UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB/A

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

For the quarterly period ended June 30, 2004

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-30516

CHINA GRANITE CORPORATION

(Exact name of small business issuer as specified in its charter)

Nevada	880448920
(State of Other Jurisdiction incorporation or organization)	(I.R.S. Employer I.D. No.)

2642 Collins Avenue, Suite 305, Miami, FL 33140

(Address of principal executive offices)

Issuer's telephone number (305) 534-1684

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 o

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 practical date: As of August 10, 2004 there were 14,498,000 shares of the issuer's common stock issued and outstanding.

Transitional Small Business Disclosure Format (Check one): Yes o  No x

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Financial Statements (unaudited)
Condensed Consolidated Balance Sheet as of June 30, 2004	3
Condensed Consolidated Statements of Operations for the three months ended June 30, 2004 and June 30, 2003	4
Condensed Consolidated Statements of Operations for the six months ended June 30, 2004 and June 30, 2003	5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and June 30, 2003	6
Condensed Consolidated Statements of Stockholders' Equity for the period ended December 31, 2003 and six months ended June 30, 2004	7
Notes to Condensed Consolidated Financial Statements	8

2

CHINA GRANITE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 2004

(UNAUDITED)

	US$
ASSETS
Current assets
Cash and cash equivalents		138,245
Accounts receivable		772,624
Note receivable		333,976
Inventories		164,310
Deposits, prepayments and other receivables		491,852
Total current assets		1,901,007
Plant and equipment, net		3,408,869
Mineral interests, net		1,502,295
Deferred stripping costs, net		924,794
Total assets		7,736,965
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accruals		70,204
Business and resource tax and government surcharges payable		238,180
Shareholders advances		485,828
Income tax payable		720,536
Total current liabilities		1,514,748
Stockholders’ equity
Common stock		14,498
Additional paid-in capital		4,919,019
Dedicated reserves		211,247
Currency translation adjustment		(2,622	)
Retained earnings		1,080,075
Total stockholders’ equity		6,222,217
Total liabilities and stockholders’ equity		7,736,965

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

CHINA GRANITE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	THREE MONTHS ENDED JUNE 30,
	2004			2003
	US$			US$
Net sales		610,291			626,642
Cost of sales		(274,020	)		(83,156	)
Gross profit		336,271			543,486
Selling, general and administrative expenses		(359,815	)		(16,734	)
Operating (loss) income		(23,544	)		526,752
Other income:
Interest income		3,420			4
(Loss) income before income taxes		(20,124	)		526,756
Provision for income taxes		-			(164,389	)
Net (loss) income		(20,124	)		362,367
Basic and diluted earnings per share		(0.01	)		0.07
Weighted average number of shares outstanding		14,468,769			5,000,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

CHINA GRANITE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	SIX MONTHS ENDED JUNE 30,
	2004			2003
	US$			US$
Net sales		637,692			651,853
Cost of sales		(283,549	)		(97,104	)
Gross profit		354,143			554,749
Selling, general and administrative expenses		(532,457	)		(41,216	)
Operating (loss) income		(178,314	)		513,533
Other income:
Interest income		6,713			289
(Loss) income before income taxes		(171,601	)		513,822
Provision for income taxes		-			(169,561	)
Net (loss) income		(171,601	)		344,261
Basic and diluted earnings per share		(0.01	)		0.07
Weighted average number of shares outstanding		14,035,620			5,000,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

CHINA GRANITE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	SIX MONTHS ENDED JUNE 30,
	2004			2003
	US$			US$
Cash flows from operating activities
Net (loss) income		(171,601	)		344,261
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of plant and equipment		105,535			27,492
Amortization of mineral interests		11,983			14,721
Amortization of stripping costs		7,536			8,917
Changes in operating assets and liabilities:
Accounts receivable		(529,811	)		-
Deposits, prepayments and other receivables		(394,139	)		(14,795	)
Inventories		(49,902	)		(137,966	)
Accounts payable and accruals		(101,903	)		487,638
Business and resource tax and government surcharge payable		38,581			45,286
Income taxes payable		(8	)		169,561
Net cash (used in) provided by operating activities		(1,083,729	)		945,115
Cash flows from investing activities
Acquisition of plant and equipment		(856,152	)		(1,204,440	)
Acquisition of mineral interests		-			(845,156	)
Acquisition of deferred stripping costs		-			(304,118	)
Cash received in a recapitalization of the Company		269,243			-
Net cash used in investing activities		(586,909	)		(2,353,714	)
Cash flows from financing activities
Proceeds from issuance of common stock		1,495,000			603,865
Shareholders advances		274,023			845,411
Net cash provided by financing activities		1,769,023			1,449,276
Currency translation adjustment		(1,855	)		(767	)
Net increase in cash and cash equivalents		96,530			39,910
Cash and cash equivalents, beginning of period		41,715			-
Cash and cash equivalents, end of period		138,245			39,910
Non-cash investing and financing activities:
Acquisition of plant and equipment funded by shareholders		-			1,145,822
Acquisition of inventories funded by shareholders		-			317,285
Acquisition of mineral interest funded by shareholders		-			724,892
Issuance of common stock for recapitalization		5,000			-
Income taxes paid		8			-

