SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the quarterly period ended June 30, 2004

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

              For the transition period from__________to__________.

                           Commission File No. 0-27929


                        ETERNAL TECHNOLOGIES GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


             Nevada                                    62-1655508
----------------------------------         ---------------------------------
 (State or other jurisdiction of           (IRS Employer Identification No.)
  incorporation or organization)


          Suite 04-06, 28/F, Block A, Innotec Tower, 235 Nanjing Road,
                        Heping District, Tianjin, 300100
      --------------------------------------------------------------------
                    (Address of principal executive offices)

                               011-86-22-2750-1802
                            -------------------------
                           (Issuer's telephone number)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. YES X NO ____
                                                             ----

As of August 12,  2004,  29,387,380  shares of Common  Stock of the issuer  were
outstanding.

<PAGE>



                        Eternal Technologies Group, Inc.
                                      INDEX


                                                                          Page
                                                                          Number

PART I - FINANCIAL INFORMATION

  Item 1.  Consolidated Financial Statements

           Consolidated Balance Sheets - June 30, 2004 (unaudited) and
           December 31, 2003 (audited)                                        3

           Unaudited Consolidated Statements of Income - For the
           three months and Six Months ended June 30, 2004 and 2003           4

           Unaudited Consolidated Statements of Cash Flows-
           For the Six Months ended June 30, 2004 and 2003                    5

           Notes to (unaudited) Consolidated Financial Statements             6

  Item 2.  Management Discussion and Analysis of Financial
           Condition and Results of Operations                               10

  Item 3.  Controls and Procedures                                           12


PART II - OTHER INFORMATION

  Item 1.  Legal Proceedings                                                 12
  Item 2.  Changes in Securities and Small Business Issuer Purchases
           of Equity Securities                                              12
  Item 3.  Defaults Upon Senior Securities                                   13
  Item 4.  Submission of Matters to a Vote of Security Holders               13
  Item 5.  Other Information                                                 13
  Item 6.  Exhibits and Reports on Form 8-K                                  13

            Signatures                                                       13

                Certifications                                               14
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  JUNE 30, 2004
                             (UNITED STATES DOLLARS)

                                     ASSETS

<TABLE>

                                                                                    June 30                 December 31
                                                                                     2004                      2003
                                                                             ---------------------    --------------------
                                                                                      (Unaudited)           (Audited)

<S>                                                                           <C>                      <C>

CURRENT ASSETS
  Cash and Cash equivalents                                                          $ 19,067,185             $16,302,464
  Inventories                                                                             696,937               1,214,182
  Other receivable                                                                      3,279,513               3,399,995
  Receivable due from related company                                                     617,824                 617,825
  Receivable - Property sold                                                            1,897,590                       -
  Prepayments and deposits                                                                143,976                 145,190
  Property held for sale                                                                        -               2,192,071
                                                                             ---------------------    --------------------

TOTAL CURRENT ASSETS                                                                   25,703,025              23,871,727


FIXED ASSETS
  (net of accumulated depreciation of $2,199,987 in 2004
   and $1,943,831 in 2003)                                                              6,160,183               6,416,341
LAND USE RIGHTS
   (net of accumulated amortization of $931,160 in 2004
    and $806,961 in 2003)                                                               5,068,840               5,193,039
                                                                             ---------------------    --------------------

TOTAL ASSETS                                                                         $ 36,932,048             $35,481,107
                                                                             =====================    ====================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Notes payable                                                                   $      443,366             $   503,857
   Accounts payable and accrued expenses                                                1,504,624               1,133,462
   Payable to related company                                                             103,373                 205,957
   Amounts due to related parties                                                         409,962                 417,617
                                                                             ---------------------    --------------------

TOTAL CURRENT LIABILITIES                                                               2,461,325               2,260,893
                                                                             ---------------------    --------------------


SHAREHOLDERS' EQUITY
   Preferred shares - 5,000,000 authorized $.001 par -
      none issued                                                                               -                       -
   Common shares - 95,000,000 shares authorized, at
  $.001 par, 29,387,380  and 29,177,396 shares issued and
   outstanding at June 30, 2004 and December 31, 2003, respectively                        29,387                  29,177
   Paid - in capital                                                                    8,317,110                8,088,159
   Stock subscription receivable                                                          (10,176)                (10,176)
   Retained earnings                                                                   26,134,402               25,113,054
                                                                             ---------------------    --------------------
TOTAL SHAREHOLDERS' EQUITY                                                             34,470,723               33,220,214
                                                                             ---------------------    --------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                         $   36,932,048           $  35,481,107
                                                                             =====================    ====================
</TABLE>




     The accompanying notes are integral part of these financial statements.

