U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                  Form 10-QSB


|X|  QUARTERLY  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF  1934
For the quarterly period ended June 30, 2004

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

                        Commission File Number 000-30173

                      HUAYANG INTERNATIONAL HOLDINGS, INC.
        (Exact name of small business issuer as specified in its charter)

                 Nevada                             58-1667944
      ------------------------------        ------------------------------
     (State or other Jurisdiction of             (I.R.S. Employer
             Incorporation)                     Identification No.)


                  386 Qingnian Avenue, Shenyang, China 110004
                    (Address of principal executive offices)

                  Issuer's telephone number: (86)(24) 2318-0688

The  number  of shares of common stock, par value $0.02, outstanding on June 30,
2004,  was  7,700,807.

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


<PAGE>
<TABLE>
<CAPTION>
                      HUAYANG INTERNATIONAL HOLDINGS, INC.

                                  FORM 10-QSB

                                      INDEX


                                                                                    Page
                                                                                    ----
<S>         <C>                                                                     <C>

PART I -    FINANCIAL INFORMATION

Item 1.     Financial Statements

            Condensed Consolidated Balance Sheets                                      1

            Condensed Consolidated Statements of Operations and Comprehensive Loss     2

            Condensed Consolidated Statements of Cash Flows                            3

            Notes to Condensed Consolidated Financial Statements                     4-8

Item 2.     Management's Discussion and Analysis or Plan of Operation               9-14

Item 3.     Controls and Procedures                                                   14

PART II -   OTHER INFORMATION

Item 1.     Legal Proceedings                                                         14

Item 2.     Changes in Securities                                                     14

Item 3.     Defaults Upon Senior Securities                                           15

Item 4.     Submission of Matters to a Vote of Security Holders                       15

Item 5.     Other Information                                                         15

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

SIGNATURES                                                                            16
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
              HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                June 30,      December 31,
                                                  2004            2003
                                               (Unaudited)
                                              -------------  --------------
<S>                                           <C>            <C>
ASSETS
------
  Real estate rental property, net            $  6,585,716   $   6,681,080
  Real estate held for development and sale      2,487,164       2,603,586
  Cash and cash equivalents                        258,636         302,172
  Accounts receivable                               33,919             520
  Note receivable from related company           2,388,000               -
  Due from related company, net                    175,504       2,505,987
  Property and equipment, net                    1,233,572       1,252,909
  Other assets                                      25,800          25,995
                                              -------------  --------------

  TOTAL ASSETS                                $ 13,188,311   $  13,372,249
                                              =============  ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
LIABILITIES:
  Accounts payable and accrued liabilities    $     54,370   $     155,833
  Accrued interest                                 730,339         605,650
  Bank loans                                     3,298,456       3,298,416
  Due to related parties                         1,778,157       1,778,157
  Taxes payable                                  2,359,227       2,348,849
  Minority interest                                176,019         183,905
                                              -------------  --------------

  TOTAL LIABILITIES                              8,396,568       8,370,810
                                              -------------  --------------

SHAREHOLDERS' EQUITY:
  Common stock, par value $0.02 per share;
    authorized 50,000,000 shares; issued and
    outstanding 7,700,807 shares                   154,016         154,016
  Paid-in capital                               18,342,291      18,342,291
  Accumulated deficit                          (13,730,595)    (13,520,739)
  Accumulated other comprehensive income            26,031          25,871
                                              -------------  --------------

  TOTAL SHAREHOLDERS' EQUITY                     4,791,743       5,001,439
                                              -------------  --------------

  TOTAL LIABILITIES AND SHAREHOLDERS'
    EQUITY                                    $ 13,188,311   $  13,372,249
                                              =============  ==============
<FN>
    The accompanying notes are an integral part of these condensed consolidated
                              financial statements.
</TABLE>


                                        1
<PAGE>
<TABLE>
<CAPTION>
              HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                               COMPREHENSIVE LOSS
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                  (UNAUDITED)

                                        Three months ended        Six months ended
                                             June 30,                 June 30,
                                       2004         2003         2004         2003
                                    -----------  -----------  -----------  -----------
<S>                                 <C>          <C>          <C>          <C>
REVENUES
  Real estate sales                 $   48,532   $        -   $   48,532   $        -
  Real estate rental income             78,221      144,877      162,276      291,098
  Interest income                       69,930            -       69,930            -
                                    -----------  -----------  -----------  -----------

