<PAGE>

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

                                   FORM 10-QSB

                                   (Mark One)

[X]      Quarterly report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934 For the quarterly period ended September 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 No. 0-29015

                      HUAYANG INTERNATIONAL HOLDINGS, INC.
                 (Name of Small Business Issuer in Its Charter)

             NEVADA                                       58-1667944
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

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

                               (86)(24) 2318-0688
                (Issuer's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports); and (2) has been
subject to such filing requirements for the past 90 days.
                                                                  Yes [X] No [ ]

The number of shares outstanding of each of the issuer's class of equity as of
the latest practicable date is stated below:

Title of each class of Common Stock            Outstanding as September 30, 2004
--------------------------------------------------------------------------------
Common Stock, $0.02 par value                            38,240,807

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





<PAGE>

                      HUAYANG INTERNATIONAL HOLDINGS, INC.

                                   FORM 10-QSB

                                      INDEX

PART I    - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheet                              1

         Condensed Consolidated Statements of Operations and
         Comprehensive Loss                                                2

         Consolidated statement of shareholder's equity                    3

         Condensed Consolidated Statements of Cash Flows                   4

         Notes to Condensed Consolidated Financial Statements              5-18

Item 2.  Management's Discussion and Analysis or Plan of Operation         19-23

Item 3.  Controls and Procedures                                           24

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                 25

Item 2.  Changes in Securities                                             25

Item 3.  Defaults Upon Senior Securities                                   26

Item 4.  Submission of Matters to a Vote of Security Holders               26

Item 5.  Other Information                                                 27

Item 6.  Exhibits and Reports on Form 8-K                                  29

SIGNATURES                                                                 30



<PAGE>

PART 1   FINANCIAL INFORMATION

ITEM 1   FINANCIAL STATEMENTS

               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEET

                                     ASSETS
                                     ------
                                                                   SEPTEMBER 30,
                                                                       2004
                                                                   ------------
                                                                    UNAUDITED
                                                                   ------------

            Current assets:
            Cash and cash equivalents                               $   182,701
            Accounts receivable                                       1,410,228
            Inventory                                                   384,371
            Notes receivable                                            506,399
            Other receivable                                             12,463
            Advance to suppliers                                         73,093
            Due from related parties                                      1,514
                                                                    ------------
            Total current assets                                      2,570,769

            Property, plant and equipment, net                        2,866,474
                                                                    ------------

            Total assets                                            $ 5,437,243
                                                                    ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Liabilities:

            Current liabilities:
            Accounts payable                                        $   683,278
            Customer deposits                                           128,120
            Other payable                                                68,421
            Taxes payable                                               102,847
            Payroll and welfare payable                                  63,225
            Due to related parties                                      196,994
                                                                    ------------
            Total current liabilities                                 1,242,885

                                                                    ------------
            Total liabilities                                         1,242,885
                                                                    ------------

Shareholders' equity:
            Common stock, par value $0.02 per share;
              authorized 50,000,000 shares; issued and
              outstanding 38,240,807 shares                             764,816
            Additional paid-in capital                                4,513,556
            Accumulated deficit                                      (1,084,282)
            Accumulated other comprehensive income                          268
                                                                    ------------

            Total shareholders' equity                                4,194,358
                                                                    ------------

            Total liabilities and shareholders' equity              $ 5,437,243
                                                                    ============

                   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
             OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       1


<PAGE>
<TABLE>

                                  HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                  FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003 (UNAUDITED)

                                                                   -------------   -------------   -------------   -------------
                                                                       2004             2004            2003            2003
                                                                   -------------   -------------   -------------   -------------
                                                                     UNAUDITED       UNAUDITED       UNAUDITED       UNAUDITED
                                                                   -------------   -------------   -------------   -------------
<S>                                                                <C>             <C>             <C>             <C>
REVENUES                                                           $    967,511    $  2,762,858    $  1,317,754    $  3,060,376

COST OF GOODS SOLD                                                      708,532       1,998,978         888,559       2,053,748
                                                                   -------------   -------------   -------------   -------------

GROSS PROFIT                                                            258,979         763,880         429,195       1,006,628

        General and administrative expenses                              38,645         177,627          40,819         125,122
        Selling and distribution expenses                               104,473         338,025          81,446         205,904
                                                                   -------------   -------------   -------------   -------------

INCOME FROM OPERATIONS                                                  115,861         248,228         306,930         675,602

        Interest income                                                     127             248              81             108
        Other income/(loss), net                                            (60)         45,087            (110)         66,745
                                                                   -------------   -------------   -------------   -------------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
 DISCONTINUED OPERATIONS                                                115,928         293,563         306,901         742,455

       Income taxes                                                          --              --              --              --
                                                                   -------------   -------------   -------------   -------------

INCOME BEFORE DISCONTINUED OPERATIONS                                   115,928         293,563         306,901         742,455

       Loss from discontinued operations                                (73,694)       (223,535)             --              --
       Loss from disposal of discontinued operations                 (1,580,032)     (1,580,032)             --              --
                                                                   -------------   -------------   -------------   -------------
       Loss from discontinued operations, net                        (1,653,726)     (1,803,567)             --              --

NET LOSS                                                             (1,537,798)     (1,510,004)        306,901         742,455

FOREIGN CURRENCY TRANSLATION LOSS                                            --            (218)             26             134
                                                                   -------------   -------------   -------------   -------------
COMPREHENSIVE (LOSS) INCOME                                        $ (1,537,798)   $ (1,510,222)   $    306,927    $    742,589
                                                                   =============   =============   =============   =============

WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC AND DILUTED                                                    37,388,326      36,466,153      36,000,000      36,000,000

BASIC AND DILUTED LOSS PER SHARE

       Income per common share from continuing
       operations, basic and diluted                                         --            0.01            0.01            0.02

       Net loss per common share from discontinued
       operations, basic and diluted                                      (0.04)          (0.05)             --              --

       Net income/(loss) per common share,
       basic and diluted                                                  (0.04)          (0.04)           0.01            0.02

                                            THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
                                      OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                                                2


<PAGE>
<TABLE>

                                   HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                                CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
                                      FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
                                                       (UNAUDITED)

                                                                                               ACCUMULATED
                                                                                ACCUMULATED          OTHER
                                            COMMON STOCK           ADDITIONAL      EARNINGS  COMPREHENSIVE
                                       SHARES         AMOUNT  PAID-IN CAPITAL     (DEFICIT)         INCOME          TOTAL
                                    ------------  ------------  ------------   ------------   ------------   ------------
<S>                                  <C>          <C>           <C>            <C>            <C>            <C>
BALANCE AS OF JANUARY 1,2004         36,000,000   $   720,000   $ 4,558,372    $   425,722    $         50   $ 5,704,144

Reverse merger adjustment             2,240,807        44,816       (44,816)            --             --            --

Net loss                                     --            --            --     (1,510,004)            --    (1,510,004)

Foreign currency translation gain            --            --            --             --            218           218
                                    ------------  ------------  ------------   ------------   ------------   ------------
BALANCE AS OF SEPTEMBER 30, 2004
                                     38,240,807   $   764,816   $ 4,513,556    $(1,084,282)   $       268    $ 4,194,358
                                    ============  ============  ============   ============   ============   ============

                                       THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
                                 OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>

                                                           3

<PAGE>
<TABLE>

                         HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                             (UNAUDITED)

                                                                          2004              2003
                                                                      ------------      ------------
<S>                                                                   <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                                             $(1,510,004)      $   742,455
 Adjustments to reconcile net income (loss) to net cash provided
   by operating activities:
Loss from discontinued operations, net                                  1,803,567                --
(Gain)/loss from non-monetary transactions                                (29,165)           38,324
Depreciation                                                              251,060         1,056,804

CHANGES IN OPERATING ASSETS AND LIABILITIES
DECREASE (INCREASE) IN
Accounts receivable                                                      (515,221)       (1,263,042)
Other receivable and advance to suppliers                                  33,370           129,415
Inventory                                                                 276,681            52,055

INCREASE (DECREASE) IN
Accounts payable                                                         (136,224)        1,005,079
Customer deposits                                                          51,939           (68,648)
Other payable and accrued liabilities                                     122,584             7,989
Taxes payables                                                            (31,444)           91,757
Payroll & welfare payables                                                  4,377            31,835
                                                                      ------------      ------------
Net Cash Provided By Operating Activities                                 321,520         1,824,023
                                                                      ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets                                                  (12,190)         (730,190)
                                                                      ------------      ------------
      Net Cash Used In Investing Activities                               (12,190)         (730,190)
                                                                      ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes receivable                                             (494,317)         (327,987)
Funds (advanced) received from related parties                            184,430          (728,376)
                                                                      ------------      ------------
      Net Cash Provided By Financing Activities                          (309,887)       (1,056,363)
                                                                      ------------      ------------

DECREASE IN CASH AND CASH EQUIVALENTS                                        (557)           37,470

 Effect of exchange rate changes on cash                                       50               134
 Cash and cash equivalents, beginning of year                             183,208            53,889
                                                                      ------------      ------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                    182,701            91,493
                                                                      ============      ============
</TABLE>

                             THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
                       OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                                 4

<PAGE>

               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES

During the first to third quarter of 2004, the Company had the following
non-monetary transactions.

