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

                                   FORM 10-QSB


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

               For the quarterly period ended: DECEMBER 31, 2004

                                       or

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 0R  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

          For the transition period from _____________ to ____________


                        Commission File Number: 0-31047


                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

          Nevada                                                  86-0995730
--------------------------------------------------------------------------------
(State or other jurisdiction of                                 (IRS Employer
incorporation or organization)                               Identification No.)


                        Central Plaza, 18 Harbour Road,
                            Suite 3203A, 32nd Floor
                                Hong Kong, China
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)


                                 (852) 2588-1228
--------------------------------------------------------------------------------
                 (Issuer's telephone number including area code)

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

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

    Common Stock Outstanding as of February 11, 2004: 24,599,753 shares

Transitional Small Business Disclosure Format: Yes [ ] No [X]


<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.

                               INDEX TO FORM 10QSB

                                                                            PAGE

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets as of December 31, 2004
        and September 30, 2004                                                3

        Consolidated Statements of Income and Other Comprehensive
        Income (Loss) for the Three Months Ended December 31, 2004
        and 2003                                                              4

        Consolidated Statements of Shareholders' Equity
        for the Period Ended December 31, 2004                                5

        Consolidated Statements of Cash Flows for the
        Three Months Ended December 31, 2004 and 2003                         6

        Notes to Financial Statements                                         7

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                                  20

Item 3. Controls and Procedures                                              23


PART II OTHER INFORMATION

Item 1. Legal Proceedings                                                    24

Item 2. Changes in Securities                                                24

Item 3. Defaults Upon Senior Securities                                      24

Item 4. Submission of Matters to a Vote of Security Holders                  24

Item 5. Other Information                                                    24

Item 6. Exhibits and Reports on Form 8-K                                     24

Signatures                                                                   26

                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                  CHINA ENERGY SAVINGS TECHNOLOGY, INC. AND SUBSIDIARIES

                              CONSOLIDATED BALANCE SHEETS
                    AS OF DECEMBER 31, 2004 AND SEPTEMBER 30, 2004

<TABLE>
<CAPTION>
                                      ASSETS
                                                             December 31   September 30
                                                                2004           2004
                                                              Unaudited      Audited
                                                            ------------   -------------
<S>                                                         <C>            <C>
CURRENT ASSETS:
   Cash                                                     $ 26,826,870   $  18,442,862
   Accounts receivable, trade, net of allowance
      for doubtful accounts of $768,151 as of
      December 31, 2004 and September 30, 2004,
      respectively                                             7,067,840       6,580,525
   Current maturities of notes receivable, net                 3,727,540       3,727,540
   Inventories                                                 4,319,805       4,329,552
   Prepaid expenses                                            1,141,899       1,529,955
   Due from related party                                      1,155,840       1,257,130
                                                            ------------   -------------
      Total current assets                                    44,239,794      35,867,564
                                                            ------------   -------------
PLANT AND EQUIPMENT, net                                         515,549         528,344
                                                            ------------   -------------
OTHER ASSETS:
   Long-term notes receivable, net                             6,310,727       7,087,692
   Other receivables                                             973,668         778,880
                                                            ------------   -------------
      Total other assets                                       7,284,395       7,866,572
                                                            ------------   -------------
         Total assets                                        $52,039,738   $  44,262,480
                                                            ============   =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                     $ 2,190,181   $   2,719,554
   Current portion note payable                                    4,584          12,799
   Other payables                                                761,950         551,528
   Customer deposits                                           2,868,711       1,752,216
   Taxes payable                                               2,524,599       1,892,676
                                                            ------------   -------------
      Total current liabilities                                8,350,025       6,928,773
                                                            ------------   -------------
LONG-TERM LIABILITIES:
   Note payable, net                                              12,975           7,895
                                                            ------------   -------------
      Total liabilities                                        8,363,000       6,936,668
                                                            ------------   -------------
MINORITY INTEREST                                             15,286,858      18,662,906
                                                            ------------   -------------
SHAREHOLDERS' EQUITY:
   Preferred stock, $0.001 par value, 10,000,000
      shares authorized, none issued and outstanding
   Common stock, $0.001 par value,
      20,000,000 shares authorized, 16,314,501
      and 12,968,401 shares issued and outstanding
      as of December 31, 2004 and September 30, 2004,
      respectively                                                16,314          12,968
   Additional paid-in capital                                 14,747,894       8,655,339
   Statutory reserves                                            324,583         324,583
   Retained earnings                                          13,297,749       9,666,676
   Accumulated other comprehensive income                          3,340           3,340
                                                            ------------   -------------
      Total shareholders' equity                              28,389,880      18,662,906
                                                            ------------   -------------
         Total liabilities and shareholders' equity          $52,039,738   $  44,262,480
                                                            ============   =============
</TABLE>
            See accompanying notes to condensed financial statements.

                                       3
<PAGE>

             CHINA ENERGY SAVINGS TECHNOLOGY, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
              FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003

                                                   Three Months    Three Months
                                                      Ended           Ended
                                                   December 31     December 31
                                                      2004            2003
                                                   ------------    ------------
                                                    Unaudited       Unaudited
                                                   ------------    ------------

REVENUES                                           $ 11,708,690    $ 11,501,465

COST OF GOOD SOLD                                     4,891,408       7,447,746
                                                   ------------    ------------
GROSS PROFIT                                          6,817,282       4,053,719

OPERATING EXPENSES
   Operating expense                                    612,700         812,093
   Selling, general and administrative expenses         199,044          54,854
                                                   ------------    ------------
       Total Operating Expenses                         811,744         866,947
                                                   ------------    ------------
INCOME  FROM OPERATIONS                               6,005,538       3,186,772
                                                   ------------    ------------
OTHER INCOME (EXPENSE)
   Interest income                                      348,179         777,692
   Interest expense                                        (514)           (169)
   Other income (expense)                                (2,277)             --
   Other income                                              --           5,537
                                                   ------------    ------------
       Total Other Income                               345,388         783,060
                                                   ------------    ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST      6,350,926       3,969,832

LESS PROVISION FOR INCOME TAXES                              --         678,971
                                                   ------------    ------------
INCOME BEFORE MINORITY INTEREST                       6,350,926       3,290,861

MINORITY INTEREST                                     2,719,853       1,645,431
                                                   ------------    ------------
NET INCOME                                            3,631,073       1,645,430

OTHER COMPREHENSIVE INCOME (LOSS):
   Foreign currency translation adjustment                   --         (13,215)
                                                   ------------    ------------
COMPREHENSIVE INCOME (LOSS)                        $  3,631,073    $  1,632,215
                                                   ============    ============
Net income per share - basic and diluted           $       0.25    $       0.24
                                                   ============    ============
Weighted average number of shares outstanding -
basic and diluted                                    14,568,710       6,935,438
                                                   ============    ============

            See accompanying notes to condensed financial statements.

