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


                                   FORM 10-QSB


        |X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934.

                  For the quarterly period ended June 30, 2005


       |_| 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.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

               Delaware                                 62-1690722
-------------------------------------     -------------------------------------
   (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                 Identification Number)


   Suite 1801A, Tower 1, China Hong Kong City, Tsimshatsui, Kowloon, Hong Kong
        ----------------------------------------------------------------
                    (Address of principal executive offices)

                                 (852) 2302 1636
        ----------------------------------------------------------------
                           (Issuer's telephone number)


    -------------------------------------------------------------------------
   (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.
[X] Yes   [_] No

As  of  July  31,  2005,  the  Company  had  30,096,117 common shares issued and
outstanding.

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


<PAGE>
<TABLE>
<CAPTION>
                              FANTATECH, INC. AND SUBSIDIARIES

                                        FORM 10-QSB

                                           Index

Part I - Financial Information
<S>         <C>
Item 1.     Financial Statements
            Condensed Consolidated Balance Sheets - June 30, 2005 (Unaudited) and
              December 31, 2004
            Condensed Consolidated Statements of Operations (Unaudited) - Three Months
              and Six Months Ended June 30, 2005 and 2004
            Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months
              Ended June 30, 2005 and 2004
            Notes to Condensed Consolidated Financial Statements (Unaudited) - Three Months
              and Six Months Ended June 30, 2005 and 2004

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

Item 3.     Controls and Procedures

Part II - Other Information

Item 1.     Legal Proceedings

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

Item 3.     Defaults Upon Senior Securities

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

Item 5.     Other Information

Item 6.     Exhibits

Signatures
</TABLE>


                                        2
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                FANTATECH, INC. AND SUBSIDIARIES
                              CONDENSED CONSOLIDATED BALANCE SHEETS

                                                             June 30, 2005    December 31, 2004
                                                             -----------------------------------
                             ASSETS                           (Unaudited)
<S>                                                          <C>             <C>
Current assets
  Cash                                                       $      459,075  $         4,078,891
  Guaranteed trust fund deposit                                       9,330                    -
  Short term bills receivable                                             -              554,217
  Trade receivables, net of allowance for doubtful accounts         280,994              470,858
  Related party receivable                                           62,296              477,701
  Inventories                                                     2,641,298            1,792,452
  Cost and estimated earnings in excess of
    billings on uncompleted contracts                             3,175,419            2,414,118
  Deposit and prepayments                                         1,669,439            1,428,410
  Other receivables                                                 453,780              156,333
                                                             -----------------------------------
Total current assets                                              8,751,631           11,372,980

Property, plant and equipment, net                                5,420,099            3,743,796
Construction in progress                                          2,607,480            2,255,997
Trademarks                                                                -              170,950
                                                             -----------------------------------
Total assets                                                 $   16,779,210  $        17,543,723
                                                             ===================================

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Short-term bank loans                                      $    2,433,735  $         2,433,735
  Accounts payable                                                  880,552              320,227
  Accrued liabilities and other payables                          1,110,039            1,059,114
  Related party payables                                            639,601              650,588
  Billings in excess of cost and estimated earnings
    on uncompleted contracts                                      1,052,503            1,629,408
  Deposits received                                               1,753,962            1,874,335
                                                             -----------------------------------
Total current liabilities                                         7,870,392            7,967,407

Minority interests                                                4,054,159            4,122,426
                                                             -----------------------------------
Total liabilities                                                11,924,551           12,089,833
                                                             -----------------------------------
Commitments and contingencies                                             -                    -

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, 30,096,117 shares issued and
    outstanding.                                                     30,096               30,096
  Additional paid-in capital                                      4,587,190            4,587,190
  Retained earnings                                                  92,026              691,257
  Reserve funds                                                     145,347              145,347
                                                             -----------------------------------
Stockholders' equity                                              4,854,659            5,453,890
                                                             -----------------------------------
Total liabilities and stockholders' equity                   $   16,779,210  $        17,543,723
                                                             ===================================
<FN>
See notes to condensed consolidated financial statements.
</TABLE>


                                        3
<PAGE>
<TABLE>
<CAPTION>
                              FANTATECH, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (UNAUDITED)

                                                  Three Months Ended    Three Months Ended
                                                    June 30, 2005         June 30, 2004
                                                 --------------------  --------------------
<S>                                              <C>                   <C>
NET REVENUE :                                    $                     $
  Contracted sales                                         2,351,414             1,095,269
  Revenue sharing operations                                 223,929                73,202
                                                 --------------------  --------------------
TOTAL NET REVENUE                                          2,575,343             1,168,471
                                                 --------------------  --------------------

COST OF REVENUE:
  Direct cost of sales                                     1,699,097               760,253
  Revenue sharing operations                                 215,989                47,234
                                                 --------------------  --------------------
TOTAL COST OF REVENUE                                      1,915,086               807,487
                                                 --------------------  --------------------

GROSS PROFIT                                                 660,257               360,984
                                                 --------------------  --------------------

OPERATING EXPENSES:
  Selling and marketing                                      212,011               142,995
  General and administrative                                 538,166               333,102
  Impairment of intangible property                          170,950                     -
                                                 --------------------  --------------------
TOTAL OPERATING EXPENSES                                     921,127               476,097
                                                 --------------------  --------------------

LOSS FROM OPERATIONS                                        (260,870)             (115,113)

OTHER INCOME (EXPENSES)
  Interest expense                                           (33,025)                    -
  Other income (expense)                                      13,907               (20,111)
  Interest income                                                  -                26,093
  Non-operating income                                            71                 3,604
                                                 --------------------  --------------------

LOSS FROM CONTINUING OPERATIONS                             (279,917)             (105,527)
  BEFORE TAX PROVISION

MINORITY INTERESTS' SHARE OF LOSS                             81,672                72,376

INCOME TAX EXPENSE                                                 -                 8,448
                                                 --------------------  --------------------

LOSS FROM CONTINUING OPERATIONS                             (198,245)              (41,599)

DISCONTINUED OPERATIONS
  Gain from discontinued operations (Hytech HK)                    -                   993
                                                 --------------------  --------------------

NET LOSS                                         $          (198,245)  $           (40,606)
                                                 ====================  ====================

WEIGHTED AVERAGE SHARES OUTSTANDING
  BASIC AND DILUTED                                       30,096,117            20,096,117
                                                 ====================  ====================

BASIC AND DILUTED NET (LOSS) INCOME PER SHARE
  Loss from continuing operations                $             (0.01)  $             (0.00)
  Income (loss) from discontinued operations                    0.00                  0.00
                                                 --------------------  --------------------

  Net loss per share                             $             (0.01)  $             (0.00)
                                                 ====================  ====================
<FN>
See notes to condensed consolidated financial statements.
</TABLE>


                                        4
<PAGE>
<TABLE>
<CAPTION>
                            FANTATECH INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (UNAUDITED)

                                                  Six Months Ended    Six Months Ended
                                                   June 30, 2005       June 30, 2004
                                                 ------------------  ------------------
<S>                                              <C>                 <C>
NET REVENUE :                                    $                   $
  Contracted sales                                       2,823,364           2,185,864
  Revenue sharing operations                               426,445             100,950
                                                 ------------------  ------------------
TOTAL NET REVENUE                                        3,249,809           2,286,814
                                                 ------------------  ------------------

COST OF REVENUE:
  Direct cost of sales                                   2,020,045           1,487,063
  Revenue sharing operations                               409,303              61,278
                                                 ------------------  ------------------
TOTAL COST OF REVENUE                                    2,429,348           1,548,341
                                                 ------------------  ------------------

GROSS PROFIT                                               820,461             738,473
                                                 ------------------  ------------------

OPERATING EXPENSES:
  Selling and marketing                                    401,413             279,477
  General and administrative                               883,416             640,587
  Impairment of intangible property                        170,950                   -
                                                 ------------------  ------------------
TOTAL OPERATING EXPENSES                                 1,455,779             920,064
                                                 ------------------  ------------------

LOSS FROM OPERATIONS                                      (635,318)           (181,591)

OTHER INCOME (EXPENSES)
  Interest expense                                         (65,333)                  -
  Other income (expense)                                    29,487             (34,195)
  Interest income                                            3,271              51,273
  Non-operating income                                         428               5,330
                                                 ------------------  ------------------

LOSS FROM CONTINUING OPERATIONS                           (667,465)           (159,183)
  BEFORE TAX PROVISION

MINORITY INTERESTS' SHARE OF LOSS                           68,267             139,054

INCOME TAX EXPENSE                                              33              19,889
                                                 ------------------  ------------------

LOSS FROM CONTINUING OPERATIONS                           (599,231)            (40,018)

DISCONTINUED OPERATIONS
  Gain from discontinued operations (Hytech HK)                  -                 993
                                                 ------------------  ------------------

NET LOSS                                         $        (599,231)  $         (39,025)
                                                 ==================  ==================

WEIGHTED AVERAGE SHARES OUTSTANDING
  BASIC AND DILUTED                                     30,096,117          20,096,117
                                                 ==================  ==================

BASIC AND DILUTED NET (LOSS) INCOME PER SHARE
  Loss from continuing operations                $           (0.02)  $           (0.00)
  Income (loss) from discontinued operations                  0.00                0.00
                                                 ------------------  ------------------

  Net loss per share                             $           (0.02)  $           (0.00)
                                                 ==================  ==================
<FN>
See notes to condensed consolidated financial statements.
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>
                                     FANTATECH, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)

                                                                     Six Months Ended    Six Months Ended
                                                                      June 30, 2005       June 30, 2004
                                                                    ------------------  ------------------
<S>                                                                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                            $        (599,231)  $         (39,025)
  Less: income from discontinued operations                                         -                 993
                                                                    ------------------  ------------------
Loss from continuing operations                                              (599,231)            (40,018)

Adjustments to reconcile net loss from continuing operations
to net cash used in operating activities:
  Depreciation expense                                                        505,045             270,050
  Impairment of intangible property                                           170,950                   -
  Minority interests' share of loss                                           (68,267)           (139,054)
  Provision for doubtful accounts                                              95,021                   -
Change in operating assets and liabilities:
  Decrease  in trade receivables                                               94,843             202,060
  (Increase) in inventories                                                  (848,846)         (1,036,618)
  (Increase) decrease  in costs and estimated earnings
    in excess of billings on uncompleted contracts                           (761,301)            147,050
  (Increase) in deposits and prepayments                                     (241,029)           (246,799)
  (Increase) decrease in other receivables                                   (297,447)             22,479
  (Increase)  in guaranteed unit trust fund                                    (9,330)                  -
  Decrease  in short term bills receivable                                    554,217                   -
  Decrease in related party receivable                                        415,405                   -
  Increase (decrease) in accounts payable, accrued liabilities and
    other payables                                                            611,250            (726,861)
  (Decrease) increase in related party payables                               (10,987)            172,681
  (Decrease) in billings in excess of costs and estimated earnings
    on uncompleted contracts                                                 (576,905)                  -
  (Decrease) increase in deposits received                                   (120,373)            669,437
                                                                    ------------------  ------------------
Net cash used in operating activities                                      (1,086,985)           (705,593)
                                                                    ------------------  ------------------
Net cash provided by discontinued operations                                        -                 993
                                                                    ------------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property, plant and equipment                                (2,181,348)         (1,539,469)
  Construction in progress                                                   (351,483)           (203,508)
                                                                    ------------------  ------------------
Net cash used in investing activities                                      (2,532,831)         (1,742,977)
                                                                    ------------------  ------------------

