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

                                  FORM 10-QSB/A
                                 AMENDMENT NO. 2

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

                       For the quarter ended June 30, 2005

                                       or

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

                        Commission file number: 000-27773

                            SYSVIEW TECHNOLOGY, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

DELAWARE                                                              59-3134518
--------                                                              ----------
(State of incorporation)                    (I.R.S. Employer Identification No.)

                              1772 TECHNOLOGY DRIVE
                           SAN JOSE, CALIFORNIA 95110
          (Address of principal executive offices, including zip code)

                                 (408) 436-9888
                (Issuer's telephone number, including area code)

   (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 Securities Exchange Act of 1934 during the past 12 months,
and (2) has been subject to such filing requirements for the past 90 days. Yes
|X| No |_|

The number of shares outstanding of the issuer's Common Stock, $.001 Par Value,
on August 4, 2005, was 23,110,515 shares

Transitional Small Business Disclosure Format (check one):     Yes | |  No |X|


<PAGE>


================================================================================

EXPLANATORY NOTE

This Quarterly Report on Form 10-QSB/A ("Form 10-QSB/A-2") is being filed as
Amendment No. 2 to our Quarterly Report on Form 10-QSB for the quarter ended
June 30, 2005, which was originally filed with the Securities and Exchange
Commission ("SEC") on August 15, 2005 (the "Original Filing") and amendment No.
1 to the Original Filing was filed with the SEC on August 22, 2005 ("Amendment
No. 1"). We are filing this Amendment No. 2 to correct how we accounted for our
(i) five percent (5%) Convertible Preferred Stock and related warrants and (ii)
stock-based compensation costs. We are amending and restating the following
specific items in this Amendment No. 2:

PART I.       FINANCIAL INFORMATION

Item 1. Financial Statements:

    Condensed Consolidated Balance Sheet as of June 30, 2005
    Condensed Consolidated Statements of Operations for the Three and
      Six Months Ended June 30, 2005
    Condensed Consolidated Statements of Cash Flows for the Three and
      Six Months Ended June 30, 2005

    Certain Notes to Condensed Consolidated Financial Statements:

        Note 3 - Significant Accounting Policies
                  -Earnings Per Share
                  -Stock-Based Compensation Cost
        Note 5 - Preferred Stock

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

     Critical Accounting Policies - Accounting for Certain Financial Instruments
       with Characteristics of both Liabilities and Equity

    Results of Operations - Three and Six Months ended June 30, 2005 compared to
        Three and Six Months Ended June 30, 2004, specifically the following:

                   -Operating expenses
                   -Other income (expense)
                   -Dividend on 5% Convertible Preferred Stock and Accretion of
                        Preferred Stock Redemption Value
                   -Net loss

<PAGE>


PART II. OTHER INFORMATION

Item 6.  Exhibits

     31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act -
          Darwin Hu
     31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act -
          William Hawkins
     32.1 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act -
          Darwin Hu
     32.2 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act -
          William Hawkins

We are therefore amending and restating "Item 1. Financial Statements" and "Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations" in their entirety in this Amendment No. 2 to correct how we account
for our (i) five percent (5%) Convertible Preferred Stock and related warrants
and (ii) stock-based compensation costs. We are also amending and restating in
its entirety "Item 6. Exhibits" to reflect our inclusion of updated Exhibits 31
and 32 for this filing. Other than the above specific items, there have been no
other changes to the Original Filing or Amendment No. 1 thereto.

Items included in the Original Filing and Amendment No. 1 that are not included
herein are not amended and remain in effect as of the date of their filings.
Except as noted above, this Form 10-QSB/A-2 does not update information that was
presented in our Original Filing or Amendment No. 1 to reflect recent
developments that have occurred since the date of their filings. Information
concerning recent developments since the filing of our Quarterly Report for June
30, 2005 can be found in other filings we have made with the SEC since August
15, 2005.

================================================================================



                                      -2-
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.                 FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                    SYSVIEW TECHNOLOGY, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
                                 (IN THOUSANDS)

                                                                      JUNE 30,
                                                                       2005
                                                                    (RESTATED)
                                                                    ----------
                                        ASSETS
Current assets
<S>                                                                  <C>
   Cash and cash equivalents                                         $  2,167
   Trade receivables, net                                                 732
   Inventories                                                            483
   Prepayments, deposits and other current assets                         219
   Due from related parties                                             2,501
                                                                     --------
Total current assets                                                    6,102

Fixed assets, net                                                         158
Intangible assets                                                          13
Long-term investment                                                      998
                                                                     --------

TOTAL ASSETS                                                         $  7,271
                                                                     ========

                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Bank line of credit                                               $    933
   Trade payables and accruals                                             46
  Accrued dividends on 5% convertible preferred stock                      28
                                                                     --------
Total current liabilities                                               1,007

Other liabilities
  Liability under derivative contracts                                    204
                                                                     --------

     Total liabilities                                                  1,211

Commitments and contingencies

5% Convertible preferred stock $.001 par value, 2,000 authorized,         182
    19 shares issued and outstanding, liquidation value of $18,650

Stockholders' equity
   Common stock: $0.001 par value; 50,000shares
      authorized and 23,111 shares issued and outstanding                  23

   Additional paid in capital                                          26,872
   Accumulated deficit                                                (21,017)
                                                                     --------
Total stockholders' equity                                              5,878
                                                                     --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $  7,271
                                                                     ========

            SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>


                                      -3-
<PAGE>

<TABLE>
<CAPTION>

                    SYSVIEW TECHNOLOGY, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                 (IN THOUSANDS)

                                                                THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                     JUNE 30,                 JUNE 30,
                                                              ---------------------   --------------------
                                                                2005        2004        2005        2004
                                                              --------    --------    --------    --------
                                                              (RESTATED)              (RESTATED)

<S>                                                           <C>         <C>         <C>         <C>
Net sales                                                     $  1,487    $    975    $  3,195    $  2,481

Cost of sales                                                      883         617       1,987       1,655
                                                              --------    --------    --------    --------

Gross profit                                                       604         358       1,208         826

Operating expenses:
  Selling and marketing                                            258         172         410         366
  General and administrative                                     1,335         194       1,631         342
  Research and development                                         222         117         398         231
                                                              --------    --------    --------    --------
Total operating expenses                                         1,815         483       2,439         939
                                                              --------    --------    --------    --------

Operating loss                                                  (1,211)       (125)     (1,231)       (113)
                                                              --------    --------    --------    --------

Other income (expense):
  Fair value of warrants issued                                   --          --          (290)       --
  Preferred stock issuance costs                                  --          --          (237)       --
  Change in fair value of derivative instruments                   575        --         1,661        --
  Other                                                             12           1          10           3
                                                              --------    --------    --------    --------
Total other income (expense)                                       587           1       1,144           3
                                                              --------    --------    --------    --------
Net loss before income taxes                                      (624)       (124)        (87)       (110)
Provision for income taxes                                        --          --             1        --
                                                              --------    --------    --------    --------

Net loss                                                          (624)       (124)        (88)       (110)
Dividend on 5% convertible preferred stock and accretion of
   preferred stock redemption value                               (183)       --          (210)       --
                                                              --------    --------    --------    --------
Net loss available to common stockholders                     $   (807)   $   (124)   $   (298)   $   (110)
                                                              ========    ========    ========    ========

Net loss per common share - basic and diluted:                $  (0.03)   $   --      $  (0.01)   $   --
                                                              ========    ========    ========    ========

Weighted average common shares outstanding -
   basic and Diluted                                            23,111      23,066      23,111      22,080
                                                              ========    ========    ========    ========



                       SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>



                                      -4-
<PAGE>

<TABLE>
<CAPTION>


                    SYSVIEW TECHNOLOGY, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)

