FORM 10-QSB

(Mark One)

|X|      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934.
For the quarterly period ended June 30, 2003

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.
                 (Name of Small Business Issuer in Its Charter)

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


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

                                 Not applicable
                   ------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


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
   ---     ---

                      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 June 30, 2003 there
were 40,192,063 shares outstanding

         Transitional Small Business Disclosure Format (check one):

Yes     No  X
   ---     ---



<PAGE>


                                 FANTATECH, INC.
                                   FORM 10-QSB
                                      INDEX

                                                                            Page

                         PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements...............................................1

Item 2.    Management's Discussion and Analysis or Plan of Operation..........8

Item 3.    Controls and Procedures...........................................14

                           PART II - OTHER INFORMATION

Item 2.    Changes in Securities.............................................15

Item 6.    Exhibits and Reports on Form 8-K..................................15

SIGNATURES ..................................................................15



<PAGE>
<TABLE>
<CAPTION>

                         PART I - FINANCIAL INFORMATION

                          Item 1 - Financial Statements

                        FANTATECH, INC. AND SUBSIDIARIES
      CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2003 AND DECEMBER 31, 2002
                             (UNITED STATES DOLLARS)

                                                                            June 30,     December 31,
                                                                              2003           2002
                                                                          (Unaudited)      (Audited)
                                                                         ------------    ------------
<S>                                                                      <C>             <C>
Current assets
   Cash                                                                  $  3,320,910    $  3,290,249
   Trade receivables, net of allowance of $53,220 and $25,036                 483,820         765,576
   Related party receivables                                                   14,325         137,457
   Inventories                                                              1,617,695       1,579,544
   Costs and estimated earnings in excess of billings on uncompleted
     contracts                                                              1,083,587         594,791
   Deposits and prepayments                                                   629,079         408,398
   Other receivables                                                           70,238          32,215
                                                                         ------------    ------------

Total current assets                                                        7,219,654       6,808,230

Property, plant and equipment, net                                            321,461         537,959
Trademarks                                                                    170,950         170,950
                                                                         ------------    ------------

Total assets                                                             $  7,712,065    $  7,517,139
                                                                         ============    ============

Current liabilities
   Short-term bank loan                                                  $  2,168,675    $  2,168,675
   Short-term loans-unsecured                                                 300,000         300,000
   Billings on uncompleted contracts in excess of costs and estimated
     earnings                                                                  74,019            --
   Related party payables                                                      50,000            --
   Accounts payable                                                           217,616         236,235
   Accrued liabilities and other payables                                   1,066,265       1,088,890
                                                                         ------------    ------------

Total current liabilities                                                   3,876,575       3,793,800

Minority interest                                                           1,396,446       1,326,833

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          40,192
   Additional paid-in capital                                               2,865,278       2,865,278
   Retained deficit                                                          (611,773)       (654,311)
   Reserve funds                                                              145,347         145,347
                                                                         ------------    ------------

Stockholders' equity                                                        2,439,044       2,396,506
                                                                         ------------    ------------

Total liabilities and stockholders' equity                               $  7,712,065    $  7,517,139
                                                                         ============    ============
</TABLE>

See notes to consolidated financial statements


                                       1
<PAGE>

                        FANTATECH, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002
                             (UNITED STATES DOLLARS)

                                                        2003            2002
                                                   ------------    ------------

SALES                                              $    592,077    $  1,662,535

COST OF SALES                                          (511,906)     (1,160,076)
                                                   ------------    ------------
GROSS PROFIT                                             80,171         502,459

SELLING AND MARKETING EXPENSES                          (65,771)       (132,469)

GENERAL AND ADMINISTRATIVE EXPENSES                    (216,063)        (96,474)
                                                   ------------    ------------

INCOME (LOSS) FROM OPERATIONS                          (201,663)        273,515

OTHER INCOME (LOSS)
   Loss on disposition of fixed assets                   (2,488)           --
   Other income                                             903            --
   Other expenses                                          --              --
   Interest expense                                     (31,599)           (297)
   Interest income                                        6,041             682
                                                   ------------    ------------

INCOME (LOSS) BEFORE TAX PROVISION                     (228,806)        273,900

INCOME TAX EXPENSE                                       (7,625)        (11,080)
                                                   ------------    ------------

INCOME (LOSS) BEFORE MINORITY INTEREST                 (236,431)        262,820

MINORITY INTEREST                                        29,658         (90,909)
                                                   ------------    ------------

NET INCOME (LOSS)                                  $   (206,773)   $    171,911
                                                   ============    ============


WEIGHTED AVERAGE SHARES OUTSTANDING
   BASIC AND DILUTED                                 40,192,063      40,000,000
                                                   ============    ============

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE      $      (0.01    $       0.00
                                                   ============    ============

Note:    The number of weighted  average shares  outstanding at June 30, 2002 is
         the  amount  of  shares  issued  for  the  reverse  merger  and  is for
         comparison purposes only.