                                       4
<PAGE>

             CHINA ENERGY SAVINGS TECHNOLOGY, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                     FOR THE PERIOD ENDED DECEMBER 31, 2004
<TABLE>
<CAPTION>
                                                                                            Unappro-     Accumulated
                                                                 Additional                 priated      other
                                            Number     Common    Paid-in       Statutory    Retained     comprehensive
                                          of shares    stock     capital       Reserves     Earnings     income (loss)    Totals
                                          ----------   -------   -----------   ---------   -----------   -------------  -----------
<S>                                       <C>          <C>       <C>           <C>         <C>           <C>            <C>
BALANCE, September 30, 2003, unaudited           100   $    11   $   666,666   $ 329,489   $ 3,996,754   $      (1,142) $ 4,991,778
   Net income                                                                                1,645,430                    1,645,430
   Foreign currency translation
     adjustments                                                                                               (13,215)     (13,215)
   Change in statutory reserves                                                   (4,906)                                    (4,906)
                                          ----------   -------   -----------   ---------   -----------   -------------  -----------
BALANCE, December 31, 2003, audited              100        11       666,666     324,583     5,642,184         (14,357)   6,619,087
   Net income                                                                                4,024,492                    4,024,492
   Foreign currency translation
     adjustments                                                                                                17,697       17,697
   Shares issued in connection
     with the recapitalization            12,338,301    12,327       (12,327)
   Shares issued for employee
    compensation                             630,000       630     8,001,000                                              8,001,630
                                          ----------   -------   -----------   ---------   -----------   -------------  -----------
BALANCE, September 30, 2004, audited      12,968,401    12,968     8,655,339     324,583     9,666,676           3,340   18,662,906
   Net income                                                                                3,631,073                    3,631,073
   Stock issued for the acquisition of
     additional invesment in Starway
     Management Limited                    3,346,100     3,346     6,092,555                                              6,095,901
                                          ----------   -------   -----------   ---------   -----------   -------------  -----------
BALANCE, December 31, 2004, unaudited     16,314,501   $16,314   $14,747,894   $ 324,583   $13,297,749   $       3,340  $28,389,880
                                          ==========   =======   ===========   =========   ===========   =============  ===========
</TABLE>

            See accompanying notes to condensed financial statements.

                                       5
<PAGE>

             CHINA ENERGY SAVINGS TECHNOLOGY, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
<TABLE>
<CAPTION>
                                                                December 31     December 31
                                                                    2004            2003
                                                               ------------    ------------
                                                                 Unaudited       Unaudited
                                                               ------------    ------------
<S>                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                  $  3,631,073    $  1,645,430
   Adjustments to reconcile net income to cash
     provided by (used in) operating activities:
       Minority interest income                                   2,719,853       1,641,673
       Depreciation and amortization                                 15,808          44,705
       Decrease in statutory reserve                                                 (4,910)
   Change in operating assets and liabilities:
     (Increase) decrease in assets:
       Intangible assets                                                              6,050
       Accounts receivable                                         (487,315)     (1,755,491)
       Long-term notes receivable - Current Portion, net                            (70,189)
       Long-term notes receivable, net                              776,965      (2,300,333)
       Amount due from related parties                              101,290
       Inventories                                                    9,747         193,530
       Prepaid expenses                                             388,056         (71,582)
       Other receivables                                           (194,788)        (62,224)
       Other assets                                                                  64,617
     Increase (decrease) in liabilities:
       Accounts payable and accured expenses                       (529,373)       (316,603)
       Other payable                                                210,422
       Customer deposits                                          1,116,495        (231,109)
       Tax payable                                                  631,923       1,242,460
                                                               ------------    ------------
         Net cash provided by (used in) operating activities      8,390,156          26,024
                                                               ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of equipment                                             (3,013)        (33,020)
                                                               ------------    ------------
        Net cash used in investing activities                        (3,013)        (33,020)
                                                               ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds (payments) on loans payable - related parties                          (142,243)
   Proceeds from notes payable                                       (8,215)         12,536
   Payments on notes payable                                          5,080         (10,200)
                                                               ------------    ------------
        Net cash (used in) provided by financing activities          (3,135)       (139,907)
                                                               ------------    ------------
EFFECT OF EXCHANGE RATE ON CASH                                                    (13,215)
                                                               ------------    ------------
INCREASE (DECREASE) IN CASH                                       8,384,008        (160,118)

CASH, beginning of period                                        18,442,862         181,283
                                                               ------------    ------------
CASH, end of period                                            $ 26,826,870    $     21,165
                                                               ============    ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense                                 $        514    $        169
                                                               ============    ============
NON-CASH TRANSACTIONS:
Stock issued to acquire additional interest in
   Starway Management Limited                                  $  6,095,901    $
                                                               ============    ============
</TABLE>

            See accompanying notes to condensed financial statements.

                                        6
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION

ORGANIZATION

On August 23, 2004, China Energy Savings Technology,  Inc (the Company) formally
changed its name from Rim Holdings Inc. to China Energy Savings Technology, Inc.

On June 30, 2004 ("the Closing  Date") Rim Holdings  Inc., a Nevada  corporation
(Rim) and  Eurofaith  Holdings,  Inc.,  a  British  Virgin  Islands  Corporation
("Eurofaith),  entered a Stock Purchase  Agreement (the Eurofaith Stock Purchase
Agreement).  Pursuant to the Stock purchase  agreement,  Rim acquired 50% of the
outstanding  shares of Starway Management Ltd., a British Virgin Islands company
("Starway")  from  Eurofaith  (the  "Acquisition").  The purchase price for such
stock was  $120,000,000  payable by Rim's  issuance of a convertible  promissory
note on the Closing Date. The note may be convertible into 223,073,380 shares of
the Rim's common stock upon  maturity at the  discretion  of Rim.  Eurofaith may
also convert at any time prior to the maturity. On June 30, 2004, the fair value
of the  convertible  note payable was discounted to the fair value of the equity
interest acquired of $6,633,440. On August 26, 2004 this note was converted into
6,900,000 shares.

Immediately after the closing of this transaction, Rim redeemed 1,000,000 shares
of its common stock from  Christina M. Strauch in exchange for all of the shares
of Rimmer Computer, Inc., an Arizona corporation ("Rimmer").

Prior to the transaction, Rim was a holding company holding all of the shares of
Rimmer.  Rimmer is an approved  technical service provider for computer hardware
and software  system  manufacturers.  All of Rimmer's  customers  are  currently
located  in  the  Phoenix,  Arizona  area.  Since  the  closing,  Rim's  primary
operations consist of the operations of Starway.

As  a  result,  the  transaction  was  treated  for  accounting  purposes  as  a
recapitalization  by the accounting  acquirer Starway Management  Limited.  This
stock  issuance  represents 50% of the issued and  outstanding  stock of Starway
Management  Limited  at  the  time  of  issuance.  The  acquisition  of  Starway
Management  Limited by the Company was  accounted for as a  recapitalization  of
Starway  Management  Limited,  pursuant to which the accounting basis of Starway
Management  Limited  continued  unchanged  subsequent to the  transaction  date.
Starway  Management Limited will be the historical  financial  statements of the
Company and its subsidiaries Shenzhen Dicken Industrial  Development Limited and
Shenzhen Dicken Technology  Development  Limited.  The financial statements have
been restated to reflect the  recapitalization as if the transaction happened as
of January 1, 2002.

