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 March 31, 2007


       |_| 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 the past 90 days.
                                [X] Yes    [ ] No

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).
                                [ ] Yes    [X] No

As  of  April  30, 2007 the Company had 30,096,117 shares of common stock 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                                                            Page
<S>                                                                                       <C>
Item 1.   Financial Statements
          Condensed Consolidated Balance Sheets - March 31, 2007 (Unaudited) and
            December 31, 2006                                                                3
          Condensed Consolidated Statements of Operations (Unaudited) -Three Months
            Ended March 31, 2007 and 2006                                                    4
          Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) -
            Three Months Ended March 31, 2007 and 2006                                       5
          Condensed Consolidated Statements of Cash Flows (Unaudited) - Three Months
            Ended March 31, 2007 and 2006                                                    6
          Notes to Condensed Consolidated Financial Statements (Unaudited) -
            Three Months Ended March 31, 2007 and 2006                                       7

Item 2.   Management's Discussion and Analysis or Plan of Operation                         21

Item 3.   Controls and Procedures                                                           29

Part II - Other Information

Item 1.   Legal Proceedings                                                                 30

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds                       30

Item 3.   Defaults Upon Senior Securities                                                   30

Item 4.   Submission of Matters to a Vote of Security Holders                               30

Item 5.   Other Information                                                                 30

Item 6.   Exhibits                                                                          30

Signatures                                                                                  31
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
                                    PART I - FINANCIAL INFORMATION
ITEM  1.   FINANCIAL  STATEMENTS
------------------------------------------------------------------------------------------------------
                                   FANTATECH, INC. AND SUBSIDIARIES
                                 CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                  March 31, 2007    December 31, 2006
                                                                 ----------------  -------------------
ASSETS                                                             (Unaudited)          (Audited)
<S>                                                              <C>               <C>
Current assets
  Cash and cash equivalents                                      $     4,342,298   $        2,306,157
  Deposit at an affiliate's financial clearing center (note 3)            18,934                  170
  Guaranteed trust fund deposit                                           10,130               10,210
  Trade receivables, net of allowance for doubtful accounts              410,269              285,529
  Related party receivables (note 10(e))                               1,971,964            2,713,685
  Inventories (note 4)                                                 3,168,265            2,414,706
  Costs and estimated earnings in excess of
    billings on uncompleted contracts (note 5)                           459,233              699,277
  Deposits and prepayments                                             1,614,673            1,262,197
  Other receivables                                                      190,502              162,857
                                                                 ----------------  -------------------
Total current assets                                                  12,186,268            9,854,788

Interest in an associated company (note 7)                                     -                    -
Property, plant and equipment, net (note 6, 9)                         8,723,480            9,429,832
Construction in progress                                                 457,797              362,512
                                                                 ----------------  -------------------
Total assets                                                     $    21,367,545   $       19,647,132
                                                                 ================  ===================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Short-term bank loan                                           $     2,585,984   $                -
  Accounts payable                                                     2,871,895            2,931,051
  Accrued liabilities and other payables                                 998,533            1,861,574
  Related party payables (note 10(e))                                  2,390,816            3,172,147
  Billings in excess of costs and estimated earnings
    on uncompleted contracts (note 5)                                  2,239,678            1,298,936
  Deposits received                                                    1,800,130            1,728,649
                                                                 ----------------  -------------------
Total current liabilities                                             12,887,036           10,992,357

Minority interests (note 12)                                           4,642,552            4,674,746

Commitments and contingencies (note 13)

Stockholders' equity
  Preferred stock; $0.001 par value; 10,000,000 shares
    authorized; shares issued and outstanding - none                           -                    -
  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
  Deficit                                                             (1,623,586)          (1,433,656)
  Reserve fund                                                           409,211              409,211
  Accumulated other comprehensive income                                 435,046              387,188
                                                                 ----------------  -------------------
Stockholders' equity                                                   3,837,957            3,980,029
                                                                 ----------------  -------------------
Total liabilities, minority interests and stockholders' equity   $    21,367,545   $       19,647,132
                                                                 ================  ===================
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


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

                                                       Three Months Ended    Three Months Ended
                                                         March 31, 2007        March 31, 2006
                                                      --------------------  --------------------
<S>                                                   <C>                   <C>
REVENUE :
  Contracted sales                                    $         1,299,262   $           692,872
  Revenue sharing operations                                    1,129,772               326,714
                                                      --------------------  --------------------
TOTAL REVENUE                                                   2,429,034             1,019,586
                                                      --------------------  --------------------

COST OF REVENUE:
  Cost of sales                                                 1,240,515               535,394
  Cost of revenue sharing operations                              551,848               313,907
                                                      --------------------  --------------------
TOTAL COST OF REVENUE                                           1,792,363               849,301
                                                      --------------------  --------------------

GROSS PROFIT                                                      636,671               170,285
                                                      --------------------  --------------------

OPERATING EXPENSES:
  Selling and marketing                                           403,000               220,584
  General and administrative                                      317,274               322,048
  Loss on disposal of property, plant and equipment                   733                 1,286
                                                      --------------------  --------------------
TOTAL OPERATING EXPENSES                                          721,007               543,918
                                                      --------------------  --------------------

LOSS FROM OPERATIONS                                              (84,336)             (373,633)

OTHER INCOME (EXPENSE)
  Interest expense                                                (32,733)              (34,591)
  Other (expense) income                                           (4,860)               18,098
  Interest income                                                   5,735                 2,014
  Foreign exchange loss                                            (1,428)               (1,560)
                                                      --------------------  --------------------

LOSS BEFORE INCOME TAX, MINORITY INTERESTS
  AND EQUITY IN LOSS OF AN ASSOCIATED COMPANY                    (117,622)             (389,672)

MINORITY INTERESTS (note 12)                                      (78,087)             (122,636)

INCOME TAXES                                                      150,395                   262
                                                      --------------------  --------------------

LOSS BEFORE EQUITY IN LOSS OF AN
  ASSOCIATED COMPANY                                             (189,930)             (267,298)

EQUITY IN LOSS OF AN ASSOCIATED COMPANY                                 -               (18,657)
                                                      --------------------  --------------------

NET LOSS FOR THE PERIOD                               $          (189,930)  $          (285,955)
                                                      ====================  ====================

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

LOSS PER SHARE (note 8)
  - BASIC AND DILUTED                                 $             (0.01)  $             (0.01)
                                                      ====================  ====================
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                        FANTATECH, INC. AND SUBSIDIARIES
  CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

                                         Three Months Ended March 31,
                                            2007              2006
                                      -----------------  ---------------
<S>                                   <C>                <C>
Net loss for the period               $       (189,930)  $     (285,955)

Other comprehensive income:
  foreign currency translation gains            47,858          240,914
                                      -----------------  ---------------

Comprehensive loss for the period     $       (142,072)  $      (45,041)
                                      =================  ===============
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


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

                                                                                  Three Months Ended March 31,
                                                                                     2007              2006
                                                                               -----------------  ---------------
<S>                                                                            <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period                                                                (189,930)        (285,955)
Adjustments to reconcile net loss for the period to net cash provided by
  operating activities:
  Depreciation expense                                                                  290,313          337,664
  Allowance for doubtful accounts                                                         1,755            5,845
  Loss on disposal of property, plant and equipment                                         733            1,286
  Foreign exchange loss                                                                   1,428            1,560
  Minority interests                                                                    (78,087)        (122,636)
  Equity in loss of an associated company                                                     -           18,657
Change in operating assets and liabilities:
  (Increase) decrease in --
  Guaranteed trust fund deposit                                                              80              140
  Trade receivables                                                                    (126,495)         652,436
  Related party receivables                                                             741,721          139,286
  Inventories                                                                          (326,902)        (159,618)
  Costs and estimated earnings in excess of billings on uncompleted contracts           240,044         (215,845)
  Deposits and prepayments                                                             (352,476)      (1,139,983)
  Other receivables                                                                     (27,645)        (106,480)
  (Decrease) increase in --
  Accounts payable, accrued liabilities and other payables                             (922,197)      (1,069,610)
  Related party payables                                                               (781,331)       1,233,813
  Billings in excess of costs and estimated earnings on uncompleted contracts           940,742           72,029
  Deposits received                                                                      71,481           61,489
                                                                               -----------------  ---------------
Net cash used in operating activities                                                  (516,766)        (575,922)
                                                                               -----------------  ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property, plant and equipment                                             (14,030)      (1,717,191)
  Deposit at an affiliate's financial clearing center                                   (18,764)         321,728
                                                                               -----------------  ---------------
Net cash used in investing activities                                                   (32,794)      (1,395,463)
                                                                               -----------------  ---------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from short-term bank loan                                                  2,585,984                -
                                                                               -----------------  ---------------
EFFECT OF EXCHANGE RATE CHANGES IN CASH                                                    (283)          49,049
                                                                               -----------------  ---------------

NET INCREASE (DECREASE) IN CASH                                                       2,036,141       (1,922,336)

Cash and cash equivalents, at beginning of period                                     2,306,157        2,365,921
                                                                               -----------------  ---------------
Cash and cash equivalents, at end of period                                    $      4,342,298   $      443,585
                                                                               =================  ===============

Supplementary disclosures of cash flow information:
  Interest paid                                                                $         32,733   $       34,591
                                                                               =================  ===============
  Income tax paid                                                              $        128,354   $      143,658
                                                                               =================  ===============

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
  Transfer of property, plant and equipment to inventories                     $        521,942   $            -
                                                                               =================  ===============
  Decrease (increase) in construction in progress                              $        (95,285)  $     (361,927)
                                                                               =================  ===============
</TABLE>

The  accompanying  notes  are  an  integral part of these consolidated financial
statements.