  Total Revenues                       196,383      144,877      280,438      291,098
                                    -----------  -----------  -----------  -----------

COSTS AND EXPENSES
  Cost of real estate sold             116,452            -      116,452            -
  Real estate operating expenses        67,895      129,023      142,237      214,365
  Depreciation expense                  16,120      102,132      114,796      193,444
  Interest expense                      62,351       63,547      124,695      125,725
  Other operating expenses                   -          723            -          723
                                    -----------  -----------  -----------  -----------

  Total Costs and Expenses             262,818      295,425      498,180      534,257
                                    -----------  -----------  -----------  -----------

Loss Before Income Taxes               (66,435)    (150,548)    (217,742)    (243,159)
Income taxes                                 -            -            -            -
                                    -----------  -----------  -----------  -----------

Loss Before Minority Interest          (66,435)    (150,548)    (217,742)    (243,159)
Minority interest in loss of
  subsidiary                             1,953        5,527        7,886        8,158
                                    -----------  -----------  -----------  -----------

Net Loss                               (64,482)    (145,021)    (209,856)    (235,001)
Other comprehensive income
  Foreign currency translation             427            -          160            -
                                    -----------  -----------  -----------  -----------

Comprehensive Loss                  $  (64,055)  $ (145,021)  $ (209,696)  $ (235,001)
                                    ===========  ===========  ===========  ===========

Weighted average shares
  outstanding:
    Basic and diluted                7,700,807    7,700,807    7,700,807    7,700,807
                                    ===========  ===========  ===========  ===========

  Basic and diluted loss per share  $    (0.01)  $    (0.02)  $    (0.03)  $    (0.03)
                                    ===========  ===========  ===========  ===========
<FN>
  The accompanying notes are an integral part of these condensed consolidated
                              financial statements.
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
              HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                  (UNAUDITED)

                                                             2004        2003
                                                          ----------  ----------
<S>                                                       <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                  $(209,856)  $(235,001)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation                                              114,796     193,444
  Minority interest in loss of subsidiary                    (7,886)     (8,158)
Changes in operating assets and liabilities:
  Decrease in real estate held for development and sale     116,422           -
  Increase in accounts receivable                           (33,399)          -
  Decrease (increase) in other assets                           195    (122,605)
  (Decrease) increase in accounts payable and accrued
    liabilities                                            (101,463)     75,876
  Increase in accrued interest                              124,689           -
  Increase (decrease) in taxes payable                       10,378     (90,652)
                                                          ----------  ----------

  Net cash provided by (used in) operating activities        13,876    (187,096)
                                                          ----------  ----------

CASH FLOWS FROM INVESTING ACTIVITIES
  (Increase) decrease in amount due from related parties   (201,517)    310,276
  Repayment of note receivable                              144,000           -
  Purchase of equipment                                           -      (2,676)
                                                          ----------  ----------

  Net cash (used in) provided by investing activities       (57,517)    307,600
                                                          ----------  ----------

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

NET (DECREASE) INCREASE IN CASH                             (43,641)    120,504

  Effect of exchange rate changes on cash                       105           -

CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD                                                    302,172         110
                                                          ----------  ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                  $ 258,636   $ 120,614
                                                          ==========  ==========

SUPPLEMENTAL CASH FLOW INFORMATION
  Interest paid                                           $       -   $ 125,725
                                                          ==========  ==========
  Income taxes paid                                       $       -   $       -
                                                          ==========  ==========
<FN>
In  January 2004, the Company exchanged net amounts due from a related party for
a  $2,532,000  note  receivable.

    The accompanying notes are an integral part of these condensed consolidated
                              financial statements.
</TABLE>


                                        3
<PAGE>
              HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 2004
                                  (UNAUDITED)

1.   REPORTING  ENTITY

     The  condensed  consolidated  financial statements of Huayang International
     Holdings, Inc. and Subsidiary (HIHI) (the "Company") reflect the activities
     and  financial  transactions  of  its  subsidiary  Shenyang  Haitong  House
     Properties Development Ltd. (HAITONG). HIHI has a 95% ownership interest in
     HAITONG.

     HIHI  was  incorporated under the laws of the State of Nevada in the United
     States. HAITONG was incorporated under the laws of the People's Republic of
     China  (PRC).

