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 March 31, 2006
[ ] 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)
Sect D, 5/F, Block A, Innotec Tower, 235 Nanjing Road
Heping District, Tianjin, 300052
-----------------------------------------------------------------
(Address of principal executive offices)
011-86-22-2721-7020
-------------------------
(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 May 15, 2006, 40,567,300 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 - March 31, 2006 (unaudited)and
December 31, 2005 3
Unaudited Consolidated Statements of Income - For the
three months ended March 31, 2006 and 2005 4
Unaudited Consolidated Statements of Cash Flows-
For the three months ended March 31, 2006 and 2005 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management Discussion and Analysis or Plan of Operations 9
Item 3. Controls and Procedures 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Small Business Issuers 10
Purchaser of Equity Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
Certifications 12
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2006
(UNITED STATES DOLLARS)
ASSETS
March 31 December 31
2006 2005
--------------- --------------
(Unaudited) (Audited)
CURRENT ASSETS
Cash and Cash equivalents 22,955,677 18,224,488
Short-term Investment 9,956,193 9,909,084
Accounts receivable 3,459,777 7,137,018
Inventories 168,484 135,341
Prepayments and deposits 259,472 257,624
------------ ------------
TOTAL CURRENT ASSETS 36,799,603 35,663,555
Advances to Distributors 522,700 520,227
Property and Equipment, Net 7,188,147 7,317,502
LAND USE RIGHTS, Net 4,786,857 4,828,051
Intangible Assets 1,232,079 1,263,409
------------ -------------
TOTAL ASSETS 50,529,386 49,592,744
------------ -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable 443,366 $ 443,366
Accounts payable and accrued expenses 649,100 706,717
Amounts due to related parties 240,368 240,368
Derivitive Financial instrument liabilities 493,774 562,830
----------- ------------
TOTAL CURRENT LIABILITIES 1,826,608 1,953,281
SHAREHOLDERS' EQUITY
Preferred shares - 5,000,000 authorized $.001 par -
none issued
Common shares - 95,000,000 shares authorized, at
$.001 par, 40,567,300 and 39,854,026 shares issued
and outstanding at March 31, 2006 and December
31, 2005, respectively 40,567 39,854
Paid - in capital 13,507,866 13,217,874
Stock subscription receivable (10,176) (10,176)
Retained earnings 33,756,540 33,215,741
Accumulative Other Comprehensive Income 1,407,981 1,176,170
-------------
TOTAL SHAREHOLDERS' EQUITY 48,702,778 47,639,463
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 50,529,386 49,592,744
============ ============
See Notes to Consolidated Financial Statements
3
ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(UNITED STATES DOLLARS)
March 31
-------------------------------
2006 2005
------------- -------------
(Unaudited) (Unaudited)
SALES $ 4,216,359 $2,108,747
COST OF SALES 2,789,689 1,566,434
----------- ------------
GROSS PROFIT 1,426,670 542,313
DEPRECIATION AND AMORTIZATION 264,946 190,167
SELLING AND ADMINISTRATIVE EXPENSES 400,649 433,232
----------- -------------
Income From Operations 761,075 (81,086)
OTHER INCOME (EXPENSE)
Interest Income 40,728 48,842
Change in value of dirivative
financial instruments (221,649) 13,471
----------- -------------
NET INCOME BEFORE INCOME TAXES 580,154 (45,715)
INCOME TAXES 39,355 -
----------- -------------
NET INCOME (LOSS) 540,799 $ (45,715)
=========== =============
EARNINGS PER SHARE
Basic and diluted
Net income (loss) $ 0.01 ($0.00)
============ =============
Weighted average number of common
shares outstanding
Basic 40,074,783 29,551,485
============ =============
Diluted 40,086,595 29,563,297
============ =============
4
See Notes to Consolidated Financial Statements
ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(UNITED STATES DOLLARS)
March 31
----------------------------
2006 2005
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (Loss) 540,799 $(45,715)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 264,946 190,168
Stock issued for services - -
Non-cash expenses for services 42,000
Changes in value of Derivative
financial instruments 221,649 13,471
(Increase) decrease in assets:
Inventories (33,143) -
