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 March 31, 2007

[ ]   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 [ ]

     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 May 14, 2007: 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, 2007 (unaudited).........        3

  Consolidated Statements of Operations and Comprehensive Loss for
    the Three Months Ended March 31, 2007 and 2006 (unaudited)........        5

  Consolidated Statements of Cash Flows for the Three Months
    Ended March 31, 2007 and 2006 (unaudited).........................        6

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

Item 2. Management's Discussion and Analysis or Plan of Operation.....       12

Item 3. Controls and Procedures.......................................       17

Part II.   Other Information

Item 1.  Legal Information............................................       18
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds..       18
Item 3.  Defaults Upon Senior Securities..............................       18
Item 4.  Submission of Matters to a Vote of Security Holders..........       18
Item 5.  Other Information............................................       18
Item 6.  Exhibits and Reports on Form 8-K.............................       18

Signature.............................................................       19








PART I.   FINANCIAL INFORMATION



ITEM 1.  Financial Statements



                                    DAHUA, INC.
                     CONSOLIDATED BALANCE SHEET (UNAUDITED)

                                                                 March 31,
                            ASSETS                                 2007
                                                            ----------------

Current assets
 Cash and cash equivalents.........................         $      2,251,374
 Inventory (note 4)................................               13,302,433
                                                           ------------------
    Total current assets...........................               15,553,807

Property, plant & equipment
 Computer equipment................................                   41,266
 Office equipment..................................                   85,836
 Telephones........................................                    2,897
 Vehicles..........................................                  281,023
                                                           -----------------
    Total equipment................................                  411,022
    Accumulated depreciation.......................                 (65,145)
                                                           -----------------
    Net equipment..................................                  345,877

Loans receivable...................................                   15,674
Tax prepaid........................................                  404,056
Restricted cash (note 7)...........................                  412,894
                                                           -----------------
    Total assets...................................         $     16,732,308
                                                           =================


                   LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities
 Accounts payable...................................        $        408,058
 Customer deposits (note 6).........................               9,070,766
 Short-term loans-related parties (note 5)..........               2,286,887
 Accrued interest-short-term loans, related parties.                 755,925
 Other accruals.....................................                 103,028
                                                            -----------------
    Total current liabilities.......................              12,624,664

Minority interest in subsidiary.....................                 809,481
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.................................                (65,174)
Accumulated other comprehensive income..............                 230,385
                                                           -----------------
    Total stockholders' equity......................               3,298,163
                                                           -----------------
Total liabilities and stockholders' equity..........       $      16,732,308
                                                           =================




         See accompanying notes to consolidated financial statements









                                        DAHUA, INC.
               CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                                        (UNAUDITED)

<TABLE>
<CAPTION>

                                                            Three months ended
								                 March 31,
                                                   -----------------------------------
                                                           2007             2006
                                                   -----------------  ----------------

                                                                <c>                  <c>
Revenues
 Sales revenues.............................        $     3,127,922    $      329,152
 Cost of goods sold.........................              2,111,563           246,810
                                                   -----------------  ----------------
    Gross profit............................              1,016,359            82,342

Expenses
 Advertising................................                219,198           127,023
 Depreciation...............................                 15,155             1,485
 Payroll expense............................                 86,640            17,972
 Other general and administrative...........                463,228           100,016
                                                   -----------------   --------------
    Total expenses..........................                784,221           246,496
                                                   -----------------   --------------

Net income (loss) from operations...........                232,138         (164,154)

Other income (expense)
 Interest expense...........................               (31,088)          (50,920)
 Other income...............................                    434                 -
 Interest income............................                  3,411               367
                                                   ----------------    --------------
    Total other income (expense)............               (27,243)          (50,553)

Net income (loss) before taxes and minority interest        204,895         (214,707)

Provision for income taxes..................               (67,615)                 -
                                                    ---------------    --------------
Net income (loss) before minority interest..                137,280         (214,707)

Minority interest in subsidiary income (loss)                27,456          (42,941)
                                                   ----------------   ---------------
Net income (loss)...........................        $       109,824    $    (171,766)
                                                   ================   ===============

Foreign currency translation adjustment.....                 36,036            21,231
Comprehensive income (loss).................        $       145,860    $    (150,535)
                                                   ================   ===============

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

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




                 See accompany notes to consolidated financial statements

</TABLE>







                                           DAHUA, INC.
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (UNAUDITED)

<TABLE>
<CAPTION>




                                                                    Three months ended
                                                                          March 31,
                                                             ---------------------------------
                                                                   2007             2006
                                                             ----------------  ---------------