On  November  17,  2004,  the  Company  acquired  an  additional  15% of Starway
Management  Limited to bring its stock ownership to 65% as of December 31, 2004,
as further  described in note 16. On February 1, 2005, the Company  acquired the
remaining  35% of  Starway  Management  Limited,  as  described  in note 17, and
Starway  Management  Limited became a wholly owned  subsidiary of the Company at
that time.

                                       7
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION, (CONTINUED)

Starway was  incorporated  in the British  Virgin Islands on September 15, 1998.
Starway  owns  all  of  the  equity  interests  in  Shenzhen  Dicken  Industrial
Development Limited, a company incorporated in the People's Republic of China on
November  20,  1996  (SDID)  which in turn owns all of the  equity  interest  in
Shenzhen Dicken Technology  Development  Limited, a company  incorporated in the
People's Republic of China on November 9, 1999 (SDTD). In 2003,  Eurofaith,  the
shareholder  of SDID  exchanged 100% of the common shares of SDID for 100 shares
of Starway.

ACTIVITIES

Starway  through its two  subsidiaries  SDTD and SDID is a People's  Republic of
China based marketer, distributor and manufacturer of energy saving products for
use in commercial and industrial  settings.  SDID is a foreign-owned  enterprise
and  responsible  for  the  operation  and  sales  of its  products.  SDTD  is a
wholly-owned  subsidiary of SDID and is a limited liability company incorporated
in the PRC and is responsible  for the  development of energy saving projects of
Shenzhen Dicken Group. The Company through its  subsidiaries  mainly sells their
products within the People's Republic of China.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The  accompanying  financial  statements  have been prepared in accordance  with
accounting  principles  generally accepted in the United States of America.  The
accompany  consolidated  financial  statements  include the  accounts of Starway
Management Limited,  Shenzhen Dicken Technology Development Limited and Shenzhen
Dicken  Industrial  Development  Limited,   (collectively  the  "Company").  All
material  intercompany  transactions  and balances  have been  eliminated in the
consolidation.

USE OF ESTIMATES

In  preparing  financial   statements  in  conformity  with  generally  accepted
accounting principles,  management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent  assets and  liabilities at the date of the financial  statements and
revenues and expenses  during the reported  period.  Actual results could differ
from those estimates.

CASH AND CASH EQUIVALENTS

For  purposes  of the cash flow  statements,  the Company  considers  all highly
liquid investments with original  maturities of three months or less at the time
of purchase to be cash equivalents.

                                       8
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES, (CONTINUED)

NOTES RECEIVABLE

The Company carries its notes  receivable at the net present value of the notes,
net of allowance for doubtful accounts.

INVENTORY

Inventory is stated at the lower of cost or market value,  cost being determined
on a first-in, first-out (FIFO) method.

PLANT AND EQUIPMENT

The Company's  plant and equipment are stated at cost.  Depreciation is provided
over the  estimated  useful lives of the  respective  assets on a  straight-line
basis from five to fifteen years.

INTANGIBLES

Under the  Statement of  Accounting  Standards  ("SFAS") No. 142,  "Goodwill and
Other Intangible Assets",  all goodwill and certain intangible assets determined
to have indefinite lives will not be amortized but will be tested for impairment
at least annually.  Intangible assets other than goodwill will be amortized over
their useful lives of 10 years and reviewed for  impairment in  accordance  with
SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets".

IMPAIRMENT OF LONG-LIVED ASSETS

Per SFAS No. 144, long-lived assets will be analyzed annually for indications of
impairment.  Impairment of long-lived assets is assessed by the Company whenever
there  is an  indication  that  the  carrying  amount  of the  asset  may not be
recovered.  Recoverability  if these  assets are  determined  by  comparing  the
forecasted  undiscounted cash flows generated by those assets to the assets' net
carrying  value.  The amount of  impairment  loss,  if any,  is  measured as the
difference between the net book value of the assets and the estimated fair value
of the related assets.

The Company  evaluates the  recoverability of long-lived assets by measuring the
carrying  amount of the assets  against the estimated  undiscounted  future cash
flows associated with them. At the time such flows of certain  long-lived assets
are not sufficient to recover the carrying value of such assets,  the assets are
adjusted to their fair values.

REVENUE AND DEFERRED REVENUE RECOGNITION

The Company recognizes product sales under the following two types of contracts:

1.   Equipment sale contract - Under the Equipment  sale  contract,  the Company
     recognizes revenue when persuasive  evidence of an arrangement  exists, the
     sales  price  to the  buyer is fixed  or  determinable,  collectability  is
     reasonably assured, delivery has occurred and accepted by the buyers.

                                       9
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES, (CONTINUED)

REVENUE AND DEFERRED REVENUE RECOGNITION (CONTINUED)

2.   Energy savings sharing  contract - Under this contract,  the Company grants
     customers  extended  payment terms under contracts of sale. These contracts
     are  generally  for a period of one to five  years at  prevailing  interest
     rates  and  are   collateralized  by  the  related   equipment,   which  if
     repossessed,  may be less  than the  receivable  balance  outstanding.  The
     Company recognizes revenue under profit sharing agreements when the amounts
     are  fixed and  determinable  and  collectability  is  reasonably  assured.
     Amounts  received by the Company in excess of the original  estimated  cost
     savings on the contract is recorded as interest income.

PRODUCT DEVELOPMENT COSTS

Product  development  costs  incurred  in  the  process  of  developing  product
improvements  and  enhancements  or new  products  are  charged  to  expense  as
incurred.   Statement  of  Financial   Accounting  Standards  ("SFAS")  No.  86,
Accounting  for the Costs of Computer  Software to be Sold,  Leased or Otherwise
Marketed,   requires   capitalization  of  certain  software  development  costs
subsequent  to the  establishment  of  technological  feasibility.  Based on the
Company's product development process,  technological feasibility is established
upon the  completion of a working model.  Costs incurred by the Company  between
the  completion of the working model and the point at which the product is ready
for general release have been insignificant.

FOREIGN CURRENCY TRANSLATION

The functional  currency of the Company is the Chinese  Renminbi.  The financial
statements of the Company are translated to United States dollars using year-end
exchange  rates as to assets and  liabilities  and average  exchange rates as to
revenues and  expenses.  Capital  accounts are  translated  at their  historical
exchange  rates  when the  capital  transaction  occurred.  Net gains and losses
resulting from foreign  exchange  translations are included in the statements of
operations and stockholders' equity as other comprehensive income.

COMPREHENSIVE INCOME (LOSS)

The foreign currency  translation gain or loss resulting from the translation of
the financial  statements expressed in Chinese Renminbi to United States dollars
is reported as other comprehensive  income (loss) in the statement of income and
stockholders' equity.

