU FROM
ATTENDING AND VOTING YOUR SHARES IN PERSON. PROMPT RETURN OF YOUR PROXY WILL
REDUCE THE COMPANY'S EXPENSES IN THIS MATTER.

Only shareholders of record as shown on the books of the Company at the close
of business on June 22, 2001 will be entitled to vote at the Annual Meeting or
any adjournment thereof. A list of the Company's Shareholders entitled to notice
of, and to vote at, the Annual Meeting will be made available during regular
business hours at the Company's Principal Executive Offices at 3060 Mainway
Drive, Suite 301, Burlington, Ontario, from the date of this notice for
inspection by any Shareholder for any purpose germane to the Annual Meeting.

The Annual Meeting may adjourn from time to time without notice other than by
announcement at the Annual Meeting, or at any adjournments thereof, and any and
all business for which the Annual Meeting is hereby noticed may be transacted at
any such adjournments.

By order of the Board of Directors,
Dr. Donald Iwacha, President

LIGHT MANAGEMENT GROUP, INC.
3060 Mainway Drive, Suite 301
Burlington, Ontario L7M 1A3

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON JULY 27, 2001

INFORMATION CONCERNING SOLICITATION AND VOTING

This Proxy Statement is being furnished to shareholders of Light Management
Group, Inc. (the "Company") in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Shareholders to be held on July 27, 2001, and at any adjournment of that meeting
(the "Annual Meeting"). The first date on which this Proxy Statement and the
form of Proxy are first being mailed to Shareholders of the Company is on or
about July 5, 2001.

The Board of Directors has fixed June 22, 2001 as the record date for
determining stockholders who are entitled to vote at the Annual Meeting. At the
close of business on June 6, 2001, the Company had issued and outstanding
22,441,382 shares of common stock with par value $0.0001 per share (the "Common
Stock"), held of record by approximately 756 stockholders. Each share of Common
Stock is entitled to one vote on each matter properly coming before the Meeting.
Holders of shares of Common Stock have no cumulative, conversion, preemptive or
other subscription rights, and there are no redemption provisions applicable to
the Common Stock. The Company also had one holder of 2,766,798 shares of Series
A Preferred Stock with a par value of $0.0001 (the "Preferred Stock"). Each
share of Preferred Stock is entitled to vote 2.5 shares of Common Stock on each
matter properly coming before the Meeting, which increases the number of shares
entitled to vote at the meeting to 29,358,377.

The Company will not solicit proxies personally, by telephone or
facsimile. The Company, however, may make a request by telephone, facsimile, or
mail strictly limited to confirming the shareholder's receipt of the proxy and
requesting that the shareholder sign and return the proxy solicited by this
statement. The Company does not expect to pay compensation to any party other
than employees (and then only their regular salaries plus expenses) for the
solicitation of proxies, but may reimburse brokers, custodians, nominees and
fiduciaries for the expense of forwarding solicitation material and proxies to
beneficial owners of their outstanding stock. The cost of soliciting proxies,
not expected to exceed $15,000, will be borne by the Company.

All proxies will be voted in accordance with the instructions contained
therein, if properly executed and not revoked. Proxies that are signed by
shareholders but that lack any such specification will be voted in favor of the
proposals set forth in the Notice of the Annual Meeting. The management of the
Company does not know of any other matters which will be presented for action at
the Annual Meeting, but the person, Dr. Donald Iwacha, named in the Proxy
intends to vote or act with respect to any other proposal which may be presented
for action in accordance with his best judgment. Any proxy may be revoked by a
stockholder at any time before it is exercised by giving written notice to that
effect to the Corporate Secretary of the Company or by voting in person at the
Annual Meeting.

The presence in person or by executed proxy of the holders of a majority
of the aggregate voting power represented by the shares of Common Stock and
Preferred Stock, issued and outstanding and entitled to vote at the meeting,
together as a single class, shall constitute a quorum for transacting business
at the meeting. Any shares which are withheld or abstain from voting will be
counted for the purpose of obtaining a quorum. Shares held in "street name" by
brokers or nominees who indicate that they do not have discretionary authority
to vote such shares as to a particular matter ("broker non-votes") will not be
counted as votes "for" or "against" the proposals, and will not be counted as
shares voted on such matter.

The total number of votes cast "for" will be counted for purposes of
determining whether sufficient affirmative votes have been cast to approve each
proposal. Abstentions from voting on a proposal by a shareholder at the Annual
Meeting, as well as broker non-votes, will be considered for purposes of
determining the number of total votes present at the Annual Meeting. Abstentions
will have the same effect as votes against the proposals, but will not affect
the election of Directors. Broker non-votes will not be considered as votes
"for" or "against" the proposals.

The affirmative vote of the holders of a plurality of the aggregate voting
power represented by the shares of Common Stock and Preferred Stock, voting
together as a single class, present or represented at the meeting is required to
elect the Board of Directors, to ratify and approve the selection by the Board
of Feldman Sherb & Co., P.C. as the Company's independent accountants for the
current year, and to adopt the 2001 Stock Incentive Plan. The affirmative vote
of holders of a majority of the aggregate voting power represented by the shares
of Common Stock and Preferred Stock, issued and outstanding and entitled to vote
at the meeting, together as a single class, is required to amend the Company's
Articles of Incorporation to increase the number of the Company's common shares
of stock authorized for issuance from 100,000,000 to 200,000,000.

Management of the Company has been informed by the executive officers,
directors, and control persons of the Company that such parties intend to vote
all shares beneficially held with voting rights by such parties FOR the nominees
and FOR all of the proposals set forth in the notice. Together, such parties and
proxies represent approximately 51.2% of the votes eligible to be cast at the
Annual Meeting. Management believes such votes will be sufficient to elect the
nominees, approve or ratify the proposals, and appoint the Company's independent
auditor as set forth herein. However, since other items to be voted upon may be
presented at the Annual Meeting which require the vote of two-thirds of the
outstanding shares, there is no assurance that the voting rights mentioned above
will guaranty passage of any such other proposals.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of June 7, 2001, by each shareholder who
is known by the Company to beneficially own more than 5% of the outstanding
Common Stock, by each director and by all executive officers and directors as a
group. The table also sets forth the number and percentage of the outstanding
shares to be owned by each such person or group. The percentages of ownership
and the number of shares beneficially owned are disproportionate due to joint
beneficial ownership making the notes following the table essential for a
complete understanding of our ownership structure.

Name and Address of Number of Shares Percent of
Beneficial Owner Beneficially Owned Class
- --------------------------------------------------------------------------------
Omega Holdings, Bahamas, Ltd. (1)
201 Saffrey Square 4,430,331 19.74%
P.O. Box N303
Bay Street & Bank Lane, Nassau, Bahamas
- --------------------------------------------------------------------------------
Executive Officers and Directors
- --------------------------------------------------------------------------------
Barrington L. Simon
3060 Mainway, Suite 301 3,218,798 (2) 14.34%
Burlington, Ontario, Canada L7M1A3
- --------------------------------------------------------------------------------
Bryan Latimer
3060 Mainway, Suite 301 338,500 1.50%
Burlington, Ontario, Canada L7M1A3
- --------------------------------------------------------------------------------
Ian Brock
3060 Mainway, Suite 301 10,000 (3) Less than 1%
Burlington, Ontario, Canada L7M1A3
- --------------------------------------------------------------------------------
Dr. Donald Iwacha
3060 Mainway, Suite 301 38,000 Less than 1%
Burlington, Ontario, Canada L7M1A3
- --------------------------------------------------------------------------------
Dr. Arkadi Rozenchtein
3060 Mainway, Suite 301 80,430 Less than 1%
Burlington, Ontario, Canada L7M1A3
- --------------------------------------------------------------------------------
All Executive Officers & Directors 3,685,728 16.42%
as a Group (Five persons)
- --------------------------------------------------------------------------------
** Less than 1%

(1) Omega Holdings, Bahamas, Ltd. is 38% owned by Barrington Simon. Mr. Simon
disclaims ownership of the shares owned by this entity.
(2) Includes 697,500 shares owned by Mr. Simon's wife, Elaine Simon. Mr. Simon
disclaims ownership of the shares owned by Elaine Simon. Also includes the
right to acquire 717,462 shares of common stock within 60 days upon the exercise
of stock options.
(3) Includes 8,000 shares owned by Mr. Brock's wife, Nicole Brock.

The following table sets forth certain information regarding the
beneficial ownership of the Company's Preferred Stock as of June 21, 2001, which
is held by one shareholder, who is not a director and executive officer. Each
share of Preferred Stock possesses a cumulative dividend of 6.5 percent, voting
rights equal to 2.5 to 1 common shares and is non-dilutable.

Compliance with Section 16(a) of the Exchange Act

Based solely upon a review of forms 3, 4 and 5 furnished to the Company,
the Company is not aware of any person, who at any time during the fiscal year
ended December 31, 2000, was a director, officer, or beneficial owner of more
than ten percent (10%) of the common stock of the Company, and who failed to
file, on a timely basis, reports required by Section 16(a) of the Securities
Exchange Act of 1934 during such fiscal year, other than Barrington Simon, who
filed a form 4 on May 31, 2001, relating to his purchase of 13,500 shares in
December 2000.

DESCRIPTION OF BUSINESS

The Company, through wholly owned subsidiaries, develops new applications
for optical and light technologies. The Company offers products based on its
proprietary acousto-optic deflection and related non-diode laser, photonics and
optic technologies. These technologies are used in the fiber optic
communications, biomedical, out-of-home advertising, industrial and aerospace
markets. The Company's research and development provide ideation, patenting and
development of new products.

The Company is pursuing strategic partnerships, licensing agreements and
acquisitions to optimize, integrate and develop new applications for its laser
technology in major urban markets. Five areas have been identified for
application development: visual media (including outdoor advertising); digital
communications; industrial equipment; aerospace; and biomedical.

The Company focuses on three business strategies: increasing research
through joint ventures and increasing the number of contracts established with
corporate partners; establishing market position by patenting the full range of
its products and designs; and establishing market leadership by acquiring
strategic, forward-looking partners. The Company's growth has thus far been
effected through mergers and acquisitions of technology companies which
complement The Company's acousto-optic management and laser technologies.