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

CHINA GRANITE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

	Common stock
	Shares		Amount			Additional paid-in capital		Dedicated reserves		Currency translation adjustment			Retained earnings			Total
			US$			US$		US$		US$			US$			US$
Balance, at inception
Issuance of stock for:
Cash of $603,865		-		-			-		-		-			-			-
Plant and equipment, $1,145,822		-		-			-		-		-			-			-
Inventories, $317,285		-		-			-		-		-			-			-
Mineral interests, $724,892		5,000,000		603,865			2,187,999		-		-			-			2,791,864
Currency translation		-		-			-		-		(767	)		-			(767	)
Net income		-		-			-		-		-			1,462,923			1,462,923
Transfer		-		-			-		211,247		-			(211,247	)		-
Balances, December 31, 2003		5,000,000		603,865			2,187,999		211,247		(767	)		1,251,676			4,254,020
Recapitalization on February 5, 2004		8,998,000		(589,867	)		1,236,520		-		-			-			646,653
Stock subscribed in private placement, net		500,000		500			1,494,500		-		-			-			1,495,000
Currency translation		-		-			-		-		(1,855	)		-			(1,855	)
Net loss		-		-			-		-		-			(171,601	)		(171,601	)
Balances, June 30, 2004		14,498,000		14,498			4,919,019		211,247		(2,622	)		1,080,075			6,222,217

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

CHINA GRANITE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position as of June 30, 2004 and the results of its operations and cash flows, for the three months and six months ended June 30, 2004 and 2003 have been made. Operating results for the three months and six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ended December 31, 2004.

These condensed financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's Form 10-KSB for the year ended December 31, 2003, and the financial statements of China Laizhou Bay Mining International Corporation included in the Company's Form 8-K/A filed April 19, 2004.

Restatement of financial statements

Subsequent to the issuance of the Company’s 2003 consolidated financial statements, management determined that the financial statements required restatement due to the change of method in amortizing mineral interests from the straight-line basis to unit-of-production method and capitalization of stripping costs and amortization of such deferred stripping costs using the units-of production method.

Management believes that the units-of-production method results in a better matching of current costs with current revenues and that costs incurred during the development of the mine should be capitalized under EITF 04-6 “Accounting for Stripping Costs Incurred during Production in the Mining Industry” and amortized using the units-of production method

The restatement is attributable only to the non-recognition of (i) amortization of mineral interests; and (ii) amortization of deferred stripping costs; and (iii) capitalization of stripping costs and (iv) additional tax arise from amortization of mineral rights and stripping costs. The restatement increased the Company’s net loss for the three months ended June 30, 2004 by US$2,912 and decreased the Company’s net loss for the six months ended June 30, 2004 by US$13,694 respectively.

The dollar effects of the retroactive application of the restatement to net loss, additional paid-up capital, retained earnings, stockholders’ equity and total assets throughout the period is summarized in the table below:

8

NOTE 1. BASIS OF PRESENTATION (CONTINUED)

Restatement of financial statements (Continued)

	THREE MONTHS ENDED JUNE 30, 2004						SIX MONTHS ENDED JUNE 30, 2004
				Per share						Per share
	US$			US$			US$			US$
(1)      Net loss
- As previously reported		(17,712	)		(0.01	)		(185,295	)		(0.01	)
Adjustments:
(i)     Amortization of mineral right		4,624			-			21,230			-
(ii)    Amortization of stripping costs		(7,536	)		-			(7,536	)		-
- As restated		(20,624	)		(0.01	)		(171,601	)		(0.01	)

	AT DECEMBER 31, 2003			AT JUNE 30, 2004,
	US$			US$
(2)      Additional paid-in capital (“APIC”)(no effect on restatement)		2,187,999			4,919,019
(3)      Retained earnings
- As previously reported		619,875			434,580
Adjustments:
(i)    Amortization of mineral rights		10,656			31,886
(ii)   Amortization of stripping costs		932,330			924,794
(iv)  Additional income tax provided		(311,185	)		(311,185	)
- As restated		1,251,676			1,080,075
(4)      Ordinary stock (no effect on restatement)		603,865			14,498
(5)      Currency translation adjustment(no effect on restatement)		(767	)		(2,622	)
(6)      Dedicated reserves (no effect on restatement)		211,247			211,247

9

NOTE 1. BASIS OF PRESENTATION (CONTINUED)

Restatement of financial statements (Continued)

