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

                                     FORM 10-QSB/A

(Mark One)

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

                  For the quarterly period ended June 30, 2005

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

        For the transition period from _________________ to __________________

        Commission file number:                       000-49852
                                ______________________________________________


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

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

           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 [ ]


                        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 August 8, 2006.


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





                                       DAHUA INC.

                                   Table of Contents


Part I. Financial Information


Item1.  Financial Statements

 Consolidated Balance Sheet as of June 30, 2005 (unaudited) (Restated)         3

 Consolidated Statements of Operations for the Three and Six Months
   Ended June 30, 2005 and 2004 (Unaudited)...........................         4

 Consolidated Statements of Cash Flows for the Six Months
   Ended June 30, 2005 and 2004 (Unaudited) (Restated)................         5

 Notes to Consolidated Financial Statements...........................         6


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


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


Part II.   Other Information

Item 1.  Legal Information............................................        15
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds..        15
Item 3.  Defaults Upon Senior Securities..............................        15
Item 4.  Submission of Matters to a Vote of Security Holders..........        16
Item 5.  Other Information............................................        16
Item 6.  Exhibits and Reports on Form 8-K.............................        16

Signatures............................................................        16






PART I.   FINANCIAL INFORMATION


ITEM 1.  Financial Statements



                                     DAHUA INC.
                        Consolidated Balance Sheet (Unaudited)
                                     (Restated)

                                       ASSETS

                                                               June 30, 2005
                                                              ----------------
Current Assets:
 Cash and cash equivalents..........................          $        300,778
 Inventory (note 4).................................                 9,319,356
 Prepaid construction costs (note 7)................                 4,791,514
                                                              ----------------
   Total Current Assets.............................                14,411,648

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

Due from related party..............................                    50,039
Loans receivable....................................                    12,021
                                                              ----------------

Total Assets........................................          $     14,509,902
                                                              ================


                        LIABILITIES AND STOCKHOLDERS' EQUITY

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

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

Stockholders' Equity:

 Preferred stock: par value $.0001, 20,000,000 shares
  authorized; none issued and outstanding...........                         -
 Common stock: par value $.0001; 80,000,000 shares
  authorized; 20,000,000 share issued and outstanding                    2,000
 Additional paid-in capital..........................                  865,352
 Accumulated deficit.................................                (915,053)
                                                              ----------------
   Total stockholders' equity........................                 (47,701)
                                                              ----------------

Total Liabilities and Stockholders' Equity...........         $     14,509,902
                                                              ================





     See accompanying notes to unaudited consolidated financial statements










                                        DAHUA, INC.
                        Consolidated Statements of Operations (Unaudited)


<TABLE>
<CAPTION>

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

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

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

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

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

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

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

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

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

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

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

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



                   See accompanying notes to unaudited consolidated financial statements

</TABLE>









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

<TABLE>
<CAPTION>

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

                                                                <c>                <c>
Cash Flows from Operating Activities:
Net loss..............................................             $       (207,735)  $      (216,433)
 Adjustments to reconcile net income to net cash
  used in operating activities:
  Depreciation........................................                        3,416              4,574
  Minority interest...................................                      (51,934)          (58,674)
 Changes in operating assets and liabilities:
  Inventory...........................................                     (869,307)       (1,810,672)
  Prepaid construction costs..........................                   (2,956,117)         (825,699)
  Loan receivable.....................................                     (112,021)            79,791
  Due from related parties............................                             -          (25,020)
  Accounts payable....................................                      (25,393)          (91,657)
  Customer deposits...................................                     1,505,320         2,456,681
  Accrued interest....................................                        92,638            80,619
  Other accruals......................................                         2,687            11,431
                                                                   -----------------  ----------------
     Net cash used in operating activities............                   (2,518,446)         (395,059)

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

Cash Flows from Financing Activities:
 Net payment on loans payable.........................                             -          (34,134)
 Net proceeds from loans payable, related party.......                     1,876,120           615,328
 Acquired treasury stock..............................                     (100,000)                 -
 Investment in subsidiary by minority owner...........                       568,320                 -
                                                                   -----------------  ----------------
    Net cash provided by financing activities.........                     2,344,440           581,194
                                                                   -----------------  ----------------
Increase (decrease) in cash and cash equivalents......                     (174,006)           185,042

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

Supplemental disclosure of cash flow information:

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




                See accompanying notes to unaudited consolidated financial statements

</TABLE>




                                  DAHUA, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


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 S-B. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States of America for annual financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The accounts
of the Company and all of its subsidiaries are included in the consolidated
financial statements. All significant intercompany accounts and transactions
have been eliminated in consolidation. The consolidated operating results for
the six months ended June 30, 2005 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2005.