2.   CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS  AND  FOOTNOTES

     The  interim  condensed  consolidated financial statements presented herein
     have  been  prepared  by  the Company and include the unaudited accounts of
     HIHI and its subsidiary HAITONG. All significant inter-company accounts and
     transactions  have  been  eliminated  in  the  consolidation.

     These  condensed  consolidated  financial  statements have been prepared in
     accordance  with  generally  accepted  accounting  principles  for  interim
     financial  information  and  the  instructions  to  Form 10-QSB and Article
     310(b)  of  Regulation  S-B.  Certain  information and footnote disclosures
     normally  included  in  financial  statements  presented in accordance with
     generally  accepted  accounting  principles have been condensed or omitted.
     The  Company  believes  the  disclosures  made  are  adequate  to  make the
     information  presented  not  misleading. The condensed consolidated balance
     sheet  information  as  of  December  31, 2003 was derived from the audited
     consolidated  financial  statements included in the Company's Annual Report
     Form 10-KSB. The condensed consolidated financial statements should be read
     in  conjunction  with  that  report.

     In  the  opinion  of  management,  the  unaudited  condensed  consolidated
     financial  statements  reflect  all  adjustments (which include only normal
     recurring  adjustments)  necessary  to  present  fairly  the  consolidated
     financial  position  of  the  Company  as  of June 30, 2004, the results of
     operations  for  the  three  and  six  months ended June 30, 2004 and 2003,
     respectively.  Interim  results are not necessarily indicative of full year
     performance  because  of  the impact of seasonal and short-term variations.


                                        4
<PAGE>
              HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 2004
                                  (UNAUDITED)

3.   USE  OF  ESTIMATES

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

4.   LOSS  PER  SHARE

     Basic  loss  per  share  is  computed  by dividing loss available to common
     shareholders  by  the  weighted-average number of common shares outstanding
     during the period. Diluted loss per share is computed similar to basic loss
     per share except that the denominator is increased to include the number of
     additional  common shares that would have been outstanding if the potential
     common  shares  have  been  issued and if the additional common shares were
     dilutive. There are no differences between basic and diluted loss per share
     as  of  June  30,  2004  and  2003 as the effect of additional common share
     equivalents  would  be  anti-dilutive.

5.   FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

     The  carrying  value  of  financial  instruments  including  cash  and cash
     equivalents,  receivables,  accounts payable and accrued expenses and debt,
     approximates their fair value at June 30, 2004 and December 31, 2003 due to
     the  relatively  short-term  nature  of  these  instruments.

6.   GOING  CONCERN

     The  Company's  condensed  consolidated  financial  statements  have  been
     presented  on  the basis that it is a going concern, which contemplates the
     realization  of  assets  and  the satisfaction of liabilities in the normal
     course  of  business. The Company has a net loss of $209,856 and a negative
     cash  flow  of  $43,641  for the six months ended June 30, 2004, and has an
     accumulated deficit of $13,730,595 as of June 30, 2004. These matters raise
     substantial  doubt  its  ability  to  continue  as  a  going  concern.


                                        5
<PAGE>
              HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 2004
                                  (UNAUDITED)

6.   GOING  CONCERN  (CONTINUED)

     The  Company is dependent on the management company to collect revenues and
     to  make  payments  on  a timely basis. As of June 30, 2004, the management
     company owed the Company $11,760,517 in aggregate, against which $9,197,013
     has  been  provided  as  an allowance for doubtful accounts. The management
     company is a related party and is controlled by the majority shareholder of
     the  Company.  On  January  30,  2004,  the  management  company signed and
     executed  a  promissory  note  for  an amount of $2,532,000 in favor of the
     Company.  This  amount was previously disclosed as due from related company
     in  the  condensed  consolidated  balance  sheet  at December 31, 2003. The
     promissory  note  is  repayable  by  installments  as  follows:

<TABLE>
<CAPTION>
Period                             Installment payment schedule
---------------------------------  ----------------------------------
<S>                                <C>
Year 2004                          Monthly installments of $24,000
Year 2005                          Quarterly installments of $121,000
Year 2006                          Quarterly installments of $181,000
First three quarters of year 2007  Quarterly installments of $266,000
Fourth quarter of year 2007        Final payment of $238,000
</TABLE>

     The  promissory  note  bears  interest  at 5.5% per annum. In addition, the
     promissory  note  is secured by a security agreement dated January 30, 2004
     executed  by  the management company for the benefit of the Company whereby
     the  management  company  grants  and  conveys  to  the  Company a security
     interest in all of its fixed and current assets which it owns. According to
     the  management  company's  management accounts, the management company had
     unaudited  total  assets  and  unaudited  net assets of approximately $17.9
     million  and  $6.2  million,  respectively  as  of  December  31,  2003.

