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, 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)

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


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

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


                     APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 25,000,000 shares of common stock,
par value $.0001, as of November 16, 2007.

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, 2007 (unaudited).........    3

  Consolidated Statements of Operations and Comprehensive Income
    for the Three and Nine Months Ended September 30, 2007 and 2006
    (Unaudited)...........................................................    5

  Consolidated Statements of Cash Flows for the Nine Months
     Ended September 30, 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...........................................   16


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

Signatures................................................................   19






                        PART I.   FINANCIAL INFORMATION




ITEM 1.  Financial Statements


                                      DAHUA, INC.
                              Consolidated Balance Sheet
                                      (Unaudited)



                                   ASSETS

                                                          September 30, 2007
                                                          ------------------


Current assets:
 Cash and cash equivalents...........................       $      1,168,105
 Inventory (note 4)..................................             10,565,559
                                                            ----------------
     Total Current Assets............................             11,733,664

Equipment:
 Computer equipment..................................                 51,366
 Office equipment....................................                 91,403
 Telephones..........................................                  2,983
 Vehicles............................................                277,999
                                                             ---------------
      Total Equipment................................                423,751
      Less: Accumulated depreciation.................               (93,075)
                                                             ---------------
      Net equipment..................................                330,676

Construction in progress (note 5)....................              1,061,677
Loans receivable.....................................                283,400
Prepaid tax (note 9).................................                860,973
Restricted cash......................................                635,841
                                                             ---------------

Total Assets.........................................         $   14,906,231
                                                             ===============



                  LIABILITIES AND STOCKHOLDERS' EQUITY


Current Liabilities:
 Accounts payable....................................         $      133,142
 Customer deposits (note 7)..........................              8,929,315
 Short-term loans - related parties (note 6).........                768,792
 Accrued interest - short-term loans, related parties (note 6)       808,522
 Other accruals......................................                146,315
                                                             ---------------
      Total Current Liabilities......................             10,786,086

Minority interest in subsidiary......................                788,330

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 and outstanding                 2,500
Additional paid-in capital...........................              3,130,452
Accumulated deficit..................................              (149,778)
Accumulated other comprehensive income...............                348,641
                                                            ----------------
     Total stockholders' equity......................              3,331,815
                                                            ----------------

Total Liabilities and Stockholders' Equity...........        $    14,906,231
                                                            ================






      See accompanying notes to unaudited consolidated financial statements








                                DAHUA, INC.
        Consolidated Statement of Operations and Comprehensive Income
                                 (Unaudited)


<TABLE>
<CAPTION>


                                                     Three months ended         Nine months ended
                                                        September 30,              September 30,
                                                  -------------------------  ---------------------------
                                                      2007        2006           2007         2006
                                                  ------------ ------------   ------------ -------------

                                                   <c>         <c>             <c>          <c>
Revenues
 Sales revenues............................      $  6,272,503  $  3,294,393   $ 11,900,437  $  6,704,740
 Cost of goods sold........................         5,558,855     1,846,213      9,756,553     3,894,840
                                                 ------------  ------------   ------------  ------------
     Gross Profit..........................           713,648     1,448,180      2,143,884     2,809,900

Expenses
 Advertising...............................            58,139       718,515        418,806     1,096,909
 Depreciation..............................            17,092         3,544         48,484         6,814
 Payroll expense...........................           194,152        81,670        423,454       128,562
 Selling, general and administrative.......           399,737       101,753      1,157,104       383,578
                                                 ------------  ------------   ------------  ------------
     Total expenses........................           669,120       905,482      2,047,848     1,615,863
                                                 ------------  ------------   ------------  ------------
Net income from operations.................            44,528       542,698         96,036     1,194,037

Other Income (expense)
 Interest expense..........................           (1,921)      (78,938)       (60,972)     (174,413)
 Other revenues............................                 3             1            439           250
 Interest income...........................             3,680         3,977         11,550         6,152
                                                 ------------  ------------   ------------  ------------
     Total other income (expense)..........             1,762      (74,960)       (48,983)     (168,011)
                                                 ------------  ------------   ------------  ------------

