SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
 
 
 FORM
        10-QSB
 
 [X]
        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE
 ACT
        OF
        1934
 
 For
        the
        quarterly period ended September 30, 2007
 
 [
        ]
        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. 0-27929ETERNAL
                  TECHNOLOGIES GROUP, INC.
                (Exact
                  name of registrant as specified in its charter)Nevada
                (State
                  or other jurisdiction of
                incorporation
                  or organization)
              62-1655508
                (IRS
                  Employer Identification No.)Suite
                  2007, Golden Central Tower,
                No.
                  3037, Jintian Rd., Futian District, Shenzhen, Guangdong,
                  Province,
                P.R.
                  China011-86-22-2721-7020
                (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
        October 1, 2007, 47,073,579 shares of Common Stock of the issuer were
        outstanding.
 
 
 
 
 
   1
  
  
 **TABLE
                  OF CONTENTS****ETERNAL
                  TECHNOLOGIES GROUP, INC.****Part
                  I. Financial Information**Item
                  1. Consolidated Financial StatementsConsolidated
                  Balance Sheets at September 30, 2007 (Unaudited ) and
              3December
                  31, 2006Unaudited
                  Consolidated Statements of Operations for the three and
                  nineMonths
                  ended September 30, 2007 and 2006
              4Unaudited
                  Consolidated Statements of Cash Flows for the nine months
                  endedSeptember
                  30, 2007 and 2006
              5Notes
                  to the Unaudited Consolidated Financial Statements
              6Item
                  2. Management's Discussion and Analysis or Plan of
                  OperationsItem
                  3. Controls and Procedures
              12**Part
                  II. Other Information**Item
                  1. Legal Proceedings
              14Item
                  2. Unregistered Sales of Equity Securities and Use of Proceeds
              14Item
                  3. Defaults Upon Senior Securities
              14Item
                  4. Submission of Matters to a Vote of Security Holders
              14Item
                  5. Other Information
              14Item
                  6. Exhibits
              14Signatures
              15
 
 
 
  2
  Item
        1.
        Consolidated Financial Statements
 
 **ETERNAL
                  TECHNOLOGIES GROUP, INC.****UNAUDITED
                  CONSOLIDATED CONDENSED BALANCE SHEETS****September
                  30, 2007 and December 31, 2006****(Amounts
                  in United States Dollars)****September
                  30,**
              
              **December
                  31,****2007**
              
              **2006****ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              
              
              
              $
              45,634,503
              
              $
              16,024,123Short-term
                  investments
              
              
              
              
              
              -
              
              
              15,350,176Accounts
                  receivable
              
              
              
              
              
              4,345,803
              
              
              6,790,534Inventories
              
              
              
              
              
              50,920
              
              
              5,358,213Prepayments
                  and deposits
              
              
              
              
              
              6,252
              
              
              200,705Total
                  current assets
              
              
              
              
              
              50,037,478
              
              
              43,723,751Advances
                  to distributors
              
              
              
              
              
              1,090,774
              
              
              1,048,929Property
                  and equipment, net of accumulated depreciationof
                  $4,073,726 and $3,943,592 at September 30, 2007 and
              
              
              
              
              
              5,816,690
              
              
              6,882,175December
                  31, 2006, respectivelyLand
                  use rights, net of accumulated amortizationof
                  $1,919,392 and $1,647,961 at September 30, 2007 and
              
              
              
              
              
              4,705,062
              
              
              4,722,362December
                  31, 2006, respectivelyIntangible
                  assets
              
              
              
              
              
              1,636,160
              
              
              1,688,520Long-term
                  investment
              
              
              
              
              
              4,178,473
              
              
              -Total
                  assets
              
              
              
              
              $
              67,464,637
              
              $
              58,065,737**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Notes
                  Payable and convertible debt
              
              
              
              
              $
              443,366
              
              $
              443,366Accounts
                  payable and accrued liabilities
              
              
              
              
              
              1,055,838
              
              
              532,037Amounts
                  due to related parties
              
              
              
              
              
              215,295
              
              
              216,175Payable
                  due to Income Taxes
              
              
              
              
              
              215,065
              
              
              229,680Derivative
                  financial instrument liability
              
              
              
              
              
              281,670
              
              
              438,356Total
                  current liabilities
              
              
              
              
              
              2,211,234
              
              
              1,859,614Stockholders'
                  equity:Preferred
                  shares - $0.001 par value, 5,000,000authorized,
                  none issued or outstanding
              
              
              
              
              
              -
              
              
              -Common
                  shares - $0.001 par value; 95,000,000authorized;
                  47,073,579 shares issued andoutstanding
              
              
              
              
              
              47,073
              
              
              43,566Additional
                  paid - in capital
              
              
              
              
              
              17,232,327
              
              
              14,931,218Subscription
                  receivable
              
              
              
              
              
              -
              
              
              (10,176
              )Retained
                  earnings
              
              
              
              
              
              43,219,386
              
              
              38,097,409Accumulated
                  other comprehensive income
              
              
              
              
              
              5,636,707
              
              
              3,144,106Treasury
                  shares, at cost, 1,509,730 shares
              
              
              
              
              
              (882,090
              )
              
              -Total
                  stockholders' equity
              
              
              