<PAGE>

                ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
        FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                             (UNITED STATES DOLLARS)

<TABLE>

                                               Three Months Ended June 30         Six Months Ended June 30
                                       ------------------------------------    ------------------------------
                                             2004                   2003           2004              2003
                                       -----------------    ---------------    ---------------    ------------
                                         (Unaudited)          (Unaudited)         (Unaudited)     (Unaudited)
<S>                                     <C>                 <C>                <C>                <C>


SALES                                     $4,096,253            $  91,084         $6,140,831           119,460


COST OF SALES                              2,500,561                    -          3,950,498                 -
                                       --------------    -----------------    ---------------    --------------

GROSS PROFIT                               1,595,692               91,084          2,190,333           119,460


DEPRECIATION AND AMORTIZATION                190,167              213,469            380,355           426,938

SELLING AND ADMINISTRATIVE EXPENSES          421,809              161,147            789,963           295,157

OTHER INCOME (EXPENSE)

  Interest Income                             28,470                    -             54,850                 -

  Impairment Loss                                  -                    -           (53,517)                 -
                                       --------------    -----------------    ---------------    --------------

NET INCOME (LOSS) BEFORE
INCOME TAXES                               1,012,186            (283,532)          1,021,348          (602,635)


INCOME TAXES                                       -                    -                  -                 -

                                       --------------    -----------------    ---------------    ---------------

NET INCOME (LOSS)                         $1,012,186          $ (283,532)         $1,021,348      $  (602,635)
                                       ==============    =================    ===============    ===============


EARNINGS PER SHARE
  Basic and diluted

  Net income (loss)                         $  0.03            $   (0.01)           $  0.03       $     (0.02)

Weighted average number of common
  shares outstanding
  Basic and diluted                      29,387,380           26,119,233         29,362,380         25,892,971

</TABLE>

     The accompanying notes are integral part of these financial statements.

<PAGE>

                ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                             (UNITED STATES DOLLARS)

<TABLE>

                                                                         June 30
                                                          -----------------------------------
                                                              2004                   2003
                                                          ---------------       -------------
                                                            (Unaudited)          (Unaudited)
<S>                                                       <C>                    <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                    $1,021,348          $ (602,635)
Adjustments to reconcile net income to
   net cash provided by operating activities:
     Impairment of reception center                               53,517                    -
     Depreciation and amortization                               380,358              426,938
     Stock issued for service                                     90,000                    -
(Increase) decrease in assets:
     Inventories                                                 517,245                    -
     Accounts receivable                                               -            4,483,855
     Other receivable                                            120,482                    -
     Amounts due from related parties                                  -              (4,000)
     Prepayments and deposits                                      1,214              (2,892)
Increase (decrease) in liabilities:
     Accounts payable and accrued expenses                       371,162               78,086
     Amounts due to related parties                              (7,655)               30,390
     Account payable to related company                        (102,584)              (4,886)
                                                       ------------------    -----------------

     Net cash provided by operating activities                 2,445,087            4,404,856
                                                       ------------------    -----------------

CASH FLOWS FROM INVESTING ACTIVIES
    Cash received from sale of property held for sale            240,964                    -
                                                       ------------------    -----------------

CASH FLOWS FROM FINANCING ACTIVIES
    Proceeds from issuance of common stock                             -              187,236
    Capital contributed                                           78,670                    -
                                                       ------------------    -----------------

     Net cash provided by financing activities                    78,670              187,236
                                                       ------------------    -----------------


NET INCREASE IN CASH AND
     CASH EQUIVALENTS                                          2,764,721            4,592,092

     Cash and cash equivalents, beginning of period           16,302,464            7,135,559
                                                       ------------------    -----------------

     Cash and cash equivalents, at end of period             $19,067,185          $11,727,651
                                                       ==================    =================

SUPPLEMENTARY CASH FLOWS DISCLOSURES

1. Interest paid                                                       -                    -
   Taxes paid                                                          -                    -

2. During the six months ended June 30, 2004, 109,984 shares
   were issued for the payment of notes payable of $60,491 and
   100,000 shares were issued related to services totaling
   $90,000.
</TABLE>



     The accompanying notes are integral part of these financial statements.