NET DECREASE IN CASH                                                       (3,619,816)         (2,447,577)

Cash and cash equivalents, at beginning of period                           4,078,891           5,240,816
                                                                    ------------------  ------------------

Cash and cash equivalents, at end of period                         $         459,075   $       2,793,239
                                                                    ==================  ==================

Supplementary disclosures of cash flow information:
  Interest paid                                                     $          65,333   $               -
                                                                    ==================  ==================

  Taxes paid                                                        $          60,683   $          26,041
                                                                    ==================  ==================
<FN>
See notes to condensed consolidated financial statements.
</TABLE>


                                        6
<PAGE>
                        FANTATECH, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
             THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004

1.   ORGANIZATION  AND  PRINCIPAL  ACTIVITIES

Fantatech,  Inc.  (hereinafter  referred  to  as the "Company", which term shall
include,  when  the  context  so  requires,  its  subsidiaries  and affiliates),
formerly  Lucas  Educational  Systems,  Inc.,  was  incorporated in the State of
Delaware  in 1996. The Company is engaged in the design, manufacturing, sale and
operation of hi-tech entertainment and amusement attractions for group audiences
including  simulation  attractions  and  equipment,  3D/4D  theatres,  indoor
entertainment  centers  and  outdoor  theme  parks.

In  November 2002, the Company acquired all of the issued and outstanding shares
of  Intsys  Share  Limited  ("Intsys").  Intsys  was incorporated in the British
Virgin  Islands ("BVI") on April 29, 2002. Intsys is currently the sole owner of
Shenzhen  Digitainment Co., Ltd. ("SDCL"), incorporated in the People's Republic
of China (the "PRC" or "China"), and Megabase Investment Limited ("Megabase"), a
BVI company, and is the majority (70%) shareholder of Hytechnology Inc. ("Hytech
US"),  a  Delaware  corporation.  SDCL,  in  turn  is  a  40% owner of Fantatech
Development  Inc.  ("FDI"),  a  PRC  Company.

In  May  2002,  Intsys  acquired a 65.41% interest in SDCL, then a joint venture
company operating under the name Shenzhen Hytechnology Inc., in exchange for all
of the outstanding shares of Intsys. The business combination was deemed to be a
reverse  merger  and  the  acquisition  of  the 65.41% interest in SDCL has been
accounted for at historical cost. SDCL was established in 1998 and is engaged in
the  development and production of hi-tech entertainment and amusement products,
including  4D  theatres,  simulation  games, indoor entertainment centers, large
size  indoor  attractions  and  theme  parks.

In  August 2002, Intsys established and became a 99% shareholder of Hytechnology
Limited  ("Hytech HK"), a Hong Kong company.  Hytech HK engaged in the sales and
marketing  of  the products of SDCL outside the United States (excluding China).
On  May  12, 2004, the Company sold its entire interest in Hytech HK to Top Link
Hi-Tech  Development  (H.K.)  Limited  ("Top  Link"),  a  Hong  Kong corporation
ultimately  owned  by  Shenzhen Huaqiang Holdings Ltd. ("SHQ"). The Chairman and
the  President  of  SHQ  are  also  the  Chairman  and  the  CEO of the Company,
respectively.

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

In  August  2003, SDCL, Shenzhen Huaqiang Industry Company Limited ("SHICL") and
Shenzhen  Huaqiang  Venture Capital Company Limited ("SHVCCL") incorporated FDI.
Each  of  SDCL  and  SHICL  hold  a  40%  interest in FDI with the remaining 20%
interest  held  by  SHVCCL.  FDI  is  engaged  in the sales and marketing of the
products  of  SDCL  in  China and assists SDCL with soliciting contracts for the
development  of  hi-tech  entertainment  and  amusement centers and theme parks.
Subsequent  to  its formation, SHVCCL assigned all of its management and control
rights  in  FDI  to  SDCL.  SHICL  and  SHVCCL  are  affiliates  of  SHQ.

In October 2004, the Company entered into a Share Exchange Agreement with Intsys
and  Topforce  Asia  Limited  ("Topforce"), a BVI corporation, pursuant to which
Intsys acquired  from Topforce 100% of the shares of Megabase Investment Limited
("Megabase"),  the  BVI  corporation that owned the remaining 34.59% interest in
SDCL,  in  exchange  for 10,0000,000 shares of the Company's common stock.  Upon
consummation  of  the  share  exchange,  Intsys  became  the sole owner of SDCL.

Palisades  Capital Group, LLC ("PCG"), an independent financial advisory company
that  was  engaged  by  the  Board  of Directors of the Company, valued SDCL and
issued  a fairness opinion which concluded that the shares of the Company issued
under  the  Share  Exchange  Agreement  reflected fairly the value of the assets
acquired.


                                        7
<PAGE>
The  acquisition of the remaining 34.59% interest of SDCL was not treated by the
Company as a business combination since it was the acquisition of noncontrolling
equity  interest  in  a  subsidiary  -  the  minority  interest, pursuant to the
definition  as  contained  in  SFAS  No.  141.

In  determining  the  fair  value of the remaining interest in SDCL, the Company
relied  on  the  following  facts:

(1)  The  trading  of  the  Company's  common  stock in the open market has been
limited  and sporadic and with little volume and should therefore not be used as
a  reliable  indicator  of  fair  market  value.

(2)  At  the  time  of  the  acquisition, the Company's only major asset was its
65.41%  interest  in  SDCL, and it had approximately 20,100,000 shares of common
stock  outstanding.  Therefore,  the  34.59%  interest  would  be  equivalent to
approximately  an  additional  10,000,000  shares  of  common  stock.

(3)  Based on the opinion of PCG, after taking into account the potential market
discount  for  the  limited liquidity and the restricted nature of the Company's
common  stock, and other relevant factors, the fair value derived for the 34.59%
interest  approximated  its book value, which was within the range of fair value
pursuant  to  the  opinion.

Accordingly,  the  acquisition  was  accounted  for using the purchase method of
accounting and the value of the acquired interest was $1,711,816, which was also
approximately  equal  to  the proportional historical equity value of the 34.59%
interest  in  SDCL.

Subsequent to the issuance of the 10,000,000 shares of common stock, the Company
had  a  total  of  30,096,117  shares  of  common  stock issued and outstanding.

On  April  4,  2005,  through a share exchange with Shenzhen Huaqiang Technology
Co.,  Ltd.  ("SHT"),  a PRC company, all of the issued and outstanding shares of
Vinsway  Holding  Limited  ("Vinsway"),  a company which was formerly controlled
jointly  by  the  Company's  Chairman,  CEO, and two former directors, who owned
6,222,963  shares  of  common  stock  of  the Company, was transferred to SHT in
exchange for an aggregated 2.5% interest in SHT.  Xinan Hu, a former director of
the  Company, is one of the Directors of SHT.  Subsequent to the share exchange,
SHT,  through  its  effective  control  of  Vinsway,  became an affiliate of the
Company  by  virtue of its ownership of a 20.68% interest in the Company.  It is
expected  that  this  share  transfer  will  not  affect  the  stability  of the
management  of  the  Company.

All  of the Company's production and most of its business operations are located
in  the  PRC  and  are  conducted  in Renminbi ("RMB"), which is the currency of
China.  During the three months and six months ended June 30, 2005 and 2004, the
exchange  rate  remained  stable  at  approximately  US$1.00  to  RMB  8.30.

On July 21, 2005, the People's Bank of China ("PBC") announced that RMB would no
longer  be  tied  directly  to  the  United  States Dollar ("USD") but against a
'basket'  of  foreign  currencies under a managed floating exchange rate regime,
and  the  new  official parity exchange rate of USD to RMB was set at US 1.00 to
RMB  8.11,  to  be  allowed  to  float within a band of +-0.3 percent around the
central  parity rate as published by the PBC daily. Subsequent to June 30, 2005,
the  Company  will  record  and  adjust  its  exchange  rate  applicable  to the
translation  of financial information in accordance with the announced change as
of  the  effective  date.

The  Company  purchases  some of its raw materials from related parties, and has
continuing  transactions  with  such  parties.


                                        8
<PAGE>
2.   BASIS  OF  PRESENTATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES

BASIS  OF  PRESENTATION  AND  CONSOLIDATION  -  The  interim unaudited condensed
consolidated  financial  statements  include  the  financial  statements  of the
Company,  its  subsidiaries  in  which  the Company has an effective controlling
interest,  including  its  effectively  controlled  associated company, FDI. All
material  intercompany balances and transactions, including intercompany profits
and  unrealized  profits  and  losses  are  eliminated  in  consolidation.

The interim unaudited condensed consolidated financial statements as of June 30,
2005  and  for  the three months and six months ended June 30, 2005 and 2004, in
the  opinion of the management of the Company, reflect all adjustments of normal
and  recurring  nature,  which  are  necessary  for  a  fair presentation of the
Company's  financial  position,  results  of  operations  and cash flows for the
interim periods presented. Certain information and footnote disclosures normally
included  in  financial  statements  have  been condensed or omitted pursuant to
rules  and  regulations  of  the  Securities  and  Exchange Commission, although
management of the Company believes that the disclosures are adequate to make the
information  presented  herein  not  misleading.  Accordingly,  these  unaudited
interim  financial  statements  should  be  read in conjunction with the audited
consolidated  financial  statements  and  the  notes  thereto  included  in  the
Company's  Annual  Report  on Form 10-KSB for the fiscal year ended December 31,
2004.  The  results  of  operations  for  the  interim periods presented are not
necessarily  comparable  to  or  indicative  of the results of any other interim
period  or  to  be  expected  for  the  entire  year  ending  December 31, 2005.

USE  OF  ESTIMATES  - The preparation of financial statements in conformity with
generally  accepted  accounting  principles  in  the  United  States  of America
requires  management  to  make certain estimates and assumptions that affect the
reported amounts of assets and liabilities, including those related to costs and
estimated earnings in excess of billings on uncompleted contracts, allowance for
doubtful  accounts,  disclosure of contingent assets and liabilities at the date
of  the  financial statements and the amount of revenues and expenses during the
reporting  periods.  Actual  results  could  differ  from  those  estimates.

