SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON DC 20549



                                   FORM 10-KSB

(Mark One)

|X|      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
         OF 1934.
For the fiscal year ended  December 31, 2002

OR

|_|      TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
         ACT OF 1934.
For the transition period from                  to
                              ------------------  ------------------

                         Commission file Number   0-24374
                                               -------------

                                 FANTATECH, INC.
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                 (Name of Small Business Issuer in Its Charter)

         Delaware                                                 62-1690722
-----------------------------------------------              -------------------
(State or other Jurisdiction of Incorporation)               (I.R.S. Employer
                                                             Identification No.)


Flat K, 12/F., International Industrial Centre,
    2-8 Kwei Tei St., Fo Tan, Shatin, N.T.,
                   Hong Kong
-----------------------------------------------              -------------------
        (Address of Principal Executive Offices)                   (Zip Code)


                                 (604) 438-3598
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                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:

                                                      Name of Each Exchange
        Title of Each Class                            on Which Registered
-------------------------------------          ---------------------------------
-------------------------------------          ---------------------------------

Securities registered under Section 12(g) of the Exchange Act:


--------------------------------------------------------------------------------
                                (Title of Class)


--------------------------------------------------------------------------------
                                (Title of Class)


<PAGE>

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the Company was required to file such reports),  and (2) has
been subject to such filing requirements for past 90 days.

Yes   X     No
   -------    -------

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be  contained  to the  best of  Company's  knowledge,  in  definitive  proxy  or
information  statements  incorporated  by  reference  in Part  III of this  Form
10-SKB. |X|

         State issuer's revenue for its most recent fiscal year  $5,785,510
                                                                  ---------

         State the aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common equity as sold, or the average bid and asked price of such common equity,
as of a specified date within the past 60 days.  $11,816,216  based on a closing
bid price of $.40 on April 11, 2003.



                      APPLICABLE ONLY TO CORPORATE COMPANY

         State the number of shares  outstanding of each of the issuer's classes
of common  equity,  as of the latest  practicable  date. As of December 31, 2002
there were 40,192,063 shares outstanding

         Transitional Small Business Disclosure Format (check one):

Yes   X     No
   -------    -------




<PAGE>

                                 FANTATECH, INC.
                                   FORM 10-KSB
                                      INDEX

                                                                            Page
                                                                            ----

                                     PART I

Item 1.   Description of Business..............................................1

Item 2.   Description of Properties...........................................13

Item 3.   Legal Proceedings...................................................13

Item 4.   Submission of Matters of a Vote of Security Holders.................13

                                     PART II

Item 5.   Market for Company's Common Equity and Related
          Stockholder Matters.................................................13

Item 6.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations.................................15

Item 7.   Financial Statements................................................18

Item 8.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure.................................19

                                    PART III

Item 9.   Directors and Executive Officers, Promoters and Control Persons;
          Compliance with Section 16(a) of the Exchange Act...................19

Item 10.  Executive Compensation..............................................21

Item 11.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stock Matters...........................................21

Item 12.  Certain Relationships and Related Transactions......................22

Item 13.  Exhibits, List and Reports on Form 8-K..............................22

Item 14.  Control Procedures..................................................23

Signatures        ............................................................24

Financial Statement..........................................................F-1


<PAGE>

                                     PART I
ITEM 1.  DESCRIPTION OF BUSINESS

         This Annual Report on Form 10-KSB contains  forward-looking  statements
within the meaning of Section 27A of the Securities Act of 1933, and Section 21E
of the Securities Exchange Act of 1934. These statements relate to future events
or the  Company's  future  financial  performance.  The Company has attempted to
identify  forward-looking  statements by  terminology  including  "anticipates,"
"believes,"  "expects,"  "can,"  "continue,"  "could,"  "estimates,"  "expects,"
"intends,"  "may," "plans,"  "potential,"  "predict,"  "should" or "will" or the
negative of these terms or other  comparable  terminology.  Although the Company
believes that the expectations  reflected in the forward-looking  statements are
reasonable,  the Company cannot  guarantee  future results,  levels of activity,
performance or  achievements.  The Company  expectations are as of the date this
Form  10-KSB is filed,  and the  Company  does not  intend to update  any of the
forward-looking  statements  after the date this Annual Report on Form 10-KSB is
filed to confirm these statements to actual results, unless required by law.

Company History

         Fantatech, Inc., formerly Lucas Educational Systems, Inc., ("Fantatech"
or the  "Company")  was founded in 1996 by Jerry R. Lucas to  commercialize  the
learning  techniques  developed  by Mr.  Lucas  over 30  years of  research  and
experimentation.  In December  2000 the Company  announced its intention to seek
additional  funding to allow it to exit the development  stage and build a sales
and marketing organization.  On February 28, 2001, the Company announced that it
had been  unsuccessful  in raising the  necessary  funding.  Further,  the Board
resolved that the Company  maximize its value by ceasing current  operations and
pursue a merger  candidate  that might value the public entity after the current
operations had been removed.  All employees were terminated,  Mr. Lucas resigned
from the  Board  and the  remaining  Board  members  proceeded  to wind down the
operations  in an orderly  manner to maximize the  residual  value of the public
entity.

         On June 19, 2001, Halter Capital Corporation purchased 1,687,178 shares
of common stock from various shareholders, thereby acquiring approximately 50.5%
of the outstanding  shares of the corporation.  All of the existing officers and
directors resigned and were replaced by a new management team, Messrs.  Kevin B.
Halter and Kevin Halter, Jr.

         On November 6, 2002 (the "Closing  Date") pursuant to the terms a Share
Exchange Agreement,  dated as of November 6, 2002 (the "Exchange  Agreement") by
and among the Company,  Halter Capital Corporation,  a Texas corporation,  Kevin
Halter and Fang Dehou ("Dehou"),  Li Ming ("Ming") and Lui Lingxiao ("Lingxiao")
(Dehou,  Ming and Lingxiao are herein referred to  collectively,  as the "Intsys
Shareholders"),  the  Company  acquired  (the  "Acquisition")  from  the  Intsys
Shareholders  all of the issued and  outstanding  capital  stock of Intsys Share
Limited, a British Virgin Islands corporation  ("Intsys").  As consideration for
the shares of Intsys,  the Company issued  40,000,000  shares of common stock to
the Intsys  Shareholders and certain designees of the Intsys  Shareholders.  The
consideration   for  the   Acquisition   was  determined   through  arms  length
negotiations between the management of the Company and the Intsys Shareholders.

         On the Closing  Date,  Mr.  Kevin B. Halter and Mr. Kevin  Halter,  Jr.
resigned from the board of directors and Mr. Jinqiang Zhang, Mr. Guangwei Liang,
Mr.  Liechong  Li, Mr.  Xinan Hu and Mr. Ming Li became  members of the board of
directors of the Company.  The newly elected  directors then appointed Mr. Zhang
as  Chairman  of the Board,  Mr.  Liang as Vice  Chairman of the Board and Chief
Executive  Officer,  Mr. Li as Chief Operational  Officer,  Ms. Fengming Peng as
Chief Financial Officer and Mr. Jianguo Cheng as the Corporate Secretary.

<PAGE>

         Until the  Closing  Date,  the  Company  had only  nominal  assets  and
liabilities  and no business  operations.  As a result of the  Acquisition,  the
Company  continued  the  business  operations  of Intsys.  Intsys owns 65.41% of
Shenzhen  Digitainment Co., Ltd. ("SDCL").  As such the information disclosed in
this report relates to the Company's operation of SDCL. The financial statements
are the results of operations for SDCL.

         On  January  29,  2003,  the  Company   changed  its  name  from  Lucas
Educational Systems, Inc to Fantatech, Inc.

         SDCL is  headquartered  in China and is engaged in the  development  of
hi-tech  entertainment  and amusement  products,  including 4D theater,  digital
film, indoor entertainment center and large size indoor attractions, intelligent
low voltage engineering,  theme sites projects and the exploitation,  design and
production of computer systems integration projects.

         In August  2002,  Intsys  formed  Hytechnology  Limited  in Hong  Kong.
Hytechnology  Limited  is 99% owned by Intsys  and is  engaged  in the sales and
marketing  of the  products  of  SDCL  outside  the  United  States  of  Amercia
(excluding China).

         In  September   2002,   Intsys   acquired  a  70%  equity  interest  in
Hytechnology,  Inc., a Delaware  corporation,  from a third party for  $172,000.
Hytechnology, Inc. is engaged in the sales and marketing of the products of SDCL
in the United States of Amercia.

         As of December 31, 2002,  the  organization  chart of the Company is as
follows:
                                ---------------
                                Fantatech, Inc.
                                ---------------
                                        |
                                        |
                                        |100%
                              --------------------
                              Intsys Share Limited
                              --------------------
                                        |
                                        |
        -------------------------------------------------------------
        |                               |                           |
        |                               |                           |    56.41%
        |   70%                         |99%              ----------------------
-----------------              -------------------                Shenzhen
Hytechnoloy, Inc.              Hytechnoloy Limited        Digitainment Co., Ltd
-----------------              -------------------        ----------------------


INDUSTRY BACKGROUND

         The  entertainment  products  in  earlier  decades  mainly  focused  on
single-track  rides such as roller coasters,  rotating horses and corsairs which
produced the novelty of  rectilinear  or rotating  mechanical  movement.  Though
these products are still in use today,  the development and maturity of electron
and control  technology  allowed us to adopt many hi-tech  effects  using light,
sound, external decorations which greatly improved the entertainment  experience
as well as allowing increased safety, reliability, enjoyment and excitement.

         The  invention  of  computers   greatly  improved  the  performance  of
entertainment  facilities  and  further  allowed us to utilize  technologies  in
computer  powered  digital  control,   sound,  light  and  digital  imagery  and
ultimately  made it  possible  for us to  form a new  generation  of  integrated
entertainment facilities.  From the 1970s, development of simulation technology,
followed naturally by the dynamic-simulation amusement attraction,  proved to be
the outcome of symbiotic  applications  of modern  hi-tech  computer-controlled,
hydraulics,   digital  imagery  and  Hi-Fi  sound.  Also,   computer  networking
technology and the Internet are the latest pieces of technology, widely supplied
to all industries including the amusement industry,  resulting in the reality of
network-linked series of amusement products. Computer, video and film technology
based interactive and dynamic  entertainment  products have become more and more
popular in the entertainment industry.

Business Scope

         The Company designs, developments and produces of hi-tech entertainment
and amusement products. Its optimal integration team is experienced and creative
in software,  film production and some  comprehensive  serial products  involved


                                       2
<PAGE>

with  wide  range  field  and  specialty,  including  computer,  video and film,
simulation,  artificial  intelligence  and system  integration.  The Company has
already  successfully  launched  a  series  of  hi-tech  popular  amusement  and
entertainment   products  that  are  presently  applied  in  many  theme  parks,
entertainment centers and shopping malls worldwide.  Many years ago, the Company
realized the impending  increase of scientific  and technical  requirements  for
amusement  products  as well  as the  developing  trend  of  multiple  technique
application on digital film and virtual  reality.  After many years, the Company
has developed the capabilities of scheming,  designing,  producing, and managing
CG technology  based hi-tech  entertainment  products,  and we are among the few
hi-tech companies in the world who can create an entire system of works on large
size indoor attraction design.

         The main business scope of the Company can be divided into three parts:

         o 4D Theater

         4D Theater is one of the major  entertainment  products  developed  and
produced by the Company.  4D Theater is traditional 3D theater,  known as stereo
film,  updated by adding  such  special  effects  as  vibration,  falling,  wind
blowing,  water spraying and leg ticklers,  and combined with other  simulations
like virtual fog,  rain,  lightning,  air bubbles,  and smell,  which  provide a
unique  performance and rendering effect to the plots in movies. The Company has
pushed  forward the standards for 4D theater into the next  generation  with the
introduction  of the first  cylindrical  screen in the world for the 4D theater,
which greatly widen the visual field of the audience and solves the plane motion
limitation of only moving in a perpendicular direction to the screen inherent in
Flat Screen 4D theater. The Company has already successfully installed more than
twenty 4D theaters worldwide,  including Saudi Arabia, Taiwan, South Korea, USA,
Canada, Venezuela, Italy, Kuwait, Philippine and China.

         o FantaWild's HiTech Family FunPlex

         FantaWild's HiTech Family FunPlex is a middle size indoor entertainment
center,  which is made up of 25 attractions  organized into 7 sections:  Cartoon
City, Virtual Sports, Magic Picture Land, 3D Zone,  Cyberfield,  Story House and
4D  Theater.  The  Company  distributes  FunPlex by the means of direct sale and
revenue  sharing.  In the way of revenue  sharing,  the Company  invests all the
equipment in FunPlex and is responsible  for on-site  installation,  maintenance
and update during the  cooperation  period.  Its partner will be responsible for
ground works, decoration,  advertisement and daily management.  The Company will
recoup the capital outlay by collecting a proportion of monthly revenue.

         o Large Size Indoor Attraction

         Large size  attractions are the main parts of theme park and recreation
facilities  which bring large  numbers of tourists  and  increase  entertainment
revenues.  Only a few companies have the ability to design and produce the large
size  attraction is due to technical  difficulty and  development  complication.
With many years effort,  the Company has developed the capabilities of scheming,
designing,  producing, and managing large-size attractions. 4D Ride Dino-Rampage
and Floating Sphere 4D Theater are two large size indoor attractions  completely
developed by the Company.


                                       3
<PAGE>

PRODUCT INTRODUCTION

         o FantaWild 4D Theater System

         a.       FantaWild 4D Theater

         The Company manufactures and installs all of the equipment needed for a
FantaWild 4D Theater system.  4D theater is an ultimate sensory  experience that
uses several  different 3D  technologies  to create a unique and engaging visual
and audio experience.  The essential  distinction  between a 4D theater and a 3D
theater is the former's use of additional  "4D" effects.  Examples of 4D effects
include special effect chairs that can vibrate,  simulate falling,  spray water,
blow wind and tickle the viewer's legs when activated, and environmental effects
such as the  generation  of air  bubbles,  snowflakes,  smoke  and fog and  also
smells.  In a 4D theater,  4D effects are synchronized with the on-screen action
to produce a  customized  entertainment  attraction  that  totally  immerses the
viewer within the reality of the film experience.