                                                                 <c>               <c>
Cash flows from operating activities:
Net income (loss)....................................         $      109,824    $   (171,766)
Adjustments to reconcile net income (loss) to
 net cash provided by (used in)operations:
  Depreciation.......................................                 15,155            1,485
  Minority interest..................................                 27,456         (42,941)
Changes in operating assets and liabilities:
 Inventory...........................................                718,997        (570,360)
 Tax prepaid.........................................              (134,087)                -
 Restricted cash.....................................                      -         (22,558)
 Accounts payable....................................                      -           26,263
 Customer deposits...................................              (658,030)          848,538
 Accrued interest....................................                 31,088           50,920
 Income tax payable..................................                      -           21,312
 Other accruals......................................                 11,201            2,043
                                                              ---------------  --------------
Net cash provided by (used in) operations............                121,604          142,936

Cash flows from investing activities:
 Loans receivable....................................               (15,619)                -
 Purchases of property, plant & equipment............               (21,088)         (14,539)
 Advances to related parties.........................                      -            (303)
                                                              ---------------  --------------
Net cash used in investing activities................               (36,707)         (14,842)

Cash flows from financing activities:
 Payments on loans payable...........................              (193,121)                -
 Proceeds from loans payable-related party...........                      -           24,832
                                                              ---------------  --------------
Net cash provided by (used in) financing activities..              (193,121)           24,832

Effect of rate changes on cash.......................                 20,763           21,231

Increase (decrease) in cash and cash equivalents.....               (87,461)          174,157

Cash and cash equivalents, beginning of period.......              2,338,835          417,065
                                                              ---------------  --------------
Cash and cash equivalents, end of period.............         $    2,251,374     $    591,222
                                                              ===============   =============


Supplemental disclosures of cash flow information:
 Interest paid in cash...............................          $           -     $          -
                                                               ==============   ==============
 Income taxes paid in cash...........................          $     226,027     $          -
                                                               ==============   ==============



                        See accompany notes to consolidated financial statements


</TABLE>





                                      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, 2007 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2007. 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, 2006.

1.  Nature of operations

Dahua, Inc. ("Dahua") was incorporated on March 8, 2002 in the State of Delaware
as Norton Industries Corp. ("Norton"). 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").  Incident to the reverse
acquisition the Company paid $100,000 to the previous shareholders of Norton for
shares of stock that were canceled. 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 and the $100,000 paid to purchase and cancel the previous shares was
treated as an adjustment to paid in capital.

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' 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 completed all of the construction on its current
development project and all of the houses are sold or available for sale.

2.   Basis of Presentation

The consolidated financial statements include the accounts of Dahua, Inc.,
Bauer Invest, Inc. and Beijing Dahua Real Estate Development, Ltd. All
material intercompany accounts and transactions have been eliminated in
consolidation. The Company records minority interest expense, which reflects
the 20% portion of the earnings of Beijing Dahua Real Estate Development, Ltd.
allocable to holders of the minority interest.

The accompanying consolidated 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 n
ecessary 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' 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 allowance for doubtful
accounts is made when collection of the full amount becomes questionable. The
Company had no trade accounts receivable at March 31, 2007.

Inventories

Inventories consist primarily of land acquisition and development costs,
engineering, infrastructure, capitalized interest, and construction costs. The
inventories are valued at cost based on the level of completion using the
weighted-average method.

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 equipmen                 7 years
           Vehicles                        7 years

Depreciation expense for the three months periods ended March 31, 2007 and 2006
was $15,155 and $1,485, 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

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
$219,198 and $127,023 for the three months periods ended March 31, 2007 and
2006.

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 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.

Earnings Per Share

Basic earnings per common share ("EPS") are calculated by dividing net income
by the weighted average number of common shares outstanding during the year.
Diluted EPS is calculated by adjusting the weighted average outstanding shares,
assuming conversion of all potentially dilutive securities, such as stock
options and warrants, using the treasury stock method. The numerators and
denominators used in the computations of basic and diluted EPS are presented
in the following table:
<TABLE>
<CAPTION>

                                                                 For the three months ended
                                                          -----------------------------------------
                                                             March 31, 2007        March 31, 2006
                                                          -------------------- --------------------

                                                              <c>                    <c>
NUMERATOR FOR BASIC AND DILUTED EPS
Net income to common stockholders                          $         109,824    $         (171,766)
                                                          ===================  ====================
DENOMINATORS FOR BASIC AND DILUTED EPS
   Weighted average shares of common stock outstanding            25,000,000             25,000,000
                                                          -------------------  --------------------
   Add: dilutive equity securities outstanding                             -                      -
                                                          -------------------  --------------------

   Denominator for diluted EPS                                    25,000,000             25,000,000
                                                          -------------------  --------------------

EPS-Basic                                                   $           0.00    $            (0.01)
                                                          -------------------  --------------------
EPS-Diluted                                                 $           0.00    $            (0.01)
                                                          -------------------  --------------------
</TABLE>

The Company had no potentially dilutive securities outstanding at March 31,
2007.