FOREIGN  CURRENCY  TRANSLATION  -  The Company's PRC subsidiaries maintain their
financial  records  and  the statutory financial statements in Renminbi ("RMB"),
the  official  currency  of  the  PRC.  Revenue  and expenditures denominated in
currencies  other  than  RMB  are translated into RMB at the prevailing exchange
rate when recognized and recorded in the PRC financial records.  Monetary assets
and  liabilities  denominated  in  other currencies are also translated into and
recorded  in  RMB  at  the balances sheet date.  Any transaction gain or loss is
charged  to the statement of operations of the PRC subsidiaries in the period in
which  such  gain  or loss occurs.  The PRC accounts denominated in RMB are then
translated  into  USD, the reporting currency of the Company, using the exchange
rate prevailing at the balance sheet date for consolidation and presentation. As
of June 30, 2005 and 2004, the PRC financial statements were translated from RMB
to USD at a single exchange rate of US 1.00 to RMB 8.3.  Since the exchange rate
has  remained  fixed during such periods, there is no resulting translation gain
or  loss  recorded as a separate component of stockholders' equity. The official
exchange  rate  has  been revised to US 1.00 to RMB 8.11 by the People's Bank of
China  effective  on  July  21,  2005.

This  quotation  of the exchange rates does not imply free convertibility of RMB
to  USD.  All foreign exchange transactions in PRC 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 Foreign Exchange Management Bureau or other
institutions  requires  submitting  a  payment  application  form  together with
invoices,  shipping  documents  and  signed  contracts.

The  Company's  other  subsidiaries  in  the  US  and  BVI  adopted USD as their
functional  currency.  Transactions  denominated  in  currencies  other than the
functional  currency  of  these subsidiaries are converted into their functional
currency  at  the  prevailing  exchange  rates  at  the  date  of transaction or
settlement.  No  further  translation  of  currency  is  thus  required.


                                        9
<PAGE>
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 excludes the dilutive effects of
stock  options,  warrants and convertible securities, if any, and is computed by
dividing  net  income  (loss)  available  to common stockholders by the weighted
average  number  of  common  shares  outstanding during the period.  Diluted EPS
reflects  the  potential  dilution  that  could  occur  if  securities  or other
contracts  to  issue common stock (such as convertible preferred stock, warrants
to  purchase  common stock and common stock options) were exercised or converted
into  common  stock  (see  Note  8).

All  common share amounts present herein have been restated to reflect a 1 for 2
reverse  stock  split  effective  June  30,  2004.

RECLASSIFICATIONS  -  Certain  prior  year amounts in the accompanying unaudited
condensed consolidated financial statements have been reclassified to conform to
the  current  year  presentation.  These  reclassifications had no effect on the
results  of  operations  or  financial  position  for  any  period  presented.


3.   INVENTORIES

Inventories as at June 30, 2005 and December 31, 2004 are summarized as follows:

<TABLE>
<CAPTION>
                       June 30, 2005   December 31, 2004
                        (Unaudited)
                      ---------------  ------------------
<S>                   <C>              <C>
     Raw Materials    $     2,365,616  $        1,437,481
     Work-in-process          134,071             195,525
     Finished Goods           141,611             159,446
                      ---------------  ------------------
                      $     2,641,298  $        1,792,452
                      ===============  ==================
</TABLE>


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

Costs  and  estimated earnings in excess of billings on uncompleted contracts as
of  June  30,  2005  and  December  31,  2004  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                                          June 30, 2005   December 31, 2004
                                                           (Unaudited)
                                                         ---------------  -----------------
<S>                                                      <C>              <C>
     Cumulative costs incurred on uncompleted contracts  $   14,156,457   $     13,472,578

     Cumulative estimated earnings to date                    3,705,607          3,665,374
                                                         ---------------  -----------------
                                                             17,862,064         17,137,952

     Less: Billings to date                                 (15,739,148)       (16,353,242)
                                                         ---------------  -----------------
                                                         $    2,122,916   $        784,710
                                                         ===============  =================
</TABLE>

Included  in  the  accompanying  balance  sheets  under  the following captions:


                                       10
<PAGE>
<TABLE>
<CAPTION>
                                                    June 30, 2005    December 31, 2004
                                                     (Unaudited)
                                                   ---------------  -------------------
<S>                                               <C>               <C>
     Costs and estimated earnings in excess       $                 $
       of billings on uncompleted contracts             3,175,419            2,414,118
     Billings in excess of costs and estimated
       earnings on uncompleted contracts               (1,052,503)          (1,629,408)
                                                   ---------------  -------------------
                                                  $    2,122,916    $          784,710
                                                   ===============  ===================
</TABLE>


5.  PROPERTY,  PLANT  AND  EQUIPMENT

Property,  plant,  and  equipment  as  at  June  30,  2005 and December 31, 2004
consisted  of  the  following:

<TABLE>
<CAPTION>
                                                        June 30, 2005   December 31, 2004
                                                         (Unaudited)
                                                       ---------------  ------------------
<S>                                                    <C>              <C>
     Lease hold improvements                           $      423,270   $         412,964
     Plant and machinery                                      485,718             455,927
     Furniture and fixtures                                   107,758             105,353
     Equipment invested in revenue sharing operations       4,973,626           3,017,555
     Computers and equipment                                1,028,869           1,009,350
     Motor vehicles                                           313,936             295,633
                                                       ---------------  ------------------
                                                            7,333,177           5,296,782
     Less: Acumulated depreciation and amortization        (1,913,078)         (1,552,986)
                                                       ---------------  ------------------
                                                       $    5,420,099   $       3,743,796
                                                       ===============  ==================
</TABLE>

Depreciation  expense  was $266,627 and $149,170 for the three months ended June
30,  2005  and  2004, respectively, and $505,045 and $270,050 for the six months
ended  June  30,  2005  and  2004,  respectively.


6.  STOCK-BASED  COMPENSATION

On  January  7,  2004, the Company granted a total of 2,000,000 stock options to
its  key  employees  to  purchase common stock at an exercise price of $1.00 per
share.  Market  price  of the Company's common stock at the grant date was $0.80
per  share.  The  stock  options  vest  and  are  exercisable  as  follows:

<TABLE>
<CAPTION>
     Scale        Vested and exercisable
     ------       ---------------------------
<S>               <C>
     50%          On or after January 7, 2007
     80%          On or after January 7, 2008
     100%         On or after January 7, 2009
</TABLE>

All  options unexercised expire on January 6, 2014 and options are cancelled one
month  after  termination  of  employment.

On  December  16,  2004,  the  Financial  Accounting  Standards  Board published
Statement  of Financial Accounting Standards No. 123 (Revised 2004), Share-Based
Payment  ("SFAS  123R").  SFAS  123R  requires that compensation cost related to
share-based  payment  transactions  be  recognized  in the financial statements.
Share-based  payment  transactions  within  the scope of SFAS 123R include stock
options,  restricted  stock  plans, performance-based awards, stock appreciation
rights,  and  employee


                                       11
<PAGE>
share  purchase plans. The Company will implement SFAS 123R beginning January 1,
2006.  Currently,  the Company accounts for its share-based payment transactions
under  the  provisions of Accounting Principles Board Opinion No. 25, which does
not  necessarily  require  the recognition of compensation cost in the financial
statements.  Management  is  assessing  the  implications of adopting SFAS 123R.

Presently,  the  Company follows SFAS No. 123, which defines a fair-value method
of  accounting for stock based employee compensation and transaction in which an
entity  issues  its  equity  instruments  to  acquire  goods  and  services from
non-employee. The provisions of SFAS No. 123 allow companies to either record an
expense in the financial statements to reflect the estimated fair value of stock
options  to  employees,  or to continue to follow the intrinsic value method set
forth  in  Accounting  Principles  Board  Opinion  No. 25, "Accounting for Stock
Issued to Employees", but to disclose on an annual basis the pro forma effect on
net  income  (loss)  and  net  income (loss) per share had the fair value of the
stock  options  been  recorded  in  the  financial  statements.

SFAS  No.  123  was  amended  by  SFAS  No. 148, which now requires companies to
disclose  in  interim  financial  statements  the pro forma effect on net income
(loss) and net income (loss) per common share of the estimated fair market value
of  stock  options issued to employees. Accordingly, compensation cost for stock
options to employees is measured as the excess, if any, of the fair market price
of  the Company's common stock at the date of grant above the amount an employee
must  pay  to  acquire  the  common  stock.

In  accordance  with SFAS No. 123, the cost of stock options and warrants issued
to  non-employees  is  measured at the grant date based on the fair value of the
award.  The  fair value of the stock-based award at the grant date is determined
using the Black-Scholes option-pricing model. The resulting amount is charged to
expense  on the straight-line basis over the period in which the Company expects
to  receive  benefit,  which  is  generally  the  vesting  period.

Pro  forma  Disclosure - The fair value of stock options and warrants granted by
the  Company  has  been  estimated  on  the  grant  date using the Black-Scholes
option-pricing model. Had such stock options been accounted for pursuant to SFAS
No.  123,  the  effect on the Company's results of operations would have been as
shown  below:

<TABLE>
<CAPTION>
                                      Three months ended June 30,     Six months ended June 30,
                                     -----------------------------  -----------------------------
                                          2005           2004            2005           2004
                                     -----------------------------  -----------------------------
<S>                                  <C>             <C>            <C>             <C>
Net loss
  As reported                        $    (198,245)       (40,606)  $    (599,231)       (39,025)
    Compensation expense for stock
      options based on fair value,
        net of taxes                       (69,047)       (69,047)       (138,094)      (138,094)
                                     -----------------------------  -----------------------------
    Pro forma net loss                    (267,292)      (109,653)       (737,325)      (177,119)
                                     -----------------------------  -----------------------------
Net loss per share
    As reported - Basic and diluted  $       (0.01)         (0.00)  $       (0.02)         (0.00)
                                     -----------------------------  -----------------------------
    Pro forma - Basic and diluted            (0.01)         (0.01)          (0.02)         (0.01)
                                     -----------------------------  -----------------------------
</TABLE>


7.   EARNINGS  PER  SHARE

The  Company  accounts  for  earnings  per share ("EPS") under the provisions of
Statement of Financial Accounting Standard No. 128, "Earnings per share", ("SFAS
No.  128"),  which  requires  dual  presentation of basic and diluted EPS with a
reconciliation  of the numerator and denominator of the EPS computations.  Basic
EPS  excludes  dilutive  effects  of  stock  options,  warrants  and convertible


                                       12
<PAGE>
securities,  if  any, and is computed by dividing net income (loss) available to
common  stockholders by the weighted average number of common shares outstanding
for  the period. Diluted EPS reflects the potential dilution that would occur if
securities  or  other  contracts  to  issue  common  stock  (such as convertible
preferred  stock,  warrants  to  purchase common stock and common stock options)
were  exercised  or converted into common stock using the treasury stock method,
unless  the  effect  is  to  reduce  a  loss  or  increase  earnings  per share.

On  January 6, 2004, the Company granted 2,000,000 stock options to the officers
and  key  employees of the Company to purchase common stock at an exercise price
of  $1.00  per  share.  As  at June 30, 2005, there were 2,000,000 stock options
issued  and  outstanding.  None of the outstanding stock options are exercisable
prior  to  January  7,  2007.  Although  the average closing market price of the
Company's  common  stock  as  at  June  30,  2005 was approximately $1.01, which
exceeds  slightly  the  option  exercise  price  of  $1.00 of the stock options,
trading  of  the  Company's common stock was generally limited and sporadic, and
the  market  price  reference should not be deemed to constitute a reference for
the  computation.