	AT DECEMBER 31, 2003			AT JUNE 30, 2004,
	US$			US$
(7)      Stockholders’ equity (sum of (2) + (3) + (4) + (5) + (6))
- As previously reported		3,622,219			5,576,722
Adjustments:
(i)    Amortization of mineral rights		10,656			31,886
(ii)   Amortization of stripping costs		932,330			924,794
(iv)  Additional income tax provided		(311,185	)		(311,185	)
- As restated		4,254,020			6,222,217
(8)      Total liabilities
- As previously reported		939,788			1,203,563
Adjustments:
(iv)Additional income tax provided		311,185			311,185
- As restated		1,250,973			1,514,748
(9)      Total liabilities and stockholders’ equity(sum of (7) + (8))
- As restated		5,504,993			7,736,965

(10)     Total assets
- As previously reported	4,562,007		6,780,285
Adjustments:
(i)   Amortization of mineral rights	10,656		31,886
(ii)  Amortization of stripping costs	(33,854	)	(41,390	)
(iii)  Capitalization of stripping costs	966,184		966,184
- As restated	5,504,993		7,736,965

10

NOTE 2. STOCK EXCHANGE TRANSACTION

On February 5, 2004 Arbor, Inc. (Arbor-subsequently named China Granite Corporation) entered into a stock exchange transaction with China Laizhou Bay Mining International Corporation (the Company or Laizhou), a corporation organized under the laws of the British Virgin Islands which owns all of the outstanding common stock of Laizhou Jia Sheng Stone Company Limited, a granite producer and manufacturer, resulting in a change of control of Arbor. Arbor acquired all of the issued and outstanding common stock of Laizhou for 8,500,000 shares of restricted common stock of which 5 million shares were represented by newly issued shares of Arbor, and the balance represented by shares held by the principal shareholder of Arbor. Laizhou is considered the accounting acquirer and all future financial statements subsequent to February 5, 2004 will be that of the acquirer and its subsidiaries which include Arbor, whose assets as of February 5, 2004 were consolidated at fair value and whose accumulated deficit from inception through the February 5, 2004, was eliminated against the Company's paid in capital in accordance with the accounting rules for a stock exchange transaction.

Because of the stock exchange transaction and the substantial earned revenues attributed to the Company, there is no longer the requirement to provide cumulative amounts from inception for operations and cash flows in accordance with Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises".

NOTE 3. PRINCIPLES OF CONSOLIDATION

The Company's unaudited condensed consolidated financial statements as of June 30, 2004 and 2003 include the financial statements of Laizhou, its 100 % owned subsidiary, Laizhou Jia Sheng Stone Company Limited for all periods presented, and Arbor, Inc. since February 5, 2004. All significant intercompany accounts and transactions have been eliminated in consolidation.

NOTE 4. STOCK OPTIONS

During the three months ended March 31, 2004, the Company approved the issuance of 960,000 non qualified stock options to acquire 960,000 shares of the Company's common stock for certain directors, officers and employees. The share price for 840,000 shares was $4 per share, and the balance of 120,000 were granted at $5.20 per share. No stock options were issued during the current quarter. None of the shares issued are vested as of June 30, 2004 and exercise price of all stock options granted are based on the market price of the Company’s stock on the date of grant, consequently no compensation expense attributable to these shares was recorded in accordance with APB Opinion No. 25.

Stock-based employee compensation cost is reflected over the options’ vesting period of 6 months. The following table illustrates the effect on net loss and earnings per share (“EPS”) for the three and six months ended June 30, 2004, if we had applied the fair-value recognition provisions of SFAS No. 123 to stock-based employee compensation:

11

NOTE 4. STOCK OPTIONS (Continued)

	THREE MONTHS ENDED JUNE 30, 2004			SIX MONTHS ENDED JUNE 30, 2004
	US$			US$
Net loss		(20,124	)		(171,601	)
Total stock-based employee compensation expense under the fair-value based method for all awards, net of related tax effects		(1,737,000	)		(2,713,640	)
Pro forma net loss		(1,757,124	)		(2,885,241	)
Basic and diluted EPS, as reported		(0.01	)		(0.01	)
Basic and diluted EPS, pro forma		(0.12	)		(0.21	)

No information is presented for the three and six months ended June 30, 2003 because no stock options were issued and outstanding during the periods.

NOTE 5. SEASONAL BUSINESS

The Company's operations in China are seasonal due to weather and Chinese holidays. Consequently, operations were at a minimum for the three months ended March 31, 2003 and 2004. Operations resume during the three months ended June 30, 2003 and 2004.

NOTE 6. INCOME TAXES

For a period of two years commencing 2004, the operations in China will not incur income taxes and for three years following that period the income tax rate will be reduced 50 percent in accordance with the regulations relating to foreign companies. In addition, the accrual for income taxes for 2003 of approximately $720,000 may eventually be eliminated if pending approvals are finalized.

NOTE 7. EARNINGS PER SHARE

Basic and diluted earnings per share are computed by dividing net (loss) income by the weighted average number of common shares outstanding.