4.  Inventory

Inventory represents completed houses available for sale at March 31, 2007.
During 2005, the Company completed all of its construction-in-progress. As of
March 31, 2007, 36 units were sold, 27 units were reserved with clients'
deposits, and 13 units were available for sale.

5.  Related Party Transactions

Short-term loans due to related parties had balances of $3,042,812 and
$3,176,699 (including accrued interest) at March 31, 2007 and December 31, 2006,
respectively. The loans carry an annual interest rate of 6 percent and are due
on demand. Interest accrued on the loans was $237,158 and $200,880 for the
three months periods ended March 31, 2007 and 2006. The interest amounts, which
were accrued for the three months periods ended March 31, 2007, were expensed
as interest expense since houses were substantially constructed and ready for
sales as of December 31, 2005.

6.  Customer deposits

Customer deposits consist of down payments received on sales contracts for
houses. When all of the conditions set forth in the Company's revenue
recognition policy are met, the Company will recognize the down payments as
revenue. The aggregate of the customers' deposits at March 31, 2007 was
$9,070,766. Of the 27 units reserved, 12 unit' deposits are money received
from bank arrangements (see note 7) in the amounts of $3,112,151. Accordingly,
the bank has liens against these 12 units.

7. Off-Balance Sheet Arrangements

The Company entered into an agreement with two banks that extended mortgage
loans to its home buyers, where the Company agrees 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
Banks have withheld 5% of the loan, which was a percentage ranging from 5% to
20% in June 2006, and deposited such funds into a segregated account in each
bank. At March 31, 2007, the balance of this separate account was $412,894.
Since the Company does not recognize revenue when its 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, as is explained in note 6.

8. Tax

The Company made a provision for sales tax, which totaled $187,675 and $708,016
respectively for the three months periods ended March 31, 2007 and the year
ended December 31, 2006. The sales tax is calculated on the basis of sales
revenues. The provision for sales tax is included as part of cost of inventory.

The Company made a provision for income tax, which totaled $67,615 and $243,276
respectively for the three months periods ended March 31, 2007 and the year
ended December 31, 2006. The income tax is calculated on the basis of the net
income before taxes and minority interest.

The Company paid sales tax and income tax in cash, which totaled $164,196 and
$226,027 respectively for the three months periods ended March 31, 2007.

The Company prepaid individual tax on behalf of staff, which totaled $332 at
March 31, 2007.

9. 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 $2,265,600 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 Company issued 4,750,000 shares to the individual owners of Dahua
Project Management Group at the price of $0.477 per share in exchange for the
short-term loans Dahua Group provided. According to the Share Exchange
Agreement signed on January 30, 2005, it is Dahua's responsibility to maintain
the proportionate ownership of the Company held by Comp Hotel International
Ltd. ("Comp") and Waywood Investments Ltd. ("Waywood"). In this regard the
Company issued 212,500 shares and 37,500 shares to Comp and Waywood,
respectively. There's no cash inflow from this issuing. After the capital
increase, the subsidiary's registered capital is $4,036,145, of which the
Company, through Bauer, holds 80% of the shares.

10.  Stock

The Company is authorized to issue up to 80,000,000 shares of common stock,
$.0001 par value, and 20,000,000 shares of preferred stock, $.0001 par value
per share. As of March 31, 2007, there were 25,000,000 shares of common stock
issued and outstanding, and no shares of preferred stock were issued and
outstanding.

11. Contingencies

The Company has not, historically, carried any property or casualty insurance.
No amounts have been accrued for any liability that could arise from the lack
of insurance. Management feels the chances of such an obligation arising are
remote.

Deposits in banks in the PRC are not insured by any government entity or
agency, and are consequently exposed to risk of loss. Management believes the
probability of a bank failure, causing loss to the Company, is remote.



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, 2007, 36 units were sold, 27 units were reserved with clients'
deposits, and 13 units were available for sale.

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 the end of 2007.

(2) As of the date of this report, there are 13 housing units available for
sale. For the next a few months, we will continue to sell those remaining 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 Changping 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 middle of 2008. 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. We plan to begin our
Second Phase of Dahua Garden in the end of 2007. The construction will take up
to 18 to 20 months to complete, and we expect to commence sales in the end of
2009. It is estimated that approximately $60.5 million is needed to complete
the project.