         To  satisfy  the  varied  needs of  consumers,  the 4D  theater is also
capable of  utilizing  different  formats,  such as  advancing  from flat screen
theater to cylindrical screen theater. Various motion bases, rotating bases, and
tracking  cars also have been  introduced  to  coordinate  the plots in  movies.
Cylindrical  screen 4D theaters with larger  diameters and multiple screens will
likely become the industry standard for companies that want to provide consumers
with a totally immersing theatrical experience that represents an alternative to
the traditional film experience.

         The FantaWild 4D Theater  systems are  classified as either Flat Screen
4D or Cylindrical Screen 4D (respectively called F series and C series in short)
according to the screen forms.  Each series includes two types,  namely film and
video  projection.  Each  type in the flat  screen  series  is  classified  into
different  models  according  to  the  size  of the  screen.  Each  type  in the
cylindrical  screen series changes with the screen radian,  diameter and whether
it is motion-base equipped.

         Flat screen 4D theater applies the conventional  film play mode, with a
screen aspect ratio of 16:9.  Because of the  non-curvature  of a flat screen 4D
theater, the audience's vision is generally limited to a smaller range when they
watch a 4D movie and objects in the movie move only in a perpendicular direction
to the screen.  Without the special  effect  chairs  supplied by Intsys,  a flat
screen 4D theater would not be any different from a traditional theater.

         The major difference between the flat screen 4D theater and cylindrical
4D theater is that the cylindrical  screen used in the latter type of theater is
not kept in one specific plain area, but rather at a section of one circle. In a
FantaWild  Cylindrical  Screen 4D Theater,  the motions of 3D objects in a movie
are not limited to one plane. The elimination of the plane motion  limitation of
only  moving in a  perpendicular  direction  to the  screen,  and the ability to
generate many other  different  motions like crossing and circling,  are the two
principles  underlying 4D  cylindrical  technology.  In a FantaWild  Cylindrical
Screen 4D Theater, movie images are seamlessly blended and the screen is made of
high  quality  unified  gain  material  with audio  sound  speaker  holes in its
surface.  To satisfy  the visual  requirements  of the  audience  when they view
cylindrical   screen  movies,  the  Company  also  has  specially  designed  and
manufactured  proprietary  cylinder-polarizing  glasses to view the  cylindrical
pictures.

         The Company provides a multi-channel  surround sound system that uses a
digital  memory and play system in its 4D theaters.  The  multi-channel  digital
surround sound system is designed to precisely locate the moving 3D objects that
are produced on a FantaWild Cylindrical 4D Screen Theater. The Company offers an
entire  package to produce and develop a FantaWild  client's sound system to fit
each movie plot shown in a FantaWild 4D Theater.

         Each  FantaWild 4D Theater  system comes  equipped with special  effect
chairs  designed to  simulate  natural  phenomena.  Through the use of a special
effect  control system  (SPECON)  provided by the Company,  special  effects are
added to the  performance  of the movie plots so that each viewer has a virtual,


                                       4
<PAGE>

life-like  experience.  The  FantaWild  4D  Theater  chairs  can  generate  five
different special effects (vibration,  falling, water spraying, wind blowing and
leg ticklers) all of which are controlled by the SPECON.  Using the SPECON,  the
program and time length of each effect can be adjusted to match different visual
and sensory  feelings.  The special effect chairs  installed with a FantaWild 4D
Theater are designed so that there can be three to five chairs in one group. The
groups can be arranged or combined to suit the needs of different theaters.

         The Company also offers environmental effects equipment options as part
of its 4D theater packages to greatly enhance the theater atmosphere provided to
audience members.  The equipment can supply FantaWild  clients includes:  (1) An
air bubble generator; (2) a strobe generator; (3) a smoke and fog generator; (4)
a snowflake  generator;  and (5) a smell  generator.  A setting  generator  that
generates the settings  according to the film plot is also  provided  along with
each environmental effects equipment option.

         b.       FantaWild 4D Films

         The Company's related company,  Shenzhen Huaqiang Digital Movie Company
Limited,  independently  creates and produces  three to five new 4D films a year
for exclusive  distribution  and exhibition at FantaWild 4D Theaters.  FantaWild
clients  can lease films on a yearly  basis  through  the  Company.  The current
library of films  includes  "Dino-Rampage"  (a futuristic  film about  dinosaurs
spread over the city due to an  accident in a museum and how people  combat with
all  kinds of  dinosaurs),  "Escape  from Bane  Manor"  (a horror  film set in a
Victorian  castle),   "Strategic  Command"  (an  action-packed  film  about  two
fictional  warring  factions),  "Deep Sea Adventure" (a futuristic movie about a
young man's  adventurous and romantic  exploration of deepsea life),  "UFO Space
Flight" (a film about  space  travel and alien  life),  "An Ode to Life" (a film
that journeys  through the annals of time,  from the creation of the universe to
the  rule  of  the  dinosaurs)  and  "Legend  of  Pyramid"  (a   mystery-filled,
action-adventure film set in ancient Egypt).

         FantaWild's HiTech Family FunPlex

         FantaWild's  HiTech Family FunPlex is an advanced family  entertainment
center.  The minimum FunPlex covers about fifteen thousand  (15,000) square feet
with capacity of approximately 500 persons.

         The FantaWild  FunPlex is made up of 25  attractions  organized  into 7
sections as follows:

         3D Zone: 3D technology is the common  technological  characteristic for
all  attractions in 3D Zone.  Tourists need to wear  polarized  glasses and will
enjoy games of virtual  reality.  Advanced  technology  is prevalent  throughout
these  attractions  that  are all  novel in  format  and  scenario  and are thus
extremely exciting.  Computer technology  combining with dynamic motion bases as
well as  special  effects  sounds  and  lights  enable  tourists  to  experience
unsurpassed  stimuli with its video and audio.  There are six  attractions in 3D
Zone namely the Target 3D shooter  game,  the Game 3D arcade  cabinets,  VR Helm
War, Jungle Adventure, VR- Helicopter and City Hero.

         Magic  PictureLand:  Magic  PictureLand  is a place where you can bring
your creativity and imagination into play. The attractions in Magic  Pictureland
mainly  utilize the computer and image  processing  technologies  to  manipulate
images of people to create  photos  with  special  effects.  You can create your
photo and completely  change your  surroundings  and  appearance.  There are two
attractions in this section: The Magic Photo Shop and Smart Artist.

         Cartoon City: All the attractions are in  Cartoon-influenced,  which is
simple  and  interesting  for the young  children.  The  children  come into the
cartoon  paradise  when they enter this area.  Cartoon City is composed of seven
attractions  namely: The Cartoon Studio, Big Mouth, Ali Baba's Cave, Jungle Drum
King, Rolling Stone and Pterodactyl Island.


                                       5
<PAGE>

         Virtual Sports: A combination of many virtual reality sports games, the
Virtual Sports area will give players many indoor and outdoor activities without
having to be there.  Novice  players can try out many  hazardous  and  difficult
real-life  sports  with  perfect  ease and safety;  and  without  any  practice,
professional  training or  expensive  equipment.  Virtual  sports is composed of
seven  attraction  namely  VR-Bowling,   VR-Football,   VR-Rafting,   VR-Glider,
VR-Fighter, Bicycle Challenging and Speedway.

         Cyberfield:  Cyberfield  is an area in which up to five  visitors  at a
time can play a multi-networked computer style interactive 4D videogame. Players
sit in specially  molded battle chairs and the cockpit's  features will simulate
being  inside  of the  robot's  control  center.  Inside,  the view  screen is a
porthole  and the walls  are  filled  with many  indicators,  alarm  lights  and
instruments; all of which are interactive with the computer game. The indicators
show  damage,  distance  to the  enemy,  ammo and  energy  levels.  The  biggest
characteristic of this attraction is group participation.

         Story House:  A magical  theater where the  technology  of  illusionary
images is applied.  The oriented sound and the dynamic  motion chair  technology
with the special effects lighting construct a dreamy atmosphere of a fairy tale.
Stories  with  different  subjects  are told  coinciding  with the  image on the
screen.  The program begins when the tourists are seated. The story is told by a
sweet voice and the image appears on five different  screens,  each portraying a
different  image.  In sync with the image,  the voice comes  around the tourists
from  different  areas and  distance,  creating a story  world.  Meanwhile,  the
special 4D seats can make such special effects as shaking, falling, leg ticklers
and water spraying according to the scenario.

         FantaWild 4D Theater:  The cylindrical  screen provides a wider viewing
area than normal movie theaters, which was invented by Intsys first in the world
and  international  patent  has been  claimed  for it.  Moreover,  4D chairs can
produce such special effects as vibration, falling, wind blowing, water spraying
and leg ticklers.  When these effects are combined with other  simulations  like
virtual fog,  rain,  lightning,  air bubbles,  and smell,  they provide a unique
performance and rendering effect to the plots in the movies. Audiences will have
both visual and sensory experiences while they are watching the movies.

         Ideal as a  tourist  attraction,  the  FunPlex  comes  equipped  with a
computerized management system that facilitates  organization and administration
of the  day-to-day  FunPlex  business.  The  system  can be used to print  daily
computer-generated  reports featuring revenue information and data on each day's
top-performing  attraction and peak operating hours. FunPlex visitors can pay by
buying  credits  on a  Fanta-Transporter  card,  which  they  can  swipe at each
attraction.  The  FantaWild  FunPlex  system also offers  gift  certificates  to
visitors to encourage repeat business.

         Large Size Indoor Attraction

         a.       4D Ride Dino-Rampage

         4D Ride  Dino-Rampage is a large-size  indoor modern  attraction  which
integrates the elements of 3D animated movie clips,  crafted  dioramas,  dynamic
motion  cars,  disaster  imitation  and  various  performance  tricks.  4D  Ride
Dino-Rampage can facilitate 96 persons  simutanously and the peak circulation is
1440 man times per hour.  The peak  circulation of it can reach 14,400 man times
per day.

         The story premise  underlying this attraction is that in the year 2020,
a time  in  which  humanity  has  made a  great  achievement  in  the  field  of
biotechnology,  the  Municipal  Museum  has  performed  a series of  experiments


                                       6
<PAGE>

regarding  the  incubations  of  ancient  dinosaur  eggs and  embryos  that have
received worldwide media attention.  Just as the scientists at the museum are on
the verge of a  breakthrough,  an unexpected  event occurs in which the genes of
the dinosaur  embryos mutate  radically and develop into actual live,  dinosaurs
over the course of one night.  The dinosaurs break out of the museum and proceed
to wreak havoc throughout the streets of the city.

         To experience  the 4D Ride  Dino-Rampage,  tourists board a twelve-seat
capacity  aero-bus that is a dynamic motion car. The car allows three degrees of
movement  including swaying  left/right,  pitching up and down, and rotating.  A
falling  feature  is also  built  into  each car  seat.  All car  movements  are
computer-controlled  and are  synchronized  to the  various  scenes of the movie
images projected on 4D theater screens that are strategically  placed in various
locations  throughout  the  attraction  site.  As the tourists  ride through the
attraction,  they  experience  3D animated  movie clips that are blended to look
consistent with the actual outdoor city scene through which they are moving.

         Special  effects   features  are  an  integral  part  of  the  4D  Ride
Dino-Rampage.  Such effects  include  large amounts of vapor  (generated  from a
smoke machine) and electrical  sparks (simulated by  short-circuited  powerlines
that emit showers of sparks).  The special  effects are nealy  through the whole
attraction  and  skillfully  absorbed  into the film  plotlines  to enhance  the
realism of the attraction for the tourists.

         b.       Floating Sphere 4D Theater

         The  FantaWild  Floating  Sphere 4D Theater is a new type of 4D theater
that integrates such hi-tech elements as 3D visuals,  spherical  theater screen,
large lifting mechanisms and on-site special effects. Owing to its ingenious and
spectacular   design,  it  represents  the  cutting  edge  of   state-of-the-art
technology  in the modern  entertainment  industry and is now a new milestone in
the theater technology and development.

         Floating  Sphere 4D Theater  covers  about  sixteen  thousand  (16,000)
square feet (82 feet long) and is composed of huge hemispherical screen, dynamic
motion-chair suspending system, rotating platform, special effects system and 3D
animated  movie  content.  Floating  Sphere 4D Theater can facilitate 60 persons
simultaneously  and the peak  circulation  per hour is 420 man  times.  The peak
circulation of it can reach 4200 man times per day.

         With a hemispherical  shaped screen, 3D visuals and a mid-air suspended
viewpoint,  the Floating Sphere 4D Theater will let audiences feel like they are
birds flying through the air!

PRODUCT QUALITY

         The Company has a reputation for creating and producing premium quality
3D and 4D  entertainment  that represents the cutting-edge in product design and
technological  development for  entertainment and  recreation-oriented  centers.
Through on going  research  and  development  efforts  and the use of an optimal
integration  team  with  considerable   experience  in  the  diverse  fields  of
entertainment,  technology and design,  the Company is setting the standards for
4D theaters  systems as well as advanced theme park attractions and recreational
project design.


                                       7
<PAGE>

         The Company sets up a complete  quality  management  system,  which can
fully  meet  the  requirements  of  production.   There  are  several  different
principals  applied in the process control of development  and  production.  The
whole process,  including supplier authentication,  contract examining,  product
design,  production,  test,  after sale service and etc are under the  effectual
control.  Furthermore,  the Company attaches  importance to  standardization  of
product research and development and production.  Considering the  international
distribution,  all the products are developed and produced according to relevant
international standards.

         The Company always takes customer  satisfaction as the sole tenet.  All
the  products  sold by the Company are highly  commented  by the customer due to
their high product quality and good service.

PRODUCTION

         The Company develops, designs and assembles all of the key elements and
proprietary   components  of  its  4D  theater  systems,   middle  size  in-door
entertainment  center and large size attractions.  The manufacturing  plants are
located in Shenzhen, China.