As per above, none of the stock options issued were vested during the three months and six months ended June 30, 2004. Therefore, basic and diluted earnings per share are the same.

12

NOTE 8. SEGMENT INFORMATION

The Company adopted SFAS No. 131 "Disclosures About Segments of a Enterprise and Related Information", in respect of its operating segments. The Company's reportable segments are granite mining (sale of granite blocks) and production of granite slabs. All of the Company's operating activities and customers are located in the People’s Republic of China. These segments are managed separately because each business requires different technology and marketing strategies. The Company evaluates performance based on operating earnings of the respective business units.

There were no significant inter-segment transactions during the period. In determining operating income/loss by reportable segment, general corporate expenses, other income and expense items of non-operating nature are not considered, as such items are not allocated to the Company's segments. Segment information for the comparative periods are as follows:

(a) Net sales

	THREE MONTHS ENDED JUNE 30,				SIX MONTHS ENDED JUNE 30,
	2004		2003		2004		2003
	US$’000		US$’000		US$’000		US$’000
Granite mining		492		620		492		643
Production of granite slabs		118		7		146		9
		610		627		638		652

(b) Net (loss) income

	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2004			2003			2004			2003
	US$’000			US$’000			US$’000			US$’000
Granite mining		335			445			336			442
Production of granite slabs		(2	)		5			(3	)		3
		333			450			333			445
Reconciliation:
Granite mining		333			450			333			445
Unallocated corporate income and expenses		(353	)		(88	)		(504	)		(101	)
		(20	)		362			(171	)		344

13

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

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or to our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks enumerated in the section entitled "Risk Factors", that may cause our actual results or the actual results in our industry, of our levels of activity, performance or achievement to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Introduction

We were incorporated in the State of Nevada as E Investments, Inc., on February 25, 1999, and subsequently changed our name to Arbor, Inc. ("Arbor") on December 16, 1999. We originally intended to engage in the business of manufacturing, selling and distributing fence posts to be used by government parks, highway departments, ranchers and farmers throughout North America. Due to a lack of capital, we were forced to abandon our original business and examine other business options.

In October 2002, we appointed a new director, Mr. Costas Takkas, to assist us with our strategic planning and in forming a new direction for our business. Mr. Takkas was responsible for the management of our new business direction in 2003 and helped to focus the Company's efforts on real estate development projects in Brazil.

The Brazil Project

In October and November 2003 (the "November Placement"), we received $500,000 ($250,000 of which came from Mr. Takkas) through a private placement of 600,000 shares of our restricted common stock to fund a real estate development project between CPL Construcoes e Comercio, Inc. ("CPL") and Arbor (now as China Granite) in Brazil. To this end a Brazilian corporation was formed to carry on the venture, namely CPL Arbor do Brasil Construtora Limitada ("CPL Arbor"), which is owned in equal parts by CPL and us. An aggregate of $425,000 of the funds raised in the November Placement have been committed to CPL Arbor. Of this aggregate amount, $325,000 is a loan to CPL Arbor and is repayable on October 31, 2004, with an interest rate of 4% above LIBOR. The remaining $100,000 is held in trust and will not be released to CPL Arbor unless it completes the infrastructure work for the project. As a result of the reorganization with Laizhou described below, we determined in February 2004 that we would no longer pursue the Brazil Project and we intend on selling our interest in CPL Arbor. To date, however, no such sale has been consummated.

On February 5, 2004 we entered into a stock exchange transaction (the "Reorganization") with China Laizhou Bay Mining International Corporation, a corporation organized under the laws of the British Virgin, Islands ("Laizhou") which owns all of the outstanding common stock of Laizhou Jia Sheng Stone Company Limited, a limited company organized under the laws of the People's Republic of China ("Laizhou China"). Pursuant to the Reorganization we changed our name to China Granite Corporation ("China Granite").

14

In 2004, we have focused on the business operations of Laizhou China and the acquisition of other granite mining properties in the PRC. As a result of the acquisition of Laizhou, we will no longer pursue the Brazil Project and plan to sell our interest in CPL Arbor.

Financial information for the three and six months ended June 30, 2003 is the historical financial information of Laizhou China. Financial information for the three and six months ended June 30, 2004 is the historical financial information of the Company (Laizhou China and Arbor combined).

Results of Operation for the six months ended June 30, 2004 and June 30, 2003.

Revenues:

Total revenues for the three months ended June 30, 2004, were $610,291, compared to $626,642 for the three months ended June 30, 2003. This contributed to revenue of $637,692 for the six months to June 30, 2004, compared to $651,853 for the six months to June 30, 2003. The slight decrease in revenue for the three and six months ended June 30, 2004 compared to the same periods of 2003 is explained in greater detail below. Please see Note 5 to our financial statements regarding the seasonal nature of our operations.

