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

                                   FORM 10-QSB/A
                                 (Amendment No. 1)

(Mark One)

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

                 For the quarterly period ended March 31, 2006

[ ]  TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the transition period from ___________________ to __________________

     Commission file number:                        000-49852
                             ________________________________________________

                                   DAHUA INC.
------------------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

           Delaware                                  04-3616479
------------------------------------------------------------------------------
State or other jurisdiction             (I.R.S. Employer Identification No.)
 of incorporation or organization)

          19th Floor, Building C, Tianchuangshiyuan, Huizhongbeili,
                    Chaoyang District, Beijing, China, 100012
------------------------------------------------------------------------------
                   (Address of principal executive offices)

                              86-10-6480-1527
------------------------------------------------------------------------------
                        (Issuer's telephone number)

------------------------------------------------------------------------------
       (Former name, former address and former fiscal year, if changed
                           since last report)

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


                                      - 1 -


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

State the number of shares outstanding of each of the issuer's classes of common
equity: As of December 11, 2006: 25,000,000 shares of common stock, par value
$.0001.

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





                                       DAHUA INC.

                                  Table of Contents



Part I. Financial Information


Item1.  Financial Statements

  Consolidated Balance Sheet as of March 31, 2006 (unaudited)(Restated)...    3

  Consolidated Statements of Operations and Comprehensive Loss for the
   Three Months Ended March 31, 2006 and 2005 (unaudited) (Restated)......    5

  Consolidated Statements of Cash Flows for the Three Months
   Ended March 31, 2006 and 2005 (unaudited) (Restated)...................    6

  Notes to Consolidated Financial Statements..............................    7


Item 2. Management's Discussion and Analysis or Plan of Operation.........   10

Item 3. Controls and Procedures...........................................   14


Part II.   Other Information

Item 1.  Legal Information.................................................  14
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.......  14
Item 3.  Defaults Upon Senior Securities...................................  14
Item 4.  Submission of Matters to a Vote of Security Holders...............  14
Item 5.  Other Information.................................................  14
Item 6.  Exhibits and Reports on Form 8-K..................................  15

Signature..................................................................  15




                                       - 2 -




                         PART I.   FINANCIAL INFORMATION



ITEM 1.  Financial Statements




                                     DAHUA, INC.
                        CONSOLIDATED BALANCE SHEET (UNAUDITED)
                                     (Restated)



                                        ASSETS                  March 31, 2006
                                                             -----------------
Current assets
  Cash and cash equivalents...........................       $        591,222
  Inventory...........................................             15,501,728
                                                             ----------------
    Total current assets..............................             16,092,950

Property, plant & equipment
  Computer equipment..................................                  6,469
  Office equipment....................................                 44,836
  Telephones..........................................                  1,058
  Vehicles............................................                 23,087
                                                              ---------------
   Total property, plant & equipment..................                 75,450
   Accumulated depreciation...........................               (30,568)
                                                              ---------------
   Net property, plant and equipment..................                 44,882

Restricted cash.......................................                378,232
Due from related parties..............................                 46,082
                                                              ---------------

Total assets..........................................        $    16,562,146
                                                              ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities
Accounts payable......................................         $      119,200
Customer deposits.....................................              7,135,530
Short-term loans-related parties......................              5,394,226
Accrued interest-short-term loans, related parties....                511,199
Accrued sales and income taxes........................                245,094
Accrued others........................................                 33,634
                                                               --------------
    Total current liabilities.........................             13,438,883

Minority interest in subsidiary.......................                640,299

Stockholders' equity
Preferred stock: par value $.0001; 20,000,000 shares
  authorized; none issued and outstanding.............                      -
Common stock: par value $.0001; 80,000,000 shares
  authorized; 25,000,000 issued and outstanding.......                  2,500
Additional paid in capital............................              3,130,452
Accumulated deficit...................................              (741,902)
Accumulated other comprehensive income................                 91,914
                                                               --------------
    Total stockholders' equity........................              2,482,964

Total liabilities and stockholders' equity............         $   16,562,146
                                                               ==============




         See accompanying notes to consolidated financial statements





                                       - 4 -




                                   DAHUA, INC.