INCOME TAXES

The  Company  accounts  for  income  taxes  under  the  Statement  of  Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement 109").

                                       10
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES, (CONTINUED)

INCOME TAXES (CONTINUED)

Under Statement 109,  deferred tax assets and liabilities are recognized for the
future tax  consequences  attributable  to  differences  between  the  financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those  temporary  differences  are expected to be  recovered  or settled.  Under
Statement 109, the effect on deferred tax assets and  liabilities of a change in
tax rates is  recognized  in income in the period that  includes  the  enactment
date.  The Company is organized in the British  Virgin  Islands and the People's
Republic  of China and no tax  benefit is  expected  from the tax credits in the
future. The Company located its factories in a special economic region in China.
This economic region allows foreign  enterprises a two-year income tax exemption
and a 50% income tax reduction for the  following  three years.  The Company was
approved as a wholly owned foreign  enterprise  in 2004.  The Company has income
tax exemption for 2004 and 2005 and 50% income tax reduction for 2006,  2007 and
2008.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial  instruments  including accounts
receivable,  stockholder  loans and notes payable  approximate fair value due to
the relatively short period to maturity of these instruments.

The fair value of short-term and long-term notes receivable was determined using
a discounted  cash flow  analysis  based on the  Company's  borrowing  rate.  At
December  31, 2004 and  September  30, 2004,  the carrying  value of these notes
approximated their fair value.

EARNINGS PER SHARE

The Company reports earnings per share in accordance with the provisions of SFAS
No. 128,  "Earnings Per Share." SFAS No. 128 requires  presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing  such earnings per share.  Basic  earnings per share  excludes
dilution and is computed by dividing income available to common  stockholders by
the  weighted  average  common  shares  outstanding  during the period.  Diluted
earnings per share takes into account the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock.

Effective  August 25, 2004, the Company  concluded a reverse split at a ratio of
20 to 1. In accordance  with U.S. SEC SAB Topic 4C., the shares on the financial
statements  and notes to financial  statements  including  per share amounts are
presented after applying retroactively to reflect the reverse stock split.

                                       11
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES, (CONTINUED)

CONCENTRATIONS AND CREDIT RISKS

During 2004 and 2003, 100% of the Company's  sales were to companies  located in
the PRC. At December 31, 2004 and September  30, 2004 all the  Company's  assets
were located in the PRC.

The Company's  operations may be adversely  affected by  significant  political,
economic and social uncertainties in China.  Although the Chinese government has
pursued  economic  reform  policies in the past,  there is no assurance that the
Chinese  government  will continue to pursue such policies or that such policies
may not be  significantly  altered,  especially  in the  event  of a  change  in
leadership,  social or political  disruption or unforeseen  circumstances affect
China's political,  economic and social  conditions.  There is also no guarantee
that the Chinese  government's pursuit of economic reforms will be consistent or
effective.

CASH IN BANK ACCOUNTS

Cash  includes  cash on hand and demand  deposits  in accounts  maintained  with
state-owned  banks within the People's Republic of China. The total cash balance
in  state-owned  banks at December 31, 2004 and  September  30, 2004 amounted to
$26,766,964  and  $18,269,919,  respectively of which no deposits are covered by
insurance.  The  Company has not  experienced  any losses in such  accounts  and
believes it is not exposed to any risks on its cash in bank accounts.

NEW ACCOUNTING PRONOUNCEMENTS

In  March  2004,   the  FASB  issued  EITF  Issue  No.  03-1,   THE  MEANING  OF
OTHER-THAN-TEMPORARY IMPAIRMENT AND ITS APPLICATION TO CERTAIN INVESTMENTS. EITF
03-1 includes new guidance for  evaluating  and recording  impairment  losses on
debt  and  equity  investments,  as  well  as new  disclosure  requirements  for
investments that are deemed to be temporarily  impaired.  In September 2004, the
FASB issued Staff  Position EITF 03-1-1,  which delays the effective  date until
additional  guidance  is  issued  for the  application  of the  recognition  and
measurement  provisions  of EITF  03-1 to  investments  in  securities  that are
impaired;  however, the disclosure requirements are effective for annual periods
ending after June 15, 2004.  Although the Company will  continue to evaluate the
application of EITF 03-1,  management does not currently  believe  adoption will
have a  material  impact on the  Company's  financial  position  or  results  of
operations.

In November 2004, the FASB issued SFAS No. 151, INVENTORY COSTS, an amendment of
ARB No. 43, Chapter 4. This statement amends the guidance in ARB No. 43, Chapter
4, Inventory  Pricing,  to clarify the  accounting for abnormal  amounts of idle
facility  expense,  freight,  handling costs,  and wasted  material  (spoilage).
Paragraph 5 of ARB No. 43,  Chapter 4,  previously  stated that  "...under  some
circumstances,  items such as idle facility expense,  excessive spoilage, double
freight,  and  rehandling  costs may be so abnormal as to require  treatment  as
current period  charges..." SFAS No. 151 requires that those items be recognized
as current-period  charges  regardless of whether they meet the criterion of "so
abnormal."  In  addition,  this  statement  requires  that  allocation  of fixed
production  overhead to the costs of conversion be based on the normal  capacity
of the production facilities.

                                       12
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES, (CONTINUED)

NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)

The provisions of SFAS 151 shall be applied  prospectively and are effective for
inventory costs incurred during fiscal years beginning after June 15, 2005, with
earlier  application  permitted for inventory costs incurred during fiscal years
beginning  after the date this Statement was issued.  The Company's  adoption of
SFAS  No.  151 is not  currently  expected  to  have a  material  impact  on the
Company's financial position or results of operations.

In December 2004, the FASB issued SFAS No. 123(R) (revised  2004),  "Share-Based
Payment",  which amends FASB  Statement No. 123 and will be effective for public
companies  for interim or annual  periods  beginning  after June 15,  2005.  The
revised  standard  requires,  among  other  things  that  compensation  cost for
employee  stock  options be measured at fair value on the grant date and charged
to expense over the employee's  requisite service period for the option.  Due to
the absence of observable market prices for employee stock options, the standard
indicates that the fair value of most stock options will be determined  using an
option-pricing model. The Company's adoption of SFAS No. 123(R) is not currently
expected  to have a  material  impact on the  Company's  financial  position  or
results of operations.

In December 2004, the FASB issued SFAS No. 153, EXCHANGES OF NONMONETARY ASSETS,
AN  AMENDMENT  OF APB  OPINION  NO.  29. The  guidance  in APB  Opinion  No. 29,
ACCOUNTING  FOR  NONMONETARY  TRANSACTIONS,  is  based  on  the  principle  that
exchanges of  nonmonetary  assets should be measured  based on the fair value of
assets  exchanged.  The  guidance in that  Opinion,  however,  included  certain
exceptions to that principle.  This Statement amends Opinion 29 to eliminate the
exception for  nonmonetary  exchanges of similar  productive  assets that do not
have commercial  substance.  A nonmonetary  exchange has commercial substance if
the future cash flows of the entity are  expected to change  significantly  as a
result of the  exchange.  SFAS No. 153 is effective  for  nonmonetary  exchanges
occurring  in fiscal  periods  beginning  after  June 15,  2005.  The  Company's
adoption  of SFAS No.  153 is not  expected  to have a  material  impact  on the
Company's  financial  position  or results  of  operations.