-        Received inventories valued at $109,779 in settlement of outstanding
         accounts receivable of $109,779.

-        Inventories, with a book value of $109,779 were exchanged for motor
         vehicles, valued at $138,944 resulting in a gain of $29,165.

During the nine months ended September 30, 2003, the Company received
inventories, valued at $1,190,883 for settling an outstanding balance of
accounts receivable, of $1,190,883 and inventories, with a book value of 123,237
were exchanged for motor vehicles, valued at $84,913 resulting in loss of
38,324.

                                       5

<PAGE>

               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2004
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

           The interim condensed consolidated financial statements presented
           herein have been prepared by the Company and include the unaudited
           accounts of Huayang International Holdings, Inc. and Subsidiary (the
           "Company" or "HIHI") and its subsidiary China Carbon Black Holdings
           Company Limited ("CCB"). All significant inter-company accounts and
           transactions have been eliminated in the consolidation.

           On September 20, 2004 and September 30, 2004, the Company filed a
           preliminary schedule 14C information statement pursuant to section
           14(c) of the Securities Exchange Act of 1934 and definite schedule
           14C information statement pursuant to section 14(c) of the Securities
           Exchange Act of 1934, respectively, to file an Amendment with the
           Nevada Secretary of State to change the name of the Company to "China
           Energy and Carbon Black Holdings, Inc."

           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 financial statements should be read in
           conjunction with the company's annual report Form 10KSB.

           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 September 30,
           2004, the results of operations for the three and nine months ended
           September 30, 2004 .

           Interim results are not necessarily indicative of full year
           performance because of the impact of seasonal and short-term
           variations.

NOTE 2 - NATURE OF COMPANY

           HIHI was incorporated under the laws of the State of Nevada in the
           United States. The condensed consolidated financial statements of the
           Company reflect the activities of its subsidiary CCB, a Company
           incorporated under the laws of Hong Kong SAR ("Hong Kong").

           CCB was a new subsidiary currently acquired by HIHI during the
           current quarter. On August 5, 2004, the Company completed a share
           exchange (the "Exchange") with the stockholders of 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. The Exchange resulted in a change of voting control of
           the Company. Also see Note 10.

                                       6

<PAGE>

           CCB owns 100% of Xin Jiang YaKeLa Carbon Black Limited ("YaKeLa").
           From 2002 to 2004, YaKeLa mainly engaged in the business of sales and
           manufacturing of carbon black, a black powder made partly from the
           burning of natural gas. The product is used for making rubber tires
           and other rubber products. Starting in 2005 YaKeLa, with its own
           extraction facilities, will be capable of a full-scale extraction of
           natural gas to generate electricity and supply it to a nearby factory
           through its own power generators and power transmission networks.

           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
           and which provides one of the best quality natural gas in China
           without any contamination by impurities of carbon dioxide and nitride
           compounds.

           On September 30, 2004, the Company entered into an Agreement for Sale
           of Stock (the "Sales Stock Agreement") with Mr. Gao Wan Jun, a
           shareholder of the Company and former Chief Executive Officer of the
           Company. Pursuant to the Sales Stock Agreement, the Company agreed to
           sell the 95% ownership interest in HAITONG owned by the Company to
           Mr. Gao Wan Jun. The closing under the Sale Stock Agreement was
           completed on September 30, 2004 and the Company transferred the 95%
           ownership interest in HAITONG to Mr. Gao Wan Jun and on this closing
           date and thereafter, HAITONG ceased to be a consolidated subsidiary
           of the Company and is reported as discontinued operations in the
           condensed consolidated finaincial statement.

           Therefore, as a result of the Exchange of CCB and Sales Stock
           Agreement for HAITONG, the Company reported CCB as a 100% owned
           subsidiary of the Company while HAITONG as a business unit on
           discontinued operations in all of the Company's condensed
           consolidated financial statements. Also see Note 11.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           (a)  Economic and Political Risks

           The Company's operations are conducted in the PRC. Accordingly, the
           Company's business, financial condition and results of operations may
           be influenced by the political, economic and legal environments in
           the PRC, and by the general state of the PRC economy.

           The Company's operations in the PRC are subject to special
           considerations and significant risks not typically associated with
           companies in North America and Western Europe. These include risks
           associated with, among others, the political, economic and legal
           environments and foreign currency exchange. The Company's results may
           be adversely affected by changes in the political and social
           conditions in the PRC, and by changes in governmental policies with
           respect to laws and regulations, anti-inflationary measures, currency
           conversion and remittance abroad, and rates and methods of taxation,
           among other things.

           (b) Concentration of credit risk

           The Company has four major customers who accounted for the following
           percentage of total sales and total accounts receivable as of
           September 30, 2004 and for nine months ended September 30, 2004 and
           2003:

                                       7


<PAGE>

                                     Sales                 Accounts Receivable
Major Customers            2004                 2003       September 30, 2004
---------------            ----                 ----       ------------------
Company A                   22%                 21%                19%
Company B                    0%                 11%               0.1%
Company C                    5%                  9%                 0%
Company D                   35%                 24%                42%

           The Company has two major suppliers of natural gas who accounted for
           the following percentage of total purchases and total accounts
           payable as of September 30, 2004 and for nine months ended September
           30, 2004 and 2003:

                                    Purchases               Accounts Payable
Major Suppliers            2004                 2003       September 30, 2004
---------------            ----                 ----       ------------------
Company E                   54%                 11%                14%
Company F                   0%                  35%                56%

           (c)  Property, Plant and Equipment

           Property, plant and equipment are carried at cost less accumulated
           depreciation. Depreciation is provided over their respective
           estimated useful lives, using the straight-line method. Estimated
           useful lives of the property, plant and equipment are as follows:

                     Buildings                                20 years
                     Machinery and equipment                  10 years
                     Motors vehicles                           5 years
                     Furniture and fixtures                    5 years

           The cost and related accumulated depreciation of assets sold or
           otherwise retired are eliminated from the accounts and any gain or
           loss is included in the statement of operations. The cost of
           maintenance and repairs is charged to income as incurred, whereas
           significant renewals and betterments are capitalized.

           (d)  Impairment of Long-Term Assets

           Long-term assets of the Company are reviewed annually as to whether
           their carrying value has become impaired, pursuant to the guidelines
           established in Statement of Financial Accounting Standards ("SFAS")
           No. 144, "Accounting for the Impairment or Disposal of Long-Lived
           Assets". The Company also re-evaluates the periods of amortization to
           determine whether subsequent events and circumstances warrant revised
           estimates of useful lives.

           (e)  Accounts and Other Receivables

           Accounts and other receivables are recognized and carried at original
           invoice amount less allowance for any uncollectible amounts. An
           estimate for doubtful accounts is made when collection of the full
           amount is no longer probable. Bad debts are written off as incurred.

           There was no reserve for doubtful accounts at September 30, 2004.

                                       8

<PAGE>

           (f)  Inventories

           Inventories are stated at the lower of cost and net realizable value.
           Finished goods are determined on the weighted average cost basis and
           are comprised of direct materials, direct labor and an appropriate
           proportion of overhead. The cost of packing materials and supplies is
           determined on the basis of weighted average.