         Most parts of products including software, hardware, electronic control
systems,  mechanics,  etc. are developed and produced by the Company itself. The
Company also uses materials  readily  available  from the market,  which include
well-developed  software,  computer accessories and parts. For certain processes
which involve a lot of manpower such as metal works,  decorating  and packaging,
the Company sub-contracts to other third party factories.

         However, no matter whatever the parts of the products are produced, the
final assembly,  testing,  quality control,  etc.  processes are done within the
Company's own plants.

         The  Company's  whole  production  is carried out within the  following
departments:

         o        Research and Development Center

         o        Video/Movie/Program Production Center

         o        Technical Design Center

         o        Mechanics Processing Center

         o        Product Assembly Center

         o        Quality Control Center

         We also  create and  produce  entertainment  content  that is  financed
internally to accompany product systems.  We rely on the strength of our optimal
integration  team to develop  such  content  through the  combined  use of their
skills in technology and story development.

TRANSPORTATION AND DISTRIBUTION

         We transport,  configure and install all of the equipment  necessary to
run the 4D theater systems,  middle size indoor  entertainment  center and large
size  indoor  attractions.  We  also  distribute  entertainment  products  under
cooperation agreements that we invest with entertainment products and recoup the
capital outlay by collecting the monthly  revenue of these  attractions or lease
agreements that providesome  entertainment  products and 4D films on the base of
certain lease fee.


                                       8
<PAGE>

RAW MATERIALS

         Raw materials used include:

         o        Computer  hardware  including main board,  CPU, hard disk, RAM
                  and other parts

         o        Electronic components

         o        Optical projectors

         o        Optical or mechanical transducers

         o        Screens and displaying equipment

         o        Air pressure container

         o        Hydraulic systems

         o        Fiber or plastic parts

         o        Metal components or parts

         We  purchase   our  raw   materials   from  both  large   international
corporations  such  as  Intel,   Seagate  Technology  Inc.,  as  well  as  local
corporations in China.  There are multiple suppliers for all of our raw material
and components and we have not experienced any supply interruptions.

MARKETING AND SALES

         Our sales and marketing strategies revolve principally around
developing a reputable brand identity and ongoing customer relationships, in
addition to continuously innovating and improving the quality of our products.
We market our products through a direct sales force and marketing staff located
in offices in Baldwin Park, California, Hong Kong and Shenzhen, China. In
addition, through Hytechnology Inc., we have participated actively in
international exhibitions such as IAAPA, Euro Amusement Show, NAB, Infocomm,
AAE, E3, Fun Expo, etc. since 2001 to promote our proprietary products to the
international markets. Our future plans to penetrate both international and
local markets in years 2003 to 2004 are through the following actions:

         o        Distribute twenty (20) FantaWild 4D Theaters  worldwide by the
                  means of direct sale or revenue sharing;

         o        Set up twenty  five (25)  FantaWild's  HiTech  Family  FunPlex
                  worldwide by the means of joint venture,  revenue  sharing and
                  direct sale;

         o        Invest and operate an indoor theme park covering three hundred
                  thousand  (300,000)  square feet in southern China.  The theme
                  park  will  include  six  large  size  attractions  of 4D Ride
                  Dino-Rampage,  Floating Sphere 4D Theater,  FantaWild's HiTech
                  Family FunPlex, 4D Theater,  Magic Theater (a theater combines
                  the   illusions   and  special   effects  with  a  live  stage
                  performance,  in which  the  actor  seems to  control  magical
                  images and  objects  float  through the air around him and the
                  actor  himself can appear and  disappear  suddenly)  and Space
                  Ship (a  simulated  Space  shuttle  that can  facilitate  many
                  persons  to  experience  a space  travel  from one  planet  to
                  another planet);

         o        Invest and operate an indoor amusement center covering seventy
                  thousand  (70,000)  square  feet in  northern  China.  4D Ride
                  Dino-Rampage,  Floating  Sphere  4D  Theater  and  FantaWild's
                  HiTech Family FunPlex will be included in it.


                                       9
<PAGE>

CUSTOMERS

         Our  institutional  customers  include  recreation-oriented  companies,
theme/amusement park, entertainment center and individual investor.

REGULATION

         We are  subject,  from time to time,  to various  laws and  regulations
administered  by various  government  bodies  relating to the  operation  of our
manufacturing  and  distribution  facilities,   as  well  as  environmental  and
pollution control, including air emissions. We believe that we are in compliance
with  all  governmental  laws  and  regulations  related  to  its  products  and
facilities,  and we do not expect to make any material  expenditure in 2003 with
respect to compliance with any such regulations.

RESEARCH AND DEVELOPMENT

         We  are  a  hi-tech  company  specializing  in  entertainment   product
development and design with proprietary expertise in computer technology,  video
and  film   technology,   simulation,   artificial   intelligence,   and  system
integration.  Our ongoing research and development program involves creating new
products and modifying  existing products to meet market demands and redesigning
existing  products  to  reduce  the  cost of  manufacturing.  The  research  and
development department is staffed with experienced design engineers. The cost of
research and development has been charged to operations.

STRATEGY

         Our  strategy  is  to  capitalize  on  our  significant   research  and
development  capabilities  and the strength of our optimal  integration  team to
enhance  the brand  identity  and achieve  greater  economies  of scale.  We are
committed to developing  innovative,  cutting-edge 3D, 4D and other  interactive
simulation dynamic  entertainment  products that will define the next generation
in entertainment industry.

COMPETITION

         We  compete  with a  number  of video  game  developers,  digital  film
developers,  game machine  providers,  indoor attraction  manufacturers and also
certain  content   providers   servicing  the  entertainment   markets.   IWERKS
Entertainment, Inc. is a main competitor of the Company in the 4D theater field.
However,  IWERKS  only  supplies  flat  screen 4D  theater,  whereas the Company
provides both flat screen 4D theater and cylindrical 4D theater, emphasizing the
latter.  Moreover, the Company can develop and produce multiple types of hi-tech
entertainment  products,  including 4D theater, middle size indoor entertainment
center and large size indoor attraction as described above.

         We are not only a manufacturer of entertainment  products,  but also an
investor  capable of investing and operating our own  entertainment  centers and
theme parks. We invest in the products we develop and produce,  which are always
the most  advanced  and  attractive  entertainment  products  as a result of our
continuously updating the old ones and developing new ones.

         The R&D base and production  base of the Company are located in the low
cost region,  such as China.  So both the R&D cost and production  cost are much
lower as  compared  with our  competitors.  Thus the  Company  can  provide  its
products at a  competitive  price.  Its  creative  team always  designs the most
attractive entertainment products in high efficiency. Low cost, premium products
quality,  commitment  to ongoing  research  and  development  and  technological
innovation,  and the strength and creativity of our optimal integration team are
factors in enabling the Company to compete.


                                       10
<PAGE>

PATENTS AND TRADEMARKS

         We have applied to the US Patent and Trademark Office ("USPTO") for the
registration  patent in the area of stereo  cylindrical  imaging.  In  addition,
other invention such as new type  entertainment  simulation means and apparatus,
interactive   exercise   bicycle  etc.  will  be  submitted  to  the  USPTO  for
registration  in the near  future.  We have  also  applied  to the USPTO for the
registration  of  the  trademarks  "FantaWild"  and  "FunPlex".   All  of  these
applications are still being processed and pending for approval.

EMPLOYEES

         As of March 13, 2003, we had 240 employees, 30 of which are involved in
management and administration,  126 in research and development, 12 in sales and
marketing  and 72 in  engineering  and  production.  All employees are primarily
based in Shenzhen,  China but some management and sales staff work  occasionally
in the Company's  offices in Hong Kong, China and Baldwin Park,  California.  We
believe our  relationship  with our  employees  are good.  Our employees are not
represented by a collective bargaining  organization and we have not experienced
a work stoppage.

GOVERNMENTAL REGULATION OF OUR OPERATIONS IN CHINA

         Our  corporate  headquarters  are  located  in Hong Kong and we run our
international  business  operation out of an office located in Shenzhen,  China.
Accordingly,  our operations  must conform to the  governmental  regulations and
rules of China.

         The Chinese Legal System

         The practical effect of the People's  Republic of China legal system on
our business operations in China can be viewed from two separate but intertwined
considerations.  First,  as a matter of  substantive  law, the Foreign  Invested
Enterprise  laws that are applied to our operation in China provide  significant
protection from government  interference.  In addition, these laws guarantee the
full  enjoyment of the benefits of corporate  Articles and  contracts to Foreign
Invested  Enterprise  participants.  These laws,  however,  do impose  standards
concerning  corporate  formation  and  governance,  which are not  qualitatively
different from the general corporation laws of the United States. Similarly, the
People's Republic of China accounting laws mandate accounting  practices,  which
are mostly  consistent with US Generally  Accepted  Accounting  Principles.  The
China accounting laws require that an annual  "statutory  audit" be performed in
accordance  with People's  Republic of China  accounting  standards and that the
books of account of Foreign  Invested  Enterprises  are maintained in accordance
with  Chinese  accounting  laws.  Article 14 of the  People's  Republic of China
Wholly Foreign-Owned  Enterprise Law requires a Wholly Foreign-Owned  Enterprise
to submit certain periodic fiscal reports and statements to designated financial
and tax authorities, at the risk of business license revocation.

         Second,  while the  enforcement of  substantive  rights may appear less
clear than United States procedures, the Foreign Invested Enterprises and Wholly
Foreign- Owned  Enterprises are Chinese  registered  companies,  which enjoy the
same  status  as other  Chinese  registered  companies  in  business-to-business
dispute resolution.  Because the terms of the respective Articles of Association
provide that all business  disputes  pertaining to Foreign Invested  Enterprises
are to be resolved by the  Arbitration  Institute  of the  Stockholm  Chamber of
Commerce in Stockholm,  Sweden  applying  Chinese  substantive  law, the Chinese
minority  partner in our joint  venture  companies  will not assume a privileged
position  regarding  such  disputes.  Any  award  rendered  by this  arbitration
tribunal is, by the express  terms of the  respective  Articles of  Association,
enforceable in accordance with the "United Nations Convention on the Recognition
and Enforcement of Foreign  Arbitral Awards (1958)."  Therefore,  as a practical
matter,  although no assurances can be given, the Chinese legal  infrastructure,
while  different in operation  from its United  States  counterpart,  should not
present  any  significant  impediment  to  the  operation  of  Foreign  Invested
Enterprises.


                                       11
<PAGE>

         Economic Reform Issues

         Although  the majority of  productive  assets in China are owned by the
Chinese  government,  in the past several years the government  has  implemented
economic reform measures that emphasize  decentralization  and encourage private
economic activity. Because these economic reform measures may be inconsistent or
ineffectual, there are no assurances that:

o        We will be able to capitalize on economic reforms;
o        The Chinese  government  will  continue its pursuit of economic  reform
         policies;
o        The economic policies, even if pursued, will be successful;
o        Economic policies will not be significantly  altered from time to time;
         and
o        Business  operations  in China will not  become  subject to the risk of
         nationalization.

         Negative impact upon economic reform policies or nationalization  could
result in investment loss in our common stock.

         Since 1979, the Chinese  government has reformed its economic  systems.
Because many reforms are unprecedented or experimental,  they are expected to be
refined and improved.  Other  political,  economic and social  factors,  such as
political  changes,  changes in the rates of economic  growth,  unemployment  or
inflation,  or in the  disparities in per capita wealth  between  regions within
China, could lead to further readjustment of the reform measures.  This refining
and readjustment process may negatively affect our operations.

         Over the last few years,  China's  economy has registered a high growth
rate.  Recently,  there  have been  indications  that  rates of  inflation  have
increased.  In response,  the Chinese government has taken measures to curb this
excessively  expansive economy.  These measures have included devaluation of the
Chinese  currency,  the Renminbi,  restrictions on the  availability of domestic
credit,  reducing the  purchasing  capability of certain of its  customers,  and
limited  re-centralization of the approval process for purchases of some foreign
products.  These  austerity  measures  alone may not succeed in slowing down the
economy's  excessive  expansion or control  inflation,  and may result in severe
dislocations in the Chinese economy. The Chinese government may adopt additional
measures to further combat inflation,  including the establishment of freezes or
restraints on certain projects or markets.

         To date reforms to China's economic system have not adversely  impacted
our  operations  and are not  expected to  adversely  impact  operations  in the
foreseeable  future;  however,  there can be no  assurance  that the  reforms to
China's economic system will continue or that we will not be adversely  affected
by changes in China's political,  economic, and social conditions and by changes
in policies of the Chinese government,  such as changes in laws and regulations,
measures  which may be introduced to control  inflation,  changes in the rate or
method of taxation, imposition of additional restrictions on currency conversion
and  remittance  abroad,  and  reduction in tariff  protection  and other import
restrictions.

         China's Accession into the WTO

         On November 11,  2001,  China signed an agreement to become a member of
the World Trade Organization sometimes referred to as the WTO, the international
body that sets most  trade  rules,  further  integrating  China  into the global
economy and  significantly  reducing  the  barriers to  international  commerce.
China's  membership  in the WTO was  effective on December  11, 2001.  China has


                                       12
<PAGE>
<TABLE>
<CAPTION>

agreed upon its accession to the WTO to reduce tariffs and non-tariff  barriers,
remove  investment  restrictions,  provide trading and  distribution  rights for
foreign firms. The tariff rate reductions and other  enhancements will enable us
to  develop  better  investment  strategies.  In  addition,  the  WTO's  dispute
settlement  mechanism provides a credible and effective tool to enforce members'
commercial rights.  Also, with China's entry to the WTO, it is believed that the
relevant  laws on foreign  investment in China will be amplified and will follow
common practices.

ITEM 2.  DESCRIPTION OF PROPERTIES.