<PAGE>

                                                                 NOTES

1.   Reporting entity

     Pursuant  to an  exchange  agreement,  Eternal  Technologies  Group,  Inc.,
     ("Company") formerly known as Waterford Sterling Corporation, completed its
     acquisition of 100% interest of Eternal Group Limited and  Subsidiaries  on
     December 12,  2002.  The Company has treated the  transaction  as a reverse
     merger for  accounting  purposes.  Following  the  acquisition,  the former
     shareholders of Eternal  Technology Group Limited, a British Virgin Islands
     limited  liability  company,  now owns  approximately 85% of the issued and
     outstanding common shares of Eternal Technologies Group Inc.

     Eternal  Phoenix  Company  Limited was  incorporated  in the British Virgin
     Islands with limited  liability on March 3, 2000.  Pursuant to a resolution
     passed on June 17, 2000 Eternal Phoenix Company Limited changed its name to
     ETERNAL  TECHNOLOGY GROUP LTD.,  ("Eternal").  Eternal is a holding company
     for investments in operating companies.

     Eternal  acquired  a 100%  equity  interest  in  Willsley  Company  Limited
     ("Willsley"),  a company  incorporated  in the British  Virgin  Island with
     limited liability on May 16, 2000.

     Willsley's  principal  activity is  investments  and owns 100%  interest in
     Inner  Mongolia  Aershan  Agriculture  &  Husbandry   Technology  Co.,  Ltd
     ("Aershan").

     Aershan was incorporated in the People's Republic of China ("the PRC") with
     limited liability on July 11, 2000 and its principal  activities are to run
     a breeding center,  transplant embryos, and to propagate quality meat sheep
     and other livestock breeds in Inner Mongolia.

2.   Condensed financial statements and footnotes

     The interim  consolidated  financial  statements presented herein have been
     prepared by the Company and include the  unaudited  accounts of the Company
     and  its   subsidiaries.   All  significant   inter-company   accounts  and
     transactions have been eliminated in the consolidation.
<PAGE>

     These condensed financial  statements have been prepared in accordance with
     generally accepted accounting  principles for interim financial information
     and the  instructions  to Form  10-QSB  and  Item 310 (b)  Regulation  S-B.
     Certain information and footnote disclosures normally included in financial
     statements  presented in  accordance  with  generally  accepted  accounting
     principles  have been  condensed  or  omitted.  The  Company  believes  the
     disclosures  made  are  adequate  to make  the  information  presented  not
     misleading.  The condensed consolidated financial statements should be read
     in conjunction with the Company's consolidated financial statements for the
     year ended  December 31, 2003 and notes  thereto  included in the Company's
     Form 10-KSB.

     In  the  opinion  of  management,   the  unaudited  condensed  consolidated
     financial  statements  reflect all  adjustments  (which include only normal
     recurring  adjustments)  necessary to present fairly the financial position
     of the Company as of June 30, 2004, the results of operations for the three
     and six months ended June 30, 2004 and 2003, respectively.  Interim results
     are not  necessarily  indicative  of full year  performance  because of the
     impact of seasonal and short-term variations.

3.   Cash

     At June 30, 2004,  approximately  $18,174,000  of cash is to be exclusively
     used for operations in the Peoples' Republic of China.
<PAGE>

4.   Receivable - Property sold

     On April 30, 2004,  the Company and a local  government  entity  reached an
     agreement on the final  purchase  price and terms  related to the Company's
     reception  center and certain  equipment that is recorded as "Property held
     for Sale" at December  31, 2003 and March 31,  2004.  At December 31, 2003,
     the Company had recorded an estimated impairment loss of $300,000. At March
     31, 2004,  the Company  recorded an additional  impairment  loss of $53,517
     based on the amount the Company had  recorded of  $2,192,071  and the final
     purchase  price of  $2,138,554.  The  agreement  calls for cash payments of
     $620,482 and the  remainder  will be paid in livestock of  $1,518,072.  The
     Company  accounts for  non-monetary  transactions  in  accordance  with APB
     Opinion No. 29. During the three months ended June 30, 2004, a cash payment
     of $240,964 was received in accordance with this agreement.