The subsidiaries create synergies by which the Company hopes to increase
sales and utilize the advertising of its new laser technology which is marketed
toward the advertising industry. These subsidiaries give the Company the ability
to increase its capabilities in technology, advertising, European operations and
research and development.

Industry - Non-Diode Lasers

The Company's lasers are non-diode lasers, which include large,
conventional gas lasers used in industry and science. Newer Diode Pumped Solid
State (DPSS) lasers are smaller non- diode lasers that are an alternative to the
conventional gas lasers. The diode lasers currently dominate the fiber optic
industry.

Information from Laser Focus World's 2001 Annual Review and Forecast of
the Laser Marketplace indicates that after a flat non-diode laser market between
1998 and 1999, the market increased by 26% in 2000 and is expected to increase
13% in 2001, reaching $2.5 billion in sales. Significant market segments for
non-diode lasers include bar-code scanning, telecommunications, optical storage,
sensing, entertainment, image recording, instrumentation, basic research,
medical and therapeutic, and materials processing.

Technology

On May 18, 1999, the Company acquired as a wholly owned subsidiary, Laser
Show Systems (Canada), LTD. ("Laser"), a Canadian corporation. Laser was
incorporated in Ontario, Canada, in September 1998. Laser's primary activity has
been directed toward using a patented technique to acoustically manage light.
Laser sells and markets this system of light projections that emanate graphics
in a colorful and attractive design that is utilized as a marketing technique.

Laser began operations on August 1, 1997 and seeks to provide leading edge
laser products, utilizing the best technologies from around the world.

Laser provides installation, service and creative graphics services for
systems of light projections in a colorful and attractive design that is
utilized as a marketing technique. With up to 1024 points per object, Laser's
RGB Laser-Projection System ("RGB-LPS") can display objects with 256 different
colors from a palette of 16.7 million colors. Each palette can be changed
continuously to get smooth color changes, fades, color cycling, etc. The
acousto-optic laser projection system works by a raster imaging process and
allows for the projected images to be three-dimensional in appearance and to be
active over the full screen size without "ghosting"or trailing of the laser
image. Software features allow objects to be positioned, rotated, sized, scaled,
and distorted. It can also map objects onto surfaces (i.e., a logo can be put on
a waving flag). The software and laser allow the appearance of animated text to
fly through the air and/or over a landscape. The applications for this product
are numerous, including entertainment packages, display of logos, and
advertising.

The Company sees the market for its RGB-LPS as outdoor advertising
companies, property management companies, and specialty properties such as
resorts and entertainment centers. Property management companies own and manage
properties such as retail malls, large commercial buildings with retail
components, and specialty sites. Laser will either sell the RGB-LPS units or
market them on a lease/revenue sharing arrangement with the above clients
through its own sales group or associated agent companies. While LSSI's (Russia)
RGB-LPS patent is only valid in Russia, the Company currently has multiple
patents pending in the United States and intends to secure world wide patents on
its technology.

Three patents were filed during the year 2000 with the United States
Patent and Trademark Office. These patents relate to the following products:
(1) an Acousto-Optical

Switch for Fiber Optic Lines as part of an all optical fiber communication
network; (2) an Information Compressor for Fiber Optic Lines, which is an
invention that relates to wavelength division multiplexing in fiber optic
systems; and (3) a Fiber Optic Display Screen, which is capable of displaying
still and moving video images, particularly a graphic image in an array of
pixels generated by the RGB-LPS.

Advertising

Through the wholly owned subsidiary, Exclusive Advertising, Inc.
("Exclusive"), the Company holds the exclusive contract to sell advertising
space on Toronto's GO Transit system which services the Greater Toronto Area and
carries more than 40,000,000 commuters every year. Exclusive's primary and sole
activity has been the marketing of advertising space on Toronto's GO Transit
system, but it intends to expand both its geographic area and scope of target
advertisers.

European Operations

The Company is committed to providing ideation, new product development
and to acquiring the equipment and patent rights owned by other companies, which
is why it acquired Laser Show Systems Investments, Ltd. (United Kingdom) ("Laser
UK"), and incorporated LSSI (Russia) as a 99% owned subsidiary. Laser UK's
primary activity is contracting its laser equipment to advertisers and companies
in the entertainment field in Europe.

Laser UK allows the Company to contract with companies to provide the
display of advertisements as well as the production of laser shows throughout
Europe, and it secures contracts for product manufacturing in Europe. LSSI
(Russia) allows the Company to conduct operations in Russia but has been
inactive to date.

Research and Development

On January 14, 2000, the Company acquired all of the common stock of
1028177 Ontario, Ltd., d/b/a Light Research and Development ("LRD"). LRD is the
research entity through which the Company conducts its research and development
of new optic, laser and related technologies. LRD is operated by a world-class
research team, led by Dr. Donald Iwacha, Ph.D., Dr. Arkadi Rozenchtein, Ph.D.,
and Dr. Gennadii Ivtsenkov. In addition to the development of new ideas and
concepts, through LRD, the Company will focus on developing new applications
using the Company's acousto-optic technology in five key areas: digital
communications; visual media (e.g., outdoor advertising); industrial equipment;
aerospace; and biomedical. LRD intends to build product prototypes and
commercially viable working models which it expects to develop into new leading
technologies and products.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of Common Stock, with a par value of $0.0001 (the "Common
Stock"). As of June 6, 2001, the number of shares issued and outstanding of the
Common Stock, $0.0001 par value, was 22,441,382 held of record by approximately
756 stockholders.

The Common Stock is currently trading on the NASD OTC-BB under the symbol
"LMGR". The high and low closing trading prices for its common stock for each
fiscal quarter since January 1, 1999, are listed in the following table. The
prices in the table reflect inter- dealer prices, without retail markup,
markdown or commission and may not represent actual transactions.

- --------------------------------------------------------------------------------
Fiscal Quarter High Closing Price Low Closing Price
- --------------------------------------------------------------------------------
1st Quarter 1999 $.01 $.01
- --------------------------------------------------------------------------------
2nd Quarter 1999 $8.2 $.01
- --------------------------------------------------------------------------------
3rd Quarter 1999 $1.56 $1.00
- --------------------------------------------------------------------------------
4th Quarter 1999 $4.25 $0.125
- --------------------------------------------------------------------------------
1st Quarter 2000 $16.31 $1.75
- --------------------------------------------------------------------------------
2nd Quarter 2000 $7.187 $2.687
- --------------------------------------------------------------------------------
3rd Quarter 2000 $4.00 $2.218
- --------------------------------------------------------------------------------
4th Quarter 2000 $3.75 $0.875
- --------------------------------------------------------------------------------
1st Quarter 2001 $3.50 $1.46
- --------------------------------------------------------------------------------

On June 18, 2001, the closing trade price for the Common Stock was
approximately $1.44 per share.

Dividends

The Company has not declared any cash dividends on its Common Stock for
the last three years and does not anticipate paying any dividends on its Common
Stock in the foreseeable future. The payment of dividends on the Common Stock is
within the discretion of the board of directors and will depend on our earnings,
capital requirements, financial condition and other relevant factors. The
Company intends to fully honor its future obligation to pay dividends on any
shares of Common Stock issued pursuant to this Offering.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-Looking Statements

The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere herein. Except
for historical information contained herein, certain statements herein are
forward-looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. These statements relate to future
events or to our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue" or the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially. There are a number of factors that could cause the Company's
actual results to differ materially from those indicated by such forward-looking
statements.

This discussion contains forward-looking statements which involve the
acquisition of technology, and the Company's financial position, business
strategy and other plans and objectives for future operations. Although the
Company believes that these expectations are reasonable, there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected effects on its business or operations. Moreover, the Company does not
assume responsibility for the accuracy and completeness of such statements. The
Company is under no duty to update any of the forward-looking statements after
the date of this report to conform such statements to actual results.

General

The Company has experienced solid growth in the scope of its operations,
technology and revenues since it became focused in the non-diode laser and
acousto-optic industry in May 1999. Much of this growth has been effected
through mergers and acquisitions, as operations are now conducted through five
subsidiaries, three of which were acquired externally. The Company expects to
continue to grow internally, as its technological products become more well
known and are sold in increasing quantities, and externally, as the Company
seeks to effect other acquisitions.

Acquisition of Raw Materials

The current goal of the Company is to expand product sales. For this to
occur, the Company must obtain required raw materials, which include laser and
switch products and technologies. The Company is considering raising capital in
either a private or public offering to provide for the purchase of these raw
materials.

RESULTS OF OPERATIONS

2000 Accounting Adjustments

Subsequent to the completion of its 2000 audit, the Company identified
$327,185 of expenses, which were paid for by a related company. In addition, the
Company had recorded a discount to notes payable of $1,439,586 related to the
issuance of warrants in connection with borrowings from such entity. Since the
loans were due upon demand, the Company has restated its financial statements to
record an expense for such discount in the year ended December 31, 2000. In
addition, the Company has included the disclosure of the conversion in March
2001, of $1,600,000 of debt into shares of its common stock, which was not
previously disclosed.

1999 Accounting Adjustments

In connection with the completion of the 2000 audit, the Company
identified various adjustments as follows: expenses paid for by a related
company; an increase in accrued liabilities; and a change in depreciation
because of a reclassification of fixed assets to inventory. As a result, the
Company recorded adjustments decreasing sales by $23,356, increasing selling,
general and administrative expenses by $1,748,147, decreasing depreciation
expense by $50,571 and increasing other expense by $18,156. Additionally, the
Company's stockholders' equity decreased by $1,739,088 as a result of these
adjustments.

A complete discussion of the adjustments and the effects of the 2000 and
1999 adjustments on our years ended December 31, 2000 and 1999 financial
statements are contained in the Notes to our audited financial statements.

Year Ended December 31, 2000 Compared To Year Ended December 31, 1999

The following discussion sets forth certain financial information
regarding our operations. Our financial statements, and the following discussion
on results of operations, set forth financial information as of the year ended
December 31, 2000, and as of the year ended December 31, 1999.

The Company had sales revenues of $1,038,216 for its fiscal year ended
December 31, 1999 as compared to $711,630 for the year ended December 31, 2000.
This decrease in revenues is believed by the Company to be the result of an
economic slowdown and represents a decrease in revenue from the Company's sole
source of revenue for 1999, which was offset by revenue generated from
operations of Exclusive Advertising, which was acquired in March 2000. We expect
to experience greater revenues in 2001 because Exclusive Advertising has already
rebounded from the economic cooling of 2000.