                                                                      SIX MONTHS ENDED
                                                                          JUNE 30,
                                                                   --------------------
                                                                      2005       2004
                                                                   ---------  ---------
                                                                   (RESTATED)
OPERATING ACTIVITIES
<S>                                                                <C>        <C>
Net loss available to common stockholders                          $  (298)   $  (110)
Adjustments to reconcile net loss to net cash used by
      operating activities:
  Depreciation expense                                                  10          4
  Stock-based compensation cost - options                            1,104       --
  Preferred stock issuance expenses paid by issuance of warrants       290       --
  Change in fair value of derivative instruments                    (1,661)      --
  Dividend on 5% convertible preferred stock and accretion of
     preferred stock redemption value                                  210       --
  Changes in operating assets and liabilities:
     Trade receivables                                                 396      1,150
     Inventories                                                        14          9
     Prepaid expenses and other current assets                         (29)      (470)
     Accrued dividends on 5% convertible preferred stock                28       --
     Trade payables and other current liabilities                      (73)      (254)
                                                                   -------    -------
Cash provided (used) by operating activities                            (9)       329
                                                                   -------    -------

INVESTING ACTIVITIES:
  Cash acquired in reverse acquisition                                --           28
  Capital expenditures                                                (145)       (11)
                                                                   -------    -------
Cash provided (used) by investing activities                          (145)        17
                                                                   -------    -------

FINANCING ACTIVITIES:
  Proceeds from issuance of preferred stock                          1,865       --
  Advances/repayments - related parties                               (231)      (907)
                                                                   -------    -------
Cash provided (used) by financing activities                         1,634       (907)
                                                                   -------    -------

Net increase (decrease) in cash and cash equivalents                 1,480       (561)

Cash and cash equivalents at beginning of period                       687      1,020
                                                                   -------    -------

Cash and cash equivalents at end of period                         $ 2,167    $   459
                                                                   =======    =======







                SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>



                                      -5-
<PAGE>


                    SYSVIEW TECHNOLOGY, INC. AND SUBSIDIARIES
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                                   (UNAUDITED)
================================================================================



1 - STATEMENT OF INFORMATION FURNISHED

The accompanying unaudited condensed consolidated financial statements of
Sysview Technology, Inc. ("Sysview", "the Company", "we" or "our") have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and the instructions to Form
10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include all
information and disclosures necessary for a presentation of our financial
position, results of operations, and cash flows in conformity with accounting
principles generally accepted in the United States.

In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows for all periods presented have been made.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses. Actual results may differ from these estimates. The results of
operations for the period ended June 30, 2005 are not necessarily indicative of
the operating results that may be expected for the entire year ending December
31, 2005. These financial statements should be read in conjunction with the
Management's Discussion and Analysis included in the Company's financial
statements and accompanying notes thereto as of and for the year ended December
31, 2004, filed with the Company's Annual Report on Form 10-KSB. Certain amounts
from prior periods have been reclassified to conform to the current period's
presentation.

The Company does not have any off-balance sheet arrangements that have, or are
reasonably likely to have, a current or future effect on our financial
condition, changes in financial condition, revenue or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
expected to be material.


2 - RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued SFAS No. 123 (Revised 2004) "Share-Based
Payment" ("SFAS No. 123R"). SFAS No. 123R addresses all forms of share-based
payment ("SBP") awards, including shares issued under employee stock purchase
plans, stock options, restricted stock and stock appreciation rights. SFAS No.
123R will require the Company to expense SBP awards with compensation cost for
SBP transactions measured at fair value. On March 29, 2005, the SEC issued Staff
Accounting Bulletin (SAB) 107 which expresses the views of the SEC regarding the
interaction between SFAS No. 123R and certain SEC rules and regulations and
provides the SEC's views regarding the valuation of share-based payment
arrangements for public companies. In April 2005, the SEC issued a release which
amends the compliance dates for SFAS No. 123R. We expect the adoption of SFAS
No. 123R and SAB 107 to have a material impact on the Company's financial
statements.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections". SFAS No. 154 replaces APB Opinion No. 20 "Accounting Changes" and
SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements". SFAS
No. 154 requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. We do not expect the adoption of SFAS No. 154 to have any impact on the
Company's financial statements.


3 - SIGNIFICANT ACCOUNTING POLICIES

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially expose the Company to a concentration of
credit risk are as follows:


                                      -6-
<PAGE>

CASH HELD AT BANKS. We maintain cash balances at several banks. Accounts at each
institution are insured by the Federal Deposit Insurance Corporation up to
$100,000.

DUE TO GEOGRAPHIC SALES AND SIGNIFICANT CUSTOMERS. We operate in a single
industry segment - scanner and fax modules. We market our products in the United
States, Europe and the Asia Pacific region through our sales personnel and
independent sales representatives.

Our geographic sales as a percent of total revenue were as follows for the
quarter ended June 30:

                                         2005               2004
                                    ----------------    --------------
United States                            73.0%              96.5%
Asia Pacific                             18.4%               0.1%
Europe and others                         8.6%               3.4%





Our geographic sales as a percent of total revenue were as follows for the six
month period ended June 30:

                                         2005               2004
                                    ----------------    --------------
United States                            86.4%              97.1%
Asia Pacific                             8.8%               0.1%
Europe and others                        4.8%               2.8%





Sales to major customers as a percentage of total revenues were as follows for
the quarters ended June 30:
                                         2005               2004
                                    ---------------    --------------
Customer A                                42%                54%
Customer B                                15%                14%
Customer C                                7%                 10%
Customer D                                7%                 6%






Sales to major customers as a percentage of total revenues for the six month
period ended June 30:

                                        2005               2004
                                    ---------------    --------------
Customer A                               34%                33%
Customer B                               15%                20%
Customer C                               15%                13%
Customer D                               12%                8%






DUE TO ACCOUNTS RECEIVABLE. Financial instruments that potentially subject the
Company to a concentration of credit risk consist primarily of trade
receivables. Our customers are concentrated in the industrial/consumer
electronics channels and with major original equipment manufacturers. As of June
30, 2005, the concentration was approximately 75% (3 customers). The loss of any
of these customers could have a material adverse effect on our results of
operations, financial position and cash flows.

DUE TO SIGNIFICANT VENDORS. For each of the periods ended June 30, 2005 and
2004, our purchases have primarily been concentrated with the wholly-owned
subsidiary of our majority stockholder. If this vendor was unable to provide
materials in a timely manner and we were unable to find alternative vendors, our
business, operating results and financial condition would be materially
adversely affected.

DUE TO PRODUCT SALES. We had 5 different product categories in the second
quarter of 2005 (2004: 5 products) and 3 different products during the six
months ended June 30, 2005 (2004: 5 products) that each accounted for more than
10% of sales. We have made positive efforts to mitigate the impact of loss of
any single category, however if any of these products were to become obsolete or
unmarketable and we were unable to successfully develop and market alternative
products, our business, operating results and financial condition could be
adversely affected.


                                      -7-
<PAGE>



RELATED PARTY TRANSACTIONS

A related party is generally defined as (i) any person that holds 10% or more of
the Company's securities and their immediate families, (ii) the Company's
management, (iii) someone that directly or indirectly controls, is controlled by
or is under common control with the Company, or (iv) anyone who can
significantly influence the financial and operating decisions of the Company. A
transaction is considered to be a related party transaction when there is a
transfer of resources or obligations between related parties.

The Company purchases significantly all its finished scanner imaging products
from the parent company of its majority stockholder, Syscan Technology Holdings
Limited ("STH"). Our Chairman and CEO, Darwin Hu, was formerly the CEO of STH,
and beneficially owns approximately 5.33% of the issued and outstanding capital
stock of STH.

During the three and six months ended June 30, 2005 and 2004, related party
purchases from entities that are wholly-owned subsidiaries of STH were $713,000,
$1,979,000, $526,000 and $1,610,000, respectively. The purchases were carried
out in the normal course of business.

Amounts due from related parties are unsecured, interest-free and repayable on
demand and consisted of the following:


Due from STH                                               $    446,000

Due from Majority Stockholder                                   100,000

Due from various subsidiaries wholly-owned by STH             1,955,000

                                                           ------------
                                                           $  2,501,000
                                                           ============


EARNINGS PER SHARE

Basic net earnings (loss) per share is computed by dividing net earnings (loss)
by the weighted average number of shares of common stock outstanding during the
period. Diluted net earnings (loss) per share is computed by dividing net loss
by the weighted average number of shares of common stock and common stock
equivalents outstanding during the period. Common stock equivalents were not
considered in calculating diluted net loss per common share for the three and
six months ended June 30, 2005 and 2004 as their effect would be anti-dilutive.
As a result, for all periods presented, the Company's basic and diluted net
earnings (loss) per share is the same.