              
              
              65,253,403
              
              
              56,206,123Total
                  liabilities and stockholders' equity
              
              
              
              
              $
              67,464,637
              
              $
              58,065,737The
                  accompanying notes are an integral part of these unaudited consolidated
                  financial statements
 
  3
  
 **ETERNAL
                  TECHNOLOGIES GROUP, INC.****UNAUDITED
                  CONSOLIDATED CONDENSED STATEMENTS OF
                  OPERATIONS****For
                  the Three and Nine Months Ended September 30, 2007 and
                  2006****(Amounts
                  in United States Dollars)****Three
                  Months Ended September 30,**
              
              **Nine
                  Months Ended September 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Revenue:
              
              $
              
              
              $
              
              
              $
              
              
              $Agricultural
                  and genetics sales
              
              
              1,506,132
              
              
              3,129,128
              
              
              16,514,000
              
              
              15,652,944Medical
                  device sales and services
              
              
              2,327,130
              
              
              3,697,468
              
              
              5,533,578
              
              
              5,761,636Land
                  lease
              
              
              152,595
              
              
              289,579
              
              
              601,895
              
              
              288,091Total
                  revenue
              
              
              3,985,857
              
              
              7,116,175
              
              
              22,649,473
              
              
              21,702,671Cost
                  of sales and servicesAgricultural
                  and genetics sales
              
              
              1,226,044
              
              
              2,635,873
              
              
              13,481,271
              
              
              12,190,489Medical
                  device sales and services
              
              
              674,294
              
              
              1,257,431
              
              
              1,706,211
              
              
              2,087,083Land
                  lease
              
              
              68,097
              
              
              64,282
              
              
              201,451
              
              
              192,845Total
                  cost of sales and services
              
              
              1,968,435
              
              
              3,957,586
              
              
              15,388,933
              
              
              14,470,417Gross
                  profit
              
              
              2,017,422
              
              
              3,158,589
              
              
              7,260,540
              
              
              7,232,254Depreciation
                  Expense
              
              
              146,072
              
              
              203,291
              
              
              566,172
              
              
              605,714Selling,
                  general and administrativeExpenses
              
              
              760,397
              
              
              975,078
              
              
              2,845,511
              
              
              2,289,608Income
                  from operations
              
              
              1,110,953
              
              
              1,980,220
              
              
              3,848,857
              
              
              4,336,932Other
                  income (expense)Interest
                  income
              
              
              416,015
              
              
              52,384
              
              
              866,250
              
              
              141,221Gain
                  on Sales of Assets
              
              
              481,444
              
              
              -
              
              
              473,897
              
              
              -Investment
                  Income
              
              
              99,088
              
              
              -
              
              
              293,131
              
              
              -Change
                  in value of derivativefinancial
                  instruments
              
              
              57,992
              
              
              64,373
              
              
              19,881
              
              
              (39,841)Other
                  income (expense), net
              
              
              1,054,539
              
              
              116,757
              
              
              1,653,159
              
              
              101,380Income
                  before provision forincome
                  taxes
              
              
              2,165,492
              
              
              2,096,977
              
              
              5,502,016
              
              
              4,438,312Provision
                  for income taxes
              
              
              175,330
              
              
              253,234
              
              
              380,039
              
              
              395,070Net
                  income
              
              $
              1,990,162
              
              $
              1,843,743
              
              $
              5,121,977
              
              $
              4,043,242Net
                  income per common sharebasic
                  and diluted
              
              $
              0.04
              
              $
              0.05
              
              $
              0.11
              
              $
              0.10Weighted
                  average number ofcommon
                  shares outstanding,basic
                  and diluted
              
              
              47,073,579
              
              
              40,567,300
              
              
              47,073,579
              
              
              40,321,041The
                  accompanying notes are an integral part of these unaudited consolidated
                  condensed financial statements
 
  4
  
 **ETERNAL
                  TECHNOLOGIES GROUP, INC.****UNAUDITED
                  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS****For
                  the Nine Months Ended September 30, 2007 and 2006****(Amounts
                  in United States Dollars)****2007**
              
              **2006**Cash
                  flows from operating activitiesNet
                  income
              
              
              
              
              $
              5,121,977
              
              $
              4,043,243Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              
              
              
              
              
              767,623
              
              
              798,559Gain
                  From Sales of Fixed Assets
              
              
              
              
              
              (473,897
              )Equity
                  in earnings of Turtle Farm
              
              
              
              
              
              (293,131
              )
              
              -Change
                  in value of derivative financial instruments
              
              
              
              
              
              (156,686
              )
              
              39,841Changes
                  in operating assets and liabilities:Inventories
              
              
              
              
              
              5,521,048
              
              
              79,055Accounts
                  receivable
              
              
              
              
              
              2,916,266
              
              
              4,898,444Prepayments
                  and deposits
              
              
              
              
              
              202,460
              
              
              (633
              )Accounts
                  payable and accrued expenses
              
              
              
              
              
              478,798
              
              
              1,420,264Account
                  payable to related parties
              
              
              
              
              
              -
              
              
              (29,262
              )Net
                  cash provided by operating activities
              
              
              
              
              
              14,084,458
              
              
              11,249,511Cash
                  flows from investing activities:Redemption/(Purchase)
                  of Short-Term Investment
              