See notes to consolidated financial statements

                                       2
<PAGE>

                        FANTATECH, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                             (UNITED STATES DOLLARS)

                                                       2003            2002
                                                   ------------    ------------

SALES                                              $  1,907,177    $  2,458,313

COST OF SALES                                        (1,172,964)     (1,836,786)
                                                   ------------    ------------

GROSS PROFIT                                            734,213         621,527

SELLING AND MARKETING EXPENSES                         (133,111)       (193,526)

GENERAL AND ADMINISTRATIVE EXPENSES                    (429,230)       (186,130)
                                                   ------------    ------------

INCOME FROM OPERATIONS                                  171,872         241,871

OTHER INCOME (LOSS)
   Loss on disposition of fixed assets                   (2,571)           --
   Other income                                           2,682            --
   Other expenses                                           (34)           --
   Interest expense                                     (64,914)           (769)
   Interest income                                       20,125           1,246
                                                   ------------    ------------

INCOME BEFORE TAX PROVISION                             127,160         242,348

INCOME TAX EXPENSE                                      (15,009)        (11,080)
                                                   ------------    ------------

INCOME BEFORE MINORITY INTEREST                         112,151         231,268

MINORITY INTEREST                                       (69,613)        (79,996)
                                                   ------------    ------------

NET INCOME                                         $     42,538    $    151,272
                                                   ============    ============


WEIGHTED AVERAGE SHARES OUTSTANDING
   BASIC AND DILUTED                                 40,192,063      40,000,000
                                                   ============    ============

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

Note:  The number of weighted average shares outstanding at June 30, 2002 is the
       amount of shares issued for the reverse merger and is for comparison
       purposes only.

See notes to consolidated financial statements

                                       3
<PAGE>
<TABLE>
<CAPTION>

                        FANTATECH, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                             (UNITED STATES DOLLARS)

                                                                            2003           2002
                                                                        -----------    -----------
<S>                                                                     <C>            <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income                                                              $    42,538    $   151,272
Adjustments to reconcile net income to net cash provided by
   operating activities:
   Depreciation expense                                                     260,721        297,042
   Loss on disposition of fixed assets, net                                   2,571           --
   Minority interest expense                                                 69,613         79,996
Changes in operating assets and liabilities:
   Decrease in trade and related party receivables                          404,888         74,614
   Increase in inventories                                                  (38,151)      (115,176)
   Increase in costs and estimated earnings in excess of billings on
     uncompleted contracts                                                 (488,796)      (387,100)
   Increase in deposits and prepayments                                    (220,681)      (126,175)
   (Increase) Decrease in other receivables                                 (38,023)       (10,369)
   Increase in billings in excess of costs and estimated earnings on
     uncompleted contracts                                                   74,019        372,114
   Increase (Decrease) in trade and related party payable and accrued
     liabilities                                                              8,756        (62,679)
                                                                        -----------    -----------

Net cash provided (used) by operating activities                             77,455        273,539
                                                                        -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures                                                     (46,794)       (10,303)
                                                                                       -----------

Net cash provided (used) by investing activities                            (46,794)       (10,303)
                                                                        -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES                                           --             --
                                                                        -----------    -----------

NET INCREASE IN CASH                                                         30,661        263,236

Cash and cash equivalents, at beginning of period                         3,290,249        310,976
                                                                        -----------    -----------

Cash and cash equivalents, at end of period                             $ 3,320,910    $   574,212
                                                                        ===========    ===========

Supplementary disclosures of cash flow information:
   Interest paid                                                        $    64,914    $       769
                                                                        ===========    ===========
                                                                        ===========    ===========
   Taxes paid                                                           $    13,522    $    44,231
                                                                        ===========    ===========
</TABLE>

See notes to consolidated financial statements

                                       4
<PAGE>


                                 FANTATECH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                                   (UNAUDITED)
                             (UNITED STATES DOLLARS)