         Our  corporate  offices  are  located at Flat K,  12/F.,  International
Industrial  Centre,  2-8 Kwei Tei St. Fo Tan Shatin  N.T.  Hong  Kong.  We lease
several premises for factory and office as follows:

----------------- --------- ---------------- --------------------------- ---------------
                                  Area                                     Approximate
Location            Usage    (Square meter)     Expiry date of Leases     annual rental
----------------- --------- ---------------- --------------------------- ---------------
<S>               <C>       <C>              <C>                         <C>
Shenzhen, China    Factory       773.51           September 9, 2003              $25,722
----------------- --------- ---------------- --------------------------- ---------------

Shenzhen, China    Factory      1,082.49          September 9, 2003              $26,606
----------------- --------- ---------------- --------------------------- ---------------

Shenzhen, China    Factory      1180.00      Expired, moving to a larger
                                                       premise                   $29,002
----------------- --------- ---------------- --------------------------- ---------------

Shenzhen, China     Office      1,770.96          February 28, 2004              $77,000
----------------- --------- ---------------- --------------------------- ---------------

Chengdu, China      Office         75              October 31, 2004               $2,600
----------------- --------- ---------------- --------------------------- ---------------

Beijing, China      Office         45             November 30, 2003               $5,000
----------------- --------- ---------------- --------------------------- ---------------
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS.

         We are not a party to any pending or to the best of our knowledge,  any
threatened legal proceedings.  None of our directors, officers or affiliates, or
owner of  record or of more than five  percent  (5%) of our  securities,  or any
associate of any such director, officer or security holder is a party adverse to
ours  or has a  material  interest  adverse  to  ours in  reference  to  pending
litigation.

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

         During the fourth quarter of the fiscal year the only matter  submitted
to the  shareholders  for approval was our acquisition of the interest in Intsys
pursuant  to  the  Share  Exchange   Agreement.   The  matter  was  approved  by
shareholders holding a majority of our issued shares.


                                     PART II

ITEM 5.  MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a)      Market Prices of Common Stock

         Our common stock is traded on the Over-The-Counter Bulletin Board under
the  symbol  "FNTA.OB".  The  following  table sets forth the high and low sales
prices  for the  shares  of common  stock as  reported  on the  Over-The-Counter
Bulletin Board for each quarterly period of the last two fiscal years. The sales
prices listed below represent prices, adjusted for stock splits, between dealers
without  adjustments for retail  markups,  breakdowns or commissions and may not
represent actual transactions.


                                       13
<PAGE>


                                                            Price Range
                                                       High             Low
         Fiscal Year Ended December 31, 2002
         First Quarter                                 0.32            0.22
         Second Quarter                                0.21            0.09
         Third Quarter                                  -                -
         Fourth Quarter                                0.40            0.25

         Fiscal Year Ended December 31, 2001
         First Quarter                                 0.15            0.07
         Second Quarter                                0.15            0.06
         Third Quarter                                 0.55            0.17
         Fourth Quarter                                0.40            0.25

(b)      Shareholders

         Our common  shares  are issued in  registered  form.  Securities  Stock
Transfer,  Dallas,  Texas is the  registrar  and  transfer  agent for our common
stock. As of March 15, 2003,  there were  40,192,063  shares of our common stock
outstanding and we had approximately 252 shareholders of record.

(c)      Dividends

         We have never  declared or paid any cash  dividends on our common stock
and we do not anticipate paying any cash dividends in the foreseeable future. We
currently  intend to retain future earnings,  if any, to finance  operations and
the expansion of our businesses.  Any future determination to pay cash dividends
will be at the  discretion  of the board of directors and will be based upon our
financial  condition,   operating  results,  capital  requirements,   plans  for
expansion,  restrictions  imposed by any  financing  arrangements  and any other
factors that the board of directors deems relevant.

(d)      Penny Stock

         Until the Company's  shares qualify for inclusion in the NASDAQ system,
the public  trading,  if any, of the  Company's  common stock will be on the OTC
Bulletin Board.  As a result,  an investor may find it more difficult to dispose
of, or to obtain  accurate  quotations  as to the price  of,  the  common  stock
offered.  The  Company's  common stock is subject to provisions of Section 15(g)
and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"),  commonly referred to as the "penny stock rule." Section 15(g) sets forth
certain  requirements  for  transactions  in penny  stocks,  and  Rule  15g-9(d)
incorporates the definition of "penny stock" that is found in Rule 3a51-1 of the
Exchange Act. The SEC generally  defines "penny stock" to be any equity security
that  has a  market  price  less  than  $5.00  per  share,  subject  to  certain
exceptions. If the Company's common stock is deemed to be a penny stock, trading
in the shares  will be subject to  additional  sales  practice  requirements  on
broker-dealers who sell penny stock to persons other than established  customers
and  accredited  investors.  "Accredited  investors"  are persons with assets in
excess of $1,000,000 or annual income  exceeding  $200,000 or $300,000  together
with their spouse. For transactions covered by these rules,  broker-dealers must
make a special  suitability  determination for the purchase of such security and
must  have the  purchaser's  written  consent  to the  transaction  prior to the
purchase.  Additionally,  for any  transaction  involving a penny stock,  unless
exempt,  the rules require the delivery,  prior to the first  transaction,  of a
risk  disclosure  document,  prepared  by the SEC,  relating  to the penny stock
market. A broker-dealer  also must disclose the commissions  payable to both the
broker-dealer and the registered representative,  and current quotations for the
securities.  Finally,  monthly  statements must be sent disclosing  recent price
information  for the penny  stocks  held in an account  and  information  on the
limited  market in penny  stocks.  Consequently,  these rules may  restrict  the
ability of  broker-dealer  to trade  and/or  maintain a market in the  Company's
common stock and may affect the ability of the  Company's  shareholders  to sell
their shares.


                                       14
<PAGE>

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

         The  following  is  management's  discussion  and  analysis  of certain
significant  factors which have  affected our  financial  position and operating
results during the periods included in the accompanying financial statements, as
well as information relating to the plans of our current management.

OVERVIEW

         The  Company  entered  into a Share  Exchange  Agreement,  dated  as of
November 6, 2002 (the  "Exchange  Agreement")  by and among the Company,  Halter
Capital Corporation, a Texas corporation, Kevin Halter and Fang Dehou ("Dehou"),
Li Ming  ("Ming") and Lui Lingxiao  ("Lingxiao")  (Dehou,  Ming and Lingxiao are
herein referred to collectively, as the "Intsys Shareholders").  Pursuant to the
Exchange  Agreement,  on  November  6, 2002 (the  "Closing  Date"),  the Company
acquired (the  "Acquisition") from the Intsys Shareholders all of the issued and
outstanding  capital stock of Intsys Share  Limited,  a British  Virgin  Islands
corporation  ("Intsys").  As consideration for the shares of Intsys, the Company
issued 40,000,000 shares of common stock to the Intsys  Shareholders and certain
designees of the Intsys Shareholders.  The consideration for the Acquisition was
determined  through  arms  length  negotiations  between the  management  of the
Company and the Intsys Shareholders.

RESULTS OF OPERATIONS

SALES

         The Company generated  revenues of $5,785,510 for the fiscal year ended
December 31, 2002,  which was a $300,287 or 5% decrease from  $6,085,797 for the
fiscal year ended  December 31, 2001.  This is primarily due to the delay of the
work schedule of certain contracts during the year. During the fiscal year 2002,
two customers of ours accounted for approximately 21% and 15% of our total sales
revenue.

GROSS PROFIT

         Gross  profit  margin has improved to 21% for the fiscal year 2002 from
17% for the fiscal year 2001.  This is primarily due to a number of  high-margin
small projects  (total  contract values of which were below $240,000) which were
both commenced and completed during the year. These  high-margin  small projects
had an average  gross  profit  margin of 53% and  accounted  for 9% of our total
sales  revenue for 2002, as compared to those in 2001 which had an average gross
profit margin of 17% and accounted for 8% of total sales revenue for 2001.

SELLING AND MARKETING EXPENSES

         Selling and  marketing  expenses  increased  by $49,607 or 17% over the
year to $335,811 for the year ended December 31, 2002 from $286,204 for the year
ended December 31, 2001. This is due to the  significant  increase in exhibition
expenses  from  $95,457 for the fiscal year 2001 to $138,048 for the fiscal year
2002,  which  were  primarily  incurred  for our  participation  in a number  of
international exhibitions to promote our products during the year.


                                       15
<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES

         General and  administrative  expenses  decreased by $62,004 or 11% over
the year to $506,654 for the year ended  December 31, 2002 from $568,658 for the
year ended  December 31, 2001.  The decrease is primarily due to the decrease in
travelling expenses from $24,648 in 2001 to $3,200 in 2002.

INCOME FROM OPERATIONS

         As  gross  profit  margin  increased  and  selling  and  administrative
expenses were maintained at similar levels,  income from operations for the year
increased by 88% to $392,047, as compared to $208,213 for the fiscal year 2001.

MINORITY INTEREST

         The Company  recorded a minority  interest of $115,870 and $104,356 for
the fiscal  years 2002 and 2001  respectively  to reflect the  interests  of the
minority shareholders in Hytechnology, Inc. (30%), Hytechnology Limited (1%) and
SDCL (34.6%).

MERGER COSTS

         Expenses  incurred  relating to the merger with  Intsys  Share  Limited
amounted to $1,017,822 for the fiscal year ended December 31, 2002 whereas these
expenses for the fiscal year ended December 31, 2001 estimated at $0.

OTHER INCOME (LOSS)

         There  was no gain on sale of  investment  for the  fiscal  year  ended
December 31, 2002 as the Company has no longer  invested in listed  shares.  All
listed shares were sold during the fiscal year ended December 31, 2001 and a net
gain on sale of investment of $81,178 was realized thereon.

         There was no loss on the  disposition  of fixed  assets  for the fiscal
year ended December 31, 2002 as compared to the loss on the disposition of fixed
of $44,001 for the fiscal year ended December 31, 2001.

         Interest  expense for the fiscal year 2002  increased  to $39,223  from
$768 for the fiscal  year 2001.  This is  primarily  due to the new bank loan of
$2,168,675 obtained in August 2002.

         Interest  income  for the fiscal  year 2002  decreased  to $7,951  from
$29,306 for the fiscal year 2001 due to the decrease in interest  rates and cash
held in interest-bearing accounts.

INCOME TAX EXPENSE

         The  Company is subject  to income  taxes on an entity  basis on income
arising or derived from the tax  jurisdiction in which each entity is domiciled.
Intsys Share Limited is not liable for income taxes.  The Company's 65.41% owned
China subsidiary - SDCL is subject to Enterprise  Income Tax in the China a rate
of 15% on net income. However, based on the local tax rules, SDCL is entitled to
a tax holiday for the first two years of its  operations  and a 50% reduction of
the tax  rate  for  the  third  through  fifth  years  (years  2001 -  2003)  of
operations.  The  provision  for taxes on  earnings  of SDCL for the years ended
December 31, 2002 and 2001 was $39,936 and $24,961 respectively.


                                       16
<PAGE>

NET LOSS

         The Company  recorded a net loss of $812,853  for the fiscal year ended
December  31, 2002 as  compared to a net profit of $144,341  for the fiscal year
ended December 31, 2001. This is primarily due to the merger costs of $1,017,822
incurred in connection with our merger with Intsys Share Limited.

Financial Condition, Liquidity, Capital Resources

         For the fiscal year ended December 31, 2002,  our operations  generated
net cash of  $818,018,  as compared  to net cash of $950,324  used in the fiscal
year ended December 31, 2001.  After taking into effect the $1,017,822  non-cash
merger costs  incurred,  this is primarily  due to the  significant  increase in
accounts payable in 2002 and the significant increase in inventory in 2001.

         As of  December  31,  2002,  we had  cash on hand of  $3,290,249  and a
positive current ratio of 1.79.

         To finance the working  capital  requirement  of a major  project,  the
Company  obtained  a bank loan of  $2,168,675  during  the year.  The loan bears
interests at 5.31% per annum and is  repayable  on August 27, 2003.  The loan is
guaranteed by Shenzhen Huaqiang  Holdings Limited,  a related party. As a result
of this bank  loan,  our  gearing  ratio  (measured  on the basis of total  bank
borrowings as a percentage of total shareholders' equity) was 90% as of December
31, 2002.

         We had no significant capital expenditure  commitment outstanding as of
December 31, 2002.

         During the fiscal year 2002,  the Company issued  40,000,000  shares of
common  stock to the Intsys  Shareholders  and certain  designees  of the Intsys
Shareholders  as the  consideration  of the  acquisition  of all the  issued and
outstanding capital stock of Intsys in a reverse merger.

Inflation and Changing Prices

         Fluctuations  of currency  exchange  rates between  Renminbi and United
States dollar could adversely  affect our business since we conduct our business
primarily in China,  and the sale of our products to  corporations  in China are
settled in  Renminbi.  The Chinese  government  controls  its  foreign  reserves
through  restrictions  on  imports  and  conversion  of  Renminbi  into  foreign
currency.  Although the Renminbi to United States dollar  exchange rate has been
stable since January 1, 1994 and the Chinese government has stated its intention
to maintain the  stability  of the value of Renminbi,  there can be no assurance
that exchange rates will remain stable.  The Renminbi could devalue  against the
United States  dollar.  Exchange  rate  fluctuations  may  adversely  affect our
revenue  arising from the sales of products in China and denominated in Renminbi
and our financial performance when measured in United States dollar.

Recent Accounting Pronouncements

         In April 2002, The Financial  Accounting  Standards Board (FASB) issued
SFAS  Statement  No.  145,  "Recission  of  FASB  Statements  No.  4, 22 and 64.
Amendment of FASB  Statement No. 13, and Technical  Corrections".  The Statement
addresses the accounting for extinguishment of debt, sale-leaseback transactions
and certain lease  modifications.  The  Statement is effective for  transactions
occurring  after May 15,  2002.  The  Company  does not expect the  adoption  of
Statement No. 15 to have a material  impact on the Company's  future  results of
operations or financial position.