     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
                                   (Restated)


<TABLE>
<CAPTION>



                                                       Three months ended March 31,
                                                    ---------------------------------
                                                           2006             2005
                                                    ---------------   ---------------

                                                        <c>             <c>
Revenues
Sales revenues................................      $       329,152    $            -
Cost of goods sold............................              246,810                 -
                                                    ---------------    --------------
Gross profit..................................               82,342                 -

Expenses
Advertising...................................              127,023             14,902
Depreciation..................................                1,485              1,708
Payroll expense...............................               17,972             37,554
Other general and administrative..............              100,016             87,340
                                                    ----------------    --------------
    Total expenses............................              246,496            141,504
                                                    ----------------    --------------

Net loss from operations......................            (164,154)          (141,504)

Other income (expense)
Interest expense..............................             (50,920)                  -
Interest income...............................                  367                962
                                                     ---------------    --------------
    Total other income (expense)..............             (50,553)                962
                                                     ---------------    --------------

Net income (loss) before taxes and minority interest      (214,707)          (140,542)

Provision for income taxes....................                    -                  -
                                                     ---------------    --------------
Net income (loss) before minority interest....            (214,707)          (140,542)
Minority interest in subsidiary loss..........             (42,941)           (28,108)
                                                     ---------------    --------------
Net loss......................................       $    (171,766)     $    (112,434)

Foreign currency translation adjustment.......               21,231                  -
                                                     --------------     --------------
Comprehensive loss............................       $    (150,535)     $    (112,434)
                                                     ==============     ==============

Basic and diluted loss per share..............       $       (0.01)     $       (0.01)
                                                     ==============     ==============

Weighted average common shares outstanding....           25,000,000         20,000,000
                                                     ==============     ==============


                 See accompany notes to consolidated financial statements

</TABLE>



                                               - 5 -





                                            DAHUA, INC.

                       CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                           (Restated)

<TABLE>
<CAPTION>

								             Three months ended March 31,
                                                           --------------------------------
                                                                  2006          2005
                                                           ---------------  ---------------

                                                               <c>             <c>

Cash flows from operating activities:
Net income (loss)....................................      $     (171,766)   $    (112,434)
Adjustments to reconcile net loss to
 net cash (used in )operations:
   Depreciation......................................                1,485            1,708
   Minority interest.................................             (42,941)         (28,108)
Changes in operating assets and liabilities:
 Inventory...........................................            (570,360)        (448,633)
 Prepaid construction costs..........................                    -        (295,729)
 Loans receivable....................................                    -        (172,480)
 Restricted cash.....................................             (22,558)                -
 Accounts payable....................................               26,263                -
 Customer deposits...................................              848,538        1,264,692
 Accrued interest....................................               50,920           84,036
 Accrued sales and income taxes......................               21,312                -
 Accrued others......................................                2,043            1,763
                                                            --------------   --------------
     Net cash provided operations....................              142,936          294,815

Cash flows from investing activities:
Advances to related parties..........................                (303)                -
Purchases of property, plant & equipment.............             (14,539)                -
                                                            --------------   --------------
     Net cash (used in) investing activities.........             (14,842)                -

Cash flows from financing activities:
Net proceeds from related party loans payable........               24,832           10,883
                                                            --------------   ---------------
     Net cash provided by financing activities.......               24,832           10,883

Effect of rate changes on cash.......................               21,231                -
                                                            --------------   ---------------

Increase in cash and cash equivalents................              174,157          305,698

Cash and cash equivalents, beginning of period.......              417,065          474,784

Cash and cash equivalents, end of period.............       $      591,222    $     780,482
                                                            ==============   ==============


Supplemental disclosures of cash flow information:

Interest paid in cash................................       $            -    $           -
                                                            ==============    =============
Income taxes paid in cash............................       $            -    $           -
                                                            ==============    =============




                    See accompany notes to consolidated financial statements

</TABLE>



                                        - 6 -




                                      DAHUA INC.
                       Notes to the Unaudited Financial Statements



The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to Form
10-QSB and item 310 of Regulation SB. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States of America for annual financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.