These  stock  options were not considered to be potentially dilutive securities,
and  were not included in the calculation of loss per share for the three months
and  six  months  ended June 30, 2005 because the Company incurred losses during
these  periods  and  thus their effect would have been anti-dilutive. Similarly,
for  the  three  months  and  six  months period ended June 30, 2004, the common
shares  issuable  upon  exercise of outstanding stock options were also excluded
from  the  calculation of diluted EPS. Accordingly, basic and diluted EPS is the
same  for  all  periods  presented.


8.  DISPOSAL  OF  HYTECHNOLOGY  LIMITED  -  DISCONTINUED  OPERATIONS

On  May  12, 2004, the Company sold its entire interest in Hytech HK to Top Link
for $1,277. The sale price represented the value of the issued capital of Hytech
HK. The carrying value of Hytech HK at the time of disposal was negative ($747),
which  amount  had  previously  been  written  off.  Top  Link  is  a  Hong Kong
corporation ultimately owned by SHQ, of which the Chairman and the President are
also the Chairman and the CEO of the Company. Hytech HK was engaged in the sales
and  marketing  of  entertainment  products,  including  the  products  of SDCL.

Management  believed  that the disposal of Hytech HK will have minimal impact on
the  Company's  operation  as  the  Company will continue to sell and market its
products  through  its  other  subsidiaries  subsequent  to  the  disposal.


9.  IMPAIRMENT  OF  INTANGIBLE  ASSET

In view of the reduced business activities of Hytech US, including the fact that
there  were no sales contracts secured in 2004 and 2005, the Company conducted a
re-evaluation  of  the intangible assets associated with trademark registered by
Hytech  US  and  the  related  expected  future  cash flows. As a result of this
evaluation, the Company recorded a full provision for impairment of $170,950 for
the  three  months  ended  June  30, 2005. There was no impairment of intangible
assets  recorded  in  2004.


10.  RELATED  PARTY  TRANSACTIONS  AND  ARRANGEMENTS

(a)  Agreement  with  associated  company

On  June  1, 2004, SDCL and FDI entered into an Agreement pursuant to which SDCL
engaged  FDI,  its  controlled  associated  company,  as its sales agent for the
marketing  and  distribution of its amusement and simulation equipment and 3D/4D
theatres  in  China.

Commencing  January 1, 2005 and thereafter, FDI will be entitled to a commission
ranging  from  10%  to


                                       13
<PAGE>
20%  of  the  contract  price,  depending  on  the  gross margin of the specific
contract  and the size of the related project under the contract. In addition, a
5%  advertising  and  promotional  incentive  will  be  provided to FDI for each
contract  solicited  by  FDI.  The  aforesaid commissions and incentives will be
reflected in the ex-factory price (reduced selling price) and transferred to FDI
through  its  purchase  from  SDCL  of  the  related equipment and products. The
agreement  can be terminated at any time with 60 days notice to the other party.

FDI  will  be  responsible for its own operating costs including staff salaries,
marketing  and  promotional  expenses, general office administrative expenses as
well  as  the  associated  sales  taxes  and  income  tax.

In  addition,  the  agreement  also  provides  that FDI may include in its sales
contracts  a  provision  for  the cooperative operation of any hi-tech amusement
center  "FunPlex" or theme park "Fantawild" when the proposed operating venue is
suitable  for the business. However, FDI will only act as the agent in such part
of the contract on behalf of SDCL.  FDI will have no direct or indirect economic
or  legal  interest  in the revenue sharing operations, which will be solely the
business of SDCL and SDCL will be responsible for contributing the equipment and
fixed  assets required for the cooperative operation. All revenues generating by
such  cooperated  businesses  will  be  received  by  SDCL,  and all the related
expenses  as  stipulated  in  such  cooperation contracts will be borne by SDCL.

In practice, the advertising and promotional incentives and commissions are paid
to  FDI  through  a  price reduction. SDCL reduces the sales price to FDI by the
amount  of the agreed percentage of incentives and commissions, which represents
a reduction in the revenue of SDCL. FDI can capture such portion of revenue from
its  onward  sales  to  the  ultimate  customers.  In  this  regard, the revenue
recognized  by  SDCL  is  in  compliance  with  EITF  No.  01-9, "Accounting for
Consideration  Given  by  a  Vendor  to  a Customer (Including a Reseller of the
Vendor's  Products)".

When FDI receives the commissions and incentives, which are reflected as reduced
costs  of  sales  for  FDI,  the income is included in FDI's gross profit, which
supports  FDI's  selling,  administrative  and  other  operating  functions.  No
further  incentives  are  passed  on  to  the  ultimate  customers  from  FDI.

The  revenue recognized by SDCL and the reduced costs of sales for FDI, however,
are  eliminated  in  preparing  the  consolidated  financial  statements  of the
Company.  Accordingly, the commission and incentive received by FDI are included
in  the  consolidated  gross  profit  only.

During  the  three  months  and  six  months  ended June 30, 2005, SDCL sold its
products  to  FDI for an aggregate price of $149,328 and $445,379, respectively,
for  resale  to end customers. During the three months and six months ended June
30,  2005  FDI collected for SDCL a total of $81,180 and $149,328, respectively,
of  the  net revenue shared from three of the FunPlex amusement centers operated
for SDCL. During the three months and six months ended June 30, 2004, there were
no  such  sale  and  revenue  sharing  transactions  between  SDCL  and  FDI.


(b)  Purchases  of  digital  films  and  related  components

During  the  three  months  and  six  months  ended  June  30, 2005, the Company
purchased  certain  components  for its products from Hyvision Digital Film Inc.
("Film  Inc."),  an  affiliate  of  SHQ,  having  a  total value of $337,349 and
$409,538,  respectively.  During  the three months and six months ended June 30,
2004,  total  purchases  from  Film Inc. were $0 and $253,012, respectively. Mr.
Guangwei  Liang  and  Mr.  Ming  Li  are  common  directors of Film Inc. and the
Company.


(c)  Sales  to  related  parties

During  the  three  months  and six months ended June 30, 2005, the Company sold
equipment  to Hytech HK for an aggregate price of $0 and $100,000, respectively,
and  $0  and  $830  for  the  three  months  and six months ended June 30, 2004,
respectively.


                                       14
<PAGE>
(d)     Related  party  receivables  and  payables

As  at  June  30, 2005 and December 31, 2004, the amounts payable and receivable
from  related  parties  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                            June 30, 2005    December 31, 2004
                                           ---------------  -------------------
Amounts due from:
-----------------
<S>                                        <C>              <C>
Hytech HK (1)                              $            -   $          400,862
Shenzhen Huaqiang Industrial
  and Trading Co. Ltd. (2)                         25,046               17,470
Chunren Xie (3)                                     1,500                1,500
Directors (4)                                      35,750                1,922
Shenzhen Huaqiang Technology Co., Ltd (6)               -               55,947
                                           ---------------  -------------------
                                           $       62,296   $          477,701
                                           ===============  ===================

Amounts due to:
---------------
Hytech HK (1)                              $     (140,676)  $         (350,588)
Top Link Development Limited (7)                 (280,000)            (280,000)
Dehou Fang (7)                                    (20,000)             (20,000)
Film Inc. (5)                                    (168,675)                   -
Bilibest Industries Ltd (8)                       (30,250)                   -
                                           ---------------  -------------------
                                           $     (639,601)  $         (650,588)
                                           ===============  ===================
</TABLE>

(1)  The  amount  payable  to Hytech HK represents the payment made on behalf of
     the  Company in respect of its administrative expenses incurred outside the
     PRC. These amounts are unsecured, non-interest bearing and have no definite
     term  of  repayment.  The  amount  due from Hytech HK was the trade account
     receivable  that  arose  from  the  sales  of  the  Company's  products.

(2)  Shenzhen  Huaqiang Industrial and Trading Co., Ltd. ("HIT") is an affiliate
     of SHQ. This amount was loaned to HIT in connection with one of the revenue
     sharing  operations  that  has  since  been terminated and moved to another
     location.  The  loan is unsecured, non-interest bearing and has no definite
     term  of  repayment.

(3)  Chunren  Xie  is  a  30%  minority  shareholder  of  Hytech  US.

(4)  Amount  due  from directors represent cash advances made for business trips
     and  trade  fairs.

(5)  The  amount  payable  to  Film  Inc.  represents the trade accounts payable
     arising  from  the  purchase  of  products.

(6)  The  receivable  due  from  SHT  is the interest receivable on cash deposit
     placed  with the clearing center organized and managed by SHT. The clearing
     center  offered a market interest rate for the Company's cash fixed deposit
     and  allowed  flexibility  with respect to changing deposit terms. SHT is a
     PRC  company  that  holds  20.7% interest in the Company. SHT is also a 20%
     shareholder  of  Film  Inc.

(7)  The  amounts due to Top Link Development Limited ("TLD") and Mr. Dehou Fang
     represent  the  amounts  loaned  to  Intsys  in 2002 for the acquisition of
     Hytech  US  and  other  administrative  expenses of the Company. TLD is the
     immediate  holding  company of Top Link and Mr. Dehou Fang is a director of
     Intsys.  These  related  party  loans  aggregating  $300,000 are unsecured,
     non-interest  bearing  and  have  no  definite  term  of  repayment.


                                       15
<PAGE>
(8)  The  amounts  payable  to Bilibest Industries Limited, an affiliate of SHQ,
     represent  payment made on behalf of the Company for certain administrative
     expenses  incurred  outside  PRC. These amounts are unsecured, non-interest
     bearing  and  have  no  definite  term  of  repayment.


11.   SEGMENT  REPORTING

The  following segment information is presented in accordance with SFAS No. 131,
"Disclosure  About  Segments  of  an  Enterprise and Related Information," which
requires  companies to report selected segment information and to report certain
entity-wide  disclosures  about  products and services, major customers, and the
material  countries  in  which the entity holds assets and reports revenue which
were assessed by the management separately.  The segment information is based on
the  management  approach adopted in the Company's internal organization and the
reported  revenue  and  operating  income for the measured segments are based on
information  provided  to  the  chief  operating  decision maker for performance
review  and  resources  allocation.

Management  of  the  Company  monitors  the performance of the operations in two
segments  with  respect to the nature of revenue generated from the sales of its
products,  which  are  divided  into two main categories:  (1) contract sales of
equipment  or facilities used in hi-tech amusement centers or theme parks, 3D/4D
theaters  and  the  related  products;  and  (2)  revenue  sharing  operations.

Each  segment involves different marketing strategies and business techniques as
well  as  different resource allocation.  The Company's chief operating decision
maker  evaluates  performance  based  on EBIT (earnings or loss before interest,
taxes,  impairment  losses,  and  minority  interest).  The  segments related to
contracted  sales  and  revenue sharing operations are assessed based on the net
income  after  deducting  the  relevant  direct  costs  of  sales,  depreciation
expenses,  selling,  administrative  and  management  costs.  Other  corporate
expenses  consist  of  general  administrative  expenses  that  are not directly
related  to  the  operations  of  this  segment  are  classified  to  corporate.

The following tables summarize revenues and EBIT by segment for the three months
and  six  months  ended  June  30,  2005  and  2004.