Revenues from granite mining operations for the six months ended June 30, 2004, were approximately $492,000 compared to $643,000 for the same period last year. The decrease of approximately $150,000 was due in part to the restructuring and design of our quarry operations in an attempt to be more productive in the future

Revenues from processing operations for the six months increased to approximately $146,000 for the six months ended June 30, 2004, from approximately $9,000 for the six months ended June 30, 2003. This increase is due to the increase in orders for processed granite. While the large majority of orders processed to date have been for the domestic (Chinese) market, sometime in the future we hope to target the processing of granite for export.

Other Income for the six months ended June 30, 2004 was $6,713 compared to $289 for the same period in 2003. This is primarily due from interest accrued on the loan to CPL Arbor in Brazil.

General and Administrative Expenses:

General and administrative expenses for the six months ended June 30, 2004 were $532,457. This is an increase of $491,241 from general and administrative expenses of $41,216 for the six months ended June 30, 2003. The majority of this increase is due to professional fees in connection with the audit, reporting and completion of the reorganization between Laizhou and Arbor in February 2004 and the introduction of international professional staff and consulting and advisory services which alone cost approximately $202,000. A large number of these reorganization expenses are not considered to be of a reoccurring nature, but we do expect our professional fees for legal and accounting services to continue to be higher than Laizhou China's were for fiscal year 2003 as we are now a publicly traded company.

Net Loss:

As a result of the foregoing factors, our net loss for the six months to June 30, 2004, totals $171,601 compared to a profit of $344,261 for the six months to June 30, 2003. The three months ended June 30, 2004, only contributed a net loss of $20,124 compared to a profit of $362,367 for the three months ended June 30, 2003. Our net loss per share stands at $0.01 down from a profit of $0.07 to the date in 2003.

15

Liquidity and Capital Resources

In October and November 2003, we completed the November Placement. We sold 600,000 shares of our restricted common stock for $500,000. A director and the then President, Costas Takkas, purchased 300,000 of these shares. The November Placement was made only to accredited investors without general solicitation in compliance with Regulation D of the Securities Act of 1933, as amended. There were no finders' fees or brokerage commissions paid for the November Placement.

In December 2003, we completed the December Placement, selling an aggregate of 550,000 shares of our restricted common stock for $1.00 per share. The December Placement was made only to accredited investors without general solicitation in compliance with Regulation D of the Securities Act of 1933, as amended. There were no finders' fees or brokerage commissions paid for the December Placement.

In April 2004, we completed an additional private placement of 500,000 shares of restricted common stock priced at $3.00 per share (the "April Placement"). The April Placement was made only to accredited investors without general solicitation in compliance with Regulation D of the Securities Act of 1933, as amended. There were no finders' fees or brokerage commissions paid for the April Placement.

Our management estimates that after giving effect to the November, December and April Placements, the current capital reserves that result, combined with the current outstanding accounts receivable, will allow us to operate for at least twelve months without relying on additional financing. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution and such securities may have rights, preferences and privileges senior to those of our common stock. There can be no assurance that additional financing will be available on terms favorable to us or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to fund expansion, take advantage of unanticipated acquisition opportunities, develop or enhance services or products or respond to competitive pressures. Such inability could harm our business, results of operations and financial condition.

For the next 12 months we expect the primary sources of liquidity to be funds generated by operations, outstanding accounts receivable, and cash on hand. To June 30, 2004, we have not been profitable, due in part to the costs incurred in connection with the Reorganization, and have experienced negative cash flows from operations. Operations have been primarily financed through the issuance of stock.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that affect the amounts reported. Note 1 of the Notes to our Financial Statements describes the significant accounting policies used in the preparation of our financial statements.

CAUTIONARY STATEMENTS REGARDING FUTURE RESULTS OF OPERATIONS

You should read the following cautionary statements in conjunction with the factors discussed elsewhere in this Quarterly Report and other of the Company's filings with the Securities and Exchange Commission. These cautionary statements are intended to highlight certain factors that may affect the Company's financial condition and results of operations and are not meant to be an exhaustive discussion of risks that apply to companies such as China Granite. Like other businesses, the Company is susceptible to macroeconomic downturns in the PRC and other economies that may affect the general economic climate and performance of China Granite or its customers. Similarly, the price of the Company's securities is subject to volatility due to fluctuations in general market conditions, differences in results of operations from estimates and projections generated by the investment community and other factors beyond the Company's control.

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RISKS RELATING TO OUR OPERATIONS:

WE MAY NEED FURTHER CAPITAL.

Based on current reserves and anticipated cash flow from operations, we currently anticipate that the available funds will be sufficient to meet our anticipated needs for working capital, capital expenditures and business expansion for 12 months. Thereafter, we will need to raise additional funds. If any of our assumptions are incorrect, we may need to raise capital before the end of 12 months. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution and such securities may have rights, preferences and privileges senior to those of our common stock. There can be no assurance that additional financing will be available on terms favorable to us or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to fund expansion, take advantage of unanticipated acquisition opportunities, develop or enhance services or products or respond to competitive pressures. Such inability could have a material adverse effect on our business, results of operations and financial condition.