     During  the  six  months ended June 30, 2004, the management company repaid
     $144,000 to the Company in accordance with the installment payment schedule
     as  above. However, no interest payment was made by the management company.
     As  of  June  30,  2004, the balance of the note receivable was $2,388,000.
     Accrued  interest  income  of  $69,930 has been recorded in amount due from
     related  company.

     During  the  six  months  ended  June  30,  2004,  the Company made further
     advances  of  $306,142  to  the  management  company for its payment to the
     maintenance  fund  of  the  real  estate.


                                        6
<PAGE>
              HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 2004
                                  (UNAUDITED)


6.   GOING  CONCERN  (CONTINUED)

     Should  the  management company continue to fail to pay obligations as they
     fall due, it could impair the ability of the Company to continue as a going
     concern.  Management of the Company believe that sufficient funding will be
     available  to  meet  operating  needs  of  the  Company.

7.   REAL  ESTATE  RENTAL PROPERTY AND REAL ESTATE HELD FOR DEVELOPMENT AND SALE

     As of June 30, 2004, real estate comprised the following:

<TABLE>
<CAPTION>
                                     Held for Rental    Held for Sale
                                    -----------------  ---------------
<S>                                 <C>                <C>
Cost                                $     17,771,030   $    3,671,954
Less: Accumulated depreciation and
      amortization                        (1,523,788)               -
      Provision for impairment            (9,661,526)      (1,184,790)
                                    -----------------  ---------------

Real estate, net                    $      6,585,716   $    2,487,164
                                    =================  ===============
</TABLE>

8.   BANK  LOANS

     The  Company's  bank  loans bear interests at a rate of 6.44% per annum and
     are  secured  by the Company's real estate and guaranteed by its subsidiary
     HAITONG.  The bank loans are currently in default and management is working
     with  the  respective  banks  to extend the repayment terms or sell certain
     properties  to  offset the loan balance with the proceeds. According to the
     terms  of  the  loan agreements, the banks have the right to impose default
     interests at a daily rate of 0.021% and the Company is accruing interest at
     the  default  rate.

9.   SUBSEQUENT  EVENT

     On  August 5, 2004, the Company completed a share exchange (the "Exchange")
     with the stockholders of China Carbon Black Holding Company Limited, a Hong
     Kong  corporation  ("CCB")  pursuant to the terms of an Agreement for Share
     Exchange, dated July 15, 2004. In the Exchange, the Company acquired all of
     the  issued  and  outstanding  stock of CCB in exchange for the issuance of
     36,000,000  shares  of  its  common  stock.


                                        7
<PAGE>
              HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 2004
                                  (UNAUDITED)

9.   SUBSEQUENT  EVENT  (CONTINUED)

     At  the  time  of  execution  of  the  Agreement  for  Share  Exchange, and
     immediately prior to completion of the Exchange, the Company had a total of
     7,700,807  shares issued and outstanding. However, in conjunction with, and
     as  a  condition to, completion of the Exchange, a principal shareholder of
     the  Company,  Gao Wan Jun, agreed to surrender a total of 5,460,000 of his
     shares  following  completion  of  the  Exchange.

     The  Exchange  resulted  in a change of voting control of the Company. Upon
     completion  of  the  Exchange  and the related share cancellation and share
     issuances  described  above,  the  Company has a total of 38,240,807 shares
     issued  and  outstanding, of which 30,178,382, or approximately 78.92%, are
     owned  by  persons  who  were  previously  stockholders  of  CCB.

     There  has  not  yet  been  any change in the officers and directors of the
     Company  subsequent  to  completion  of  the  Exchange.

     CCB  owns  100%  of  Xin  Jiang  YaKeLa  Carbon Black Limited ("YaKeLa"), a
     leading  energy  company  in  China  engaged in natural gas and natural gas
     by-product  production. Located at the Xin Jiang desert region at the North
     Western China, YaKeLa has obtained the license right to extract natural gas
     in  Xin  Jiang  -  YaKeLa natural gas field, one of the biggest natural gas
     field  in  China  with  over  50  billion cubic meters natural gas reserve.