<TABLE>
<CAPTION>
2005                                             Three months ended June 30,            Six months ended June 30,
                                             -------------------------------------  -------------------------------------
                                                            Revenue                                Revenue
                                             Contracted     Sharing                 Contracted     Sharing
                                                Sales     Operations      Total        Sales     Operations      Total
                                             -----------  -----------  -----------  -----------  -----------  -----------
<S>                                          <C>          <C>          <C>          <C>          <C>          <C>
NET REVENUE                                  $ 2,351,414  $   223,929  $2,575,343   $ 2,823,364  $   426,445  $3,249,809
                                             -----------  -----------  -----------  -----------  -----------  -----------

Direct costs of production                       686,213                  686,213       907,213                  907,213
Salaries, wages and                                                             -                                      -
  related personnel expenses                     882,776       18,095     900,871       970,317       46,773   1,017,090
Selling & marketing expenses                     212,011                  212,011       401,413                  401,413
Depreciation of fixed assets                     130,108      197,894     328,002       142,515      362,530     505,045
                                             -----------  -----------  -----------  -----------  -----------  -----------
  Total Operating Expenses                     1,911,108      215,989   2,127,097     2,421,458      409,303   2,830,761
                                             -----------  -----------  -----------  -----------  -----------  -----------

INCOME (LOSS) FROM OPERATIONS                    440,306        7,940     448,246       401,906       17,142     419,048

Corporate administrative and other expenses            -            -     524,188             -            -     853,501
                                             -----------  -----------  -----------  -----------  -----------  -----------

EBIT                                                                      (75,942)                              (434,453)
                                                                       -----------                            -----------

Reconciliation of EBIT to net income:
  Minority interest                                                       (81,672)                               (68,267)
  Interest (income) expenses, net                                          33,025                                 62,062
  Income tax expenses                                                           -                                     33
  Impariment on intangible assets                                         170,950                                170,950
                                                                       -----------                            -----------
NET LOSS                                                               $ (198,245)                            $ (599,231)
                                                                       ===========                            ===========
</TABLE>


                                       16
<PAGE>
<TABLE>
<CAPTION>

2004                                             Three months ended June 30,            Six months ended June 30,
                                             -------------------------------------  -------------------------------------
                                                            Revenue                                Revenue
                                             Contracted     Sharing                 Contracted     Sharing
                                                Sales     Operations      Total        Sales     Operations      Total
                                             -----------  -----------  -----------  -----------  -----------  -----------
<S>                                          <C>          <C>          <C>          <C>          <C>          <C>
NET REVENUE                                  $ 1,095,269  $    73,202  $1,168,471   $ 2,185,864  $   100,950  $2,286,814
                                             -----------  -----------  -----------  -----------  -----------  -----------

Direct costs of production                       386,383                  386,383       667,015                  667,015
Salaries, wages and                                                             -                                      -
  related personnel expenses                     361,303       11,431     372,734       599,845       11,431     611,276
Selling & marketing expenses                      95,726                   95,726       279,477                  279,477
Depreciation of fixed assets                      59,836       35,803      95,639       220,203       49,847     270,050
                                             -----------  -----------  -----------  -----------  -----------  -----------
  Total Operating Expenses                       903,248       47,234     950,482     1,766,540       61,278   1,827,818
                                             -----------  -----------  -----------  -----------  -----------  -----------

INCOME (LOSS) FROM OPERATIONS                    192,021       25,968     217,989       419,324       39,672     458,996

Corporate administrative and other expenses            -            -     349,609             -            -     669,452
                                             -----------  -----------  -----------                            -----------

EBIT                                                                     (131,620)                              (210,456)
                                                                       -----------                            -----------

Reconciliation of EBIT to net income:
  Minority interest                                                       (72,376)                              (139,054)
  Interest (income) expenses, net                                         (26,093)                               (51,273)
  Income tax expenses                                                       8,448                                 19,889
  Gain on disposal of Hytech HK                                              (993)                                  (993)
                                                                       -----------                            -----------
NET LOSS                                                               $  (40,606)                            $  (39,025)
                                                                       ===========                            ===========
</TABLE>

The  following  table reconciles each reporting segment's assets to total assets
reported  on  the  Company's consolidated balance sheets as of June 30, 2005 and
2004.

<TABLE>
<CAPTION>
                                       June 30, 2005   June 30, 2004
                                      --------------  --------------
<S>                                   <C>             <C>
     Contracted sales                 $    5,782,899  $    1,886,100
     Revenue sharing operations            4,521,891       1,851,517
     Shared assets *                       6,474,421       7,696,443
                                      --------------  --------------

     Total Assets                     $   16,779,211  $   11,434,060
                                      ==============  ==============
</TABLE>

*  Shared  assets  represent assets that provide benefit to all of the Company's
operating  segments.

Shared  assets are not allocated to operating segments for internal reporting or
decision-making  purposes.

There  were  no  intersegment  revenues  generated  for the three months and six
months  ended  June  30,  2005  and  2004,  respectively.


12.  MINORITY  INTEREST

As  of June 30, 2005, the Company's minority interest balance was $4,054,159. It
was  comprised  of  the  minority shares of effectively controlled subsidiaries,
including  FDI and Hytech US. As of June 30, 2004, the minority interest balance
was  $5,650,126,  which  was comprised of the minority shares of SDCL, Hytech US
and FDI, which the Company did not own. As of June 30, 2005, the Company owned a
70%  interest  in  Hytech  US  and  a  40%  interest  in  FDI.

During the three months and six months ended June 30, 2005, the Company recorded
the  minority  interests  share of loss of $81,672 and $68,267, respectively, as
compared  to  the  minority  interests  share  of  loss of $72,376 and $139,054,
respectively,  for  the  three  months  and  six  months  ended  June  30, 2004.


                                       17
<PAGE>
13.  SUBSEQUENT  EVENTS

(a)  Management  Companies

During  the three months ended June 30, 2005, the Company resolved to set up two
management companies in the cities of Chongqing and Tianjin in the PRC, in order
to  manage the operations of the theme park in Chongqing and the Dino-Rampage in
Tianjin,  respectively, which are scheduled to commence operations by the end of
2005.  These proposed management companies are intended to facilitate the smooth
operation  of  the  aforesaid  large-size revenue sharing operations and will be
budgeted  to  operate  at  a  break-even  level.

The relevant incorporation documentation and applications have been submitted to
the  local governmental authorities for approval and registration. The Chongqing
management company has been named as "Chongqing FantaWild FanPlex Tour Co. Ltd."
("Chongqing  FTC") and will be owned by SDCL (90%) and FDI (10%) with registered
capital  of  approximately $620,000. The approval for corporate registration was
received  in  July  2005  and  the  Company  is in the process of completing the
remaining  incorporation  procedures,  including  tax  registration.

The  proposed  name  for  the  Tianjin  management  company is "Tianjin Longqiao
FantaWild  Kepu  Ltd."  ("Tianjin  LFK"), which will be owned equally by FDI and
Tianjin  Longqiao  Property Development Co. Ltd. ("Longqiao PDL"), a third party
local  partner  of  the  revenue  sharing operations, with registered capital of
approximately  $37,000.  The  corporate  registration process for Tianjin LFK is
being  handled by Longqiao PDL and is currently awaiting approval from the local
government as well as the completion of other relevant incorporation procedures.

As  soon  as the incorporation procedures for Chongqing FTC and Tianjin LFK have
been  completed,  the  financial  statements  of  these  newly set up management
companies  will  be  established  and  consolidated into the Company's financial
statements,  although  it  is  not  expected  to have any material effect on the
Company's  financial  position  during  the  remainder  of  2005.

(b)  Bridge  Loan

In  early  August  2005,  the  Company  obtained  a bridge loan of approximately
$1,000,000  from Shenzhen Huaqiang Technology Co., Ltd., a related party, at the
prevailing  market  interest  rate  of  5.58%  per  annum.


                                       18
<PAGE>
ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

Cautionary  Statement  Pursuant  to  Safe  Harbor  Provisions  of  the  Private
Securities  Litigation  Reform  Act  of  1995:

This  Quarterly  Report  on  Form 10-QSB for the quarterly period ended June 30,
2005  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,  as  amended,  including  statements  that  include  the words "believes",
"expects",  "anticipates",  or  similar  expressions.  These  forward-looking
statements  include,  among  others,  statements  concerning  the  Company's
expectations  regarding  sales trends, gross margin trends, operating costs, the
availability  of  funds to finance capital expenditures and operations, facility
expansion  plans,  competition,  and  other statements of expectations, beliefs,
future  plans  and  strategies,  anticipated  events  or  trends,  and  similar
expressions  concerning  matters  that  are  not  historical  facts.  The
forward-looking  statements  in  this  Quarterly  Report  on Form 10-QSB for the
quarterly  period  ended  June  30,  2005  involve  known  and  unknown  risks,
uncertainties and other factors that could the cause actual results, performance
or  achievements  of the Company to differ materially from those expressed in or
implied  by  the forward-looking statements contained herein. Except as required
by  applicable law or regulation, the Company undertakes no obligation to update
or  revise  any  forward-looking statement contained in this Quarterly Report on
Form  10-QSB  for  the  quarterly  period  ended  June  30,  2005.

OVERVIEW

Fantatech,  Inc.,  formerly Lucas Educational Systems, Inc. (the "Company"), was
incorporated  in  1996. Effective November 6, 2002, the Company acquired Intsys,
which,  through  its subsidiaries and affiliates, is engaged in the development,
manufacturing,  sale  and  operation  of  hi-tech  entertainment  and  amusement
products,  including  4D theaters, indoor entertainment centers (FunPlex), large
size  outdoor  attractions  and  theme  parks.  The  Company's technical team is
experienced  in  the  design  and  manufacturing  of  comprehensive, integrated,
computerized  entertainment  products.

Most  of  the  Company's customers are located in the People's Republic of China
("PRC"), and sales to such customers are generally on an open account basis with
deposit  collected  in  advance. The Company purchases raw materials and certain
components  from  various  suppliers  located  in  the  PRC.

The  Company  participates  in  the  operation  of  FunPlex indoor entertainment
centers,  large  size  outdoor  attractions  and  theme  parks  (each,  a
"Revenue-Sharing  Center")  through  cooperation  agreements  with local venture
partners  in PRC cities. The Company selects appropriate partners and sells them
a  portion  of  the  amusement  equipment  and  machines  required  to  set up a
Revenue-Sharing  Center.  The  Company  generally  provides  the  balance of the
amusement and entertainment equipment required for the Revenue-Sharing Center to
its  local  venture  partners  in  exchange for approximately a 50% share of its
gross  revenue. The local partners are responsible for operating, promoting, and
providing  suitable  venues  for  the  Revenue-Sharing Centers.  In general, the
amount  of  equipment  required  to  be  purchased by a local venture partner is
calculated  such  that  the  Company's  gross  margin on the purchased equipment
covers its internal cost for the balance of the required equipment.  The Company
also  considers  the  credibility  of the local partner and the costs associated
with  the operating venues. The Revenue-Sharing Centers therefore require only a
minimal  cash  investment  on  the part of the Company, related primarily to the
provision  of  maintenance  services,  after commencement of the Revenue-Sharing
Center  operations.  The Company retains all title to the equipment  it provides
to  the  Revenue-Sharing  Center  (except for equipment purchased by the venture
partner)  and  may  repossess  and  relocate such equipment if its local venture
partners  cannot  fulfill  their  obligations  under the cooperation agreements.