The accounts of the Company and all of its subsidiaries are included in the
consolidated financial statements. All significant intercompany accounts and
transactions have been eliminated in consolidation. The consolidated operating
results for the three months ended March 31, 2006 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2006. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB for the year ended
December 31, 2005.

1.  Nature of operations

Dahua, Inc. ("Dahua") was incorporated on March 8, 2002 in the State of Delaware
as Norton Industries Corp. The name was changed to Dahua, Inc. on February 7,
2005 as result of a reverse acquisition in which Norton acquired all capital
shares of Bauer Invest Inc. ("Bauer").  The acquisition was accounted for as a
reverse merger, as the post acquisition owners and control persons of Dahua are
substantially the same as the pre-acquisition owners and control persons of
Bauer.

Bauer Invest Inc. was incorporated on December 10, 2003, under the laws of the
Territory of the British Virgin Islands (BVI). Bauer has had no operations other
than the acquisition of 80% of Beijing Dahua Real Estate Development, Ltd.
(Subsidiary) on May 25, 2004. The Subsidiary is a corporation established on
September 24, 2001 in the People's Republic of China (PRC). The acquisition was
accounted for as a reverse merger, as the post acquisition owners and control
persons of Bauer are substantially the same as the pre acquisition owners and
control persons of the subsidiary. These financial statements are essentially
those of the Subsidiary with a recapitalization to show the effects due to the
reverse mergers. The consolidated entity is hereafter referred to as
"the Company".

The Company engages in the development of real estate and the sale of commodity
housing.  The Company has been in the process of acquiring and developing land
and housing for sale, and is now prepared for sales of those items to begin.

2.   Basis of Presentation

The accompanying financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (US GAAP). This
basis differs from that used in the statutory accounts of the Company, which
were prepared in accordance with the accounting principles and relevant



                                         - 7 -


financial regulations applicable to enterprises in the PRC. All necessary
adjustments have been made to present the financial statements in accordance
with US GAAP.

3.   Summary of Significant Accounting Policies

Economic and Political Risks
----------------------------

The Company faces a number of risks and challenges as a result of having primary
operations and markets in the PRC. Changing political climates in the PRC could
have a significant effect on the Company's business.

Cash and Cash Equivalents
-------------------------

For purposes of the statements of cash flows, cash and cash equivalents includes
cash on hand and demand deposits held by banks. Deposits held in financial
institutions in the PRC are not insured by any government entity or agency.

Trade Accounts Receivable
-------------------------

Trade accounts receivable are recognized and carried at original invoice amount
less an allowance for any uncollectible amounts. An estimate for doubtful
accounts is made when collection of the full amount becomes questionable.  The
Company had no trade accounts receivable during the periods presented.

Inventories
-----------

Inventories consist primarily of land acquisition and development costs,
engineering, infrastructure, capitalized interest, and construction work-in-
progress costs. The inventories are valued at cost based on the level of
completion. No provision for potential obsolete inventory has been made.

Property, Plant, and Equipment
------------------------------

Property, plant, and equipment are carried at cost less accumulated
depreciation, which is computed using the straight-line method over the useful
lives of the assets. Upon disposal of assets, the cost and related accumulated
depreciation are removed from the accounts and any gain or loss is included in
income.  Property and equipment are depreciated over their estimated useful
lives as follows:

    Computer equipment        3 years
    Office equipment          7 years
    Vehicles                  7 years

Depreciation expense for the three month periods ended March 31, 2006 and 2005
was $1,485 and $1,708, respectively.


                                       - 8 -



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

Revenue Recognition
-------------------

The Company recognizes revenue on the sale of a house when the consummation of
a sale is evidenced by: 1) a contractual arrangement that is binding to both
parties; 2) the exchange of all consideration (i.e. the seller has transferred
to the buyer the usual risks and rewards of ownership and the buyer has made
payment in full to the seller); 3) the arrangement of all permanent financing
for which the seller is responsible and; 4) the performance of all conditions
precedent to closing. No revenue is recognized when the Company's receivable is
subject to future subordination, as is the case when the Company guarantees a
bank loan for the period prior to the certification of title transfer.

Advertising Expenses
--------------------

Advertising costs are expensed as incurred.  Advertising expense amounted to
$127,023, and $14,902 for the three month periods ended March 31, 2006 and
2005.