WE ARE THE PRODUCT OF A RECENT MERGER, AND HAVE A LIMITED OPERATING HISTORY ON WHICH TO EVALUATE OUR POTENTIAL FOR FUTURE SUCCESS.

On February 5, 2004, we completed a reorganization with Laizhou pursuant to the Agreement. We intend on continuing the business operations of Laizhou, which conducts granite mining and processing operations in the PRC through its wholly owned subsidiary, Laizhou China. We have only a limited operating history as a combined company upon which you can evaluate our business and prospects, and we have yet to develop sufficient experience regarding actual revenues to be received from our combined operations.

You must consider the risks and uncertainties frequently encountered by companies in situations such as ours, including but not limited to the ability to grow and prosper and finance such growth. If we are unsuccessful in addressing these risks and uncertainties, our business, results of operations and financial condition will be materially and adversely affected.

WE MAY FACE STRONG COMPETITION FROM OTHER MINING COMPANIES FOR THE ACQUISITION OF NEW PROPERTIES.

Mines have limited lives and as a result, we may seek to replace and expand our reserves through the acquisition of new properties. In addition, there is a limited supply of desirable mineral lands available in the PRC and other areas where we would consider conducting exploration and/or production activities. Because we may face strong competition for new properties from other mining companies, some of whom may have greater financial resources than we do, we may be unable to acquire attractive new mining properties on terms that we consider acceptable.

RISKS RELATED TO DOING BUSINESS IN THE PRC:

Laizhou operates from facilities that are located in the People's Republic of China. Accordingly, its operations must conform to the governmental regulations and rules of China.

THE PRC LEGAL SYSTEM HAS INHERENT UNCERTAINTIES THAT COULD LIMIT THE LEGAL PROTECTIONS AVAILABLE TO YOU.

The practical effect of the PRC's legal system on our business operations in China can be viewed from two separate but intertwined considerations. First, as a matter of substantive law, the Foreign Invested Enterprise laws provide significant protection from government interference. In addition, these laws guarantee the full enjoyment of the benefits of corporate Articles and contracts to Foreign Invested Enterprise participants. These laws, however, do impose standards concerning corporate formation and governance, which are not qualitatively different from the corporation laws found in the United States.

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Similarly, PRC accounting laws mandate accounting practices, which may not be consistent with US Generally Accepted Accounting Principles. The China accounting laws require that an annual "statutory audit" be performed in accordance with People's Republic of China accounting standards and that the books of account of Foreign Invested Enterprises are maintained in accordance with Chinese accounting laws. Article 14 of the PRC Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned Enterprise to submit certain periodic fiscal reports and statements to designate financial and tax authorities, at the risk of business license revocation.

Second, while the enforcement of substantive rights may appear less clear than United States procedures, Foreign Invested Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered companies that enjoy the same status as other Chinese registered companies in business-to-business dispute resolution. The Chinese legal infrastructure is significantly different in operation from its United States counterpart, and may present a significant impediment to the operation of Foreign Invested Enterprises.

Laizhou China is organized under the laws of the PRC and is governed by its articles of association. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but are not binding on subsequent cases and have limited precedential value. Since 1979, the Chinese legislative bodies have promulgated laws and regulations dealing with such economic matters as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.

NEGATIVE IMPACT UPON ECONOMIC REFORM POLICIES OR NATIONALIZATION COULD RESULT IN A TOTAL INVESTMENT LOSS IN OUR COMMON STOCK.

Since 1979, the Chinese government has reformed its economic systems. Because many reforms are unprecedented or experimental, they are expected to be refined and improved. Other political, economic and social factors, such as political changes, changes in the rates of economic growth, unemployment or inflation, or in the disparities in per capita wealth between regions within China, could lead to further readjustment of the reform measures. This refining and readjustment process may negatively affect our operations.

Although the Chinese government owns the majority of productive assets in China, including mines and quarrying sites, in the past several years the government has implemented economic reform measures that emphasize decentralization and encourage private economic activity. Because these economic reform measures may be inconsistent or ineffectual, there are no assurances that:

Ÿ we will be able to capitalize on economic reforms;

Ÿ the Chinese government will continue its pursuit of economic reform policies;

Ÿ the economic policies, even if pursued, will be successful;

Ÿ economic policies will not be significantly altered from time to time; and

Ÿ business operations in China will not become subject to the risk of nationalization.

Over the last few years, China's economy has registered a high growth rate. Recently, there have been indications that rates of inflation have increased. In response, the Chinese government recently has taken measures to curb this excessively expansive economy. These measures have included restrictions on the availability of domestic credit, reducing the purchasing capability of certain of its customers, and limited re-centralization of the approval process for purchases of some foreign products. These austerity measures alone may not succeed in slowing down the economy's excessive expansion or control inflation, and may result in severe dislocations in the Chinese economy. The Chinese government may adopt additional measures to further combat inflation, including the establishment of freezes or restraints on certain projects or markets. These measures may adversely affect our operations.

