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, 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)

                        NORTON INDUSTRIES CORP.
-----------------------------------------------------------------------------
         (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 [ ]

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


                   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: 25,000,000 shares of common stock,
par value $.0001, as of November 17, 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 September 30, 2005 (unaudited)......       3

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

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

  Notes to Consolicated Financial Statement............................       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.............................................      16
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds...      16
Item 3.  Defaults Upon Senior Securities...............................      16
Item 4.  Submission of Matters to a Vote of Security Holders...........      16
Item 5.  Other Information.............................................      16
Item 6.  Exhibits and Reports on Form 8k...............................      17

Signatures.............................................................      17






                          PART I.   FINANCIAL INFORMATION


ITEM 1.  Financial Statements





                                        DAHUA INC.
                       Consolidated Balance Sheet (Unaudited)
                               As of September 30, 2005
<TABLE>
<CAPTION>

                                   ASSETS
<S>                                                                   <C>
Current Assets:
  Cash and cash equivalents...............................     $       282,323
  Inventory (note 4) .....................................           9,918,610
  Prepaid construction costs (note 7).....................           4,807,795
  Due from related parties................................              51,140
  Loans receivable........................................             114,485
                                                                --------------
Total current assets......................................          15,174,353

Property, Plant, & Equipment:
  Computer equipment......................................               3,526
  Office equipment........................................              44,420
  Telephones..............................................               1,048
  Vehicles................................................              11,751
                                                                --------------
Total Property, Plant, & Equipment........................              60,745
    Accumulated depreciation..............................            (24,978)
                                                                --------------
  Net property, plant and equipment.......................              35,767
                                                                --------------

Total Assets..............................................     $    15,210,120
                                                              ================


                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable........................................     $             -
  Customer deposits (note 6)..............................           6,862,592
  Short-term loans - related parties (note 5) ............           5,038,430
  Accrued interest - short-term loans, related parties....             359,781
  Other accruals..........................................              36,943
                                                               ---------------
Total Current Liabilities.................................          12,297,746

Minority interest in subsidiary...........................             582,475

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 shares issued an outstanding....               2,500
  Additional paid-in capital (note 8).....................           3,230,452
  Accumulated deficit.....................................           (962,552)
  Accumulated other comprehensive income..................              59,499
                                                              ----------------
Total stockholders' equity................................           2,329,899
                                                              ----------------

Total Liabilities and Stockholders' Equity................    $     15,210,120
                                                              ================




     See accompanying notes to unaudited consolidated financial statements

</TABLE>




                                        DAHUA, INC.

    Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

<TABLE>
<CAPTION>
                                        Nine months ended               Three months ended
                                          September 30                     September 30
                                    --------------------------       -----------------------
                                       2005           2004              2005         2004
                                    -----------   ------------       ----------   ----------

                                    <c>           <c>                <c>          <c>
Revenues
  Sales revenues.................   $         -   $          -       $        -   $        -
  Cost of goods sold.............             -              -                -            -
                                    -----------   ------------       ----------   ----------
    Gross Profit.................             -              -                -            -

Expenses

  Advertising....................        66,176         91,901            5,232       30,634
  Depreciation...................         5,150          6,861            1,734        2,287
  Payroll expense................        47,838         97,967           16,731       32,656
  Other general and administrative      202,018        210,832           36,233       70,274
                                    -----------   ------------       ----------   ----------
Total expenses...................       321,182        407,550           59,930      135,851
                                    -----------   ------------       ----------   ----------

Net loss from operations.........     (321,182)      (407,550)         (59,930)    (135,851)

Other Income
Interest income..................         2,139          1,736              556          578
                                    -----------   ------------       ----------   ----------
    Total other income...........         2,139          1,736              556          578
                                    -----------   ------------       ----------   ----------
Net loss before taxes
 and minority interest...........     (319,043)      (405,814)         (59,374)    (135,273)

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

Net loss before minority interest     (319,043)      (405,814)         (59,374)    (135,273)