              
              
              
              
              15,962,541
              
              
              (15,157,639
              )Proceeds
                  from Sales of Fixed Assets
              
              
              
              
              
              1,376,770
              
              
              -Advances
                  to distributors
              
              
              
              
              
              -
              
              
              (252,628
              )Long
                  Term Investment
              
              
              
              
              
              (3,885,342
              )
              
              -Net
                  cash provided by investing activities
              
              
              
              
              
              13,453,969
              
              
              (15,410,267
              )Cash
                  flows from financing activities:Capital
                  contributed
              
              
              
              
              
              2,304,615
              
              
              -Repurchase
                  of common stock
              
              
              
              
              
              (882,090
              )
              
              -Collection
                  of Subscription Receivable
              
              
              
              
              
              10,176
              
              
              -Net
                  cash provided by financing activities
              
              
              
              
              
              1,432,701
              
              
              -Effect
                  of exchange rate changes on cash
              
              
              
              
              
              639,251
              
              
              827,939Net
                  increase (decrease) in cash and cash equivalents
              
              
              
              
              
              29,610,380
              
              
              (3,332,817
              )Cash
                  and cash equivalents, beginning of period
              
              
              
              
              
              16,024,123
              
              
              18,224,488Cash
                  and cash equivalents, end of period
              
              
              
              
              $
              45,634,503
              
              $
              14,891,671Supplemental
                  disclosure of cash flow information:Interest
                  Paid
              
              
              
              
              $
              -
              
              $
              -Tax
                  paid
              
              
              
              
              
              380,039
              
              
              395,070The
                  accompanying notes are an integral part of these unaudited consolidated
                  financial statements
 
  5
  
 **ETERNAL
        TECHNOLOGIES GROUP INC. AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **1.** **Background
        and Critical Accounting Policies**
 
 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 September
        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 100% of 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.
 
 E-Sea
        Biomedical Engineering Co. International Ltd. was incorporated on October
        20,
        2004 under the laws of the British Virgin Islands. (E-Sea) E-Sea owns all
        of the
        issued and outstanding stock of E-Sea Shenzhen which owns a Chinese patent
        for
        dialysis technology and produces and markets a series of instruments for
        detecting breast disease specifically breast cancer by applying its image
        processing technology. E-Sea was acquired as of the close of business on
        September 30, 2005.
 
 Inventory
 
 Livestock
        inventories that are purchased for embryo transplanting, resale, or meat
        processing are recorded at historical cost. Estimated costs of raised livestock
        prior to use for embryo transplanting, sale, or meat processing are accumulated
        and capitalized as inventory at the balance sheet date. Embryo inventories
        are
        recorded at historical cost. Inventories are measured at lower of cost and
        net
        realizable value using the first-in first-out ("FIFO") or weighted average
        cost
        formulas. The Company reviews its inventory quarterly to identify slow moving,
        obsolete or otherwise impaired inventory. The identification process includes
        historical performance of the inventory, current operational plans for the
        inventory, as well as industry and customer specific trends. If actual results
        differ from management expectations with respect to the selling of inventories
        at amounts equal to or greater than their carrying amounts, an adjustment
        to
        inventories would be made.
 
 Land
        lease rights and amortization
 
 Land
        lease rights in Mainland China were stated at the amount of the prepayment
        less
        accumulated amortization. Amortization of land lease rights was calculated
        on
        the straight-line basis over the term of the lease of approximately 25 years.
        The land lease rights with respect to the Company's farm were originally
        purchased from the Chinese government for $6,000,000 and such rights extend
        through 2025. The farm is located in Wulagai Development Area in Inner
        Mongolia.
 
 Foreign
        currency translation
 
 The
        Company's reporting currency is the US$. The Company maintains no material
        accounts in currency of the United States of America. All of the subsidiaries
        maintain their books and accounts in the People's Republic of China currency,
        which is called Renminbi ("RMB"). Translation of the balance sheet amounts
        from
        RMB into US$ has been made at the single rate of exchange on September 30,
        2007
        and December 31, 2006 of 7.52 and 7.82 RMB/US$, respectively. The income
        statement has been translated at the average rate of exchange in effect during
        the year of 7.68 RMB/US$ and 7.98 RMB/US$ for the years ended December 31,
        2006,
        respectively. No representation is made as to whether the RMB amounts could
        have
        been, or could be, converted into US$ at that rate on September 30, 2007
        or
        December 31, 2006 or at any other date.
    6
 
 The
        quotation of the exchange rates does not imply free convertibility of RMB
        to
        other foreign currencies. All foreign exchange transactions continue to take
        place either through the Bank of China or other banks authorized to buy and
        sell
        foreign currencies at the exchange rates quoted by the People's Bank of China.
        Approval of foreign currency payments by the Bank of China or other institutions
        requires submitting a payment application form together with invoices, shipping
        documents and signed contracts.
 
 On
        July
        21, 2005, China effectively revalued its currency by removing its "peg" against
        the U.S. dollar at 8.3:1 and measuring it against a basket of currencies
        of
        which the U.S. dollar is only one.
 