                                        6
<PAGE>
                        FANTATECH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                   THREE MONTHS ENDED MARCH 31, 2007 AND 2006

1.   ORGANIZATION  AND  PRINCIPAL  ACTIVITIES

Fantatech,  Inc., formerly Lucas Educational Systems, Inc. (hereinafter referred
to as the "Company", which term shall include, when the context so requires, its
subsidiaries  and affiliates) was incorporated in the State of Delaware in 1996.
During  November  2002,  the  Company acquired all of the issued and outstanding
shares  of Intsys Share Limited ("Intsys") in a reverse acquisition. 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
("FunPlex")  and  outdoor  theme parks.  The Company's operations are located in
the  People's  Republic  of  China  (the "PRC" or "China"). The Company's wholly
owned subsidiaries include Intsys, Shenzhen Digitainment Co., Ltd. ("SDCL"), and
Megabase  Investment  Limited ("Megabase").  In addition, the Company's majority
controlled  companies  include  Hytechnology  Inc.  ("Hytech  US"),  Chongqing
FantaWild FunPlex Tour Co. Ltd. ("Chongqing FTC") and Fantatech Development Inc.
("FDI").

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% equity interest in FDI with the remaining 20%
equity  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 Shenzhen Huaqiang
Holdings  Limited  ("SHQ").  The  Chairman  and  President of SHQ are the former
Chairman  and  Chief  Executive  Officer  ("CEO")  of  the  Company.

In  June  2005,  the  Company resolved to set up two management companies in the
cities  of  Chongqing and Tianjin in China, in order to manage the operations of
the  theme park in Chongqing and the large-size attraction "Dino-Rampage" in the
Tianjin  FunPlex,  respectively.  These  management  companies  are  intended to
facilitate the operations of the aforesaid large-size revenue sharing operations
and  will  be  budgeted  to  operate at a break-even level. In late August 2005,
Chongqing FTC, with registered capital of approximately $620,000, which is owned
90%  by  SDCL and 10% by FDI, formally commenced its operations of assisting and
coordinating  the  establishment  of the Chongqing Theme Park and its subsequent
management.  In  late  November  2005,  Tianjin  Longqiao  FantaWild  Kepu  Ltd.
("Tianjin  LFK"),  with  registered  capital  of approximately $37,000, which is
owned  50%  by  FDI  and  50%  by Tianjin Longqiao Property Development Co. Ltd.
("Longqiao  PDL"),  a  third  party  local  partner,  formally  commenced  its
operations. There are seven members of the Board of Directors of Tianjin LFK, to
which  FDI  has  appointed  two  directors.


                                        7
<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. The
Company's  investment in Tianjin LFK is accounted for using the equity method of
accounting  as  the  Company does not have effective control over its Board. All
material  intercompany balances and transactions, including intercompany profits
and  unrealized  profits  and  losses  are  eliminated  on  consolidation.

The  interim unaudited condensed consolidated financial statements for the three
months  ended  March  31, 2007 and 2006, 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
year  ended December 31, 2006. 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,
2007.

GOING  CONCERN  -  The  accompanying  unaudited condensed consolidated financial
statements have been prepared assuming that the Company will continue as a going
concern,  which  contemplates  the realization of assets and the satisfaction of
liabilities in the normal course of business. The carrying amounts of assets and
liabilities  presented  in  the  accompanying  unaudited  consolidated financial
statements  do  not  purport  to  represent the realizable or settlement values.
During the three months ended March 31, 2007, the Company has been concentrating
its  efforts  in  the  two  projects  regarding  the  sales  and installation of
equipments  to  the  theme park in the cities of Wuhu and Shantou, respectively.
Although  the  two  projects  have  progressed  within  the anticipated extended
schedule,  the  related progress revenue has not been fully recognized until the
delivery and installation of equipment to the respective sites. Accordingly, the
progress  payments  from  the  customers  totaling  approximately $2,780,000 are
recorded  as  current liabilities (approximately $1,100,000 was invoiced but not
recognized, while approximately $1,680,000 was recorded as deposit received). As
a  result,  the  Company  has  a net working capital deficiency of approximately
$700,768  as of March 31, 2007. The Company expects that the net working capital
deficiency  is  temporary  and  will gradually return to positive level once the
Company  starts to recognize the progress revenue upon delivery and installation
of  the  equipment.

The Company anticipates that, based on current 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  will  be  sufficient  to  support  the  Company's  working  capital
requirements  for  its  normal  level  of operations for the next twelve months,
although  there  may  be  temporarily lower levels of working capital at certain
times  during  the  course  of  its  business.


                                        8
<PAGE>
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  gradually  be  reduced for the next twelve months.
However,  there  is  no assurance that the Company will not encounter unexpected
financial  and  technical difficulties during the process of construction of the
two  theme  parks,  and in such case, the Company will seek possible resolution,
including  the  assistance  from  its  major  shareholder,  Shenzhen  Huaqiang
Technology  Co.,  Ltd  ("SHT").  Subject to the continue progress on uncompleted
contracts,  the  projected payment from the sale of equipment to the theme parks
in  Wuhu  and  Shantou,  respectively,  will improve the working capital for the
Company  during  the  remainder  of  2007.

USE  OF  ESTIMATES  - The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
requires  management  to  make certain estimates and assumptions that affect the
reported  amounts  of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the respective reporting period.  Actual results
could  differ  from  those  estimates.  Significant estimates made by management
are, among others, accounting for asset impairment, revenue and cost recognition
as  well  as stages of contracts completion (including items listed as "billings
in  excess  of costs and estimated earnings on uncompleted contracts" and "costs
and estimated earnings in excess of billings on uncompleted contracts"), and the
allowance  for  doubtful  accounts.  Actual  results  could  differ  from  those
estimates.

FOREIGN  CURRENCY  TRANSLATION - 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 official currency of China. The Company's PRC subsidiaries
maintain  their financial records and the statutory financial statements in RMB.
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 balance 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 United States Dollar
("USD"),  the  reporting  currency  of  the  Company,  using  the  exchange rate
prevailing  at  the  balance  sheet  date  for  consolidation  and presentation.

On  July  21,  2005,  the  People's Bank of China ("PBC") announced that the RMB
would  no  longer  be tied directly to the 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 USD 1.00 to RMB 8.11 (previously,
USD1.00 to RMB 8.3), to be allowed to float within a band of +0.3 percent around
                                                             -
the  central parity rate as published by the PBC daily. The Company recorded and
adjusted  its  exchange  rate  applicable  to  the  translation  of  financial
information  in  accordance  with the announced change as of the effective date.
Accordingly,  as  of  March  31,  2007,  the  Chinese  financial statements were
translated  from  RMB  to  USD  at  the prevailing exchange rate. For assets and
liabilities  (other than equity and reserves) translation, the published closing
exchange rate of USD 1.00 to RMB 7.73 was applied, while for revenues, expenses,
gains and losses, the weighted average rate of USD 1.00 to RMB 7.75 was used for
translation.  The  resulting  translation  gains  or  losses  were recorded as a
separate  component  of  stockholders'  equity.

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


                                        9
<PAGE>
The Company's other subsidiaries in the United States of America and the British
Virgin  Islands  ("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.

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.