     Xin  Jiiang  -  YaKeLa  natural  gas field provides one of the best quality
     natural  gas  in  China  without  any contamination by impurities of carbon
     dioxide  and  nitride  compounds.

     With  its  own  extraction  facilities  established  at  the  center of the
     XinJiang-YaKeLa  natural  gas  field,  YaKeLa  is  capable  of a full scale
     extraction  of  natural  gas  to sell to various provinces in China. YaKeLa
     also  produces  fine  quality  carbon black as a by-product of natural gas.
     Furthermore,  YaKeLa  supplies  hot  air  through its air tunnels to nearby
     factories  and  offices  to support their warmers and heaters during winter
     seasons.

10.  RECLASSIFICATION

     Certain  2003  balances  have  been  reclassified  to  conform  to the 2004
     presentation.


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

FORWARD-LOOKING STATEMENTS

The  following  discussion  of the financial condition and results of operations
should  be  read  in  conjunction with our consolidated financial statements and
related  notes  thereto.  The  following  discussion  contains  forward-looking
statements.  Huayang  International Holdings, Inc. is referred to herein as "the
Company", "we" or "our." The words or phrases "would be," "will allow," "intends
to," "will likely result," "are expected to," "will continue," "is anticipated,"
"estimate,"  "project,"  or  similar  expressions  are  intended  to  identify
"forward-looking  statements".  Such  statements  include  those  concerning our
expected  financial  performance,  our corporate strategy and operational plans.
Actual  results  could  differ  materially  from  those  projected  in  the
forward-looking  statements  as a result of a number of risks and uncertainties,
including:  (a)  our  attempt to enter into the technology sector and whether we
can successfully incorporate such business into our operations; (b) our low cash
balances  which  may impede our ability to grow our business and compete against
our  competitors  and  other  liquidity  related  risks  discussed  below  under
"Liquidity  and  Capital  Resources";  (c)  any economic, political, regulatory,
legal  and  social  conditions in China that may negatively affect our business;
and  (d)  our  dependence  upon  funding from related companies. Statements made
herein  are  as  of  the  date  of  the  filing  of  this period report with the
Securities  and  Exchange  Commission  and  should  not be relied upon as of any
subsequent  date.  Unless  otherwise  required  by  applicable  law,  we  do not
undertake,  and  we  specifically  disclaim  any  obligation,  to  update  any
forward-looking  statements  to reflect occurrences, developments, unanticipated
events  or  circumstances  after  the  date  of  such  statements.

SECOND  QUARTER  OVERVIEW

During  the  second  quarter of 2004, the Company continued its business to sell
and  lease  its  real  estate  properties  in  the Huayang International Mansion
("Mansion"). The Company conducts its real estate business primarily through its
95%  owned  subsidiary  Shenyang  Haitong House Properties Development Co., Ltd.
("Haitong").

RESULTS OF OPERATIONS - Three months ended June 30, 2004

Revenues

During  the  three  months ended June 30, 2004, the Company recorded real estate
sales  of  $48,532. No real estate sales were made during the three months ended
June  30,  2003.

Real  estate rental income for the three months ended June 30, 2004 was $78,221,
down 46% from $144,877 for the three months ended June 30, 2003. The reasons for
the  significant  drop  included  (1)  the  average  rent  per  square meter has
decreased  due  to  competition  from  two  new office towers near the Company's
property;  and  (2)  the  total  area  leased  out  decreased  by 20% due to the
declining  property  market  condition  following  the  outbreak of Severe Acute
Respiratory  Syndrome  (or  known as SARS, an atypical pneumonia which was first
reported and recognized in February 2003) in China around mid 2003.


                                        9
<PAGE>
For  the  three months ended June 30, 2004, the Company recorded interest income
of $69,930 on the promissory note receivable from the related company. While the
promissory  note  was executed on January 30, 2004, there was no interest income
for  the  same  period  in  2003.

Costs  and  Expenses

Total costs and expenses for the three months ended June 30, 2004 were $262,818,
which  decreased  by  11% from $295,425 of total costs and expenses in the three
months  ended  June  30,  2003.

For  the  three months ended June 30, 2004, $116,452 was recorded as the cost of
real  estate  sold.  As  the  corresponding sales were only $48,523, there was a
gross loss of $67,920 on the sale of real estate for the three months ended June
30,  2004.  There was no real estate sold during the three months ended June 30,
2003.