1.  Nature of operations

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

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

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

2.  Basis of Presentation

The accompanying financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (US GAAP). This
basis differs from that used in the statutory accounts of the Company, which
were prepared in accordance with the accounting principles and relevant
financial regulations applicable to enterprises in the PRC. All necessary
adjustments have been made to present the financial statements in accordance
with US GAAP.

3.  Summary of Significant Accounting Policies

Economic and Political Risks

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

Cash and Cash Equivalents

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

Trade Accounts Receivable

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

Inventories

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

Property, Plant, and Equipment

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

     Computer equipment        3 years
     Office equipment          7 years
     Vehicles                  7 years

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

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

Revenue Recognition

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
$60,944 and $61,267 for the six-month periods ended June 30, 2005 and 2004.

Foreign Currency and Comprehensive Income

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

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

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

Taxes

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date. A valuation allowance
is provided for deferred tax assets if it is more likely than not these items
will either expire before the Company is able to realize their benefits, or that
future deductibility is uncertain. Nearly all differences in tax bases and
financial statement carrying values are permanent differences. Therefore, the
Company has recorded no deferred tax assets or liabilities.

Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.

4.  Inventory

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

<TABLE>
<CAPTION>

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

                                                             <c>                   <c>

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


5.  Short-term loans

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

6.  Customer deposits

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

7.  Prepaid construction cost

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

8.  Additional investment in subsidiary

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

9.  Restatement of financial statements

Subsequent to the publication of the financial statements in form 10-QSB it was
discovered that an error had been made on consolidation. The amount of $100,000
paid to acquire and cancel treasury stock was incorrectly shown as loans
receivable. Other amounts shown as due from related parties and loans
receivable, previously classified as current assets, were determined to be other
assets due to the lack of fixed repayment terms. The restatements had no effect
on the statements of operations for the three and six months ended June 30,
2005.



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

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

Overview

We, through our subsidiary Beijing Dahua Real Estate Development Ltd., are
engaged in the business of development, construction and sale of luxury
residential single-family homes in Beijing, China. In July 2003, we began to
develop our first real estate project, Dahua Garden (the "First Phase"), which
consists of 76 luxury residential units, all of which are single-family houses
ranging from approximately 2,000 to 5,000 square feet, each with 3 - 4 bedrooms.
The construction site is located at the northern skirt of Beijing, China.  The
construction began in July 2003 and was substantially completed in December
2004. As of June 30, 2005, the Company was finishing up plumbing, electric
wiring, water supply, and landscaping, which is expected to be completed by the
end of October 2005.

As of June 30, 2005, the Company has pre-sold 25 of the 76 units of the First
Phase, out of which none unit has been paid in full, all pre-sold 25 units were
reserved with clients' deposits and are being paid off in installments, and 51
units were available for sale. Because the home units have not been delivered
to the buyers, all funds received from the pre-sold units and installment
payments are recorded as customer deposits until physical delivery and release
of any Company's guarantees to the financing bank. As of June 30, 2005, we had
received customer deposits totaling $7.10 million

As of June 30, 2005, the Company was in the process of applying with Beijing
municipal and Changping district government agencies for the requisite licenses,
permits, and approvals in order to start the Second Phase of Dahua Garden,
which will include 250 units of luxury single-family houses located in Chanping
District, Beijing, China, on an approximately 267,000 square-meter site with a
community clubhouse, creeks, ponds, and professionally manicured gardens and
landscape.  Each will be 3,000 to 5,000 square feet in size to be sold for
RMB 4.5 to 6 million, or approximately $ 550,000 to $720,000.  The Company will
serve as the sole developer of the project, including construction and sales.
The Second Phase is not contingent upon the Company's successful completion of
the First Phase. As of the date of this Report (September 21, 2005), 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. There is
no assurance that said permit will be issued within the timeframe anticipated.
The construction will take up to 18 to 20 months to complete, and we expect to
commence sales in early 2008.