RECENT  ACCOUNTING  PRONOUNCEMENTS
----------------------------------

In  July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty
in  Income  Taxes ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in
income  taxes  recognized  in an enterprise's financial statements in accordance
with  FASB  Statement  No. 109, Accounting for Income Taxes. FIN 48 prescribes a
recognition  threshold  and  measurement  attribute  for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax  return.  This  Interpretation  also  provides  guidance  on  derecognition,
classification,  interest  and  penalties,  accounting  in  interim  periods,
disclosure,  and  transition.  This Interpretation is effective for fiscal years
beginning after December 15, 2006, with earlier adoption permitted. The adoption
of  FIN  48  did  not  have  a  significant impact on the consolidated financial
statements.

In  September  2006, the FASB issued Statement of Financial Accounting Standards
("SFAS")  No.  157,  Fair  Value Measurements. SFAS No. 157 establishes a common
definition  for  fair  value  to be applied to US GAAP guidance requiring use of
fair  value,  establishes  a  framework  for  measuring  fair value, and expands
disclosure  about  such  fair  value measurements. SFAS No. 157 is effective for
fiscal  years  beginning  after  November  15,  2007.  The  company is currently
evaluating  the  provisions  of  SFAS  No.  157.

In  February  2007,  the  FASB  issued  SFAS  No. 159, The Fair Value Option for
Financial  Assets  and  Financial  Liabilities. SFAS No. 159 permits entities to
choose  to  measure  many  financial instruments and certain other items at fair
value.  SFAS  No. 157 is effective for fiscal years beginning after November 15,
2007.  The  company  is  currently  evaluating  the  provisions of SFAS No. 159.

3.   DEPOSIT  AT  AN  AFFILIATE'S  FINANCIAL  CLEARING  CENTER

Cash  on  deposit  at  the  financial  clearing  center  ("FCC")  operated by an
affiliate  as  at March 31, 2007 and December 31, 2006 is summarized as follows:

<TABLE>
<CAPTION>
                                         March 31, 2007    December 31, 2006
                                          (Unaudited)          (Audited)
                                        ----------------  -------------------
<S>                                     <C>               <C>
Financial clearing center operated by:
  Shenzhen Huaqiang Holdings Limited    $         18,934  $               170
                                        ================  ===================
</TABLE>

The  Company's  PRC  subsidiaries  are  members  of the FCC operated by SHQ.  As
described  below,  the  role  of  SHQ  is  to primarily coordinate the financial
arrangement  of  its members via the FCC. The Company has cash on deposit at the
FCC.


                                       10
<PAGE>
A FCC resembles an internal bank which accepts deposits from and grants loans to
its  members at the prevailing market rate of interest. A FCC also obtains loans
from  external  commercial  banks  and  then in turn sub-lends to its members in
order  to  meet  their  working  capital  requirements  with  less  complicated
application  procedures and no attendant financial charges. The cash deposits at
the  FCC  can  be  withdrawn  any time without any restrictions, except that the
respective  FCC can collect directly from the Company's account any overdue loan
principal  and  accrued  interest  in  case  the  Company  is  in default in its
repayment  obligations.

4.   INVENTORIES

Inventories  at  March 31, 2007 and December 31, 2006 are summarized as follows:

<TABLE>
<CAPTION>
                             March 31, 2007    December 31, 2006
                              (Unaudited)          (Audited)
                            ----------------  -------------------
<S>                         <C>               <C>
     Raw Materials          $      1,106,820  $           809,577
     Work-in-progress              1,942,880            1,487,655
     Finished Goods                  118,565              117,474
                            ----------------  -------------------
                            $      3,168,265  $         2,414,706
                            ================  ===================
</TABLE>


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

Costs  and  estimated earnings in excess of billings on uncompleted contracts as
of  March  31,  2007  and  December  31,  2006  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                                     March 31, 2007    December 31, 2006
                                                      (Unaudited)          (Audited)
                                                    ----------------  -------------------
<S>                                                 <C>               <C>
Cumulative costs incurred on uncompleted contracts  $    19,932,422   $       22,391,872

Cumulative estimated earnings to date                     3,112,066            5,133,243
                                                    ----------------  -------------------
                                                         23,044,488           27,525,115

Less: Billings to date                                  (24,824,933)         (28,124,774)
                                                    ----------------  -------------------
                                                    $    (1,780,445)  $         (599,659)
                                                    ================  ===================
</TABLE>

Included in the accompanying balance sheets under the following captions are the
following:

<TABLE>
<CAPTION>
                                            March 31, 2007    December 31, 2006
                                             (Unaudited)          (Audited)
                                           ----------------  -------------------
<S>                                        <C>               <C>
Costs and estimated earnings in excess
  of billings on uncompleted contracts     $       459,233   $          699,277
Billings in excess of costs and estimated
  earnings on uncompleted contracts             (2,239,678)          (1,298,936)
                                           ----------------  -------------------
                                           $    (1,780,445)  $         (599,659)
                                           ================  ===================
</TABLE>


                                       11
<PAGE>
6.   PROPERTY,  PLANT  AND  EQUIPMENT

Property,  plant,  and  equipment  as  at  March  31, 2007 and December 31, 2006
consisted  of  the  following:

<TABLE>
<CAPTION>
                                                   March 31, 2007    December 31, 2006
                                                    (Unaudited)          (Audited)
                                                  ----------------  -------------------
<S>                                               <C>               <C>
Leasehold improvements                            $       485,859   $          481,131
Plant and machinery                                       605,681              596,109
Furniture and fixtures                                    116,515              115,381
Equipment for revenue sharing operations                9,797,494           10,692,616
Computers and equipment                                   955,199              937,605
Motor vehicles                                            371,308              367,873
                                                  ----------------  -------------------
                                                       12,332,056           13,190,715

Less: Accumulated depreciation and amortization
(net of write off on disposal)                         (3,608,576)          (3,760,883)
                                                  ----------------  -------------------
                                                  $     8,723,480   $        9,429,832
                                                  ================  ===================
</TABLE>

Depreciation  charge  was $290,313 and $337,664 for the three months ended March
31,  2007  and  2006,  respectively.


7.   INTEREST  IN  AN  ASSOCIATED  COMPANY

The  investment  consists  of  the Company's 50% equity interest in Tianjin LFK,
which  is  held  by  FDI  (a  40%  owned but effectively controlled subsidiary).
Tianjin  LFK  was  established  in  November  2005 to manage the Tianjin FunPlex
entertainment  center  which  commenced  its  formal operation in February 2006.
Based  on  the  agreement  with  Longqiao  PDL, the local venture partner of the
Tianjin  FunPlex, revenue income from the FunPlex will be shared equally between
the  Company  and  Longqiao PDL net of the rental and administrative expenses of
the  FunPlex. For the three months March 31, 2007 and 2006, the Company recorded
no  income  from  the  Tianjin  FunPlex due to the loss incurred by Tianjin LFK.

Although  Tianjin  LFK  is  budgeted  to operate at a break-even level annually,
actual profitability, especially on an interim basis and at the initial stage of
operation  in particular, is subject to substantial variability. The Company has
no  contractual  obligation for any losses incurred by Tianjin LFK except to the
maximum  amount  of  its  capital  investment  in  Tianjin  LFK.


                                       12
<PAGE>
The  unaudited  condensed  statements of operations of Tianjin LFK for the three
months  ended  March  31,  2007  and  2006  are  as  follows:

<TABLE>
<CAPTION>
                                                           Three months ended     Three months ended
                                                             March 31, 2007         March 31, 2006
                                                          ---------------------  --------------------
                                                               (Unaudited)           (Unaudited)
<S>                                                       <C>                    <C>
Sales                                                     $            144,633   $           182,470
                                                          =====================  ====================
Net loss for the period                                   $            (16,236)  $          (185,400)
                                                          =====================  ====================
The Company's share of net loss for the period            $                  -   $           (18,657)
                                                          =====================  ====================


                                                                  As at                  As at
                                                             March 31, 2007         March 31, 2006
                                                          ---------------------  --------------------
                                                               (Unaudited)           (Unaudited)

Cumulative losses in excess of investment (unrecognized)  $            (30,387)  $           (74,043)
                                                          =====================  ====================
</TABLE>


8.   LOSS  PER  SHARE

On  January  6,  2004,  the  Company granted stock options to purchase 2,000,000
shares  common  stock to certain officers and key employees of the Company at an
exercise  price  of  $1.00 per share. None of the outstanding stock options were
exercisable  prior  to January 7, 2007. All of the Company's outstanding options
were  cancelled  effective from October 10, 2005. As at March 31, 2007 and 2006,
there  were  no  stock  options  issued  and  outstanding.