For  the  three  months  ended  June 30, 2004, depreciation expense decreased by
84.2%  to $16,120 from $102,132 for the same period in 2003 because the carrying
values  of  the  investment properties and properties held for sale were written
down for impairment by an aggregate amount of approximately $10.8 million at the
end  of year 2003. Interest expense for the three months ended June 30, 2004 was
$62,351,  which decreased only slightly by 1.9% from $63,547 for the same period
in  2003,  because  bank loans remain at the same level. On the other hand, real
estate  operating expenses for the three months ended June 30, 2004 decreased by
47.4%  to  $67,895  from $129,023 in the same period in 2003 because the Company
refurbished  the  lobby  of  its  real  estate  in  2003.

Net  Loss

For  the three months ended June 30, 2004, the net loss was $64,482, as compared
to  $145,021  for  the  three  months ended June 30, 2003. Net losses per share,
basic  and  diluted,  for  the  three  months  ended  June 30, 2004 was $0.01 as
compared  to  $0.02  for  2003.  The  decrease in net loss was mainly due to the
interest  income  on  the  promissory  note receivable from the related company.


                                       10
<PAGE>
RESULTS OF OPERATIONS - Six months ended June 30, 2004

Revenues

During  the  six  months  ended  June 30, 2004, the Company recorded real estate
sales  of  $48,532.  No  real estate sales were made during the six months ended
June  30,  2003.

Real  estate  rental income for the six months ended June 30, 2004 was $162,276,
down 44.3% from $291,098 for the six months ended June 30, 2003. The reasons for
the  significant  drop  included  (1)  the  average  rent  per  square meter has
decreased  due  to  competition  from  two  new office towers near the Company's
property;  and  (2)  the  total  area  leased  out  decreased  by 22% due to the
declining  property  market  condition  following  the  outbreak of Severe Acute
Respiratory  Syndrome  (or  known as SARS, an atypical pneumonia which was first
reported  and  recognized  in  February  2003)  in  China  around  mid  2003.

For  the six months ended June 30, 2004, the Company recorded interest income of
$69,930  on  the  promissory note receivable from the related company. While the
promissory  note  was executed on January 30, 2004, there was no interest income
for  the  same  period  in  2003.

Costs  and  Expenses

Total  costs  and expenses for the six months ended June 30, 2004 were $498,180,
which  decreased  by  6.8%  from $534,257 of total costs and expenses in the six
months  ended  June  30,  2003.

For  the  six  months  ended June 30, 2004, $116,452 was recorded as the cost of
real  estate  sold.  As  the  corresponding sales were only $48,523, there was a
gross  loss  of $67,920 on the sale of real estate for the six months ended June
30,  2004.  There  was  no real estate sold during the six months ended June 30,
2003.

For  the six months ended June 30, 2004, depreciation expense decreased by 40.7%
to  $114,796  from  $193,444  for  the  same period in 2003 because the carrying
values  of  the  investment properties and properties held for sale were written
down for impairment by an aggregate amount of approximately $10.8 million at the
end  of  year  2003. Interest expense for the six months ended June 30, 2004 was
$124,695,  which  decreased  only  slightly  by  0.8% from $125,725 for the same
period  in 2003, because bank loans remain at the same level. On the other hand,
real  estate operating expenses for the six months ended June 30, 2004 decreased
by  33.6%  to  $142,237  from  $214,365  in  the same period in 2003 because the
Company  refurbished  the  lobby  of  its  real  estate  in  2003.

Net  Loss

For  the  six months ended June 30, 2004, the net loss was $209,856, as compared
to  $235,001 for the six months ended June 30, 2003. Net losses per share, basic
and  diluted,  for  the six months ended June 30, 2004 and 2003 were both $0.03.


                                       11
<PAGE>
LIQUIDITY  AND  CAPITAL  RESOURCES

The Company's condensed consolidated financial statements have been presented on
the  basis  that  it  is  a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company  has  a net loss of $209,856 and a negative cash flow of $43,641 for the
six months ended June 30, 2004, and has an accumulated deficit of $13,730,595 as
of  June 30, 2004. These matters raise substantial doubt its ability to continue
as  a  going  concern.

Our liquidity consists of cash, receivables and receipts from rental activities.
As  of  June  30,  2004, our cash balance was $258,636. Our past operations were
supported  by  related  companies  which  from  time  to  time lent funds to us.
However,  such financing from related companies may not always be available, and
the  Company  may  need  to  secure further financing to support its operations.
Future cash needs may be financed by a combination of cash flows from rental and
leasing  operations,  future  advances  under  bank  loans, and if needed, other
alternative  financing  arrangements,  which  may or may not be available to us.