           Net realizable value is based on estimated selling prices less any
           further costs expected to be incurred for completion and disposal.

           (g)  Cash and Cash Equivalents

           For financial reporting purpose, the Company considers all highly
           liquid investments purchased with original maturity of three months
           or less to be cash equivalents. The Company maintains no bank
           accounts in the United States of America.

           (h)  Fair Value of Financial Instruments

           The Company's financial instruments include cash and cash
           equivalents, accounts receivable, notes receivable, other
           receivables, advances to customers, accounts payable, accrued
           expenses, customer deposits and amounts due to/from related parties.
           Management has estimated that the carrying amount approximates fair
           values due to their short-term nature.

           (i)  Revenue Recognition

           Revenue represents the sale of carbon black and other non-monetary
           transactions, which is recognized upon the delivery of goods to
           customers, and acceptance by the customers.

           (j)  Retirement Benefits

           Retirement benefits are charged to operation at 14% of the payroll
           cost in the form of contributions under defined contribution
           retirement plans to the relevant authorities. As of September 30,
           2004 and December 31 2003, the accrued retirement benefits payable
           were $ 48,958 and $34,314, respectively. The retirement benefits
           charged to operations were $22,336 and $40,914 in 9 months ended
           September 30 2004 and in year 2003, respectively.

           (k)  Foreign Currency Translation

           The accompanying condensed consolidated financial statements are
           presented in United States dollars. The functional currency of the
           Company is the Renminbi (RMB). The financial statements are
           translated into United States dollars from RMB at year-end exchange
           rates as to assets and liabilities and average exchange rates as to
           revenues and expenses. Capital accounts are translated at their
           historical exchange rates when the capital transactions occurred.

                                                             September 30, 2004
                                                             -------------------
                 Year end RMB : US$ exchange rate                  8.2766
                 Average yearly RMB : US$ exchange rate            8.2766

           The RMB is not freely convertible into foreign currency and all
           foreign exchange transactions must take place through authorized
           institutions. No representation is made that the RMB amounts could
           have been, or could be, converted into US$ at the rates used in
           translation.

                                       9

<PAGE>

           (l)  Income Taxes

           The Company accounts for income tax using an asset and liability
           approach and allows for recognition of deferred tax benefits in
           future years. Under the asset and liability approach, deferred taxes
           are provided for the net tax effects of temporary differences between
           the carrying amounts of assets and liabilities for financial
           reporting purposes and the amounts used for income tax purposes. A
           valuation allowance is provided for deferred tax assets if it is more
           likely than not these items will either expire before the Company is
           able to realize their benefits, or that future utilization is
           uncertain.

           (m)  Reserve Funds

           In accordance with the PRC Companies Law, the Company is required to
           transfer a percentage of its profit after taxation, as determined in
           accordance with PRC accounting standards and regulations, to the
           surplus reserve funds. The surplus reserve funds are comprised of the
           statutory surplus reserve fund and the public welfare fund. Subject
           to certain restrictions set out in the PRC Companies Law, the
           statutory surplus reserve fund may be distributed to stockholders in
           the form of share bonus issues and/or cash dividends. The public
           welfare fund is non-distributable and must be used for capital
           expenditures on staff welfare facilities.

             (n)  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.

           (o) Comprehensive Income

           SFAS No. 130, Reporting Comprehensive Income, established standards
           for the reporting and display of comprehensive income, its components
           and accumulated balances in a full set of general purpose financial
           statements. SFAS No. 130 defines comprehensive income to include all
           changes in equity except those resulting from investments by owners
           and distributions to owners. Among other disclosures, SFAS No. 130
           requires that all items that are required to be recognized under
           current accounting standards as components of comprehensive income be
           reported in a financial statement that is presented with the same
           prominence as other financial statements. The Company's only current
           component of comprehensive income is foreign currency translation
           adjustment.

           (p) Non-Monetary Transactions

           In the normal course of operations, and in accordance with industry
           custom, the Company trades its inventories or machineries with some
           of its customers and suppliers. These transactions are recorded at
           fair market value or relative market value, which uses retail price
           netting of relative depreciated amounts, when fair market value is
           not available. Gains or losses are recognized for the differences
           between the book value of the assets given up and the fair market
           value or relative market value of the assets traded in.

                                       10

<PAGE>

           When the assets traded in are considered held for re-sale, the cost
           method is used to record these transactions. No gain or loss is
           recognized for the assets traded in.

           (q) Recent Accounting Pronouncements

           In January 2003, (as revised in December 2003) The Financial
           Accounting Standards Board ("FASB") issued Interpretation No. 46,
           "Consolidation of Variable Interest Entities", an interpretation of
           Accounting Research Bulletin ("ARB") No. 51, "Consolidated Financial
           Statements". Interpretation No. 46 addresses consolidation by
           business enterprises of variable interest entities, which have one or
           both of the following characteristics: (i) the equity investment at
           risk is not sufficient to permit the entity to finance its activities
           without additional subordinated support from other parties, which is
           provided through other interest that will absorb some or all of the
           expected losses of the entity; (ii) the equity investors lack one or
           more of the following essential characteristics of a controlling
           financial interest: the direct or indirect ability to make decisions
           about the entities activities through voting rights or similar
           rights; or the obligation to absorb the expected losses of the entity
           if they occur, which makes it possible for the entity to finance its
           activities; the right to receive the expected residual returns of the
           entity if they occur, which is the compensation for the risk of
           absorbing the expected losses.

           Interpretation No. 46, as revised, also requires expanded disclosures
           by the primary beneficiary (as defined) of a variable interest entity
           and by an enterprise that holds a significant variable interest in a
           variable interest entity but is not the primary beneficiary.
           Interpretation No. 46, as revised, applies to small business issuers
           no later than the end of the first reporting period that ends after
           December 15, 2004. This effective date includes those entities to
           which Interpretation 46 had previously been applied. However, prior
           to the required application of Interpretation No. 46, a public entity
           that is a small business issuer shall apply Interpretation 46 or this
           Interpretation to those entities that are considered to be
           special-purpose entities no later than as of the end of the first
           reporting period that ends after December 15, 2003.

           Interpretation No. 46 may be applied prospectively with a
           cumulative-effect adjustment as of the date on which it is first
           applied or by restating previously issued financial statements for
           one or more years with a cumulative-effect adjustment as of the
           beginning of the first year restated.

           In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
           133 on Derivative Instruments and Hedging Activities". SFAS No. 149
           amends and clarifies financial accounting and reporting for
           derivative instruments, including certain derivative instruments
           embedded in other contracts (collectively referred to as derivatives)
           and for hedging activities under SFAS No. 133, "Accounting for
           Derivative Instruments and Hedging Activities". The changes in SFAS
           No. 149 improve financial reporting by requiring that contracts with
           comparable characteristics be accounted for similarly. This statement
           is effective for contracts entered into or modified after June 30,
           2003 and all of its provisions should be applied prospectively.

           In May 2003, the Financial Accounting Standards Board ("FASB") issued
           Statement of Financial Accounting Standards ("SFAS") No. 150,
           "Accounting For Certain Financial Instruments with Characteristics of
           both Liabilities and Equity". SFAS No. 150 changes the accounting for
           certain financial instruments with characteristics of both
           liabilities and equity that, under previous pronouncements, issuers
           could account for as equity. The new accounting guidance contained in
           SFAS No. 150 requires that those instruments be classified as
           liabilities in the balance sheet.

                                       11

<PAGE>

           SFAS No. 150 affects the issuer's accounting for three types of
           freestanding financial instruments. One type is mandatorily
           redeemable shares, which the issuing company is obligated to buy back
           in exchange for cash or other assets. A second type includes put
           options and forward purchase contracts, which involves instruments
           that do or may require the issuer to buy back some of its shares in
           exchange for cash or other assets. The third type of instruments that
           are liabilities under this Statement is obligations that can be
           settled with shares, the monetary value of which is fixed, tied
           solely or predominantly to a variable such as a market index, or
           varies inversely with the value of the issuers' shares. SFAS No. 150
           does not apply to features embedded in a financial instrument that is
           not a derivative in its entirety.