As  no  options  or  other  dilutive securities were outstanding as of March 31,
2007  and  2006,  basic  and  diluted EPS is the same for all periods presented.


9.   IMPAIRMENT  OF  PROPERTY,  PLANT  AND  EQUIPMENT

During  the year ended December 31, 2006, management of the Company conducted an
evaluation  of  the  carrying  value  of  its  property, plant and equipment, in
particular  for  those  equipment  used  for  its  Revenue-Sharing  Operations.

As of December 31, 2006, the Company operated twenty-six Revenue-Sharing Centers
including  fourteen  FuntaWild  FunPlexes,  ten  4D  theaters,  one  large-size
attraction  and one theme park. Approximately 70% of the Revenue-Sharing Centers
were  launched  in 2004 and 2005, while all of the fourteen FunPlexes and one 4D
theater  were  not  operated profitably due to insufficient visitors. In view of
the  non-profitable  performance of most of the indoor FunPlexes centers and the
increasing  efforts that the Company has placed on the development and operation
of theme parks, management has conducted an examination of the recoverable value
of  the equipment used in these Revenue-Sharing Centers, including the review of
the  type,  nature,  actual  wear  and  tear,  mobility,  attractiveness,
transferability  as  well  as  market  acceptability of those related equipment,
taking  into  account of the estimated cash flow for each of the Revenue-Sharing
Centers.  As  a  result  of  such  evaluation,  the  Company  determined that an
impairment of the carrying value of the equipments associated with the aforesaid
FunPlexes  and theater should be approximately $4,209,000. No further impairment
was  recorded  as  of  March  31,  2007.


                                       13
<PAGE>
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 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.

During  the three months ended March 31, 2007 and 2006, FDI collected for SDCL a
total  of  $28,914 and $83,947, respectively, of the net revenue shared from the
revenue  sharing  centers  operated  for  SDCL.


                                       14
<PAGE>
(b)  Contracts  with  related  party
     -------------------------------

On  January  24,  2006,  SDCL entered into an Equipment Sale Contract (the "Sale
Contract")  and an Equipment Installation Contract (the "Installation Contract")
with  Wuhu Huaqiang Tour City Development Co., Ltd. ("Wuhu Huaqiang").  Pursuant
to the Sale Contract, Wuhu Huaqiang will purchase from SDCL 22 sets of amusement
attractions/equipment  (the  "Equipment") for use in a specific theme park to be
built  in  the  City  of Wuhu, Anhui Province, China.  The consideration for the
Equipment  is  RMB  126,730,000  (approximately $15,650,000) (the "Sale Price"),
plus a right to receive 8% of the theme park's Distributable Income for a period
of  15 years from commencement of theme park operations.  "Distributable Income"
means  the  theme park's Gross Revenue, less certain limited expenses (including
sales  tax  and  the  purchase  cost  of  souvenirs,  beverages, foods and other
commodities  sold in the theme park).  Wuhu Huaqiang has made an initial deposit
of  approximately 6% of the Sale Price (approximately $938,000) within one month
of  the  effective  date of the Sale Contract.  The balance of the Sale Price is
payable  in  five  separate installments to be made through May 30, 2007.  Under
the  Sale  Contract, Wuhu Huaqiang has guaranteed that the 8% revenue share from
the theme park's aggregate Distributable Income during such 15-year period shall
in  no  case  be  less  than  RMB  50,000,000  (approximately  $6,170,000).

The  Installation Contract provides for the installation of the Equipment at the
theme  park  by  SDCL.  Total  consideration for the installation service is RMB
10,000,000  (approximately  $1,230,000)  payable  in  five  equal  installments
beginning one month after the signing of the Installation Contract and ending 10
days  after  completion  of the installation services. The installation services
are  scheduled  to  be  completed  by  July  18,  2007.

Management  believes  that  these  arrangements  with  Wuhu  Huaqiang  will  be
advantageous  to  the Company and that its participation in the large-size theme
park  business  will  enhance  its  reputation  in  the  industry with a minimum
investment.  Both the Sale and Installation Contracts were reviewed and approved
by  the  Company's  Audit  Committee  and  Board  of  Directors.

Wuhu  Huaqiang  is  a joint venture company incorporated in the City of Wuhu and
controlled 75% by an affiliate of SHQ. The Chairman and President of SHQ are the
former  Chairman  and  CEO  of  the  Company.  The then Chairman and CEO did not
participated  in the discussion regarding or eventual Board approval of the Sale
and  Installation  Contracts.

During  the three months ended March 31, 2007, the Company recorded sale revenue
from  Wuhu  Huaqiang  of  approximately $701,198 while no such sale revenue from
Wuhu  Huaqiang  during  the  three  months  ended  March  31,  2006.

(c)  Purchases  of  digital  films  and  related  components
     -------------------------------------------------------

During  the  three  months  ended March 31, 2007 and 2006, the Company purchased
certain  components  for  its  products  from  Hyvision  Digital  Film  Inc.
("Hyvision"),  an  affiliate  of  SHQ,  having a total value of $0 and $373,134,
respectively.  SHT,  a  significant shareholder of the Company, has a 20% equity
interest  in  Hyvision.  The  Company's  CEO  is  also  a  director  of  SHT.

(d)  Sales  to  related  parties
     ---------------------------

During  the  three  months  ended  March  31,  2007  and  2006, the Company sold
equipment to Hytechnology Limited ("Hytech HK") for an aggregate price of $7,000
and  $10,500,  respectively.  Hytech  HK  is  beneficially  owned  by  Top  Link
Development  Limited  ("TLD"),  a  company  controlled  by  SHQ.


                                       15
<PAGE>
(e)  Related  party  receivables  and  payables
     ------------------------------------------

As  of  March 31, 2007 and December 31, 2006, the amounts payable and receivable
from  related  parties  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                      March 31, 2007    December 31, 2006
                                       (Unaudited)          (Audited)
                                     ----------------  -------------------
<S>                                  <C>               <C>
Amounts due from:
-----------------
Hytech HK (1)                        $       697,767   $          850,714
Shenzhen Huaqiang Industrial
  and Trading Co. Ltd. ("HIT") (2)             7,254                7,183
Chunren Xie (3)                                1,500                1,500
Director (4)                                   7,438               19,298
Wuhu Huaqiang (5)                          1,258,005            1,540,050
Shenzhen Juqiang Construction
  Co. Ltd. ("SJC") (6)                             -               54,670
Shenzhen Huaqiang Information
  Industry Co. Ltd.("HII") (7)                     -                3,074
Hyvision (8)                                       -              237,196
                                     ----------------  -------------------
                                     $     1,971,964   $        2,713,685
                                     ----------------  -------------------
Amounts due to:
---------------
Hytech HK (1)                        $      (974,553)  $         (908,634)
TLD (9)                                      (50,000)             (50,000)
Dehou Fang (9)                               (20,000)             (20,000)
Wuhu Huaqiang FantaWild Happyworld
  Co. Ltd. ("WFH") (10)                       (7,996)                   -
Bilibest Industries Limited (11)            (511,947)            (478,947)
Hyvision (8)                                (814,585)          (1,702,945)
SHQ (12)                                     (11,735)             (11,621)
                                     ----------------  -------------------
                                     $    (2,390,816)  $       (3,172,147)
                                     ================  ===================
</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
     China.  These  amounts  are  unsecured,  non-interest  bearing  and have no
     definite  term  of  repayment.  The amount due from Hytech HK was the trade
     receivable  that  arose  from  the  sales  of  the  Company's  products.

(2)  HIT  is  an  affiliate of SHQ. This amount represents a payment made by the
     Company  on  behalf  of  HIT  in connection with one of the revenue-sharing
     operations  that  has  since been terminated and moved to another location.
     The  amount  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  director represent cash advances made for business trips
     and  trade  fairs.

(5)  The  amounts  due from Wuhu Huaqiang represent the trade receivable arising
     from  the  sale  of equipment related to the theme park in the City of Wuhu
     and  consultation  services  provided,  as  well as the payment made by the
     Company  on  behalf  of Wuhu Huaqiang related to an exhibition in Shanghai.

(6)  SJC  is  an affiliate of SHQ. The receivable amount due from SJC represents
     sundry  expenses  made  by  the  Company  on  behalf  of SJC. The amount is
     unsecured,  non-interest  bearing  and  has  no definite term of repayment.