As  of  June  30,  2004,  the management company owed the Company $11,760,517 in
aggregate,  against  which  $9,197,013  has  been  provided  as an allowance for
doubtful  accounts. On January 30, 2004, the related company signed and executed
a  promissory  note  for  an  amount of $2,532,000 in favor of the Company. This
amount  was  previously  disclosed  as due from related company in the condensed
consolidated  balance  sheet  at  December  31,  2003.  The  promissory  note is
repayable  by  installments  as  follows:

<TABLE>
<CAPTION>
Period                             Installment payment schedule
---------------------------------  ----------------------------------
<S>                                <C>
Year 2004                          Monthly installments of $24,000
Year 2005                          Quarterly installments of $121,000
Year 2006                          Quarterly installments of $181,000
First three quarters of year 2007  Quarterly installments of $266,000
Fourth quarter of year 2007        Final payment of $238,000
</TABLE>

The  promissory  note  bears  interest  at  5.5%  per  annum.  In  addition, the
promissory  note  is  secured  by  a  security  agreement dated January 30, 2004
executed  by  the  related  company  for  the benefit of the Company whereby the
related  company grants and conveys to the Company a security interest in all of
its  fixed  and current assets which it owns. According to the related company's
management  accounts,  the  related  company  had  unaudited  total  assets  and
unaudited  net  assets  of  approximately  $17.9  million  and  $6.2  million,
respectively  as  of  December  31,  2003.

During  the  six  months  ended  June  30,  2004,  the management company repaid
$144,000  to  the Company in accordance with the installment payment schedule as
above.  However,  no  interest payment was made by the management company. As of
June  30,  2004,  the  balance  of  the  note receivable was $2,388,000. Accrued
interest  income  of  $69,930  has  been  recorded  in due from related company.


                                       12
<PAGE>
During  the six months ended June 30, 2004, the Company made further advances of
$306,142  to  the  management company for its payment to the maintenance fund of
the  real  estate.

We  do  not  have any material commitments for capital expenditures for the year
ending  December  31,  2004.  We  anticipate, based on the scale of our existing
operations  and  apart from the requirement to repay our bank loans as discussed
below,  that  our  projected  cash  flows from operations would be sufficient to
support  our  planned  operations  for  the  next  twelve  months.

Our  projection  of  future  cash  requirements is affected by numerous factors,
including but not limited to, changes in customer receipts, real estate industry
trends,  operating  cost  fluctuations,  and  unplanned  capital  spending.

As  of  June 30, 2004, we had total bank debt of $3,298,456 which is in default.
We  also  owed $1,778,158 to related parties. Our indebtedness poses substantial
risks  to  holders  of  our  Common  Stock,  including  the  risks such as (i) a
substantial  portion  of  our cash flow from operations will be dedicated to the
payment  of  interest on such indebtedness, (ii) our indebtedness may impede our
ability  to  obtain  financing  in  the  future  for  working  capital,  capital
expenditures  and  general  corporate  purposes  and (iii) our debt position may
leave  us  more  vulnerable  to  economic downturns and may limit our ability to
withstand  competitive  pressures.  If we are unable to generate sufficient cash
flow  from  operations in the future to service our indebtedness and to meet our
other  commitments,  we will be required to adopt one or more alternatives, such
as  refinancing  or  restructuring  our indebtedness, selling material assets or
operations,  or seeking to raise additional debt or equity capital. There can be
no  assurance that any of these actions could be effected on satisfactory terms,
that  they  would  enable  us to continue to satisfy our capital requirements or
that they would be permitted by the terms of existing or future debt agreements.

All  of  our  bank  debt is secured by properties in the Mansion. As of June 30,
2004,  our  lenders held an aggregate of $3,298,456 of liens against the Mansion
as security for bank loans of the same amount. We are in default under such bank
loans.  The  loans are immediately due and payable and the bank may foreclose on
the  Mansion, which would have a material adverse effect on us. We are currently
working  with the respective banks to extend the repayment terms or sell certain
properties  to  offset  the  loan  balance  with  the  proceeds.