 Revenue
        recognition
 
 In
        accordance with Staff Accounting Bulletin No. 104 (SAB 104), revenue from
        the
        sale of livestock, mutton embryos, and raw materials is recognized when
        persuasive evidence of an arrangement exists; the price to the buyer is fixed
        or
        determinable; the merchandise is delivered to the customer and title passes;
        and
        collectibility is reasonably assured. Lease income for 2007 is recognized
        quarterly.
 
 Stock-based
        compensation
 
 Stock
        compensation expense for stock granted to non-employees has been determined
        in
        accordance with Statement of Financial Accounting Standards No. 123, "Accounting
        for Stock-Based Compensation" ("SFAS 123") and the Emerging Task Force consensus
        in Issue No. 96-18, "Accounting for Equity Instruments that are Issued to
        Other
        than Employees for Acquiring, or in conjunction with Selling Goods or Services
        ("EITF 96-18"), as the fair value of the consideration received or the fair
        value of the equity instruments issued, whichever is more reliably
        measured.
 
 Stock
        compensation expense for stock granted to employees has been determined in
        accordance with SFAS 123.
 
 Use
        of
        estimates
 
 The
        preparation of consolidated financial statements requires management to make
        estimates and assumptions that affect the amounts reported in the consolidated
        financial statements and accompanying notes. Actual results could differ
        from
        those estimates.
 
 Recent
        accounting pronouncements
 
 In
        November 2004, FASB issued SFAS No. 151, "Inventory Costs - An Amendment
        of ARB
        No. 43, Chapter 4" (SFAS No. 151). SFAS No. 151 amends the guidance in ARB
        No.
        43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
        amounts of idle facility expense, handling costs, and wasted material
        (spoilage). Among other provisions, the new rule requires that items such
        as
        idle facility expense, excessive spoilage, double freight, and rehandling
        costs
        be recognized as current-period charges regardless of whether they meet the
        criterion of "so abnormal" as stated in ARB No. 43. SFAS No. 151 is effective
        for fiscal years beginning after September 15, 2005 and is required to be
        adopted by the Company in the first quarter of fiscal 2006, beginning on
        January
        1, 2006. The Company is currently evaluating the effect that the adoption
        of
        SFAS No. 151 will have on its consolidated financial position, results of
        operations and cash flows but do not expect SFAS No. 151 to have a material
        impact
 
 Reclassifications
 
 Certain
        reclassifications have been made to prior period financial statements to
        conform
        to the current period presentation. These reclassifications did not have
        an
        impact on the Company’s results of operations.
 
 **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, 2006 and notes thereto
        included in the Company's Form 10-KSB.
   
 7
 In
        the
        opinion of management, the unaudited consolidated condensed financial statements
        reflect all adjustments (which include only normal recurring adjustments)
        necessary to present fairly the financial position of the Company as of
        September 30, 2007, the results of operations for the three and nine months
        ended September 30, 2007 and 2006, respectively. Interim results are not
        necessarily indicative of full year performance because of the impact of
        seasonal and short-term variations.
 
 **3.** **Cash
        and Cash Equivalents**
 
 At
        September 30, 2007, the Company maintains bank accounts in the PRC of
        approximately $45,634,503.
 
 **4.** **Notes
        Payable**
 
 On
        August
        22, 2007, the Federal District Court for the Southern District of Texas issued
        a
        decision involving the promissory notes in default to Tom Tedrow and Market
        Management LLC awarding them $636,757.86 which includes accrued interest.
        The
        full amount of this judgment had previously been reserved.
 
 **5.**  **Income
        Taxes**
 
 The
        companies operate in several jurisdictions and may be subject to taxation
        in
        those jurisdictions.
 
 It
        is
        management's intention to reinvest all the income attributable to the Company
        earned by its operations outside of the United States of America. Accordingly,
        no United States corporate taxes have been provided in these consolidated
        financial statements. The Company has a U.S. net operating loss carry forward
        of
        approximately $2,300,000 expire in years between 2022 and 2025. However a
        valuation allowance has been provided as management does not expect the tax
        benefits to be realized. No other significant deferred assets or liabilities
        existed at December 31, 2006. The Company's net operating loss carry forwards
        may be subject to annual limitations, which could reduce or defer the
        utilization of the losses as a result of an ownership change as defined in
        section 382 of the Internal Revenue Code.
 
 Under
        current law of the British Virgin Islands (BVI), any dividends and capital
        gains
        arising from the Company's investments are not subject to income tax in the
        British Virgin Islands.
 
 Companies
        with operations in the Peoples Republic of China may be subject to taxes
        for
        income therein. The Income Tax Law of the Peoples Republic of China for
        Enterprises with Foreign Investment and Foreign Enterprises provide certain
        exemptions from taxation. Under current PRC law, Aershan is exempt from taxation
        as Aershan's operations currently benefit from a tax holiday. The tax holiday,
        granted by Xilingol League, which is the local government, and the central
        PRC
        government, commenced on the incorporation of Inner Mongolia Aershan Agriculture
        and Husbandry Technology Co., Ltd., in July 2000. The Company has benefited
        from
        this holiday since inception and anticipates that the holiday will extend
        through July 2008.
 