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

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

Revenue

The Company started its first construction project on development of real
estate residential single-family homes in July 2003, and the construction was
substantially completed in December 2004. During the three-month period ended
June 30, 2005, the Company was finishing up plumbing, wiring and landscaping.
As of June 30, 2005, the Company had pre-sold 25 of the 76 units of the First
Phase, out of which none unit has been paid in full, all pre-sold 25 units were
reserved with clients' deposits and are being paid off in installments, and 51
units were available for sale. Because the home units have not been delivered
to the buyers, all funds received from the pre-sold units and installment
payments are recorded as customer deposits until physical delivery and all
requirements for revenue recognition are met. Accordingly, no sales revenues
have been recognized for the three months ended June 30, 2005 and 2004,
respectively.

Operating Expenses

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

Net Loss

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

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

Revenue

The Company started its first construction project on development of real
estate residential single-family homes in July 2003, and the construction was
substantially completed in December 2004. During the six-month period ended
June 30, 2005, the Company was finishing up plumbing, wiring and landscaping.
As of June 30, 2005, the Company had pre-sold 25 of the 76 units of the First
Phase, out of which none unit has been paid in full, all pre-sold 25 units
were reserved with clients' deposits and are being paid off in installments,
and 51 units were available for sale. Because the home units have not been
delivered to the buyers, all funds received from the pre-sold units and
installment payments are recorded as customer deposits until physical delivery
and all requirements for revenue recognition are met. Accordingly, no sales
revenues have been recognized for the three months ended June 30, 2005 and
2004, respectively.

Operating Expenses

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

Net Loss

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

Liquidity and Capital Resources

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

After receiving the Residential Housing Pre-sale Permit issued by the
government, the Company is 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 the Company
used to construct its residential housing units. At June 30, 2005, customer
deposit balance was $6,483,977.

The Company also borrows from time to time based on a verbal line of credit
agreement from Dahua Group, an affiliate. The funds so borrowed are unsecured
and there is no upper limit on the amount of money that we can borrow as long
as there are funds available and we need it for our operation. The loans carry
an annual interest of 6%, repayable within 30 days upon demand. As of June 30,
2005, the short-term loans due to related parties had balance of $7,105,399,
accrued interest included.

For the six months ended June 30, 2005, the Company's operating activities used
$2.52 million of net cash, primarily due to an increase in inventory of
$869,307, prepaid construction costs of $2,956,117, and offset by increase in
customer deposits of $1,505,320. For the six months ended June 30, 2005, the
Company had no investing activities. For the same period, the financing
activities of the Company provided $2,344,440 of net cash, largely by net
proceeds from related part loans payable ($1,876,126), and investment in
subsidiary by minority owner ($568,320), offset by using $100,000 to acquire
and cancel treasury stock.

As of June 30, 2005, the Company was 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, which will
include 250 luxurious single-family houses located on a 267,000 square meter
site with community clubhouse, creeks, ponds, and professionally manicured
gardens and landscape.  As of the date of this report, the Company is in the
process of applying for necessary licenses, permits or approvals.  It is
estimated that approximately $60.5 million is needed to complete the Second
Phase. In addition to customer deposits, short-term loans (line of credit)
from Dahua Group, the proceeds generated from sale of the First Phase will
also be used to finance the Second Phase development. The Company has made
no material commitments for capital expenditures.

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

Off-balance sheet arrangements

The Company entered into an agreement with each of two banks that extended
mortgage loans to our home buyers, whereby we agreed to provide a certain
limited guarantee, which covers the risk before the conveyance of title upon
closing. Upon initiating the loan on behalf of the buyer for the down payment,
the bank has withheld a percentage ranging from 5% to 20% of the loan and
deposited such funds into a segregated account in the bank. At June 30, 2005,
the balance of the separate accounts was $295,042. Since the Company doesn't
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

As of the end of the period covered by this quarterly report on Form 10-QSB,
the Company evaluated the effectiveness of the design and operation of its
disclosure controls and procedures, and our internal control over financial
reporting. This evaluation was performed by our President and Chief Executive
Officer, and our Chief Financial Officer.

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


PART II.  OTHER INFORMATION


ITEM 1.   Legal Information:  None.

ITEM 2.   Unregistered Sales of Equity Securities and Use of Proceeds:

          None.

ITEM 3.   Defaults Upon Senior Securities:   None.

ITEM 4.   Submission of Matters to a Vote of Security Holders:   None.

ITEM 5.   Other Information:  None.

ITEM 6.   Exhibits and Reports on Form 8-K


(a)  Exhibits

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

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



                                   SIGNATURES


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



DAHUA, INC.


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


Date: August 8, 2006