Minority interest in subsidiary
 gain (loss).....................        63,809         81,163           11,875       27,055
                                    -----------  --------------      ------------ -----------

Net loss.........................  $  (255,234)  $   (324,651)      $   (47,499)  $ (108,218)
                                    ============  =============      ===========  ===========
Foreign currency translation
 adjustment......................        57,500              -                -            -
                                    -----------   ------------       ----------   -----------

Comprehensive loss...............   $  (197,734)  $   (324,651)      $  (47,499)  $ (108,218)
                                    ============  =============      ===========  ===========

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

Weighted average common shares
 outstanding.....................    20,164,835     20,000,000       20,489,130   20,000,000
                                   ============  =============      ===========  ===========



                See accompanying notes to unaudited consolidated financial statements

</TABLE>






                                        DAHUA, INC.

                     Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>


                                                             Nine months ended September 30,
                                                         ------------------------------------
                                                               2005               2004
                                                         ----------------    ----------------

                                                             <c>                <c>
Cash Flows from Operating Activities:
Net loss.........................................        $      (255,234)   $       (324,651)
Adjustments to reconcile net income to net cash
  provided by (used in) operating activities
  Depreciation...................................                   5,150               6,861
  Provision for allowance on accounts receivable.                       -              32,795
  Minority interest..............................                (63,809)            (81,163)
Changes in operating assets and liabilities:
Inventory........................................             (1,468,561)         (2,750,896)
Prepaid construction costs.......................             (2,972,398)             184,000
  Loan receivable................................               (114,485)              22,848
  Due from related parties.......................                 (1,101)                   -
  Accounts payable...............................                (25,393)           (183,313)
  Customer deposits..............................               1,883,935           3,683,742
  Accrued interest...............................                 100,382                   -
  Other accruals.................................                   4,834             (5,032)
                                                          ---------------     ---------------
     Net cash provided by (used in) operating activities      (2,906,680)             585,191

Cash Flows from Investing Activities:
 Purchase of property, plant and equipment.......                 (1,307)             (2,185)
                                                          ----------------    ---------------
     Net cash used in investing activities.......                 (1,307)             (2,185)

Cash Flows from Financing Activities:
  Net proceeds from loans payable, related party.               2,074,251           (116,773)
  Investment in subsidiary by minority owner.....                 566,265                   -
                                                          ---------------    ----------------
    Net cash provided by (used in) financing activities         2,640,516           (116,773)
                                                          ---------------    ----------------
Effect of rate changes on cash...................                  75,010                   -
                                                          ---------------    ----------------

Increase (decrease) in cash and cash equivalents.               (192,461)             466,233

Cash and cash equivalents, beginning of period...                 474,784             104,699
                                                          ---------------    ----------------
Cash and cash equivalents, end of period.........         $       282,323     $       570,932
                                                          ===============    ================

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
                          September 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 nine months ended September 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 nine-month periods ended September 30, 2005 and
2004 was $5,150 and $6,861, 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 are recognized when (1) persuasive evidence of an arrangement exists;
(2) delivery has occurred and title has passed according to the sale terms,
(3) the seller's price to the buyer is fixed or determinable; and (4)
collectibility is reasonably assured.

Advertising Expenses

Advertising costs are expensed as incurred.  Advertising expense amounted to
$66,176 and $91,901 for the nine-month periods ended September 30, 2005 and
2004.

Foreign Currencies

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.

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

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 September 30, 2005 and December 31,
2004:
<TABLE>
<CAPTION>

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

                                                   <c>                 <c>
Compulsory land acquisition
and removal compensation                      $       3,548,036     $     3,470,992
Construction and installation project cost            2,077,233           1,474,022
Prophase engineering cost                               750,551             687,000
Infrastructure cost                                   1,581,564           1,239,927
Auxiliary public establishment                          373,386             264,475
Indirect development cost,
  including capitalized interest                      1,587,840           1,313,633
                                              -----------------    ----------------
                                               $      9,918,610     $     8,450,049
</TABLE>

5.  Short-term loans

Short-term loans due to related parties had balances of $5,398,211 (including
accrued interest) at September 30, 2005.  The loans carry an annual interest
rate of 6 percent and are due on demand. Interest accrued on the loans was
$100,382 for the nine months ended September 30, 2005, which remained accrued
at September 30, 2005. 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 September 30, 2005
were $6,862,592.