Accounts receivable 3,660,793 (1,039,470)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (60,703) 153,117
Amounts payable related parties 3,082 18,000
----------- -----------
Net cash provided (used in) by operating
activities 4,597,423 (668,429)
-----------
CASH FLOWS FROM FINANCING ACTIVIES
Capital Contributed - 182,377
----------- ------------
Net cash provided by financing activities - 182,377
----------- ------------
Effect of exchange rate changes in cash 129,766 -
NET INCREASE (DECREASE) IN CASH AND
Cash Equivalents 4,727,189 (486,052)
Cash and cash equivalents, beginning of period 18,228,488 27,473,354
------------ ------------
Cash and cash equivalents, at end of period 22,955,677 $ 26,987,302
=========== =============
SUPPLEMENTARY CASH FLOWS DISCLOSURES
1. Interest paid - -
Taxes paid 39,355 -
5
See Notes to Consolidated Financial Statements
ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2006
- --------------------------------------------------------------------------------
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 - BVI was incorporated in the British Virgin Islands in March 2000.
In May 2000, Eternal - BVI acquired 100% of Willsley Company Limited.
Willsley is a holding company that owns 100% of Inner Mongolia Aershan
Agriculture & Husbandry Technology Co., Ltd. ("Aershan Agriculture").
Aershan Agriculture owns a cattle herd, conducts breeding operations and
owns a farm in Innner Mongolia which it leases to a Chinese company for
approximately $572,000 per year.
As of the fourth quarter of 2005 we acquired certain assets, subject to
certain liabilities of E-Sea Biomedical Engineering Co. International, Ltd.
E-Sea's principal activities are the manufacture, sale and licensing of
medical devices used to detect breast cancer.
6
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, 2005 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 March 31, 2006, the results of operations for the three months ended March
31, 2006 and 2005, respectively. Interim results are not necessarily indicative
of full year performance because of the impact of seasonal and short-term
variations.
Significant Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the consolidated condensed financial statements and the reported amounts of
revenues and expenses during the periods. Actual results could differ from
estimates making it reasonably possible that a change in the estimates could
occur in the near term.
Principles of Consolidation
The unaudited consolidated condensed financial statements include the accounts
of the Company and its wholly owned subsidiaries after elimination of all
significant inter-company accounts and transactions.
3. CASH AND CASH EQUIVALENTS
At March 31, 2006, substantially all of the Company's cash is to be exclusively
used for operations in the PRC.
4. RESTATEMENT
The accompanying March 31, 2005 financial statements have been restated to
properly account for derivative financial instruments associated with
convertible debt. Following is the impact of the restatement:
As Originally Filed
- -------------------------------------
Current assets $ 30,186,994
Total assets 40,845,516
Current liabilities 2,413,543
Unregistered common stock subject
to registration
registration rights -
Stockholders' equity 38,431,973
Revenues 2,108,747
Gross profit 542,313
Income (loss) from operations (81,086)
Other income and expenses 48,842
Net loss (32,244)
Basic and diluted earnings (loss)
per share (0.00)
7
As Restated
- -------------------------------------
Current assets $ 30,186,994
Total assets 40,845,516
Current liabilities 3,075,801
Unregistered common stock subject
to registration
registration rights 563,991
Stockholders' equity 37,205,724
Revenues 2,108,747
Gross profit 542,313
Income (loss) from operations (81,086)
Other income and expenses 35,371
Net income (45,715)
Basic and diluted earnings per share (0.00)
5. SEGMENT REPORTING
The operating segments presented are the segments for which separate financial
information is available and for which operating performance is evaluated
regularly by management to decide how to allocate resources and in to assess
performance. The Company evaluates the performance of the operating segments
based on income from operations that is defined as total revenues less operating
expenses.