NOTE 3 - CONDENSED FINANCIAL STATEMENTS AND FOOTNOTES

The interim condensed  consolidated  financial  statements presented herein have
been prepared by the Company and include the  unaudited  accounts of the Company
and its subsidiaries.  All significant  inter-company  accounts and transactions
have been eliminated in the consolidation.

These  condensed   consolidated  financial  statements  have  been  prepared  in
accordance with generally  accepted  accounting  principles in the United States
for  interim  financial  information  and the  instructions  to Form  10-QSB and
Article 10 of  Regulation  S-X.  Certain  information  and footnote  disclosures
normally included in financial statements presented in accordance with generally
accepted accounting principles have been condensed or omitted. Management of the
Company  believes  the  disclosures  made are  adequate to make the  information
presented not misleading.

                                       13
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - CONDENSED FINANCIAL STATEMENTS AND FOOTNOTES (CONTINUED)

The condensed  consolidated  financial  statements should be read in conjunction
with the Company's audited  financial  statements for the period ended September
30,  2004 and notes  thereto  included in the  Company's  Form  10-KSB/A,  dated
January 30, 2005.

In the opinion of management,  the unaudited  condensed  consolidated  financial
statements   reflect  all  adjustments  (which  include  only  normal  recurring
adjustments)  necessary to present fairly the financial  position of the Company
as of December 31, 2004 and the results of operations for the three months ended
December 31, 2004 and 2003,  respectively.  Interim  results are not necessarily
indicative  of full year  performance  because  of the  impact of  seasonal  and
short-term variations.

NOTE 4 - ACCOUNTS RECEIVABLE

Accounts  receivable as of December 31, 2004 and September 30, 2004 consisted of
the following:

                                       December 31,     September 30,
                                           2004             2004
                                       ------------     -------------
Accounts receivable                    $  7,835,991     $   7,348,676
Less: allowance for
      doubtful accounts                     768,151           768,151
                                       ------------     -------------
Totals                                 $  7,067,840     $   6,580,525
                                       ============     =============

NOTE 5 - NOTES RECEIVABLE

The notes receivable  represent amounts due on Energy Savings Sharing contracts.
The Company carries its notes  receivable at the net present value of the notes.
The notes receivable are secured by the related equipment.  The notes receivable
amounted to the following:

                                         December 31,     September 30,
                                             2004             2004
                                         ------------     -------------
Notes receivable                         $ 10,038,267     $  10,815,232
Less:
   Current portion of notes receivable      3,727,540         3,727,540
                                         ------------     -------------
Totals                                   $  6,310,727     $   7,087,692
                                         ============     =============

The following table  represents as of December 31, 2004 the estimated  principal
collections on notes receivable:

        Period Ending December 31,                          Amount
        --------------------------                        ----------
                  2005                                    $3,727,540
                  2006                                     3,407,370
                  2007                                     3,199,932
                  2008                                       296,575

                                       14
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - INVENTORIES

Inventories  as of December  31, 2004 and  September  30, 2004  consisted of the
following:

                                         December 31,     September 30,
                                             2004             2004
                                         ------------     -------------
Raw materials                            $  1,040,690     $   1,013,976
Work in progress                              982,813           869,059
Finished goods                              2,296,302         2,446,517
                                         ------------     -------------
Totals                                   $  4,319,805     $   4,329,552
                                         ============     =============

NOTE 7 - PREPAID EXPENSES

Prepaid  expenses  at  December  31, 2004 and  September  30,  2004  amounted to
$1,141,899 and $1,529,955,  respectively. Prepaid expenses represent advances to
suppliers on inventory purchases.

NOTE 8 - PLANT AND EQUIPMENT

Plant and  equipment  as of  December  31,  2004  annd  September  30,  2004 are
summarized as follows:

                                         December 31,     September 30,
                                             2004             2004
                                         ------------     -------------
Building                                 $    409,888     $     409,888
Office equipment                               83,316            80,100
Furniture and fixtures                         41,371            41,574
Plant, machinery and equipment                 80,127            80,126
Vehicle                                       148,586           148,586
                                         ------------     -------------
                                              763,288           760,274
Less: accumulated depreciation                247,738           231,930
                                         ------------     -------------
Plant and equipment, net                 $    515,550     $     528,344
                                         ============     =============

Depreciation  expense for the three  months  ending  December  31, 2004 and 2003
amounted to $15,808 and $44,705, respectively.

NOTE 9 - NOTES PAYABLE, NET

Long-term obligations consisted of the following:

Note payable to finance company, secured by automobile,
interest at 5.44% per annum. Monthly payments of $1,067
due through April 2006                                           $    17,559
Less current maturities                                               12,975
                                                                 -----------
Total                                                            $     4,584
                                                                 ===========

                                       15
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - NOTES PAYABLE, NET (CONTINUED)

Principal payments for the next five years are as follows:

        Year Ending September 30,
        -------------------------
                  2005                                           $    12,975
                  2006                                                 4,584

NOTE 10 - RELATED PARTY TRANSACTIONS

As of December 31, 2004, the due from related party  amounted to  $1,155,840.  A
majority  of  this  amount  was  generated  from  making  cash  advances  to the
shareholders for ordinary business expenses.  In addition,  certain shareholders
had collected payments on receivables on the Company's behalf from the customers
and those  payments  had not been repaid to the Company by  December  31,  2004.
These amounts are unsecured, interest free and have no fixed terms of repayment.

NOTE 11 - CUSTOMER DEPOSITS

The Company  requires  their  customers to deposit  monies with the Company when
they place an order for their  products.  The Company  does not pay  interest on
these amounts in customer  deposits  amounted to $2,868,711 and $1,752,216 as of
December 31, 2004 and September 30, 2004, respectively.

NOTE 12 - TAXES PAYABLE

Taxes  payable at  December  31,  2004 and  September  30,  2004  consist of the
following:

                                         December 31,     September 30,
                                             2004             2004
                                         ------------     -------------
Urban maintenance and
  construction tax                       $     23,030     $      21,104
Education tax                                     895             1,058
Value added tax                             2,500,674         1,870,514
                                         ------------     -------------
Totals                                   $  2,524,599     $   1,892,676
                                         ============     =============

On July 22, 2004, the local Chinese tax authority waived the previously  accrued
tax accumulated  prior to January 1, 2004 in the amount of $4,853,332  which was
recorded as a credit  during  2004 for  previously  accrued  income  taxes.  The
Company has  elected to record the entire  credit for  Chinese  income  taxes in
2004.