5.   Public relations agreement

     During January 2004, the Company entered into a six-month  public relations
     agreement with PMR and Associates,  LLC (PMR). As consideration  for public
     relations  services,  the Company shall  compensate  PMR the  equivalent of
     $90,000 in shares  subject to Rule 144.  During  February 2004, the Company
     issued 100,000 shares to PMR for these  services.  For the six months ended
     June 30, 2004, the Company expensed $90,000 associated with this agreement.

6.   Notes payable

     The Company's promissory notes payable are in default at June 30, 2004. The
     Company and its attorneys are performing an additional  detailed  review of
     all expenditures prior to the merger. The balances of the notes are subject
     to change  pending  the  outcome of the review of these  expenditures.  The
     Company believes it has meritorious  defenses to portions of the promissory
     notes.
<PAGE>


7.   Contingencies

     In conjunction  with certain  subscription  agreements  entered into during
     2003,  the Company has agreed to register  the shares  issued  under a Form
     SB-2  registration  statement.  There are penalties for not timely  meeting
     filing and  effectiveness  deadlines,  and the Company has received  claims
     related to these  penalties.  For the six months ended June 30,  2004,  the
     Company has accrued expenses for penalties of $145,219.

8.   Segment Reporting

     The company has identified two reportable segments:

     Agricultural  Genetics/Animal husbandry and Pharmaceutical  operations. The
     amounts  reported at June 30, 2004 and for the three and six month  periods
     ended June 30, 2004 and 2003 related to our Agricultural  Genetics / Animal
     husbandry segment.

9.   Subsequent events

     On August 1, 2004, the Company  entered into a six-month  public  relations
     agreement with Empire Relations Group,  Inc.  ("Empire").  As consideration
     for public relations services,  the Company shall compensate Empire 100,000
     shares of Eternal  subject to Rule 144 as follows:  50,000  shares upon the
     execution of this agreement and 10,000 shares per month  beginning with the
     second month of the contract and extending through the six months.

     On July 27, 2004, the annual  shareholder  meeting approved the adoption of
     "Year 2004 Stock Option Plan".
<PAGE>


Item 2. Management  discussion and Analysis of Financial Condition and Result of
        Operations


The  following is derived  from,  and should be read in  conjunction  with,  our
unaudited condensed consolidated financial statements,  and related notes, as of
and for the three and six months ended June 30, 2004 and 2003.

Three Months Ended June 30, 2004 Compared to Three months Ended June 30, 2003

Revenues -

Revenues  for the three months ended June 30, 2004  increased by  $4,005,169  or
4397.2% to  $4,096,253  from $91,084 for the  corresponding  period of the prior
year.  This  increase  resulted  from an  increase  in the sale of lamb  meat of
$1,397,458  and an increase  of  $2,607,711  in fees  earned from cattle  embryo
transfers.  The company had no sales of lamb meat and earned $91,084 from cattle
embryo transfers in the corresponding period of the prior year.

Cost of Sales -

Cost of sales for the three months ended June 30, 2004  increased by  $2,500,561
to  $2,500,561  from $0 for the  corresponding  period of the prior  year.  This
increase  resulted  from costs  incurred in the sales of lamb meat of $1,009,193
and cost incurred in the cattle embryo transfers of $1,491,368. The gross profit
margin  from the sale of lamb meat was  27.78%  and the gross  profit  margin on
embryo transfers was 44.74%.

Depreciation and Amortization -

Depreciation and amortization expenses decreased by $23,302 or 10.9% to $190,167
from  $213,469 for the  corresponding  period of the prior year.  This  decrease
resulted  from the fact that certain  equipment had been fully  depreciated  and
accordingly  there was no  depreciation  charge  against such  equipment for the
three months ended June 30, 2004.

Selling and Administrative Expenses -

Selling and administrative  expenses increased by $260,662 or 161.8% to $421,809
from  $161,147 for the  corresponding  period of the prior year.  This  increase
resulted  from an increase in salaries  of  $144,220,  an increase in  marketing
costs of  $40,949,  an  increase  in  penalties  of $92,858  and an  increase in
miscellaneous  expenses of $21,874 which was  partially  offset by a decrease in
professional fees of $39,238.

Other Income (Expense)

For the three  months  ended  June 30,  2004 the  company  had  other  income of
$28,470,  all of which was  interest  income.  There was no other income for the
corresponding period of the prior year.

As a result of the  foregoing,  the company had net income of $1,012,186 or $.03
per share for the three  months  ended June 30,  2004  compared to a net loss of
$283,532 or $.01 per share for the corresponding period of the prior year.
<PAGE>

Six Months Ended June 30, 2004 As Compared to Six Months Ended June 30, 2003.