The Company has identified two reportable segments: agricultural genetics and
medical devices. The agricultural genetics segment activities include a breeding
center, embryo-transplantation, and propagating quality sheep meat and other
livestock breeds in Inner Mongolia, PRC. Medical devices' operations include the
manufacture, development, sales, marketing and delivery of medical devices in
the PRC. Included in "Other" are corporate-related items, insignificant
operations and costs that are not allocated to the reportable segments.
Information regarding our reportable segments for the three months ended March
31, 2006 and 2005, is as follows:
Agricultural Medical
Genetics Devices Corporate Total
------------- ---------- ---------- -------
2006
- -------------------------------
Revenues $ 3,608,571 $ 607,787 $ - $ 4,216,359
Income from operations 598,399 259,513 (96,837) 761,075
Depreciation and amortization 197,021 67,925 - 264,946
Total assets 45,162,078 5,324,872 42,438 50,529,386
2005
- -------------------------------
Revenues $ 2,108,747 $ - $ - $ 2,108,747
Income (loss) from operations 148,710 - (229,796) (81,086)
Depreciation and amortization 190,167 - - 190,167
Total assets 40,842,789 - 2,727 40,845,516
8
Item 2. Management Discussion and Analysis or Plan of Operation
The Company's business is highly seasonal, with most of the Company's revenue
and income being earned during the second half of the calendar year.
Accordingly, the results of operations for the calendar quarter ended March 31,
2006 are not indicative of the results for any other quarter or for the fiscal
year.
Three Months Ended March 31, 2006 compared to the Three Months Ended March 31,
2005
Revenues
Revenues
Revenues for the three months ended March 31, 2006 increased by $2,107,612 or
99% to $4,216,359 from $2,108,747 for the corresponding period of the prior
year. This increase is revenue resulted primarily from one major sale of lamb
meat for $3,608,571 and $607,787 of sales in the medical devices business
segment
Cost of Sales
Cost of sales for the three months ended March 31, 2006 increased by $1,223,255
or 78% to $2,789,689 from $1,566,434 from the corresponding period of the prior
year. Our gross margins increased from 26% to 34% principally because of
improved margins on our sales of lamb meat.
Depreciation and Amortization
Depreciation and amortization expense for the three months ended March 31, 2006
totaled $264,946, an increase of $74,779 from $190,167 for the corresponding
period of the prior year. This increase is substantially attributable to the
acquisition of certain assets from E-Sea at the beginning of the fourth quarter
of 2005.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended March
31, 2006 decreased by $32,583 or 7.5% to $400,649 from $433,232 for the
corresponding period of the prior year. The decrease in the selling, general and
administrative expenses is principally attributable the fact that two
significant expenses occurred in the first quarter of 2005 as follows: 1) a
$42,000 non-cash charge for marketing and 2) failure to register penalties of
$30,441. The fact that these expenses were not recurring in 2006 was partially
offset by additional expenses in the Company's medical devices business segment.
Other Income (Expense)
Other income decreased by $216,292 to $(180,921) for the three months ended
March 31, 2006 from $35,371 for the corresponding period of the prior year. The
increase resulted from a change in the value of derivative instruments
($235,120) and a decrease in interest income of $8,114.
Net Income (Loss)
As a result of the foregoing, the Company reported income of $540,799 for
the three months ended March 31, 2006 compared to a loss of $(45,715) for the
three months ended March 31, 2005. There were no income taxes recorded for the
three month period ended March 31, 2005. However, the company incurred a tax
liability of $39,353 for the three months ended March 31, 2006 because of the
income from E-Sea which is non-agricultural income.
Liquidity and Capital Resources
As of March 31, 2006, the Company had cash and cash equivalents of
$22,955,677 and working capital of $34,972,995. This compares with cash and cash
equivalents of $18,224,488 and working capital of $33,710,274 at December 31,
2005.