           Most of the provisions of Statement 150 are consistent with the
           existing definition of liabilities in FASB Concepts Statement No. 6,
           "Elements of Financial Statements". The remaining provisions of this
           Statement are consistent with the FASB's proposal to revise that
           definition to encompass certain obligations that a reporting entity
           can or must settle by issuing its own shares. This Statement shall be
           effective for financial instruments entered into or modified after
           May 31, 2003 and otherwise shall be effective at the beginning of the
           first interim period beginning after June 15, 2003, except for
           mandatorily redeemable financial instruments of a non-public entity,
           as to which the effective date is for fiscal periods beginning after
           December 15, 2004.

           In March 2004, the U.S. Securities and Exchange Commission's Office
           of the Chief Accountant and the Division of Corporate Finance
           released Staff Accounting Bulletin ("SAB") No. 105, "Loan Commitments
           Accounted for as Derivative Instruments". This bulletin contains
           specific guidance on the inputs to a valuation-recognition model to
           measure loan commitments accounted for at fair value, and requires
           that fair-value measurement include only differences between the
           guaranteed interest rate in the loan commitment and market interest
           rate, excluding any expected future cash flows related to the
           customer relationship or loan servicing. In addition, SAB105 requires
           the disclosure of the accounting policy for loan commitments,
           including methods and assumptions used to estimate the fair value of
           loan commitments, and any associated hedging strategies. SAB105 is
           effective for derivative instruments, entered into subsequent to
           March 31, 2004 and should also be applied to existing instruments as
           appropriate.

           The implementation of the above pronouncements are not expected to
           have a material effect on the Company's financial statement
           presentation or disclosures.

           (r) Reclassification

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

NOTE 4 - INVENTORIES

           Inventories consist of the following:

                                                              September 30, 2004
                                                             -------------------

                 Finished goods                              $          223,170
                 Packing materials and supplies                         161,201
                                                             -------------------
                                                             $          384,371
                                                             ===================

                                       12

<PAGE>

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

           Property, plant and equipment consist of the following:

                                                              September 30, 2004
                                                              ------------------
                 At cost:
                   Buildings                                  $         793,021
                   Machinery and equipment                            2,576,867
                   Motor vehicles                                       245,087
                   Furniture and fixtures                                11,420
                                                              ------------------
                                                                      3,626,395
                                                              ------------------

                 Less : Accumulated depreciation
                   Buildings                                             67,335
                   Machinery and equipment                              562,444
                   Motor vehicles                                       125,433
                   Furniture and fixtures                                 4,709
                                                              ------------------
                                                                        759,921
                                                              ------------------
                 Property, plant and equipment, net           $       2,866,474
                                                              ==================

           Depreciation expense for nine months ended September 30, 2004 and
           2003 was $212,252 and $1,056,804, respectively.

           In 2003, the Company sold machinery with a net book value of $128,368
           for $207,200. A gain of $78,836 has been recognized as other income.

NOTE 6 - DUE FROM / TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

           Due from related parties:
                                                             September 30, 2004
                                                             ------------------

                 Daxin Petrolic Tech. Co., Ltd.              $          1,514
                                                             ==================

           Due to related parties:
                                                             September 30, 2004
                                                             ------------------

                 Guozhuang Wang                              $          74,607
                 Guoyuan Wang                                            9,666
                 Daxin Petrolic Tech Co., Ltd.                         110,909
                 Tabei Carbon Black Co., Ltd.                            1,812
                                                             ------------------
                                                             $         196,994
                                                             ==================

           All the balances are unsecured, interest-free and have no fixed
           repayment terms.

           As of September 30, 2004, the Company purchased materials amounting
           to $62,042 from Wang Guo Zhuang, who is the president of the Company.

                                       13

<PAGE>

           In nine months ended September 2004 Daxin Petrolic Tech Co., Ltd.,
           another company owned by the president of the Company, paid rental
           fees amounting to $30,206 on behalf of the Company, which were all
           repaid by the Company in 2004. In 2004, the Company paid rental fees
           of $36,247 to Daxin Petrolic Tech Co., Ltd. for a leased dynamotor.
           In addition, the Company loaned $32,296 to Daxin Petrolic Tech Co.,
           Ltd. during nine months ended September 30, 2003, which has been
           fully written off when Daxin Petrolic Tech Co., Ltd. liquidated its
           business.

NOTE 7 -INCOME TAXES

           (a)  Corporation Income Tax ("CIT")

           In accordance with the relevant tax laws and regulations of PRC, the
           applicable corporation income tax rate for the Company is 33%. The
           Company is entitled to full exemption from CIT from 2002 to 2004 due
           to the approval of local government. No provision for CIT was made
           for 9 months ended September 30, 2004 as the Company enjoyed the CIT
           exemption.

           The Company's tax expense differs from the "expected" tax expense for
           the nine months ended September 30, 2004 (computed by applying the
           CIT rate of 33 percent to net profit) as follows:
<TABLE>
                                                                              September 30, 2004
                                                                              ------------------
<S>                                                                           <C>
                 Computed "expected" expense                                  $      (498,301)
                 Non-taxable income net of non-deductible expenses                     588,021
                 Unused net operating loss carried forward                                  --
                 CIT exemption                                                         (89,720)
                                                                              ------------------
                 Income tax expense                                           $             --
                                                                              ==================

           The tax effects of temporary differences that give rise to the
           Company's net deferred tax assets as of September 30, 2004 are as
           follows:

                                                                              September 30, 2004
                                                                              ------------------

                 Deferred tax assets:
                 Depreciation                                                 $         12,948
                 Expenses not yet deducted for tax purposes                             10,179
                                                                              ------------------
                 Total deferred tax assets                                              23,127
                 Valuation allowance                                                   (23,127)
                                                                              ------------------
                 Net deferred tax assets                                      $             --
                                                                              ==================
</TABLE>

           (b)  Value Added Tax ("VAT")

           In accordance with the relevant tax laws in the PRC, VAT is levied at
           17% on the invoiced value of sales and is payable by the consumer.
           The Company is required to remit the VAT collected to the tax
           authority, but may deduct therefrom the VAT it has paid on eligible
           purchases. As of September 30, 2004, the VAT payable was $102,430.

                                       14

<PAGE>

NOTE 8 -NON-MONETARY TRANSACTIONS

           During first to third quarter of 2004, the Company received 485 sets
           of tires, valued at $109,779 from Hangzhou Zhongce Tire Co. for
           settlement of the outstanding balances of accounts receivable
           $109,779. The Company considers that all inventories traded in will
           be used for future sales. Thus, all tires received are valued based
           on cost method and no gain or loss has been recognized in first to
           third quarter of 2004.

           In February 2004, the Company exchanged sets of tires with a book
           value of $109,779 for 5 loading machines with a relative market value
           of $138,944. A gain of 29,165, which represents the excess of
           relative market values of assets traded in over the book values of
           the inventories exchanged, had been recognized as other income in
           2004. As of September 30, 2004, the 485 sets of tires have been
           delivered, the Company have received the 5 loading machines.

           During 2003, the Company received 6,819 sets of tires, valued at
           $1,545,942 and 2,500 sets of tires, valued at $329,570 from Hangzhou
           Zhongce Tire Co. & Guizhou Tires Co. Ltd., respectively for
           settlement of the outstanding balances of accounts receivable
           $1,545,942 and $329,570. The Company considers that all inventories
           traded in will be used for future sales. Thus, all tires received are
           valued based on cost method and no gain or loss has been recognized
           in 2003.

           In April 2003, the Company exchanged 760 sets of tires with a book
           value of $94,240 for two motor vehicles with a relative market value
           of $60,410 and $24,503. A loss of $9,327, which represents the excess
           of book values of the inventories exchanged over the relative market
           values of assets traded in, had been recognized as other expense in
           2003. The legal titles of the motor vehicles received are in the name
           of the president, Mr Wang Guo Zhuang. Mr Wang and the Company
           mutually agreed that Mr Wang held the motor vehicles on behalf of the
           Company and the Company's legal counsel has confirmed that they are
           the Company's assets. Currently, the Company is in the process of
           transferring the legal titles of the motor vehicles over to the
           Company. Such transfer procedures are expected to be completed in
           late 2004 or early 2005.