Revenues -

Revenues  for the six months  ended June 30, 2004  increased  by  $6,021,371  or
5040.5% to 6,140,831  from  $119,460 for the  corresponding  period of the prior
year.  This increase is  attributable to an increase in the sale of lamb meat of
$3,436,012 and an increase in cattle embryo transfer fees of $2,585,359.

Cost of Sales -

Cost of sales for the six months  ended June 30, 2004  increased  to  $3,950,498
from $0 for the  corresponding  period of the prior year. This increase resulted
from the  costs  incurred  in the sale of lamb meat of  $2,453,530  and the cost
incurred in cattle embryo  transfers of  $1,496,968.  The gross profit margin on
the sale of lamb meat was 28.6% and the gross profit  margin from cattle  embryo
transfers was 44.7%.

Depreciation and Amortization -

Depreciation  and  amortization  expenses for the six months ended June 30, 2004
decreased by $46,583 or 10.9% to $380,355  from  $426,938 for the  corresponding
period of the prior year.  This decrease  resulted from certain  equipment being
fully  depreciated in a prior period and  accordingly no charge to  depreciation
was made against such equipment during the six months ended June 30, 2004.

Selling and Administrative Expenses -

Selling  and  administrative  expenses  for the six months  ended June 30,  2004
increased by $494,806 or 167.6% to $789,963 from $295,157 for the  corresponding
period of the prior year. This increase resulted from an increase in salaries of
$247,160 marketing expenses of $86,469,  penalties of $145,219 and miscellaneous
expenses of $42,390 which were  partially  offset by a decrease in  professional
expenses of $26,430.

Other Income (Expense)

Other  income  increased  by $54,850  for the six months  ended June 30, 2004 to
$54,850 from $0 for the corresponding period of the prior year. All of the other
income  for the six months  ended  June 30,  2004 is  attributable  to  interest
income.  Other  expense  increased  by $53,517 for the six months ended June 30,
2004 to $53,517 from $0 for the  corresponding  period of the prior year. All of
the other expense is an impairment loss which resulted from the anticipated loss
from the sale of the  reception  center  and  certain  equipment  located on the
Company's farm in Inner Mongolia.

As a result of the  foregoing,  the Company had net income of $1,021,348 or $.03
per share for the six  months  ended  June 30,  2004  compared  to a net loss of
$602,635 or $.02 per share for the corresponding period of the prior year.


Liquidity and Capital Resources

As of June 30, 2004,  the Company had cash and cash  equivalents  of $19,067,185
and working capital of $23,241,700. This compares with cash and cash equivalents
of $16,302,464 and working capital of $21,610,824 as of December 31, 2003.

Cash flows from operating activities totaled $2,445,087 for the six months ended
June 30,  2004.  This  compares  with cash flows from  operating  activities  of
$4,404,856  for the  corresponding  period  of the  prior  year.  This  decrease
resulted  from an  increase  in non-cash  expense of $96,934  which  consists of
$53,517 of impairment  losses and $90,000 of stock issued for services which was
partially offset by a decrease in depreciation  and  amortization of $46,583;  a
change in the net current  accounts of $4,580,553  for the six months ended June
30, 2003 (of which  4,483,855 is  attributable  to a decrease in receivables for
the six months ended June 30, 2003) compared to a change in net current accounts
of $382,619 for the six months ended June 30, 2004;  which was partially  offset
by a net increase in earnings of $1,623,983.
<PAGE>

Cash flows from investing  activities  totaled $240,964 for the six months ended
June 30,2004  compared to $0 for the six months ended June 30, 2003.  All of the
cash from  investing  activities  during the six months  ended June 30, 2004 was
from the sale of property.

Cash flows from  financing  activities  for the six months  ended June 30, 2004,
totaled $78,670 all from capital contributed. This compares with cash flows from
financing  activities of $187,236 for the six months ended June 30, 2003. All of
the cash from  financing  activities  for the six months ended June 30, 2003 was
from the sale of shares.