                                       16
<PAGE>
(7)  The  amount  due  from  Shenzhen  Huaqiang  Information  Industry  Co. Ltd.
     ("HII"),  an  affiliate  of SHQ, represents the receivable arising from the
     Company's disposal of obsolete property, plant and equipment. The Secretary
     of  the  Company  is  also  director  of  HII.

(8)  The  amount  due from Hyvision represents the trade receivable arising from
     the  market survey and consulting services performed by FDI. The amount due
     to  Hyvision represents the amount payable for the purchase of digital film
     products  and  other  components  from  Hyvision.

(9)  The  amounts  due to TLD and Mr. Dehou Fang represent the remaining balance
     of  the  loan  to Intsys in 2002 for the acquisition of Hytech US and other
     administrative  expenses  of  the Company. TLD is controlled by SHQ and Mr.
     Dehou Fang is a director of Intsys. The amounts are unsecured, non-interest
     bearing  and  have  no  definite  term  of  repayment.

(10) WFH is an affiliate of SHQ. The amount due to WFH represents sundry payment
     made  on  behalf  of  the  Company.

(11) The  amount  due  to  Bilibest  Industries  Limited,  an  affiliate of SHQ,
     represents  payments  made  on  behalf  of  the  Company  for  certain
     administrative  expenses  incurred  outside China. The amount is unsecured,
     non-interest  bearing  and  has  no  definite  term  of  repayment.

(12) The  amount  due  to  SHQ  represents  the rental expenses of the Company's
     Shenzhen  office  payable  to  SHQ.


(f)  Deposit  at  financial  clearing  center  operated  by  an  affiliate
     ---------------------------------------------------------------------

     -  See  Note  3.

(g)  Guarantee  of  bank  loan

     The  Company's  short-term  bank  loan  is  guaranteed  by  SHQ.


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 reporting 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 three
segments  with  respect to the nature of revenue generated from the sales of its
products  and  services,  which  are  divided  into  three 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; (2) contracts in relation
to  the  design of 4D theater, amusement center, large-size attraction and theme
park,  as  well  as  any  related consultation services; and (3) revenue sharing
operations.  During the three months ended March 31, 2007 and 2006, there was no
revenue recorded from segment in relation to the design and consulting services.


                                       17
<PAGE>
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  interests).  The segments related to
contracted  sales,  design  and  consulting,  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 as corporate
administrative  and  other  expenses.

The following tables summarize revenues and EBIT by segment for the three months
ended  March  31,  2007  and  2006.

<TABLE>
<CAPTION>
                                                        Three months ended March 31, 2007
                                                    ------------------------------------------
                                                                     Revenue
                                                     Contracted      Sharing
                                                       Sales       Operations        Total
                                                    ------------  -------------  -------------
<S>                                                 <C>           <C>            <C>
REVENUE                                             $ 1,299,262   $   1,129,772  $  2,429,034
                                                    ------------  -------------  -------------

Direct costs of production                              812,421         252,188     1,064,609
Salaries, wages and related personnel expenses          395,970         160,281       556,251
Selling and marketing expenses                          118,964         181,712       300,676
Depreciation of property, plant and equipment            60,770         213,057       273,827
                                                    ------------  -------------  -------------
  Total Operating Expenses                            1,388,125         807,238     2,195,363
                                                    ------------  -------------  -------------

(LOSS) INCOME FROM OPERATIONS                           (88,863)        322,534       233,671

Corporate administrative and other expenses                   -               -       324,295
                                                    ------------  -------------  -------------

EBIT                                                                                  (90,624)

Reconciliation of EBIT to net loss for the period:
  Minority interests                                                                  (78,087)
  Interest expenses, net                                                               26,998
  Income taxes                                                                        150,395
                                                                                 -------------

NET LOSS FOR THE PERIOD                                                          $   (189,930)
                                                                                 =============
</TABLE>


                                       18
<PAGE>
<TABLE>
<CAPTION>
                                                         Three months ended March 31, 2006
                                                    -------------------------------------------
                                                                      Revenue
                                                     Contracted       Sharing
                                                       Sales        Operations        Total
                                                    ------------  ---------------  ------------
<S>                                                 <C>           <C>              <C>
REVENUE                                             $   692,872   $      326,714   $ 1,019,586
                                                    ------------  ---------------  ------------

Direct costs of production                              508,243                -       508,243
Salaries, wages and related personnel expenses          101,583           54,528       156,111
Selling and marketing expenses                          114,953           20,400       135,353
Depreciation of property, plant and equipment             2,990          267,188       270,178
                                                    ------------  ---------------  ------------
  Total Operating Expenses                              727,769          342,116     1,069,885
                                                    ------------  ---------------  ------------

LOSS FROM OPERATIONS                                    (34,897)         (15,402)      (50,299)

Corporate administrative and other expenses                   -                -       306,796
                                                    ------------  ---------------  ------------

EBIT                                                                                  (357,095)

Reconciliation of EBIT to net loss for the period:
  Minority interests                                                                  (122,636)
  Interest expenses, net                                                                32,577
  Income taxes                                                                             262
  Equity in loss of an associated company                                               18,657
                                                                                   ------------

NET LOSS FOR THE PERIOD                                                            $  (285,955)
                                                                                   ============
</TABLE>

The  following  table reconciles each reporting segment's assets to total assets
reported  on  the Company's consolidated balance sheets as of March 31, 2007 and
December  31,  2006,  respectively.

<TABLE>
<CAPTION>
                             March 31, 2007    December 31, 2006
                              (Unaudited)          (Audited)
                            ----------------  -------------------
<S>                         <C>               <C>
Contracted sales            $      2,019,509  $         1,738,519
Revenue sharing operations         9,057,601            9,178,143
Shared assets *                   10,290,435            8,730,470
                            ----------------  -------------------
Total Assets                $     21,367,545  $        19,647,132
                            ================  ===================
</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 ended March
31,  2007  and  2006,  respectively.

All of the Company's revenues are derived from its operations in the PRC and all
of  the  Company's  assets  are  located  in  the  PRC.


                                       19
<PAGE>
12.  MINORITY  INTERESTS

As of March 31, 2007, the Company's minority interest balance was $4,642,552. It
was  comprised  of  the  minority shares of effectively controlled subsidiaries,
including  Hytech  US,  FDI  and  Chongqing  FTC.  As  of December 31, 2006, the
minority  interest  balance  was $4,674,746, which was comprised of the minority
shares of Hytech US, FDI and Chongqing FTC, which the Company did not own. As of
March 31, 2007, the Company owned a 70% interest in Hytech US, a 40% interest in
FDI  and  a  94%  interest  in  Chongqing  FTC.

For  the  three  months  ended March 31, 2007 and 2006, the Company recorded the
minority  interests  share  of  loss  of  $78,087  and  $122,636,  respectively.


13.  COMMITMENTS  AND  CONTINGENCIES

Operating  leases

The  following  are  the approximate minimum lease payments that will have to be
made  in  the years as indicated below based on operating leases in effect as of
March  31,  2007:

<TABLE>
<CAPTION>
                                                 Total
                                               ----------
<S>                                            <C>
          March 31, 2008                       $  268,561
          March 31, 2009                          220,475
          March 31, 2010                          210,846
          March 31, 2011                          188,461
          March 31, 2012                          207,957
          Thereafter till March 31, 2018        1,299,728
                                               ----------

          Minimum lease payment                $2,396,028
                                               ==========
</TABLE>

Capital  expenditures

At  March  31, 2007 and December 31, 2006, the Company's commitments for capital
expenditures  were  approximately $1,570,000 and $1,460,000, respectively.  This
commitment relates to costs to acquire machinery and equipment which are used in
the  Company's  revenue  sharing  operations.

Legal  proceedings

The  Company  is  periodically  subject  to various pending and threatened legal
actions  which arise in the normal course of business.  The Company's management
believes that the impact of any such current litigation will not have a material
adverse  impact  on  the  Company's financial position or results of operations.


                                       20
<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 March 31,
2007  contains "forward-looking" statements within the meaning of Section 27A of
the  Securities  Act  of  1933,  as  amended,  and Section 21E of the Securities
Exchange  Act  of  1934, as amended, including statements that include the words
"believes",  "expects",  "anticipates",  "intends",  "plans",  "may",  "will" or
similar  expressions  that  are intended to identify forward-looking statements.
In  addition,  any  statements  that refer to expectations, projections or other
characterizations  of  future  events or circumstances, including any underlying
assumptions,  are  forward-looking statements.  These forward-looking statements
may  include,  among  others,  statements  concerning the Company's expectations
regarding  its  business,  growth  prospects, sales trends, gross margin trends,
operating  costs,  the availability of funds to finance capital expenditures and
operations,  facility  expansion plans, competition, operating results 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 March 31, 2007 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.