Net income before taxes and minority interest          46,290       467,738         47,053     1,026,026

Provision for income taxes.................          (15,276)     (154,353)       (15,528)     (338,588)
                                                 ------------  ------------   ------------  ------------

Net income before minority interest........            31,014       313,385         31,525       687,438

Minority interest in subsidiary income.....             6,203        62,677          6,305       137,488
                                                 ------------  ------------   ------------  ------------

Net income.................................      $     24,811   $   250,708    $    25,220   $   549,950
                                                 ============  ============   ============   ===========
Foreign currency translation adjustment....            56,847        45,356        154,291        75,779
                                                 ------------  ------------   ------------  ------------
Comprehensive income.......................      $     81,658   $   296,064     $  179,511   $   625,729
                                                 ============  ============   ============  ============

Basic and diluted earnings per share.......      $       0.00   $      0.01     $     0.00    $     0.02
                                                 ============  ============   ============   ===========

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





             See accompanying notes to unaudited consolidated financial statements


</TABLE>







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


<TABLE>
<CAPTION>



                                                        Nine months ended September 30,
                                                       --------------------------------
                                                              2007           2006
                                                       ----------------  --------------

                                                           <c>             <c>
Cash Flows from Operating Activities:
 Net income........................................    $        25,220   $     549,950
 Adjustments to reconcile net income (loss)
  to net cash provided by operating activities:
  Depreciation.....................................             48,484           6,814
  Minority interest................................              6,305         137,488
Changes in operating assets and liabilities:
 Inventory.........................................          3,796,741         968,399
 Prepaid tax.......................................          (571,597)       (281,102)
 Accounts payable..................................          (281,220)               -
 Customer deposits.................................        (1,275,419)       1,455,849
 Accrued interest..................................             60,972         174,413
 Income tax payable................................                  -        (39,698)
 Other accruals....................................             50,744          62,031
                                                         -------------   -------------
     Net cash provided by operating activities.....          1,860,230       3,034,144

Cash Flows from Investing Activities:
Due from related parties...........................                  -       (124,844)
Purchase of property, plant and equipment..........           (29,519)        (91,094)
Construction in progress...........................        (1,040,102)               -
Loan receivable....................................          (277,641)       (128,609)
                                                         -------------  --------------
     Net cash used in investing activities.........        (1,347,262)       (344,547)

Cash Flows from Financing Activities:
Payment on loans payable, related party............        (1,749,385)       (162,984)
                                                         -------------  --------------
Net cash used in financing activities..............        (1,749,385)       (162,984)

Effect of rate changes on cash.....................             65,687          40,377

Increase (decrease) in cash and cash equivalents...        (1,170,730)       2,566,990

Cash and cash equivalents, beginning of period.....          2,338,835         417,065
                                                         -------------  --------------
Cash and cash equivalents, end of period...........      $   1,168,105  $   2, 984,055
                                                         =============  ==============


Supplemental disclosure of cash flow information:

 Interest paid in cash.............................      $          -    $           -
                                                         ============   ==============
 Income taxes paid in cash.........................      $    524,360    $     242,209
                                                         ============   ==============
 Sales taxes paid in cash..........................      $    776,614    $     832,886
                                                         ============   ==============



          See accompanying notes to unaudited consolidated financial statements


</TABLE>






                                   DAHUA, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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'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 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
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 at September 30, 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.

Equipment

Equipment is 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.  Equipment is
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, 2007 and
2006 was $48,484 and $6,814, 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 Financial 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
$418,806 and $1,096,909 for the nine-month periods ended September 30, 2007 and
2006.