         In July 2002, the FASB issued SFAS Statement No. 146,  "Accounting  for
Cost  Associated  with Exit or  Diposal  Activities".  The  Statement  addresses
financial  accounting and reporting for costs  associated  with exit or disposal
activities and supercedes Emergin Issues Task Force Issue No. 94-3,  "Liabilitiy


                                       17
<PAGE>

Recognition for Certain  Employee  Termination  Benefits and Other Costs to Exit
and  Activity  (Including  Certain  Costs  Incurred  in  a  Restructing)".   The
provisions of Statement  No. 146 are  effective for exit or disposal  activities
that are  initiated  after  December 31,  2002.  The Company does not expect the
adoption of Statement No. 146 to have a material impact on the Company's  future
results of operations or financial position.

         In  November  2002,  the  FASB  issued  FASB   Interpretation  No.  45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees of  Indebtedness  of Others" (FIN 45). FIN 45 requires that
upon  issuance of a guarantee,  a guarantor  must  recognize a liability for the
fair value of an  obligation  assumed  under a guarantee.  FIN 45 also  requires
additional  disclosures  by a  guarantor  in its  interim  and annual  financial
statements  about  the  obligations   associated  with  guarantees  issued.  The
recognition  provisions  of FIN 45 are effective  for any  guarantees  issued or
modified after December 31, 2002. The disclosure  requirements are effective for
financial  statements  of interim or annual  periods  ending after  December 15,
2002.  The adoption of FIN 45 is not  expected to have a material  effect on the
Company's financial position, results of operations, or cash flows.

         In  December  2002,  the  FASB  issued  SFAS  No.148,  "Accounting  for
Stock-Based  Compensation.  Transition and Disclosure"  SFAS No. 148 amends SFAS
No. 123  "Accounting  for  Stock-Based  Compensation,"  to  provide  alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for  stock-based  employee  compensation.  In addition,  SFAS No. 148
amends  the  disclosure  requirements  of  SFAS  No.  123 to  require  prominent
disclosures in both annual and interim financial  statements about the method of
accounting for stock-based  employee  compensation  and the effect of the method
used on reported  results.  SFAS No. 148 is effective for fiscal years beginning
after  December 15, 2002.  The interim  disclosure  provisions are effective for
financial reports containing  financial statements for interim periods beginning
after  December 15,  2002.  The Company does not expect the adoption of SFAS No.
148 to have a material effect on our financial position,  results of operations,
or cash flows.

ITEM 7.  FINANCIAL STATEMENTS.

(a)      Financial Statements

The following financial statements are set forth at the end hereof.

     1.   Report of Independent Auditors

     2.   Consolidated Balance Sheet as of December 31, 2002

     3.   Consolidated  Statements  of Operations  the years ended  December 31,
          2002 and December 31, 2001

     4.   Consolidated  Statements of Changes in  Stockholders'  Equity  through
          December 31, 2002

     5.   Consolidated Statements of Cash Flows for the years ended December 31,
          2002 and December 31, 2001

     6.   Notes to Consolidated Financial Statements


                                       18
<PAGE>

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

         The Company,  dismissed Parks, Tschopp, Whitcomb & Orr ("PTWO"), as the
Company's  independent  accountants.  The  dismissal of PTWO was approved by the
Company's Board of Directors.

         PTWO were the  independent  accountants  for the Company for the period
from July 1, 2002 to November 30, 2002.  During their  engagement,  PTWO did not
perform an audit of the Company's financial statements and as such there were no
audit reports issued for this period.

         During the period from July 1, 2002 to November 30, 2002, there were no
disagreements  with PTWO on any matter of  accounting  principles  or practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements,  if not resolved to the  satisfaction of PTWO,  would have caused
such  firm to make  reference  to the  subject  matter of the  disagreements  in
connection with its report on the Company's financial  statements.  In addition,
there were no such events as described under Item 304(a)(1)(IV)(B) of Regulation
S-B during the period from July 1 to November 30, 2002.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT.

         The  following  table and text sets forth the names and ages of all our
directors and executive officers and the key management personnel as of December
31, 2002.  Our Board of  Directors  is  comprised of only one class.  All of the
directors  will serve until the next annual  meeting of  stockholders  and until
their  successors  are elected and  qualified,  or until  their  earlier  death,
retirement,  resignation or removal.  Executive officers serve at the discretion
of the Board of  Directors,  and are appointed to serve until the first Board of
Directors meeting following the annual meeting of stockholders. Also provided is
a brief  description  of the business  experience of each director and executive
officer  and the key  management  personnel  during  the past five  years and an
indication of directorships  held by each director in other companies subject to
the reporting requirements under the Federal securities laws.

Name                          Age      Position Held

Jinqiang Zhang                 61      Chairman
Guangwei Liang                 39      Vice Chairman and Chief Executive Officer
Fengming Peng                  33      Chief Financial Officer
Jianguo Cheng                  45      Secretary
Ming Li                        46      Director and Chief Operating Officer
Liechong Li                    57      Director
Xinan Hu                       34      Director


         Mr.  Jinqiang  Zhang has served as our Chairman since November 7, 2002.
Mr. Zhang has over 30 years' experience in manufacturing  industry.  Since 1980,
he  has  held  high  positions  with  various  large  electronic   manufacturing
corporations  in  China.  During  the past 10  years,  he has been  involved  in
large-scale  fund raising  activities,  property  development and  hi-technology
project investments etc.

         Mr. Guangwei Liang has served as our  Vice-Chairman and Chief Executive
Officer  since  November 7, 2002.  Mr.  Liang has over 15 years'  experience  in
manufacturing  industry.  He holds a bachelor  degree in  computer  science  and
application  from Shenzhen  University,  a master  degress in law and a doctoral
degree in  economics  from Wuhan  University.  Since 1986,  he has served in the
management level for several electronics corporations in China.


                                       19
<PAGE>

         Ms.  Fengming  Peng has  served as our Chief  Finanical  Officer  since
November 7, 2002. She has over 10 years' experience in the accounting field. She
holds a bachelor degree in business  administration  from the Chinese University
of Hong Kong.  She is currently a fellow of the Hong Kong Society of Accountants
and a member of the Association of Chartered Certified Accountants in the United
Kingdom.

         Mr.  Jianguo Cheng has served as our Secretary  since November 7, 2002.
Mr. Cheng holds a master  degree in English  language  and a doctoral  degree in
economics  from Wuhan  University.  He has spent long time in  teaching in Wuhan
University in China and is qualified as an associate professor.  During the past
two  years,  he has  been  engaged  in the  research  and  analysis  of  foreign
enterprises including public corporations in the North America. He has also been
involved in merger and acquisition transactions of some enterprises.

         Mr. Ming Li has served as Chief  Operating  Officer  since  November 7,
2002. Mr. Li has over 20 years'  experience in manufacturing  and  hi-technology
industries. From 1984 to 1988, he particiated in a visiting program in Stevenson
Polytechnic in the United States and worked for several US  corporations.  Since
1998, he has served in the management  level for  hi-technology  corporations in
China.

         Mr.  Liechong Li was appointed a director of the Company since November
7, 2002.  Mr. Li has over 20 years'  experience in  manufacturing  industry.  He
holds a bachelor degree in Physics.  Since 1980, he has served in the management
level for several manufacturing joint ventures in China.

         Mr. Xian Hu as  appointed a director of the Company  since  November 7,
2002.  Mr.  Hu  has  over  10  years'  experience  in  manufacturing,  chemical,
investment industries. He holds a bachelor degree in mechanical engineering from
Shenyang Chemical College. Since 1992, he has served in the management level for
several  corporations  in China.  He has been  involved  in various  significant
investment, fund raising, merger and acquisitions activities.

         For the period ended December 31, 2002,  certain corporate actions were
conducted by unanimous  written consent of the Board of Directors  including the
change of the Company's name.

         Directors receive no compensation for serving on the Board of
Directors, but are reimbursed for any out-of-pocket expenses, if any, incurred
in attending board meetings.

(a)      Family Relationships

         There are no family  relationships  between or among the  directors and
executive officers.

(b)      Involvement in Legal Proceedings

         To the best of the  Company's  knowledge,  during the past five  years,
none of the following  occurred with respect to a present or former  director or
executive  officer  of the  Company:  (1) any  bankruptcy  petition  filed by or
against any  business of which such  person was a general  partner or  executive
officer  either at the time of the  bankruptcy or within two years prior to that
time; (2) any conviction in a criminal  proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses); (3)
being  subject to any order,  judgment  or decree,  not  subsequently  reversed,
suspended or vacated, of any court of any competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business,  securities or banking activities;  and (4) being found
by a  court  of  competent  jurisdiction  (in a  civil  action),  the SEC or the
Commodities  Futures  Trading  Commission  to have  violated  a federal or state
securities or commodities law, and the judgment has not been reversed, suspended
or vacated.


                                       20
<PAGE>

(c)      Section 16(a) Beneficial Ownership Compliance

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires our executive  officers and directors and persons who own more than 10%
of a registered  class of our equity  securities to file with the Securities and
Exchange  Commission  initial  statements  of beneficial  ownership,  reports of
changes in ownership and annual  reports  concerning  their  ownership of common
stock  and other of our  equity  securities,  on Forms 3, 4 and 5  respectively.
Executive officers,  directors and greater than 10% shareholders are required by
Commission  regulations  to furnish the Company with copies of all Section 16(a)
reports they file. To the best of our  knowledge  (based solely upon a review of
the Form 3, 4 and 5 filed), no officer,  director or 10% beneficial  shareholder
failed to file on a timely  basis any reports  required by Section  16(a) of the
Securities Exchange Act of 1934, as amended.

ITEM 10.  EXECUTIVE COMPENSATION

         No compensation  was paid to our Chief Executive  Officer during fiscal
years ended  December 31, 2000,  2001 and 2002.  None of our executive  officers
received compensation in excess of $100,000.

         We do not maintain,  nor have we  maintained in the past,  any employee
benefit plans. No executive officer has been granted stock options.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth the number of our common shares owned by
record, or to our knowledge,  beneficially, by each of our Offices and Directors
and by each person owning five percent or more of our outstanding  shares, as of
December 31, 2002. The percentage is based on 40,192,063  shares  outstanding on
April 11, 2003.

         Each person listed below has personal and sole beneficial  ownership of
the shares of common stock listed with their name:

                                        Total Number of
                Number/Title                Shares          Percentage Ownership

Jinqiang Zhang, Chairman                   3,359,206               8.36%
Guangwei Liang, Vice Chairman, CEO         2,787,100               6.93%
Fengming Peng, CFO                                 -                 -
Jianguo Cheng, Secretary                           -                 -
Ming Li, COO, Director                        53,226               0.13%
Liechong Li, Director                      2,597,948               6.46%
Xinan Hu, Director                         1,854,042               4.61%

All Directors and Executive Officers
(5 persons)                               10,651,522              26.49%


                                       21
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Shenzhen Huaqiang Holdings Limited  (Holdings) is a wholly  state-owned
enterprise  under  the  Guangdong  provincial  government.  Holdings  indirectly
controls Shenzhen Huaqiang Information  Industry Company Limited  (Information),
the minority  shareholder of SDCL.  Holdings also indirectly controls management
policies of the Company.  There are common directors and management of Holdings,
Holding's subsidiaries and equity investments,  and the Company. Jinqiang Zhang,
Guangwei  Liang,  and  Liechong  Li are  common  directors  of the  Company  and
Holdings.  For the year ended  December 31, 2002, the Company had total contract
revenues  from sales of products to  Holdings  of  $98,368.  The Company  leases
certain facilities from Holdings and total rent expense for these facilities for
each of the years ended December 31, 2002 and 2001 was $76,813.

         The Company has cash  deposits of  $2,243,484  with  Shenzhen  Huaqiang
Group Financial Centre (Financial  Centre).  Financial Centre is a department of
Holdings.

         The Company entered into a contract with Shenzhen  Huaqiang Real Estate
Development  Company  Limited  (Development).  Holdings  has a 49%  interest  in
Development  and  Liechong  Li  and  Guangwei  Liang  are  common  directors  of
Development and the Company.  Total revenue  recognized related to this contract
by  the  Company  was  $20,168  and   $260,903  for  the  years  2002  and  2001
respectively.  As of December 31, 2002, the amount  receivable from  Development
was $14,325.

         During  the  years  ended  December  31,  2002 and  2001,  the  Company
purchased  certain  components for its products from Shenzhen  Huaqiang  Digital
Movie  Company  Limited  (Movie  Co.).   Digitainment's   minority  shareholder,
Information has a 35% interest in Movie Co.  Jinqiang Zhang,  Guangwei Liang and
Ming Li are common directors of the Company,  Movie Co. and  Information.  Total
purchases from Movie Co. were $209,819 and $385,542 for the years ended December
31, 2002 and 2001  respectively.  In  addition,  the Company  sold  products and
equipment  to Movie  Co. of  $423,242  and  $391,309  respectively.  The  amount
receivable from Movie Co. as of December 31, 2002 was $121,445.

         During the year ended  December  31,  2002,  the  Company  had sales of
$102,354 to Shenzhen Huaqiang Industry Company Limited (Industry).  Industry has
a 50%  interest in  Information,  the  minority  interest  shareholder  of SDCL.
Guangwei Liang and Ming Li are common directors of Industry and the Company.

ITEM 13.  EXHIBITS AND REPORTS ON 8K.

(a)      Exhibits.

         The following is a list of exhibits filed as part of this Annual Report
on Form 10-KSB.  Where so indicated by footnote,  exhibits which were previously
filed are incorporated by reference.

Exhibit
Number                                    Description

3.1      Certificate of Incorporation, Incorporated herein by reference from the
         filing on Form  filing on Form 3.1 S-1,  filed with the  Commission  on
         November 17, 1996

3.2      Certificate  of  Amendment  to  the   Certificate   of   Incorporation,
         Incorporated herein by reference from the Filing on Schedule 14C, filed
         with the Commission on December 30, 2002

4.1      Registration  Rights  Agreement,  dated November 5, 2002,  Incorporated
         herein by reference  from the Filing on Form 8-k, filed on November 11,
         2002.