           In April 2003, the Company exchanged 455 sets of tires with a book
           value of $28,997 for a motor vehicle, which the re-saleable value
           cannot be reasonably estimated due to the lack of second hand market
           information in the PRC. A loss of $28,997 had been recognized as
           other expense. The legal title of the motor vehicle received is in
           the name of the president, Mr Wang Guo Zhuang. Mr Wang and the
           Company mutually agreed that Mr Wang held the motor vehicle on behalf
           of the Company and the Company's legal counsel has confirmed that
           they are the Company's assets. Currently, the Company is in the
           process of transferring the legal title of the motor vehicle over to
           the Company. Such transfer procedures are expected to be completed in
           late 2004 or early 2005.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

           The Company leased three manufacturing production lines from a third
           party and a dynamotor from a related party in year 2004. Accordingly,
           for the nine months ended September 30, 2004, the Company recognized
           rental expense in the amount of $308,096.

           As of September 30, 2004, the Company has outstanding commitments in
           respect of non-cancellable operating leases for factory land use
           right, which fall due as follows:

                                       15

<PAGE>

               The minimum lease payments under non-cancellable operating
               leases:

               Within one year                                  $       102,699
                                                                ================

           The Company leased the land use right from the landlord, an
           independent third party, on a year to year renewal basis. The Company
           has obtained a representation from the landlord that the landlord has
           a 50 year land use right with the PRC and the landlord has guaranteed
           to lease the land use right to the Company as long as the Company
           wants to continue the lease within the period of the land use rights
           the landlord processes.

NOTE 10 - BUSINESS COMBINATION

           On August 5, 2004, the Company acquired China Carbon Black Holdings
           Company Limited ("CCB") and its 100% subsidiary, Yakela Carbon Black
           Co. Ltd.(Yakela) by exchanging 36,000,000 shares of its common stock
           for all of the common stock of CCB pursuant to the terms of an
           Agreement for Share Exchange, dated July 15, 2004.

           In connection with the acquisition of CCB, the Company issued to
           CCB's shareholders a total of 36,000,000 shares, valued at $1,800,000
           ($0.05 each, according to 3-day average stock price after the
           contract date, July 15, 2004). The excess of the fair market value of
           the net assets acquired over the aggregate purchase price of
           $2,991,743 was recorded as negative goodwill. The negative goodwill
           amount was applied to the non-current assets of the accounting
           acquiree, HIHI. The acquisition was accounted for as a purchase and
           accordingly, the operating results of the acquired company have been
           included in the Company's financial statements since the date of
           acquisition.

           The following summarizes the acquisition:

           Issuance of 36,000,000 shares of common stock       $      1,800,000
           Assets acquired                                          (13,188,311)
           Liabilities assumed                                        8,396,568
           Negative goodwill                                          2,991,743
                                                               -----------------
                                                               $             --
                                                               =================

NOTE 11 - DISCONTINUED OPERATIONS

           On September 30, 2004, the Company entered into a Sales Stock
           Agreement with Mr. Gao Wan Jun, a shareholder of the Company and
           former Chief Executive Officer. Pursuant to the Sales Stock
           Agreement, the Company agreed to sell all of its ownership interest
           in HAITONG to Mr. Gao and as consideration, Mr. Gao and HAITONG have
           agreed to assume and pay, and to hold the Company harmless from
           liability on the Company's obligation to Huayang International
           Investment, Ltd., a British Virgin Islands corporation, in the amount
           of $1,710,773, which has been shown on the Company's balance sheet as
           an amount due to a related party. In conjunction with the transfer of

                                       16


<PAGE>

           the Company's ownership interest in HAITONG to Mr. Gao, the Company
           have also agreed to write off a total of $175,505 in accounts
           receivable from Huayang Industry (Shenyang) Group, a company which is
           owned and controlled by Mr. Gao, and to cancel and write off a
           promissory note with a net value of $2,388,000 executed by Huayang
           Industry (Shenyang) Group. In association with the Sales Stock
           Agreement, HAITONG has ceased to become a consolidated subsidiary of
           the Company.

           Also, as a result of the sales, the following assets and liabilities
           of HAITONG have been removed from the consolidated balance sheet of
           the Company:

           o          The $175,505 in accounts receivable from Huayang Industry
                      (Shenyang) Group and the associated promissory note with a
                      net value of $2,388,000 executed by Huayang Industry
                      (Shenyang) Group, which have been assigned by HAITONG to
                      the Company through a unanimous board consent from
                      HAITONG, were written off.
           o          Income taxes payables of $6,600, other taxes payables of
                      $5,000 and other payables & accrued liabilities of $33,501
                      as of August 5, 2004, were transferred to Mr. Gao from the
                      books of the Company as of September 30, 2004 to reflect
                      that Gao Wan Jun and HAITONG assumed all the liabilities
                      of the Company as of August 5, 2004
           o          All the assets and liabilities of HAITONG as of September
                      30, 2004, were written off from the books of the Company
                      on September 30, 2004, including:

                MAJOR ASSETS:

                Real estate rental property, net                 $     6,519,561
                Real estate held for development and sale        $     2,480,152
                Cash and cash equivalents                        $       354,321
                Accounts receivable                              $        19,120
                Notes receivable from related company            $     2,309,471
                Due from related company, net                    $       531,823
                Other asset / Investment in subsidary            $        32,964

                MAJOR LIABILITIES:

                Accounts payable and accrued liabilities         $       790,445
                Bank loan                                        $     3,289,157
                Advance from customers                           $         5,817
                Amount due to related parties                    $       719,062
                Taxes payable                                    $     2,329,620

NOTE 12 - BANK LOANS

           The Company formerly had bank loans bearing interests at a rate of
           6.44% per annum and were secured by the Company's real estate owned
           through HAITONG and guaranteed by its subsidiary HAITONG. The bank
           loans were in default. 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 had accrued interest at the default rate.

           Pursuant to the Sales Stock Agreement, the Company agreed to sell all
           of its ownership of HAITONG to Mr. Gao. and as a results, the debt
           was also transfer to Mr. Gao.

                                       17


<PAGE>

NOTE 14 - SUBSEQUENT EVENT

           On November 8, 2004, the Company has filed a Form S-8 registration
           statement under the Securities Act of 1933 to register a total of
           40,000 shares for an individual. The Company has signed a consultant
           agreement with the individual on October 30, 2004 to employ her to
           assist the Company to provide updated market information and data
           analyses for the Company in greater China region from October 30,
           2004 to October 29, 2004.

                                       18


<PAGE>

ITEM 2     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

           The following discussion should be read in conjunction with the
information contained in the condensed consolidated financial statements of the
Company and the notes thereto appearing elsewhere herein and in conjunction with
the Management's Discussion and Analysis set forth in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2003 and Quarterly Report
on Form 10-QSB for the quarter ended September 30, 2003.

PRELIMINARY NOTE REGARDING 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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
------------------------------------------

           Our discussion and analysis of operations 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. 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.

           Areas where significant estimation judgments are made and where
actual results could differ materially from these estimates are:

A. Inventory reserves
B. Reserve for uncollectible receivables
C. Impairment losses on long-lived assets

                                       19


<PAGE>

           We believe the following are among the most critical accounting
policies that impact our consolidated financial statements. We suggest that our
significant accounting policies, as described in our consolidated financial
statement footnotes be read in conjunction with this Management's Discussion and
Analysis of Financial Condition and Results of Operations.

A.         We account for our inventories at the lower of cost or market on the
           first-in, first-out basis.
B.         We evaluate impairment of our long-lived assets under the provisions
           of Statement of Financial Accounting Standards No. 144, Accounting
           for Impairment or Disposal of Long-Lived Assets.
C.         We recognize revenue when merchandise is shipped and title passes to
           the customer and collectibility is reasonably assured.

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2004 AS COMPARED TO
----------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2003
-------------------------------------

For the quarter ended September 30, 2004 revenues decreased by $350,243 or 27%
to $967,511 from $1,317,754 as compared to the corresponding period of the prior
year. This decrease was attributed primarily to the decrease in sales volume of
the existing product of carbon black.