                                       16
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - TAXES PAYABLE (CONTINUED)

The credit (provision) for income taxes consisted of the following:

                                                        Year Ended
                                                        December 31
                                                -------------------------
                                                    2004          2003
                                                -----------   -----------

Provision for China income taxes                $        --   $   678,971
                                                -----------   -----------
Total provision for income taxes                $        --   $   678,971
                                                ===========   ===========


The  following  table  reconciles  the U.S.  Statutory  rates  to the  Company's
effective tax rate:

                                                        December 31
                                                -------------------------
                                                    2004          2003
                                                -----------   -----------
U.S. Statutory rates                                34.0%         34.0%
Foreign income not recognized in USA               (34.0)        (34.0)
China income taxes                                    --          17.0
                                                -----------   -----------
               Totals                                 --%         17.0%
                                                ===========   ===========


NOTE 13 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company  leases its facilities  under long term,  non  cancelable  operating
lease agreements expiring through June 2009. The non-cancelable  operating lease
agreements provide that the Company pays certain operating  expenses  applicable
to the leased premises.

Total  rent  expense  for the three  months  ended  December  31,  2004 and 2003
amounted to $36,719 and $35,929 respectively.

As of December 31, 2004, the future minimum annual lease payments required under
the operating leases for the next five years are as follows:

        Period Ending December 31,                          Amount
        --------------------------                        ----------
                  2005                                    $   59,270
                  2006                                        58,000
                  2007                                        58,000
                  2008                                        87,000
               Thereafter                                         --

                                       17
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - MINORITY INTEREST

Minority  interest  represents  the outside  shareholder's  35% ownership of the
common  stock of Starway  Management  Limited.  Due to common  control  over the
entities the  financial  statements of the Company have been restated to reflect
the  minority's  shareholder's  interest  as if the  transaction  was  effective
January 1, 2003.

NOTE 15 - EQUITY INCENTIVE PLAN

On September 8, 2004, the Company adopted an Equity  Incentive Plan. The purpose
of this plan is to attract,  retain and motivate  eligible persons whose current
and  potential  contributions  are  important  to the  success of the Company by
offering them an opportunity to participate in the Company's future  performance
through awards of Options, the right to purchase common stock and stock bonuses.
A total of  1,200,000  shares of common  stock  have  been  registered  with the
Securities and Exchange Commission under this plan.

On  September  16,  2004,  the  Company  issued  10,000  shares to  non-employee
consultants  and  620,000  shares  of its  common  stock to  certain  qualifying
employees  at US$12.70  per share.  The total  shares were valued at  $8,001,000
($12.70 per share),  the closing  price of the stock at the date the shares were
issued.

The Company accounts for its employee stock option grants in accordance with the
fair value  provisions of Statement of Financial  Accounting  Standards No. 123,
"Accounting  for  Stock-Based  Compensation"  (SFAS 123). SFAS 123 established a
fair-value-based  method  of  accounting  for  stock-based  compensation  plans.
Pursuant to the transition  provisions of SFAS 148,  "Accounting for Stock-Based
Compensation  - Transition and  Disclosure"  (SFAS 148), the Company has elected
the prospective method and will apply the fair value method of accounting to all
equity  instruments  issued to employees.  As of September 30, 2004, total stock
based  compensation  expense  recorded  in  the  accompanying  income  statement
amounted to $7,874,000.

Compensation  expense  related  to stock  options  granted to  non-employees  is
accounted for under Statement of Financial  Accounting Standards No. (SFAS) 123,
"Accounting for Stock-Based Compensation" and Emerging Issues Task Force ( EITF)
96-18,  "Accounting  for  Equity  Instruments  that are  Issued  to  Other  than
Employees for Acquiring,  or in conjunction  with Selling,  Goods, or Services,"
which require  entities to recognize an expense,  based on the fair value of the
related  awards.  As  of  September  30,  2004,  total  stock   compensation  to
non-employees amounted to $127,000.

NOTE 16- SHAREHOLDERS' EQUITY

STOCK ISSUANCES

On November 17, 2004, the Company  completed an acquisition of an additional 15%
interest  in Starway.  Prior to the  acquisition,  the Company  owned 50% of the
outstanding  shares of capital  stock of  Starway.  After the  acquisition,  the
Company  will own a total of 65% of the  outstanding  shares of Starway  capital
stock.  The  Company  acquired  the  additional  15%  interest  in Starway  from
Eurofaith.  The sole  director of  Eurofaith  is also a director  and  Corporate
Secretary of the Company.

                                       18
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16- SHAREHOLDERS' EQUITY (CONTINUED)

The Company acquired the 15% interest in Starway by issuing a total of 3,346,100
shares of common stock of the Company.  The amount of consideration given by the
Company for the  acquisition was determined with reference to the acquisition of
shares of Starway  capital stock as reported in the Company's  Current Report on
Form 8-K filed on June 30, 2004. The closing of the Acquisition  (the "Closing")
occurred on November 17, 2004 (the "Closing Date").  The sole  consideration for
the Acquisition is common stock of the Company.

In accordance  with SFAS 141, the Company is required to record the  acquisition
of the  minority  interest  in  accordance  with  purchase  accounting.  However
entities that are under common control are required to record the acquisition of
the assets and  liabilities  transferred at their carrying  amounts.  Due to the
common majority ownership in the Company and Eurofaith the Company and Eurofaith
are deemed in common  control in  accordance  with SAB No. 47. Due to the common
control  element in  accordance  with SFAS 141 the Company has  recorded the 15%
acquisition from Eurofaith at historical costs value of $6,095,901.

STATUTORY RESERVES AND RESTRICTED RETAINED EARNINGS

The Company is required to make appropriations to reserve funds,  comprising the
statutory  surplus  reserve,  statutory  public  welfare fund and  discretionary
surplus  reserve,  based on after-tax net income  determined in accordance  with
generally accepted accounting  principles of the People's Republic of China (the
"PRC GAAP").  Appropriation to the statutory  surplus reserve should be at least
10% of the after tax net income determined in accordance with the PRC GAAP until
the reserve is equal to 50% of the entities' registered capital.  Appropriations
to the  statutory  public  welfare  fund are at 5% to 10% of the  after  tax net
income determined in accordance with the PRC GAAP.

The statutory  public welfare fund is  established  for the purpose of providing
employee  facilities  and other  collective  benefits  to the  employees  and is
non-distributable other than in liquidation. Appropriations to the discretionary
surplus reserve are made at the discretion of the Board of Directors.

NOTE 17 - SUBSEQUENT EVENT

On February 1, 2005,  the Company  completed an acquisition of the remaining 35%
interest (the "Acquisition") in Starway Management Limited.  ("Starway").  Prior
to the Acquisition,  the Company owned 65% of the outstanding  shares of capital
stock of  Starway.  After  the  Acquisition,  the  Company  will own 100% of the
outstanding  shares of capital  stock of Starway.  The  Registrant  acquired the
remaining 35% interest in Starway from Sky Beyond Investments Limited, a British
Virgin Islands corporation ("Sky Beyond").