The expenses incurred by the Company for its fiscal year ended December
31, 1999 were $2,706,494 compared to $7,901,630 for the year ended December 31,
2000. These increased expenses include $4,394,413 in non-cash compensation,
which include a charge of $2,128,000 constituting the excess of market price
over the exercise price of options granted to a member of the Company's
management as well as a charge for approximately $721,000, which relate to
certain consulting services, and an expense of $390,384 relating to the
Company's settlement of litigation. During the year ended December 31, 2000, the
Company also realized an interest expense of $1,439,596 related to stock rights
granted to a related party in conjunction with loans

made by such party. These increased expenses, most of which the Company believes
are non- recurring, resulted in a net loss for the fiscal year ended December
31, 2000, of $9,357,186, as compared to a loss of $1,843,464 for the year ended
December 31, 1999.

The Company's total assets increased materially from $2,088,160 as of
December 31, 1999 to $5,534,401 as of December 31, 2000. This increase is
largely due to capital assets increasing to $3,627,898 as of December 31, 2000
as compared to $66,616 as of December 31, 1999. The increase in capital assets
results from the acquisition of patents valued at $841,585 and goodwill in
connection with the acquisition of Exclusive Advertising valued at $2,488,004.
These acquisitions reflect the Company's increased focus on acquiring and
developing equipment for technologies.

As of December 31, 2000, the Company had total liabilities of $5,458,857,
consisting of $4,853,935 due to related parties, which represents an increase
from the December 31, 1999 balance of $2,662,324. The bulk of the total
liabilities as of December 31, 2000, or $4.8 million, was resolved in March 2001
through the issuance of the Company's preferred stock.

Current Liquidity and Capital Resources

The Company's current assets, as of December 31, 2000, were $1,906,503 as
compared to $2,021,544 as of December 31, 1999. The bulk of this amount was in
inventory of $974,508 and accounts receivable of $685,733. We expect our current
asset balance to increase during 2001 in conjunction with our expected increase
in sales revenue.

Accounts payable decreased to $236,978 and accrued expenses decreased
slightly to $191,730 as of December 31, 2000, as compared to $610,509 and
$202,165, respectively, as of December 31, 1999. Loans payable increased to
$55,523 as of December 31, 2000, whereas no such balance existed as of December
31, 1999.

Stockholders' equity as of December 31, 2000, was $75,544, as compared to
a deficiency of $574,164 as of December 31, 1999. These increases are largely
due to issuances of shares in the year 2000 related to the acquisition of
Exclusive Advertising and Laser Show Systems (UK).

Going Concern

The Company has relied upon its principal shareholder and chief executive
officer for capital requirements and liquidity. This lack of liquidity, net
losses for the years ended December 31, 2000 and 1999, and the working capital
deficiency of approximately $3,462,000 at December 31, 2000, resulted in the
Company receiving a going concern opinion from its auditors for the year ended
December 31, 2000. Management plans to address these matters by eliminating
existing debt, as discussed below, raising additional capital through future
issuance of equity and continuing its focus on increasing sales revenues and
achieving profitable operations.

Conversion Of Related Party Debt

In March 2001, the Company settled $4,800,000 of debt to a company in
which the Company's principal shareholder and Chief Executive Officer is also a
shareholder. Of this amount, a loan payable of $3,200,000 was settled by the
Company's issuance of 2,766,798

shares of Series A Preferred Stock. Each share of preferred stock has voting
rights equal to 2.5 shares of the Company's Common Stock, shall not be
redeemable or convertible by the Company, and shall entitle the holder to
receive a cumulative annual dividend of $0.08 per share. The preferred stock
shall be convertible into Common Stock at any time by the holder on a
one-for-one basis. The remaining $1,600,000 in debt was settled in exchange for
1,855,072 shares of the Company's Common Stock valued at $2,365,000. As a
result, the Company recorded an extraordinary loss on extinguishment of debt of
$765,000.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 1999 and 2000 Barrington Simon has advanced the Company monies as
unsecured loans which equate to Twenty-One Thousand Five Hundred Ninety and
58/100's Dollars (US$21,590.58). These monies are considered loans payable by
the Company and do not bear interest.

Between September 16, 1998 and September 1, 2000, Omega Holdings, Bahamas,
Ltd. lent the Company US$3.1 million as working capital. In March 2001, the
Company settled $3,200,000 of loans payable to a Company in which the Company's
principal shareholder and Chief Executive Officer is also a shareholder by
issuing 2,766,798 shares of Series A Preferred Stock. Each share of Preferred
Stock is convertible into one share of Common Stock at any time by the holder.

In September 2000, Omega Holdings, Bahamas, Ltd. paid approximately US$1.6
million to satisfy a debt owed by the Company to a third party. This loan
accrued approximately a 6% interest. In March 2001, the Company settled this
$1,600,000 loan payable by issuing Omega 1,855,072 shares of Common Stock.

Barrington Simon beneficially owns 38% of Omega Holdings, Bahamas, Ltd. He
disclaims beneficial ownership of the shares of the Company's Common Stock which
Omega owns because he does not have any involvement in the management of Omega.

FINANCIAL STATEMENTS

Audited financial statements are found herein on page F-1.

INDEPENDENT AUDITORS' REPORT

Board of Directors
Light Management Group, Inc.

We have audited the accompanying consolidated balance sheet of Light Management
Group, Inc and subsidiaries as of December 31, 2000 and the related consolidated
statements of operations, changes in stockholders' equity (deficiency) and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Light Management Group, Inc.
and subsidiaries as of December 31, 2000, and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1(a) to the financial
statements, the Company has incurred net losses of approximately $9,360,000 and
$1,843,000 for the years ended December 31, 2000 and 1999, respectively.
Additionally, the Company had a working capital deficiency of approximately
$3,462,000 at December 31, 2000, which creates substantial doubt about the
Company's ability to continue as a going concern. Management's plans with
respect to these matters are also described in Note 1(a) to the financial
statements. The accompanying consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Feldman Sherb & Co., P.C.
Feldman Sherb & Co., P.C.
Certified Public Accountants

New York, New York
April 12, 2001

F-1

INDEPENDENT AUDITOR'S REPORT

Board of Directors
Light Management Group, Inc.

I have audited the accompanying consolidated balance sheet of Light Management
Group, Inc and subsidiaries as of December 31, 1999 and the related consolidated
statements of operations, changes in stockholders' equity (deficiency) and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion on these
consolidated financial statements based on our audit.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Light Management Group, Inc. and
subsidiaries as of December 31, 1999, and the results of their operations, and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.

The financial statements for the year ended December 31, 1999 have been restated
(see note 3).

/s/ James E. Slayton
James E. Slayton, CPA

March 16, 2000,
(except for note 3, as of April 12, 2001)

F-2

LIGHT MANAGEMENT GROUP, INC

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2000
(Restated - see note 3)

ASSETS

CURRENT ASSETS:
Cash $ 55,236
Accounts receivable (net of allowance of $2,000) 685,733
Inventory 974,508
Prepaid expenses and other current assets 191,026
-----------

TOTAL CURRENT ASSETS 1,906,503

PROPERTY AND EQUIPMENT - net of accumulated depreciation 298,309

GOODWILL - net 2,488,004

PATENTS - net 841,585
-----------
TOTAL ASSETS $ 5,534,401
===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable $ 236,978
Accrued expenses 191,730
Note payable - bank 30,172
Loans payable - officers 55,523
Due to related parties 4,853,935
-----------
TOTAL CURRENT LIABILITIES 5,368,338

Note payable - bank (net of current portion) 90,519
-----------
TOTAL LIABILITIES 5,458,857
-----------

STOCKHOLDERS' EQUITY
Preferred Stock - $.0001 par value, 10,000,000 authorized shares-none issued
Common stock - $.0001 par value, 100,000,000
authorized shares, 20,586,310 shares issued and outstanding 2,059
Additional paid in capital 12,476,067
Deferred compensation (721,074)
Accumulated deficit (11,642,215)
Accumulated other comprehensive loss (39,293)
-----------
TOTAL STOCKHOLDERS' EQUITY 75,544
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,534,401
===========

See notes to consolidated financial statements

F-3

LIGHT MANAGEMENT GROUP, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended
--------------------------
December 31, December 31,
------------ ------------
2000 1999
--------------------------
(Restated - see note 3)

SALES $ 711,630 $1,038,216

COST OF SALES 560,398 112,314
------------ -----------
GROSS PROFIT 151,232 925,902
------------ -----------
EXPENSES
Selling, general and administrative expenses
(exclusive of $4,394,413 for 2000 reported below
as non-cash salaries and services) 2,216,079 2,606,343
Purchased Research and Development 630,000 -
Litigation settlement 390,384 -
Non-cash salaries and services 4,394,413 -
Depreciation and amortization 270,754 100,151
----------- -----------

TOTAL OPERATING EXPENSES 7,901,630 2,706,494
----------- -----------
LOSS FROM OPERATIONS (7,750,398) (1,780,592)

INTEREST EXPENSE 1,606,788 62,872
----------- -----------
NET LOSS $(9,357,186) $(1,843,464)
----------- -----------
NET LOSS PER SHARE - BASIC AND DILUTED $ (0.48) $ (0.12)
=========== ===========
Weighted Average Shares Used in Computation -
Basic and diluted 19,605,250 15,568,611
=========== ===========

See notes to consolidated financial statements

F-4

LIGHT MANAGEMENT GROUP, INC

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

Additional Other Total Total
Common Stock Paid in Deferred Comprehensive Accumulated Stockholders Comprehensive
Shares Amount Capital Compensation Loss Deficit Equity (Deficit)Loss
----------------------------------------------------------------------------------------------------

Balance, December 31, 1998 $ 7,950,000 $ 795 $ 435,349 $ - $ - $ (441,565) $ (5,421) $ -

Reverse split - May 1999 (5,300,000) (530) - - - - (530) -

Issuance of Common Stock 11,446,672 1,145 50,183 - - - 51,328 -

Stock issued for acquisition of
Laser Show Sytems Canada 3,000,000 300 1,223,123 - - - 1,223,423 -