 The
        tax
        holiday resulted in tax savings that account for substantially the entire
        difference between the income tax provision that would be expected using
        United
        States federal statutory tax rates and the tax provision of zero for the
        three
        and nine months ended September 30, 2007. The tax provision for the
        corresponding period of the current year were $175,330 and $ 380,039
        respectively, all from the business activities of E-Sea.
 
 **6.** **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 were penalties for not timely meeting filing and effectiveness
        deadlines, and the Company received claims related to these penalties. On
        May
        24, 2005 the Company issued convertible notes, allowing for conversion of
        the
        penalty to the Company’s common stock, to the holders of the subscription
        agreements who accepted settlement. One subscription agreement holder elected
        to
        not accept a convertible note and is pursuing legal action as discussed in
        Part
        II, Item 1.
   
 8
 The
        Company's operations are conducted in the PRC. Accordingly, the Company's
        business, financial condition and results of operations may be influenced
        by the
        political, economic and legal environments in the PRC, and by the general
        state
        of the PRC economy.
 
 The
        Company's operations in the PRC are subject to special considerations and
        significant risks not typically associated with companies in North America
        and
        Western Europe. These include risks associated with, among others, the
        political, economic and legal environments and foreign currency exchange.
        The
        Company's results may be adversely affected by changes in the political and
        social conditions in the PRC, and by 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.
 
 **7.**  **Related
        Party Transactions**
 
 During
        the three and nine months ended the Company engaged in various transactions
        with
        related parties as follows:
 
 **Three
                  Months Ended**
              
              **Nine
                  Months Ended****September
                  30,**
              
              **September
                  30,**
              
              **September
                  30,**
              
              **September
                  30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Common
                  stock sold by officers/ directorsdirectors
                  with proceeds contributedto
                  the company for payment ofoperating
                  expenses
              
              $
              186,972
              
              $
              -
              
              $
              186,972
              
              $
              -
 
 **8.
        Non-Cash Investing and Financing**
 
 During
        the three and nine months ended the Company engaged in various transactions
        with
        related parties as follows:
 
 Three
                  Months Ended September 30
              
              Nine
                  Months Ended September 302007
              
              2006
              
              2007
              
              2006Common
                  Stock issued to convert debt
              
              $
              -
              
              $
              52,262
              
              
              
              
              $
              $
                  419,335Common
                  Stock issued for acquisition of Investment
              
              $
              -
              
              $
              -
              
              $
              1,903,811
              
              $
              -Common
                  Stock issued upon exercise of warrants
              
              $
              -
              
              $
              -
              
              $
              136,804
              
              $
              -Compensatory
                  common stock issuances
              
              $
              -
              
              $
              -
              
              $
              264,000
              
              $
              -
 
 
 **9.**
            **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 nine months ended September 30,
        2007and 2006, is as follows:
  9
  
 **Agricultural**
              
              **Land**
              
              **Medical****Genetics**
              
              **Lease**
              
              **Devices**
              
              **Corporate**
              
              **Total****2007****Revenues**
              
              $
              16,514,000
              
              $
              601,895
              
              $
              5,533,578
              
              $
              -
              
              $
              22,649,473**Income
                  from operations**
              
              
              3,475,971
              
              
              400,444
              
              
              2,153,555
              
              
              (907,993
              )
              
              5,121,977**Depreciation
                  and amortization**
              
              
              351,675
              
              
              201,451
              
              
              214,497
              
              
              -
              
              
              767,623**Total
                  assets**
              
              
              50,007,709
              
              
              4,705,062
              
              
              10,810,992
              
              
              1,940,874
              
              
              67,464,637
 
 **Agricultural**
              
              **Land**
              
              **Medical****Genetics**
              
              **Lease**
              
              **Devices**
              
              **Corporate**
              
              **Total****2006****Revenues**
              
              
              15,652,944
              
              
              288,091
              
              
              5,761,636
              
              
              -
              
              
              21,702,671**Income
                  from operations**
              
              
              2,310,783
              
              
              95,246
              
              
              2,624,488
              
              
              (693,585
              )
              
              4,336,932**Depreciation
                  and amortization**
              
              
              400,984
              
              
              192,845
              
              
              204,730
              
              
              -
              
              
              798,559**Total
                  assets**
              
              
              44,031,943
              
              
              4,728,236
              
              
              7,742,108
              
              
              2,730
              
              
              56,505,017
 
 
 Information
        regarding our reportable segments for the three months ended September 30,
        2007
        and 2006, is as follows:
 
 **Agricultural**
              
              **Land**
              
              **Medical****Genetics**
              
              **Lease**
              
              **Devices**
              
              **Corporate**
              
              **Total****2007****Revenues**
              
              $
              1,506,132
              
              $
              152,595
              
              $
              2,327,130
              
              $
              -
              
              $
              3,985,857**Income
                  from operations**
              
              
              (62,968
              )
              
              84,498
              
              
              1,164,005
              
              
              (74,582
              )
              
              1,110,953**Depreciation
                  and amortization**
              
              
              73,443
              
              
              68,097
              
              
              72,629
              
              
              -
              
              
              214,169
 
 **Agricultural**
              
              **Land**
              
              **Medical****Genetics**
              
              **Lease**
              
              **Devices**
              
              **Corporate**
              
              **Total****2006****Revenues**
              
              
              3,129,128
              
              
              289,579
              
              
              3,697,468
              
              
              -
              
              
              7,116,175**Income
                  from operations**
              
              
              158,484
              
              
              225,297
              
              
              1,679,762
              
              
              (83,323
              )
              
              1,980,220**Depreciation
                  and amortization**
              
              
              134,692
              
              
              64,282
              
              
              68,599
              
              
              -
              
              
              267,573
 
 
 
 10
  Item
        2.
        Management’s Discussion and Analysis or Plan of Operation
  The
        Company’s business is seasonal. Accordingly, the results of operations for the
        three and nine month periods ended September 30, 2007 are not indicative
        of the
        results for any other quarter, period or for the fiscal year.
 