To date reforms to China's economic system have not adversely impacted our operations and are not expected to adversely impact operations in the foreseeable future; however, there can be no assurance that the reforms to China's economic system will continue or that we will not be adversely affected by changes in China's political, economic, and social conditions and by changes in policies of the Chinese government, such as changes in laws and regulations, measures which may be introduced to control inflation, changes in the rate or method of taxation, imposition of additional restrictions on currency conversion and remittance abroad, and reduction in tariff protection and other import restrictions.

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OUR MINING RIGHTS ARE SUBJECT TO GOVERNMENTAL CONTROL AND RENEWAL.

The Company's mining rights are subject to renewals by the relevant governmental authority. The Company is awaiting final approval of its mining rights to the Group 14 Quarry. Despite the Company having received written confirmation from the governmental authority, there is no guarantee that the Company will be granted the renewals.

YOU MAY EXPERIENCE DIFFICULTIES IN EFFECTING SERVICE OF LEGAL PROCESS, ENFORCING FOREIGN JUDGMENTS OR BRINGING ORIGINAL ACTIONS IN THE PRC BASED ON U.S. OR OTHER FOREIGN LAW AGAINST OUR MANAGEMENT AND US.

Laizhou China, our operating company, is incorporated under the laws of the PRC, and substantially all of our assets are located in the PRC. In addition, many of our directors, managers, and executive officers reside within the PRC, and substantially all of the assets of these persons are located within the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside the PRC upon certain directors, supervisors or executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom, Japan or many other countries. As a result, recognition and enforcement in the PRC of judgments of a court in the United States and any of the other jurisdictions mentioned above in relation to any matter may be difficult or impossible. Furthermore, an original action may be brought in the PRC against us, our directors, managers, or executive officers only if the actions are not required to be arbitrated by PRC law and Laizhou China's articles of association, and only if the facts alleged in the complaint give rise to a cause of action under PRC law. In connection with any such original action, a PRC court may award civil liability, including monetary damages.

GOVERNMENT CONTROL OF CURRENCY CONVERSION AND THE FLUCTUATION OF THE RENMINBI MAY MATERIALLY AND ADVERSELY AFFECT OUR OPERATIONS AND FINANCIAL RESULTS.

We receive substantially all of our revenues in Renminbi, which currently is not a freely convertible currency. The Chinese government may, at its discretion, restrict access in the future to foreign currencies for current account transactions. If this were to occur, we may not be able to pay dividends in foreign currencies to our shareholders.

The value of the Renminbi against the U.S. dollar and other currencies fluctuates and is affected by, among other things, changes in the PRC's political and economic conditions. Since 1994, the conversion of Renminbi into foreign currencies, including Hong Kong and U.S. dollars, has been based on rates set by the People's Bank of China, which are set daily based on the previous day's interbank foreign exchange market rates and current exchange rates on the world financial markets. Since 1994, the official exchange rate for the conversion of Renminbi to U.S. Dollars generally has been stable. Any devaluation of the Renminbi, however, may materially and adversely affect the value of, and any dividends payable on, our shares in foreign currency terms, since we will receive substantially all of our revenues, and express our profits, in Renminbi. Our financial condition and results of operations also may be affected by changes in the value of certain currencies other than the Renminbi. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

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RISKS RELATED TO THE GRANITE MINING INDUSTRY:

WE OPERATE IN A SPECIALIZED INDUSTRY THAT REQUIRES MODERN FACILITIES AND EQUIPMENT.

The Company operates in business segments that require the use of specialized facilities and technology. The Company currently relies on older equipment, such as drills, excavators and loaders, and facilities to process the raw granite blocks to maintain its production level. There is no guarantee that the Company will be able to upgrade its equipment, facilities and technology to increase production and make operations more efficient.

OUR CASH FLOW DEPENDS HEAVILY ON THE MARKET PRICE FOR GRANITE.

The cash flow and profitability of the Company's current operations are significantly affected by the market price of granite that is affected by numerous factors beyond the Company's control. Specifically, the prices for granite slabs and cladding depend heavily on the type and amount of commercial and residential construction in the PRC.

Factors that could cause such volatility may include, among other things:

Ÿ actual or anticipated fluctuations in our quarterly operating results;

Ÿ conditions or trends in the mining industries and governmental regulations that affect such industries;

Ÿ changes in the market valuations of other mining companies, especially our partners and competitors;

Ÿ general market conditions; and political events, including actions by the PRC government.

OUR COMMON STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE.

Our common stock price is likely to be highly volatile. The market price of our common stock has been, and is likely to continue to be, highly volatile as the stock market in general, and the market for mining companies in particular, has been highly volatile. Investors may not be able to resell their shares of our common stock following periods of volatility because of the market's adverse reaction to volatility. The trading prices of many mining companies' stocks have been highly volatile, and we cannot assure you that our stock will trade at the same levels of other mining stocks or that mining stocks in general will sustain their current market prices.