Foreign Currency and Comprehensive Income
-----------------------------------------

The accompanying financial statements are presented in United States ("US")
dollars. The functional currency is the Yuan Renminbi ("RMB") of the PRC. The
financial statements are translated into US dollars from RMB at period-end
exchange rates for assets and liabilities, and weighted average exchange rates
for revenues and expenses. Capital accounts are translated at their historical
exchange rates when the capital transactions occurred.

During July 2005, China changed its foreign currency exchange policy from a
fixed RMB/US dollar exchange rate into a flexible rate under the control of
China's government.  We used the Closing Rate Method in translation of the
financial statements.

RMB is not freely convertible into the currency of other nations. All such
exchange transactions must take place through authorized institutions. There
is no guarantee the RMB amounts could have been, or could be, converted into
US dollars at rates used in translation.

Taxes
-----

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date. 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



                                   - 9 -


future deductibility is uncertain. Nearly all differences in tax bases and
financial statement carrying values are permanent differences. Therefore, the
Company has recorded no deferred tax assets or liabilities.

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 disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.

4.  Restatement of financial statements

Subsequent to the publication of the financial statements in form 10-QSB it was
discovered that an error had been made on operation. The amount of $51,220
interest expense was incorrectly shown as capitalized construction interest. The
restatements resulted in an increase loss of $40,736.



Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


The discussion in this quarterly report on Form 10-QSB contains forward-looking
statements. Such statements are based upon beliefs of management, as well as
assumptions made by and information currently available to management of the
Company as of the date of this report. These forward-looking statements can be
identified by their use of such verbs as "expect", "anticipate", "believe" or
similar verbs or conjugations of such verbs.  If any of these assumptions
prove incorrect or should unanticipated circumstances arise, the actual results
of the Company could materially differ from those anticipated by such forward
looking statements. The Company assumes no obligation to update any such
forward-looking statements.

Overview
--------

We, through our subsidiary Beijing Dahua Real Estate Development Ltd., are
engaged in the business of development, construction and sale of luxury
residential single-family homes in Beijing, China. In July 2003, we began to
develop our first real estate project, Dahua Garden (the "First Phase"), which
consists of 76 luxury residential units, all of which are single-family houses
ranging from approximately 2,000 to 5,000 square feet, each with 3 - 4 bedrooms.
The construction site is located at the northern skirt of Beijing, China. The
construction began in July 2003 and was completed in December 2005. As of
March 31, 2006, six units were sold, 26 units were reserved with clients'
deposits, and 44 units were available for sale.



                                     - 10 -



Plan of Operations
------------------

For the next 12 months, we plan to do the following:

(1)  To date, we have made the full payment to the government, which amounts to
approximately 20,000,000 yuan, approximately $2.49 million, for the acquisition
of land use rights. We are applying for deeds for our newly built homes with
the government. Upon receipt of the deeds, we will distribute the deeds to
individual homeowners. We expect to complete this process by June of 2006.

(2)  As of March 31, 2006, we have sold 35 units, including 28 which were
reserved with clients' deposits, out of the 76 housing units. For the next 12
months, we will continue to sell the remaining 41 units to the public. At
present, we don't know when they can be sold out. There is no significant amount
of budget required.

(3)  We are currently in the process of applying with Beijing municipal and
Changping district government agencies for the requisite licenses, permits, and
approvals in order to start the Second Phase of Dahua Garden, which will include
250 units of luxury single-family houses located in Chanping District, Beijing,
China, on an approximately 267,000 square-meter site with a community clubhouse,
creeks, ponds, and professionally manicured gardens and landscape. Each will be
3,000 to 5,000 square feet in size to be sold for 4.5 to 6 million yuan, or
approximately $550,000 to $720,000. We will serve as the sole developer of the
project, including construction and sales. The Second Phase is not contingent
upon our successful completion of the First Phase. As of the date of this
report, the status of the Company's applications for permits, licenses and
approvals is set forth below:

   (i)  We have entered into an agreement with the land owner, the Village
Committee of Lutuan Village, Beiqijia Township, North Changping District, which
has been approved by the government of Beiqijia Township;

   (ii)  Upon receipt of such approval, we have submitted a proposal for the
Second Phase development to the Development and Reconstruction Commission of
Changping District, which, in turn, submitted the proposal to the Development
and Reconstruction Commission of Beijing Municipal government;

   (iii)  Upon receipt of the proposal, the Development and Reconstruction
Commission of Beijing sent a letter to the Urban Planning Commission of Beijing
for its opinion, which it is reviewing; and

   (iv)  We are currently applying with the National Land Resource Bureau and
Housing Administration Bureau of Beijing Municipality for the initial
development rights and land use rights of the Second Phase development.