Each  forward-looking  statement  should  be  read  in context with, and with an
understanding  of,  the  various  disclosures  of concerning the Company and its
business  made  elsewhere  in  this  Quarterly  Report  on  Form  10-QSB for the
quarterly  period  ended  March  31, 2007, as well as other public reports filed
with the United States Securities and Exchange Commission.  Investors should not
place  undue reliance on any forward-looking statement as a prediction of actual
results  or  developments.  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  March  31,  2007,  whether as a result of new information, future
events  or  otherwise.

OVERVIEW

Fantatech,  Inc.,  (the  "Company"), through its subsidiaries and affiliates, is
engaged  in  the  design,  development,  manufacturing,  and  sale  of  hi-tech
entertainment  and amusement products and their related operations, including 4D
theaters,  indoor  entertainment  centers  ("FunPlexes"),  large  size  outdoor
attractions  and  theme  parks.  The  Company  is  experienced in the design and
manufacturing of comprehensive, integrated, computerized entertainment products.

The Company's wholly owned subsidiaries include Intsys Share Limited ("Intsys"),
Shenzhen  Digitainment  Co.,  Ltd.  ("SDCL"),  and  Megabase  Investment Limited
("Megabase").  In  addition, the Company's majority controlled companies include
Hytechnology  Inc.  ("Hytech  US"),  Chongqing  FantaWild FunPlex Tour Co., Ltd.
("Chongqing  FTC")  and  Fantatech  Development  Inc.  ("FDI").

The  Company  both  manufactures  and  sells hi-tech amusement equipment for its
proprietary  FantaWild  FunPlexes, FantaWild 4D Theaters, large-size attractions
and  FantaWild  Theme  Parks. The Company also participates in these attractions
through  revenue-sharing  operating  arrangements  and  is becoming increasingly
involved in the development of theme parks. The Company provides its products to
customers  both  directly  and  through  local  partners  in  revenue-sharing
operations.

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


                                       21
<PAGE>
As  for  revenue-sharing operations, the Company supplies the equipment for each
of  its  4D  theaters,  FunPlex indoor entertainment centers, large size outdoor
attractions  and  theme  parks  (each,  a  "Revenue-Sharing  Center")  through
cooperation  agreements with local venture partners in different Chinese 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 30% to 50% share of such Center's 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.  With  respect  to  4D  theater
Revenue-Sharing  Centers, the Company generally contributes all of the equipment
necessary for the theaters while the local partners provide suitable venues. The
Company  retains  all  title to the equipment it provides to the Revenue-Sharing
Centers  (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. The Revenue-Sharing
Center  arrangements  generally  have  terms  of  five  to  ten years, which are
approximately  equal  to  the estimated useful life of the equipment provided by
the  Company.

During  the three months ended March 31, 2007, no new Revenue-Sharing Operations
were  launched.  As  of  March  31,  2007,  there  were  a total of twenty-three
Revenue-Sharing  Centers  (twelve  FunPlex  centers,  nine  4D  theaters,  one
large-size outdoor attraction and one theme park) operating in different Chinese
cities  (including  the cities of Tianjian, Urumchi, Changchun, Kunming, Beihai,
Langfang,  Taiyuan,  Nanning,  Yantai,  Chifeng,  Shenyang,  Zhongshan, Nanjing,
Huaian,  Changzhi,  Dalian,  Datong,  Wuhan,  Hangzhou,  Beijing,  Dongguan  and
Chongqing).

Currently,  the  Company is concentrating its efforts in building and installing
the  equipment for the theme parks in Wuhu and Shantou, both are scheduled to be
opened  in  October 2007. However, as some of the attractions in these two theme
parks  are  entirely  new to the Company, there could be unforeseeable technical
difficulties  or  site  preparation  problems  during  the  manufacturing  or
installation  processes.  The  final  completion  date  may  still be changed in
accordance  with  actual  progress.

The unaudited condensed consolidated financial statements of the Company include
the accounts of the Company and its wholly-owned and majority-owned subsidiaries
as  well  as  the  controlled  associated  entities.  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  China and are conducted in Renminbi ("RMB"), which is the currency of China.
Prior  to  July  21,  2005,  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 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.


                                       22
<PAGE>
For  the  three  months  ended  March  31,  2007 and 2006, the Chinese financial
statements  were  translated  from  RMB  to  USD  at  the new prevailing closing
exchange rates: for the translation of assets and liabilities (other than equity
and  reserves), the published closing exchange rates of US 1.00 to RMB 7.734 and
US  1.00  to  RMB 8.02 were applied, respectively; for revenues, expenses, gains
and losses, the weighted average rates of US 1.00 to RMB 7.75 and US 1.00 to RMB
8.04  for  the  respective periods were used. The resulting translation gains or
losses  were  recorded  as  a  separate component of stockholders' equity. As of
December  31, 2006, the Chinese financial statements were translated from RMB to
USD  at  the  closing  exchange  rate  of  US  1.00  to  RMB  7.81.

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
principles  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
accounting  for asset impairment, revenue and cost recognition as well as stages
of  contracts completion (including items listed as "billings in excess of costs
and  estimated  earnings  on  uncompleted  contracts"  and  "costs and estimated
earnings in excess of billings on uncompleted contracts"), and the allowance for
doubtful  accounts 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) contract sales of equipment
or  facilities  used in hi-tech amusement centers or theme parks, 3D/4D theaters
and the related products; (2) contracts in relation to the design of 4D theater,
amusement  center,  large-size attraction and theme park, as well as any related
consultation  services;  and  (3)  revenue  sharing  operations.

Revenue  is  recognized  when  the  following  four  criteria  are  met:

-     persuasive  evidence  of  an  arrangement  exists;
-     delivery  has  occurred  or  services  have  been  rendered;
-     the  price  is  fixed;  and
-     collectibility  is  reasonably  assured.

(A)  Contract sales of equipment or facilities used in hi-tech amusement centers
     or  theme  parks,  3D/4D  theaters  and  the  related  products

(a)  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 specifications or
sales  discounts  offered  to  the  customers.


                                       23
<PAGE>
(b)  Long-term  construction  contract  revenue  and  costs

Long-term  contract revenues 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  (a)  and  (b)  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.

The  Company considers that profits on contracts are derived from its efforts in
all  phases  of  operations, including areas such as procurement and management.
Costs  incurred  closely  relate  to  contract  performance  and  are  therefore
considered  the  best  measure  to  determine  recognition  of  contracted sales
revenue.  The  Company  periodically  reviews  its  calculation  methodology  to
evaluate  the  accuracy  of  the  results  of  the  input  measures.

(B)  Contracts  in  relation  to  the  design  of  4D theater, amusement center,
     large-size  attractions and theme park, as well as any related consultation
     services

Design  and  consultation  income  is  recognized  when  services  are rendered.

(C)  Revenue  from  revenue  sharing  operations

Income  is recognized based on the agreed percentage of revenue when the revenue
from  Revenue-Sharing  Centers becomes due and receivable.  The Company recorded
$1,129,772  and  $326,714  in  revenue  from its Revenue-Sharing Centers for the
three  months  ended  March  31,  2007  and  2006,  respectively.


                                       24
<PAGE>
Asset  Impairment:
------------------

The  Company  reviews its long-lived assets, including its production facilities
and  the  amusement  and  entertainment  equipment  used  in the Revenue-Sharing
Centers,  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. During the three
months  ended  March  31,  2007  and  2006,  no  impairment charge was recorded.

CONSOLIDATED  RESULTS  OF  OPERATIONS

REVENUE

For the three months ended March 31, 2007, net sales were $2,429,034 as compared
to  net  sales  of  $1,019,586  for  the  three  months  ended  March  31, 2006.
Approximately  46.5%  and  32.0%  of the net sales during the three months ended
March 31, 2007 and 2006, respectively, were from the revenues generated from the
revenue  sharing  operations.

During  the three months ended March 31, 2007, net contracted sales increased by
$606,390  or  87.5%  to $1,299,262, as compared to $692,872 for the three months
ended  March  31,  2006.  This  was  primarily  due  to  the increase in revenue
recognized  from  the  sales  contract in relation to equipment sold to the Wuhu
Theme  Park.  During  the  three months ended March 31, 2007, revenue recognized
from  the sale of equipment to Wuhu Huaqiang amounted to approximately $607,000.
In  view  of  the Company's limited number of sales contracts currently on hand,
and  based  on  the stage of completion of the related projects, the Company may
not be able to maintain the level of net contracted sales in 2007 as compared to
2006.

During the three months ended March 31, 2007, the Company recorded revenues from
its  Revenue-Sharing Centers totaling $1,129,772 as compared to $326,714 for the
three  months  ended  March  31,  2006,  representing an increase of $803,058 or
245.8%.  The  increase was mainly attributable to the opening of Chongqing Theme
Park  (which  accounted  for  approximately  $846,000  of  the revenue).  As the
scheduled  opening  of the theme parks in the cities of Wuhu and Shantou will be
late 2007, the Company anticipates that income from Revenue-Sharing Centers will
not  have  any  significant  changes  until  the opening of the two theme parks.

GROSS  PROFIT

For  the  three  months ended March 31, 2007, total gross profit was $636,671 or
26.2% of total net sales, as compared to total gross profit of $170,285 or 16.7%
of total net sales for the three months ended March 31, 2006. Net of the revenue
from  the Revenue-Sharing Centers, gross profit margin decreased by 18.2% due to
a  decrease in contract profitability. The decrease is primarily attributable to
the  lower profitability from the sale contract related to the equipment sold to
Wuhu Huaqiang. The Company, however, has obtained the right to receive 8% of the
theme  park's distributable income for a period of 15 years from commencement of
theme  park  operation  (see  note 10(b) to the Condensed Consolidated Financial
Statements).


                                       25
<PAGE>
Cost  of  revenue  in relation to contracted sales during the three months ended
March  31,  2007  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. Costs to
revenue-sharing operations included cost of souvenirs sold, equipment and venues
rental,  depreciation  for  the fixed assets used in the operations, maintenance
costs,  salaries  for  staffs  and  engineers,  administrative expenses, and the
associated  traveling  and  lodging  expenses.

During  the  three  months  ended  March  31,  2007,  total  gross  profit  from
Revenue-Sharing  Centers was $577,924 or 51.2% of the total segment revenues, as
compared  to total gross profit of $12,807 or 3.9% of the total segment revenues
for  the three months ended March 31, 2006. The increase in segment gross profit
margin  was  solely  attributable to the Chongqing Theme Park.  However, none of
the  FunPlex  Revenue-Sharing  Centers were operated profitably during the first
quarter  of  2007.  The  Company  anticipates  that  the  gross  profit  from
Revenue-Sharing  Centers  will  not  change  substantially  in  2007  until  the
completion  of  the  two  theme  parks  in  Wuhu and Shantou. The opening of the
Shantou  theme park, initially scheduled to occur early 2007, has been postponed
until  the fourth quarter of 2007 due to delays in site preparation by the local
partner.  The  Wuhu  theme  park  is  expected  to be completed by October 2007.
Subject  to  the  successful  opening  of  the two theme parks in late 2007, the
Company anticipates that revenue and gross profit from theme park operations may
improve  gradually.  However, there is no assurance that the two new theme parks
in  Wuhu  and Shantou will receive the same level of visitors and revenue as the
Chongqing  theme  park  due  to  differences  in  demographic  and  economic
characteristics  of  local  customers. As the Company has limited number of sale
contract  on  hand,  the  fixed  overhead  costs  for contracted sales may exert
pressure  on  the  overall  gross  profit  margin.

SELLING  AND  MARKETING  EXPENSES

Selling  and  marketing  expenses increased by $182,416 or 82.7% to $403,000 for
the  three  months  ended  March 31, 2007, as compared to $220,584 for the three
months  ended March 31, 2006. This was primarily due to the increase in expenses
related  to  marketing, promotional, sales representative offices and exhibition
in  2007.  The  Company  will  continue its marketing and promotional efforts in
order  to  obtain  sufficient  sales  contract.

GENERAL  AND  ADMINISTRATIVE  EXPENSES

General  and  administrative expenses ("G&A Expenses") consist of the management
office  operating  costs  of  SDCL,  FDI, Hytech US, Chongqing FTC 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 March 31, 2007, G&A Expenses decreased slightly by $4,774 or
1.5%  to  $317,274  as  compared  to  the G&A Expenses of $322,048 for the three
months  ended  March  31,  2006.

INCOME  (LOSS)  FROM  OPERATIONS

Loss  from  operations  for  the  three months ended March 31, 2007 decreased by
$289,297 to $84,336, as compared to the loss from operations of $373,633 for the
three  months ended March 31, 2006. The decrease in operating loss was primarily
attributable  to  the increase in gross profit, offset partially by the increase
in  selling and marketing expenses during the three months ended March 31, 2007.

OTHER  INCOME  (EXPENSE)

For  the three months ended March 31, 2007, the Company recorded interest income
of  $5,735  as compared to $2,014 for the three months ended March 31, 2006. For
the  three months ended March 31, 2007, interest expense was $32,733 as compared
to  $34,591  for  the  three  months  ended  March  31,  2006.


                                       26
<PAGE>
Other  expense  was $4,860 for the three months ended March 31, 2007 as compared
to  other  income  of  $18,098  for  the  three months ended March 31, 2006. The
increase  in  other  expense  was  due primarily to the discretionary payment in
addition  to  insurance  compensation  made  to  a worker who was injured in the
factory premise. Other income is mainly comprised of miscellaneous income earned
from  the  sub-letting  of  part  of  the  Company's  factory  space temporarily
available.

MINORITY  INTERESTS

During  the three months ended March 31, 2007, the Company recorded the minority
interests' share of loss of $78,087 as compared to the minority interests' share
of  loss  of $122,636 for the three months ended March 31, 2006. As of March 31,
2007,  the  minority  interests  represented effectively the 60% shareholding in
FDI,  30%  in  Hytech  US  and  6%  in  Chongqing  FTC.

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 States of America. Intsys and Megabase
are  not  liable  for  income  taxes  in BVI. The Company's Chinese subsidiaries
(SDCL)  and  associates  (FDI)  located  in  the City of Shenzhen are subject to
Enterprise  Income  Tax  ("EIT")  in China at a rate of 15% on net income, while
Chongqing  FTC is subject to an EIT rate of 33%. Based on the local tax rules in
Shenzhen,  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
Chinese subsidiaries, calculated based on the prevailing accounting standards in
China,  for  the  three  months  ended March 31, 2007 and 2006 were $150,395 and
$262,  respectively.

The  increase  in income tax provision was primarily attributable to the revenue
shared from the Revenue sharing operations. SDCL issued taxed invoice to collect
its  share  of  revenue  from  each  of  the  revenue  sharing  operations. Such
expenditure  was  treated  as  rental  costs  by  the respective revenue sharing
operations.  The  shared  revenue  received  by SDCL is subject to a sale tax of
approximately  5% and a lower income tax rate of 7.5% applicable to SDCL in 2006
and  15%  in  2007,  while  the  local  income tax rates for the revenue sharing
operations are usually 33%. The Company is unable to obtain written confirmation
from the local officials about the validity of such arrangement. Accordingly, as
at  March  31, 2007, the Company recorded a provision of $150,395 for income tax
liabilities.

Starting from January 1, 2008, the Enterprise Income Tax rate in the PRC will be
adjusted  to  25%  from the previous 33%. For the Company's Chinese subsidiaries
currently  enjoying  any  tax benefits mentioned above, those benefits are still
valid  until year 2012. The income tax rate is expected to gradually increase to
the  standard  rate  of  25%  over  a five-year transition period. Also, the new
Enterprise  Income  Tax  Law  has not set out the details as to how the existing
preferential  tax  rate  will  gradually  increase  to  standard  rate  of  25%.
Consequently,  the  Company  is  not  able  to make an estimate of the financial
effect  of  the  new  Enterprise  Income  Tax Law on its deferred tax assets and
liabilities.  The  Company  will  continue to assess the impact on the Company's
results of operations and financial position of this change in enterprise income
tax  rates.

EQUITY  LOSS  RELATED  TO  AN  ASSOCIATED  COMPANY

During  the  three  months  ended March 31, 2006, the Company recorded a loss of
$18,657  reflecting  the Company's share of the net loss incurred by Tianjin LFK
(limited  to  the  total  amount  of  investment).  (See note 7 to the Condensed
Consolidated  Financial  Statements.) No further equity loss was recorded during
the  three  months  ended  March  31,  2007.

NET  INCOME  (LOSS)

The Company recorded a net loss of $189,930 for the three months ended March 31,
2007  as compared to a net loss of $285,955 for the three months ended March 31,
2006.  The  decrease  in net loss is primarily the result of the decrease in the
loss  from  operation  and  the decrease in equity loss, offset partially by the
increase  in  income  tax  as  well as the decrease in other income and minority
interests  share  of  loss  during  the  three  months  ended  March  31,  2007.


                                       27
<PAGE>
FINANCIAL  CONDITION,  LIQUIDITY  AND  CAPITAL  RESOURCES

General
-------

The  Company  has financed its operations over the past few years primarily from
loans  from related and unrelated parties, as described below under "Financing".

The  Company  anticipates  that,  based  on  current  operations and assumptions
relating  to  its existing businesses, its projected cash flow from projects and
revenue  sharing  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 will be sufficient to
support  the  Company's  working  capital requirements of its activities for the
next  twelve months. The Company will continue its efforts in arranging external
short-term  bank  loans  for  its  working  capital  requirements  and  to  seek
additional  capital  to  support  its  operations.

The  Company  is  also  monitoring  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 predicts that the pressure on the Company's
cash  flows  will  gradually  be  reduced  for  the  next  twelve  months.

Operations
----------

During the three months ended March 31, 2007, the Company's operations used cash
resources  of $516,766, as compared to the net cash used by operating activities
of  $575,922 for the three months ended March 31, 2006.  During the three months
ended  March  31,  2007,  the  Company's cash balance increased by $2,036,141 to
$4,342,298  at  March  31, 2007, as compared to $2,306,157 at December 31, 2006.
Taking into account the cash deposited at affiliates' financial clearing centers
("FCCs")  (defined in note 3 to the Condensed Consolidated Financial Statements)
the  Company's total cash balance increased by $2,054,905 to $4,361,232 at March
31,  2007,  as  compared  to  $2,306,327  at December 31, 2006. During the three
months  ended  March  31,  2007,  the  Company's net working capital improved by
$436,801  to  a  shortfall  of  ($700,768)  at  March  31,  2007, as compared to
($1,137,569) at December 31, 2006, and the Company had a current ratio of 0.95:1
at  March 31, 2007, as compared to 0.90:1 at December 31, 2006, representing the
total  current  assets  were  still  insufficient  to  cover  the  total current
liabilities  during  the  three  months  ended  March  31,  2007.

The  deficiency  in the Company's net working capital was mainly attributable to
the increase in billings in excess of cost and estimated earnings as a result of
delay  in  delivery  of  equipment  and  recognition  of  revenue  due  to  site
preparation  problems.  In  addition, as soon as the Company starts to recognize
progress  revenue  from  the  theme parks in Wuhu and Shantou upon completion of
delivery and installation, the amount of deposits received will also be reduced,
which  in  turn  may  also  narrow  the  shortfall  of  net  working  capital.

Trade receivables, net of allowance for doubtful debts, increased by $124,740 or
43.7%  to  $410,269  at  March 31, 2007, as compared to $285,529 at December 31,
2006,  which  was  attributable  to the increase in accounts receivable due from
revenue  sharing  operations  during  the three months ended March 31, 2007. The
Company  provided  a general allowance for doubtful debts of $91,969 and $90,214
as  at  March  31,  2007  and  December  31,  2006,  respectively.

Inventories  increased  by $753,559 or 31.2% to $3,168,265 at March 31, 2007, as
compared  to  $2,414,706  at  December  31,  2006,  which  was mainly due to the
transfer  of certain usable parts and components received from the three revenue
sharing  centers  in  the  cities  of  Beijing, Zhuhai and Guangzhou, which were
closed  in  January  2007.


                                       28
<PAGE>
As  of  March  31,  2007,  costs and estimated earnings in excess of billings on
uncompleted contracts decreased by $240,044 or 34.3% to $459,233, as compared to
$699,277  at  December  31,  2006. The billings in excess of costs and estimated
earnings  increased  by  $940,742  or  72.4% to $2,239,678 at March 31, 2007, as
compared  to  $1,298,936  at December 31, 2006. The increase was attributable to
the  delay  in  delivery of equipment to the Shantou and Wuhu theme parks due to
site  preparation  problems  and  postponed  schedule.

Deposits received made by the Company increased by $71,481 or 4.1% to $1,800,130
at  March  31,  2007,  as  compared  to  $1,728,649  at  December  31,  2006.

During  the  three  months  ended  March  31, 2007, the total amount of accounts
payable,  accrued  liabilities and other payables decreased by $922,197 or 19.2%
to  an  aggregate of $3,870,428, as compared to $4,792,625 at December 31, 2006,
which  was  due  primarily  to  the  payment  of  income  tax.

The  amounts  receivable  from related parties decreased by $741,721 or 27.3% to
$1,971,964 at March 31, 2007, as compared to $2,713,685 at December 31, 2006 due
primarily  to  the  decrease  in  trade  receivable  due  from Wuhu Huaqiang and
Hyvision.  The  amount payable to related parties decreased by $781,331 or 24.6%
to $2,390,816 at March 31, 2007, as compared to $3,172,147 at December 31, 2006,
which  was  mainly  attributable  to  the  decrease  in  account  payable due to
Hyvision.

Investing
---------

For  the  three months ended March 31, 2007, the Company's investment activities
used  cash  resources  of  $32,794,  as  compared  to  $1,395,463  cash  used by
investment  activities  for  the  three  months  ended  March  31,  2006.

Additions  to  property, plant and equipment during the three months ended March
31,  2007  aggregated $14,030, of which approximately $746 was for investment in
the  Company's  Revenue-Sharing  Centers.  At  March  31,  2007, the Company had
capital  expenditure  commitments  for  2007  relating  to  contracts on hand of
approximately $1,570,000.  The Company believes that it will be able to fund the
expected capital expenditures through internal cash flow and external resources.

As of March 31, 2007 and December 31, 2006, the Company maintained cash deposits
of  $18,934 and $170 at the FCC operated by SHQ, respectively. The cash deposits
at  the  FCC  can  be  withdrawn  any  time  without  any  restrictions.

Financing
---------

In  January  2007,  the  Company  obtained  a  one-year  short-term  loan  of
approximately  $2,585,984  (the  "Loan")  from  the  Shenzhen  Development  Bank
Limited.  The  Loan  is  unsecured  and  accrues interest at a rate of 6.12% per
annum.  The  Loan  was  guaranteed  by  SHQ  and  replaced  the short-term loans
obtained  by  SDCL  during  November  2005.

As of March 31, 2007 and December 31, 2006, the Company had no off-balance sheet
arrangements.


ITEM  3.  CONTROLS  AND  PROCEDURES

(a)  Evaluation  of  Disclosure  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 March 31, 2007, 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.


                                       29
<PAGE>
(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 quarterly period
ended  March 31, 2007 that have materially affected, or are reasonably likely to
materially  affect,  our  internal  control  over  financial  reporting.

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:  May 14, 2007                     By:  /s/  ZIBO NIU
                                             -------------------------
                                             Zibo Niu
                                             Chief Executive Officer


Date:  May 14, 2007                     By:  /s/  GARY LUI
                                             -------------------------
                                             Gary Lui
                                             Chief Financial Officer


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

Exhibit
Number   Description of Document
-------  -----------------------
<S>      <C>
3.1      Certificate of Incorporation (1)
3.2      Certificate of Amendment to the Certificate of Incorporation (2)
3.3      Bylaws of Registrant (3)
         Certification of the Chief Executive Officer pursuant to Section 302 of the
31.1     Sarbanes-Oxley Act of 2002
         Certification of the Chief Financial Officer pursuant to Section 302 of the
31.2     Sarbanes-Oxley Act of 2002
         Certification by the Chief Executive Officer pursuant to Section 906 of the
32.1     Sarbanes-Oxley Act of 2002
         Certification by the Chief Financial Officer pursuant to Section 906 of the
32.2     Sarbanes-Oxley Act of 2002
</TABLE>

(1)  Incorporated  by  Reference  from  Company's  report  on  Form S-1 filed on
     November  17,  1996.

(2)  Incorporated by Reference from Company's report on Schedule 14C on December
     30,  2002.

(3)  Incorporated  by  Reference  from Company's Annual Report on Form 10KSB for
     the  year  ended  March  31,  1999.


                                       32