4.2      Stock Purchase Agreement,  dated November 4, 2002,  Incorporated herein
         by reference from the Filing on Form 8-k, filed on November 11, 2002.

4.3      Stock Purchase Agreement,  dated October 16, 2002,  Incorporated herein
         by reference from the Filing on Form 8-k, filed on November 11,2002.


                                       22
<PAGE>

4.4      Share Exchange Agreement,  dated November 6, 2002,  Incorporated herein
         by reference from the Filing on Form 8-k, filed on November 11, 2002.

21.1     Subsidiaries of the Company*

99.1     Certification  of the  Chief  Executive  Officer  and  Chief  Financial
         Officer pursuant to Title 18 U.S.C. Section 1350 as adopted pursuant to
         Section 906 of the Sarbanes-oxley Act of 2002*

*Filed herewith

(b)      Reports on Form 8-K.

         1. There was a report filed on Form 8-K on December 4, 2002,  regarding
the dismissal of Lucas Educational  Systems,  Inc.'s accountants and a change in
the company's fiscal year.

         2. There was a report filed on Form 8-K on December 12, 2002, regarding
the acquisition of Intsys Share Limited.

14. CONTROLS AND PROCEDURES

         Based on their  evaluation  of the  Company's  disclosure  controls and
procedures  as of a date within 90 days of the filing of this Report,  the Chief
Executive  Officer and Chief Financial Officer have concluded that such controls
and procedures are effective. There were no significant changes in the company's
internal  controls  or in other  factors  that could  significantly  affect such
controls subsequent to the date of their evaluation.






















                                       23
<PAGE>

                                   SIGNATURES

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

                                FANTATECH, INC.

Dated:  April 14, 2003          By  /s/ Guangwei Liang
                                ------------------------------------------------
                                Name:  Guangwei Liang
                                Title:   Chief Executive Officer

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the  following  persons on behalf of the Company and in the
capacities and on the dates indicated.


Dated:  April 14, 2003          By  /s/ Jinqiang Zhang
                                ------------------------------------------------

                                Name: Jinqiang Zhang
                                Title: Chairman


Dated:  April 14, 2003          By  /s/ Guangwei Liang
                                ------------------------------------------------
                                Name: Guangwei Liang
                                Title: Chief Executive Officer and Vice Chairman


Dated:  April 14, 2003          By  /s/ Fengming Peng
                                ------------------------------------------------
                                Name: Fengming Peng
                                Title:   Chief Financial Officer


Dated:  April 14, 2003          By  /s/ Jianguo Cheng
                                ------------------------------------------------
                                Name: Jianguo Cheng
                                Title: Secretary


Dated:  April 14, 2003          By  /s/ Ming Li
                                ------------------------------------------------
                                Name: Ming Li
                                Title:  Chief Operating Officer


Dated:  April 14, 2003          By  /s/ Liechong Li
                                ------------------------------------------------
                                Name: Liechong Li
                                Title: Director


Dated:  April 14, 2003          By   /s/ Xinan Hu
                                ------------------------------------------------
                                Name: Xinan Hu
                                Title: Director




                                       24
<PAGE>

                                 CERTIFICATIONS

         I, Guangwei Liang, certify that:

1.   I have reviewed this report on Form 10-KSB of Fantatech, Inc.:

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report.

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          (a)  designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               report is being prepared;

          (b)  evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this report (the "Evaluation Date"); and

          (c)  presented in this report our conclusions  about the effectiveness
               of the disclosure controls and procedures based on our evaluation
               as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

          (a)  all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          (b)  any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     report whether or not there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.

April 14, 2003                                            /s/ Guangwei Liang
                                                         -----------------------
                                                         Guangwei Liang
                                                         Chief Executive Officer


                                       25
<PAGE>


         I, Fengming Peng, certify that:

1.   I have reviewed this report on Form 10-KSB of Fantatech, Inc.:

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report.

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          (a)  designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               report is being prepared;

          (b)  evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this report (the "Evaluation Date"); and

          (c)  presented in this report our conclusions  about the effectiveness
               of the disclosure controls and procedures based on our evaluation
               as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

          (a)  all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          (b)  any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     report whether or not there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.



April 14, 2003                                            /s/ Fengming Peng
                                                         -----------------------
                                                         Fengming Peng
                                                         Chief Financial Officer

                                       26
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





                                                                           Pages
                                                                           -----

Report of Independent Auditors                                              F-2

Consolidated Balance Sheet as of December 31, 2002                          F-3

Consolidated Statements of Operations for the Years
Ended December 31, 2002 and 2001                                            F-4

Consolidated Statements of Changes in Stockholders' Equity
 for the Years Ended December 31, 2002 and December 31, 2001                F-5

Consolidated Statements of Cash Flows for the Years
Ended December 31, 2002 and December 31, 2001                               F-6

Notes to Consolidated Financial Statements                           F-7 to F-18


<PAGE>


                          INDEPENDENT AUDITORS' REPORT



TO THE STOCKHOLDERS AND BOARD OF DIRECTORS
OF FANTATECH, INC.

We have audited the accompanying  consolidated balance sheet of Fantatech,  Inc.
and subsidiaries as of December 31, 2002 and the related consolidated statements
of  operations,  changes  in  stockholders'  equity and cash flows for the years
ended December 31, 2002 and 2001. These  consolidated  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 audits.

We conducted our audits in accordance with generally accepted auditing standards
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Fantatech,  Inc. as
of December  31, 2002 and the results of its  operations  and its cash flows for
the years ended December 31, 2002 and 2001 in conformity with generally accepted
accounting principles in the United States of America.





Thomas Leger & Co., L.L.P.
Houston, Texas
March 28, 2003


                                      F-2
<PAGE>

                        FANTATECH, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2002
                             (UNITED STATES DOLLARS)

                                                                        2002
                                                                    ------------
                                     ASSETS
Current assets
   Cash                                                             $ 3,290,249
   Trade receivables, net of allowance of $25,036                       765,576
   Related party receivables                                            137,457
   Inventories                                                        1,579,544
   Costs and estimated earnings in excess of billings
      on uncompleted contracts                                          594,791
   Deposits and prepayments                                             408,398
   Other receivables                                                     32,215
                                                                    -----------

Total current assets                                                  6,808,230

Property, plant and equipment, net                                      537,959
Trademarks                                                              170,950
                                                                    -----------

Total assets                                                        $ 7,517,139
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Short-term bank loan                                             $ 2,168,675
   Short-term loans-unsecured                                           300,000
   Accounts payable                                                     236,235
   Accrued liabilities and other payables                             1,088,890
                                                                    -----------

Total current liabilities                                             3,793,800


Minority interests                                                    1,326,833

Commitments and contingencies (Notes 9 and 16)                             --

Stockholders' equity
Preferred stock; $0.001 par value; 10,000,000
   shares authorized; no shares issued and
   outstanding                                                             --
Common stock; $ 0.001 par value; 100,000,000 shares
   authorized, 40,192,063 shares issued
   and outstanding                                                       40,192
Additional paid-in capital                                            2,865,278
Retained deficit                                                       (654,311)
Reserve funds                                                           145,347
                                                                    -----------

Stockholders' equity                                                  2,396,506
                                                                    -----------

Total liabilities and stockholders' equity                          $ 7,517,139
                                                                    ===========



The accompanying footnotes are an integral part of these financial statements.

                                       F-3
<PAGE>

                        FANTATECH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                             (UNITED STATES DOLLARS)

                                                         2002           2001
                                                     -----------    -----------

SALES                                                  5,785,510      6,085,797

COST OF SALES                                          4,550,998      5,022,722
                                                     -----------    -----------

GROSS PROFIT                                           1,234,512      1,063,075

SELLING AND MARKETING EXPENSES                           335,811        286,204

GENERAL AND ADMINISTRATIVE EXPENSES                      506,654        568,658
                                                     -----------    -----------

INCOME FROM OPERATIONS                                   392,047        208,213

MINORITY INTEREST                                        115,870        104,356

MERGER COSTS                                           1,017,822           --

OTHER INCOME (LOSS)
   Net gain on sale of investments                          --           81,178
   Loss on disposition of fixed assets                      --          (44,001)
   Interest expense                                      (39,223)          (768)
   Interest income                                         7,951         29,036
                                                     -----------    -----------

INCOME BEFORE TAX PROVISION                             (772,917)       169,302

INCOME TAX EXPENSE                                        39,936         24,961
                                                     -----------    -----------

NET INCOME (LOSS)                                       (812,853)       144,341
                                                     ===========    ===========

WEIGHTED AVERAGE SHARES OUTSTANDING
   BASIC AND DILUTED                                  40,029,467     40,000,000
                                                     ===========    ===========

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE        $     (0.02)   $      0.00
                                                     ===========    ===========


Note:     The number of weighted average shares outstanding at December 31, 2001
          are the  amount of shares  issued for the  reverse  merger and are for
          comparison purposes only.





The accompanying footnotes are an integral part of these financial statements.

                                       F-4

<PAGE>
<TABLE>
<CAPTION>

                        FANTATECH, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                             (UNITED STATES DOLLARS)



                                            Common Stock              Additional      Retained                      Total
                                        --------------------------      Paid-In       Earnings        Reserve    Stockholders'
                                           Shares         Amount        Capital       (Deficit)        Funds        Equity
                                        -----------    -----------    -----------    -----------    -----------   -----------
<S>                                     <C>            <C>            <C>            <C>            <C>           <C>

Balance, December 31, 2000                     --      $      --      $ 1,859,444    $    14,201    $   145,347   $ 2,018,992

Net income                                     --             --             --          144,341           --         144,341
                                        -----------    -----------    -----------    -----------    -----------   -----------
Balance, December 31, 2001                     --             --        1,859,444        158,542        145,347     2,163,333

Issuance of common stock for
   Intsys Share Limited reverse
   merger                                50,000,000        500,000       (500,000)          --             --            --

Net effect of Fantatech, Inc. reverse
   merger including merger costs
   paid by shareholders                  (9,807,937)      (459,808)     1,505,834           --             --       1,046,026

Net loss                                       --             --             --         (812,853)          --        (812,853)
                                        -----------    -----------    -----------    -----------    -----------   -----------

Balance, December 31, 2002               40,192,063    $    40,192    $ 2,865,278    $  (654,311)   $   145,347   $ 2,396,506
                                        ===========    ===========    ===========    ===========    ===========   ===========
</TABLE>























The accompanying footnotes are an integral part of these financial statements.

                                       F-5

<PAGE>
<TABLE>
<CAPTION>

                        FANTATECH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
                             (UNITED STATES DOLLARS)

                                                                           2002           2001
                                                                       -----------    -----------
<S>                                                                    <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                             $  (812,853)   $   144,341
Adjustments to reconcile net income to
     net cash provided by operating activities:
     Depreciation expense                                                  678,859        523,044
     Loss on disposition of fixed assets, net                                 --           44,001
     Gain on disposition of short-term investments                            --          (81,178)
     Minority interest expense                                             115,870        104,356
     Merger costs paid by shareholders                                   1,017,822           --
Changes in operating assets and liabilities:
     Increase in trade receivables                                        (316,022)      (226,669)
     Increase in Inventories                                              (223,581)      (702,007)
     Decrease (increase) in costs and estimated
        earnings in excess of billings on uncompleted contracts             29,366       (584,434)
     Increase in deposits and prepayments                                  (61,715)        (3,139)
    (Increase) decrease in other receivables                                34,410        253,147
     Decrease in billings in excess of costs and
       estimated earnings on uncompleted contracts                         (49,573)      (234,698)
     (Decrease) increase in accounts payable and accrued liabilities       405,435       (187,088)
                                                                       -----------    -----------

Net cash  used  by operating activities                                    818,018       (950,324)
                                                                       -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                 (136,957)       (70,545)
     Proceeds from disposition of fixed assets                                --           49,375
     Purchase of Hytechnology, Inc.                                       (172,000)          --
     Purchase of short-term investments                                       --          (63,623)
     Proceeds from sale of short-term investments                             --          157,457
                                                                       -----------    -----------

Cash provided (used) by investing activities                              (308,957)        72,664
                                                                       -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Capital contributions                                                   1,537           --
     Proceeds from bank loan                                             2,468,675           --
     Principal payments on bank loan                                          --         (963,855)
                                                                       -----------    -----------

Cash provided (used) by financing activities                             2,470,212       (963,855)
                                                                       -----------    -----------

NET INCREASE (DECREASE) IN CASH                                          2,979,273     (1,841,515)

Cash and cash equivalents, at beginning of period                          310,976      2,152,491
                                                                       -----------    -----------
Cash and cash equivalents, at end of period                            $ 3,290,249    $   310,976
                                                                       ===========    ===========

Supplementary disclosures of cash flow information:
      Interest paid                                                    $    37,106    $       768
                                                                       ===========    ===========
      Taxes paid                                                       $    18,383    $    35,709
                                                                       ===========    ===========
</TABLE>



The accompanying footnotes are an integral part of these financial statements.

                                       F-6

<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   DESCRIPTION OF BUSINESS AND BUSINESS COMBINATION

     Fantatech,  Inc., formerly Lucas Educational Systems, Inc., (the "Company")
     was  incorporated  in the State of  Delaware.  During  November  2002,  the
     Company  acquired all of the issued and outstanding  shares of Intsys Share
     Limited  (Intsys)  in a reverse  merger.  Intsys  was  incorporated  in the
     British Virgin Islands on April 29, 2002.  Intsys is a holding  company for
     investments in operating companies.

     During May 2002, Intsys acquired a 65.41% interest in Shenzen  Digitainment
     Company Limited (Digitainment) and the former owners of the 65.41% interest
     in  Digitainment  became  all the  shareholders  of  Intsys.  The  business
     combination  is deemed to be a reverse  merger and the  acquisition  of the
     65.41% interest in Shenzhen  Digitainment  Co., Ltd. has been accounted for
     at historical  cost.  Digitainment  is  principally  engaged in the design,
     development  and  construction  of 4-dimension  cylindrical  screen system,
     digital  video,  intelligent  weak  current  engineering,  theme  sites and
     similar computer system integration  projects and the sale of entertainment
     and  amusement  products in the  Peoples  Republic  of China  ("PRC").  All
     current operations are in the PRC.