At  June 30, 2005, there were a total of eight Revenue-Sharing Centers operating
in  different  PRC  cities  in which the Company has a revenue-sharing interest,
including  Zhuhai,  Changzhi,  Beijing,  Dalian,  Datong,  Wuhan,  Huizhou  and
Dongguan.  Also,  the first 4D Ride Dino-Rampage attraction built by the Company
commenced  operation  in  the Beijing FunPlex amusement center in November 2004.
The


                                       19
<PAGE>
Dino  Rampage  attraction in Tianjin is scheduled to open in October 2005. As of
June 30, 2005, the Company has been engaged in building a theme park with ten to
twelve  large  size  attractions in the city of Chongqing.  A Floating Sphere 4D
theatre  in  Beijing  is  also  currently under construction and scheduled to be
completed  and  opened  in  December  2005.

During  the  six  months  ended  June  30, 2005, the FunPlex centers in Nanjing,
Dalian  Shida and Chenzhou were closed due to tenancy disputes between the local
operators  and the landlords, in which the Company was not involved. The Company
has  repossessed  all  equipment  in  these  three centers and will transfer and
relocate  the equipment to locations or cities under new cooperation agreements.
The  Company  expects  that  the  carrying value of this equipment will be fully
recovered  through  the  transfer  and  reinstallation of the equipment to other
Revenue-Sharing  Centers,  and  therefore,  no  impairment  provision  has  been
provided.

The unaudited condensed consolidated financial statements of the Company include
the  accounts  of  the  Company  and  its  wholly-owned  and  majority-owned
subsidiaries. All material intercompany balances and transactions are eliminated
on  consolidation.  The  consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America  and  are  reported  and  presented  in  U.S.  Dollars  ("$"  or "USD").

All  of the Company's production and most of its business operations are located
in  the  PRC  and  are  conducted  in Renminbi ("RMB"), which is the currency of
China.  During the three months and six months ended June 30, 2005 and 2004, the
exchange  rate remained stable at approximately US$1.00 to RMB 8.30.  As of June
30,  2005 and 2004, the PRC financial statements were translated from RMB to USD
at  a  single  exchange rate of US$1.00 to RMB 8.3.  Since the exchange rate has
remained  fixed  during  such periods, there is no resulting translation gain or
loss  recorded  as  a  separate  component  of  stockholders'  equity.

On July 21, 2005, the People's Bank of China ("PBC") announced that RMB would no
longer  be  valued  with  respect  to the U.S. Dollar, but against a 'basket' of
foreign  currencies  under  a managed floating exchange rate regime, and the new
official  parity  exchange rate of USD to RMB was set at US$1.00 to RMB 8.11, to
be  allowed  to  float  within a band of +-0.3 percent around the central parity
rate  as  published  by  the PBC daily. Subsequent to June 30, 2005, the Company
will  record  and  adjust  its  exchange  rate application to the translation of
financial  information  in  accordance  with  the  announced  change  as  of the
effective  date.

CRITICAL  ACCOUNTING  POLICIES:

The  discussion and analysis of the Company's financial condition and results of
operations  is  based  upon  the  Company's  unaudited  condensed  consolidated
financial  statements,  which  have  been prepared in accordance with accounting
principals  generally  accepted in the United States of America. The preparation
of these financial statements requires the use of estimates and assumptions that
affect  the  reported  amounts  of  assets and liabilities and the disclosure of
contingent  assets  and  liabilities at the date of the financial statements and
the  reported  amount  of  revenues  and  expenses  during the reporting period.
Management  periodically  evaluates  the estimates and judgments made, including
those  related  to  revenue  and cost recognition, inventories, income taxes and
impairment  of  assets.  Management  bases  their  estimates  and  judgments  on
historical  experience and on various factors that are believed to be reasonable
under  the  circumstances.  Actual  results may differ from these estimates as a
result  of  different  assumptions  or  conditions.

The following critical accounting policies affect the more significant judgments
and  estimates  used  in  the  preparation  of the Company's unaudited condensed
consolidated  financial  statements.

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

The  Company  principally derives its revenue from (1) the sale of entertainment
and  amusement


                                       20
<PAGE>
products,  (2)  long  term  contracts  related  to the design, manufacturing and
assembling of 4-D screen systems, simulation amusement equipment, and large-size
attractions  and  (3)  admission fees generated from revenue sharing operations.

Revenue  is  recognized  when  the  following  four  criteria  are  met:
1)   persuasive  evidence  of  an  arrangement  exists,
2)   delivery  has  occurred  or  services  have  been  rendered,
3)   the  price  is  fixed,  and
4)   collectibility  is  reasonably  assured.

(1)  Sale  of  entertainment  and  amusement  products

Revenue from the sale of entertainment and amusement products is recognized when
the  products  are delivered to the customers, installed and tested.  Revenue is
adjusted  for  any  reduction in sales due to change in product specification or
sales  discounts  offered  to  the  customers.

(2)  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 the
contract  can  be  estimated  reliably. The stage of completion of a contract is
determined  based  on the proportion of costs incurred at the balance sheet date
compared  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  unpriced change orders are 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,  those  costs  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.

During  the  process  of  recognizing  the  revenue  generated from the sales of
products  as  described  in  (1)  and  (2)  above, the Company has evaluated the
criteria  for  multiple  deliverables  in  using separate unit of accounting for
identifiable  delivered  items  in  accordance  with  EITF  No.  00-21  "Revenue
Arrangements  with  Multiple Deliverables", and concluded that the amusement and
entertainment  products  designed,  manufactured and installed by the Company do
not  meet the stand-alone test since no part of the products will be or are sold
in  the market by the Company or by other similar vendors.  There is no reliable
evidence of fair value of the undelivered items and the contracts for sales have
no  general  right  of  return  relative  to  the  delivered  items.

In  addition,  the Company has evaluated the scope and applicability of SOP 97-2
"Software  Revenue  Recognition"  and  determined that the revenue earned on the
Company's  amusement  products containing software is incidental to the products
as  a whole.  The Company does not engage in businesses of licensing, selling or
leasing,  or  otherwise  marketing  computer  software.  The  software  does not
require  significant  production,  modification and customization and is not the
focus of the marketing efforts, nor is it what the customer perceives to obtain.
The post contract services associated with the Company's products do not involve
multiple  element  arrangements  and the estimated cost for the one year product
warranty  is  insignificant,  and  there are no upgrades/enhancements offered to
customers currently or historically.  Accordingly, the Company believes that its
revenue  requires  no  software  revenue  recognition.

(3)  Revenue  generated  from  revenue  sharing  operations


                                       21
<PAGE>
Income  is recognized based on the agreed percentage of revenue when the revenue
from  Revenue-Sharing  Centers becomes due and receivable.  The Company recorded
$223,929 and $426.445 as revenues from its Revenue-Sharing Centers for the three
months  and  six  months  ended  June  30,  2005,  respectively, and $73,202 and
$100,950  for the three months and six months ended June 30, 2004, respectively.

Asset  Impairment:
------------------

The  Company  reviews its long-lived assets, including the production facilities
and  the  amusement  and  entertainment  equipment  used  in the Revenue-Sharing
Centers,  as  well as identifiable intangibles for impairment whenever events or
changes  in  circumstances indicate that the carrying amount of an asset may not
be  recoverable  based  upon undiscounted cash flows expected to be generated by
such  assets over their expected useful lives.  If such assets are considered to
be  impaired, the impairment to be recognized is measured by the amount by which
the  carrying  amount  of  the  assets  exceeds  the  fair  value of the assets.

In  view  of  the  fact  that  the  business  activities  of  Hytech  US reduced
substantially  and  there  were no sales contracts secured in 2004 and 2005, the
Company  conducted  a  re-evaluation  of  the  intangible assets associated with
Hytech  US  and  the  related  expected  future  cash flows. As a result of this
evaluation, the Company recorded a full provision for impairment of $170,950 for
the  three  months  ended  June  30, 2005. There was no impairment of intangible
assets  recorded  in  2004.


CONSOLIDATED RESULTS OF OPERATIONS

The  unaudited  condensed  consolidated  statements  of operations for the three
months and six months ended June 30, 2004 have been adjusted in order to provide
comparison  for  segment  performance.  This  adjustment  had  no  effect on the
operating  results  for  the  period  concerned.

Three months ended June 30, 2005 and 2004:

REVENUE

For  the three months ended June 30, 2005, net sales were $2,575,343 as compared
to  net  sales  of  $1,168,471  for  the  three  months  ended  June  30,  2004.
Approximately  8.7% and 6.3% of the net sales during the three months ended June
30,  2005  and  2004,  respectively,  were  from the revenues generated from the
revenue  sharing  operations.

During  the  three months ended June 30, 2005, net contracted sales increased by
$1,256,145  or  114.7%  to  $2,351,414,  as compared to $1,095,269 for the three
months  ended June 30, 2004. This was primarily due to the normal fluctuation of
the business since the recognition of revenue from contracted sales was based on
costs incurred in relation to the stages of completion. A significant portion of
the  project  costs  for  the  contracts entered in the second half of 2004 were
incurred  and recorded during the three months ended June 30, 2005, resulting in
an  increase  in  recognized  revenue.  In  view  of the Company's current sales
contracts,  and  based  on  the stage of completion of the related projects, the
Company  expects  the  increase in net contracted sales will be sustained during
the  remainder  of  2005.

During  the three months ended June 30, 2005, the Company recorded revenues from
its  Revenue-Sharing  Centers  totaling  $223,929 as compared to $73,202 for the
three  months  ended  June  30,  2004,  representing  an increase of $150,727 or
205.9%.  The increase was mainly attributable to the opening of five new FunPlex
amusement  centers  during  the  period  in  2005.  As a result of the scheduled
opening  of  a large size attraction in Tianjin and a theme park in Chongqing in
late 2005, the Company anticipates that income from Revenue-Sharing Centers will
gradually  increase  beginning  in  early  2006.

GROSS  PROFIT


                                       22
<PAGE>
For  the  three  months  ended June 30, 2005, total gross profit was $660,257 or
25.6% of total net sales, as compared to total gross profit of $360,984 or 30.9%
of  total  net sales for the three months ended June 30, 2004. Net of the effect
from  the  Revenue-Sharing  Centers,  gross  profit  margin  decreased  by 2.8%,
primarily  as  a  result  of  the  slight  decrease  in  profit  margin from the
contracted  sales  recognized during the 2005 period concerned. The gross profit
margin  from  contracted sales depends largely on the type of equipment sold and
the  different pricing and payment arrangements negotiated with customers.  As a
result,  it  is  difficult  for  the  Company  to  predict if it will be able to
maintain  its  gross profit from contracted sales at a given level. However, the
Company  will  follow  its  pricing and costing policies to maximize its returns
from  each  contracted  sale.