In addition to the above permits and approvals, we also need to obtain a permit
to commence construction by Beijing Municipal Construction Commission. We
expect to obtain this permit by the end of September 2006. There is no assurance
that said permit will be issued within the timeframe anticipated. There is no
significant amount of budget required.

(4)   After we obtain all necessary permits and approvals, we plan to begin our
construction of 250 units of luxury single-family homes (the Second Phase of
Dahua Garden). We plan to begin our Second Phase of Dahua Garden in August 2006.
The construction will take up to 18 to 20 months to complete, and we expect to
commence sales in the end of 2008. It is estimated that approximately $60.5
million is needed to complete the project.



                                           - 11 -



Results of Operations
---------------------

For the Three Months Ended March 31, 2006 and 2005
--------------------------------------------------

Revenues

We began our First Phase of Dahua Garden construction, which consists of 76
luxury residential units, in July 2003. The construction was completed in
December 2005. As of March 31, 2006, we have sold 7 units out of 76 units. For
the three months ended March 31, 2006, we recognized sales revenues of $329,152
from the sale of our housing units. No sales revenues was recognized for the
same period of the prior year because the house construction was not completed
at that time, and all clients' deposits and installment payments were recorded
as customer deposits until physical delivery and release of any Company's
guarantees to the financing bank.

Cost of Good Sold

Cost of good sold consists primarily of land acquisition and development costs,
engineering, infrastructure, capitalized interest, and construction costs. For
the three months ended March 31, 2006, our cost of good sold was $246,810. No
cost of good sold was recorded for the three months ended March 31, 2005,
because no houses had been sold.

Operating Expenses

For the three months ended March 31, 2006, our operating expenses were $246,496,
an increase of 74.2%, as compared to $141,504 for the same period of prior year,
largely due to the substantial increase, by 784%, in advertising expenses, from
$14,902 for the quarter ended March 31, 2005 to $127,023 for the same period of
2006. Because of the completion of our First Phase of Dahua Garden, the payroll
expenses were significantly reduced, from $37,554 for the three months ended
March 31, 2005 to $17,972 for the same period of 2006. But our other general
and administrative expenses increased 14.5%, or $12,686.

Net Loss

For the three months ended March 31, 2006, we had comprehensive loss of
$150,535, or $0.01 per share, as compared with net loss of $112,434, or $0.01
per share, for the same period of the prior year.

Liquidity and Capital Resources
-------------------------------

Since inception, our operations have been primarily funded by equity capital,
unsecured short-term loans from Dahua Project Management Group ("Dahua Group"),
our affiliate, and customer deposits that we received from our pre-sale of
housing units.

After receiving the Residential Housing Pre-sale Permit issued by the
government, we are permitted to sell the residential units to be built to the
public, which is common practice in China. Upon execution of a binding purchase
contract between the developer and a homebuyer, a deposit and installment


                                      - 12 -


payments are required to be made to the developer, which we use to construct
our residential housing units. At March 31, 2006, our customer deposit balance
was $7,135,530.

We also borrow from time to time based on a verbal line of credit agreement from
Dahua Group, our affiliate. The funds so borrowed are unsecured and there is no
upper limit on the amount of money that we can borrow as long as there are funds
available and we need it for our operation. The money we borrow under this
arrangement bears interest at an annual rate of 6%, repayable within 30 days
upon demand by the lender. As of March 31, 2006, the short-term loans due to
related parties had balance of $5,394,226.