ENVIRONMENTAL AND GOVERNMENTAL REGULATIONS

Our operations are subject to and affected by national, provincial and local laws and regulations relating to the environment, health and safety, and other regulatory matters. Certain of our operations may from time to time involve the use of substances that are classified as toxic or hazardous substances within the meaning of these laws and regulations. Environmental operating permits are, or may be, required for certain of our operations and such permits are subject to modification, renewal, and revocation. We regularly monitor and review our operations, procedures, and policies for compliance with these laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of our businesses, as it is with other companies engaged in similar businesses, and there can be no assurance that environmental liabilities will not have a material adverse effect on us in the future.

We believe that our operations and facilities, both owned and leased, are in substantial compliance with applicable laws and regulations and that any noncompliance is not likely to have a material adverse effect on our operations or financial condition. See "Legal Proceedings" on page 19 of this Form 10-QSB/A. However, future events, such as changes in or modified interpretations of existing laws and regulations or enforcement policies, or further investigation or evaluation of the potential health hazards of certain products or business activities, may give rise to additional compliance and other costs that could have a material adverse effect on our operations and business. We, through safety information sheets and other means, communicate what we believe to be appropriate warnings and cautions to employees about the risks associated with granite mining and processing.

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ENVIRONMENTAL LIABILITY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS; POTENTIAL LITIGATION ARISING FROM OUR OPERATIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION

From time to time claims of various types may be asserted against us arising out of our operations in the normal course of business, including claims relating to land use and permits, safety, health and environmental matters. Such matters are subject to many uncertainties and it is not possible to determine the probable outcome of, or the amount of liability, if any, from these matters. In the opinion of our management (which opinion is based in part upon consideration of the opinion of counsel), it is unlikely that the outcome of these claims will have a material adverse effect on our operations or financial condition. However, there can be no assurance that an adverse outcome in any of such litigation would not have a material adverse effect on our operating segments or us.

SOME OF THE INFORMATION IN THIS QUARTERLY REPORT ON FORM 10-QSB/A CONTAINS FORWARD-LOOKING STATEMENTS.

Some of the information in this Quarterly Report on Form 10-QSB/A contains forward-looking statements that involve risks and uncertainties. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue" or similar words. You should read statements that contain these words carefully because they:

Ÿ discuss our expectations about our future performance;

Ÿ contain projections of our future operating results or of our future

Ÿ financial condition; or

Ÿ state other "forward-looking" information.

We believe it is important to communicate our expectations to our stockholders. There may be events in the future, however, that we are not able to predict accurately or over which we have no control. The risk factors listed in this section, as well as any cautionary language in this Quarterly Report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of any of the events described in these risk factors and elsewhere in this Quarterly Report could have a material and adverse effect on our business, results of operations and financial condition.

ITEM 3. CONTROLS AND PROCEDURES

On June 30, 2004, our management concluded its evaluation of the effectiveness of its disclosure controls and procedures. As of that date, our President and Chief Financial Officer concluded that we maintains effective disclosure controls and procedures that ensure information required to be disclosed in reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Specifically, the disclosure controls and procedures assure that information is accumulated and communicated to management, including the President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of management's evaluation.

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PART II.

ITEM 1. Legal Proceedings

There were no new legal proceeding or significant developments in existing proceedings that occurred during the three months ended June 30, 2004.

ITEM 2. Changes in Securities and Use of Proceeds

In April 2004, we completed a private placement of 500,000 shares of restricted common stock priced at $3.00 per share to seven investors (the "April Investors"). Each April Investor completed a subscription agreement, the form of which is filed as an exhibit to this registration statement, and represented to us that they were accredited investors purchasing the shares for their own account. Mr. Costas purchased 2,000 of these shares and Mr. Spoonamore purchased 10,000 of theses shares. The April Placement was made only to accredited investors without general solicitation in compliance with Regulation D of the Securities Act of 1933, as amended. There were no finders' fees or brokerage commissions paid for the April Placement. The April Investors also received registration rights with respect to the 500,000 shares issued, and this registration statement satisfies our obligations.

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 Chief Executive Officer
31.2	Section 302 Certification of Chief Financial Officer
32.1	Section 906 Certification of Chief Executive Officer
32.2	Section 906 Certification of Chief Financial Officer

(b) Reports on Form 8-K

On July 30, 2004 we filed a current report on Form 8-K to announce the dismissal of Braverman and Company as our independent auditors and the appointment of Moores Rowland Mazars as our independent auditors.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

February 8, 2006

CHINA GRANITE CORPORATION
By:	/s/ Dong Chen
	Dong Chen, President and CEO
By:	/s/ Costas Takkas
	Costas Takkas, CFO and Chief Accounting Officer

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