Cost  of  sales  mainly  consisted  of  raw materials, electronic parts, factory
consumables,  sub-contracting  charges  and  related  supplies  purchased  for
fabrication  and  assembling  of  the amusement equipment, factory rent, workers
wages  and salaries, and the depreciation of production facilities.  Other costs
of revenue for Revenue-Sharing Centers include depreciation for the fixed assets
used  in  the  operations,  maintenance  costs,  salaries for engineers, and the
associated  traveling  and  lodging  expenses.

During  the  three  months  ended  June  30,  2005,  total  gross  profit  from
Revenue-Sharing  Centers  was  $7,940  or 3.5% of the total segment revenues, as
compared to total gross profit of $25,968 or 35.5% of the total segment revenues
for the three months ended June 30, 2004. The lower gross profit margin recorded
in  2005  on the revenue sharing operations was attributable to the larger scale
of  resources  and  amount of depreciation involved with the increased number of
Revenue-Sharing  Centers in operation. In addition, the closure of three FunPlex
amusement  centers  located  in  Chenzhou,  Dalian Shida and Nanjing reduced the
overall gross profit from the revenue sharing operations during the three months
ended June 30, 2005, as the Company continued to record depreciation charges for
the  relevant  equipment  and  assets  during  the transitional period for those
assets  to  other  Revenue-Sharing  Centers. It normally takes approximately two
months  for  the  Company  to  repossess  the  equipment  from  one location and
reallocate  it  to  other  projects  under  construction.

The  Company anticipates that the gross profit from Revenue-Sharing Centers will
increase  gradually following the transfer of the repossessed equipment from the
closed  FunPlex  amusement  centers  to  other locations, and the more efficient
management and operations of the existing FunPlex amusement centers with economy
of  scale  and  increased  experience.

SELLING  AND  MARKETING  EXPENSES

Selling and marketing expenses increased by $69,016 or 48.3% to $212,011 for the
three  months  ended  June 30, 2005 as compared to $142,995 for the three months
ended  June  30,  2004.  This  was  primarily  due to the increase in marketing,
promotional  and  exhibition  related  expenses in 2005, as a result of expanded
operations.  The Company plans to continue its marketing and promotional efforts
in  order  increase  its  business  in  the  PRC  and  also in overseas markets.

GENERAL  AND  ADMINISTRATIVE  EXPENSES

General  and  administrative expenses ("G&A Expenses") consist of the management
office  operating  costs  of SDCL, FDI, Hytech US, and the costs associated with
the  operation  of the Company's executive offices, and the legal and accounting
costs  associated  with  the operation of a public company. For the three months
ended  June 30, 2005, G&A Expenses increased by $205,064 or 61.6% to $538,166 as
compared  to  the  G&A  Expenses of $333,102 for the three months ended June 30,
2004.  The  increase  is  primarily  due  to  the  increase in personnel related
expenses  due  to  expanded  operations.  In  addition,  the  accounting  and
professional  costs  associated  with  the  operation  of  a public company also
increased  substantially  in  response  to  heightened  regulatory  measures and
compliance  requirements.

IMPAIRMENT  OF  INTANGIBLE  ASSETS

During  the  three  months  ended  June  30,  2005,  in  view of the substantial
reduction  of  business  activities  in  Hytech  US  and  the fact that no sales
contracts  were  secured  by  Hytech  US  in  2004  or  2005,  the


                                       23
<PAGE>
Company  conducted  a  re-evaluation  of  the  intangible assets associated with
Hytech  US  and  the  related  expected  future  cash flows. As a result of this
evaluation, the Company recorded a full provision for impairment of $170,950 for
the  intangible assets. There was no impairment of intangible assets recorded in
2004.

LOSS  FROM  OPERATIONS

Loss  from  operations  for  the  three  months ended June 30, 2005 increased by
$145,757  to  $260,870,  as compared to the loss from operations of $115,113 for
the  three  months  ended  June  30,  2004.  The  increase in operating loss was
primarily  attributable  to  the  impairment  provision made with respect to the
Hytech  US  assets  during the three months ended June 30, 2005. The substantial
increase in selling, general and administrative expenses also contributed to the
increase  in  loss  from  operations.

OTHER  INCOME  (EXPENSE)

For  the three months ended June 30, 2005, the Company had no interest income as
compared to interest income of $26,093 for the three months ended June 30, 2004,
due primarily to the substantial decrease in the average bank deposit balance in
2005  as  a  result  of  the  increase  in resources allocated to projects under
construction  and  Revenue-Sharing  Centers.

For  the  three  months ended June 30, 2005, interest expense was $33,025, while
there  was  no  interest  expenses  incurred for the three months ended June 30,
2004,  as  a  result  of  bank  borrowings  incurred  in  2005.

Other income was $13,907 for the three months ended June 30, 2005 as compared to
other  expense of $20,111 for the three months ended June 30, 2004. The increase
in other income was attributable to miscellaneous income earned from sub-letting
of  part  of  the  Company's factory space, which was temporarily available, and
sales  of  consumable  items  and  repair services for the equipment sold by the
Company.

MINORITY  INTEREST

During  the  three months ended June 30, 2005, the Company recorded the minority
interests'  share  of  loss  of  $81,672, as compared to the minority interests'
share  of  loss  of $72,376 for the three months ended June 30, 2004. As of June
30, 2005, the minority interests represented effectively the 60% interest in FDI
and  the  30%  interest  in  Hytech  US  that  are  not  held  by  the  Company.

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. Fantatech
Inc.  and  Hytech  US  are  both  Delaware  corporations  and are subject to the
corporation income taxes of the United State of America. Intsys and Megabase are
not  liable  for  income  taxes  in  BVI.  The  Company's  PRC  subsidiaries and
associates  are  subject to Enterprise Income Tax in the PRC at a rate of 15% on
net  income.  However,  based on the local tax rules, SDCL was entitled to a tax
holiday  for  the  first two years of its operations (years 1999 and 2000) and a
50%  reduction  of  the  rate  for the third through eighth years (years 2001 to
2006)  of  operations  due  to  the high technology content of the business. The
provision for taxes on earnings of the PRC subsidiaries, calculated based on the
prevailing accounting standards in PRC, for the three months ended June 30, 2005
and  2004  were  $0  and  $8,448,  respectively.


                                       24
<PAGE>
NET  LOSS

The  Company recorded a net loss of $198,245 for the three months ended June 30,
2005  as  compared  to a net loss of $40,606 for the three months ended June 30,
2004.  This  was  primarily  due  to  the  increase  in  selling,  marketing and
administrative  expenses  as  well  as  impairment  provision in relation to the
intangible  assets  recorded  in  2005.

Six months ended June 30, 2005 and 2004:

REVENUE

For the six months ended June 30, 2005, net sales were $3,249,809 as compared to
net  sales  of  $2,286,814 for the six months ended June 30, 2004. Approximately
13.1% and 4.4% of the net sales in during the six months ended June 30, 2005 and
2004,  respectively,  were  from the revenues generated from the Revenue-Sharing
Centers.

During  the  six  months  ended June 30, 2005, net contracted sales increased by
$637,500  or  29.2%  to $2,823,364, as compared to $2,185,864 for the six months
ended  June  30,  2004.  This was primarily due to the normal fluctuation of the
business  since  the  recognition  of revenue from contracted sales was based on
costs  incurred  in relation to the stages of completion.  A significant portion
of  the  project costs for the contracts entered in the second half of 2004 were
incurred and recorded during the six months ended June 30, 2005, resulting in an
increase  in  recognized  revenue.  In  view  of  the  Company's  current  sales
contracts,  and  based  on  the  stage  of  completion the related projects, the
Company  expects  the  increase of net contracted sales will be sustained during
the  remainder  of  2005.

During  the  six  months ended June 30, 2005, the Company recorded revenues from
its  Revenue-Sharing  Centers  totaling $426,445 as compared to $100,950 for the
six  months ended June 30, 2004, representing an increase of $325,495 or 322.4%.
The  increase  was  mainly  attributable  to  the  opening  of  five new FunPlex
amusement  centers  during  the  period  in  2005.  As a result of the scheduled
opening  of  a large size attraction in Tianjin and a theme park in Chongqing by
the  end  of  2005,  the  Company  anticipates  that income from Revenue-Sharing
Centers  will  gradually  increase  beginning  in  early  2006.

GROSS  PROFIT

For the six months ended June 30, 2005, total gross profit was $820,461 or 25.2%
of  total  net  sales, as compared to total gross profit of $738,473 or 32.3% of
total  net  sales for the six months ended June 30, 2004. Net of the effect from
the  Revenue-Sharing  Centers,  gross profit margin decreased by 3.5%, which was
primarily  due  to  the  slightly  lower  contribution  provided  from  certain
contracted sales recognized during the period concerned. The gross profit margin
from  contracted  sales  depends  largely  on the type of equipment sold and the
different  pricing  and  payment  arrangements  negotiated with customers.  As a
result,  it  is  difficult  for  the  Company  to  predict if it will be able to
maintain  its  gross profit from contracted sales at a given level. However, the
Company  will  follow  its  pricing and costing policies to maximize its returns
from  each  contracted  sales.

During  the  six  months  ended  June  30,  2005,  total  gross  profit  from
Revenue-Sharing  Centers  was  $17,142 or 4.0% of the total segment revenues, as
compared to total gross profit of $39,672 or 39.3% of the total segment revenues
for  the  six months ended June 30, 2004. The lower gross profit margin recorded
in  2005  on the Revenue-Sharing Centers was attributable to the larger scale of
resources  and  amount of depreciation involved with the Revenue-Sharing Centers
in  operation.  In  addition,  the  closure  of three FunPlex centers located in
Chenzhou, Dalian Shida and Nanjing has reduced the overall gross profit from the
Revenue-Sharing  Centers  during  the  six  months  ended  June 30, 2005, as the
Company  continued to record depreciation charges for the relevant equipment and
assets  during  the  transitional  period  of transferring those assets to other
Revenue-Sharing  Centers. It normally will take approximately two months for the
Company  to  repossess  equipment  from  one location and reallocate it to other
projects  under  construction.


                                       25
<PAGE>
The  Company anticipates that the gross profit from Revenue-Sharing Centers will
increase  gradually following the transfer of the repossessed equipment from the
closed  FunPlex amusement centers to other Revenue-Sharing Centers, and the more
efficient management and operations of the existing Revenue-Sharing Centers with
economy  of  scale  and  experience.

SELLING  AND  MARKETING  EXPENSES

Selling  and  marketing  expenses increased by $121,936 or 43.6% to $401,413 for
the  six  months ended June 30, 2005, as compared to $279,477 for the six months
ended  June  30,  2004.  This  was  primarily  due to the increase in marketing,
promotional  and  exhibition  related  expenses in 2005, as a result of expanded
operations.  The  Company will continue its marketing and promotional efforts in
order  increase  its  business  in  the  PRC  and  also  in  overseas  markets.

GENERAL  AND  ADMINISTRATIVE  EXPENSES

For  the  six  months ended June 30, 2005, G&A expenses increased by $242,829 or
37.9%  to  $883,416  as  compared to G&A expenses of $640,587 for the six months
ended  June 30, 2004. The increase is primarily due to the increase in personnel
related  expenses  due to expanded operations. In addition, the costs associated
with  the operation of a public company also increased substantially in response
to  the  heightened  regulatory  measures  and  compliance  requirements.