     During    August    2002,    Intsys    formed     Hytechnology     Limited,
     ("Hytechnology/HK"),  a Hong Kong company. Intsys owns 99% of Hytechnology/
     HK.  Hytechnology/  HK purchases  products from  Digitainment for resale to
     unrelated third parties outside the United States of America.

     During  September  2002,  Intsys  acquired  70% of  HyTechnology,  Inc.,  a
     Delaware  Corporation   ("HyTechnology/USA").   HyTechnology/USA  plans  to
     purchase  products from Digitainment for resale within the United States of
     America.


2.   BASIS OF PRESENTATION AND CONSOLIDATION

     The  accompanying  financial  statements  are prepared in  accordance  with
     generally accepted accounting principles in the United States of America.

     The consolidated  financial  statements include the financial statements of
     the Company and majority owned subsidiaries.  All significant  intercompany
     balances and transactions,  including  intercompany  profits and unrealized
     profits and losses are eliminated on consolidation.


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Cash and cash equivalents
     -------------------------

     Cash and cash  equivalents  include cash on hand,  demand and time deposits
     with banks and liquid investments with an original maturity of three months
     or less.

     Short-term Investments
     ----------------------

     The Company  follows  Statement of Financial  Accounting  Standards No. 115
     "Accounting  for  Certain  Investments  in  Debt  and  Equity  Securities."
     Accordingly,  the Company  classifies  short-term  investments as available
     -for -sale and at their fair value. Unrealized holding gains and losses are

                                      F-7
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

     included as a  component  of other  comprehensive  income  until  realized.
     Realized  gains and losses are  determined  by the specific  identification
     method and are reflected in income. There were no short-term investments at
     December  31,  2002.  Proceeds  and gross  realized  gains from the sale of
     short-term  investments  for the year ended December 31, 2001 were $157,457
     and $81,178 respectively.

     Inventory
     ---------

     Inventories  consist of raw  materials and are stated at the lower of cost,
     on a first-in,  first-out  basis,  or net  realizable  value.  Costs of raw
     materials  include  purchases  and related  costs  incurred in bringing the
     products to their present location and condition.

     Property, plant and equipment
     -----------------------------

     Property,  plant and  equipment  are  recorded at cost.  Gains or losses on
     disposals  are  reflected in current  operations.  Major  expenditures  for
     betterments  and  renewals  are   capitalized.   All  ordinary  repair  and
     maintenance  costs are expensed as  incurred.  Depreciation  for  financial
     reporting  purposes is  provided  using the  straight-line  method over the
     estimated  useful  lives of the  assets,  generally  three  to five  years.
     Leasehold  improvements  are  amortized on a  straight-line  basis over the
     shorter of the useful life of the improvement or the term of the lease.

     The carrying  value of property,  plant and equipment is assessed  annually
     and when factors  indicating  impairment is present,  the carrying value of
     the fixed  assets is reduced by the amount of the  impairment.  The Company
     determines  the  existence of such  impairment  by  measuring  the expected
     future cash flows (undiscounted and without interest charges) and comparing
     such amount to the net asset carrying value. An impairment loss, if exists,
     is measured as the amount by which the carrying amount of the asset exceeds
     the fair value of the asset.

     Trademarks
     ----------

     The identifiable  intangible assets of the Company are trademarks  acquired
     in a business combination.  The Company adopted the provisions of Statement
     of Financial  Accounting  Standards  ("SFAS") No. 142,  "Goodwill and Other
     Intangible  Assets", at the beginning of 2002. Under the provisions of SFAS
     No. 142, identifiable intangibles with finite lives are amortized and those
     with indefinite lives are not amortized.

     Revenue and cost recognition
     ----------------------------

     The  Company   principally   derives  its  revenue  from  (i)  the  design,
     development  and  construction  of 4-dimension  cylindrical  screen system,
     digital video, intelligent low-voltage engineering, theme sites and similar
     computer system integration projects and (ii) the sale of entertainment and
     amusement products, and (iii) equipment rental.


                                      F-8
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

     (i)  Long-term construction contract revenue and costs

          Long-term  construction  contract  revenue and costs are recognized as
          revenue and expenses in the  statement of  operations  by reference to
          the  stage  of  completion  of a  contract  (i.e.  the  percentage  of
          completion  method) when the outcome of that contract can be estimated
          reliably. The stage of completion of a contract is determined based on
          the proportion that costs incurred to balance sheet date bear to total
          estimated  costs.  A loss on a contract  is  recognized  as an expense
          immediately  when it is probable that total contract costs will exceed
          total contract revenue.

          Costs  attributable  to  un-priced  change  orders would be treated as
          costs of  contract  performance  in the  period in which the costs are
          incurred  if it is not  probable  that  the  costs  will be  recovered
          through a change in the  contract  price.  If it is probable  that the
          costs will be recovered  through a change in the contract price,  they
          would be treated  as costs of  contract  performance  in the period in
          which they are incurred,  and contract  revenue would be recognized to
          the extent of the costs incurred.  If it is probable that the contract
          price  will  be  adjusted   by  an  amount  that   exceeds  the  costs
          attributable  to the change  order and the amount of the excess can be
          reliably estimated, the original contract price would also be adjusted
          for that  amount  when the costs are  recognized  as costs of contract
          performance if its realization is probable.

     (ii) Sale of entertainment and amusement products

          Revenue  from  sale  of  entertainment   and  amusement   products  is
          recognized  when the products are delivered to the customers.  Revenue
          is arrived at after deduction of any sales returns and discounts.

     (iii) Equipment rental income

          Equipment  rental income is recognized when the rentals become due and
          receivable.

     Income taxes
     ------------

     The  Company   accounts  for  income  tax  using  Statements  of  Financial
     Accounting  Standards ("SFAS") No. 109 "Accounting for Income Taxes".  SFAS
     No. 109 requires an asset and liability  approach for financial  accounting
     and reporting for income taxes and allows  recognition  and  measurement of
     deferred  tax  assets  based  upon the  likelihood  of  realization  of tax
     benefits in future years. Under the asset and liability approach,  deferred
     taxes are provided for the net tax effects of temporary differences between
     the carrying  amounts of assets and  liabilities  for  financial  reporting
     purposes  and the  amounts  used  for  income  tax  purposes.  A  valuation
     allowance is provided for deferred tax assets if it is more likely than not
     these items will either  expire before the Company is able to realize their
     benefits, or that future deductibility is uncertain.

                                      F-9
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

     Stock based compensation
     ------------------------

     The  Company  has  adopted  Statement  of  Financial  Accounting  Standards
     ("SFAS") No. 123, which defines a fair-value-based method of accounting for
     stock  based  employee  compensation  and  transactions  in which an entity
     issues  its  equity   instruments   to  acquire  goods  and  services  from
     non-employees.  Stock  compensation for stock granted to non-employees  has
     been  determined  in accordance  with SFAS No. 123 and the Emerging  Issues
     Task Force consensus in Issue No. 96-18, "Accounting for Equity Instruments
     that are issued to Other than  Employees for  Acquiring,  or in Conjunction
     with Selling  Goods or Services  ("EITF  96-18"),  as the fair value of the
     consideration  received  or the fair  value of equity  instruments  issued,
     whichever is more reliably measured.

     Research and development
     ------------------------

     Research and development costs are expensed to operations as incurred.  The
     Company does not segregate its research and development expenditures in its
     books and records.

     Reserve funds
     -------------

     In  accordance  with the PRC  Companies  Law,  the  Company is  required to
     transfer a  percentage  of its profit  after  taxation,  as  determined  in
     accordance with PRC accounting  standards and  regulations,  to the surplus
     reserve  funds.  The surplus  reserve  funds are comprised of the statutory
     surplus  reserve  fund and the  public  welfare  reserve  fund.  Subject to
     certain  restrictions  set  out in the PRC  Companies  Law,  the  statutory
     surplus  reserve fund may be  distributed  to  stockholders  in the form of
     share  bonus  issues  and/or cash  dividends.  The public  welfare  fund is
     non-distributable and must be used for the benefits of all the staff of the
     enterprise.

     Earnings per share
     ------------------

     Statement of  Financial  Accounting  Standard No. 128,  Earnings per share,
     ("SFAS No. 128") requires dual  presentation of basic and diluted  earnings
     per share ("EPS") with a reconciliation of the numerator and denominator of
     the EPS computations.  Basic EPS amounted are based on the weighted average
     shares of common  stock  outstanding.  Diluted EPS assumes the  conversion,
     exercise or issuance of all  potential  common  stock  instruments  such as
     options,  warrants  and  convertible  securities,  unless  the effect is to
     reduce  a loss  or  increase  earnings  per  share.  For  presentation  and
     comparative  purposes,  the  Company  has  assumed  40,000,000  shares were
     outstanding  during 2002 and 2001 to the date of the reverse  merger of the
     Company and Intsys Share Limited.


                                      F-10
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

     Foreign currency translation
     ----------------------------

     The Company maintains its books and accounting records in Renminbi: ("RMB")
     the PRC's  currency.  Translation  of  amounts  from RMB in  United  States
     dollars   ("US$")  has  been  made  at  the  single  rate  of  exchange  of
     US$1.00:RMB8.30.  No  representation  is made that RMB amounts have been or
     could be, converted into US$ at that rate.

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

     On January 1, 1994, the PRC government introduced a single rate of exchange
     as  quoted  daily by the  People's  Bank of China  (the  "Unified  Exchange
     Rate").

     This quotation of the exchange rates does not imply free  convertibility of
     RMB to other foreign currencies. All foreign exchange transactions continue
     to take place either through the Bank of China or other banks authorized to
     buy and sell foreign currencies at the exchange rate quoted by the People's
     Bank of China.  Approval of foreign currency  payments by the Bank of China
     or other  institutions  required  submitting  a  payment  application  form
     together with invoices, shipping documents and signed contracts.

     Jointly controlled operations
     -----------------------------

     A jointly  controlled  operation  is a joint  venture  in which two or more
     venturers  combine  their  operations,  resources and expertise in order to
     construct,  market  and  operate  jointly  a  particular  project  under  a
     contractual  arrangement  when no corporation,  partnership or other entity
     has been  established.  Different  parts of the  construction  process  are
     carried out by each of the venturers. Each venturers bear its own costs and
     takes a share of the  revenue  from the  project,  which is  determined  in
     accordance with the contractual arrangement.

     In respect of its interests in jointly controlled  operations,  the Company
     recognizes in the consolidated financial statements:

     (i)  the assets that it controls and the liabilities that it incurs; and

     (ii) the expenses  that it incurs and its share of the income that it earns
          from the sale of goods or services by the joint ventures.

     Fair values of financial instruments
     ------------------------------------

     The Company  values its financial  instruments as required by SFAS No. 107,
     "Disclosures  about Fair Value of  Financial  Instruments".  The  Company's
     financial  instruments  primarily  consist  of cash and  cash  equivalents,
     accounts receivable, other receivables,  prepayments,  accounts payable and
     accruals. The carrying values of financial instruments approximate the fair
     values because of their short-term maturities.

     Long-Lived Asset Recoverability
     -------------------------------

     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
     144,  "Accounting for impairment of "Long-Lived Assets," long-lived assets,
     primarily property and equipment,  are tested for  recoverability  whenever
     events or changes in  circumstances  indicate that its carrying  amount may
     not be recovered. The SFAS No. 144 impairment is a two-step process. If the
     carrying  value  of the  asset  exceeds  the  expected  future  cash  flows
     (undiscounted  and  without  interest)  from the asset,  an  impairment  is
     indicated.  The  impairment  loss  recognized is the excess of the carrying
     value of the asset over its fair value.


                                      F-11
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

     Use of estimates
     ----------------

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

     Recent accounting pronouncements
     --------------------------------

     In April  2002,  the FASB  issued  Statement  No. 145  "Rescission  of FASB
     Statements  No. 4, 44 and 64,  Amendment  of FASB  Statement  No.  13,  and
     Technical   Corrections".   The  statement  addresses  the  accounting  for
     extinguishment  of debt,  sale-leaseback  transactions  and  certain  lease
     modifications.  The statement is effective for transactions occurring after
     May 15, 2002. The Company does not expect the adoption of Statement No. 145
     to have a material impact on the Company's  future results of operations or
     financial position.

     In July 2002,  the FASB issued  Statement  No. 146,  "Accounting  for Costs
     Associated  with Exit or  Disposal  Activities".  The  statement  addresses
     financial  accounting  and  reporting  for  costs  associated  with exit or
     disposal  activities  and supercedes  Emerging  Issues Task Force Issue No.
     94-3, "Liability  Recognition for Certain Employee Termination Benefits and
     Other  Costs to Exit an Activity  (Including  Certain  Costs  Incurred in a
     Restructuring)." The provisions of Statement No. 146 are effective for exit
     or disposal  activities  that are initiated  after  December 31, 2002.  The
     Company  does not  expect  the  adoption  of  Statement  No.  146 to have a
     material impact on the Company's  future results of operations or financial
     position.

     In November 2002, the FASB issued FASB  Interpretation No. 45, "Guarantor's
     Accounting and Disclosure  Requirements for Guarantees,  Including Indirect
     Guarantees of  Indebtedness  of Others" (FIN 45). FIN 45 requires that upon
     issuance of a guarantee,  a guarantor  must  recognize a liability  for the
     fair value of an obligation assumed under a guarantee. FIN 45 also requires
     additional  disclosures by a guarantor in its interim and annual  financial
     statements  about the obligations  associated with guarantees  issued.  The
     recognition provisions of FIN 45 are effective for any guarantees issued or
     modified after December 31, 2002. The disclosure requirements are effective
     for financial statements of interim or annual periods ending after December
     15, 2002. The adoption of FIN 45 is not expected to have a material  effect
     on the Company's financial position, results of operations, or cash flows.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
     Compensation - Transition and Disclosure". SFAS No. 148 amends SFAS No. 123
     "Accounting for Stock-Based  Compensation," to provide  alternative methods
     of  transition  for a voluntary  change to the fair value  based  method of
     accounting for stock-based employee compensation. In addition, SFAS No. 148
     amends the  disclosure  requirements  of SFAS No. 123 to require  prominent
     disclosures  in both  annual and  interim  financial  statements  about the


                                      F-12
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued

     method of accounting for stock- based employee  compensation and the effect
     of the method  used on  reported  results.  SFAS No. 148 is  effective  for
     fiscal years  beginning  after  December 15, 2002.  The interim  disclosure
     provisions  are  effective  for  financial  reports  containing   financial
     statements  for interim  periods  beginning  after  December 15, 2002.  The
     Company  does not  expect the  adoption  of SFAS No. 148 to have a material
     effect on our financial position, results of operations, or cash flows.