1.       INTERIM CONDOLIDATED FINANCIAL STATEMENTS

         The  interim  consolidated  unaudited  financial  statements  have been
prepared by Fantatech,  Inc. and include all material  adjustments  which in the
opinion of the  management  are necessary for a fair  presentation  of financial
results  for the three  months  and the six  months  ended  June 30,  2003.  All
adjustments and provisions  included in these statements are of normal recurring
nature.  Certain  information and footnote  disclosures  made in the most recent
annual  consolidated  financial  statements  included in the Form 10-KSB for the
year ended  December  31,  2002 have been  condensed  or omitted for the interim
financial  statements;  accordingly,  the interim financial statements should be
read  in  conjunction  with  the  December  31,  2002   consolidated   financial
statements.  The results of operations for the interim period  presented are not
necessarily indicative of the results that can be expected for the entire year.

         The  preparation of 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  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the amount of revenues and expenses during the reporting periods.
Management  makes these  estimates using the best  information  available at the
time the estimates are made.  However,  actual  results could differ  materially
from those results.

2.       INVENTORIES

Inventories at June 30, 2003 and December 31, 2002 are summarized as follows:

                                                        June 30,    December 31,
                                                         2003           2002
                                                      (Unaudited)     (Audited)
                                                     ------------   ------------

         Raw materials                               $  1,045,255   $  1,036,814
         Work-in-progress                                 534,139        461,974
         Finished goods                                    36,881         80,756
         Consumable stores                                  1,420           --
                                                     ------------   ------------

                                                     $  1,617,695   $  1,579,544
                                                     ============   ============


                                       5
<PAGE>
<TABLE>
<CAPTION>



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

                                                                   June 30,     December 31,
                                                                    2003            2002
                                                                 (Unaudited)      (Audited)
                                                                ------------    ------------
         <S>                                                    <C>             <C>
         Costs incurred on uncompleted contracts                $ 10,153,951    $ 10,167,426
         Estimated earnings to date                                1,844,143       2,134,073
                                                                ------------    ------------

                                                                  11,998,094      12,301,499

         Less: Billings to date                                  (10,988,526)    (11,706,708)
                                                                ------------    ------------

                                                                $  1,009,568    $    594,791
                                                                ============    ============

         Included in the accompanying balance sheet under
             the following captions:

         Costs and estimated earnings in excess of billings
             on uncompleted contracts                           $  1,083,587    $   594,791

         Billings in excess of costs and estimated earnings
             on uncompleted contracts                                (74,019)           --
                                                                ------------    ------------
                                                                $  1,009,568    $    594,791
                                                                ============    ============
</TABLE>

4.       PROPERTY, PLANT AND EQUIPMENT

         Property,  plant,  and equipment at June 30, 2003 and December 31, 2002
consisted of the following:

                                                      June 30,     December 31,
                                                        2003            2002
                                                    (Unaudited)      (Audited)
                                                   ------------    ------------

         Leasehold improvements                    $    209,352    $    209,352
         Plant and machinery                             30,459          28,863
         Furniture and fixtures                          90,347          87,488
         Computers and equipment                      1,604,078       1,577,200
         Motor vehicles                                 203,844         193,964
                                                   ------------    ------------

                                                      2,138,080       2,096,867

         Less: Accumulated depreciation              (1,816,619)     (1,558,908)
                                                   ------------    ------------

                                                   $   321,461     $    537,959
                                                   ============    ============







                                       6
<PAGE>

5.       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.

         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. 6. 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.  Deferred tax assets and  liabilities are not
considered material at June 30, 2003 and December 31, 2002.

7.       EARNINGS PER SHARE

         Basic EPS amounts 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 the six months ended June 30, 2002 to
the date of the reverse merger of the Company and Intsys Share Limited.






















                                       7
<PAGE>

Item 2 - Management's Discussion and Analysis or plan of operation

         This  quarterly   report  on  Form  10-QSB   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  identity  forward-looking  statements  by  terminology  including
"anticipates",  "believes",  "expects", "can", "continue",  "could", estimates",
"intends",  "may", "plans",  "potential",  "predict",  "should" or "will" or the
negative of these terms or other  comparable  terminology.  Although the Company
believes that the expectation  reflected in the  forward-looking  statements are
reasonable,  the Company cannot  guarantee  future  results,  level of activity,
performance or  achievements.  The Company  expectations are as of the date this
Form  10-QSB is filed,  and the  Company  does not  intend to update  any of the
forward-looking  statements  after the date this quarterly report on Form 10-QSB
is filed to confirm these statements to actual results, unless required by law.