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

For the Three Months Ended March 31, 2007 and 2006
--------------------------------------------------

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. For the three months ended March 31, 2007 and 2006, we sold 6
and 1 units, and recognized sales revenues of $3,127,922 and $329,152,
respectively.

The following table sets forth more detailed information about our sales of
housing units:

(1) Unit sold and reserved

                                       Three months        Three months
                                          ended                ended
                                      March 31, 2007       March 31, 2006
                                    -----------------    ----------------
Houses sold                                 6                     1
Houses reserved                            (3)                    1

(2) Cumulative balance


				             ----- Cumulative Balance as of--------

                                        March 31, 2007     March 31, 2006
                                      ------------------  -----------------
Units sold                                    36                  7
Units reserved with deposits                  27                 28
Units available for sales                     13                 41
                                      ------------------   ----------------
          Total                               76                 76
                                      ==================   ================


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, 2007 and 2006, our cost of goods sold was
$2,111,563 and $246,810 respectively, approximately 67.51% and 74.98% of the
sales.

Operating Expenses
------------------

During the three months ended March 31, 2007, our operating expenses increased
by $537,725, or 218.15%, to $784,221 from $246,496 for the same period of prior
year, mainly due to the large increase of the other general and administrative
expense, which increased $363,212, or 363.15%, to $463,228 from $100,016 for
the same period of prior year. The reason for the large increase of other
general and administrative expenses was as below:

       In February 2007, one person wanted to purchase the unit which has been
reserved by one client. However, the new client wanted to purchase the unit from
us, rather than from the older client. After talking with him, the older client
agreed that we could repurchase the unit. As the compensation, we should
compensate the older client $135,049 in additional to the amounts he paid
originally. We have pre-sold the unit to the new client at a higher price.

Also, the advertising expense increase by $92,175, or 72.57%, to $219,198 for
the same period in 2006. The reason for the large increase of advertising
expense was as below:

        After our construction was completed in December 2005, one of our
big jobs after the construction was completed was to sell those housing units
to the public. We are a small company and have little market share in our target
market. We are little known by many of our potential customers. Therefore, for
the three months ended March 31, 2007, we spent much more on promoting than the
same period of prior year, and hope such large amount of promoting expense can
make more people know us and know our Dahua Garden, and may help us to have more
brand recognition when we start our Second Phase of Dahua Garden, which will
include 250 units of luxury single-family houses and we expect to start in the
middle of 2008.

Net Income
----------

For the three months ended March 31, 2007, we had net income of $109,824, or
$0.00 per share, as compared with net loss of $171,766, 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
payments are required to be made to the developer, which we use to construct our
residential housing units. As of March 31, 2007, our customer deposit balance
was $9,070,766.

We also borrow from time to time based on a verbal line of credit agreement
from Dahua Group, our affiliate. The funds 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 operations. 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, 2007, the short-term loans due
to related parties had a balance of $2,286,887, and accrued interest of
$755,925.

On May 12, 2005, Beijing Dahua Real Estate Development, Ltd, our operating
subsidiary, increased its registered capital, in which Dahua increased its
investment by $2,265,600 and the minority shareholder increased its investment
by $566,265. Dahua Group advanced funds to us to allow for the increase in
investment. On September 21, 2005, we issued 4,750,000 shares to Dahua Group
at the price of $0.477 per share in exchange for the short-term loans Dahua
Group provided. At the same time, according to the Shares Exchange Agreement
signed on January 30, 2005, it is our responsibility to maintain the ownership
percentage held by Comp Hotel International Ltd. ("Comp Hotel") and Waywood
Investments Ltd. ("Waywood"). In this regard, we 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 we, through Bauer, still hold 80% of the shares
of Dahua Real Estate.

As of March 31, 2007, we had cash and cash equivalents balance of $2,251,374.
For the three months ended March 31, 2007, our operating activities provided
$121,604 of net cash, largely due to decrease in inventories ($718,997) and
partly offset by decrease in customer deposits ($658,030). For the three months
ended March 31, 2007, the investing activities used $36,707 of net cash, used
for purchase of property, plant & equipment of $21,088 and loans receivable of
$15,619. For the same period, the financing activities used $193,121 of net
cash, which was due to the payments to related parties.

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 two banks that extended mortgage loans to our
home buyers, where we agree 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 each bank. At March 31, 2007, the balance of this separate account
was $412,894. Since the Company does not recognize revenue when its 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.



Item 3.       CONTROLS AND PROCEDURES


(a) Evaluation of disclosure controls and procedures

The Company's Chief Executive Officer and Chief Financial Officer, after
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.


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

May 14, 2007



By: /s/ Hua Meng
---------------------------------------------------
Hua Meng, Chief Financial Officer
(principal financial officer and principal accounting officer)

May 14, 2007