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees." Compensation cost for stock options,
if any, is measured as the excess of the quoted market price of the Company's
stock at the date of grant over the amount an employee must pay to acquire the
stock. SFAS No.123, "Accounting for Stock-Based Compensation," established
accounting and disclosure requirements using a fair-value-based method of
accounting for stock-based employee compensation plans. The Company has elected
to remain on its current method of accounting as described above, and has
adopted the disclosure requirements of SFAS No. 123. In December 2002, the FASB
issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure, amending FASB No. 123, and "Accounting for Stock-Based
Compensation". This statement amends Statement No. 123 to provide alternative
methods of transition for an entity that voluntarily changes to the fair value
based method of accounting for stock-based employee compensation.


                                      -8-
<PAGE>


In accordance with SFAS 148, the following table illustrates the effect on the
Company's net loss and loss per share as if the Company had applied the fair
value recognition provisions of SFAS 123 to its stock-based employee
compensation awards, and recognized expense over the applicable award vesting
period (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS):

<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED    SIX MONTHS ENDED
                                                           JUNE 30,             JUNE 30,
                                                    -------------------   -------------------
                                                       2005      2004       2005      2004
                                                    ---------- --------   ---------- --------
                                                    (RESTATED)            (RESTATED)

<S>                                                 <C>        <C>        <C>        <C>
Net loss available to common stockholders           $  (807)   $  (124)   $  (298)   $  (110)
Add: Stock-based compensation cost
  included in reported net loss                       1,104       --        1,104       --
Less:  Stock-based employee compensation
  cost determined under fair value based
  method for all awards, net of related
  tax effects                                        (1,118)        (3)    (1,118)        (3)
                                                    -------    -------    -------    -------
Pro forma net loss                                  $  (821)   $  (127)   $  (312)   $  (113)
                                                    =======    =======    =======    =======

Basic and diluted net loss per share, as reported   $ (0.03)   $  --      $ (0.01)   $  --
                                                    =======    =======    =======    =======

Pro-forma basic and diluted net loss per share      $ (0.03)   $  --      $ (0.01)   $  --
                                                    =======    =======    =======    =======
</TABLE>


The weighted average fair value on the date of grant was $0.7695 for those
options granted in 2005. The fair value of each option grant is estimated on the
date of grant using the Black-Scholes Option pricing model with the following
weighted-average assumptions: dividend yield of 0%, expected volatility of 144%,
risk-free interest rate of 5%, and expected life of two years.

4 - STOCK OPTIONS

STOCK OPTIONS OUTSTANDING

The Company has a stock option plan, the objectives of which include attracting
and retaining the best personnel, providing for additional performance
incentives, and promoting the success of the Company by providing directors,
consultants, and key employees the opportunity to acquire common stock. The plan
is administrated by the Board of Directors, which determine among other things,
those individuals who shall receive options, the time period during which the
options may be partially or fully exercised, the number of common stock to be
issued upon the exercise of the options and the option exercise price.

The maximum term of the plan is ten years and options may be granted to
officers, directors, consultants, employees, and similar parties who provide
their skills and expertise to the Company.

Options granted under the plans have a maximum term of ten years and shall be at
an exercise price that may not be less than 85% of the fair market value of the
common stock on the date of the grant. Options are non-transferable and if a
participant ceases affiliation with the company for a reason other than death or
permanent and total disability, the participant will have 90 days to exercise
the option subject to certain extensions. In the event of death or permanent and
total disability, the option holder or their representative may exercise the
option within one (1) year. Any unexercised options that expire or that
terminate upon an employee's ceasing to be employed by the Company become
available again for issuance under the plan, subject to applicable securities
regulation. The plan may be terminated or amended at any time by the Board of
Directors. No options were forfeited, canceled or exercised during the six
months ended June 30, 2005. Information about options outstanding and
exercisable at June 30, 2005 is summarized below:


                                      -9-
<PAGE>

<TABLE>
<CAPTION>

----------------------- -------------- -------------------- ------------- --------------- -------------- --------------
                                                                                          WEIGHTED-AVERAGE
                                        WEIGHTED-AVERAGE    WEIGHTED-AVERAGE                REMAINING
  RANGE OF EXERCISE        NUMBER           REMAINING         EXERCISE        NUMBER       CONTRACTUAL   WEIGHTED-AVERAGE
        PRICES           OUTSTANDING    CONTRACTUAL LIFE       PRICE       EXERCISABLE    LIFE (YEARS)     EXERCISE
                                             (YEARS)                                                         PRICE

----------------------- -------------- -------------------- ------------- --------------- -------------- --------------
<S>                       <C>                 <C>              <C>          <C>               <C>            <C>
        $0.01             3,700,000           1.75             $0.01        1,293,333         1.75           $0.01
----------------------- -------------- -------------------- ------------- --------------- -------------- --------------
     $0.90-$2.50           60,000             1.50             $1.17          60,000          1.50           $1.17
</TABLE>


BOARD OF DIRECTOR APPROVED STOCK OPTIONS SUBJECT TO SHAREHOLDER APPROVAL

On April 2, 2004, the Company's Board of Directors authorized the increase in
the number of stock options available under the 2002 Stock Option Plan (the
"Plan") from 200,000 to 2,200,000. On July 21, 2004, the Company's Board of
Directors further authorized the increase in the number of stock options
available under the 2002 Stock Option Plan from 2,200,000 to 3,200,000. The
subject increases are subject to stockholder ratification at the next annual or
special meeting of stockholders, which has not been obtained as of the date this
filing.

On April 13, 2004, the Company's Board of Directors authorized an aggregate of
1,700,000 options under the Plan to certain individuals at $1.50 per share, and
expiring through April 2014. These options were canceled by the Board of
Directors on May 7, 2004. On July 21, 2004, the Company's Board of Directors
further authorized an aggregate of 2,200,000 options under the 2002 Stock Option
Plan to be issued to certain individuals at $2.00 per share and expiring through
July 2014, of which 165,000 have been canceled as a result of an employment
termination subsequent to year end and 55,000 options exercisable through May 4,
2005. The grant of the above options are subject to stockholder ratification of
the Company's increase in the number of stock options available for grant under
the Plan. The Company plans to obtain stockholder approval at its annual or
special meeting of stockholders, which has not yet been scheduled as of the date
of this filing.

On April 26, 2005, the Company entered into employment agreements with its
executive officers, the terms of which were previously approved by the
independent members of the Company's board of directors. The employment
agreements extend through 2008 and provide for a base salary, annual bonus to be
determined by the Board of Directors, termination payments, stock options,
non-competition provisions, and other terms and conditions of employment. In
addition, the Company maintains employment agreements with other key employees
with similar terms and conditions.

Total options granted under the agreements with the Company's executive officers
were 3,300,000, exercisable at $0.01 per share. One-third of the options vest on
the date of execution of the employment agreement, one-third vest on April 3,
2006 and one-third vest on April 2, 2007.

Additionally, the Company issued an aggregate of 400,000 options exercisable at
$0.01 per share to two of its key employees in connection with the execution of
employment agreements with such individuals. One-third of such options vest on
April 26, 2005, one-third vest on April 3, 2006 and one-third vest on April 2,
2007.


5 - PREFERRED STOCK

The Company has authorized 2,000,000 shares of preferred stock, of which an
aggregate of 60,000 have been designated Series A Preferred Stock and of which
18,650 shares are outstanding.

On March 15, 2005, the Company sold $1,865,000 of its Series A Convertible
Preferred Stock to institutional and accredited retail investors in a private
offering pursuant to exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). Starboard Capital
Markets, LLC, a NASD member firm, acted as placement agent in the sale of the
Preferred Stock, for which it received $186,500 in commissions and 186,500
warrants to purchase shares of the Company's common stock at an exercise price
equal to $1.00 per share.