OVERVIEW

         Fantatech,   Inc.,  formerly  Lucas  Educational  Systems,  Inc.,  (the
"Company")  was  incorporated  in  1996.  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  Company.  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 of 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 the Chairman of the board,  Mr. Liang as Vice Chairman of the board and Chief
Executive Officer,  Mr. Ming Li as Chief Operational  Officer, Ms. Fengming Peng
as Chief Financial Officer and Mr. Jianguo Cheng as Corporate Secretary.

         On April 15, 2003, Ms. Peng tendered her resignation as Chief Financial
Officer of the Company and Ms. Fuxiao Wang was appointed in her place.

         Until the  Closing  Date,  the  Company  had only  nominal  assets  and
liabilities and had 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
for the three months ended March 31, 2002 are the results of operations of SDCL.

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


                                       8
<PAGE>

         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   centers  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  America
(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.

Results of operations - Three months ended June 30, 2003

Sales

         The Company  generated  revenues of $592,077 for the three months ended
June 30, 2003,  which was a $1,070,458 or 64.4% decrease from $1,662,535 for the
three months ended June 30, 2002. This was primarily due to the outbreak of SARS
in China in May and June in 2003  coupled  with the  recent  change in  business
strategy.  In the second  quarter of 2003,  the  Company  started to explore new
markets and focus on the  development  of projects for large  hi-tech  amusement
centres and hi-tech parks like "Dino-Rampage" and "Fantawild FunPlex" as well as
existing  projects for "4D theatre".  In 2002, the Company focused mainly on the
contract works and product sales of "4D theatre" and other  amusement  products.
Accordingly,  it resulted in the  significant  decrease in contract works in the
second  quarter of 2003. The major  contracts in 2002 were primarily  related to
"4D  theater"  which was new products to the market at that time.  In 2003,  the
Company  mainly  devoted its  resources  to the  development  of new  projects -
"Dino-Rampage" and "Fantawild FunPlex" and hence the Company devoted less effort
in marketing  for "4D theater"  project  which caused a decrease in the sales of
"4D theater" related contract works.

Gross profit

         Gross profit margin  decreased to 13.5% for the three months ended June
30,  2003,  from  30.2% for the  three  months  ended  June 30,  2002.  This was
primarily  due to the  outbreak  of SARS in China in May and  June  2003,  which
caused the Company's  operations in works for "4D theater" and amusement centres
to record a loss of  $57,453  for the  three  months  ended  June 30,  2003.  In
addition,  certain exemptions of value added tax on products sold by the Company
in 2002 were no longer available in 2003.

Selling and marketing expenses

         Selling and marketing expenses decreased by $66,698 or 50.3% to $65,771
for the three  months  ended June 30, 2003 from  $132,469  for the three  months
ended June 30, 2002. This was primarily due to a decrease in exhibition expenses
from $90,925 in 2002 to $18,297 in 2003.

General and administrative expenses

         General and administrative  expenses increased by $119,589 or 124% over
the year to $216,063  for the three  months ended June 30, 2003 from $96,474 for
the three months ended June 30, 2002.  This is primarily due to the increases in
insurance  expenses  of $5,562,  wages of $6,879 and office  expenses of $3,923.


                                       9
<PAGE>

Fantatech,  Inc. also incurred  legal and  professional  fees of $54,345 for the
three  months  ended June 30, 2003,  while it had no such  expenses in 2002.  In
addition,  there were increases in rental and utilities  expenses of $14,357 and
salary  expenses of $24,398 for the three  months ended June 30, 2003 which were
incurred by  Hytechnology,  Inc.  Hytechnology,  Inc.  was only  acquired by the
Company in September 2002.  Therefore,  these expenses were not incurred for the
three months ended June 30, 2002.

Income (loss) from operations

         As revenue and gross profit margin decreased significantly, the
financial results changed from income from operations of $273,515 for the three
months ended June 30, 2002 to a loss from operations of $201,663 for the three
months ended June 30, 2003.

Other income (loss)

         There was a loss on the  disposition  of fixed assets of $2,488 for the
three months ended June 30, 2003 as compared to no  disposition  of fixed assets
for the three months ended June 30, 2002.

         Interest  expense for the three months ended June 30, 2003 increased to
$31,599 from $297 for the three  months  ended June 30, 2002.  This is primarily
due to the new bank loan of $2,168,675 obtained in August 2002.

         Interest income for the three months ended June 30, 2003 increased to
$6,041 from $682 for the three months ended June 30, 2002 due to the increase in
cash held in interest-bearing accounts.