Cost of sales decreased by $180,027 or 20% to $708,532 from $888,559 for the
three months ended September 30, 2004, as compared to the corresponding period
of the prior year. This decrease resulted from the decreased product costs
incurred as associated with decrease in sales of the existing product of carbon
black of the Company.

The gross profit margin has decreased from 33% to 27%. This was mainly due to
increase in the raw material usage rate and wastage rate as a result of less
effective usage of raw materials that was resulted from lower production scale
in associated with decrease in sales volume.

Selling and administrative expenses increased by $23,027 or 28% to $104,473 as
compared to the corresponding period of the prior year. This increase was
attributed primarily to increase selling and marketing in order to stimulate the
sales activities of the Company in the forth quarter especially the Company
experienced a reduction in sales volume in the current quarter.

General and administrative expenses decreased by $2,174 or 5% to $38,645 as
compared to the corresponding period of the prior year. This decrease is
attributed to decrease in sales volume that resulted in decrease in
administrative activities.

Our income from continued operations has decreased by $190,973 or 62% to
$115,928 from $306,901.

We reported a loss from discontinued operations of $73,694 and from disposal of
discontinued operations of $4,571,775 in the current quarter as a result of
disposal of Shenyang Haitong House Properties Development Limited ("HAITONG").

RESULTS OF OPERATION - NINE MONTHS ENDED SEPTEMBER 30, 2004 AS COMPARED TO NINE
-------------------------------------------------------------------------------
MONTHS ENDED SEPTEMBER 30, 2003
-------------------------------

For the nine months ended September 30, 2004 revenues decreased by $297,518 or
10% to $2,762,858 from $3,060,376 as compared to the corresponding period of the
prior year. This decrease is attributed primarily to the decrease in sales
volume of our existing product of carbon black.

                                       20


<PAGE>

Cost of sales decreased by $54,770 or 3% to $1,998,978 from $2,053,748 for the
nine months ended September 30, 2004, as compared to the corresponding period of
the prior year. This decrease resulted from the decreased product costs incurred
as associated with decrease in sales of our product of carbon black.

The gross profit margin has decreased from 33% to 28%. This was mainly due to
increase in the raw material usage rate and wastage rate as a result of less
effective usage of raw materials that was resulted from lower production scale
in associated with decrease in sales volume.

Selling and administrative expenses increased by $132,121 or 64% to $338,025 as
compared to the corresponding period of the prior year. This increase was
attributed primarily to increased selling and marketing efforts as compared to
the same period of the prior year.

General and administrative expenses increased by $52,505 or 42% to $177,627 as
compared to the corresponding period of the prior year. This is mainly due to
increase in administrative activities in associated with corporate developments
and expansion of business.

Our income from continued operations decreased by $448,892 to $293,563 from
$742,455

We reported a loss from discontinued operations of $223,535 and from disposal of
discontinued operations of $4,571,775 in the current quarter as a result of
disposal of Shenyang Haitong House Properties Development Limited ("HAITONG").

RECENT DEVELOPMENTS
-------------------

           On August 5, 2004, the Company completed a share exchange (the
"Exchange") with the stockholders of China Carbon Black Holdings Company Limited
("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. The Exchange resulted in a change of voting control of the Company.

           CCB owns 100% of Xin Jiang YaKeLa Carbon Black Limited ("YaKeLa").
From 2002 to 2004, YaKeLa mainly engaged in the business of sales and
manufacturing of carbon black, a black powder made partly from the burning of
natural gas. The product is used for making rubber tires and other rubber
products. Starting in 2005 YaKeLa, with its own extraction facilities, will be
capable of a full-scale extraction of natural gas to generate electricity and
supply it to a nearby factory through its own power generators and power
transmission networks.

           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 and which provides one of
the best quality natural gas in China without any contamination by impurities of
carbon dioxide and nitride compounds.

           On September 30, 2004, the Company entered into an Agreement for Sale
of Stock (the "Sales Stock Agreement") with Mr. Gao Wan Jun. Pursuant to the
Sales Stock Agreement, the Company agreed to sell the 95% ownership interest in
HAITONG owned by the Company to Mr. Gao Wan Jun. The closing under the Sale
Stock Agreement was completed on September 30, 2004 and the Company transferred
the 95% ownership interest in HAITONG to Mr. Gao Wan Jun and on this closing
date and thereafter, HAITONG ceased to be a consolidating subsidiary of the
Company to be reported under its condensed consolidated financial statements.

           For the quarter ended September 30, 2004 revenues has reached
$967,511 and the total revenue for nine months ended September 30, 2004 amounted
to $2,762,858. Revenue is attributed primarily to sales of our existing product
of carbon black.

                                       21

<PAGE>

           Cost of sales increased by $708,532 for the three months ended
September 30, 2004 and totaled to $1,998,978 for the nine months ended September
30, 2004. This increase resulted from associated increase in production cost to
support increase in sales of the product of the Company.

           The gross profit margin was 27% for the current quarter and 28% for
the nine months ended September 30, 2004.

           Selling and administrative expenses increased by $104,473 for the
current quarter to $338,025 for the nine months ended September 30, 2004. This
increase is attributed primarily to increased selling and marketing overheads in
order to support increase in sales.

           General and administrative expenses increased by $38,645 for the
current quarter to $177,627 for the nine months ended September 30, 2004. This
increase is attributed to increase in activity level as a result of increase in
sales the Company's product.

           Our net loss was $4,529,541 for the current quarter and $4,501,965
for the nine months ended September 30, 2004 mainly due to loss from
discontinued operations of HAITONG.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

           We have funded capital requirements through cash flow from
operations. As of September 30, 2004 we had a cash balance of $182,701 and a
working capital surplus of $1,327,884.

           Cash flow generated from our existing operations will be sufficient
to fund our working capital needs of the Company. We have sufficient cash inflow
streams attributable from our cash flow from operations and we do not anticipate
any material liquidity issues in the near future.

NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------

           In January 2003, (as revised in December 2003) The Financial
Accounting Standards Board ("FASB") issued Interpretation No. 46, "Consolidation
of Variable Interest Entities", an interpretation of Accounting Research
Bulletin ("ARB") No. 51, "Consolidated Financial Statements". Interpretation No.
46 addresses consolidation by business enterprises of variable interest
entities, which have one or both of the following characteristics: (i) the
equity investment at risk is not sufficient to permit the entity to finance its
activities without additional subordinated support from other parties, which is
provided through other interest that will absorb some or all of the expected
losses of the entity; (ii) the equity investors lack one or more of the
following essential characteristics of a controlling financial interest: the
direct or indirect ability to make decisions about the entities activities
through voting rights or similar rights; or the obligation to absorb the
expected losses of the entity if they occur, which makes it possible for the
entity to finance its activities; the right to receive the expected residual
returns of the entity if they occur, which is the compensation for the risk of
absorbing the expected losses.

           Interpretation No. 46, as revised, also requires expanded disclosures
by the primary beneficiary (as defined) of a variable interest entity and by an
enterprise that holds a significant variable interest in a variable interest
entity but is not the primary beneficiary. Interpretation No. 46, as revised,
applies to small business issuers no later than the end of the first reporting
period that ends after December 15, 2004. This effective date includes those
entities to which Interpretation 46 had previously been applied. However, prior
to the required application of Interpretation No. 46, a public entity that is a
small business issuer shall apply Interpretation 46 or this Interpretation to
those entities that are considered to be special-purpose entities no later than
as of the end of the first reporting period that ends after December 15, 2003.

                                       22





<PAGE>

           Interpretation No. 46 may be applied prospectively with a
cumulative-effect adjustment as of the date on which it is first applied or by
restating previously issued financial statements for one or more years with a
cumulative-effect adjustment as of the beginning of the first year restated.

           In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities". SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities". The
changes in SFAS No. 149 improve financial reporting by requiring that contracts
with comparable characteristics be accounted for similarly. This statement is
effective for contracts entered into or modified after June 30, 2003 and all of
its provisions should be applied prospectively.

           In May 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting For
Certain Financial Instruments with Characteristics of both Liabilities and
Equity". SFAS No. 150 changes the accounting for certain financial instruments
with characteristics of both liabilities and equity that, under previous
pronouncements, issuers could account for as equity. The new accounting guidance
contained in SFAS No. 150 requires that those instruments be classified as
liabilities in the balance sheet.