IMPAIRMENT  OF  INTANGIBLE  ASSETS

During  the six months ended June 30, 2005, in view of the substantial reduction
of  business  activities in Hytech US and no sales contracts secured in 2004 and
2005,  the Company conducted a re-evaluation of the intangible assets associated
with  Hytech  US and the related expected future cash flows. As a result of this
evaluation, the Company recorded a full provision for impairment of $170,950 for
the  intangible assets. There was no impairment of intangible assets recorded in
2004.

LOSS  FROM  OPERATIONS

Loss  from  operations  for  the  six  months  ended  June 30, 2005 increased by
$453,727  to  $635,318,  as compared to the loss from operations of $181,591 for
the six months ended June 30, 2004. The increase in operating loss was primarily
attributable  to  the impairment provision made during the six months ended June
30,  2005.  The  substantial  increase  in  selling,  general and administrative
expenses  also  contributed  to  the  increase  in  loss  from  operations.

OTHER  INCOME  (EXPENSE)

For  the  six months ended June 30, 2005, interest income was $3,271 as compared
to  interest  income  of  $51,273  for  the  six months ended June 30, 2004, due
primarily  to  the  substantial  decrease in the average bank deposit balance in
2005  as  a  result  of  the  increase  in resources allocated to projects under
construction.

For  the  six  months  ended  June 30, 2005, interest expense was $65,333, while
there  was no interest expenses incurred for the six months ended June 30, 2004,
as  a  result  of  bank  borrowings  incurred  in  2005.

Other  income  was $29,487 for the six months ended June 30, 2005 as compared to
other expense of $34,195 for the six months ended June 30, 2004. The increase in
other  income  was  attributable  to  the  miscellaneous  income  earned  from
sub-letting  of  part  of  the factory space that was temporarily available, and
sales  of  consumable  items  and  repair services for the equipment sold by the
Company.


                                       26
<PAGE>
MINORITY  INTEREST

During  the  six  months  ended June 30, 2005, the Company recorded the minority
interests'  share  of  loss  of  $68,267, as compared to the minority interests'
share of loss of $139,054 for the six months ended June 30, 2004. As of June 30,
2005, the minority interests represented effectively the 60% shareholding in FDI
and  the  30%  in  Hytech  US.

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. Fantatech
Inc. and Hytechnology Inc. are both Delaware corporations and are subject to the
corporation income taxes of the United State of America. Intsys and Megabase are
not  liable  for  income  taxes  in  BVI.  The  Company's  PRC  subsidiaries and
associates  are  subject to Enterprise Income Tax in the PRC at a rate of 15% on
net  income.  However,  based on the local tax rules, SDCL was entitled to a tax
holiday  for  the  first two years of its operations (years 1999 and 2000) and a
50%  reduction  of  the  rate  for the third through eighth years (years 2001 to
2006)  of  operations  due  to  its  high  technology content of businesses. The
provision for taxes on earnings of the PRC subsidiaries, calculated based on the
prevailing  accounting  standards in PRC, for the six months ended June 30, 2005
and  2004  were  $33  and  $19,889,  respectively.

NET  LOSS

The  Company  recorded  a net loss of $599,231 for the six months ended June 30,
2005  as  compared  to  a  net loss of $39,025 for the six months ended June 30,
2004.  This  was  primarily  due  to  the  increase  in  selling,  marketing and
administrative  expenses  as  well  as  impairment  provision in relation to the
intangible  assets  recorded  in  2005.


FINANCIAL  CONDITION,  LIQUIDITY  AND  CAPITAL  RESOURCES

General
-------

The  Company anticipates that, based on currently plans and assumptions relating
to  its  existing  operations, its projected cash flow from operations, combined
with  cash on hand, bank lines of credit, and other external credit sources, and
the  credit  facilities provided by affiliates or related parties, its financial
resources  are  sufficient to support the Company's working capital requirements
for  its  planned operations for the next twelve months. Depending on the future
rate of growth, the Company may seek additional capital in the future to support
its  expansion  in  operations.

In  order to finance the continuing working capital requirements of the Company,
the  Company  is  attempting  to  arrange  additional  short-term  bank loans of
approximately  $2,000,000.  The  Company  is  also  expediting  the  process  of
invoicing  its  customers  for  project progress payments in order to reduce the
carrying  amounts  of  work  in  progress  and  the  costs incurred in excess of
billings  on  uncompleted  contracts.  Based  on  management's evaluation of the
Company's  short-term  cash  requirements  and  liquidity  resources, management
anticipates  that the pressure on the Company's cash flows will be substantially
reduced following the completion of the large-size attraction project in Tianjin
and  the  theme park in Chongqing by the end of 2005, as well as by the progress
payments  to be received from other uncompleted projects.  In early August 2005,
the  Company  obtained  a  bridge loan of approximately $1,000,000 from Shenzhen
Huaqiang  Technology  Co.,  Ltd.,  a  related  party,  at  the prevailing market
interest  rate  of  5.58% per annum, to provide additional operational liquidity
for  the  remainder  of  2005.

Operating
---------

During  the  six  months ended June 30, 2005, the Company's operations used cash
resources  of


                                       27
<PAGE>
$1,086,985,  as  compared  to  $705,593  for the six months ended June 30, 2004.
During  the six months ended June 30, 2005, the Company's cash balance decreased
by  $3,619,816,  to  $459,075  at  June  30,  2005, as compared to $4,078,891 at
December  31, 2004. During the six months ended June 30, 2005, the Company's net
working  capital  decreased  by  $2,523,334,  to  $881,239  at June 30, 2005, as
compared to $3,405,573 at December 31, 2004, and the Company had a current ratio
of  1.11:1  at  June  30,  2005,  as  compared  to  1.43:1 at December 31, 2004.

Inventories  increased  by  $848,846 or 47.4% to $2,641,298 at June 30, 2005, as
compared to $1,792,452 at December 31, 2004, which was the result of an increase
in  resources  allocated to fulfill the contracts for the large size attractions
and  theme  parks.

The  costs and estimated earnings in excess of billings increased by $761,301 or
31.5%  to $3,175,419 at June 30, 2005, as compared to $2,414,118 at December 31,
2004,  which  was attributable to the increase in resources utilized in projects
under  construction.  The  billings  in  excess  of costs and estimated earnings
decreased  by  $576,905  or  35.4% to $1,052,503 at June 30, 2005 as compared to
$1,629,408  at  December  31,  2004.

As  of  June  30,  2005,  the  Company  recorded in other receivables a total of
$211,740  representing  the  tax  recoverable  or  receivable,  which  primarily
consisted  of  tax  credit generated from input value added taxes ("VAT") on the
raw materials purchased which were available for offsetting the potential output
VAT  liabilities  when  the  Company  invoiced  its  customers.

During the six months ended June 30, 2005, the total amount of accounts payable,
accrued  liabilities  and  other  payables  increased by $611,250 or 44.3% to an
aggregate  of $1,990,591 at June 30, 2005, as compared to $1,379,341 at December
31,  2004, which was due to the increase in purchases by the Company in order to
fulfill  the  uncompleted  contracts.

The  amount  receivable  from  related parties decreased by $415,405 or 86.9% to
$62,296  at  June  30,  2005,  as  compared to $477,701 at December 31, 2004 due
primarily  to  the  repayment  of  a  trade  receivable by Hytech HK. The amount
payable  to related parties decreased by $10,987 or 1.7% to $639,601 at June 30,
2005, as compared to $650,588 at December 31, 2004, as a result of the repayment
of  approximately  $210,000  of the advance from Hytech HK, offset largely by an
increase  of  approximately  $170,000  payable  to  Films Inc. for a purchase of
product  and  approximately  $30,000  payable  to  Bilibest Industries Ltd for a
payment  made  on  behalf  of  the  Company.

Investing
---------

For the six months ended June 30, 2005, the Company's investment activities used
cash resources of $2,532,831, as compared to $1,742,977 for the six months ended
June  30,  2004.

Additions  to property, plant and equipment during the six months ended June 30,
2005  aggregated  $2,181,348,  of  which  $1,956,071  was  for investment in the
Company's  Revenue-Sharing  Centers.  In  addition,  there  was  an  increase in
construction  in progress of $351,483 or 15.6% at June 30, 2005 to $2,607,480 as
compared  to  $2,255,997  at  December  31, 2004 as the Company has devoted more
resources  to the new Revenue-Sharing Centers. At June 30, 2005, the Company had
capital  expenditure  requirements  of  approximately  $8,700,000  in  order  to
complete  the  contracts  on  hand. The Company believes that it will be able to
fund  expected  capital  expenditures  through  internal  cash flow and external
resources.

Financing
---------

During  the six months ended June 30, 2005, there was no change to the Company's
short-term bank loan totaling $2,433,735 as compared to its position at December
31,  2004.  The  bank  loans bear interest at fixed rate of 5.31% per annum with
interest  payable  monthly  and  the principal is due for repayment in September
2005.  The  loan was guaranteed by Shenzhen Huaqiang Holdings Limited ("SHQ"), a


                                       28
<PAGE>
related  party.


ITEM  3.  CONTROLS  AND  PROCEDURES

Members  of  the  Company's  management,  including  its principal executive and
financial officers, have evaluated the effectiveness of the Company's disclosure
controls  and  procedures,  as  defined  by  paragraph (e) of Exchange Act Rules
13a-15  or  15d-15,  as  of June 30, 2005, the end of the period covered by this
report.  Based  upon  that  evaluation,  the  Company's  principal executive and
financial  officers  have  concluded  that the Company's disclosure controls and
procedures  are  effective.

(b)  Changes  in  Internal  Controls

There were no changes in the Company's internal control over or in other factors
identified  in  connection  with  the  evaluation  required  by paragraph (d) of
Exchange  Act Rules 13a-15 or 15d-15 that occurred during the quarter ended June
30,  2005  that have materially affected, or are reasonably likely to materially
affect,  our  internal  control  over  financial  reporting.


                                       29
<PAGE>
PART  II  -  OTHER  INFORMATION


ITEM 1. LEGAL PROCEEDINGS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

A  list of the exhibits required to be filed as part of this report is set forth
in  the  Index  to  Exhibits,  which  immediately precedes such exhibits, and is
incorporated  herein  by  reference.


                                       30
<PAGE>
                                   SIGNATURES


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




                                         FANTATECH, INC.
                                         ---------------
                                          (Registrant)



Date:  August 12, 2005               By: /s/ GUANGWEI LIANG
                                         -----------------------
                                         Guangwei Liang
                                         Chief Executive Officer



Date:  August 12, 2005               By: /s/ GARY LUI
                                         -----------------------
                                         Gary Lui
                                         Chief Financial Office


                                       31
<PAGE>
<TABLE>
<CAPTION>
                                Index to Exhibits

<S>      <C>
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 by the Chief Executive Officer pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002
32.2          Certification by the Chief Financial Officer pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002
</TABLE>


                                       32