Foreign Currency and Comprehensive Income

The accompanying consolidated financial statements are presented in United
States ("US") dollars. The functional currency is the Yuan Renminbi ("RMB") of
the PRC. The consolidated 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 consolidated 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 consolidated
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. The numerators and denominators used in the computations
of basic and diluted EPS are presented in the following table:

<TABLE>
<CAPTION>


                                                           For the nine months ended
                                                    ------------------------------------------
                                                      September 30, 2007   September 30, 2006
                                                    --------------------- --------------------

                                                            <c>                 <c>

NUMERATOR FOR BASIC AND DILUTED EPS
Net income (loss) to common stockholders              $         25,220     $         549,950
                                                      ================     =================
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      $           0.02
                                                      ----------------     -----------------
EPS-Diluted                                            $          0.00      $           0.02
                                                      ----------------     -----------------
</TABLE>


The Company had no potentially dilutive securities outstanding at September 30,
2007 and 2006.

4.  Inventory

Inventory represents completed houses available for sale at September 30, 2007.
During 2005, the Company completed all of its housing construction. As of
September 30, 2007, 51 units were sold, 23 units were reserved with clients'
deposits, and 2 units were available for sale.

5.  Construction in progress

Construction in progress represents the cost of the new building, which the
Company is constructing. The new building will have four stories. The Company
plans to use two stories for its office and administration, and give out the
other two stories (lease free) to the home owner association. The home owner
association will hire a third party to collect usage fee and maintain the
facilities at their cost. As of September 30, 2007, the balance of construction
in progress was $1,061,677.

6.  Related Party Transactions

Short-term loans due to related parties had balances of $1,577,314 (including
accrued interest) at September 30, 2007.  The loans carry an annual interest
rate of 6 percent and are due on demand.  Interest accrued on the loans was
$60,972 and $174,413 for the nine-months ended September 30, 2007 and 2006.
The interest amounts, which were accrued for the nine months periods ended
September 30, 2007, were expensed as interest expense since houses were
substantially constructed and ready for sales as of December 31, 2005.

7.  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 September 30, 2007 was
$8,929,315. Of the 23 units reserved, 7 unit's deposits are money received from
bank arrangements (see note 8) in the amounts of $1,858,657. Accordingly, the
 bank has liens against these 7 units.

8.  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 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 September 30, 2007, the
balance of this separate account was $635,841. 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 7.

9. Tax

The Company made a provision for sales tax, which totaled $714,026 and $402,284
respectively for the nine months periods-ended September 30, 2007 and 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 $15,528 and $338,588
respectively for the nine months periods-ended September 30, 2007 and 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 $776,614 and
$524,360 respectively during the nine months periods ended September 30, 2007.

As of September 30, 2007, the Company has prepaid tax of $860,973.

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 September 30, 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
September 30, 2007, out of 76 luxury residential units, 51 units have been sold,
23 units were reserved with clients' deposits, and 2 units were available for
sale.

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. But, in August
2006, Chinese government issued a number of new rules and regulations for real
estate developers, like us, in an attempt to push down rising house prices by
cutting down luxury single family house constructions and favoring construction
of apartment buildings. Under the government's new policy, (i) no single family
houses can be built, if the construction has not started, without special
construction permits; (ii) All permits previously issued have to be re-reviewed
and re-approved; and (iii) the land previously acquired for luxury housing
construction have to be revalued and sold to the people who offer the most money
for the land in an auction. Because of those new government policies, we have
incurred a long delay for obtaining the consents and approvals to commence our
construction for the second phase of Dahua Garden. On May 9, 2007, we contacted
a Beijing Municipal Government agency, who is responsible for the issuance of
construction permits, for our construction approval time frame guidance. We were
told two weeks later that our construction permit is very much likely to be
issued for two reasons: (1) We have completed our First Phase of Dahua Garden;
and (2) We have acquired for this land for almost ten (10) years. It is
expected that we may obtain our construction approvals by the middle of 2008.
However, there is no assurance that we will obtain those consents and approvals
from the government. If no consents and approvals are obtained, we may have to
cease our Second Phase of single luxury family house operations, and change our
business plan to build apartment buildings.