     Reclassification
     ----------------

     Certain reclassifications have been made to the December 31, 2001 financial
     statements  in order to conform to the  classification  used in the current
     year.


4.   BUSINESS ACQUISITIONS

     During May 2002,  Intsys Share Limited (Intsys)  acquired a 65.41% interest
     in Shenzhen Digitainment Company Limited (Digitainment) in a reverse merger
     for 50,000,000  shares of Intsys.  The former owners of the 65.41% interest
     in Digitainment  became all the shareholders of Intsys.  The acquisition of
     the 65.41%  interest in  Digitainment  has been accounted for at historical
     cost.  The  proforma  effects of the  acquisition  are not  material to the
     consolidated financial statements.

     During  September  2002,  Intsys acquired 70% of the issued and outstanding
     stock  of  Hytechnology,   Inc.  for  $172,000  cash.  The  acquisition  of
     Hytechnology,  Inc. has been  accounted  for using the  purchase  method of
     accounting  for  business   acquisitions.   Accordingly,   the  results  of
     operations have been included in the Company's  financial  statements since
     the date of acquisition.  The  significant  assets acquired of $170,950 are
     two "pending"  trademarks  including  "Hytechnology"  and "Fantawild".  The
     trademark  applications for  "Hytechnology" and "Fantawild" were filed with
     the United States Patent and Trademark  Office during 2001 and at March 28,
     2003,  the trademarks  are not  officially  "registered"  but classified as
     "pending".  Management believes the "pending" trademarks will be officially
     "registered"  during  2003.  The Company  believes  the useful lives of the
     "pending"  trademarks are indefinite and will perform an impairment test in
     accordance  with SFAS No. 142 during the year ended  December 31, 2003. The
     proforma  effects of the acquisition  are not material to the  consolidated
     financial statements.

     During  November  2002,  the  Company   acquired  all  of  the  issued  and
     outstanding  shares of Intsys in a reverse  merger.  Under the terms of the
     merger  agreement,  the Company issued 40,000,000 shares of common stock to
     the shareholders and their designees. There would be no proforma difference
     in revenues,  net income, or earnings per share for the year ended December
     31, 2002 had the merger taken place at the beginning of 2002.  Net loss and
     loss per share on an unaudited  proforma  basis would have been  ($873,481)
     and ($0.02) respectively for the year ended December 31, 2001 had the merge
     taken  place at the  beginning  of 2001.  The  proforma  adjustments  would
     reflect the merger costs. The unaudited  proforma  results  discussed above
     have been prepared for  comparative  purposes only and do not purport to be
     indicative  of the results of  operations  that would have occurred had the
     merger occurred at the beginning of 2001.


                                      F-13
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


5.   INVENTORIES

     Inventories are summarized as follows at December 31, 2002:

     Raw materials                                                  $  1,036,814
     Work-in-progress                                                    461,974
     Finished goods                                                       80,756
                                                                    ------------
                                                                    $  1,579,544
                                                                    ============

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


                                                                        2002
                                                                   -------------

     Costs incurred on uncompleted contracts                         10,167,426
     Estimated earnings to date                                       2,134,073
                                                                   ------------
                                                                     12,301,499

     Less: Billings to date                                         (11,706,708)
                                                                   ------------
                                                                   $    594,791
                                                                   ============


     Included in the accompanying balance sheet under the following captions:

     Costs and estimated earnings in excess
         of billings on uncompleted contracts                      $    594,791

     Billings in excess of costs and estimated
          earnings on uncompleted contracts                                --
                                                                   ------------
                                                                   $    594,791
                                                                   ============

7.   PROPERTY, PLANT AND EQUIPMENT AND IMPAIRMENT

     Property,  plant, and equipment  consisted of the following at December 31,
     2002:

     Leasehold improvements                                        $    209,352
     Plant and machinery                                                 28,863
     Furniture and fixtures                                              87,488
     Computers and equipment                                          1,577,200
     Motor vehicles                                                     193,964
                                                                   ------------
                                                                      2,096,867

     Less: Accumulated depreciation                                  (1,558,908)
                                                                   ------------

                                                                   $    537,959
                                                                   ============

                                      F-14

<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

7.   PROPERTY, PLANT AND EQUIPMENT AND IMPAIRMENT Continued

     At December 31, 2002,  there was certain  computer and other equipment that
     was not being  utilized  by the  Company.  The Company  performed  an asset
     impairment  review and  recognized  an impairment  charge of $126,495.  The
     amount was recorded as depreciation expense.


8.   SHORT-TERM LOANS

     On August 27, 2002,  the Company  obtained a bank loan of  $2,168,675.  The
     bank loan bears interest at 5.31% per annum with interest  payable  monthly
     and a principal  due date of August 27,  2003.  The loan is  guaranteed  by
     Shenzhen  Huaqiang  Holdings  Limited,  a related  party  (Note 13).  Total
     interest expense related to the loan is approximately  $38,000 for the year
     ended December 31, 2002.

     Short-term  loans-unsecured  represent  $280,000  borrowed  from  Top  Link
     Development  Limited,  an unrelated  third party and $20,000  borrowed from
     Fang  Dehou,  a related  party.  Fang  Dehou is a  director  of Intsys  and
     Hytechnology  Limited, the Company's  subsidiaries.  Loans in the amount of
     $300,000 are unsecured, non-interest bearing and payable during 2003.


9.   INCOME TAXES

     The Company is subject to income taxes on an entity basis on income arising
     or derived from the tax jurisdiction in which each entity is domiciled. The
     Company's  British Virgin Island subsidiary is not liable for income taxes.
     The Company's  65.41% owned PRC subsidiary is subject to Enterprise  Income
     Tax at the PRC a rate of 15% on net  profits.  However,  based on the local
     tax rules,  the PRC  subsidiary  is entitled to a tax holiday for the first
     two years of its  operations  and a 50% reduction of the rate for the third
     through  fifth years (years 2001 - 2003) of  operations.  The provision for
     taxes on earnings of the PRC  subsidiary  for the years ended  December 31,
     2002 and 2001 was $39,936 and $24,961  respectively.  The Company has a net
     operating  loss  carryforward  of  approximately   $2,151,000,   however  a
     valuation allowance for this amount has been established as management does
     not expect the tax benefits to be realized.  No other significant  deferred
     tax assets or liabilities existed at December 31, 2002.

     The income tax expense  (benefit)  was different  than the amount  computed
     using the U.S. Federal income tax rate of 35% as a result of the following:

                                                        Years Ended December 31
                                                        -----------------------
                                                           2002        2001
                                                        ----------   ----------
     Computed "expected" tax (benefit) expense          $ (253,021)  $   59,256
     Difference in foreign subsidiary rates                144,583      (33,860)
     Income tax exemption                                   54,219      (12,698)
     Items which give rise to no tax benefit:
     Net loss of the Company and BVI subsidiary             80,649         --
     Other                                                  13,506       12,263
                                                        ----------   ----------

                                                        $   39,936   $   24,961
                                                       ==========   ==========



                                      F-15

<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

10.  LEASE COMMITMENTS

     Operating leases

     The following are the approximate  minimum lease payments that will have to
     be made in each of the years indicated based on operating  leases in effect
     as of December 31, 2002:

     2003                                                           $    171,281
     2004                                                                 43,244
                                                                    ------------

     Total minimum lease payments                                   $    214,525
                                                                    ============

     The total rental  expenses  incurred for the years ended  December 31, 2002
     and 2001 amounted to $186,359 and $158,632 respectively.


11.  MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK

     Financial   instruments   which   potentially   expose   the   Company   to
     concentrations of credit risk,  consist of cash and accounts  receivable at
     December 31, 2002.  The Company  performs  ongoing  evaluations of its cash
     position  and  credit   evaluations  at  the  subsidiary  level  to  ensure
     collections and minimize losses.

     Two customers accounted for approximately 21% and 15% of sales for the year
     ended December 31, 2002. One customer  accounted for  approximately  48% of
     sales  for the  year  ended  December  31,  2001.  At  December  31,  2002,
     approximately 73% of accounts  receivable were from trade transactions with
     five customers,  of which one customer  accounted for  approximately 35% of
     the accounts receivable balance.


12.  CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

     The Company's primary operations are conducted in the PRC. Accordingly, the
     Company's  business,  financial  condition and results of operations may be
     influenced by the political,  economic and legal  environments  in the PRC,
     and by the general state of the PRC's economy.

     The Company's  operations in the PRC are subject to special  considerations
     and  significant  risks not typically  associated  with  companies in North
     America and Western  Europe.  These include risks  associated  with,  among
     others, the political, economic and legal environments and foreign currency
     exchange. The Company's results may be adversely affected by changes in the
     political and social  conditions in the PRC, and by changes in governmental
     policies with respect to laws and regulations,  anti-inflationary measures,
     currency  conversion  and  remittance  abroad,  and  rates and  methods  of
     taxation, among other things.



                                      F-16
<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


13.  RELATED PARTY TRANSACTIONS

     Shenzhen  Huaqiang  Holdings  Limited  (Holdings)  is a wholly  state-owned
     enterprise under the Guangdong provincial  government.  Holdings indirectly
     controls   Shenzhen   Huaqiang   Information   Industry   Company   Limited
     (Information),  the minority  shareholder  of  Digitainment.  Holdings also
     indirectly controls  management  policies of the Company.  There are common
     directors and  management of Holdings,  Holding's  subsidiaries  and equity
     investments,  and the Company. Zhang Jin Qiang, Liang Guang Wei, and Li Lie
     Chong are common directors of the Company and Holdings.  For the year ended
     December 31, 2002,  the Company had total  contract  revenues from sales of
     products to Holdings of $98,368. The Company leases certain facilities from
     Holdings and total rent expense for these  facilities for each of the years
     ended December 31, 2002 and 2001 was $76,813.

     The Company has cash deposits of $2,243,484  with Shenzhen  Huaqiang  Group
     Financial Centre  (Financial  Centre).  Financial Centre is a department of
     Holdings.

     The Company  entered into a contract  with  Shenzhen  Huaqiang  Real Estate
     Development Company Limited  (Development).  Holdings has a 49% interest in
     Development  and Li Lie Chong and Liang Guang Wei are common  directors  of
     Development  and the  Company.  Total  revenue  recognized  related to this
     contract  by the  Company  was  $20,168  and  $260,903  for the years ended
     December 31, 2002 and 2001  respectively.  At December 31, 2002, the amount
     receivable from Development was $14,325.

     During the years ended  December 31, 2002 and 2001,  the Company  purchased
     certain  components for its products from Shenzhen  Huaqiang  Digital Movie
     Company   Limited  (Movie  Co.).   Digitainment's   minority   shareholder,
     Information  has a 35% interest in Movie Co.  Zhang Jin Qiang,  Liang Guang
     Wei  and Li Ming  are  common  directors  of the  Company,  Movie  Co.  and
     Information.  Total purchases from Movie Co. were $204,819 and $385,542 for
     the years ended December 31, 2002 and 2001 respectively.  In addition,  the
     Company sold  products and  equipment to Movie Co. of $423,242 and $391,309
     respectively. The amount receivable from Movie Co. at December 31, 2002 was
     $121,445.

     During the year ended  December 31, 2002, the Company had sales of $102,354
     to Shenzhen Huaqang Industry Company Limited (Industry). Industry has a 50%
     interest in Information,  the minority  shareholder of Digitainment.  Liang
     Guang Wei and Li Ming are common directors of Industry and the Company.

                                      F-17

<PAGE>

                         FANTATECH, INC AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

14.  NON-CASH INVESTING AND FINANCING ACTIVITIES

     For the year ended  December 31, 2002,  the  following  represent  non-cash
     investing and financing activities:


     Transfer of inventory to fixed assets, net                       $  126,085
     Conversion of accrued liabilites to paid-in capital              $   53,000
     Merger costs paid by shareholders                                $1,017,822


15.  CONSULTING AGREEMENT

     The Company has an oral consulting agreement with Eastern Spirit Investment
     Limited (Eastern Spirit) that commenced during 2002. The services  rendered
     by Eastern Spirit include advisory and other managerial  assistance related
     to  the  reverse  merger  of the  Company  and  Intsys  Share  Limited.  In
     connection  with  the  reverse  merger,  Eastern  Spirit  received  cash of
     approximately  $240,000 and 883,286  shares of the  Company's  common stock
     with an aggregate value of $220,822.  These amounts are included in "MERGER
     COSTS" for the year ended December 31, 2002.


16.  CONTINGENCIES

     There are a significant amount of construction contracts that have not been
     completed  in  accordance  with  the  scheduled  completion  dates  of  the
     contracts. There are certain contracts with potentially severe penalties if
     the Company is unable to complete the  contracts  on  schedule.  There have
     been no claims or lawsuits against the Company as management represents the
     Company  is not at  fault  and  certain  customers  have not  performed  in
     accordance with the contracts.  The ultimate legal and financial  liability
     of  the  Company  in  respect  to  all  potential  claims,   lawsuits,  and
     proceedings referred to above cannot be estimated with certainty.  However,
     in the opinion of  management,  based on its  examination of these matters,
     its experience to date, and no claims have been filed by its customers, the
     ultimate  outcome of these  legal  proceedings  is not  expected  to have a
     material adverse effect on the Company's consolidated financial statements.









                                      F-18