 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 September 30, 2007 and 2006.
 
 **Three
        Months Ended September 30, 2007 Compared to Three months Ended September
        30,
        2006**
 
 **Revenues
        -**
 Revenues
        for the three months ended September 30, 2007 decreased by $3,130,318 or
        44.0%
        to $3,985,857 from $7,116,175 for the corresponding period of the prior year.
        The following table indicates the changes in sales by category for the two
        periods.
 
 Three
                  months ended September 30Source
                  of Revenue
              
              2007
              
              2006
              
              DifferenceMutton
              
              
              1,506,132
              
              
              3,129,128
              
              
              (1,622,996
              )Land
                  Lease
              
              
              152,595
              
              
              289,579
              
              
              (136,984
              )E-Sea
              
              
              2,327,130
              
              
              3,697,468
              
              
              (1,370,338
              )Totals
              
              
              3,985,857
              
              
              7,116,175
              
              
              (3,130,318
              )
  **Cost
        of Sales and Services**
 
 Cost
        of
        sales and services for the three months ended September 30, 2007 decreased
        $1,989,151 or 50.3% to $1,968,435 from $3,957,586 for the corresponding period
        of the prior year. The following table indicates the changes in cost of sales
        and services for the two periods .
 
 Source
                  of Cost of
              
              Three
                  Months Ended September 30,
              
              
              
              2007Sales
                  and Services
              
              2007
              
              2006
              
              Difference
              
              Profit
                  MarginCattle
                  Embryo TransferLand
                  lease expense
              
              
              68,097
              
              
              64,282
              
              
              3,815
              
              
              55.4
              %Feeding
                  fee
              
              
              29,066
              
              
              48,846
              
              
              (19,780
              )
              
              -Mutton
              
              
              1,196,978
              
              
              2,587,027
              
              
              (1,390,049
              )
              
              20.6
              %E-Sea
              
              
              674,294
              
              
              1,257,431
              
              
              (583,137
              )
              
              71.0
              %Totals
              
              
              1,968,435
              
              
              3,957,586
              
              
              (1,989,151
              )
              
              50.3
              %
 
 **Depreciation
        and Amortization -**
 Depreciation
        and amortization expenses decreased by $57,219 or 28.1% to $146,072 from
        $203,291 for the corresponding period of the prior year. This decrease is
        attributable to the disposition of fixed assets.
 
 **Selling
        and Administrative Expenses -**
 
 Selling
        and administrative expenses decreased by $214,681 or 22% to $760,397 from
        $975,078 for the corresponding period of the prior year. The following table
        indicates the changes in selling, general and administrative expenses by
        category for the two periods:
 Three
                  Months Ended September 30,Category
              
              
              2007
              
              
              2006
              
              
              DifferenceOffice
                  charges
              
              $
              24,259
              
              $
              16,136
              
              $
              8,123Salaries
              
              
              369,019
              
              
              244,197
              
              
              124,822Distributor
                  Commissions
              
              
              144,668
              
              
              227,526
              
              
              (82,858
              )Travel
              
              
              4,973
              
              
              3,731
              
              
              1,242Entertainment
              
              
              2,043
              
              
              2,887
              
              
              (844
              )Legal
                  & Professional
              
              
              65,453
              
              
              80,113
              
              
              (14,660
              )Rent
              
              
              15,950
              
              
              24,019
              
              
              (8,069
              )Telephone
              
              
              1,706
              
              
              2,174
              
              
              (468
              )Research
                  & Development
              
              
              132,117
              
              
              -
              
              
              132,117Miscellaneous
              
              
              210
              
              
              363
              
              
              (153
              )Advertising
              
              
              -
              
              
              373,932
              
              
              (373,932
              )760,397
              
              
              975,078
              
              
              (214,681
              )
 
 
   11
 **Other
        Income (Expense)**
 
 For
        the
        three months ended September 30, 2007 the company experienced an increase
        in
        other income of $937,782 or 803% to $1,054,539 from $116,757 for the
        corresponding period of the prior year. The increase is primarily attributable
        to an increase in interest income of $416,015 from short-term investment,
        an
        increase in equity earnings of $99,088 on investment in Changsha Hongyuan
        and a
        gain on the sale of assets $481,444.
 
 For
        the
        three months ended September 30, 2007 the company had a change in the value
        of
        derivative instruments of $57,992. For the three months ended September 30,
        2006
        the company also had a positive change in the value of derivative instruments
        of
        $64,373.
 