7.  Prepaid construction costs

Prepaid construction costs consist of payments to our subcontractors before
they provide us services. Prepaid construction costs will be converted into
inventory when the subcontractors finish their work. Prepaid construction
costs at September 30, 2005 were $4,807,795.

8.  Additional paid in capital

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 $2,265,100 and the minority shareholder
increased its investment by $566,265. Dahua Project Management Group advanced
funds to the Company to allow for the increase in investment. On September 21,
2005, the Board of Dahua Inc. issued 4,750,000 shares to Dahua Project
Management Group at the price of US$0.477 per share in exchange for the short-
term loans Dahua Group provided. According to the Shares Exchange Agreement
signed on January 30, 2005, it is the Dahua Inc.'s responsibility to maintain
the ownership percentage held by Comp Hotel International Ltd. ("Comp") and
Waywood Investments Ltd. ("Waywood"). In this regard, Dahua Inc. issued
212,500 shares and 37,500 shares to Comp and Waywood, respectively. There was
no cash inflow from this issuance. After the capital increase, the subsidiary's
registered capital is $4,036,145, of which Bauer 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 80% owned subsidiary Beijing Dahua Real Estate Development Ltd.
("Dahua Real Estate"), engage in the business of development, construction and
sale of luxury single-family homes in the northern suburb of Beijing, China.

In July 2003, we began to develop our first real estate project. The project is
called the first phase of Dahua Garden (the "First Phase"), which consists of 76
luxury residential housing units, all of which are single houses ranging from
approximately 2,000 to 5,000 square feet, each with 3-4 bedrooms with built-in
closets and adjacent bathrooms, an open eat-in kitchen, a family room, a living
room, and an attic solarium for indoor sun bathing. 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 finishing up plumbing, wiring and landscaping, which is expected
to be completed by the end of December 2005.

To date we have pre-sold 28 of the 76 units of the First Phase, out of which 4
units have been paid in full, while the rest are still being paid off in
installments. Because those pre-sold homes and their legal titles have not been
physically delivered or transferred to home buyers, all funds received from the
pre-sold units and installment payments are recorded as customer deposits, and
no sales revenues have been recognized. As of September 30, 2005, we had
received customer deposits totaling $6.86 million.

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 our 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 our 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 will need a permit to
commence construction by Beijing Municipal Construction Commission. We expect
to obtain the permit before 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 the
middle of 2008.

Results of Operations

Three Months Ended September 30, 2005 and 2004

Revenues

We began our first construction project of the 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 has been recognized for
the three months ended September 30, 2005 and 2004.

Operating Expenses

For the three months ended September 30, 2005, our operating expenses decreased
by 55.9% to $59,930 from $135,850 in the prior year, mainly due to the
substantial completion of our first construction project. Many expense items,
such as advertising and marketing, payroll and other general and administrative
expenses were also substantially reduced.

Net Loss

For the three months ended September 30, 2005, we had net loss of $47,499, or
$0.00 per share, compared with net loss of $108,218, or $0.01 per share, for
the same period of the prior year.

Nine Months Ended September 30, 2005 and 2004

Revenues

We began our first construction project of the 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 has been recognized for
the nine months ended September 30, 2005 and 2004.

Operating Expenses

For the nine months ended September 30, 2005, our operating expenses decreased
by 21.2% to $321,182 from $407,550 in the prior year, mainly due to the
substantial completion of our first construction project in December 2004.
Accordingly, many expense items, such as advertising and marketing, payroll and
other general and administrative expenses were substantially reduced.