Net loss - - - - - (1,843,464) (1,843,464) -

----------------------------------------------------------------------------------------------------
Balance, December 31, 1999 17,096,672 1,710 1,708,655 - - (2,285,029) (574,664) -
(Restated - see note 3)

Signing bonuses given to officers
and employees 383,000 38 1,008,886 - - - 1,008,924 -

Shares issued for acquisition of
research and development from
1028177 Ontario Limited 360,000 36 629,964 - - - 630,000 -

Shares issued for acquisition of
LSS UK 897,600 90 646,334 - - - 646,424 -

Shares issued for consulting
services 755,000 76 1,803,925 - - - 1,804,001 -

Shares issued for acquisition of
Exclusive Advertising Inc. 500,000 50 2,499,950 - - - 500,000 -

Shares issued for legal services 111,500 11 236,997 - - - 237,008 -

Exercise of options 482,538 48 373,760 - - - 373,808 -

Options granted: excess of market
price over exercise price - - 2,128,000 - - - 2,128,000 -

Stock rights issued to Omega
Financial Corp. for loan to
Company - - 1,439,596 - - - 1,439,596 -

Employees' deferred compensation - - - (721,074) - - (721,074) -

Foreign currency translation
adjustment - - - - (39,293) - (39,293) (39,293)

Net Loss (Restated - see note 3) - - - - - (9,357,186)* (9,357,186) (9,357,186)

----------------------------------------------------------------------------------------------------
Balance, December 31, 2000 20,586,310 $2,059 $12,476,067 $(721,074) $(39,293) $(11,642,215)* $ 75,544 $(9,396,479)
----------------------------------------------------------------------------------------------------
(* Restated - see note 3)

See notes to consolidated financial statements

F-5

LIGHT MANAGEMENT GROUP, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended
----------------------------
December 31, December 31,
2000 1999
------------- --------------
(Restated - see note 3)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,357,186) $ (1,843,464)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 270,754 3,774
Stock issued for salaries 1,008,924 -
Stock issued for legal services 237,008 -
Stock issued for consulting services 1,020,481 -
Stock rights issued to Omega Financial Corp. for
loan to Company resulting in interest expense 1,439,596 -
Acquisition of research and development with stock 630,000 -
Options granted: excess of market price over
exercise price 2,128,000 -
Expenses paid by related company - 1,600,000

Changes in assets and liabilities (net of effect of acquisitions):
Decrease in accounts receivable 680,305 (1,366,038)
Increase (Decrease) in inventory (334,508) 1,085,000
Decrease (Increase) in prepaid and other current
assets 743,086 (15,506)
Decrease in accounts payable (373,531) (77,552)
(Decrease) Increase in accrued expenses (401,852) 278,205
------------- --------------
NET CASH USED IN OPERATING ACTIVITIES (2,308,923) (335,581)
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (263,480) (70,390)
Purchase of patent (700,000) -
------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (963,480) (70,390)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable - bank (22,630) -
Proceeds from loans payable - 85,401
Proceeds from loans payable - related parties 2,976,461 269,242
Proceeds on exercise of stock options 373,808 -
Sale of common stock - 51,328
------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,327,639 405,971
------------- --------------
NET INCREASE IN CASH 55,236 -

CASH - Beginning of year - -
------------- --------------
CASH - End of year $ 55,236 $ -
============= ==============
SUPPLEMENTAL INFORMATION OF CASH FLOW INFORMATION:

Cash paid for interest $ 17,190 $ 40,942
============= ==============
Cash paid for taxes $ - $ -
============= ==============
NON-CASH FINANCING AND INVESTING ACTIVITIES:

Shares issued for acquisition of Canada $ - $ 1,223,423
============= ==============
Shares issued for acquisition of LSS UK $ 646,424 $ -
============= ==============
Shares issued for acquisition of Exclusive
Advertising, Inc. $ 2,500,000 $ -
============= ==============

See notes to consolidated financial statements

F-6

LIGHT MANAGEMENT GROUP INC.

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2000 AND 1999

1. ORGANIZATION AND SIGNIFICANT EVENTS

Triton Acquisition Corporation (formerly Triton Asset Management, Inc.)
("Triton") was originally incorporated on March 4, 1985 under the laws of
the State of Florida as Vyquest International Capital, Inc. Triton was
formed for the purpose of seeking, investigating, and if warranted,
acquiring an interest in or merging with a suitable on-going entity.

In 1989, Triton changed its corporate name to Triton Asset Management,
Inc. In 1991, concurrent with a pending transaction, Triton changed its
corporate name to Bio-Chem Technology, Inc. This pending transaction did
not consummate and, in 1993, Triton failed to file the required reports
and pay the requisite fees to the State of Florida and its corporate
charter was revoked. In September 1997, Triton reinstated its corporate
charter and changed its corporate name back to Triton Asset Management,
Inc.

On December 28, 1998, Triton changed its State of Incorporation from
Florida to Nevada by means of a merger with and into Triton Acquisition
Corporation, a Nevada Corporation formed solely for the purpose of
effecting the reincorporation and on February 23, 2000, changed its name
to Light Management Group, Inc. ("Light"). Light, through wholly-owned
subsidiaries, develops new applications for optical and light
technologies. Light is authorized to issue 100,000,000 shares of $.0001
par value common stock.

On May 13 1999, Light acquired 100% of the outstanding stock of Laser
Shows Systems Canada and its 97% owned subsidiary Laser Shows Systems
International.

On January 14, 2000, Light acquired all the issued and outstanding shares
of 1028177 Ontario Limited.

On March 24, 2000, Light acquired all of the outstanding shares of
Exclusive Advertising Inc., a company incorporated under the laws of
Ontario, Canada.

On March 29, 2000, Light acquired all of the outstanding shares of Laser
Show Systems Investment, Ltd. UK, a company incorporated in the United
Kingdom), ("LSS UK").

In addition, during the year ended December 31, 2000 the Company
incorporated two companies, which to date have been inactive, LMGR Switch
Technologies, Inc. and LSSI (Russia), a company owned 99% by the Company.
LSSI Russia was formed to facilitate the conduct of business in Russia.

Hereinafter, all of the aforementioned companies are collectively referred
to as the "Company".

F-7

2. SUMMARY OF Significant Accounting Policies

a. Basis of Presentation - The accompanying financial statements have
been prepared assuming the Company will continue as a going concern.
The Company has incurred net losses of approximately $9,360,000 and
$1,843,000 for the years ended December 31, 2000 and 1999,
respectively. Additionally, the Company had a working capital
deficiency of approximately $3,462,000 at December 31, 2000, which
creates substantial doubt about the Company's ability to continue
as a going concern. The recovery of assets and continuation of
future operations are dependent upon the Company's ability to obtain
additional debt or equity financing and its ability to generate
revenues sufficient to continue pursuing its business purposes. The
Company is actively pursuing financing to fund future operations
and acquisitions. In addition, in March 2001, $4,800,000 of loans
to a related party was converted into $3,200,000 of preferred shares
and $1,600,000 of common shares of the Company's stock. The
accompanying consolidated financial statements do not include any
adjustments that might be necessary should the Company be unable to
continue as a going concern.

b. Use of Estimates -The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that effect 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 revenue and expenses during
the reporting period. Actual results could differ from those
estimates.

c. Basis of Consolidation - The Consolidated financial statements
include the accounts of the Company and its wholly owned
subsidiaries, Laser Shows Systems International, Inc., Laser Show
Systems (Canada) Ltd., Exclusive Advertising, Inc. (all Canadian
Corporations), and Laser Shows Systems Investments, Inc. (a United
Kingdom corporation) collectively referred to as the "Company." All
significant intercompany transactions and balances have been
eliminated in consolidation.

d. Goodwill - Goodwill represents the aggregate excess of the cost of
companies acquired over the fair value of their net assets at dates
of acquisition and it is being amortized on the straight-line method
over 15 years. Amortization expense charged to operations and
accumulated amortization at December 31, 2000 was $83,333.

e. Amortization of Patents - The patent is being amortized over its
expected useful life of 4 years.

f. Net loss per share - Basic loss per share is computed using the
weighted average number of shares of outstanding common stock.
Diluted per share amounts where applicable also include the effect
of dilutive common stock equivalents from the assumed exercise of
stock options.

g. Cash and cash equivalents - For the purposes of the statement of
cash flows, the Company considers all highly liquid debt instruments
purchases with a maturity of three months or less to be cash
equivalents.

h. Inventories - Inventories are recorded at the lower of cost or
market. Cost is determined using the first-in first-out method.

F-8

i. Depreciation - Fixed assets are depreciated on the straight-line and
accelerated methods over the estimated useful lives of the related
assets, which ranges from 3 to 5 years.

j. Recognition of Revenue - Income from sales of goods is recognized
when the orders are completed and shipped, provided that collection
of the resulting receivable is reasonably assured. In circumstances
where there is significant uncertainty to reasonably estimate the
extent of payments to be received, the Company uses the cost
recovery method whereby revenue is recorded only when collection
occurs.

k. Advertising - The Company's policy is to expense advertising as
costs are incurred. Advertising was $600,387 and $160,518 for the
years ended December 31, 2000 and 1999, respectively.

l. Research and Development Expenditures - Research and development
expenditures are charged to income as incurred. Such costs were
$279,156 and $132,501 for the years ended December 31, 2000 and
1999, respectively.

m. Comprehensive Income - The Company has adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130") "Reporting
Comprehensive Income", which establishes standards for reporting and
display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under
current accounting standards as a component of comprehensive income
be reported in the financial statements that is displayed with the
same prominence as other financial statements. Comprehensive income
is displayed in the statement of stockholders' equity and in the
balance sheet as a component of stockholders' equity.

n. Stock-based Compensation - The Company accounts for all transactions
under which employees, officers and directors receive shares of
stock or options in the Company in accordance with the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," ("APB 25"), under which no compensation cost
is recognized. The Company adopted Statements of Financial
Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for
Stock-Based Compensation," for disclosure purposes, and has adopted
the proforma disclosure requirements of SFAS 123. Accordingly, no
compensation has been recognized in the results of operations for
the employee, officers and directors stock plan other than for
options issued at an exercise price below market price, to non-
employees for consulting services or to debt providers that had
stock or options attached.

o. Foreign Currency Translation - Assets and liabilities of
subsidiaries operating in foreign countries are translated into U.S.
dollars using both the exchange rate in effect at the balance sheet
date or historical rate, as applicable. Results of operations are
translated using the average exchange rates prevailing throughout
the year. The effects of exchange rate fluctuations on translating
foreign currency assets and liabilities into U.S. dollars are
included in stockholders' equity (Accumulated other comprehensive
loss), while gains and losses resulting from foreign currency
transactions are included in operations.