At June 30,  2004,  the  Company  had notes  payable  of  $443,366  that are due
December  11,  2005.  Interest  on the  notes  shall  be  payable  semi-annually
commencing  180 days after the date of the note  (December  11,  2002) at 8% per
annum.  The notes are payable from the first dollars  received from any proceeds
of any offering subsequent to the acquisition of Eternal Technologies Group Ltd.
or at the option of the  lender,  convertible  into post  reverse  split  common
shares  at a rate  equal to the mean of the high and low  share  price as of the
December 31, 2003,  the principal  balances on the notes was $503,587 and during
2004,  the Company  issued 109,984 shares which reduced the balance on the notes
to $443,366.  Although  these notes are recorded at $443,366,  an outside review
was conducted to determine if all amounts accrued are properly chargeable to the
Company. These findings have been forwarded to outside counsel for resolution.

Although  the  Company  has a cash  and bank  balance  of  $19,067,185,  all but
$893,185 is to be  exclusively  used by  management  for  operations  within the
People's Republic of China.  Therefore,  if the Company is to expand outside the
PRC, as it anticipates  doing,  or pay its non-PRC  obligation,  it will have to
sell additional  shares of its stock or borrow funds from third parties.  Unless
it is able to  either  borrow  funds or sell  additional  shares,  it will  have
insufficient  resources to carry out is business  objectives outside the PRC for
the next twelve (12) months.

Item 3.    Controls and Procedures

     (a) Evaluation of disclosure  controls and procedures.  Our chief executive
officer and our chief financial  officer,  after evaluating the effectiveness of
the Company's "disclosure controls and procedures" (as defined in the Securities
Exchange  Act  of  1934  Rules  13a-14(c)  and  15-d-14(c))  as of a  date  (the
"Evaluation  Date")  within 90 days  before  the filing  date of this  quarterly
report,  have concluded that as of the Evaluation Date, our disclosure  controls
and  procedures  were adequate and designed to ensure that material  information
relating to us and our consolidated  subsidiaries would be made known to them by
others within those entities.

     (b) Changes in internal controls.  There were no significant changes in our
internal controls or to our knowledge, in other factors that could significantly
affect our disclosure controls and procedures subsequent to the Evaluation Date.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

         None

Item 2. Changes in  Securities  and Small  Business  Issuer  Purchases of Equity
        Securities

         None
<PAGE>

Item. 3. Defaults Upon Senior Securities

         None

Item 4.  Submissions of Matters to a Vote of Security Holders

On  July  27,  2004,  the  shareholders  at the  annual  meeting  elected  seven
directors,  ratified the  appointment of Thomas Leger & Co. LLP and approved the
2004 Stock Option Plan.

Item 5.  Other Information

        None

Item 6. Exhibits and Reports on Form 8-K

     a)   Exhibits

                   None

     b)   Reports on Form 8-K

     1.   Form 8-K dated July 27, 2004 reporting the results of the  shareholder
          meeting.

                                    Signature

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


                                       ETERNAL TECHNOLOGIES GROUP, INC.


                                      /s/
                                       -------------------------------------
August ___, 2004                       Jiansheng Wei,  Chief Executive Officer


                                      /s/
August ___, 2004                       -------------------------------------
                                      Xingjian Ma, Chief Financial Officer
<PAGE>


                                 CERTIFICATIONS

I, Jiansheng Wei, certify that:

1.  I have reviewed this Form 10-QSB of Eternal Technologies Group, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the small  business  issuer as of, and for,  the periods  presented in this
     report;


4.   The  small  business  issuer's  other  certifying   officer(s)  and  I  are
     responsible  for  establishing  and  maintaining  disclosure  controls  and
     procedures  (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) and
     internal control over financial reporting (as defined in Exchange Act Rules
     13a-15(f) and 15d-15(f))** for the small business issuer and have:

(a) Designed such disclosure controls and procedures,  or caused such disclosure
controls and  procedures to be designed  under our  supervision,  to ensure that
material  information  relating  to the small  business  issuer,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) Designed  such internal  control over  financial  reporting,  or caused such
internal control over financial  reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles;**

(c)  Evaluated  the  effectiveness  of the small  business  issuer's  disclosure
controls and procedures and presented in this report our  conclusions  about the
effectiveness  of the disclosure  controls and procedures,  as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business  issuer's internal
control  over  financial  reporting  that  occurred  during  the small  business
issuer's most recent fiscal quarter (the small business  issuer's  fourth fiscal
quarter in the case of an annual  report) that has  materially  affected,  or is
reasonably  likely to materially  affect,  the small business  issuer's internal
control over financial reporting; and

5.   The  small  business  issuer's  other  certifying  officer(s)  and  I  have
     disclosed,  based on our most recent  evaluation  of internal  control over
     financial reporting,  to the small business issuer's auditors and the audit
     committee of the small  business  issuer's  board of directors  (or persons
     performing the equivalent functions):

(a) All  significant  deficiencies  and  material  weaknesses  in the  design or
operation of internal  control over  financial  reporting  which are  reasonably
likely to  adversely  affect  the small  business  issuer's  ability  to record,
process, summarize and report financial information; and

(b) Any fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant  role in the small business  issuer's  internal
control over financial reporting.


Date: August ___, 2004
                                            _______________________
                                            Jiansheng Wei
                                            Chief Executive Officer
<PAGE>


I, Xingjian Ma, certify that:

1.  I have reviewed this Form 10-QSB of Eternal Technologies Group, Inc.;

4.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

5.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the small  business  issuer as of, and for,  the periods  presented in this
     report;


4.   The  small  business  issuer's  other  certifying   officer(s)  and  I  are
     responsible  for  establishing  and  maintaining  disclosure  controls  and
     procedures  (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) and
     internal control over financial reporting (as defined in Exchange Act Rules
     13a-15(f) and 15d-15(f))** for the small business issuer and have:

(a) Designed such disclosure controls and procedures,  or caused such disclosure
controls and  procedures to be designed  under our  supervision,  to ensure that
material  information  relating  to the small  business  issuer,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) Designed  such internal  control over  financial  reporting,  or caused such
internal control over financial  reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles;**

(c)  Evaluated  the  effectiveness  of the small  business  issuer's  disclosure
controls and procedures and presented in this report our  conclusions  about the
effectiveness  of the disclosure  controls and procedures,  as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business  issuer's internal
control  over  financial  reporting  that  occurred  during  the small  business
issuer's most recent fiscal quarter (the small business  issuer's  fourth fiscal
quarter in the case of an annual  report) that has  materially  affected,  or is
reasonably  likely to materially  affect,  the small business  issuer's internal
control over financial reporting; and

5.   The  small  business  issuer's  other  certifying  officer(s)  and  I  have
     disclosed,  based on our most recent  evaluation  of internal  control over
     financial reporting,  to the small business issuer's auditors and the audit
     committee of the small  business  issuer's  board of directors  (or persons
     performing the equivalent functions):

(a) All  significant  deficiencies  and  material  weaknesses  in the  design or
operation of internal  control over  financial  reporting  which are  reasonably
likely to  adversely  affect  the small  business  issuer's  ability  to record,
process, summarize and report financial information; and

(b) Any fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant  role in the small business  issuer's  internal
control over financial reporting.


Date: August ___, 2004
                                            _______________________
                                            Xingjian Ma
                                            Chief Financial Officer
<PAGE>


CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO
18  U.S.C.   SECTION  1350,   AS  ADOPTED   PURSUANT  TO  SECTION  906  OF  TEHE
SARBANES-OXLEY ACT OF 2002


--------------------------------------------------------------------------------

I,  Jiansheng  Wei,  certify,  pursuant to 18 U.S.C.  Section  1350,  as adopted
pursuant to Section 906 of the  Sarbanes-Oxley  Act of 2002,  that the Quarterly
Report of Eternal  Technologies  Group,  Inc. on Form  10-QSB for the  quarterly
period ended June 30, 2004 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities  Exchange Act of 1934 and that information  contained
in such Form 10-QSB  fairly  presents in all  material  respects  the  financial
condition and results of operations of Eternal Technologies Group, Inc.

By: /s/
----------------------------
Name: Jiansheng Wei
Title: Chief Executive Officer
August ___, 2004
<PAGE>

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO
18  U.S.C.   SECTION  1350,   AS  ADOPTED   PURSUANT  TO  SECTION  906  OF  TEHE
SARBANES-OXLEY ACT OF 2002



--------------------------------------------------------------------------------

I, Xingjian Ma, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the  Sarbanes-Oxley  Act of 2002, that the Quarterly Report of
Eternal  Technologies  Group, Inc. on Form 10-QSB for the quarterly period ended
June 30, 2004 fully complies with the  requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and that information  contained in such Form
10-QSB  fairly  presents in all material  respects the  financial  condition and
results of operations of Eternal Technologies Group, Inc.

By: /s/
----------------------------
Name: Xingjian Ma
Title: Chief Financial Officer
August ___, 2004