Results of Operations

For the Three Months Ended September 30, 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 September 30, 2007, we sold an
additional ten (10) units, of which eight (8) units were released from reserve
because all payments were received in the current quarter. The following table
sets forth certain information about our sales of housing units:

<TABLE>
<CAPTION>

				        -------------- Cumulative Balance as of-------------------
				          September 30, 2007     June 30, 2007  December 31, 2006
                                ---------------------  ---------------  ------------------

                                      <c>                <c>                <c>
Units sold                               51                  41                 30
Units reserved with deposits             23                  31                 30
Units available for sales                 2                   4                 16
                                 --------------------  ---------------  ------------------
             Total                       76                  76                 76
                                 ====================  ===============  ==================



                                    Nine months         Three months        Six months
                                       ended                ended              ended
                                  September 30, 2007  September 30, 2007    June 30, 2007
                                 -------------------  ------------------  ----------------
Houses sold                              21                   10                  11
Houses reserved                         (7)                  (8)                   1

</TABLE>

For the three months ended September 30, 2007 and 2006, we recognized sales
revenues of $6,272,503 and $3,294,393 respectively from the sale of our housing
units.

Cost of Goods Sold

Cost of goods sold consists primarily of land acquisition and development costs,
engineering, infrastructure, capitalized interest, and construction costs. For
the three months ended September 30, 2007 and 2006, our cost of goods sold was
$5,558,855 and $1,846,213, respectively, approximately 88.6% and 56.0% of sales.
As compared to 2006, the decrease in gross profit was primarily due to the
increase of cost of goods sold. Due to competitive market, we should invest more
on the modification of units to improve the quality of units and ensure the
sales of units..

Operating Expenses

For the three months ended September 30, 2007, our operating expenses were
$669,120, a decrease of $236,362, or 26.1%, as compared to $905,482 for the same
period of prior year.

Net Income

For the three months ended September 30, 2007, we had a net income of $24,811,
or $0.00 per share, as compared with a net income of $250,708, or $0.01 per
share, for the same period of the prior year.

For the Nine Months Ended September 30, 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 nine months ended September 30, 2007, we sold additional
21 units. During this period, sales revenue of $11,900,437 was recognized from
the sale of our housing units. For the same period in 2006, we recognized sales
revenues of $6,704,740.

Cost of Goods Sold

Cost of goods sold consists primarily of land acquisition and development costs,
engineering, infrastructure, capitalized interest, and construction costs. For
the nine months ended September 30, 2007 and 2006, our cost of goods sold were
$9,756,553and $3,894,840 respectively, approximately 82% and 58.1% of the
sales. As compared to 2006, the decrease in gross profit was primarily due to
the increase of cost of goods sold. Due to competitive market, we should invest
more on the modification of units to improve the quality of units and ensure
the sales of units. Also the company made a provision of $110,100 for houses
which will be sold below cost.

Operating Expenses

During the nine months ended September 30, 2007, our operating expenses were
$2,157,948 as compared to $1,615,863 during the nine-month period in 2006, an
increase of $542,085 or 33.55%, mainly due to the large increase of selling
general and administrative expense, which increased $773,526 or 201.66%, to
$1,157,104 from $383,578 for the same period of prior year and was partly
opposite by advertising expenses.

The reason for the large increase of other general and administrative expense
was mainly due to the additional selling expenses:

(1) During February 2007, we incurred selling commission expense of $135,049.
(2) During July 2007 we incurred selling commission expense of $80,870.

Payroll expenses of the Company also increased, from $128,562 for the nine
months ended September 30, 2006 to $423,454 for the same period of 2007, or
229%, largely due to the increased employees.

And because most of the houses have been sold, the Company cut short the
advertising expenses accordingly. Advertising expenses of the Company decreased
from $1,096,909 for the nine months ended September 30, 2006 to $418,806 for the
same period of 2007, or 62%.