Cash provided by operating activities totaled $4,597,423 for the three
months ended March 31, 2005. This compares with cash flows used in operating
activities of $668,429 for the three months ended March 31, 2004. The increase
in cash flows resulted from changes in the current accounts, particularly a
decrease in accounts receivable of $3,660,783 and an increase in earnings and
depreciation and an increase in accounts payable which was partially offset by a
decrease in non-cash expenses and an increase in inventories.
There were no investing activities by the Company during either the three
months ended March 31, 2006 or 2005.
For the three months ended March 31, 2005 the company had financing
activities, all from the contribution of capital totalling $182,377.
The company believes that it has sufficient working capital to carry out
its business plan for the next twelve months.
9
Item 3. Controls and Procedures
We strive to maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our management, including our chief executive officer and chief
financial officer, as appropriate, to allow for timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designated and operated, can provide only reasonable assurance of
achieving the desired control objectives and management necessarily is required
to apply its judgment in evaluating the cost-benefit relationship of possible
controls. Our former independent accountants, Thomas Leger & Co. LLP conducted
audits of our financial statements for 2002, 2003 and 2004. In connection with
the issuance of its report of the independent registered public accounting firm,
Thomas Leger & Co. LLP reported to our Board of Directors two material
weaknesses under standards established by the Public Company Accounting
Oversight Board regarding some elements of our system of internal controls. They
noted the following material deficiencies:
(i) The Company's reported financial statements relating to the acquisition of
E-Sea Biomedical Engineering Co. International, Ltd. were indicative of a
material weakness in controls over closing procedures and the accounting
for non-routine transactions. We determined the Company lacked certain
procedures and required expertise needed to properly account for
non-routine transactions (such as acquisitions of other businesses) and
preparation of its required financial statement disclosure in accordance
with U.S. G.A.A.P. and SEC rules and regulations.
(ii)The Company has restated its consolidated financial statements for the
year-ended December 31, 2002 to reflect merger costs of $867,411 as post
acquisition activity. The restatement is considered a material weakness
over financial reporting as defined by the PCAOB.
We have conducted a review of the errors requiring restatement, including a
separate review by our board of directors to determine what remedial measures
were necessary. We believe our management has taken or is in the process of
taking the steps necessary to correct the errors and avoid similar errors in the
future. One important measure is to have our President also become involved in
the review of our internal controls and procedures.
As required by SEC rule 13a-15(b) we conducted an evaluation, under the
supervision and with the participation of our management, including our Chief
Executive Officer, President and Vice President of Finance, the effectiveness of
the design and operation of our disclosure controls and procedures. Based upon
that evaluation, the Chief Executive Officer, President and Vice President of
Finance concluded that our disclosure controls and procedures are effective in
timely alerting them to material information relating to us (including our
subsidiaries) required to be included in our periodic SEC filings.
Our new independent accountants, Ham Langston & Brezina LLP conducted an audit
of our financial statements for 2005. In connection with the issuance of its
report to the Board of Directors, Ham Langston & Brezina LLP reported two
material weaknesses under standards established by the Public Company Accounting
Oversight Board regarding some elements of our system of internal controls. They
noted the following specific material deficiencies.
(i) The Company lacked the required expertise needed to properly account for
non-routine transactions (such as the acquisition of other businesses and
preparation of its required financial statement disclosure in accordance
with U.S.G.A.A.P. and SEC rules and regulations.
(ii) The Company has restated its consolidated financial statements for the
year-ended December 31, 2004 to reflect the accounting for derivatives. The
restatement is considered a material weakness over financial reporting as
defined by the PCAOB.
Other than the foregoing initiatives, there were no significant changes in our
internal controls or to our knowledge, in other factors that could significantly
affect such internal controls subsequent to the date of their evaluation.