                                      -10-
<PAGE>


In connection with the financing, the Company also issued to the purchasers
common stock purchase warrants to purchase up to an aggregate of 932,500 shares
of the Company's common stock at an exercise price of $2.00 per share. The
warrants are exercisable for a period of five years from the date of issuance.
Pursuant to a registration rights agreement, the Company has registered the
shares of common stock issuable upon conversion of the Preferred Stock and upon
exercise of the warrants with the Securities and Exchange Commission on Form
SB-2.

The warrants must be exercised by the payment of cash, except if there is no
effective registration statement covering the resale of the shares of Common
stock underlying the warrants, a holder may exercise their warrants on a
cashless basis. Holders of the warrants are entitled to full ratchet
anti-dilution protection for issuances of common stock or common stock
equivalents, prior to the effective date of the registration statement covering
the resale of the shares of common stock underlying the Preferred Stock, at less
than the exercise price of such warrants. Holders of warrants also have standard
anti-dilution protection for splits, dividends, subdivisions, distributions,
reclassifications and combinations of our common stock. None of the individual
holders of the Warrants are entitled to exercise any such Warrant held by them,
if such exercise would cause such holder to be deemed to beneficially own in
excess of 4.999% of the outstanding shares of our Common stock on the date of
issuance of such shares.

PREFERRED STOCK CONVERSION RIGHTS. All or any portion of the stated value of
Preferred Stock outstanding may be converted into common stock at anytime by the
purchasers. The initial fixed conversion price of the preferred stock is $1.00
per share ("Conversion Price"). The Conversion Price is subject to anti-dilution
protection adjustments, on a full ratchet basis, at anytime that the preferred
stock is outstanding and prior to the effective date of the registration
statement required to be filed pursuant to the Registration Rights Agreement,
upon our issuance of additional shares of common stock, or securities
convertible into common stock, at a price that is less than the then Conversion
Price.

DIVIDENDS. The Preferred Stock accrues dividends at a rate of 5% per annum,
payable semiannually on July 1 and January 1 in cash, by accretion of the stated
value or in shares of common stock. Subject to certain terms and conditions, the
decision whether to accrete dividends to the stated value of the Preferred Stock
or to pay for dividends in cash or in shares of common stock, shall be at our
discretion. During the three and six months ended June 30, 2005, preferred stock
dividends were approximately $28,000 and recorded as a non-operating expense on
the Company's statement of operations.

REDEMPTION. On March 15, 2008 (the "Redemption Date"), all of the outstanding
Preferred Stock shall be redeemed for a per share redemption price equal to the
stated value on the Redemption Date (the "Redemption Price"). The Redemption
Price is payable by us in cash or in shares of common stock at our discretion
and shall be paid within five trading days after the Redemption Date. In the
event we elect to pay all or some of the Redemption Price in shares of common
stock, the shares of common stock to be delivered to the purchasers shall be
valued at 85% of the fifteen-day volume weighted average price of the common
stock on the Redemption Date.

RIGHT TO COMPEL CONVERSION. If, on any date after March 15, 2006, (A) the
closing market price per share of our common stock for ten (10) consecutive
trading days equals at least $4.00 (subject to adjustment for certain events),
and (B) the average reported daily trading volume during such ten-day period
equals or exceeds 100,000 shares, then we shall have the right, at our option,
to convert, all, but not less than all, of the outstanding shares of Preferred
Stock at the Conversion Price; provided that there shall be an effective
registration statement covering the resale of the shares of common stock
underlying the preferred stock at all times during such 10-day period and during
the 30-day notice period to the holders thereof.

RESTRICTIONS ON CONVERSION OF PREFERRED STOCK. No holder of our Preferred Stock
is entitled to receive shares upon payment of dividends on the Preferred Stock,
or upon conversion of the Preferred Stock held by such holder if such receipt
would cause such holder to be deemed to beneficially own in excess of 4.999% of
the outstanding shares of our common stock on the date of issuance of such
shares (such provision may be waived by such holder upon 61 days prior written
notice to us). In addition, no individual holder is entitled to receive shares
upon payment of dividends on the Preferred Stock, or upon conversion of the
Preferred Stock held by such holder if such receipt would cause such holder to
be deemed to beneficially own in excess of 9.999% of the outstanding shares of
our common stock on the date of issuance of such shares (such provision may be
waived by such holder upon 61 days prior written notice to us).


                                      -11-
<PAGE>


REGISTRATION RIGHTS. Pursuant to the terms of a Registration Rights Agreement
between us and the holders of the preferred stock, we are obligated to file a
registration statement on Form SB-2 registering the resale of shares of our
common stock issuable upon conversion of the preferred stock and exercise of the
warrants. We are required to file the registration statement on or before April
24, 2005 and have the registration statement declared effective on or before
July 13, 2005. If the registration statement is not declared effective within
the timeframe described, or if the registration is suspended other than as
permitted in the Registration Rights Agreement, we will be obligated to pay each
holder a fee equal to 1.0% of such holders purchase price of the Preferred Stock
during the first 90 days, and 2.0% for each 30 day period thereafter (pro rated
for partial periods), that such registration conditions are not satisfied.

RIGHT OF FIRST REFUSAL. Subject to certain conditions, we have granted the
holders a right of first refusal, for a period until one (1) year from the
effective date of the registration statement required to be filed in connection
with the purchase of the Preferred Stock, to participate in any subsequent
financing that we conduct.

VOTING RIGHTS. Holders of the Preferred Stock shall have no voting rights.
However, so long as any shares of Preferred Stock are outstanding, we shall not,
without the affirmative vote of the holders of a majority of the shares of the
Preferred Stock then outstanding, (a) alter or change adversely the powers,
preferences or rights given to the Preferred Stock or alter or amend the Series
A Certificate of Designation, (b) authorize or create any class of stock ranking
as to dividends or distribution of assets upon a liquidation senior to or
otherwise pari passu with the Preferred Stock, (c) amend our certificate or
articles of incorporation or other charter documents so as to affect adversely
any rights of the holders of the Preferred Stock, (d) increase the authorized
number of shares of Preferred Stock, or (e) enter into any agreement with
respect to the foregoing.

LIQUIDATION PREFERENCE. Upon our liquidation, dissolution or winding up, whether
voluntary or involuntary (a "Liquidation"), the holders of the Preferred Stock
shall be entitled to receive out of our assets, whether such assets are capital
or surplus, for each share of Preferred Stock an amount equal to the stated
value per share before any distribution or payment shall be made to the holders
of any of our securities with rights junior to the Preferred Stock, and if our
assets shall be insufficient to pay in full such amounts, then the entire assets
to be distributed to the holders of the Preferred Stock shall be distributed
among such holders ratably in accordance with the respective amounts that would
be payable on such shares if all amounts payable thereon were paid in full.

ANTI-DILUTION. Holders of the Preferred Stock are entitled to full ratchet
anti-dilution protection for issuances of common stock or common stock
equivalents, prior to the effective date of the registration statement covering
the resale of the shares of common stock underlying the Preferred Stock, at less
than the Conversion Price. Holders of Preferred Stock also have standard
anti-dilution protection for splits, dividends, subdivisions, distributions,
reclassifications and combinations of our common stock.

PREFERRED STOCK ACCOUNTING TREATMENT. Pursuant to SFAS 133, "ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES" ("SFAS 133") and EITF Abstract
No. 00-19, "ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS" ("EITF 00-19"), the
Company's 5% Convertible Preferred Stock and related warrants, are deemed
derivative instruments as a result of the embedded conversion feature.
Accordingly, the fair value of these derivative instruments has been recorded in
the Company's consolidated balance sheet as a liability with the corresponding
amount as a discount to the 5% Convertible Preferred Stock. The discount is
being accreted from the issuance date, March 15, 2005, through the redemption
date, March 15, 2008, adjusted for conversions. Accretion of the preferred stock
redemption value for the three and six months ended June 30, 2005 was
approximately $155,000 and $182,000, respectively and is disclosed as a
non-operating expense on the Company's consolidated statement of operations. The
decrease in the fair value of the liability for derivative contracts totaled
approximately $575,000 and $1,661,000 for the three and six months ended June
30, 2005, respectively and is included with other income (expense) in the
consolidated statements of operations.