Minority interests

         The Company recorded  minority interest income of $29,658 for the three
months ended June 30, 2003, as compared to minority  interest expense of $90,909
for the three  months  ended June 30,  2002,  to reflect  the  interests  of the
minority shareholders in Hytechnology, Inc. (30%), Hytechnology Limited (1%) and
SDCL (34.6%).

Income tax expenses

         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 China at 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  provisions  for taxes on earnings of SDCL for the three months
ended June 30, 2003 and 2002 were $7,625 and $11,080, respectively.

Net income (loss)

         The Company  recorded a net loss of $206,773 for the three months ended
June 30, 2003 as compared to a net income of $171,911 for the three months ended
June 30, 2002.  This was primarily due to the  significant  decreases in revenue
and gross profit.



                                       10
<PAGE>

Results of operations - Six months ended June 30, 2003

Sales

         The Company  generated  revenues of $1,907,177 for the six months ended
June 30, 2003,  which was a $551,136 or 22.4%  decrease from  $2,458,313 for the
six months ended June 30, 2002.  This was  primarily due to the outbreak of SARS
in  China in May and June  2003  coupled  with the  recent  change  in  business
strategy.  In the second  quarter of 2003,  the  Company  started to explore new
markets and focus on the  development  of projects for large  hi-tech  amusement
centres and hi-tech parks like "Dino-Rampage" and "Fantawild FunPlex" as well as
existing  projects for "4D theatre".  In 2002, the Company focused mainly on the
contract works and product sales of "4D theatre" and other  amusement  products.
Accordingly,  it resulted in the  significant  decrease in contract works in the
second  quarter of 2003. The major  contracts in 2002 were primarily  related to
"4D  theater"  which was new products to the market at that time.  In 2003,  the
Company  mainly  devoted its  resources  to the  development  of new  projects -
"Dino-Rampage" and "Fantawild FunPlex" and hence the Company devoted less effort
in marketing  for "4D theater"  project  which caused a decrease in the sales of
"4D theater" related contract works.

Gross profit

         Gross  profit  margin  increased to 38.5% for the six months ended June
30, 2003,  from 25.3% for the six months  ended June 30, 2002.  The increase was
primarily  due to the  increases  in  product  sales  to  new  overseas  markets
including the U.S.,  Kuwait,  and Philippines,  with an average profit margin of
48.2% for the six  months  ended  June 30,  2003,  as  compared  to 29.7% of the
product sales for the same period in 2002. Products sales accounted for 41.4% of
the total revenue for the six months ended June 30, 2003.

Selling and marketing expenses

         Selling  and  marketing  expenses  decreased  by  $60,415  or  31.2% to
$133,111 for the six months ended June 30, 2003 from $193,526 for the six months
ended June 30, 2002. This was primarily due to a decrease in exhibition expenses
from $125,516 in 2002 to $42,101 in 2003.

General and administrative expenses

         General and administrative  expenses increased by $243,100 or 131% over
the year to $429,230  for the six months  ended June 30, 2003 from  $186,130 for
the six  months  ended  June,  2002.  This was  primarily  due to  increases  in
insurance  expenses of $15,367,  wages of $12,847,  bad debt expenses of $16,494
and  office  expenses  of  $13,254.  Fantatech,  Inc.  also  incurred  legal and
professional  fees of $57,752 for the six months ended June 30, 2003,  whilst it
had no such  expenses in 2002.  In addition,  there were the increases in rental
and utilites  expenses of $34,443,  salary  expenses of $39,678,  motor  vehicle
expenses of $15,128 and commission  expenses of $27,483 for the six months ended
June 30, 2003 which were incurred by Hytechnology,  Inc. Hytechnology,  Inc. was
only acquired by the Company in September 2002.  Therefore,  these expenses were
not incurred for the six months ended June 30, 2002.




                                       11
<PAGE>

Income from operations

         As general and  administrative  expenses increased  significantly,  the
income from  operations  decreased  by $69,999 or 28.9% to $171,872  for the six
months  ended June 30,  2003,  from  $241,871  for the six months ended June 30,
2002.

Other income (loss)

         There was a loss on the  disposition  of fixed assets of $2,571 for the
six months ended June 30, 2003 as compared to no disposition of fixed assets for
the six months ended June 30, 2002.

         Interest  expense for the six months  ended June 30, 2003  increased to
$64,914 from $769 for the six months ended June 30, 2002.  This is primarily due
to the new bank loan of $2,168,675 obtained in August 2002.