As of March 31, 2006, we had cash and cash equivalent balance of $591,222. For
the three months ended March 31, 2006, our operating activities provided
$142,936 of net cash, largely due to increase in customer deposits of $848,538,
and offset by increase in inventory of $570,360. During the three months ended
March 31, 2006, our investing activities used $14,539 of net cash, mainly for
the purchase of property and equipment. For the same period, the financing
activities provided us with $24,832 of net cash, which were net proceeds from
loans payable from a related party.

Our First Phase of Dahua Garden was completed in December 2005. We are
currently applying with Beijing municipal and Changping district governmental
agencies for all the requisite licenses, permits, and approvals to start our
Second Phase of Dahua Garden. It is estimated that approximately $60.5 million
is needed to complete the Second Phase. In addition to customer deposits, and
short-term loans (line of credit) from Dahua Group, the proceeds generated from
sale of the First Phase will also be used to finance the Second Phase
development. There are no material commitments for capital expenditures.

While there can be no assurance that we will have sufficient funds over the
next twelve months, we believe that funds generated from the sale of our First
Phase of Dahua Garden housing units, purchaser deposits from pre-sale contracts,
and the line of credit provided by our affiliate, Dahua Group, will be adequate
to meet our anticipated operating expenses, capital expenditure and debt
obligations for at least the next twelve months. Nevertheless, our continuing
operating and investing activities may require us to obtain additional sources
of financing. In that case, we may seek financing from institutional investors,
banks, or other sources of financing. There can be no assurance that any
necessary additional financing will be available to us on commercially
reasonable terms, if at all.

Off-balance sheet arrangements
------------------------------

We entered into an agreement with each of two banks that extended mortgage loans
to our home buyers, whereby we agreed to provide a certain limited guarantee,
which covers the risk before the conveyance of title upon closing. Upon
initiating the loan on behalf of the buyer for the down payment, the bank has
withheld a percentage ranging from 5% to 20% of the loan and deposited such
funds into a segregated account in the bank. At March 31, 2006, the balance
of the separate accounts was $378,232. Since we don't recognize revenue when
our receivables are subject to future subordination, the entire amount that
could become payable to the bank under the limited guarantee is recorded as a
liability on the balance sheet and is included in customer deposits.



                                     - 13 -



Item 3.  CONTROLS AND PROCEDURES


(a) Evaluation of disclosure controls and procedures. The Company's Chief
Executive Officer and Chief Financial Officer, after re-evaluating the
effectiveness of the Company's disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period
covered by this report, have concluded that, the Company's disclosure controls
and procedures contained certain deficiencies and weaknesses in the internal
control over financial reporting, thus they concluded that, the Company's
disclosure controls and procedures were ineffective.

(b) Changes in internal controls over financial reporting. The internal control
deficiencies that were identified as weaknesses were (i) the lack of adequate
accounting and reporting personnel with sufficient US GAAP knowledge related to
construction accounting and (ii) the lack of sufficient formalized and
consistent finance and accounting procedures to detect instances of non-
compliance with existing policies and procedures.

The Company is committed to remedying these deficiencies and weaknesses and has
planned to implement certain remedial measures, including (i) the provision of
additional training to our accounting personnel on the requirements of US GAAP
to increase their familiarity with those standards, (ii) the expansion of our
finance and accounting team by seeking to recruit additional qualified
personnel, and (iii) the reassessment of our existing finance and accounting
policies and procedures.



                          PART II.  OTHER INFORMATION


Item 1.     LEGAL INFORMATION

            None.

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

            None

Item 3.     DEFAULTS UPON SENIOR SECURITIES

            None.

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

            None.

Item 5.     OTHER INFORMATION

            None.


                                      - 14 -



Item 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

 Exhibit No.                         Description
 ---------   ------------------------------------------------------
   31.1      Section 302 Certification of CEO
   31.2      Section 302 Certification of CFO
   32.1      Section 906 Certification of CEO
   32.2      Section 906 Certification of CFO

(b)  Reports on Form 8-K:   None.






                                SIGNATURES



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


DAHUA, INC.


By: /s/  Yonglin Du
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Younglin Du, Chief Executive Officer and President

December 11, 2006



By: /s/ Hua Meng
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Hua Meng, Chief Financial Officer

December 11, 2006



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