F-9

p. Income Taxes - The Company accounts for income taxes under the
provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS No. 109). SFAS No. 109 requires
the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statements and
tax basis of assets and liabilities, and for the expected future tax
benefit to be derived from tax loss and tax credit carry forwards.
SFAS No. 109 additionally requires the establishment of a valuation
allowance to reflect the likelihood of realization of deferred tax
assets.

q. Accounting for Long-Lived Assets - The Company reviews long-lived
assets for impairment whenever circumstances and situations change
such that there is an indication that the carrying amounts may not
be recovered. At December 31, 2000, the Company believes that there
has been no impairment of its long-lived assets.

r. Fair Value of Financial Instruments - The carrying amounts of the
assets and liabilities reported in the balance sheet approximate
their fair market value based on the short-term maturity of these
instruments.

s. New Accounting Standards

(i) In June 1999, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard No. 137
("SFAS No. 137"), "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133". SFAS No. 137 amends SFAS No. 133,
"Accounting for Derivative Instruments and Hedging
Activities", which was issued in June 1998. SFAS 137 defers
the effective date of SFAS No. 133 to all fiscal years
beginning after June 15, 2000. Accordingly, the Company will
adopt the provisions of SFAS No. 133 for the year ended
December 31, 2001. The application of the new pronouncement
should not have a material impact on the Company's financial
statements.

(ii) In December 1999, the United States Securities and Exchange
Commission released Staff Accounting Bulletin No. 101 ("SAB
No. 101"), "Revenue Recognition in Financial Statements". (The
implementation date of SAB 101, was subsequently amended by
SAB 101A and SAB 101B.) Under SAB 101 additional guidance on
revenue recognition criteria and related disclosure
requirements are required. Implementation of SAB No. 101 is
required no later than the fourth fiscal quarter of fiscal
years beginning after December 15, 1999, but is effective
retroactively to the beginning of that fiscal period (per SAB
101B). Company management has evaluated the standard and the
reporting implications thereof, and has determined that there
will not be a significant impact on the Company's operating
results.

3. ACCOUNTING ADJUSTMENTS

a) 1999
In connection with the completion of the 2000 audit, the Company
identified various adjustments as follows: expenses paid for by a related
company; an increase in accrued liabilities; and a change in depreciation
because of a reclassification of fixed assets to inventory. As a result,
the Company recorded adjustments decreasing sales by $23,356,

F-10

increasing selling, general and administrative expenses for
$1,748,147, decreasing depreciation expense by $50,571 and increasing
other expense by $18,156. Additionally, the Company's stockholders' equity
decreased by $1,739,088 as a result of these adjustments.

b) 2000
Subsequent to the completion of its 2000 audit, the company identified
$327,185 of expense, which were paid for by a related company. In
addition, the company had recorded a discount to notes payable of
$1,439,586 related to the issuance of warrants in connection with
borrowings from such entity. Since the loans were due upon demand, the
Company has restated its financial statements to record an expense for
such discount in the year ended December 31, 2000. In addition, the
Company has included the disclosure of the conversion in March 2001, of
$1,600,000 of debt into shares of its common stock, which was not
previously disclosed.

The aforementioned adjustments have been reflected in the Company's financial
statements as follows:

December 31, 2000
As reported
in 2000
Form 10-KSB As Restated
------------- -------------
Current assets $1,906,503 $1,906,503
Long-term assets 3,627,898 3,627,898
------------- -------------
Total assets $ $
============= =============
Total liabilities $3,692,076 $5,458,857
------------- -------------
Total shareholders' equity $1,842,325 $ 75,544
------------- -------------
$5,534,401 $5,534,401
============= =============

December 31, 1999 December 31, 2000
As reported
in 1999 in 2000 Form
Form 10-KSB As Restated 10-KSB As Restated
------------- ------------- -------------- -------------

Sales $ 1,061,572 $ 1,038,216 $ 711,630 $ 711,630
Cost of sales 112,314 112,314 560,398 560,398
------------- ------------- -------------- -------------
Gross profit 949,258 925,902 151,232 151,232

Total operating expenses 990,762 2,706,494 7,574,445 7,901,630
------------- ------------- -------------- -------------
Loss from operations (41,504) (1,780,592) (7,423,213) (7,750,398)
Interest expense 62,872 62,872 167,192 1,606,788
------------- ------------- -------------- -------------
Net loss $ (104,376) (1,843,464) $(7,590,405) $(9,357,186)
============= ============= ============== =============
Net loss per share -
basic and diluted $ (0.07) $ (0.12) $ (0.39) $ (0.48)
============= ============= ============== =============
Weighted Average Shares
Used in Computation -
Basic and diluted 15,568,611 15,568,611 19,605,250 19,605,250
============= ============= ============== =============

F-11

4. ACQUISITION OF COMPANIES

On May 13, 1999, the Company acquired all of the outstanding stock of
Laser Shows Systems Canada ("Canada") for 3,000,000 shares of the
Company's common stock. Canada was owned in excess of 50% by shareholders
of the Company. The Company recorded the acquisition of Canada at the net
book value of the assets acquired.

On January 14, 2000, the Company acquired all of the common stock of
1028177 Ontario, Ltd., which was a development stage enterprise engaged in
the development of light switching technology. The Company recorded the
amount paid of 360,000 shares of the Company's common stock at $1.75 per
share as an acquisition of process research and development and
accordingly, recorded a charge to operations of $630,000 related to the
acquisition.

On March 24, 2000, the Company acquired all of the outstanding shares of
Exclusive Advertising, Inc. for 500,000 shares of the Company's common
stock valued at $5 per share or $2,500,000. On March 29, 2000 all of the
outstanding shares of stock of Laser Systems, Inc. UK was acquired for
$700,000 and 897,600 shares of the Company's stock valued at $646,424 for
an aggregate purchase price of $1,346,424.

All of the above acquisitions were recorded under the purchase method of
accounting. The following is a summary of the acquisitions:

2000 1999
--------------- ------------
Purchase Price $ 4,378,910 $ 1,550,778
Fair Value of Assets Acquired (1,220,452) (1,550,778)
In Process Research and Development 630,000 -
--------------- ------------
Goodwill $ 2,528,458 $ -0-
=============== ============

The detailed components consist of the following:

Cash to Sellers $ 700,000 $ -
Common Stock to Sellers
(1,007,600 shares in 2000 and
3,000,000 shares in 1999) 3,678,910 1,550,778
-------------- ------------
Purchase Price $ 4,378,910 $ 1,550,778
============== ============

The following table summarizes the pro forma consolidated results of
operations (unaudited) of the Company and the 2000 and 1999 acquisitions
as though the acquisitions had been consummated at January 1, 1999. The
proforma amounts give effect to the appropriate adjustments for the fair
value of the assets acquired and amortization of goodwill.

Years Ended
December 31,
-------------------------------
2000 1999
-------------------------------
Total revenue $ 811,398 $ 1,243,147
Net loss $ (9,361,534) $ (1,968,416)
Net loss per share $ (.48) $ (.11)
Weighted average number of shares $ 19,363,849 $ 17,196,591

F-12

5. INVENTORIES

Inventories consist of the following at December 31, 2000:

Raw Material $ 9,745
Finished Goods 964,763
--------------
$974,508
==============

6. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 2000:

Estimated
Useful life
-----------
Equipment 5 years $ 229,270
Furniture and fixtures 5 years 36,021
Leasehold improvements 5 years 90,402
Computers 3 years 39,285
Automobiles 3 years 5,132
-----------
400,110
Less: accumulated depreciation 101,801
-----------
$ 298,309
===========

7. NOTE PAYABLE - BANK

At December 31, 2000, the Company had a bank loan requiring monthly
payments of $2,515 plus interest at 2.5% above prime, maturing in 2004,
secured by certain equipment. The debt matures as follows:

Year Ending
December 31

2001 $ 30,180
2002 30,180
2003 30,180
2004 30,151
$120,691

F-13

8. Related Party Transactions

a. DUE TO OFFICERS

Due to officers on the accompanying balance sheet represents the
balance owed to two officers for advances to the Company and
expenses paid on behalf of the Company during the years ended
December 31, 2000 and 1999.

b. DUE TO RELATED PARTIES

During the years ended December 31, 2000 and 1999, a principal
shareholder of the Company, which is a corporation, advanced the
Company $2,832,319 and $269,242 during the year ended December 31,
2000 and 1999. The Chief Executive Officer of the Company is also a
shareholder of the lending company. In addition, during 1999, such
company paid $1,600,000 of expenses on behalf of the Company. The
advances were evidenced by notes bearing interest ranging from 5% to
6%. The $1,600,000 obligation is without interest. In conjunction
with the aforementioned borrowings, the Company issued 1,000,000
stock rights to acquire the Company's common stock at exercise
prices ranging from $2.25 to $3.50 per share. The exercise of such
rights expires August 1, 2003. The issuance of the rights has been
recorded as interest expense of $1,439,596.

A summary of the Company's related party obligations is as follows:

Notes payable and advances $ 4,700,000
Accrued Interest 153,935
----------------
$
================

9. STOCK OPTIONS

During the year ended December 31, 2000, the Company granted 1,474,285
options to the Company's chief executive officer to purchase the Company's
common stock at exercise prices ranging from $.25 to $2.73. Such options
vest upon grant and expire in five years. The Company recorded a charge to
earnings of $2,128,000 in connection with such grants for the excess of
the market price of the Company's stock at the date of grant and the
exercise price. In addition, 27,650 options were granted to the Company's
President at an exercise price of $2.73.

Options Weighted
average
Exercise price
-------------- ---------------
Balance at January 1, 2000 - -
Granted 1,501,935 $ 1.68
Exercised (482,538) .77
-------------- ---------------
Balance at December 31, 2000 1,019,387 $ 2.11
============== ===============

F-14

The following is additional information related to the Company's stock
options as of December 31, 2000.