While we have taken or are in the process of taking the foregoing steps in order
to address the adequacy of our disclosure controls and procedures, and, in
addition, to develop and implement a formal set of internal controls and
procedures for financial reporting in accordance with SEC's proposed rules to
adopt the internal control report requirements included in Section 404 of the
Sarbanes-Oxley Act of 2002, the efficiency of the steps we have taken to date
and the steps we are still in the process of completing is subject to continued
management review supported by confirmation and testing by our internal and
external auditors. As a result, it is likely that additional changes will be
made to our internal controls.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
As of May 16, 2006, we were a party to one legal proceeding. The proceeding
involves a lawsuit brought by Western Securities Corporation seeking payment of
$500,942 on two outstanding promissory notes, one to Market Management, Inc. and
one to Thomas L. Tedrow plus accrued interest since July 11, 2004, attorney's
fees, cost of collection and other court costs. This cause of action was
initially filed in Federal District Court in the Eastern District of Louisiana.
The Company filed a Motion to Dismiss for lack of personal jurisdiction or
alternatively a Motion to Dismiss for lack of venue.
In October 2005, the Court granted the Company's motion for a change of venue
and the case was moved to the Southern District Court of Texas in Houston,
Texas. The Company believes that the case is without merit and the basis of the
promissory note involves expenditures not made on the company's behalf.
Furthermore, the Company has significant counterclaims that it plans to assert
against Mr. Tedrow and Market Management, Inc.. The Company believes that this
matter will be resolved during 2006 and that the Company will prevail on all
counts.
The State Court in New York dismissed a cause of action, filed by Bristol
Investments Limited against the Company, on February 14, 2006. On March 30, 2006
without stating a new cause of action, Bristol Investments Limited re-filed the
cause of action against the Company.
As of May 15, 2006, there are no other causes of action pending against the
Company.
Item 2. Changes in Securities
None
Item. 3. Defaults Upon Senior Securities
None
Item 4. Submissions 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
None
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.
10
ETERNAL TECHNOLOGIES GROUP, INC.
/s/ Jiansheng Wei
-------------------------------------
May 25, 2006 Jiansheng Wei, Chief Executive Officer
/s/ Zheng Shen
May 25, 2006 -------------------------------------
Zheng Shen, Chief Financial Officer
11
CERTIFICATIONS
Certification by Jiansheng Wei
Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Jiansheng Wei, certify that:
1. I have reviewed this quarterly report on 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 registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers 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 registrant 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 registrant, 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 registrant'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 registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control
over financial reporting.
Date: May 25, 2006
/s/ JIANSHENG WEI
- -----------------------
Jiansheng Wei
Chief Executive Officer
12
EXHIBIT 31.2
Certification by Zheng Shen
Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Zheng Shen, certify that:
1. I have reviewed this quarterly report on 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 registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers 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 registrant 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 registrant, 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 registrant'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 registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control
over financial reporting.
Date: May 25, 2006
/s/ ZHENG SHEN
- -----------------------
Zheng Shen
Chief Financial Officer
13
- ---------------------------------------------------------------------------
EXHIBIT 32.1
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, the undersigned, Jiansheng Wei, the chief
executive officer of Eternal Technologies Group, Inc. (the "Company"), hereby
certifies that, to his knowledge:
(i) the Quarterly Report on Form 10-QSB of the Company for the year ended
December 31, 2005, as filed with the Securities and Exchange Commission on
the date hereof (the "Report") fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: May 25, 2006
/s/ JIANSHENG WEI
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Jiansheng Wei
Chief Executive Officer
14
EXHIBIT 32.2
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Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, the undersigned, Zheng Shen, the chief financial
officer of Eternal Technologies Group, Inc. (the "Company"), hereby certifies
that, to his knowledge:
(i) the Quarterly Report on Form 10-QSB of the Company for the year ended
December 31, 2005, as filed with the Securities and Exchange Commission on
the date hereof (the "Report") fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: May 25, 2006
/s/ Zheng Shen
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Zheng Shen
Chief Financial Officer