 **Income
        Taxes**
 
 For
        the
        three months ended September 30, 2007, the Company provided taxes on its
        income
        from its E-Sea operations of $175,330. This compares to a tax provision of
        $253,234 for the corresponding period of the prior year. The remainder of
        the
        Company's income is from agricultural activities which benefits from a tax
        holiday.
 
 As
        a
        result of the foregoing, the company had net income of $1,990,162 or $.04
        per
        share for the three months ended September 30, 2007 compared to net income
        of
        $1,843,743 or $.05 per share for the corresponding period of the prior
        year.
 
 **Nine
        Months Ended September 30, 2007 As Compared to Nine Months Ended September
        30,
        2006**
 
 **Revenues-**
 
 Revenues
        for the nine months ended September 30, 2007 increased by $946,802 or 4.4%
        to
        $22,649,473 from
        $21,702,671 for the corresponding period of the prior year. The following
        table
        indicates the changes in sales by category for the two periods:
 Nine
                  Months ended September 30Source
                  of Revenue
              2007
              2006
              DifferenceLamb
                  meat
              1,746,407
              $3,625,457
              (1,879,050)Cattle
                  Embryo Transfers
              4,507,697
              5,238,018
              (730,321)Embryo
              4,051,716
              -
              4,051,716Mutton
              6,208,180
              5,442,550
              765,630E-Sea
              5,533,578
              5,761,636
              (228,058)Land
                  Lease
              601,895
              288,091
              313,804Transfer
                  Services
              -
              1,346,919
              (1,346,919)Total
              22,649,473
              $21,702,671
              $946,802
 
 **Cost
        of Sales** **and
        Services -**
 Cost
        of
        sales and services for the nine months ended September 30, 2007 increased
        by
        $918,516 or 6.3% to $15,388,933 from $14,470,417 for the
        corresponding period of the prior year. The following table indicates the
        changes in cost of sales and services by category for the two periods:
 
 Nine
                  Months Ended September 30,Source
                  of Cost of Sales & Services
              2007
              2006
              Difference
              2007
                  Gross Profit MarginLamb
                  meat
              1,220,205
              $2,544,180
              $(1,323,975)
              30.1%Cattle
                  Embryo Transfer
              3,226,912
              3,810,783
              (583,871)
              28.4%Embryo
              3,986,576
              -
              3,986,576
              1.6%Mutton
              4,918,080
              4,456,930
              461,150
              9.6%Feeding
                  fee
              129,499
              143,920
              (14,421)
              -Transfer
                  Services
              -
              1,234,676
              (1,234,676)
              -Land
                  Lease
              201,451
              192,847
              8,604
              66.5%E-Sea
              1,706,211
              2,087,081
              (380,870)
              69.2%Total
              $15,388,933
              $14,470,417
              $918,516
              32.3%
   12
 **Depreciation
        and Amortization**  -
 
 Depreciation
        and amortization expenses decreased by $39,542 or 6.5% to $566,172 from $605,714
        for the corresponding period of the prior year. This decrease is attributable
        to
        the disposition of fixed assets and change in currency valuation.
 
 **Selling,
        General and Administrative Expenses** -
  Selling,
        General and Administrative expenses increased by $555,903 or 24.3% to $2,845,511
        from $2,289,608 for the corresponding period of the prior year. The following
        table indicates the changes in Selling, General and Administrative Expenses
        by
        category for the two periods.
 
 Nine
                  Months Ended September 30,Category
              2007
              2006
              DifferenceOffice
                  changes
              $
                  75,952
              $
                  56,059
              $
                  19,893Salaries
              1,091,668
              728,829
              362,839Commissions
                  to distributors
              341,986
              319,893
              22,093Travel
              24,314
              33,967
              (9,653)Consulting
                  Fee
              -
              24,943
              (24,943)Entertainment
              51,750
              11,697
              40,053Legal
                  & Professional
              342,859
              372,102
              (29,234)Rent
              61,244
              69,194
              (7,950)Telephone
              4,512
              5,468
              (956)Research
                  & Development
              260,560
              -
              26,0560Miscellaneous
              666
              233,312
              (233,646)Advertising
                  Expense
              -
              374,144
              (374,144)Marketing
                  Expense
              30,000
              -
              30,000Litigation
                  Reserve
              500,000
              -
              500,000U.S.
                  Office Expense
              60,000
              60,000
              -Totals
              $2,845,511
              $2,289,608
              $555,903
 
 **Other
        Income (Expense)**
 
 For
        the
        nine months ended September 30, 2007 the company experienced an increase
        in
        other income of $1,551,779. This resulted from an increase in interest income
        of
        $725,029 an increase in investment income of $293,131 and a reduction in
        the
        impact of the charges in value of our derivative financial instruments of
        $59,722 and in increase in the gain on the sale of assets of $473,897.
 
 **Income
        Taxes**
 
 The
        Company provided taxes on its income from the E-Sea operations of $380,039
        for
        the nine-month ended September 30, 2007. This compares with a provision for
        income taxes for the prior year period of $395,070.
 
 As
        a
        result of the foregoing, the Company had net income of $5,121,977 or $.11
        per
        share for the nine months
        ended September 30, 2007 compared to net income of $4,043,242 or $.10 per
        share
        for the corresponding
        period of the prior year.
 