         Interest  income for the six months  ended June 30, 2003  increased  to
$20,125  from $1,246 for the six months  ended June 30, 2002 due to the increase
in cash held in interest-bearing accounts.

Minority interests

         The Company recorded  minority  interest expense of $69,613 for the six
months  ended June 30, 2003, a decrease of $10,383 or 13.0% from $79,996 for the
six months  ended  June 30,  2002,  to reflect  the  interests  of the  minority
shareholders in  Hytechnology,  Inc. (30%),  Hytechnology  Limited (1%) and SDCL
(34.6%).

Income tax expenses

         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 China at 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  provisions  for taxes on  earnings  of SDCL for the six months
ended June 30, 2003 and 2002 were $15,009 and $11,080, respectively.

Net income

         The Company  recorded  net income of $42,538  for the six months  ended
June 30, 2003, a decrease of $108,734 or 71.9% from  $151,272 for the six months
ended June 30,  2002.  This was  primarily  due to the  increase  in general and
administrative expenses.

Financial condition, liquidity, capital resources

         For the six months ended June 30, 2003,  our  operations  generated net
cash of  $77,455,  a decrease of  $196,084  or 71.7% from  $273,539  for the six
months ended June 30, 2002.

         As of June 30, 2003, we had cash on hand of  $3,320,910  and a positive
current ratio of 1.86.

         As of June  30,  2003,  we had a bank  loan of  $2,168,675,  which  was
obtained in August 2002 for the purpose of financing a major  project.  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 89% as of June 30,
2003.


                                       12
<PAGE>

         We had no significant capital expenditure  commitment outstanding as of
June 30, 2003.

Exchange rate

         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  appreciate  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
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 October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial  Acquisitions of Financial  Institutions,  except Transactions between
Two or More Mutual Enterprises".  The Company does not expect this standard will
have any effect on its financial statements.

         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.




                                       13
<PAGE>

         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 3 - CONTROLS AND PROCEDURES

          We had no significant capital expenditure commitment outstanding as of
June 30, 2003.

1.       Evaluation of Disclosure Controls and Procedures

         Disclosure   controls  and  procedures  are  designed  to  ensure  that
information required to be disclosed in the reports filed or submitted under the
Exchange Act of 1934 is recorded, processed, summarized and reported, within the
time  periods  specified in the rules and forms of the  Securities  and Exchange
Commission.  Disclosure  controls and procedures  include,  without  limitation,
controls and procedures  designed to ensure that  information  include,  without
limitation, controls and procedures designed to ensure that information required
to be  disclosed  in the  reports  filed  under  the  Exchange  Act of  1934  is
accumulated  and  communicated  to  the  Company's  management,   including  its
principal  executive and financial  officers,  as  appropriate,  to allow timely
decisions regarding required disclosure.

         Within  the 90 days  prior to the filing of this  report,  the  Company
carried out an evaluation,  under the supervision and with the  participation of
the  Company's  management,  including  its  principal  executive  and financial
officer  of the  effectiveness  of the  design and  operation  of the  Company's
disclosure  controls  and  procedures.  Based  upon  and as of the  date of that
evaluation,  the Company's  principal  executive and financial officer concluded
that the Company's  disclosure  controls and  procedures are effective to ensure
that information  required to be disclosed in the reports that Company files and
submits under the Exchange Act of 1934 is recorded,  processed,  summarized  and
reported as and when required.

2.       Changes in Internal Control

         There were no changes in the  Company's  internal  controls or in other
factors that could have significantly  affected those controls subsequent to the
date of the Company's most recent evaluation.











                                       14
<PAGE>


                           PART II - OTHER INFORMATION

                         ITEM 2 - CHANGES IN SECURITIES

During  the three  months  ended June 30,  2003,  we did not issue any shares of
common stock.



                   ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits.

Exhibit
Number                             Description
------                             -----------

31.1     Certification of the Chief Executive Officer pursuant to Section 302 of
         the Sarbanes-Oxley Act of 2002
31.2     Certification of the Chief Financial Officer pursuant to Section 302 of
         the Sarbanes-Oxley Act of 2002
32.1     Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)      Reports on Form 8-K.

         There was no report  filed on Form 8-K  during the three  months  ended
June 30, 2003.


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                 FANTATECH, INC.

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



Dated: August 14, 2003                           By  /s/ Fuxiao Wang
                                                 -------------------------------
                                                 Name:  Fuxiao Wang
                                                 Title:  Chief Financial Officer






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