Net Income

For the nine months ended September 30, 2007, we had a net income of $25,220,
or $0.00 per share, as compared with a net income of $549,950, or $0.02 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 September 30, 2007, our customer deposit
balance was $8,929,315.

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 September 30, 2007, the short-term loans
due to related parties had a balance of $768,792, and accrued interest of
$808,522.

As of September 30, 2007, we had cash and cash equivalents balance of
$1,168,105. For the nine months ended September 30, 2007, our operating
activities provided $1,860,231 of net cash. During the nine months ended
September 30, 2007, our investing activities used $1,347,262 of net cash,
mainly for the construction in progress. For the same period, the financing
activities used net cash of $1,749,385 in making payment on loans payable.

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 September 30, 2007, the balance of this separate
account was $635,841. 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


(i) Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation and under the supervision of
our Chief Executive Officer and Chief Financial Officer, the effectiveness of
our disclosure controls and procedures as of the end of the period covered by
this Quarterly Report on Form 10-QSB. Based on this evaluation, our Chief
Executive Officer and our Chief Financial Officer concluded that our disclosure
controls and procedures are effective to ensure that information we are
required to disclose in reports that we file or submit under the Securities
Exchange Act of 1934, as amended, is accumulated and communicated to our
management, including our Chief Executive Officer and our Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure
and that such information is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

(ii) Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that
occurred during our last fiscal quarter that has materially affected or is
reasonably likely to materially affect our internal control over financial
reporting, except as follows:

On December 6, 2006, we identified two material weaknesses in our internal
control over financial reporting related to construction interest accounting.
The amount of $51,220 interest expense was incorrectly shown as capitalized
construction interest. These material weaknesses resulted in the restatements
of our previously reported financial statements for the year ended December 31,
2005 and for the quarters ended March 31, June 30, and September 30, 2006. The
restatement resulted in (i) an increase in net loss of $40,736 for the quarter
ended March 31, 2006; (ii) a decrease in total assets of $50,920; and (iii) a
decrease in stockholders' equity of $40,736. The restatement has no impact on
the statement of cash flows.

In connection with this restatement, management assessed the effectiveness of
the Company's internal control over financial reporting, and identified the
following deficiencies:

   (a)   We lacked adequate resources with sufficient technical expertise to
properly account for construction in accordance with U.S. general accepted
according principles; and

   (b)   We lacked consistent and effective review and supervision to ensure
that the review of accounts entries supporting our construction interest
provision was conducted in sufficient detail by someone other than the preparer
of such entries.

Over the past six months, we have taken steps to strengthen our ability to
identify and resolve GAAP construction accounting issues as they arise.
Specifically, we have implemented new controls and procedures to substantially
mitigate the risks associated with the material weaknesses identified above:

   (1) We provided additional training to our accounting staff on the
requirements of the U.S. generally accepted accounting principles to increase
their familiarity with those standards, and ensure their proper application of
the U.S. GAAP to various transactions, including construction accounting, and
other financial statements matters;

   (2) We designated an experienced individual who is expected to provide
additional review over our presentation and disclosure in financial statements
and to provide further technical accounting expertise in applying U.S.
generally accepted accounting principles; and

   (3) We adopted procedures to conduct additional detailed transaction review
and control activities to confirm that our financial statements for each
period, present fairly, in all material respects, our financial positions,
results of operations and cash flows for the periods presented in conformity
with U.S. generally accepted accounting principles.

   (4) We adopted procedures to solicit the services of the outside consulting
firm to assist in complex and non-routine accounting transactions.

Our CEO and CFO do not expect that our internal controls and procedures will
prevent all error and all fraud. Although our internal controls were designed
to provide reasonable assurance of achieving their objectives, a control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of
two or more people or by management override of the control. The design of any
system of controls is also based partly on certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.



                    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

November 16, 2007