EFFECT  OF  FLUCTUATIONS  IN  FOREIGN  EXCHANGE  RATES

We  operate  in  the  People's Republic of China, maintain our financial control
center in Shenyang, PRC, and record most of our operating activities in Renminbi
("RMB"),  the Chinese currency. The exchange rate between RMB and US Dollars has
been  relatively  stable  for  the  last  few  years.  We  do  not  believe that
fluctuations  in  the  foreign exchange rates will have a material effect on our
consolidated financial statements. The RMB exchange rates, however, are fixed by
the  government  of  the PRC, and a change in the exchange rate by the PRC could
have  a  material  adverse  effect  on  our  consolidated  financial statements.


                                       13
<PAGE>
QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

Market risk represents the risk of change in the value of short term investments
and  financial instruments caused by fluctuations in investment prices, interest
rates  and  foreign  currency  exchange  rates.

The  Company  operates  in  the  People's  Republic  of China, and is exposed to
foreign  exchange  rate fluctuations related to the translation of the financial
results  of  our  operations in China into U.S. dollars during consolidation. As
exchange  rates vary, these results, when translated, may vary from expectations
and  adversely  impact  overall  expected  profitability.

The  effect  of  foreign exchange rate fluctuations on the Company for the three
and  six  months  ended  June  30,  2004  was  immaterial.

The  Company has not entered into any derivative financial instruments to manage
interest  rate  risk  or for speculative purpose and is not currently evaluating
the  future  use  of  such  financial  instruments.

The  Company  does not hold cash equivalents or marketable securities as of June
30,  2004  and  has  no  plans  to  do  so  within  the  next  twelve  months.


                        Item 3.  Controls and Procedures

As  of  the  end  of the period covered by this report, the Company conducted an
evaluation  under  the  supervision  and with the participation of the principal
executive  officer  and principal financial officer, of the Company's disclosure
controls  and  procedures  (as defined in Rule 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the  principal  executive  officer and the principal financial officer concluded
that  the  Company's  disclosure controls and procedures are effective to ensure
that  information  required  to  be  disclosed by the Company in reports that it
files  or  submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules  and  forms.


                          PART II - OTHER INFORMATION

                            Item 1.  Legal Proceedings

We  are not a party to, nor are any of our respective properties the subject of,
any  material  pending  legal  or  arbitration  proceeding.

                          Item 2. Changes in Securities

None.


                                       14
<PAGE>
                    Item 3.  Defaults Upon Senior Securities

As  of  June 30, 2004, we had total bank debt of $3,298,456 which is in default.
All  of  our  bank  debt is secured by properties in the Mansion. As of June 30,
2004,  our  lenders held an aggregate of $3,298,456 of liens against the Mansion
as security for bank loans of the same amount. We are in default under such bank
loans.  The  loans are immediately due and payable and the bank may foreclose on
the  Mansion, which would have a material adverse effect on us. We are currently
working  with the respective banks to extend the repayment terms or sell certain
properties  to  offset  the  loan  balance  with  the  proceeds.

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

None.

                            Item 5. Other information
None.

                    Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibit
     Number    Description
     -------   -----------
     31.1      Certification of the Chief Executive Officer pursuant to
               Section 302 of the Sarbanes-Oxley Act of 2002
     31.2      Certification of the Chief Financial Officer pursuant to
               Section 302 of the Sarbanes-Oxley Act of 2002
     32.1      Certification by Chief Executive Officer Pursuant to Rule
               13a-14(b) and 18 U.S.C. Section 1350
     32.2      Certification by Chief Financial Officer Pursuant to Rule
               13a-14(b) and 18 U.S.C. Section 1350

(b)  Reports  on  Form  8-K

     During  the six months ended June 30, 2004, the Company filed the following
     reports  on  the  Form  8-K:

Form  Filing date                   Event reported
----  -----------------  -------------------------------------

8-K  February 19, 2004   A report on Form 8-K (item 4), which
                         announced the change in the Company's
                         certifying accountants


                                       15
<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.

                                            Huayang International Holdings, Inc.


                                            /s/ Gao Wanjun

                                            ------------------------------------
                                            Name: Gao Wanjun
                                            Title:  Chairman, President and
                                            Chief Executive Officer

                                            Date: August 19, 2004


                                            /s/ Wang Yufei
                                            ------------------------------------
                                            Name: Wang Yufei
                                            Title:  Secretary, Chief Financial
                                            Officer and Director

                                            Date: August 19, 2004


                                       16
<PAGE>