           SFAS No. 150 affects the issuer's accounting for three types of
freestanding financial instruments. One type is mandatorily redeemable shares,
which the issuing company is obligated to buy back in exchange for cash or other
assets. A second type includes put options and forward purchase contracts, which
involves instruments that do or may require the issuer to buy back some of its
shares in exchange for cash or other assets. The third type of instruments that
are liabilities under this Statement is obligations that can be settled with
shares, the monetary value of which is fixed, tied solely or predominantly to a
variable such as a market index, or varies inversely with the value of the
issuers' shares. SFAS No. 150 does not apply to features embedded in a financial
instrument that is not a derivative in its entirety.

           Most of the provisions of Statement 150 are consistent with the
existing definition of liabilities in FASB Concepts Statement No. 6, "Elements
of Financial Statements". The remaining provisions of this Statement are
consistent with the FASB's proposal to revise that definition to encompass
certain obligations that a reporting entity can or must settle by issuing its
own shares. This Statement shall be effective for financial instruments entered
into or modified after May 31, 2003 and otherwise shall be effective at the
beginning of the first interim period beginning after June 15, 2003, except for
mandatorily redeemable financial instruments of a non-public entity, as to which
the effective date is for fiscal periods beginning after December 15, 2004.

           In March 2004, the U.S. Securities and Exchange Commission's Office
of the Chief Accountant and the Division of Corporate Finance released Staff
Accounting Bulletin ("SAB") No. 105, "Loan Commitments Accounted for as
Derivative Instruments". This bulletin contains specific guidance on the inputs
to a valuation-recognition model to measure loan commitments accounted for at
fair value, and requires that fair-value measurement include only differences
between the guaranteed interest rate in the loan commitment and market interest
rate, excluding any expected future cash flows related to the customer
relationship or loan servicing. In addition, SAB105 requires the disclosure of
the accounting policy for loan commitments, including methods and assumptions
used to estimate the fair value of loan commitments, and any associated hedging
strategies. SAB105 is effective for derivative instruments, entered into
subsequent to March 31, 2004 and should also be applied to existing instruments
as appropriate.

           The implementation of the above pronouncements are not expected to
have a material effect on the Company's financial statement presentation or
disclosures.

                                       23





<PAGE>

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.

                                       24





<PAGE>

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

Issuance of shares pursuant to the share exchange (the "Exchange")
------------------------------------------------------------------

           On August 5, 2004, the Company completed the Exchange with the
stockholders of 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.

Cancellation and reissuance of stock to Gao Wan Jun and his designees
---------------------------------------------------------------------

           As a condition to, completion of the Exchange, the designees of a
principal shareholder of the Company, Gao Wan Jun, agreed to surrender a total
of 5,460,000 of their shares for the Company to issue to Gao Wan Jun (but the
shares are issued to his designees instead of himself) a total of 3,240,000
shares of restricted stocks of the Company following completion of the Exchange.

           The following table sets forth, as of August 5, 2004 (immediately
following the Exchange, cancellation and reissuance of stock), stock ownership
of each executive officer and director of the Company, of all executive officers
and directors of the Company, as a group, and of each person known by the
Company to be a beneficial owner of 5% or more of its Common Stock. Except as
otherwise noted, each person listed below is the sole beneficial owner of the
shares and has sole investment and voting power as to such shares. No person
listed below has any options, warrant or other right to acquire additional
securities of the Company except as may be otherwise noted.

<TABLE>
                                              NUMBER OF SHARES
NAME                                        BENEFICAILLY OWNED   PERCENTAGE OF CLASS
------------------------------------------------------------------------------------
<S>                                                <C>                       <C>
Huayang International Trust                           540,000                 1.41%

Gao Wan Jun (1) (2)                                   540,000                 1.41%

Guo Yuan Wang                                      30,178,382                78.92%

Wang Yufei (2)                                              0                    0%

Wang Shao Hua (2)                                           0                    0%

Yu Yingtian (2)                                             0                    0%

Yin Liangpei (2)                                            0                    0%

Wang Yunfen (2)                                             0                    0%

All officers and directors as a group                 540,000                 1.41%
</TABLE>

                                       25





<PAGE>

(1)        Gao Wan Jun is the Trustee of the Huayang International Trust and he
           and his family are the beneficiaries of the trust. Accordingly, they
           may be deemed to be the beneficial owners of the shares owned by such
           trust.
(2)        The person listed is currently an officer, a director, or both, of
           the Company.

Reverse Split in pursuant to Board of Directors approval
--------------------------------------------------------

           On September 17, 2004, the Board of Directors unanimously approved
and ratified, subject to the approval of the Company's stockholders, the Reverse
Split resulted in a reduction of the number of issued and outstanding shares of
the Company from 38,240,807 to approximately 6,373,379 shares. As of the
effective date of the Reverse Split, each previously outstanding share shall be
reduced to 0.1667 shares. However, no fractional shares will be created as a
result of the reverse split. Accordingly, the number of shares owned by any
shareholder who would otherwise receive a fractional share, will be rounded up
to the next nearest whole number. As a result, on September 20, 2004 and
September 30, 2004, the Company filed a preliminary schedule 14C information
statement pursuant to section 14(c) of the Securities Exchange Act of 1934 and
definite schedule 14C information statement pursuant to section 14(c) of the
Securities Exchange Act of 1934, respectively, to record such Reverse Split

ITEM 3     DEFAULTS UPON SENIOR SECURITIES

           As of June 30, 2004, the Company, though its subsidiary HAITONG, had
total bank debt of $3,298,456 which is in default. All of the bank debt of
HAITONG is secured by properties in the Mansion. As of June 30, 2004, the
lenders of HAITONG held an aggregate of $3,298,456 of liens against the Mansion
as security for bank loans of the same amount. HAITONG is in default under such
bank loans. The loans are immediately due and payable and the bank may foreclose
on the Mansion.

           On September 30, 2004, the Company entered into an Agreement for Sale
of Stock (the "Sales Stock Agreement") with Mr. Gao Wan Jun. Pursuant to the
Sales Stock Agreement, we agreed to sell all of the Company's ownership of
HAITONG to Mr. Gao. As a result of the transfer of the Company's ownership
interest in HAITONG to Mr. Gao, HAITONG has ceased to become a subsidiary of the
Company and that the mentioned bank loans, which is under the possibility of
default, is no longer considered as a default on senior securities of the
Company and any future action that might be taken by the lender will not have
any material adverse effect on the Company.

ITEM 4     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           On September 17, 2004, the Board of Directors unanimously approved
and ratified, subject to the approval of the Company's stockholders, the Reverse
Split and the Amendment detailed as follows:

Description of Amendment
------------------------

           The Amendment resulted in the name of the Company being changed from
"Huayang International Holdings, Inc." to "China Energy and Carbon Black
Holdings, Inc."

           The purpose of the name change is to reflect the changed nature of
the Company's business following the Exchange. The name change is reflected in
the form of Amendment to Articles of Incorporation.

                                       26


<PAGE>

Description of the Reverse Split
--------------------------------

           The Reverse Split resulted in a reduction of the number of issued and
outstanding shares of the Company from 38,240,807 to approximately 6,373,379
shares. As of the effective date of the Reverse Split, each previously
outstanding share shall be reduced to 0.1667 shares. However, no fractional
shares will be created as a result of the reverse split. Accordingly, the number
of shares owned by any shareholder who would otherwise receive a fractional
share, will be rounded up to the next nearest whole number.

           The purpose of the Reverse Split is to reduce the number of
outstanding shares in an effort to increase the market value of the remaining
outstanding shares.

           The record date established by the Board for purposes of determining
the number of outstanding shares of voting stock entitled to vote on the Reverse
Split and the Amendment was September 30, 2004 (the "Record Date"). On the
Record Date, stockholders owning greater than a majority of the outstanding
shares of Common Stock approved the Reverse Split and the Amendment by action
taken without a meeting in accordance with Nevada law. No further vote of our
stockholders is required.