The Company computes fair value of these derivatives using the Black-Scholes
valuation model. The Black-Scholes model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. The
Company's derivative instruments have characteristics significantly different
from traded options, and the input assumptions used in the model can materially
affect the fair value estimate. The assumptions used in this model to estimate
fair value of each derivative instrument and the resulting value of the
derivative liability as of June 30, 2005 are as follows:


                                      -12-
<PAGE>

<TABLE>
<CAPTION>

                                                                                       EMBEDDED
                                                                                      CONVERSION
                                                                                       FEATURE
                                                                                   ASSOCIATED WITH
                                                                                        THE 5%
                                                                                     CONVERTIBLE
                                                   WARRANTS         WARRANTS       PREFERRED STOCK
                                                  ------------    -------------   -------------------
<S>                                                  <C>             <C>                <C>
Exercise/conversion Price                            $1.00           $2.00              $1.00
Fair value of the Company's common stock             $0.52           $0.52              $0.52
Expected life in years                                3.0             3.0                3.0
Expected volatility                                   61%             61%                61%
Expected dividend yield                               0%               0%                 0%
Risk free interest rate                               4%               4%                 4%
Calculated fair value per share                      $0.27           $0.14              $0.27

</TABLE>


6 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASES - The Company is committed under various non-cancelable
operating leases which expire through November 2006. Future minimum rental
commitments are as follows: 2005-$53,000 and 2006-$101,000. Rent expense charged
to operations was approximately $61,000 for the six months ended June 30, 2005
(2004: $59,000).

LINE OF CREDIT - The Company has a line of credit to borrow up to $1,000,000,
bearing interest at the rate of prime plus 1% and secured by all of the assets
of the Company. Interest payments are due monthly and all unpaid interest and
principal is due in full on August 24, 2005. Upon certain events of default as
more fully described in the agreement, the default variable interest rate
increases to prime plus 3%. The Company had $66,964 available for use at June
30, 2005.

LETTERS OF CREDIT - The Company issues letters of credit in the normal course of
business. Sysview had no outstanding letters of credit as of June 30, 2005.

EMPLOYMENT AGREEMENTS - The Company maintains employment agreements with its
executive officers which extend through 2008. The agreements provide for a base
salary, annual bonus to be determined by the Board of Directors, termination
payments, stock options, non-competition provisions, and other terms and
conditions of employment. In addition, the Company maintains employment
agreements with other key employees with similar terms and conditions.

LITIGATION, CLAIMS AND ASSESSMENTS - On May 20, 2003, Syscan, Inc., the
Company's wholly-owned subsidiary, filed a lawsuit named SYSCAN, INC. V.
PORTABLE PERIPHERAL CO., LTD. ("PPL"), IMAGING RECOGNITION INTEGRATED SYSTEMS,
INC., CARDREADER INC. AND TARGUS INC. (Case No. C03-02367 VRW) in United States
District Court, Northern District of California. Syscan, Inc. alleges claims
against the above-mentioned parties for patent infringement of patent nos.
6,054,707, 6,275,309 and 6,459,506, and unfair competition. Syscan, Inc. expects
to continue the case unless a reasonable settlement amount from the defendants
or a licensing agreement to the satisfaction of Syscan, Inc. is entered.

Syscan, Inc. is seeking: (1) a temporary restraining order, preliminary
injunction and permanent injunction against defendants, restraining defendants
from patent infringement and unfair competition; (2) treble damages due to
defendants' willful infringement; (3) punitive damages; (4) accounting of unjust
enrichment by defendants, resulting from defendants' unfair competition; and (5)
attorney's fees and costs.

The defendants are jointly represented by PPL's counsel. PPL has initiated
counterclaims against Syscan, Inc. for patent invalidity. Syscan, Inc. has not
yet been able to quantify its damage claim against PPL. Syscan, Inc. intends to
vigorously pursue this claim and denies PPL's counterclaim of patent invalidity.

The Company experiences routine litigation in the normal course of its business
and does not believe that any pending litigation will have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.


                                      -13-
<PAGE>



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


Management's discussion and analysis of financial condition and results of
operations (MD&A) is provided as a supplement to the accompanying consolidated
financial statements and footnotes to help provide an understanding of our
financial condition, changes in financial condition and results of operations.
The MD&A is organized as follows:

     o    OVERVIEW. This section provides a general description of our business,
          as well as recent developments that we believe are important in
          understanding the results of operations and to anticipate future
          trends in those operations.

     o    CRITICAL ACCOUNTING POLICIES. This section provides an analysis of the
          significant estimates and judgments that affect the reported amounts
          of assets, liabilities, revenues and expenses, and related disclosure
          of contingent assets and liabilities.

     o    RECENT ACCOUNTING PRONOUNCEMENTS. This section provides an overview of
          recent accounting pronouncements and their expected impact on our
          financial condition and results of operations.

     o    RESULTS OF OPERATIONS. This section provides an analysis of our
          results of operations for the periods ended June 30, 2005 compared to
          the same periods in 2004. A brief description is provided of
          transactions and events, including related party transactions that
          impact the comparability of the results being analyzed.

     o    LIQUIDITY AND CAPITAL RESOURCES. This section provides an analysis of
          our financial condition and cash flows as of and for the quarter ended
          June 30, 2005.


The following management's discussion and analysis should be read in conjunction
with our consolidated unaudited financial statements for the three and six
months periods ended June 30, 2005 and 2004 and related condensed notes to those
financial statements.

OVERVIEW

Management's Discussion and Analysis (MD&A) contains statements that are
forward-looking. These statements are based on current expectations and
assumptions that are subject to risks and uncertainties. Actual results could
differ materially because of factors discussed in our Form 10-KSB as filed with
the Securities and Exchange Commission on March 31, 2005, as well as other
factors which we cannot predict and that are not within our control. We
undertake no duty to update any forward-looking statement to conform the
statement to actual results or changes in our expectations.

We are in the business of developing, designing and delivering imaging
technology solutions. Our approach to research and development (R&D) is focused
on creating new deliverable and marketable technologies. We sell our products to
clients' throughout the world, including the United States, Canada, Europe,
South America, Australia and Asia. We intend to expand our business and product
offerings into the much larger image display market where we intend to leverage
our experience and expertise. We also believe that we may benefit from a level
of transfer of technologies from image capture to image display.

We design and manufacture imaging technology solutions for a worldwide customer
base. Our core business is currently focused on the manufacturing and worldwide
delivery of 20 plus mobile image-scanning products, which has allowed us to
become the largest OEM - private label manufacturer of USB driven mobile
scanning systems for a large number of major brands. Our strong intellectual
property portfolio in the imaging area consists of 19 patents with an additional
3 patents pending. We have 3 patent applications currently pending with the US
Patent & Trademark Office, 2 of which relate to image display technology and one
of which relates to image scanning.


                                      -14-
<PAGE>


In 2003, we began developing new technologies targeted towards the flat panel
LCD display market. A natural extension of their patented image scanning
technologies multiple products are in development with the first expected to
reach the marketplace in the second half of 2006. The products are designed to
significantly enhance picture quality, decrease power consumption, extend
product life and greatly reduce the manufacturing costs associated with
flat-panel televisions.

Our strategy continues to be to expand our image capture product line and
technology while leveraging our assets in other areas of the imaging industry.
We are actively shipping five categories of image capture products under the
Travel Scan marquee or their OEM counterparts. These categories include A4
format document scanners which represented approximately 23% of our sales during
the three month period ended June 30, 2005 and 28% of our sales during the six
month period ended June 30, 2005. The A6 format scanners that are ideal for ID
cards & checks, is our best selling product and represented approximately 40%
and 46%, respectively, of our sales during each of the three and six month
periods ended June 30, 2005. The A8 format that is primarily sold for use as a
business card reader represented approximately 17% and 12%, respectively, of our
sales during each of the three and six month periods ended June 30, 2005. The A5
format scanner also used for ID cards and security documents represented
approximately 11% and 7%, respectively, of our sales during each of the three
and six month periods ended June 30, 2005. We also manufacture and sell the
Contact Image Sensor (CIS) Modules that we use in our products and separately as
a component to other manufacturers which represented 11% of our three month
sales and 5% of our six month sales for the period ended June 30, 2005.