 **Liquidity
        and Capital Resources**
 
 As
        of
        September 30, 2007, the Company had cash and cash equivalents of
        $45,634,503 and working capital of
        $47,826,244. This compares with cash and cash equivalents of $16,024,123
        and
        working capital of $41,864,137
        as of December 31, 2006.
   
 13
 Cash
        provided from investing activities was $13,453.969 during the nine months
        ended
        September 30,2007 compared to cash used $15,410,267
        for the nine months ended September 30, 2006. This resulted from cash provided
        from redemption
        of short-term investment $15,962,541
        cash provided from the sale of fixed assets of $1,376,770 and reduced by
        the
        purchase of a long-term investment of $3,885,342 for the nine months ended
        September 30, 2007 compared to cash used to purchase of short-term investment
        $15,157,639 and advances to distributors of $252,658 for the corresponding
        period of the prior year.
 
 Cash
        provided from financing activities for the nine months ended September 30,
        2007,
        totaled $1,432,701, $2,304,615 from the issuance of common stock, $10,176
        from
        the collection of a common stock receivable, and $882,090 used in repurchase
        of
        common stock. There were no financing activities for the nine months ended
        September 30, 2006.
 
 The
        Company has cash and bank balances of $45,634,503 which is more than sufficient
        to cover its PRC operations. However, if the Company
        is to
        expand
        outside the PRC, as it anticipates doing, or pay its non-PRC obligations,
        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 its business objectives
        outside the PRC for the next twelve (12) months.
 
 **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
        independent registered public accounting firm, Ham Langston & Brezina,
        L.L.P. ("HLB") conducted an audit of our financial statements for 2006 and
        2005.
        In connection with the issuance of its report to the Board of Directors,
        HLB
        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)
        We
        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. GAAP.
        and
        SEC rules and regulations.
 
 (ii)
        Accounting for derivative instruments under FASB 133
 
 To
        address the weaknesses, we have hired an independent accounting firm to assist
        with accounting for derivatives and will seek outside accounting assistance
        on
        any further acquisition .
 
 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.
 
 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.
 
 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.
 
 
  14
  
 **PART
        II. OTHER INFORMATION**
 
 **Item
        1. Legal Proceedings.**
 
 On
        August
        23, 2007, the U. S. District Court for the Southern District of Texas awarded
        Western Securities Corporation the sum of $636,757.86 plus accrued interest
        since May 22, 2007 and attorney fees in an amount to be determined. The Company
        is currently considering whether to appeal this judgment. The judgment will
        have
        no impact on earnings, as the potential liability had been previously
        accrued.
 
 On
        the
        4 th of
        September 2007, the Company was served with a suit from International Capital
        Advisors LLC, as assignee of Market Management, Inc. seeking repayment of
        the
        sum of $250,000 alleged paid by Market Management, Inc. on behalf of the
        Company. On September 18, 2007, the Company filed a general denial to this
        claim
        and the case is currently in discovery. It has been scheduled for trial in
        July,
        2008.
 
 The
        third
        cause of action involves one of the convertible promissory notes owned by
        Bristol Investments Limited. This cause of action was filed in State Court
        in
        New York and three times was dismissed. On March 30, 2006 without stating
        a new
        cause of action, Bristol Investments Limited re-filed the same cause of action
        against the Company. This case is currently pending.
 
 As
        of
        October 31, 2007, there are no other causes of action pending against the
        Company.
 
 **Item
        2. Unregistered Sales of Equity Securities and Use of
        Proceeds.**
 
 During
        the three month period ended September 30, 2007 there were no sales of equity
        securities.
 
 **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**
 
 **EXHIBIT
                  NO.**
              **IDENTIFICATION
                  OF EXHIBIT**31.1
              
              Certification
                  Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section
                  302 of
                  the Sarbanes-Oxley Act of 200231.2
              
              Certification
                  Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section
                  302 of
                  the Sarbanes-Oxley Act of 200232.1
              
              Certification
                  Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 200232.2
              
              Certification
                  Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002
   
 15
 **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.Date: November
              8, 2007
            By:
            /s/ Jiansheng
              WeiJiansheng
              WeiChief
              Executive Officer  
 
 Date: November
                8, 2007
              By:
              /s/ Zheng
                ShenZheng
                ShenChief
                Financial Officer
 
 
 
  
 
 
 
 
 
  16
  **CERTIFICATIONS**
 **EXHIBIT
        31.1**
 
 **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:
        November 8, 2007
 
 /s/
        JIANSHENG WEI
 -----------------------
 Jiansheng
        Wei
 Chief
        Executive Officer
   17
 
 
 
 **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:
        November 8, 2007
 
 /s/
        ZHENG
        SHEN
 -----------------------
 Zheng
        Shen
 Chief
        Financial Officer
   18
 
 
 ****        **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 quarterly period ended
        September 30, 2007, 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:
        November 8, 2007
 
 
 /s/
        JIANSHENG WEI
 -----------------------
 Jiansheng
        Wei
 Chief
        Executive Officer
  19
  **EXHIBIT
        32.2**
 
 **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 quarterly period ended
        September 30, 2007, 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:
        November 8, 2007
 
 
 /s/
        Zheng
        Shen
 -----------------------
 Zheng
        Shen
 Chief
        Financial Officer