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 June 30, 2005

[ ]   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)

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

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

                                     N/A
-------------------------------------------------------------------------------
       (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 [  ]

                    APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 20,000,000 shares of common stock,
par value $.0001, as of September 21, 2005.

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 June 30, 2005 (unaudited)......              3

 Consolidated Statements of Operations (unaudited) for the
   Three and Six Months Ended June 30, 2005 and 2004.............              5

 Consolidated Statements of Cash Flows (unaudited) for the
   Six Months Ended June 30, 2005 and 2004.......................              6

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

Item 2. Management's Discussion and Analysis or Plan of Operation             11

Item 3. Controls and Procedures..................................             15

Part II.   Other Information

Item 1.  Legal Information.......................................             17
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds          17
Item 3.  Defaults Upon Senior Securities.........................             17
Item 4.  Submission of Matters to a Vote of Security Holders.....             17
Item 5.  Other Information.......................................             17
Item 6.  Exhibits and Reports on Form 8-K........................             17

Signatures






                       PART I.   FINANCIAL INFORMATION




ITEM 1.  Financial Statements




                                      DAHUA INC.
                        Consolidated Balance Sheet (Unaudited)
                                 As of June 30, 2005




                          ASSETS

Current Assets:
Cash and cash equivalents...................................    $       300,778
Inventory (note 4) .........................................          9,319,356
Prepaid construction costs (note 7).........................          4,791,514
Due from related parties....................................             50,039
Loans receivable............................................            112,021
                                                                 --------------
    Total Current Assets....................................         14,573,708

Property, Plant, & Equipment:
Computer equipment..........................................              3,450
Office equipment............................................             43,464
Telephones..................................................              1,026
Vehicles....................................................             11,498
                                                                 --------------
    Total Property, Plant, & Equipment......................             59,438
      Accumulated depreciation..............................           (23,244)
                                                                 --------------
    Net property, plant and equipment.......................             36,194
                                                                 --------------

Total Assets................................................     $   14,609,902
                                                                 ==============


                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable............................................     $            -
Customer deposits (note 6)..................................          6,483,977
Short-term loans - related parties (note 5).................          7,105,399
Accrued interest - short-term loans, related parties........            352,037
Other accruals..............................................             34,796
                                                                 --------------
   Total Current Liabilities................................         13,976,209

Minority interest in subsidiary.............................            581,394

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;
  20,000,000 share issued and outstanding...................              2,000
Additional paid-in capital..................................            965,352
Accumulated deficit.........................................          (915,053)
                                                                 --------------
   Total stockholders' equity...............................             52,299
                                                                 --------------

Total Liabilities and Stockholders' Equity..................     $    14,609,902
                                                                 ===============





         See accompanying notes to unaudited consolidated financial statements








                                 DAHUA, INC.
                Consolidated Statements of Operations (Unaudited)

<TABLE>
<CAPTION>


                                                        Three months ended         Six months ended
                                                              June 30                    June 30
                                                     --------------------------  -------------------------
                                                         2005            2004        2005          2004
                                                     -------------- -----------  -----------   -----------

                                                       <c>            <c>         <c>            <c>

Revenue........................................      $           -  $        -    $        -   $         -
Cost of goods sold.............................                  -           -             -             -
                                                     -------------- -----------  -----------   -----------
Gross Profit...................................                  -           -             -             -

Expenses
 Advertising...................................             46,042      30,634        60,944        61,267
 Depreciation..................................              1,708       2,287         3,416         4,574
 Payroll expense...............................            (6,447)      32,655        31,107        65,311
 Other general and administrative..............             78,445      70,274       165,785       140,547
                                                     -------------- -----------   -----------    ----------
   Total expenses..............................            119,748     135,850       261,252       271,699
                                                     -------------- -----------   -----------    ----------

Net loss from operations.......................          (119,748)   (135,850)     (261,252)     (271,699)

Other Income
 Interest income...............................               621         579          1,583         1,158
                                                     ------------- -----------   -----------    -----------
   Total other income..........................               621         579          1,583         1,158
                                                     ------------- -----------   ------------   -----------

Net loss before taxes and minority interest....          (119,127)   (135,271)     (259,669)      (270,541)

Provision for income taxes.....................                 -           -             -              -
                                                     ------------- -----------  ------------   ------------

Net loss before minority interest..............         (119,127)   (135,271)      (259,669)     (270,541)

Minority interest in subsidiary loss...........            23,826      27,054         51,934        54,108
                                                     ------------- -----------   ------------  ------------


Net loss.......................................      $   (95,301)  $ (108,217)   $  (207,735)  $  (216,433)
                                                     ============= ===========   ============  ============

Basic and diluted loss per share...............      $     (0.00)  $    (0.01)    $    (0.01)  $     (0.01)
                                                     ============= ===========   ============  ============

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




See accompanying notes to unaudited consolidated financial statements

</TABLE>




                                   DAHUA, INC.
                   Consolidated Statements of Cash Flows (Unaudited)


<TABLE>
<CAPTION>
                                                         Six months ended June 30,
                                                   -----------------------------------
                                                         2005                2004
                                                   -------------------  --------------

                                                        <c>                <c>
Cash Flows from Operating Activities:
Net loss........................................   $         (207,735)  $     (216,433)
Adjustments to reconcile net income to net cash
 used in operating activities:
  Depreciation..................................                3,416             4,574
  Minority interest.............................             (51,934)          (58,674)
Changes in operating assets and liabilities:
  Inventory.....................................            (869,307)       (1,810,672)
  Prepaid construction costs....................          (2,956,117)         (825,699)
  Loan receivable...............................            (112,021)            79,791
  Due from related parties......................                    -          (25,020)
  Accounts payable..............................             (25,393)          (91,657)
  Customer deposits.............................            1,505,320         2,456,681
  Accrued interest..............................               92,638            80,619
  Other accruals................................                2,687            11,431
                                                    -----------------  ----------------
   Net cash used in operating activities........          (2,618,446)         (395,059)

Cash Flows from Investing Activities:
 Purchase of property, plant and equipment......                    -           (1,093)
                                                    -----------------  ----------------
   Net cash used in investing activities........                    -           (1,093)

Cash Flows from Financing Activities:
 Net payment on loans payable...................                    -          (34,134)
 Net proceeds from loans payable, related party.            1,876,120           615,328
 Investment in subsidiary by minority owner.....              568,320                 -
                                                     ----------------- ----------------
    Net cash provided by financing activities...            2,444,440           581,194
                                                     ----------------- ----------------
Increase (decrease) in cash and cash equivalents            (174,006)           185,042


Cash and cash equivalents, beginning of period..              474,784           104,699
                                                     ----------------  ----------------
Cash and cash equivalents, end of period........      $       300,778  $        289,741
                                                     ================  ================


Supplemental disclosure of cash flow information:

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


See accompanying notes to unaudited consolidated financial statements


</TABLE>



                                  DAHUA, INC.

            Notes to Unaudited Consolidated Financial Statements
                              June 30, 2005 and 2004

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 six months ended June 30, 2005 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2005. 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,
2004.

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
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 six-month periods ended June 30, 2005 and 2004 was
$3,416 and $4,574, respectively.

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

Revenues for the sale of each house are recognized when legal title to the house
passes to the buyer, as evidenced by a real estate closing document.

Advertising Expenses

Advertising costs are expensed as incurred.  Advertising expense amounted to
$60,944 and $61,267 for the six-month periods ended June 30, 2005 and 2004.

Foreign Currency and Comprehensive Income

The accompanying financial statements are presented in United States (US)
dollars. The functional currency is the Renminbi (RMB). 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.