For the remainder of this year, we will expand our image capture product line
with three new products. The first product is a true-duplex high-speed A4
scanner in which we have strong market interest. The second product is an A6
scanner that follows in the footsteps of the current 662 but is high speed and
will have the expanded ability of duplex scanning. The third product is a
specialized security document scanner that utilizes infrared light sources to
help in the process of identifying fraudulent or tampered with documents.

While we continue to grow our presence in image capture technology, we have
begun creating, through research and development, new technology solutions for
the substantially larger, image display market. More specifically we are
creating products and technologies to accent and enhance the Liquid Crystal
Display (LCD) and Plasma Display Panel (PDP) television market. Our first image
display products are expected to be available for delivery during the second
half of 2006 under the SysView brand name. These SysView display products will
include highly integrated, high performance video processors that combine
state-of-the-art scaling and video processing techniques for displaying analog
and digital video/graphics on our LCD-PDP TV products. We believe that these
products will provide advanced image processing, including High-Definition (HD)
products, that will greatly enhance display quality. The next product/technology
that we are developing is a Light Emitting Diode (LED) backlighting solution to
replace the industries current standard Cold Cathode Fluorescent Lamp (CCFL).
The principal behind this technology is related to the proprietary technology
used in our image capture products. The benefits are substantial, including
longer life, higher dimming ratio, sharper contrast, and near high definition
resolution without filters, all at a performance value.

In addition to future products and technologies in various stages of research
and development, one of our objectives is to acquire companies in the image
capture and display industry that could compliment our business model, improve
our competitive positioning and expand our offerings to the marketplace, of
which there can be no assurance. In identifying potential acquisition candidates
we will seek to acquire companies with varied distribution channels, rich
intellectual property (IP) and high caliber engineering personnel.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis is based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates,
including those related to revenue recognition, accounts receivable and
allowance for doubtful accounts, inventories, intangible and long-lived assets,
and income taxes. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions.


                                      -15-
<PAGE>

An accounting policy is deemed to be critical if it requires an accounting
estimate to be made based on assumptions about matters that are highly uncertain
at the time the estimate is made, and if different estimates that reasonably
could have been used or changes in the accounting estimate that are reasonably
likely to occur could materially change the financial statements.

We believe the following critical accounting policies reflect our more
significant estimates and assumptions used in the preparation of our
consolidated financial statements:

REVENUE RECOGNITION

Revenues consist of sales of merchandise, including optical image capturing
devices, modules of optical image capturing devices, and chips and other
optoelectronic products. Revenue is recognized when the product is shipped and
the risks and rewards of ownership have transferred to the customer. We
recognize shipping and handling fees as revenue, and the related expenses as a
component of cost of sales. All internal handling charges are charged to
selling, general and administrative expenses.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

We present accounts receivable, net of allowances for doubtful accounts, to
ensure accounts receivable are not overstated due to uncollectibility. The
allowances are calculated based on detailed review of certain individual
customer accounts, historical rates and an estimation of the overall economic
conditions affecting our customer base. We review a customer's credit history
before extending credit. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required. In the event that our trade receivables
became uncollectible after exhausting all available means of collection, we
would be forced to record additional adjustments to receivables to reflect the
amounts at net realizable value. The effect of this entry would be a charge to
income, thereby reducing our net profit. Although we consider the likelihood of
this occurrence to be remote based on past history and the current status of our
accounts, there is a possibility of this occurrence.

INVENTORIES

 Inventories consist of finished goods, which are stated at the lower of cost or
net realizable value, with cost computed on a first in, first-out basis.
Provision is made for obsolete, slow-moving or defective items where
appropriate. The amount of any provision of inventories is recognized as an
expense in the period the provision occurs. The amount of any reversal of any
provision is recognized as other income in the period the reversal occurs. Our
inventory purchases and commitments are made in order to build inventory to meet
future shipment schedules based on forecasted demand for our products. We
perform a detailed assessment of inventory for each period, which includes a
review of, among other factors, demand requirements, product life cycle and
development plans, component cost trends, product pricing and quality issues.
Based on this analysis, we record adjustments to inventory for excess,
obsolescence or impairment, when appropriate, to reflect inventory at net
realizable value. Revisions to our inventory adjustments may be required if
actual demand, component costs or product life cycles differ from our estimates.
In the event we were unable to sell our products, the demand for our products
diminished, other competitors offered similar or better technology, and/or the
product life cycles deteriorated causing quality issues, we would be forced to
record an adjustment to inventory for impairment or obsolescence to reflect
inventory at net realizable value. The effect of this entry would be a charge to
income, thereby reducing our net profit. Although we consider the likelihood of
this occurrence to be remote based on our forecasted demand for our products,
there is a possibility of this occurrence.


                                      -16-
<PAGE>




INTANGIBLE AND LONG-LIVED ASSETS

We evaluate our intangible assets and long-lived assets, which represent
goodwill, long-term investments, and fixed assets, for impairment annually and
when circumstances indicate the carrying value of an asset may not be
recoverable. If impairment exists, an adjustment is made to write the asset down
to its fair value, and a loss is recorded as the difference between the carrying
value and fair value would be charged to operations. We do not believe any
impairment exists for any of these types of assets as of June 30, 2005.

INCOME TAXES

We account for income taxes under the provisions of Statement of Financial
Accounting Standards ("SFAS" No. 109), "Accounting for Income Taxes," whereby
deferred income tax assets and liabilities are computed for differences between
the financial statements and tax bases of assets and liabilities that will
result in taxable or deductible amounts in the future, based on enacted tax laws
and rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to
reduce deferred income tax assets to the amount expected to be realized.

CONTINGENCIES

Currently, there are no outstanding legal proceedings or claims, other than that
disclosed in Note 6 of the Consolidated Financial Statements. The outcomes of
potential legal proceedings and claims brought against us are subject to
significant uncertainty. SFAS 5, ACCOUNTING FOR CONTINGENCIES, requires that an
estimated loss from a loss contingency such as a legal proceeding or claim
should be accrued by a charge to income if it is probable that an asset has been
impaired or a liability has been incurred and the amount of the loss can be
reasonably estimated. Disclosure of a contingency is required if there is at
least a reasonable possibility that a loss has been incurred. In determining
whether a loss should be accrued we evaluate, among other factors, the degree of
probability of an unfavorable outcome and the ability to make a reasonable
estimate of the amount of loss. Changes in these factors could materially impact
our financial position or results of operations.

ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY

 We account for our 5% Convertible Preferred Stock pursuant to Statement of
Financial Accounting Standards ("SFAS") "ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES" ("SFAS 133") and the Emerging Issues Task Force ("EITF")
Abstract No. 00-19, "ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS" ("EITF
00-19"). Accordingly, the embedded conversion feature associated with the 5%
Convertible Preferred Stock and the warrants issued to the 5% Convertible
Preferred Stock purchasers have been determined to be derivative instruments.
The fair value of these derivative instruments, as determined by applying the
Black-Scholes valuation model, is adjusted quarterly. The Black-Scholes
valuation model requires the input of highly subjective assumptions, including
the expected stock price volatility. Additionally, although the Black-Scholes
model meets the requirements of SFAS 133, the fair values generated by the model
may not be indicative of the actual fair values of our 5% Convertible Preferred
Stock as our derivative instruments have characteristics significantly different
from traded options. Accordingly, the results obtained could be significantly
different if other assumptions were used. The effect of this entry would be a
charge to net earnings, thereby either increasing or reducing our net earnings
based upon the results obtained,

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued SFAS No. 123 (Revised 2004) "Share-Based
Payment" ("SFAS No. 123R"). SFAS No. 123R addresses all forms of share-based
payment ("SBP") awards, including shares issued under employee stock purchase
plans, stock options, restricted stock and stock appreciation rights. SFAS No.
123R will require the Company to expense SBP awards with compensation cost for
SBP transactions measured at fair value. On March 29, 2005, the SEC issued Staff
Accounting Bulletin (SAB) 107 which expresses the views of the SEC regarding the
interaction between SFAS No. 123R and certain SEC rules and regulations and
provides the SEC's views regarding the valuation of share-based payment
arrangements for public companies. In April 2005, the SEC issued a release which
amends the compliance dates for SFAS No. 123R. We expect the adoption of SFAS
No. 123R and SAB 107 to have a material impact on the Company's financial
statements.