-------------------------------------------------------------------------
Exercise Outstanding Remaining Weighted Average
Price Contractual Exercisable
Range Options Average Life Exercise Price Options
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$1.50-2.73 1,019,397 4.5 $2.11 1,019,397
-------------------------------------------------------------------------

For disclosure purposes the fair value of each stock option grant is
estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions used for stock
options granted during the years ended December 31, 2000: (i) annual
dividends of $0.00, (ii) expected volatility of 398% (iii) risk-free
interest rate of 5.7%, and (iv) expected option lives of three years. The
weighted average fair value of the stock options granted for the year
ended December 31, 2000 was $4,653,000.

Had compensation cost for the Company's two option plans been determined
in accordance with SFAS 123, the Company's net loss and loss per share
would have been increased to the pro forma amounts indicated below for the
year ended December 31, 2000.

Net loss: As reported $ (9,357,186)
Pro forma $(11,712,384)
Net loss per share:
Basic and diluted As reported $ (0.48)
Basic and diluted Pro forma $ (0.60)

10. COMMITMENTS

a) The Company has a five-year employment agreement with its Chief
Executive Officer, which commenced May 1, 1999 which provides for
annual compensation of $250,000. In addition, such officer is
granted on January 1 of each year, options equivalent to three times
the officer's annual salary divided by 125% of the closing price of
the Company's common stock on December 31 of the prior year.

b) The Company has an employment agreement with its President, which
provides for current annual compensation of $107,000. The employment
agreement also provides for the annual granting of stock options.
The Company has not yet fixed the terms of such agreement.

c) The Company subleases its office from a related company on a
month-to-month basis and leases its research and development
premises, various computer equipments and two automobiles under
operating leases. The minimum lease commitment under these operating
lease agreements for the duration of the lease are as follows:

Years ended Amounts
2001 $ 22,064
2002 14,276
2003 11,055
2004 11,055
2005 1,843

F-15

11. INCOME TAXES

The Company has not filed its corporation income tax returns since the
year ended December 31, 1996, at which time, the Company had net operating
loss carryovers of approximately $274,000. The Company has experienced
losses since such period and any resultant deferred tax asset from such
losses would be offset by a corresponding valuation allowance, as the
realization of such asset cannot be predicted at this time. A significant
portion of these carry forwards may be subject to limitations on annual
utilization due to "equity structure shifts" or "owner shifts" involving
"5 percent stockholders" (as defined in the Internal Revenue Code), which
may result in more than a 50 percent change in ownership.

The income tax benefit for year ended December 31, 2000 and 1999 differs
from the amount computed by applying the statutory federal income tax rate
to loss before income taxes is as follows:

2000 1999
----------- ----------
Income tax benefit computed at statutory rate $ 3,181,000 $ 627,000
Deductions for which no benefit derived (3,181,000) (627,000)
----------- ----------
Income tax benefit $ - $ -
=========== ==========

12. NON-CASH SALARIES AND SERVICES

During the year ended December 31, 2000 the Company issued shares of stock
for to various employees and consultants. An aggregate of 1,249,500 shares
were issued for approximately $3,050,000 of salaries, consulting and legal
services. Certain of these costs are for services to be provided in the
future and accordingly, prepaid compensation of approximately $721,000 is
reflected as a reduction of equity in the accompanying financial
statements. In addition, the Company recorded $2,128,000 in non-cash
compensation for the difference in the market price at the date of grant
and the exercise price of options granted to the Company's Chief Executive
Officer. Total non-cash salaries and services aggregated $4,394,413 in the
accompanying statement of operations.

13. MAJOR CUSTOMER

During the year ended December 31, 2000 one customer accounted for 48% of
the Company's sales. Such customer accounted for all of the Company's
sales in 1999.

14. LITIGATION SETTLEMENT

During March 2000, the Company settled a litigation against the Company,
the majority shareholder of the Company and other shareholders. Under the
terms of the settlement, the Company paid approximately $400,000 to the
plaintiff.

15. SEGMENT AND GEOGRAPHIC INFORMATION

For the year ended December 31, 2000 the Company views its operations as
principally two segments, advertising and sales of laser and related
lighting equipment. All revenues were derived from Canadian entities.
The segments share a common workforce and office headquarters, which
preclude an allocation of all overhead components. Overhead items that
are specifically identifiable to a particular segment are applied to such
segment. The

F-16

Company operated in only one segment in the year ended December 31,
1999. The Company's segment information for the year ended December 31,
2000 is as follows:

Sale of
Lasers and
related
lighting
Advertising equipment Corporate Consolidated
------------- ------------ ----------- --------------

Sales to unaffiliated customers $ 368,452 $ 343,177 $ - $ 711,630
Interest Expense 12,928 17,590 1,576,270 1,606,788
Depreciation and amortization 31,060 36,715 202,979 270,754
Segment assets 259,690 4,949,960 324,751 5,534,401
Long lived asset expenditures 1,320 262,160 - 263,480
Segment loss (129,918) (1,076,525) (8,150,743) (9,357,186)

16. Subsequent EventS

a. LEASE COMMITMENT

The Company entered into a lease agreement to lease additional
office space in Atlanta, Georgia. The lease commences on March 1,
2001, with total lease commitments aggregating $351,201 through
February 2006.

b. CAPITAL CONTRIBUTION

During April 2001, an individual and others acknowledged to the
Company that they were in violation of certain securities laws
involving "Short Swing Profits" and have agreed to return to the
Company approximately $152,000 which will be recorded as a
contribution of capital to the Company when received.

c. PREFERRED STOCK

On March 1, 2001, the Board of Directors adopted a resolution
establishing 2,766,798 of Series A preferred stock, $.0001 par
value. Such stock will have voting rights equal to 2 1/2 shares of
the Company's common stock, shall not be redeemable or convertible
by the Company and shall entitle the holder to receive dividends,
which shall be cumulative, at an annual rate of $0.08 per share. The
preferred stock shall be convertible into common stock at any time
by the holder on a one-for-one basis.

d. CONVERSION OF RELATED PARTY DEBT

In March 2001, the Company settled $3,200,000 of its loans payable
to a Company in which the Company's principal shareholder and Chief
Executive Officer is also a shareholder by issuing 2,766,798 shares
of Series A Preferred Stock. Each share of preferred stock is
convertible into one share of common stock at any time by the
holder. In addition, the Company settled $1,600,000 of its loans
payable to such company by issuing 1,855,072 shares of common stock.

F-17

Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure

On December 11, 2000, the Company's Board of Directors retained Feldman,
Sherb & Co., P.C. ("Feldman Sherb") as the Company's auditor for the fiscal year
ended December 31, 2000. The Company decided to change auditors because it
sought greater international experience than its previous auditor, James E.
Slayton, C.P.A. ("Slayton").

PROPOSAL NO. 1
ELECTION OF DIRECTORS

The Board of Directors has determined that there will be four directors of
the Company elected at the Annual Meeting. In the absence of other instructions,
the proxies will be voted for each of the individuals named below, each of whom
the Board proposes for election as a director of the Company. If elected, such
individuals will serve until the next Annual Meeting of Shareholders or until
their successors are duly elected and qualified. All of the nominees are members
of the present Board of Directors.

The Board recommends a vote FOR the election of each of the nominees
listed below.

The Board has no reason to believe that any nominee would be unable or
unwilling to serve if elected. If a nominee becomes unable or unwilling to
accept nomination or election, the Board will either select a substitute nominee
or will reduce the size of the Board. If you have submitted a proxy and a
substitute nominee is selected, your shares will be voted for the election of
the substitute nominee.

Director Information

Set forth below is biographical and other information about the persons
who will make up the Board following the annual meeting, presuming election of
the nominees named above.

BARRINGTON L. SIMON, C.G.A. Mr. Simon, age 55, has been Chief Executive
Officer and Director of the Company since May 19, 1999. Mr. Simon attended a
general business degree program at the Stratford Technical College in England.
Upon immigration to Canada he received recognition and the designation of
Certified General Account. Mr. Simon has worked for many reputable companies
such as Mercantile Bank of Canada (now known as Citibank), Halton Credit Union,
Colortron Photo Services, Taylor Leibow Chartered Accountant and PPG Canada
Limited. In addition to working for the above companies, he has owned and
operated his own accounting practice between 1982-1999 and his own financial
services company between 1995-1999.

BRYAN LATIMER. Mr. Latimer, age 34, has served as a Director of the
Company since May 1999. He has successfully owned and operated an automobile
dealership, since 1989, specializing in the exportation of vehicles, fleet
leasing and specialty application vehicles. Being a member of the Chamber of
Commerce of Burlington, Ontario Canada, Mr. Latimer is registered with the
Ontario Minister of Consumer and Commercial Relations, currently known as the
OMVIC. Mr. Latimer also worked for Daymond Vynal Products, a division of Red
Path Sugar, as a distribution coordinator.

IAN BROCK. Mr. Brock, age 61, has served as a Director of the Company
since February 1999. He has a sales background working with such companies as
York International, as Sales Manager, GE Technical, as Sales Manager, Phillips
Industries Engineered Productions, as Sales Engineer and American Standard
Engineered Productions, as Sales Engineer. Mr. Brock is currently Pastor of the
Brock Faith Ministries in Ontario, Canada.

DR. ARKADI ROZENCHTEIN, Ph.D.. Dr. Rozenchtein, age 53, has served as a
Director of the Company since August, 2000. He is instrumental in developing
new technologies and the commercial products resulting from these developments.
For the preceding five years, Dr. Rozenchtein was President of Laser Show
Systems (Moscow) and Laser Show Systems Investments (UK) until their acquisition
by the Company in 2000. Dr. Rozenchtein is a member of Legion of Honour and
Chevaller, and also has the distinction of NYAS. He heads operations in Moscow,
Russia and Burlington, Ontario.

Additional Information About the Board of Directors

The Board held six meetings and took action by written consent seventeen
times during fiscal 2000. All of the directors attended at least 75% or more of
the meetings of the Board of Directors during fiscal 2000.

The Company has no audit, compensation, or nominating committees, and no
committees performing similar functions.