The exchange rate for RMB to US dollars has varied by only 100ths during 2005
and 2004. Thus, the consistent exchange rate used has been 8.27 RMB per each US
dollar. Since there have been no greater fluctuations in the exchange rate,
there is no gain or loss from foreign currency translation and no resulting
other comprehensive income or loss.

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
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.  Inventory

Inventory costs consist of the following at June 30, 2005 and December 31, 2004:

<TABLE>
<CAPTION>

                                                           June 30, 2005     Dec. 31, 2004
                                                          ---------------   -----------------

                                                             <c>               <c>

Compulsory land acquisition and removal compensation      $    3,470,992    $     3,470,992
Construction and installation project cost                     1,833,246          1,474,022
Prophase engineering cost                                        734,312            687,000
Infrastructure cost                                            1,430,476          1,239,927
Auxiliary public establishment                                   350,878            264,475
Indirect development cost, including capitalized interest      1,499,452          1,313,633
                                                          --------------     --------------
                                                          $    9,319,356     $    8,450,049
</TABLE>

5.  Short-term loans

Short-term loans due to related parties had balances of $7,457,436 and
$5,488,678 (including accrued interest) at June 30, 2005 and December 31, 2004,
respectively.  The loans carry an annual interest rate of 6 percent and are due
on demand.  Interest accrued on the loans was $92,638 and $80,619 for the six
months ended June 30, 2005 and 2004. The entire interest amounts were
capitalized as costs of construction.

6.  Customer deposits

Customer deposits consist of down payments received on sales contracts for our
houses. Upon closing, when title passes to the buyer, the Company will recognize
the down payments as revenue.  Total customer deposits at June 30, 2005 and
December 31, 2004 was $6,483,977 and $4,978,657, respectively.

7.  Prepaid construction cost

Prepaid construction cost consists of payments to our subcontractors before they
provide us services. Prepaid construction cost will be converted into inventory
when the subcontractors finish their work. Prepaid construction cost at June 30,
2005 and December 31, 2004 was $4,791,514 and $1,835,197, respectively.

8.  Additional investment in subsidiary

The subsidiary increased its registered capital on May 12, 2005 and acquired the
license on May 19, 2005. In this capital increase, Dahua increased its
investment in the subsidiary by $2,273,277 and the minority shareholder
increased its investment by $568,320. Dahua Project Management Group advanced
funds to the Company to allow for the increase in investment, which amount is
included in short-term loans - related parties. After the capital increase, the
subsidiary's registered capital is $4,050,785, of which Dahua holds 80% of the
shares.



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 substantially completed in December
2004. We are currently finishing up plumbing, electric wiring, water supply, and
landscaping, which is expected to be completed by the end of October 2005.

We have pre-sold 25 units by the end of June 2005.  However, no sales revenues
have been recognized because deeds of the houses have not been legally delivered
to home buyers.

We are 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 RMB 4.5 to 6 million, 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 2005.  There is no assurance that said
permit will be issued within the timeframe anticipated.  The construction
will take up to 18 to 20 months to complete, and we expect to commence sales
in early 2008.

Results of Operations

Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
-----------------------------------------------------------------------------

Revenue

We began our first construction project on development of real estate
residential single-family homes in July 2003. The project was not completed
until the end of December 2004.  Because the homes have not been legally
delivered to the buyers, all funds received from the pre-sold units and
installment payments are recorded as customer deposits until physical delivery
and transfer of legal title.  Accordingly, no revenue that has been recognized
for the three months ended June 30, 2005 and 2004.

Operating Expenses

For the three months ended June 30, 2005, our operating expenses were $119,748,
as compared to $135,850 for the same period of the previous year. The decrease
was largely due to the decrease in payroll expenses and offset by increase in
advertising and other general and administrative expenses.

Net Loss

For the three months ended June 30, 2005, we recorded a net loss of $95,301, as
compared to a net loss of $108,217 for the same period of the previous year.
This resulted in basic and diluted net loss per share of $0.01 on weighted
average common shares outstanding of 20,000,000 in both report periods.


Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004
-------------------------------------------------------------------------

Revenue

We began our first construction project on development of real estate
residential single-family homes in July 2003. The project was not completed
until the end of December 2004. Because the homes have not been legally
delivered to the home buyers, all funds received from the pre-sold units and
installment payments are recorded as customer deposits until physical delivery
and transfer of legal title.  Accordingly, no revenue has been recognized for
the six months ended June 30, 2005 and 2004.

Operating Expenses

For the three months ended June 30, 2005, our operating expenses were $261,252,
as compared to $271,699 for the same period of the previous year. The decrease
was largely due to a decrease ($34,204) in payroll expenses and offset by an
increase ($25,238) in other general and administrative expenses.

Net Loss

For the six months ended June 30, 2005, we recorded a net loss of $207,735, as
compared to a net loss of $216,433 for the same period of the previous year.
This resulted in basic and diluted net loss per share of $0.01 on weighted
average common shares outstanding of 20,000,000 in both report periods.

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 the buyer, a deposit is required to be made
to the developer, which we use to construct our residential housing units.  As
of June 30, 2005, we received $6.48 million of customer deposits on the First
Phase of Dahua Garden.

We began our First Phase of Dahua Garden in July 2003. As of June 30, 2005, the
unsecured short-term loans provided by Dahua Group were $7.11 million, which
bears interest at an annual rate of 6%, for a period of three years.

On May 12, 2005, Beijing Dahua Real Estate Development, Ltd, our subsidiary,
increased its registered capital to RMB 33.5 million, approximately US$4.05
million, from RMB10 million, approximately US$1.21 million. In this capital
increase, Dahua increased its investment in the subsidiary by $2,273,277 and the
minority shareholder increased its investment by $568,320. Dahua Project
Management Group advanced funds to the Company to allow for the increase in
investment, which amount is included in short-term loans - related parties.
After the increase in registered capital, Dahua Group still holds 80% of the
shares.

For the six months ended June 30, 2005, our operating activities used $2.62
million of net cash, largely used to prepay construction costs of $2.96 million.
For the six months ended June 30, 2005, we had no investing activities. For the
same period, the financing activities provided us with $2.44 million of net
cash, which includes borrowings from our related party and investment by our
subsidiary's minority shareholder.

As of June 30, 2005, the First Phase of Dahua Garden has been completed. 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,
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
or banks to identify additional 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 have entered into an agreement with a bank that extended mortgage loans to
buyers of our residential units, whereby we agree to provide a certain limited
guarantee, which covers the risk before the conveyance of title upon closing.
We are required to deposit a certain amount of funds into a special account with
the bank. At June 30, 2005, the balance of this special account was $295,042.


ITEM 3.   Controls and Procedures

As of the end of the period covered by this quarterly report on Form 10-QSB, we
evaluated the effectiveness of the design and operation of (i) our disclosure
controls and procedures ("Disclosure Controls"), and (ii) our internal control
over financial reporting ("Internal Controls"). This evaluation ("Evaluation")
was performed by our President and Chief Executive Officer, Yonglin Du ("CEO")
and Meng Hua, our Chief Financial Officer ("CFO").

Based upon the Evaluation, our CEO and CFO have concluded that our Disclosure
Controls are effective to ensure that material information relating to the
Company is made known to management, including the CEO and CFO, particularly
during the period when our periodic reports are being prepared, and that our
Internal Controls are effective to provide reasonable assurance that our
financial statements are fairly presented inconformity with accounting
principals generally accepted in the United States. Additionally, there has been
no change in our Internal Controls that occurred during our most recent fiscal
quarter that has materially affected, or is reasonably likely to affect, our
Internal Controls.



                        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.

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
-------------------------------------------------
Younglin Du, Chief Executive Officer and President


Date: September 21, 2005