                                      -17-
<PAGE>


In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections". SFAS No. 154 replaces APB Opinion No. 20 "Accounting Changes" and
SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements". SFAS
No. 154 requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. We do not expect the adoption of SFAS No. 154 to have any impact on the
Company's financial statements.


RESULTS OF OPERATIONS - THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2005 COMPARED
TO THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2004



REVENUE

Product revenues increased to $1.49 million for the quarter ended June 30, 2005
from $0.975 million for the same period in fiscal 2004, an increase of
approximately $512,000 or 52.5%. For the six month period ended June 30, 2005
revenues were $3.195 million, an increase of $0.714 million, or 28.7%, from the
first six month period of 2004. This increase in revenues for the period is
primarily the result of improved product sales and marketing efforts to shift
our business emphasis to less seasonal sensitive channels. Once again, scanner
and sensor imaging products represented over 98% of our revenues for the quarter
ended and year-to-date. During the quarter ended June 30, 2005, our top four
customers accounted for approximately 71% of total revenues. During the same
period ended June 30, 2004, our top four customers accounted for approximately
84% of total revenues. For the six months ended June 30, 2005, our top four
customers accounted for approximately 76% of total revenues versus 74% for the
same six month period in 2004. The loss of any of these larger clients could
have a material adverse effect on our business.

COST OF SALES AND GROSS PROFIT

Cost of goods sold (COGS) includes all direct costs related to the transfer of
scanners, imaging modules and services related to the delivery of those items
manufactured in China. COGS was approximately 59.3% and 62.1% for the three and
six months ended June 30, 2005, respectively, compared to 63.3% and 66.7%,
respectively, for the same period in 2004. Our COGS decreased as a percentage of
revenues primarily as a result of slightly higher gross margins and better price
elasticity, particularly with the A6 format products. We expect that our COGS
will remain the same or slightly higher during 2005 as a result of higher fuel
costs and currency exchange rates in Mainland China. Accordingly, gross profit
increased for all periods presented compared to the same periods in the prior
period as a direct result of increased higher sales revenue and better margins
on specialty scanning products related to unique or proprietary design of our
products. We anticipate that our gross profit margins may continue to increase
as we gain better control over our source parts cost and logistics.


                                      -18-
<PAGE>


SELLING AND MARKETING

Selling and marketing expenses include payroll, employee benefits, stock-based
compensation cost and other costs associated with sales, marketing and account
management personnel. Other direct selling and marketing costs include market
development funds and promotions (retail channels only), tradeshows, website
support costs, warehousing, logistics and certain sales representative fees.
Selling and marketing expenses increased to $258,000 for the quarter ended June
30, 2005 from $172,000 in the comparable period in 2004 and to $410,000 for the
six months ended June 30, 2005 from $366,000 in the comparable period in 2004.
This represents an increase of $86,000 or approximately 50% for the quarter
ended June 30, 2005 over the same period in 2004, and $44,000 or 12% for the six
months ended June 30, 2005 over the same period in 2004. The increase in both
the three and six months ended June 30, 2005 as compared to the same period in
2004 is mainly attributable to $60,000 stock-based compensation cost (a non-cash
charge) as a result of granting stock options to certain executives and key
employees at less than fair market value on the grant date. We had no
stock-based compensation cost during the corresponding periods in 2004. To a
lesser extent, the increase for the quarter ended June 30, 2005 over the same
period in 2004 was a result of attending major trade shows located in
Philadelphia (AIIM Show), Boston (SID show) and Taipei (Computex show). The
timing on these industry keynote shows happened to occur during the quarter
ended June 30, 2005 and significantly contributed to the increased expenditures.
In 2004 we only attended the Computex show during the comparable period.

GENERAL AND ADMINISTRATIVE

General and administrative (G&A) costs include payroll, employee benefits, and
stock-based compensation cost and other headcount-related costs associated with
the finance, legal, facilities and certain human resources, as well as legal and
other professional and administrative fees. General and administrative expenses
increased to $1,335,000 for the quarter ended June 30, 2005 and $1,631,000 for
the six months ended June 30, 2005 from $194,000 and $342,000, respectively, for
the comparable three and six month periods in fiscal 2004, an increase of
$1,141,000 and $1,289,000, respectively, for the three and six month periods
ended June 30, 2005 or approximately an 588% and 377% increase for three and six
month periods ended June 30, 2005. The increase in both the three and six months
ended June 30, 2005 as compared to the same period in 2004 is mainly
attributable to $985,000 stock-based compensation cost (a non-cash charge) as a
result of granting stock options to certain executives and key employees at less
than fair market value on the grant date. We had no stock-based compensation
cost during the corresponding periods in 2004. To a lesser extent, the increase
for each of the three and six month periods ended June 30, 2005 is primarily
attributable to additional personnel costs and outside fees incurred in
connection with our public listing compliance expense. We see our costs in this
area continuing to increase over the remainder of this year, possibly in excess
of $1.2M for FY 2005.

RESEARCH AND DEVELOPMENT

Research and Development (R&D) costs include payroll, employee benefits,
stock-based compensation cost and other headcount-related costs associated with
the product design, development, compliance testing, documentation and
transition to production. R&D expenses increased to $222,000 for the quarter
ended June 30, 2005 from $117,000 for the same period in fiscal 2004, an
increase of $105,000 or approximately 90%. For the six months ended June 30,
2005, R&D expenses increased by $167,000, or 72%, to $398,000 from $231,000 for
the same comparable in fiscal 2004. The increase in both the three and six
months ended June 30, 2005 as compared to the same period in 2004 is mainly
attributable to $60,000 stock-based compensation cost (a non-cash charge) as a
result of granting stock options to certain executives and key employees at less
than fair market value on the grant date. We had no stock-based compensation
cost during the corresponding periods in 2004. Additionally, during the quarter
ended June 30, 2005, we placed a greater emphasis on the development of new
products such as the planned line of duplex scanners and advanced display
systems, which also increased our R&D expenses. These products were not being
developed during 2004.

OTHER INCOME (EXPENSE)

During the six months ended June 30, 2005 our other income (expense) was a
result of issuing our 5% Convertible Preferred Stock as follows:

     o    The $1,661,000 decrease in the fair value of the liability for
          derivative contracts (associated with our 5% Convertible Series A
          Preferred Stock) from the date of issuance, March 15, 2005 through
          June 30, 2005. Pursuant to SFAS 133, "ACCOUNTING FOR DERIVATIVE
          INSTRUMENTS AND HEDGING ACTIVITIES" ("SFAS 133") and EITF Abstract No.
          00-19, "ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS" ("EITF
          00-19"), the decrease in the fair value of the liability for
          derivative contracts is included as other income in our consolidated
          statements of operations.
     o    Cash paid for issuance costs of $237,000 in connection with our
          offering; and
     o    A non-cash charge of $290,000 representing the fair value of 186,500
          warrants issued to the placement agent for the sale of the preferred
          stock.


                                      -19-
<PAGE>


During the three months ended June 30, 2005 our other income (expense) was a
result of the $575,000 decrease in value of our derivative instruments
associated with our 5% Convertible Series A Preferred Stock.

Our other income (expense) for the three and six months ended June 30, 2004 was
immaterial to the overall financial statements.