The Company acquired the 35% interest in Starway by issuing a total of 7,807,569
shares of common stock of the Company.  The amount of consideration given by the
Company for the Acquisition was determined with reference to the acquisitions of
the  50% and  subsequently  the 15%  interest  in  Starway  as  reported  in the
Company's  Current  Report on Form 8-K filed on June 30, 2004 and  November  18,
2004  respectively.  The closing of the Acquisition (the "Closing")  occurred on
February  1,  2005  (the  "Closing  Date").   The  sole  consideration  for  the
Acquisition is common stock of the Company.

                                       19
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

The following  discussion  of our financial  condition and results of operations
should be read in  conjunction  with the financial  statements and related notes
thereto.  The following discussion contains certain  forward-looking  statements
that involve risks and uncertainties. Our actual results could differ materially
from those discussed herein. We undertake no obligation  publicly to release the
results of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances.

OVERVIEW

We are a Nevada  corporation  headquartered in Hong Kong, China that invests in,
develops,  markets,  distributes and manufactures energy saving products for use
in commercial and industrial  settings.  As of December 31, 2004, we owned a 65%
interest in Starway  Management  Limited,  a British Virgin Islands  corporation
("Starway") which owns all of the equity interests in Shenzhen Dicken Industrial
Development Limited, a company incorporated in the Republic of China on November
20,  1996  ("SDID")  which in turns owns all of the equity  interest in Shenzhen
Dicken Technology Development Limited, a company incorporated in the Republic of
China on November 9, 1999 ("SDTD"). SDID and SDTD develops,  markets distributes
and  manufactures  energy saving  products for use in commercial  and industrial
settings in China.  Subsequently,  in  February,  2005,  we acquired  all of the
remaining interest in Starway bringing out total ownership of Starway to 100%.

Our  financial  statements  are  consolidated  with  those  of  Starway  and its
subsidiaries  with an adjustment to take into account the 35% of Starway that is
not owned by us as of the end of this quarter. Starway's subsidiaries,  SDID and
SDTD develops,  markets  distributes and manufactures energy saving products for
use in commercial and industrial settings in China.

RESULTS OF OPERATIONS

QUARTER ENDED DECEMBER 31, 2004 COMPARED TO THE QUARTER ENDED DECEMBER 31, 2003.

        Quarter
        Ended December 31              2004             2003           Change
        ---------------------       ----------       ----------     ------------

        Revenues                    11,708,690       11,501,465         1.8%
        Cost of goods sold           4,891,408        7,447,746       (34.3%)
        Gross profit                 6,817,282        4,053,719        68.2%
        Operating expenses             811,744          866,947        (6.4%)
        Other income                   345,388          783,060       (55.9%)
        Income before
          minority interest          6,350,926        3,290,861          93%
        Net Income (After
          Minority Interest)         3,631,073        1,632,215         123%


INCOME BEFORE MINORITY INTEREST AND NET INCOME

Our net income before minority  interest for the three months ended December 31,
2004 and December 31, 2003 was $6,350,926 and $3,290,861,  respectively. Our net
income  before  minority  interest for the three months ended  December 31, 2004
increased by  approximately  93% when compared to our net income before minority

                                       20
<PAGE>

interest for the three months ended December 31, 2003. Such significant increase
in net income before minority  interest was due to a slight increase in revenues
coupled with a significant decrease in cost of goods sold during such periods as
further discussed below.

As of December 31,  2004,  we held a 65%  interest in Starway  which  incurred a
minority  interest charge to our profit and loss statement of $2,719,853 for the
period ended  December 31, 2004 and  $1,645,431  for 2003. As a result,  our net
income after minority  interest for the three months ended December 31, 2004 and
December 31, 2003 was $3,631,073 and $1,632,215, respectively.

REVENUES

Our  revenues  are derived  primarily  from SDID's  sales of its energy  savings
products and entering into energy savings  sharing  contracts.  Revenues for the
three  months  ended  December  31,  2004 were  $11,708,690,  a net  increase of
approximately  1.8% compared with revenues of  $11,501,465  for the three months
ended December 31, 2003. The increase in revenues reflect sales growth in SDID's
energy  savings  products,  and were the result of  increased  unit  sales.  Our
management  expects that  revenue  will  continue to grow in 2005 because of our
marketing  and  sales  efforts  and  strong  demand  for  our  products  due  to
electricity  shortages in many parts of China.  Further, our management believes
that we will be able to  maintain  our price  levels due to strong  demand and a
lack  of  strong   competitive   products.   While  our  products  may  be  used
internationally, we currently have focused our sales efforts in China, targeting
large businesses and local governments. Management hopes to continue to increase
our market share in China.

GROSS PROFIT

We had a gross profit of $6,817,282  and  $4,053,719  for the three months ended
December  31,  2004 and  December  31,  2003,  respectively,  achieving  a 68.2%
increase.  This increase is principally  due to a substantial  34.3% decrease in
our cost of goods  sold.  The  decrease in our cost of goods sold is a result of
our increased use of energy savings sharing  contracts  which  generally  yields
much higher  margins.

The  significant  decrease  in cost of goods sold is a result of better  control
over production  costs.  Because of our increase in sales volume, we are able to
buy our production  materials in mass quantities so we are able to leverage more
buying  power to get  better  prices for  supplies  and  materials  used for the
production of our products.  Additionally, we have seen an increase in suppliers
for the supplies and materials  used for the  production  of our products  which
results in more  competitive  pricing  for such  supplies  and  materials.  As a
result,  the cost of materials  such as chipsets and other  hardware used in the
production of our products has decreased  substantially  (approximately by 300%)
which in turn produces better profit margins for us. Such a decrease is expected
to continue in the short term but we expect it to be minimized in the future.

OPERATING EXPENSES

Below is a breakdown  comparison of the operating  expenses for the Three Months
Ended December 31, 2004 and December 31, 2003:


                                       21
<PAGE>

        Three Months
        Ended December 31                2004           2003           Change
        -------------------------     ----------     ----------     ------------

        Operating expenses               612,700        812,093        (24.6%)
        Sales, marketing and
          administrative expenses        199,044         54,854        262.9%

        Total Operating expenses         811,744        866,947         (6.4%)

There was a 6.4% decrease in total operating  expenses from $866,947 to $811,744
for  the  three  months   ended   December  31,  2003  and  December  31,  2004,
respectively.  In general,  there was significant increases in sales,  marketing
and administrative  expenses offset by a decrease in our operating expenses.  We
believe  expenses  related to the  marketing  and selling of our  products  will
continue  to  increase  substantially  to handle our growing  sales  volume.  In
addition,  we expect that  professional  fees and expenses to ensure  compliance
with U.S.  securities laws, the Sarbanes-Oxley Act and marketplace rules for the
NASDAQ National Market will increase substantially.

LIQUIDITY AND CAPITAL RESOURCES

        Three Months
        Ended December 31                 2004          2003           Change
        --------------------------     ----------    ----------     ------------

        Net cash provided by (used
          in) operating activities      8,390,156       26,024       8,364,132

        Net cash used in
          investing activities             (3,013)     (33,020)         30,007

        Net cash (used in) provided
          by financing activities          (3,135)    (139,907)        136,772


The  increase  of  $8,364,132  in net  cash  provided  by  operating  activities
primarily  reflects cash  generated  from profits, collection on notes and other
receivables  and the  collection  of deposits  from  customers  on future  sales
contracts.