           As a result, on September 20, 2004 and September 30, 2004, the
Company filed a preliminary schedule 14C information statement pursuant to
section 14(c) of the Securities Exchange Act of 1934 and definite schedule 14C
information statement pursuant to section 14(c) of the Securities Exchange Act
of 1934, respectively, to record such Reverse Split and Amendment.

           On the effective date of the Reverse Split the number of issued and
outstanding shares of common stock of the Company will be reduced from a total
of 38,240,807 shares which were outstanding on the Record Date, to approximately
6,373,468 shares.

           When filed with the Nevada Secretary of State, the Amendment will
change the name of the Company to "China Energy and Carbon Black Holdings, Inc."

ITEM 5     OTHER INFORMATION

Resignation of directors
------------------------

           On August 5, 2004, the Company completed a share exchange (the
"Exchange") with the stockholders of China Carbon Black Holdings Limited, a Hong
Kong corporation ("CCB") pursuant to the terms of an Agreement for Share
Exchange, dated July 15, 2004 as described earlier in Part 1 Item 1 of this
report and the Exchange resulted in a change of voting control of the Company.
The Company has a total of 38,240,807 shares issued and outstanding after the
Exchange, 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 immediate change in the officers and
directors of the Company subsequent to completion of the Exchange however, on
September 29, 2004 the following directors of the Company resigned from the
Board of Directors:

           o          Wang Shao Hua
           o          Yu Yin Tian
           o          Yin Liang Pei
           o          Wang Yun Fen
           o          Wang Yu Fei

                                       27


<PAGE>

           The resignations were not the result of any known disagreements with
the Company on any matter relating to the Company operations, policies or
practices.

Appointment of new directors
----------------------------

           On September 29, 2004, Gao Wan Jun, the sole remaining member of the
Board of Directors, appointed the following persons to fill the vacancies on the
Board created by the resignations of the previous directors:

                     GUO YUAN WANG: Mr. Guo was the founder and President of Xin
           Jiang YaKeLa Carbon Black Limited, a company he started in 1999.
           Prior to 1999, he was a senior manager of an oil and gas production
           division for China National Petroleum Corporation, the parent company
           of PetroChina (NYSE: PTR). Mr. Guo began his career with China
           National Petroleum Corporation in 1980. He obtained his bachelor's
           degree in petroleum engineering in 1980 from the University of
           Petroleum in China.

                     LUN XING: Mr. Xing began his career with Xin Jiang YaKeLa
           Carbon Black Limited in 2000 as an assistant plant manager.
           Currently, he is responsible for overall production, engineering,
           research and development, quality control, procurement, and the
           day-to-day operations of YaKeLa. Before joining YaKeLa, Mr. Xing
           began his career at Chongqing Yongchuan as maintenance engineer in
           1985. He spent fifteen years at the Chongqing Yongchuan Chemical
           Production Company as operations manager, production manager and
           maintenance manager for carbon black plant. He obtained his
           bachelor's degree in Chemical Engineering from Sichuan Luzhou
           Chemical College.

                     MEI QI ZHANG: Ms. Zhang has been the financial controller
           of Xin Jiang YaKeLa Carbon Black Limited since 2001. Prior to that
           time she held several positions with Xinjiang Tianke Chemical Company
           as accountant, accounting directors, and financial controller. She
           obtained her bachelor's degree in accounting from Xinjiang
           Communication College in China.

                     LIANG MIN ZHOU: Mr. Zhou began his career with Xin Jiang
           YaKeLa Carbon Black Limited as manager of quality control. Prior to
           joining YaKeLa, he held various positions with the Chongqing
           Yongchuan Chemical Production Company, including controls engineer
           and manager of automation. Mr. Zhou obtained his bachelor's degree in
           electrical engineering from Sichuan Chengdu Scientific University.

                     QING GUANG KONG: Mr. Kong began his career in 2001 with Xin
           Jiang YaKeLa Carbon Black Limited as an engineering manager in the
           production department. Subsequently he assumed the duties of manager
           for quality control and new product research and development. He is
           the Director of Production in YaKeLa and is responsible for
           production engineering at the carbon black production plants. Prior
           to joining YaKeLa, he held numerous positions at the Chongqing
           Yongchuan Chemical Production Company, including process engineer,
           associate director and director. Mr. Kong obtained his bachelor's
           degree in Chemical Engineering from Chongqing Chemical College.

Resignation of officers and appointment of new officers
-------------------------------------------------------

           On September 30, 2004, following the appointment of the successor
members of the Board of Directors, Gao Wan Jun resigned from the Board of
Directors of the Registrant. The resignation of Gao Wan Jun was not the result
of any known disagreement with the Registrant on any matter relating to the
Registrant operations, policies or practices.

           On the same day, Gao Wan Jun resigned also as the chief executive
officer of the Company while Wang Yu Fei resigned as the chief financial officer
of the Company. As a result, the Board of Directors of the Company has appointed
Gao Wan Jun and Mei Qi Zhang to fill the vacancies of chief executive officer
and chief financial officer, respectively.

                                       28


<PAGE>

           The resignations were not the result of any known disagreements with
the Company on any matter relating to the Company's operations, policies or
practices.

Signing of material agreements and disposal of assets
-----------------------------------------------------

           On September 30, 2004, the Company entered into an Agreement for Sale
of Stock (the "Sales Stock Agreement") with Mr. Gao Wan Jun. Pursuant to the
Sales Stock Agreement, the Company agreed to sell all its ownership of 95%
interest in HAITONG owned by the Company to Mr. Gao Wan Jun.

           As consideration for the sale of the Company's ownership interest in
HAITONG, Mr. Gao and HAITONG have agreed to assume and pay, and to hold the
Company harmless from liability on the obligation to Huayang International
Investment, Ltd., a British Virgin Islands corporation, in the amount of
$1,710,773, which has been shown on the balance sheet as an amount due to a
related party. In conjunction with the transfer of the ownership interest in
HAITONG to Mr. Gao, the Company have also agreed to write off a total of
$175,505 in accounts receivable from Huayang Industry (Shenyang) Group, a
company which is owned and controlled by Mr. Gao, and to cancel and write off a
promissory note with a net value of $2,388,000 executed by Huayang Industry
(Shenyang) Group.

           The sale of the Company's ownership interest in HAITONG was for the
purpose of divesting the Company's interest in the real estate operations that
have been carrying on through that entity. Prior to completion of the
transaction with CCB, Mr. Gao was one of the Company's principal shareholders,
and also served as one of the officers and directors. He was also the owner of
the additional 5% ownership interest in HAITONG which the Company does not own.
As a result, he has been substantially involved in the business operations
carried on through HAITONG and has an interest in taking over the operations of
HAITONG.

           The closing under the Agreement for Sale of Shares (the "Agreement")
with Gao Wan Jun was completed on September 30, 2004. On that date, the Company
transferred its 95% ownership interest in HAITONG to Mr. Gao in consideration of
the agreement of Mr. Gao and HAITONG to assume and pay and hold the Company
harmless from liability on the obligation to Huayang International Investment
Ltd., in the amount of $1,710,733. In conjunction with the transfer of the
Company's ownership interest in HAITONG to Mr. Gao, the Company also wrote off a
total of $175,505 in accounts receivable from Huayang Industry (Shenyang) Group,
a company which is owned and controlled by Mr. Gao, and have cancelled and
written off a promissory note with a net value of $2,388,000 executed by Huayang
Industry (Shenyang) Group.

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 nine months ended September 30, 2004, the Company filed the following
reports on the Form 8-K:
<TABLE>

      Form            Filing date                  Event reported
      ----            -----------                  --------------
<S>   <C>
      8K              August 19, 2004              Change in Control of Registrant
      Pre 14C         September 20, 2004           Preliminary Information Statement
      8K              September 29, 2004           Departure of Directors or Principal Officers
                                                   Election of Directors, Appointment of Officers
</TABLE>

                                       29


<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/ Guo Yuan Wang

           ------------------------------------
           Name      : Guo Yuan Wang
           Title     : Chairman, President and
                       Chief Executive Officer

           Date: November 22, 2004

           /s/ Mei Qi Zhang
           ------------------------------------
           Name      : Mei Qi Zhang
           Title     : Chief Financial Officer

           Date: November 22, 2004

                                       30