Net Loss

For the nine months ended September 30, 2005, we had net loss of $255,234, or
$0.01 per share, compared with net loss of $324,651, 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 the buyer, a deposit is required to be made
to the developer, which we use to construct our residential housing units. As
of September 30, 2005, we received $6.86 million of customer deposits on the
First Phase of Dahua Garden.

We also borrow from time to time based on an oral line of credit agreement from
Dahua Project Management Group, our affiliate. There was no written line of
credit agreement until June 20, 2005, to recapture the credit arrangement. The
funds so borrowed are unsecured and there is no upper limit on the amount of
money that we can borrow from Dahua Group as long as there are funds available
and we need it. The money we borrow under this arrangement bears interest at
an annual rate of 6%, repayable within 30 days upon demand by lender. As of
September 30, 2005, the unsecured short-term loans provided by Dahua Group were
$5.40 million, including accrued interest.

On May 12, 2005, Beijing Dahua Real Estate Development, Ltd, our subsidiary,
increased its  registered capital. In this capital increase, Dahua increased
its investment in the subsidiary by $2,265,100 and the minority shareholder
increased its investment by $566,265. Dahua Project Management Group advanced
funds to the Company to allow for the increase in investment. On September 21,
2005, the Board of Dahua Inc. issued 4,750,000 shares to Dahua Project
Management Group at the price of US$0.477 per share in exchange for the short-
term loans Dahua Group provided. According to the Shares Exchange Agreement
signed on January 30, 2005, it is the Dahua Inc.'s responsibility to maintain
the ownership percentage held by Comp Hotel International Ltd. ("Comp Hotel")
and Waywood Investments Ltd. ("Waywood"). In this regard, Dahua Inc. issued
212,500 shares and 37,500 shares to Comp Hotel and Waywood, respectively.
There was no cash inflow from this issuance. After the capital increase, the
subsidiary's registered capital is $4,036,145, of which Bauer holds 80% of the
shares.

For the nine months ended September 30, 2005, our operating activities used
$2.91 million of net cash, largely used to prepay construction costs of $2.97
million, and increase inventory by $1.47 million. For the nine months ended
September 30, 2005, we had no investing activities other than purchasing $1,307
of office equipment. For the same period, the financing activities provided us
with $2.64 million of net cash, which includes borrowings from our related
party ($2.07 million) and investment by our subsidiary's minority shareholder
($0.57 million).

As of September 30, 2005, the First Phase of Dahua Garden has been substantially
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,
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 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 September 30, 2005, the balance of this special account was
$296,433.



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

On May 12, 2005, our subsidiary, Bauer Invest Inc. ("Bauer"), increased its
registered capital. In this capital increase, we increased our investment in
the subsidiary by $2,665,100 and the minority shareholder increased its
investment by $566,265. Dahua Project Management Group ("Dahua Group") advanced
funds to us to allow for the increase in investment, which amount was recorded
as short-term loans - related parties. On September 21, 2005, we issued, on a
pro rata basis, an aggregate of 4,750,000 shares of our common stock to
shareholders of Dahua Group in exchange for the conversion of the short term
loan ($2,265,100) to equity shares. All shares were issued under the exemption
from registration provided by Regulation S of the Securities Act of 1933, as
amended. All share recipients are residents outside of the United States; the
transaction took place outside the United States; and no directed selling
efforts were made in the United States.

In connection with the issuance of additional common shares as mentioned above,
pursuant to a no-dilution clause of the Share Exchange Agreement dated January
30, 2005 we entered into with Comp Hotel and Waywood, on September 21, 2005,
we issued 212,500 and 37,500 shares of our common stock to Comp Hotel and
Waywood, respectively. All shares were issued under the exemption from
registration provided by Regulation S of the Securities Act of 1933, as amended.
All share recipients are residents outside of the United States; the
transaction took place outside the United States; and no directed selling
efforts were made in the United States.


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:  November 21, 2005