ACCRETION OF PREFERRED STOCK REDEMPTION VALUE AND PREFERRED DEEMED DIVIDENDS

During the three and six months ended June 30, 2005 accretion on our 5%
Convertible Series A Preferred Stock was approximately $155,000 and $182,000,
respectively. Preferred dividends were $28,000 for both the three and six months
ended June 30, 2005. As our 5% Convertible Series A Preferred Stock was issued
at the end of the March 2005, we did not accrue any accretion or dividends
during the three and six months ended June 30, 2004.

NET LOSS

Net loss for the quarter ended June 30, 2005 was approximately ($807,000)
compared to net loss of approximately ($124,000) during the same period in 2004.
The increased net loss was primarily attributable to the increased operating
expenses, primarily the $1,104,000 stock-based compensation cost (a non-cash
charge) as a result of granting stock options to certain executives and key
employees at less than fair market value on the grant date. This increase in
operating expenses was somewhat offset by (i) growth in revenue of $512,000 and
(ii) the accounting for our preferred stock as discussed above, which resulted
in a net increase to our earnings of $575,000.

RELATED PARTY TRANSACTIONS

We purchase significantly all our finished scanner imaging products from the
parent company of our majority stockholder, Syscan Technology Holdings Limited
("STH"). Our Chairman and CEO, Darwin Hu, was formerly the CEO of STH, and
beneficially owns approximately 5.33% of the issued and outstanding capital
stock of STH.

During the three and six months ended June 30, 2005 and 2004, related party
purchases from entities that are wholly-owned subsidiaries of STH were $713,000,
$1,979,000, $526,000 and $1,610,000, respectively. The purchases were carried
out in the normal course of business.

Amounts due from related parties are unsecured, interest-free and repayable on
demand and consisted of the following:


Due from STH                                               $   446,000

Due from Majority Stockholder                                  100,000

Due from various subsidiaries wholly-owned by STH            1,955,000

                                                           -----------
                                                           $ 2,501,000
                                                           ===========




LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were approximately $2,167,000 as of June 30, 2005 and
working capital on June 30, 2005 was approximately $5,095,000. Cash and working
capital increased from year end primarily attributable to the cash proceeds of
approximately $1,630,000 received from our convertible preferred stock offering
completed in March 2005.

OPERATING ACTIVITIES. Net cash flows provided (used) by operating activities was
($9,000) and $329,000 for the six months ended June 30, 2005 and 2004,
respectively. Net cash provided by operating activities for both periods
presented is primarily explained by decreases in accounts receivable
representing cash collections from the prior year's fourth quarter and decreases
in inventory levels as sales increased. Other factors affecting net cash used in
operating activities for 2005 primarily reflects net loss adjusted by (i)
non-cash accounting entries in connection with the sale of our 5% Series A
Preferred Stock and (ii) non-cash entries in connection with issuing stock
options below fair market value.


                                      -20-
<PAGE>


INVESTING ACTIVITIES. Net cash flows provided by investing activities during the
six months ended June 30, 2005 and 2004 consisted primarily of cash paid for
capital expenditures.

FINANCING ACTIVITIES. Net cash flows provided (used) by financing activities for
the six months ended June 30, 2005 and 2004 was $1,634,000 and ($907,000),
respectively. For 2005, we raised net cash of approximately $1,630,000 from the
sale of our convertible preferred stock offering completed in March 2005. For
both periods presented, advances to and/or repayments from related party
receivables and payables were made in the ordinary course of business.

We have financed our activities primarily with cash flows from operations, the
sale of our equity securities and borrowings under our credit facilities. We
have a $1,000,000 bank line of credit, which bears interest at prime plus one
percent, which is secured by all of our general business assets. The subject
bank line of credit had $933,000 outstanding as of June 30, 2005. We are
currently negotiating with two insured banks to increase our line of credit or
other financing arrangements. We believe the existing working capital and
anticipated cash flows from operations are expected to be adequate to satisfy
our operating and capital requirements for the next 12 months at our current run
rate and our anticipated expansion.

Our plans for the next twelve months include continuing to increase our presence
in the image capture market, heavily investing our resources into the image
display market and adding future products and technologies to our current
product offerings. Additionally, we intend to seek to identify acquisition
candidates in the image capture and display industry that we believe could
compliment our business model, improve our competitive positioning and expand
our offerings to the marketplace, of which there can be no assurance. In
identifying potential acquisition candidates, we will seek to acquire companies
with varied distribution channels, rich intellectual property (IP) and high
caliber engineering personnel.

To finance our business expansion plans, we plan to aggressively pursue
additional sources of funds, the form of which will vary depending on the
prevailing market and other conditions, and may include the issuance and sale of
debt or equity securities. However, there is no assurance that such additional
funds will be available for us to finance our expansion plans. Furthermore,
there is no assurance the net proceeds from any successful financing arrangement
will be sufficient to cover cash requirements as we expand our business
operations.

CONCENTRATION OF CREDIT RISK

CONCENTRATION OF CREDIT RISK FOR CASH HELD AT BANKS. We maintain cash balances
at several banks. Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $100,000.

CONCENTRATION OF CREDIT RISK DUE TO GEOGRAPHIC SALES AND SIGNIFICANT CUSTOMERS.
We operate in a single industry segment - scanner and fax modules. We market our
products in the United States, Europe and the Asia Pacific region through our
sales personnel and independent sales representatives.

Our geographic sales as a percent of total revenue were as follows for the
quarters ended June 30:

                                         2005               2004
                                    ----------------    --------------
United States                            73.0%              96.5%
Asia Pacific                             18.4%               0.1%
Europe and others                         8.6%               3.4%




Our geographic sales as a percent of total revenue were as follows for the six
month period ended June 30:


                                      -21-
<PAGE>


                                         2005               2004
                                    ----------------    --------------
United States                            86.4%              97.1%
Asia Pacific                              8.8%               0.1%
Europe and others                         4.8%               2.8%





Sales to major customers as a percentage of total revenues were as follows for
the quarters ended June 30:

                                         2005               2004
                                    ----------------    --------------
Customer A                                42%                54%
Customer B                                15%                14%
Customer C                                 7%                10%
Customer D                                 7%                 6%






Sales to major customers as a percentage of total revenues for the six month
period ended June 30:

                                         2005               2004
                                    ----------------    --------------
Customer A                                34%                33%
Customer B                                15%                20%
Customer C                                15%                13%
Customer D                                12%                 8%






CONCENTRATION OF CREDIT RISK DUE TO ACCOUNTS RECEIVABLE. Financial instruments
that potentially subject us to a concentration of credit risk consist primarily
of trade receivables. Our customers are concentrated in the industrial/consumer
electronics channels and with major original equipment manufacturers. As of June
30, 2005, the concentration was approximately 75% (3 customers). The loss of any
of these customers could have a material adverse effect on our results of
operations, financial position and cash flows.

CONCENTRATION OF CREDIT RISK DUE TO SIGNIFICANT VENDORS. For each of the periods
ended June 30, 2005 and 2004, our purchases have primarily been concentrated
with the wholly-owned subsidiary of our majority stockholder. If this vendor was
unable to provide materials in a timely manner and we were unable to find
alternative vendors, our business, operating results and financial condition
would be materially adversely affected.

DUE TO PRODUCT SALES. We had 5 different product categories in the second
quarter of 2005 (2004: 5 products) and 3 different products during the six
months ended June 30, 2005 (2004: 5 products) that each accounted for more than
10% of sales. We have made positive efforts to mitigate the impact of loss of
any single category, however if any of these products were to become obsolete or
unmarketable and we were unable to successfully develop and market alternative
products, our business, operating results and financial condition could be
adversely affected.


                                      -22-
<PAGE>


                                   SIGNATURES

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



Dated: August 16, 2006              By:  /S/ DARWIN HU
                                      ------------------------------------------
                                    Name:  Darwin Hu
                                    Title: Chief Executive Officer

Dated: August 16, 2006              By: /S/ WILLIAM HAWKINS
                                      ------------------------------------------
                                    Name:  William Hawkins
                                    Title: Acting Chief Financial Officer,
                                           Chief Operating Officer and Secretary



                                      -23-