Executive Officers and Control Persons

Set forth below is biographical and other information about the person(s)
who will serve as non-director executive officer(s):

DR. DONALD IWACHA. Dr. Iwacha, age 54, has been with the Company for
almost two years and now serves as its President. Prior to joining the Company
in July 1999, Dr. Iwacha was a Product Development Manager, Canadian Operations
and Manager of Innovation, North American Flexibles, for algroup Lawson Mardon,
a large multi-national packaging company. Dr. Iwacha received a Post Doctoral
Fellow at the University of British Columbia in the Department of Biochemistry,
graduated with a Ph.D. in Organic Chemistry and a B.Sc.Hons. from the University
of Manitoba.

COMPENSATION AND OTHER BENEFITS

Director Compensation

The Directors of the Company receive one thousand (1,000) shares of Common
Stock at an option price of $4.00 per month for serving as such or for attending
meetings. Directors may, by resolution of the Board of Directors, receive a
fixed fee for attendance at meetings of the Directors. Directors are not
precluded from serving in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation therefor. No Director received any cash
compensation for services as a Director in the fiscal year ended December 31,
2000.

Executive Compensation

The following table provides summary information for the years 2000 and
1999 concerning cash and noncash compensation paid or accrued by the Company to
or on behalf of its primary executive officers for the appropriate years.

SUMMARY COMPENSATION TABLES

Annual Compensation
-----------------------------------------------------
Name and Other Annual
Principal Position Year Salary (US$) Bonus ($) Compensation ($)
- -------------------------------------------------------------------------------
Don Iwacha, 2000 $107,000 - 0 - - 0 -
President
- -------------------------------------------------------------------------------
Barrington Simon, 2000 $250,000 - 0 - - 0 -
Chairman & CEO
- -------------------------------------------------------------------------------
Barrington Simon, 1999 $166,666 -0- $1,103,964 (1)
Chairman & CEO
- -------------------------------------------------------------------------------

(1) This compensation constitutes the difference between the exercise price and
market price for options to purchase 482,538 shares of the Company's Common
Stock exercised by Simon on December 14, 2000. On July 5, 2000, the Board of
Directors granted Simon options to purchase 1,200,000 shares of Common Stock as
a bonus. These stock options have exercise prices varying from $0.25 to $2.00
per share. On December 14, 2000, a Settlement Agreement was signed by the
Company and Mr. Simon whereby Mr. Simon exercised options to purchase 482,538
shares and tendered the collective exercise price of $373,808, by exchanging, or
discharging, a $207,141 loan he had made to the Company, and by exchanging, or
discharging, $166,667 the Company owed him as his unpaid salary for 1999. As a
result of this grant, Simon now has options to purchase 717,462 shares at
exercise prices between $1.50 and $2.00.

Long Term Compensation
-----------------------------------------
Awards Payouts
-----------------------------------------
Name Restricted Securities LTIP Payouts All Other
and Stock Underlying ($) Compensation
Principal Position Year Award(s)($) Options/ ($)
SARs(#)
- -------------------------------------------------------------------------------
Don Iwacha, 2000 - 0 - 27,650 (1) - 0 - - 0 -
President
- -------------------------------------------------------------------------------
Barrington Simon, 2000 - 0 - 274,285 (2) - 0 - - 0 -
Chairman & CEO
- -------------------------------------------------------------------------------
Barrington Simon, 1999 - 0 - -0- - 0 - - 0 -
Chairman & CEO
- -------------------------------------------------------------------------------

(1) Such shares were obtained upon the exercise of options granted in Dr.
Iwacha's Employment Agreement, dated July 19, 1999, which also entitles him to
an annual salary of $107,000. Pursuant to this Agreement, on July 19 of each
year during which Dr. Iwacha is employed, he is granted options to purchase
shares of Common Stock equal to two (2) times his annual salary divided by the
closing trading price of the Common Stock on such date.

(2) Such shares were obtained upon the exercise of options granted in Mr.
Simon's Employment Agreement, dated May 1, 1999. This agreement entitles him to
an annual salary of $250,000 through April 30, 2004. On January 1 of each year
during which Mr. Simon is employed, he is granted options to purchase shares of
Common Stock equal to three (3) times his annual salary divided by 125% of the
closing trade price of the Common Stock on December 31 of the year preceding the
grant of such options.

PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Subject to ratification by the stockholders, the Board has selected
Feldman Sherb & Co., P.C., independent auditors ("Feldman Sherb"), to audit the
financial statements of the Company for the fiscal year ending December 31,
2001. Feldman Sherb served as the Company's independent accountant for the year
ended December 31, 2000. Although stockholder approval of the Board of
Directors' selection of Feldman Sherb is not required by law, the Board of
Directors believes that it is advisable to give stockholders an opportunity to
ratify this selection. If the stockholders do not approve this proposal at the
Annual Meeting, the Board of Directors may reconsider the selection of Feldman
Sherb.

Representatives of Feldman Sherb are expected to be present at the Meeting
and will have an opportunity to make a statement if they desire to do so. Such
representatives are also expected to be available to respond to appropriate
questions from stockholders.

The Board recommends a vote FOR the ratification of the appointment of
Feldman Sherb & Co., P.C. as independent auditors

PROPOSAL NO. 3
INCREASE NUMBER OF SHARES OF COMMON
STOCK AUTHORIZED FOR ISSUANCE

The Board has unanimously approved and recommended that the Company's
stockholders approve the proposed amendment to the Company's Articles of
Incorporation to increase the number of common shares authorized for issuance
from 100,000,000 to 200,000,000.

If this proposal is approved, an additional 100,000,000 shares of the
Company's Common Stock, par value $0.0001 per share, will be available for
issuance by the Company. The Company currently has no immediate plans to offer
for sale any of the additional 100,000,000 shares.

Purpose

The Board of Directors has proposed the increase in the number of
authorized common shares because it deems it desirable to have additional common
shares available for issuance in the future for general corporate purposes. The
additional common shares would be available for sale to raise capital, for
issuance to consultants, or for any other lawful corporate purpose in the
discretion of the Board of Directors.

The Board of Directors recommends a vote "for" the approval of the
amendment to increase the number of authorized shares.

PROPOSAL 4
APPROVAL OF 2001 STOCK INCENTIVE PLAN

On June 28, 2001, the Board of Directors adopted resolutions, subject to
stockholder approval, to adopt the Company's 2001 Stock Incentive Plan (the
"2001 Plan"). Up to Four Million (4,000,000) shares of Common Stock (subject to
adjustment in the event of stock splits or other similar events) may be issued
pursuant to awards granted under the 2001 Plan.

The 2001 Plan is intended to provide for the Company's stock incentive
program. The Board of Directors believes that grants of stock options under the
2001 Plan will be an important element in attracting and retaining key employees
who are expected to contribute to the Company's growth and success. If the 2001
Plan is approved, the Company will have authorized shares of Common Stock
available for future grants, including grants in connection with any
acquisitions by the Company.

The Board believes that the approval and adoption of the 2001 Stock
Incentive Plan is in the best interests of the Company and its stockholders and
recommends a vote FOR this proposal.

SUMMARY OF THE 2001 PLAN

The following is a brief summary of the 2001 Plan. The following summary
is qualified in its entirety by reference to the 2001 Plan, a copy of which is
attached as Exhibit A to the

electronic copy of this Proxy Statement filed with the SEC and may be accessed
from the SEC's home page (www.sec.gov). In addition, a copy of the 2001 Plan may
be obtained from the Clerk of the Company.

Description of Awards

The 2001 Plan provides for the grant of incentive stock options intended
to qualify under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), non-statutory stock options, restricted stock awards and stock
bonus awards, (collectively "Stock Awards"). Generally, Stock Awards under the
2001 Plan are not assignable or transferable except by will or the laws of
descent and distribution, except as otherwise determined by the Board of
Directors.

Incentive Stock Options and Non-statutory Stock Options. Optionees receive
the right to purchase a specified number of shares of Common Stock at a
specified option price and subject to such other terms and conditions as are
specified in connection with the option grant. Subject to the limitations
described below, options may be granted at an exercise price which may be less
than, equal to, or greater than the fair market value of the Common Stock on the
date of grant. Under present law, however, incentive stock options and options
intended to qualify as performance-based compensation under Section 162(m) of
the Code may not be granted at an exercise price less than the fair market value
of the Common Stock on the date of grant (or less than 110% of the fair market
value in the case of incentive stock options granted to optionees holding more
than 10% of the total combined voting power of all classes of stock of the
Company, its parent or subsidiaries). Options may not be granted for a term in
excess of ten years (five years in the case of incentive stock options granted
to optionees holding more than 10% of the voting power of all classes of stock
of the Company, its parent or subsidiaries). The 2001 Plan states the manner of
payment of the exercise price of options shall be paid either (i) in cash at the
time the option is exercised or (ii) at the discretion of the Board at the time
of the grant of the option (or subsequently in the case of a Nonstatutory Stock
Option) (1) by delivery to the Company of other common stock, (2) according to
deferred payment, or other similar arrangement, or (3) in any other form of
legal consideration that may be acceptable to the Board.

Restricted Stock Awards. Restricted Stock Awards entitle recipients to
acquire shares of Common Stock, subject to the right of the Company, at the
Company's discretion, to repurchase all or part of such shares from the
recipient in the event that the conditions specified in the applicable Stock
Award are not satisfied prior to the end of the applicable restriction period
established for such Stock Award.

Stock Bonus Awards. Under the 2001 Plan, the Board has the right to grant
Stock Bonus Awards, subject to the right of the Company, at the Company's
discretion, to repurchase all or part of such shares from the recipient in the
event that the conditions specified in the applicable Award are not satisfied
prior to the end of the applicable restriction period established for such Stock
Award.

Eligibility to Receive Stock Awards

Officers, employees, directors, consultants and advisors of the Company
and its Affiliates, defined as any parent corporation or subsidiary corporation
of the Company, are eligible to be granted Stock Awards under the 2001 Plan.
Under present law, however, incentive stock options may only be granted to
employees of the Company or any Affiliate. The maximum

number of shares with respect to which Stock Awards may be granted to any
participant under the 2001 Plan may not exceed 800,000 shares per calendar year.

As of June 19, 2001, under the terms of the 2001 Plan, approximately
thirty persons would have been eligible to receive Stock Awards under the 2001
Plan, including the Company's four executive officers and two non-employee
directors. Under the Company's current compensation guidelines, Awards of
options may be granted to any employees. The granting of Stock Awards under the
2001 Plan is discretionary, and the Company cannot now determine the number or
type of Stock Awards to be granted in the future to any particular person or
group.