The  decrease  of $30,007 in net cash used in  investing  activities  was due to
purchasing less equipment during the quarter.


The decrease of $136,772 in net cash provided by financing activities was due to
the  loans  from  related  parties  that were paid off  during  the year  ending
September 30, 2004.


                                       22
<PAGE>

We believe that we have adequate  capital  resources to continue our  operations
and will not need to raise  capital  in the near  future.  We  believe  that our
current  cash  balance  and the  revenues  that  will be  generated  will  cover
anticipated  operating  expenses  for a  period  of at least  one  year  without
supplementing our cash reserves.  We may, however,  raise additional  capital to
further  develop  our  other  products.

EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES

Our operating  subsidiaries  are located in China,  and our Company buys all raw
materials in China and sells all our products in China using Chinese Renminbi as
the  functional  currency.  Based on China  government  regulation,  all foreign
currencies  under the  category  of current  accounts  are  allowed to be freely
exchanged with hard  currencies.  During the past two years of operation,  there
were no significant changes in exchange rates; however,  unforeseen developments
may cause a significant change in exchange rates.

INVESTMENT IN SUBSIDIARIES

As of December  31, 2004,  we owned a 65%  interest in Starway and  subsequently
increased our share in Starway to 100% by acquiring an  additional  35% interest
in Starway in February, 2005.

Starway holds 100% interest in Shenzhen Dicken  Industrial  Development  Limited
("SDID"),  which subsequently holds 100% interest in the energy savings project,
Shenzhen  Dicken  Technology  Development  Limited  ("SDTD") as well as owns the
intellectual property of their energy savings products in China.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

ITEM 3. CONTROLS AND PROCEDURES

     (a)  EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. As of the end of the
period  covered  by  this  report,  we  carried  out an  evaluation,  under  the
supervision and with the  participation  of our management,  including our Chief
Executive Officer and the Chief Financial  Officer,  of the effectiveness of the
design and  operation  of our  disclosure  controls and  procedures  pursuant to
Exchange  Act Rule  13a-14.  Based  upon that  evaluation,  the Chief  Executive
Officer and Chief Financial Officer  concluded that our disclosure  controls and
procedures  are  effective  in  timely  alerting  them to  material  information
relating to us required to be included in our periodic SEC filings.

     (b)  CHANGES IN INTERNAL  CONTROLS OVER FINANCIAL  REPORTING.  There was no
change in our internal  control over financial  reporting during our most recent
fiscal  quarter  that  has  materially  affected,  or is  reasonably  likely  to
materially affect, our internal control over financial reporting.




                                       23
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The  management of China Energy Savings  Technology,  Inc. are not aware of
any material legal proceedings pending against it, Starway or its subsidiaries.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     On November 16, 2004,  the  Registrant  issued  3,346,100  shares of common
stock to Eurofaith which represented that it is an accredited  investors as part
of the acquisition of a 15% interest in Starway.  This  transaction was effected
under an exemption to  registration  pursuant to Section 4(2) of the  Securities
Act of 1933, as amended.  The recipient of the securities in the above-described
transaction represented their intention to acquire the securities for investment
only  and not  with a view to or for sale in  connection  with any  distribution
thereof and appropriate  legends were affixed to the share certificate and other
instruments issued in such transaction.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     Not Applicable

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

     Not Applicable

ITEM 5. OTHER INFORMATION

     Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

     2.1  Agreement and Plan of Share  Exchange  dated  November 16, 2004 by and
          between Eurofaith Holdings,  Inc. and China Energy Savings Technology,
          Inc. (1)
     3.1  Certificate of Incorporation (2)
     3.2  Bylaws (2)
     31.1 Certification  of  Chief  Executive  Officer  Pursuant  to  302 of the
          Sarbanes-Oxley Act of 2002 (3)
     31.2 Certification  of  Chief  Financial  Officer  Pursuant  to  302 of the
          Sarbanes-Oxley Act of 2002 (3)
     32.1 Certification  of  Chief  Executive  Officer  Pursuant  to  906 of the
          Sarbanes-Oxley Act of 2002 (3)
     32.2 Certification  of  Chief  Financial  Officer  Pursuant  to  906 of the
          Sarbanes-Oxley Act of 2002 (3)
------------------
(1)  Previously  filed with the  Securities  and Exchange  Commission as Exhibit
     10.1 to the Company's  Current Report on Form 8K filed on November 18, 2004
     and incorporated herein by reference.
(2)  Previously filed with the Securities and Exchange  Commission as an exhibit
     to the  Registration  Statement  on Form 10  filed  on July  11,  2000  and
     incorporated herein by reference.
(3)  Filed herewith.

                                       24
<PAGE>

     (b)  Reports on Form 8-K

          1.   8K/A, October 15, 2004, Adding auditor letter regarding change in
               auditors.
          2.   8K, November 12, 2004, Change in Accountants.
          3.   8K, November 18, 2004, Acquisition of 15% of Starway.
          4.   8K/A,  November 23, 2004,  Adding auditor letter regarding change
               in auditors.
          5.   8K, December 3, 2004, Appointment of Directors
          6.   8K, December 9, 2004, Results of Operations
          7.   8K, December 14, 2004,  Appointment of Directors,  Resignation of
               Directors
          8.   8K, December 17, 2004,  Appointment of Directors,  Resignation of
               Directors


                                       25
<PAGE>

                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of 1934,
as amended,  the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    CHINA ENERGY SAVINGS TECHNOLOGY, INC.


                                    By:     /s/ Sun Li
                                        ----------------------------------------
                                            Sun Li
                                            Chief Executive Officer

                                    Dated:  February 14, 2005


In accordance with the Securities Exchange Act of 1934, as amended,  this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>

            SIGNATURE                                     TITLE                                 DATE
----------------------------------     -------------------------------------------        ----------------
<S>                                    <C>                                                <C>

            /s/ Sun Li                      Chief Executive Officer & Director            February 14, 2005
----------------------------------            (Principal Executive Officer)
              Sun Li

        /s/ Kam Wah Poon                         Chief Financial Officer                  February 14, 2005
----------------------------------     (Principal Financial & Accounting Officer)
           Kam Wah Poon

         /s/ Lai Fun Sim                      Corporate Secretary & Director              February 14, 2005
----------------------------------
           Lai Fun Sim

      /s/ Dennis Won Kong Yu                             Director                         February 14, 2005
----------------------------------
        Dennis Won Kong Yu

          /s/ Kam Man Lee                                Director                         February 14, 2005
----------------------------------
            Kam Man Lee

         /s/ Shao-Guang Tan                              Director                         February 14, 2005
----------------------------------
           Shao-Guang Tan

          /s/ Wing See Yau                               Director                         February 14, 2005
----------------------------------
            Wing See Yau
</TABLE>

                                       26