SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from__________to__________.
Commission File No. 0-27929
ETERNAL TECHNOLOGIES GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 62-1655508
- ---------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 04-06, 28/F, Block A, Innotec Tower, 235 Nanjing Road,
Heping District, Tianjin, 300100
--------------------------------------------------------------------
(Address of principal executive offices)
011-86-22-2750-1802
-------------------------
(Issuer's telephone number)
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 ____
----
As of August 12, 2004, 29,387,380 shares of Common Stock of the issuer were
outstanding.
Eternal Technologies Group, Inc.
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - June 30, 2004 (unaudited) and
December 31, 2003 (audited) 3
Unaudited Consolidated Statements of Income - For the
three months and Six Months ended June 30, 2004 and 2003 4
Unaudited Consolidated Statements of Cash Flows-
For the Six Months ended June 30, 2004 and 2003 5
Notes to (unaudited) Consolidated Financial Statements 6
Item 2. Management Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Controls and Procedures 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Small Business Issuer Purchases
of Equity Securities 12
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
Certifications 14
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2004
(UNITED STATES DOLLARS)
ASSETS
June 30 December 31
2004 2003
--------------------- --------------------
(Unaudited) (Audited)
CURRENT ASSETS
Cash and Cash equivalents $ 19,067,185 $16,302,464
Inventories 696,937 1,214,182
Other receivable 3,279,513 3,399,995
Receivable due from related company 617,824 617,825
Receivable - Property sold 1,897,590 -
Prepayments and deposits 143,976 145,190
Property held for sale - 2,192,071
--------------------- --------------------
TOTAL CURRENT ASSETS 25,703,025 23,871,727
FIXED ASSETS
(net of accumulated depreciation of $2,199,987 in 2004
and $1,943,831 in 2003) 6,160,183 6,416,341
LAND USE RIGHTS
(net of accumulated amortization of $931,160 in 2004
and $806,961 in 2003) 5,068,840 5,193,039
--------------------- --------------------
TOTAL ASSETS $ 36,932,048 $35,481,107
===================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 443,366 $ 503,857
Accounts payable and accrued expenses 1,504,624 1,133,462
Payable to related company 103,373 205,957
Amounts due to related parties 409,962 417,617
--------------------- --------------------
TOTAL CURRENT LIABILITIES 2,461,325 2,260,893
--------------------- --------------------
SHAREHOLDERS' EQUITY
Preferred shares - 5,000,000 authorized $.001 par -
none issued - -
Common shares - 95,000,000 shares authorized, at
$.001 par, 29,387,380 and 29,177,396 shares issued and
outstanding at June 30, 2004 and December 31, 2003, respectively 29,387 29,177
Paid - in capital 8,317,110 8,088,159
Stock subscription receivable (10,176) (10,176)
Retained earnings 26,134,402 25,113,054
--------------------- --------------------
TOTAL SHAREHOLDERS' EQUITY 34,470,723 33,220,214
--------------------- --------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 36,932,048 $ 35,481,107
===================== ====================
The accompanying notes are integral part of these financial statements.
ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(UNITED STATES DOLLARS)
Three Months Ended June 30 Six Months Ended June 30
------------------------------------ ------------------------------
2004 2003 2004 2003
----------------- --------------- --------------- ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
SALES $4,096,253 $ 91,084 $6,140,831 119,460
COST OF SALES 2,500,561 - 3,950,498 -
-------------- ----------------- --------------- --------------
GROSS PROFIT 1,595,692 91,084 2,190,333 119,460
DEPRECIATION AND AMORTIZATION 190,167 213,469 380,355 426,938
SELLING AND ADMINISTRATIVE EXPENSES 421,809 161,147 789,963 295,157
OTHER INCOME (EXPENSE)
Interest Income 28,470 - 54,850 -
Impairment Loss - - (53,517) -
-------------- ----------------- --------------- --------------
NET INCOME (LOSS) BEFORE
INCOME TAXES 1,012,186 (283,532) 1,021,348 (602,635)
INCOME TAXES - - - -
-------------- ----------------- --------------- ---------------
NET INCOME (LOSS) $1,012,186 $ (283,532) $1,021,348 $ (602,635)
============== ================= =============== ===============
EARNINGS PER SHARE
Basic and diluted
Net income (loss) $ 0.03 $ (0.01) $ 0.03 $ (0.02)
Weighted average number of common
shares outstanding
Basic and diluted 29,387,380 26,119,233 29,362,380 25,892,971
The accompanying notes are integral part of these financial statements.
ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(UNITED STATES DOLLARS)
June 30
-----------------------------------
2004 2003
--------------- -------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,021,348 $ (602,635)
Adjustments to reconcile net income to
net cash provided by operating activities:
Impairment of reception center 53,517 -
Depreciation and amortization 380,358 426,938
Stock issued for service 90,000 -
(Increase) decrease in assets:
Inventories 517,245 -
Accounts receivable - 4,483,855
Other receivable 120,482 -
Amounts due from related parties - (4,000)
Prepayments and deposits 1,214 (2,892)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 371,162 78,086
Amounts due to related parties (7,655) 30,390
Account payable to related company (102,584) (4,886)
------------------ -----------------
Net cash provided by operating activities 2,445,087 4,404,856
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVIES
Cash received from sale of property held for sale 240,964 -
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVIES
Proceeds from issuance of common stock - 187,236
Capital contributed 78,670 -
------------------ -----------------
Net cash provided by financing activities 78,670 187,236
------------------ -----------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 2,764,721 4,592,092
Cash and cash equivalents, beginning of period 16,302,464 7,135,559
------------------ -----------------
Cash and cash equivalents, at end of period $19,067,185 $11,727,651
================== =================
SUPPLEMENTARY CASH FLOWS DISCLOSURES
1. Interest paid - -
Taxes paid - -
2. During the six months ended June 30, 2004, 109,984 shares
were issued for the payment of notes payable of $60,491 and
100,000 shares were issued related to services totaling
$90,000.
The accompanying notes are integral part of these financial statements.
NOTES
1. Reporting entity
Pursuant to an exchange agreement, Eternal Technologies Group, Inc.,
("Company") formerly known as Waterford Sterling Corporation, completed its
acquisition of 100% interest of Eternal Group Limited and Subsidiaries on
December 12, 2002. The Company has treated the transaction as a reverse
merger for accounting purposes. Following the acquisition, the former
shareholders of Eternal Technology Group Limited, a British Virgin Islands
limited liability company, now owns approximately 85% of the issued and
outstanding common shares of Eternal Technologies Group Inc.
Eternal Phoenix Company Limited was incorporated in the British Virgin
Islands with limited liability on March 3, 2000. Pursuant to a resolution
passed on June 17, 2000 Eternal Phoenix Company Limited changed its name to
ETERNAL TECHNOLOGY GROUP LTD., ("Eternal"). Eternal is a holding company
for investments in operating companies.
Eternal acquired a 100% equity interest in Willsley Company Limited
("Willsley"), a company incorporated in the British Virgin Island with
limited liability on May 16, 2000.
Willsley's principal activity is investments and owns 100% interest in
Inner Mongolia Aershan Agriculture & Husbandry Technology Co., Ltd
("Aershan").
Aershan was incorporated in the People's Republic of China ("the PRC") with
limited liability on July 11, 2000 and its principal activities are to run
a breeding center, transplant embryos, and to propagate quality meat sheep
and other livestock breeds in Inner Mongolia.
2. Condensed financial statements and footnotes
The interim consolidated financial statements presented herein have been
prepared by the Company and include the unaudited accounts of the Company
and its subsidiaries. All significant inter-company accounts and
transactions have been eliminated in the consolidation.
These condensed financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information
and the instructions to Form 10-QSB and Item 310 (b) Regulation S-B.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes the
disclosures made are adequate to make the information presented not
misleading. The condensed consolidated financial statements should be read
in conjunction with the Company's consolidated financial statements for the
year ended December 31, 2003 and notes thereto included in the Company's
Form 10-KSB.
In the opinion of management, the unaudited condensed consolidated
financial statements reflect all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position
of the Company as of June 30, 2004, the results of operations for the three
and six months ended June 30, 2004 and 2003, respectively. Interim results
are not necessarily indicative of full year performance because of the
impact of seasonal and short-term variations.
3. Cash
At June 30, 2004, approximately $18,174,000 of cash is to be exclusively
used for operations in the Peoples' Republic of China.
4. Receivable - Property sold
On April 30, 2004, the Company and a local government entity reached an
agreement on the final purchase price and terms related to the Company's
reception center and certain equipment that is recorded as "Property held
for Sale" at December 31, 2003 and March 31, 2004. At December 31, 2003,
the Company had recorded an estimated impairment loss of $300,000. At March
31, 2004, the Company recorded an additional impairment loss of $53,517
based on the amount the Company had recorded of $2,192,071 and the final
purchase price of $2,138,554. The agreement calls for cash payments of
$620,482 and the remainder will be paid in livestock of $1,518,072. The
Company accounts for non-monetary transactions in accordance with APB
Opinion No. 29. During the three months ended June 30, 2004, a cash payment
of $240,964 was received in accordance with this agreement.
5. Public relations agreement
During January 2004, the Company entered into a six-month public relations
agreement with PMR and Associates, LLC (PMR). As consideration for public
relations services, the Company shall compensate PMR the equivalent of
$90,000 in shares subject to Rule 144. During February 2004, the Company
issued 100,000 shares to PMR for these services. For the six months ended
June 30, 2004, the Company expensed $90,000 associated with this agreement.
6. Notes payable
The Company's promissory notes payable are in default at June 30, 2004. The
Company and its attorneys are performing an additional detailed review of
all expenditures prior to the merger. The balances of the notes are subject
to change pending the outcome of the review of these expenditures. The
Company believes it has meritorious defenses to portions of the promissory
notes.
7. Contingencies
In conjunction with certain subscription agreements entered into during
2003, the Company has agreed to register the shares issued under a Form
SB-2 registration statement. There are penalties for not timely meeting
filing and effectiveness deadlines, and the Company has received claims
related to these penalties. For the six months ended June 30, 2004, the
Company has accrued expenses for penalties of $145,219.
8. Segment Reporting
The company has identified two reportable segments:
Agricultural Genetics/Animal husbandry and Pharmaceutical operations. The
amounts reported at June 30, 2004 and for the three and six month periods
ended June 30, 2004 and 2003 related to our Agricultural Genetics / Animal
husbandry segment.
9. Subsequent events
On August 1, 2004, the Company entered into a six-month public relations
agreement with Empire Relations Group, Inc. ("Empire"). As consideration
for public relations services, the Company shall compensate Empire 100,000
shares of Eternal subject to Rule 144 as follows: 50,000 shares upon the
execution of this agreement and 10,000 shares per month beginning with the
second month of the contract and extending through the six months.
On July 27, 2004, the annual shareholder meeting approved the adoption of
"Year 2004 Stock Option Plan".
Item 2. Management discussion and Analysis of Financial Condition and Result of
Operations
The following is derived from, and should be read in conjunction with, our
unaudited condensed consolidated financial statements, and related notes, as of
and for the three and six months ended June 30, 2004 and 2003.
Three Months Ended June 30, 2004 Compared to Three months Ended June 30, 2003
Revenues -
Revenues for the three months ended June 30, 2004 increased by $4,005,169 or
4397.2% to $4,096,253 from $91,084 for the corresponding period of the prior
year. This increase resulted from an increase in the sale of lamb meat of
$1,397,458 and an increase of $2,607,711 in fees earned from cattle embryo
transfers. The company had no sales of lamb meat and earned $91,084 from cattle
embryo transfers in the corresponding period of the prior year.
Cost of Sales -
Cost of sales for the three months ended June 30, 2004 increased by $2,500,561
to $2,500,561 from $0 for the corresponding period of the prior year. This
increase resulted from costs incurred in the sales of lamb meat of $1,009,193
and cost incurred in the cattle embryo transfers of $1,491,368. The gross profit
margin from the sale of lamb meat was 27.78% and the gross profit margin on
embryo transfers was 44.74%.
Depreciation and Amortization -
Depreciation and amortization expenses decreased by $23,302 or 10.9% to $190,167
from $213,469 for the corresponding period of the prior year. This decrease
resulted from the fact that certain equipment had been fully depreciated and
accordingly there was no depreciation charge against such equipment for the
three months ended June 30, 2004.
Selling and Administrative Expenses -
Selling and administrative expenses increased by $260,662 or 161.8% to $421,809
from $161,147 for the corresponding period of the prior year. This increase
resulted from an increase in salaries of $144,220, an increase in marketing
costs of $40,949, an increase in penalties of $92,858 and an increase in
miscellaneous expenses of $21,874 which was partially offset by a decrease in
professional fees of $39,238.
Other Income (Expense)
For the three months ended June 30, 2004 the company had other income of
$28,470, all of which was interest income. There was no other income for the
corresponding period of the prior year.
As a result of the foregoing, the company had net income of $1,012,186 or $.03
per share for the three months ended June 30, 2004 compared to a net loss of
$283,532 or $.01 per share for the corresponding period of the prior year.
Six Months Ended June 30, 2004 As Compared to Six Months Ended June 30, 2003.
Revenues -
Revenues for the six months ended June 30, 2004 increased by $6,021,371 or
5040.5% to 6,140,831 from $119,460 for the corresponding period of the prior
year. This increase is attributable to an increase in the sale of lamb meat of
$3,436,012 and an increase in cattle embryo transfer fees of $2,585,359.
Cost of Sales -
Cost of sales for the six months ended June 30, 2004 increased to $3,950,498
from $0 for the corresponding period of the prior year. This increase resulted
from the costs incurred in the sale of lamb meat of $2,453,530 and the cost
incurred in cattle embryo transfers of $1,496,968. The gross profit margin on
the sale of lamb meat was 28.6% and the gross profit margin from cattle embryo
transfers was 44.7%.
Depreciation and Amortization -
Depreciation and amortization expenses for the six months ended June 30, 2004
decreased by $46,583 or 10.9% to $380,355 from $426,938 for the corresponding
period of the prior year. This decrease resulted from certain equipment being
fully depreciated in a prior period and accordingly no charge to depreciation
was made against such equipment during the six months ended June 30, 2004.
Selling and Administrative Expenses -
Selling and administrative expenses for the six months ended June 30, 2004
increased by $494,806 or 167.6% to $789,963 from $295,157 for the corresponding
period of the prior year. This increase resulted from an increase in salaries of
$247,160 marketing expenses of $86,469, penalties of $145,219 and miscellaneous
expenses of $42,390 which were partially offset by a decrease in professional
expenses of $26,430.
Other Income (Expense)
Other income increased by $54,850 for the six months ended June 30, 2004 to
$54,850 from $0 for the corresponding period of the prior year. All of the other
income for the six months ended June 30, 2004 is attributable to interest
income. Other expense increased by $53,517 for the six months ended June 30,
2004 to $53,517 from $0 for the corresponding period of the prior year. All of
the other expense is an impairment loss which resulted from the anticipated loss
from the sale of the reception center and certain equipment located on the
Company's farm in Inner Mongolia.
As a result of the foregoing, the Company had net income of $1,021,348 or $.03
per share for the six months ended June 30, 2004 compared to a net loss of
$602,635 or $.02 per share for the corresponding period of the prior year.
Liquidity and Capital Resources
As of June 30, 2004, the Company had cash and cash equivalents of $19,067,185
and working capital of $23,241,700. This compares with cash and cash equivalents
of $16,302,464 and working capital of $21,610,824 as of December 31, 2003.
Cash flows from operating activities totaled $2,445,087 for the six months ended
June 30, 2004. This compares with cash flows from operating activities of
$4,404,856 for the corresponding period of the prior year. This decrease
resulted from an increase in non-cash expense of $96,934 which consists of
$53,517 of impairment losses and $90,000 of stock issued for services which was
partially offset by a decrease in depreciation and amortization of $46,583; a
change in the net current accounts of $4,580,553 for the six months ended June
30, 2003 (of which 4,483,855 is attributable to a decrease in receivables for
the six months ended June 30, 2003) compared to a change in net current accounts
of $382,619 for the six months ended June 30, 2004; which was partially offset
by a net increase in earnings of $1,623,983.
Cash flows from investing activities totaled $240,964 for the six months ended
June 30,2004 compared to $0 for the six months ended June 30, 2003. All of the
cash from investing activities during the six months ended June 30, 2004 was
from the sale of property.
Cash flows from financing activities for the six months ended June 30, 2004,
totaled $78,670 all from capital contributed. This compares with cash flows from
financing activities of $187,236 for the six months ended June 30, 2003. All of
the cash from financing activities for the six months ended June 30, 2003 was
from the sale of shares.
At June 30, 2004, the Company had notes payable of $443,366 that are due
December 11, 2005. Interest on the notes shall be payable semi-annually
commencing 180 days after the date of the note (December 11, 2002) at 8% per
annum. The notes are payable from the first dollars received from any proceeds
of any offering subsequent to the acquisition of Eternal Technologies Group Ltd.
or at the option of the lender, convertible into post reverse split common
shares at a rate equal to the mean of the high and low share price as of the
December 31, 2003, the principal balances on the notes was $503,587 and during
2004, the Company issued 109,984 shares which reduced the balance on the notes
to $443,366. Although these notes are recorded at $443,366, an outside review
was conducted to determine if all amounts accrued are properly chargeable to the
Company. These findings have been forwarded to outside counsel for resolution.
Although the Company has a cash and bank balance of $19,067,185, all but
$893,185 is to be exclusively used by management for operations within the
People's Republic of China. Therefore, if the Company is to expand outside the
PRC, as it anticipates doing, or pay its non-PRC obligation, it will have to
sell additional shares of its stock or borrow funds from third parties. Unless
it is able to either borrow funds or sell additional shares, it will have
insufficient resources to carry out is business objectives outside the PRC for
the next twelve (12) months.
Item 3. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Our chief executive
officer and our chief financial officer, after evaluating the effectiveness of
the Company's "disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the
"Evaluation Date") within 90 days before the filing date of this quarterly
report, have concluded that as of the Evaluation Date, our disclosure controls
and procedures were adequate and designed to ensure that material information
relating to us and our consolidated subsidiaries would be made known to them by
others within those entities.
(b) Changes in internal controls. There were no significant changes in our
internal controls or to our knowledge, in other factors that could significantly
affect our disclosure controls and procedures subsequent to the Evaluation Date.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities and Small Business Issuer Purchases of Equity
Securities
None
Item. 3. Defaults Upon Senior Securities
None
Item 4. Submissions of Matters to a Vote of Security Holders
On July 27, 2004, the shareholders at the annual meeting elected seven
directors, ratified the appointment of Thomas Leger & Co. LLP and approved the
2004 Stock Option Plan.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
1. Form 8-K dated July 27, 2004 reporting the results of the shareholder
meeting.
Signature
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
ETERNAL TECHNOLOGIES GROUP, INC.
/s/
-------------------------------------
August ___, 2004 Jiansheng Wei, Chief Executive Officer
/s/
August ___, 2004 -------------------------------------
Xingjian Ma, Chief Financial Officer
CERTIFICATIONS
I, Jiansheng Wei, certify that:
1. I have reviewed this Form 10-QSB of Eternal Technologies Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f))** for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the small business issuer, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;**
(c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the small business issuer's internal
control over financial reporting that occurred during the small business
issuer's most recent fiscal quarter (the small business issuer's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
Date: August ___, 2004
_______________________
Jiansheng Wei
Chief Executive Officer
I, Xingjian Ma, certify that:
1. I have reviewed this Form 10-QSB of Eternal Technologies Group, Inc.;
4. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
5. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f))** for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the small business issuer, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;**
(c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the small business issuer's internal
control over financial reporting that occurred during the small business
issuer's most recent fiscal quarter (the small business issuer's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
Date: August ___, 2004
_______________________
Xingjian Ma
Chief Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF TEHE
SARBANES-OXLEY ACT OF 2002
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I, Jiansheng Wei, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report of Eternal Technologies Group, Inc. on Form 10-QSB for the quarterly
period ended June 30, 2004 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and that information contained
in such Form 10-QSB fairly presents in all material respects the financial
condition and results of operations of Eternal Technologies Group, Inc.
By: /s/
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Name: Jiansheng Wei
Title: Chief Executive Officer
August ___, 2004
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF TEHE
SARBANES-OXLEY ACT OF 2002
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I, Xingjian Ma, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of
Eternal Technologies Group, Inc. on Form 10-QSB for the quarterly period ended
June 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and that information contained in such Form
10-QSB fairly presents in all material respects the financial condition and
results of operations of Eternal Technologies Group, Inc.
By: /s/
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Name: Xingjian Ma
Title: Chief Financial Officer
August ___, 2004