On June 18, 2001, the last reported sale price of the Company Common Stock
on the NASD OTC-BB was $1.44.

Administration

The 2001 Plan is administered by the Board of Directors. The Board has the
authority to establish, amend and revoke the rules and regulations relating to
the 2001 Plan and to terminate and suspend the 2001 Plan. Pursuant to the terms
of the 2001 Plan, the Board may delegate authority under the 2001 Plan to one or
more committees of the Board. Subject to any applicable limitations contained in
the 2001 Plan, the Board, or any committee to whom the Board delegates
authority, as the case may be, shall determine which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted, including the time or times
when a person shall be permitted to receive Common Stock pursuant to a Stock
Award; and the number of shares of Common Stock with respect to which a Stock
Award shall be granted to each such person.

Each Stock Award shall be in such form and shall contain such terms and
conditions as the Board of Directors shall deem appropriate, so long as
consistent with the 2001 Plan or applicable law. The Board of Directors may
also, in its sole discretion, accelerate the time at which a Stock Award may
first be exercised or the time during which a Stock Award will vest in
accordance with the Plan.

The Board of Directors is required to make appropriate adjustments in
connection with the 2001 Plan and any outstanding Stock Awards to reflect stock
dividends, stock splits and certain other events. In the event of a merger,
liquidation or other Corporate Transaction (as defined in the 2001 Plan), the
surviving corporation or acquiring corporation may assume any or all of the
outstanding Stock Awards or may substitute similar stock awards for Stock Awards
outstanding under the 2001 Plan. In the event the surviving corporation or
acquiring corporation does not assume any or all such outstanding Stock Awards
or substitute similar stock awards for such outstanding Stock Awards under the
2001 Plan, then with respect to outstanding Stock Awards that were neither
assumed or substituted and that are held by participants whose continuous
service has not terminated prior to the Corporate Transaction, the vesting of
such Stock Awards (and if applicable, the time during which such Stock Awards
may be exercised) shall be accelerated in full to a date prior to the
consummation of such Corporate Transaction. If any Stock Award for any reason
expires or is terminated, the unused shares of Common Stock shall revert and
again be available for issuance under the 2001 Plan, subject, however, in the
case of incentive stock options to any restrictions under the Code.

Amendment or Termination

No Award may be made under the 2001 Plan after June 30, 2011. The Board of
Directors may at any time amend, suspend or terminate the 2001 Plan or any
portion thereof, provided that no amendment shall be made without stockholder
approval if such approval is necessary to comply with any applicable tax or
regulatory requirement.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Stock Awards granted
under the 2001 Plan and with respect to the sale of Common Stock acquired under
the 2001 Plan.

Incentive Stock Options

In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
Common Stock acquired through the exercise of the option ("ISO Stock"). The
exercise of an incentive stock option, however, may subject the participant to
the alternative minimum tax.

Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for more than two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.

If the participant sells ISO Stock for more than the exercise price prior
to having owned it for more than two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.

If a participant sells ISO Stock for less than the exercise price, then
the participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.

Non-statutory Stock Options

As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a non-statutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
non-statutory stock option generally will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the Common Stock
acquired through the exercise of the option ("NSO Stock") on the Exercise Date
over the exercise price.

With respect to any NSO Stock, a participant will have a tax basis equal
to the exercise price plus any income recognized upon the exercise of the
option. Upon selling NSO Stock, a participant generally will recognize capital
gain or loss in an amount equal to the excess of the sale price of the NSO Stock
over the participant's tax basis in the NSO Stock. This capital gain or loss
will be a long-term gain or loss if the participant has held the NSO Stock for
more than one year prior to the date of the sale.

Restricted Stock Awards

A participant will not recognize taxable income upon the grant of a
restricted Stock Award, unless the participant makes an election under Section
83(b) of the Code (a "Section 83(b) Election"). If the participant makes a
Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary income, for the year in which the Stock
Award is granted, in an amount equal to the difference between the fair market
value of the Common Stock at the time the Stock Award is granted and the
purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, then the participant will recognize ordinary compensation income, at the
time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the Common Stock
at the time of such lapse and the original purchase price paid for the Common
Stock. The participant will have a tax basis in the Common Stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.

Upon the disposition of the Common Stock acquired pursuant to a restricted
Stock Award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's tax
basis in the Common Stock. The gain or loss will be a long-term gain or loss if
the shares are held for more than one year.

Stock Bonus Awards

The tax consequences associated with any other Stock Bonus Award granted
under the 2001 Plan will vary depending on the specific terms of such Award.
Among the relevant factors are whether or not the Award has a readily
ascertainable fair market value, whether or not the Award is subject to
forfeiture provisions or restrictions on transfer, the nature of the property to
be received by the participant under the Award and the participant's holding
period and tax basis for the Award or underlying Common Stock.

Tax Consequences to the Company

The grant of an Award under the 2001 Plan will have no tax consequences to
the Company. Moreover, in general, neither the exercise of an incentive stock
option nor the sale of any Common Stock acquired under the 2001 Plan will have
any tax consequences to the Company. The Company generally will be entitled to a
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a participant under the 2001 Plan, including in connection
with a Restricted Stock Award or as a result of the exercise of a non-statutory
stock option or a Disqualifying Disposition, any such deduction will be subject
to the limitations of Section 162(m) of the Code.

OTHER BUSINESS

The Board of Directors is not aware of any business to come before the
meeting other than those matters described above in this proxy statement. If,
however, any other matters should properly come before the meeting, it is
intended that holders of proxies will act in accordance with their judgement on
such matters.

DEADLINE FOR SUBMISSION FOR SUBMISSION OF SHAREHOLDER PROPOSALS

Proposals of shareholders that are intended to be presented at the
Company's 2002 Annual Meeting must be received by the Company not later than
March 1, 2002 in order to be included in the proxy statement and proxy relating
to the meeting.

Stockholders who wish to make a proposal at the 2002 Annual Meeting of
Stockholders other than one that will be included in the Company's proxy
materials should notify the Company not later than March 1, 2002 and no earlier
than February 15, 2002. If a stockholder who wished to present a proposal fails
to notify the Company by this date, the proxies that management solicits for
that meeting will have discretionary authority to vote on the stockholder's
proposal if it is properly brought before that meeting. If a stockholder makes
timely notification, the proxies may still exercise discretionary authority
under circumstances consistent with the Securities and Exchange Commission's
proxy rules.

ANNUAL REPORT

A copy of the Company's annual report is being furnished with this Notice
of Annual Meeting and Proxy Statement to each shareholder of record as of June
22, 2001. The Company will provide without charge to each such shareholder, upon
the written request of such person, a copy of the Company's Form 10-KSB for the
year ending December 31, 2000. A copy of any exhibit to the Company's Form
10-KSB may also be obtained from the Company upon written request accompanied by
a check in the amount of $5 for each such exhibit requested. Such written
requests should be sent to Dr. Donald Iwacha, President, Light Management Group,
Inc., 3060 Mainway Drive, Suite 301, Burlington, Ontario L7M 1A3.

BY THE ORDER OF THE BOARD OF DIRECTORS:

/s/ Dr. Donald Iwacha
- ----------------------------------------------
Dr. Donald Iwacha-President

Burlington, Ontario
July 7, 2001

LIGHT MANAGEMENT GROUP, INC.
3060 Mainway, Suite 301
Burlington, Ontario L7M 1A3

***PROXY***

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Don Iwacha as Proxy, with full power of
substitution and revocation, the true and lawful attorney and proxy of the
undersigned at the Annual Meeting of Shareholders (the "Meeting") of the Company
to be held Friday, July 27, 2001 at 1:00 p.m. (EDT), Sheraton Hotel, Capital
Ballroom, 165 Courtland Street, Atlanta, Georgia 30303, or any adjournments
thereof, to vote the shares of Common Stock of the Company standing in the name
of the undersigned on the books of the Company, or such shares of Common Stock
of the Company as the undersigned may otherwise be entitled to vote on the
record date for Meeting with all powers the undersigned would possess if
personally present at the Meeting, with respect to the matters set forth below
and described in the Notice of the Annual Meeting of Shareholders dated July 5,
2001, and the accompanying Proxy Statement of the Company.

1. Election of the Board of Directors until the next Annual Shareholders
Meeting
/ / For all nominees listed below (except as marked to the contrary)
For the nominee Against the nominee Abstain
1. Barrington Simon / / / / / /
2. Dr. Arkadi Rozenchtein / / / / / /
3. Ian Brock / / / / / /
4. Bryan Latimer / / / / / /

2. Ratification of the employment of Feldman Sherb & Co., P.C. as the
Company's independent auditor for the fiscal year ending December 31, 2001
/ / For Proposal 2 / / Against Proposal 2 / / Abstain

3. Amendment of the Company's Articles of Incorporation to increase the
number of the Company's shares of common stock authorized for issuance
from 100,000,000 to 200,000,000.
/ / For Proposal 3 / / Against Proposal 3 / / Abstain

4. Adoption of the 2001 Stock Incentive Plan.
/ / For Proposal 4 / / Against Proposal 4 / / Abstain

5. Any other business as may properly come before the meeting or any
adjournment thereof.
/ / For Proposal 5 / / Against Proposal 5 / / Abstain

In His Discretion, the Proxy Is Authorized to Vote upon Such Other Business
That May Properly Come Before the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS LISTED. IF NO
DIRECTIONS ARE GIVEN BY THE PERSON(S) EXECUTING THIS PROXY, THE SHARES WILL BE
VOTED IN FAVOR OF ALL LISTED PROPOSALS. THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER, AND
UNLESS OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED FOR ALL PROPOSALS.

Please sign exactly as your name appears on your certificate. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such and submit
powers of attorney or other appropriate document. If a corporation, please sign
in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

Dated , 2001
-----------------------

- ------------------------------ ----------------------- --------------------
Please Print or Type Your Name Signature Number of Shares
Voted

PLEASE SIGN AND RETURN TO THE ADDRESSEE IN THE ENCLOSED
STAMPED ENVELOPE.

If you have had a change of Address, please print or type your new address(s)
on the lines below:

PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY