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, 2005

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

              For the transition period from__________to__________.

                           Commission File No. 0-27929


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


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


                     Sect. D, 5/F, Block A. Innotech Tower,
                 235 Nanjing Rd. Heping District, Tianjin 300052
                    ________________________________________
                    (Address of principal executive offices)

                               011-86-22-2721-7020
                               __________________
                           (Issuer's telephone number)


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

As of November  14, 2005,  39,683,407  shares of Common Stock of the issuer were
outstanding.

<PAGE>



                                TABLE OF CONTENTS

                        ETERNAL TECHNOLOGIES GROUP, INC.

                          Part I. Financial Information


<TABLE>
<S>                                                                                        <C>


Item 1.   Consolidated Financial Statements

               Consolidated Balance Sheets at September 30, 2005 (Unaudited ) and                   3
                 December 31, 2004 (audited)


               Unaudited Consolidated Statements of Operations for the three and nine
                    Months ended September 30, 2005 and 2004                                        4


               Unaudited Consolidated Statements of Cash Flows for the nine months ended
                    September 30, 2005 and 2004                                                     5

               Notes to the Unaudited Consolidated Financial Statements                             7

Item 2.   Management's Discussion and Analysis or Plan of Operation                                 11

Item 3.    Controls and Procedures                                                                  13

                                                  Part II. Other Information

Item 1.    Legal Proceedings                                                                        14


Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds                             14


Item 3.     Defaults Upon Senior Securities                                                         14


Item 4.     Submission of Matters to a Vote of Security Holders                                     14


Item 5.     Other Information                                                                       14


Item 6.     Exhibits                                                                                14

         Signatures                                                                                 15

</TABLE>
<PAGE>



                          PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements
                        ETERNAL TECHNOLOGIES GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                    September 30, 2005 and December 31, 2004
                       (Amounts in United States Dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
<TABLE>

                                                                             September 30,       December 31,
                                                                                 2005                2004
                                                                           ------------------  ------------------
                                                                           ------------------  ------------------
                                      ASSETS                                  (Unaudited)
<S>                                                                        <C>                   <C>


 CURRENT ASSETS

     Cash and Cash equivalents                                             $      24,164,917   $      27,473,354
     Accounts receivable                                                           9,144,701           1,538,313

     Inventories                                                                     374,845             621,307

     Prepayments and deposits                                                            617                 602
                                                                           ------------------  ------------------
                                                                           ------------------  ------------------


       Total current assets                                                       33,685,080          29,633,578

 FIXED ASSETS, net of accumulated depreciation of

     $2,840,324 and $2,456,122 at September 30, 2005 and                           6,921,188           5,904,050
     December 31, 2004, respectively
 LAND USE RIGHTS, net of accumulated amortization
     of $1,241,660 and $1,055,361at September 30, 2005 and

     December 31, 2004, respectively                                               4,869,758           4,944,639
                                                                           ------------------  ------------------
                                                                           ------------------  ------------------


         Total assets                                                      $      45,476,026   $      40,482,265
                                                                           ==================  ==================
                                                                           ==================  ==================

                       LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES

     Notes Payable and convertible debt                                    $         716,495   $         443,366

     Accounts payable and accrued liabilities                                      1,569,280           1,526,595

     Amounts due to related parties                                                  413,190             272,465
                                                                           ------------------  ------------------
                                                                           ------------------  ------------------


       Total current liabilities                                                   2,698,965           2,242,426
                                                                           ------------------  ------------------

COMMITMENTS AND CONTINGENCIES

 STOCKHOLDERS' EQUITY
     Preferred shares - $0.001 par value, 5,000,000

       authorized, none issued or outstanding                                              -                   -
     Common shares - $0.001 par value; 95,000,000
       authorized; 30,679,630 shares issued and

       outstanding                                                                    30,913              30,679

     Additional paid - in capital                                                 10,265,326           9,740,830

     Subscription receivable                                                         -10,176            (10,176)

     Retained earnings                                                            31,496,500          28,478,506
                                                                           -----------------  ------------------
                                                                           -----------------  ------------------
    Cumulative Translation Adjustment                                                994,498                   -
                                                                             ----------------
                                                                             ----------------
       Total stockholders' equity                                                 42,777,061
                                                                                                      38,239,839
                                                                           ------------------  ------------------


         Total liabilities and stockholders' equity                        $      45,476,025   $      40,482,265
                                                                           ==================  ==================
</TABLE>


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

                                       3
<PAGE>


                        ETERNAL TECHNOLOGIES GROUP, INC.
            UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
     For the three months and nine months ended September 30, 2005 and 2004
                       (Amounts in United States Dollars)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<TABLE>

                                                     Three Months Ended            Nine Months Ended
                                                 ---------------------------- ----------------------------
                                                 ----------------------------
                                                  September    September 30,  September 30,   September
                                                     30,                                         30,
                                                     2005          2004           2005           2004
                                                 ------------- -------------- -------------- -------------
                                                 ------------- -------------- -------------- -------------
<S>                                              <C>           <C>            <C>            <C>


SALES                                            $  5,026,968  $   9,074,651  $  17,292,310  $ 15,215,483

COST OF SALES                                       3,512,402      5,764,096     12,576,696     9,714,594
                                                 ------------- -------------- -------------- -------------

GROSS PROFIT                                        1,514,566      3,310,555      4,715,614     5,500,888

DEPRECIATION AND
   AMORTIZATION                                       193,619        190,167        574,574       570,522

SELLING, AND
   ADMINISTRATIVE EXPENSES                            294,917        415,133      1,207,100     1,205,096
                                                 ------------- -------------- -------------- -------------
                                                ----------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest Income                                        42,278         28,765        139,206        83,615
                                                 ------------- -------------- -------------- -------------

Interest expense                                            -              -        -55,152             -
Impairment Loss                                             -              -              -       -53,517
                                                   -----------   ------------   ------------   -----------
                                                   -----------   ------------   ------------   -----------

NET INCOME BEFORE INCOME TAXES                   $  1,068,308  $   2,734,020      3,017,994     3,755,368
                                                 ============= ============== ============== =============

INCOME TAXES                                                -              -              -             -
                                                 $             $
                                                 ============= ============== ============== =============
                                                 ============= ============== ============== =============

NET INCOME                                          1,068,308      2,734,020      3,017,994     3,755,368
                                                   ============  ============                  ===========
                                                                              ===============

EARNINGS PER SHARE
Basic and diluted                                        0.03           0.09           0.10          0.13
                                                   ===========   ============   ============   ===========
                                                   ===========   ============   ============   ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic and diluted                                  30,733,058     29,337,381     30,696,630    29,362,380
                                                   ===========   ============   ============   ===========
                                                   ===========   ============   ============   ===========

</TABLE>


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

                                       4
<PAGE>


ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(UNITED STATES DOLLARS)
<TABLE>

                                                                                        September 30
                                                                      -------------------------------------------------
                                                                             2005                         2004
                                                                      --------------------        ---------------------
                                                                          (Unaudited)                 (Unaudited)
<S>                                                                      <C>                         <C>

CASH FLOWS FROM OPERATING ACTIVITIES

    Net income (loss)                                              $            3,017,994      $             3,755,369

    Depreciation and amortization                                                 574,574                      570,523

    Beneficial feature of convertible notes                                        54,764

    Stock issued for service                                                      193,831                       90,000

    Impairment loss                                                                     -                       53,517

(Increase) decrease in assets:

    Inventories                                                                   246,462                    1,179,956

    Accounts receivable                                                        (7,606,388)                  (5,371,626)

    Other receivable                                                                    -                      125,577

    Receivable from related company                                                     -                      617,825

    Prepayments and deposits                                                         (15)                        1,214

Increase (decrease) in liabilities:

    Accounts payable and accrued expenses                                         261,053                      604,625

    Account payable to related parties                                            140,725                    (131,350)

    Account payable to related company                                                  -                    (205,957)

                                                                      --------------------        ---------------------
Net cash provided by (used in) operating activities                           (3,117,004)                    1,289,673
                                                                      ====================        =====================

CASH FLOW FROM INVESTING ACTIVITIES
      Purchase of fixed assets                                                (1,516,830)
    Cash received from property held for sale                                           -                    1,506,024
                                                                      --------------------        ---------------------

Net cash provided by investing activities                                     (1,516,830)                    1,506,024
                                                                      ====================
                                                                                                  =====================

CASH FLOW FROM FINANCING ACTIVITIES

    Capital contributed                                                           330,899                       78,670

                                                                      --------------------
Net cash provided by financing activities                                         330,899                       78,670
                                                                      ====================        =====================

Effect of exchange rates on cash balances                                         994,498

NET INCREASE IN CASH AND CASH EQUIVALENTS                                     (3,308,437)                    2,901,567
                                                                      ====================        =====================

    Cash and bank balances, beginning of period                                27,473,354                   16,302,464
                                                                      --------------------        ---------------------

    Cash and bank balance, at end of period                        $           24,164,917      $            19,204,031
                                                                      ====================        =====================

SUPPLEMENTARY CASH FLOWS DISCLOSURES
    Interest paid                                                                       -                            -
    Tax paid                                                                            -                            -
</TABLE>

                                       5
<PAGE>


                ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   Background and Critical Accounting Policies

Eternal  Technologies  Group,  Inc.,  ("Company"),  formerly  known as Waterford
Sterling Corporation, completed an acquisition of all the issued and outstanding
stock of Eternal  Group  Limited and  Subsidiaries  on December  12,  2002.  The
Company  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,   controlled
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.

     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$. The Company maintains no material
accounts in currency of the United  States of America.  One of the  subsidiaries
maintain  their books and accounts in the People's  Republic of China  currency,
which is called  Renminbi  ("RMB").  Translation of the financial  statements of
amounts  from RMB  into US$ has been  made at the  single  rate of  exchange  on
December  31, 2004 and 2003 of US 1.00:  RMB 8.30 and on  September  30, 2005 of
US100:RMB  8.10. No  representation  is made the RMB amounts could have been, or
could be, converted into US$ at that rate on December 31, 2004 or 2003 or at any
other date.

                                       6
<PAGE>

On January 1, 1994, the PRC  government  introduced a single rate of exchange as
quoted daily by the People's Bank of China (the "Unified Exchange Rate").

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.

     Revenue recognition

In accordance with Staff Accounting Bulletin No. 104 (SAB 104), revenue from the
sale of livestock,  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.

     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

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, 2004 and notes
thereto included in the Company's Form 10-KSB.

                                       7
<PAGE>

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, 2005, the results of operations for the three and six months
ended  September  30,  2005 and  2004,  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,  2005,  the  Company  maintains  bank  accounts in the PRC of
approximately  $21,329,840,  and  substantially  the  entire  amount  is  to  be
exclusively used for operations in the PRC.

4.   Public Relations Agreement

On  February 1, 2005,  the Company  entered  into a six-month  public  relations
agreement with Empire Relations Group,  Inc. (ERG). As consideration  for public
relations  services,  the Company compensated ERG with 150,000 shares subject to
Rule 144. For the  three-month  period  ended  September  30, 2005,  the Company
expensed $79,500 associated with this agreement.

5.   Notes Payable

The Company's  promissory notes payable are in default at September 30, 2005 and
the holder of the notes has filed suit for  payment  of the notes.  The  Company
believes it has meritorious defenses to the lawsuit related to the notes.

6.   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 $2,285,000 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, 2004. 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 six months ended September 30, 2005 and 2004.

 7.   Contingencies

                                       8
<PAGE>

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.

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.

8.   Related Party Transactions

During  the  three  and  six  months  ended  the  Company   engaged  in  various
transactions with related parties as follows:
<TABLE>

                                             Three Months Ended           Nine Months Ended
                                            ---------------------        ---------------------
                                            ---------------------
                                               September 30,                September 30,
                                                    2005                         2005
<S>                                           <C>                           <C>


                                            ---------------------        ---------------------
                                            ---------------------        ---------------------
                                                        $ 98,087                    $ 441,298
</TABLE>

     Common stock sold by officers/
     directors
      directors with proceeds contributed
      to the company for payment of
      operating expenses



                                       9
<PAGE>


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, 2005 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 nine months ended September 30, 2005 and 2004.

Three  Months  Ended  September  30,  2005  Compared to the Three  months  Ended
September 30, 2004

Revenues -

Revenues for the three months ended  September 30, 2005  decreased by $4,047,683
or 44.6% to $5,026,968 from $9,074,651 for the corresponding period of the prior
year.  This  decrease  resulted  from a  decrease  in the  sale of lamb  meat of
$2,877,600,  in cattle embryo  transfers of $1,518,951  and the sale of sheep of
$92,723 which was partially  offset by an increase in sheep embryo  transfers of
$441,609.

Cost of Sales -

Cost of sales for the  three  months  ended  September  30,  2005  decreased  by
$2,251,681 to $3,512,402  from  $5,764,096 for the  corresponding  period of the
prior year. This decrease  resulted from a decrease in the costs of lamb meat of
$2,049,236  of cattle  embryo  transfers  of  $461,730  and sheep  purchases  of
$108,723  which was  partially  offset by an increase in sheep  embryo  transfer
costs of $368,008.  The gross  profit  margin from the sale of mutton was 28.7%,
the gross profit  (loss) margin from the sale of sheep was (17.3%) and the gross
profit margin on embryo transfers was 43.9%.

Depreciation and Amortization -

Depreciation and amortization  expenses were essentially unchanged compared with
the corresponding period of the prior year, increasing by $3,452 to $193,619 for
the three months ended September 30, 2005 compared to the  corresponding  period
of the prior year.  The  increase  resulted  because of  increased  assets being
depreciated.

Selling and Administrative Expenses -

Selling and  administrative  expenses decreased by $120,216 or 28.9% to $294,917
from  $415,133 for the  corresponding  period of the prior year.  This  decrease
resulted  from a decrease  in  penalty  expense  of  $93,878  and a decrease  in
management  expenses  of $23,329  which was offset by small  decreases  in other
categories.

 Other Income (Expense)

For the three  months  ended  September  30,  2005 the  company  experienced  an
increase in interest  income of $13,513 or 46.9% to $42,278  from  $28,765.  The
increase  is  attributable  to an  increase  in  interest  rates and the Company
keeping a larger percentage of it's cash in interest bearing accounts.

As a result of the  foregoing,  the company had net income of $1,068,308 or $.03
per share for the three months ended  September  30, 2005 compared to net income
of $2,734,020 or $.09 per share for the corresponding period of the prior year.

Nine Months Ended  September 30, 2005 As Compared to Nine Months Ended September
30, 2004.

Revenues

Revenues for the nine months ended September 30, 2005 increased by $2,076,828 or
13.6% to $17,292,310 from $15,215,482 for the corresponding  period of the prior
year.  This increase is  attributable  to an increase in cattle and sheep embryo
transplants of $2,128,056  and in roll mutton of $6,140,878  which was partially
offset by a decrease in the sale of lamb meat of $6,326,477.

                                       10
<PAGE>

Cost of Sales -

Cost of sales  for the  nine  months  ended  September  30,  2005  increased  by
$2,862,070 or 29.5% to $12,576,696 from $9,714,594 for the corresponding  period
of the prior  year.  This  increase  resulted  from an  increase in the costs of
cattle  embryo  transfers of  $2,177,574,  of sheep embryos or $364,025 and roll
mutton of  $4,622,992.  The increase  was  partially  offset by a  corresponding
decrease  in the cost of  embryos  of  $5,600.  The gross  profit  margin on the
transfer of cattle  embryos was 30.6%,  the gross profit margin from the sale of
mutton was 28.6% and the gross  profit  margin  from the sale of roll mutton was
24.7%.

Depreciation and Amortization -

Depreciation and amortization  expenses were essentially unchanged compared with
the  corresponding  period of the prior year  increasing  by $4,052 for the nine
months ended  September  30, 2005  compared to the  corresponding  period of the
prior year. The increase resulted because of increased assets being depreciated.

Selling and Administrative Expenses -

Selling  and  administrative  expenses  increased  by $2,004 for the nine months
ended September 30, 2005 to $1,207,100  virtually  unchanged from the $1,205,096
for the corresponding  period of the prior year. The increase was largely due to
an  increase  in  marketing  expense  which was offset by  reductions  in office
salaries and professional fees.

 Other Income (Expense)

For the nine months ended  September 30, 2005 the company had interest income of
$139,206,  an increase of $55,591 from the $83,615 for the corresponding  period
of the prior year. The increase is attributable to an increase in interest rates
and the Company  keeping a larger  percentage  of it's cash in interest  bearing
accounts.

Interest  expense was $55,152 for the nine months ended  September 30, 2005, due
to the Company  issuing  convertible  debentures  with a  beneficial  conversion
feature to settle  penalties  for not timely  meeting  filing and  effectiveness
deadlines for a  registration  statement.  The interest  expense  relates to the
amortization of the beneficial conversion feature. There was no interest expense
for the corresponding period of 2004.

The  Company  recorded  an  impairment  loss for the  nine  month  period  ended
September  30, 2004 of $53,517.  There was no  impairment  loss recorded for the
nine month period ended September 30, 2005.

As a result of the  foregoing,  the Company had net income of $3,017,994 or $.10
per share for the nine months ended September 30, 2005 compared to net income of
$3,755,368 or $.13 per share for the corresponding period of the prior year.

Liquidity and Capital Resources

As of  September  30,  2005,  the  Company  had  cash and  cash  equivalents  of
$24,164,917 and working capital of $30,948,076. This compares with cash and cash
equivalents of $27,473,354 and working capital of $27,436,168 as of December 31,
2004.

Cash used in operating  activities  totaled $3,117,004 for the nine months ended
September 30, 2005.  This compares with cash provided from operating  activities
of  $1,289,673  for the  corresponding  period of the prior year.  This decrease
resulted  from a decrease in net income of  $737,376  and  non-cash  expenses of
$252,643 and changes to the current  accounts  which was partially  offset by an
impairment loss in the prior year of $53,517 and other non cash-changes.

Cash used in  investing  activities  totaled  $1,272,108  during the nine months
ended September 30,2005 compared to $1,506,024 provided by investment activities
for the nine months ended  September  30, 2004.  All of the cash from  investing
activities  during the nine months ended September 30, 2004 was from the sale of
property.  All of the cash used in investment  activities during the nine months
ended September 30, 2005 was for the purchase of fixed assets.

                                       11
<PAGE>

Cash provided from financing  activities for the nine months ended September 30,
2005,  totaled  $330,899 all from contributed  capital.  This compares with cash
provided  from  financing  activities  of  $78,670  for the  nine  months  ended
September 30, 2004, again all from contributed capital.

At September 30, 2005,  the Company had notes  payable of $443,366.  These notes
are currently the subject of litigation  where the Company is challenging  their
validity.

Although the Company has a cash and bank balance of $21,329,840, it has all been
designated by management  for  expansion of its  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

We strive to maintain  disclosure  controls and procedures  that are designed to
ensure that information  required to be disclosed in our Exchange Act reports is
recorded,  processed,  summarized and reported within the time periods specified
in the SEC's  rules and forms,  and that such  information  is  accumulated  and
communicated to our management,  including our chief executive officer and chief
financial  officer,  as  appropriate,  to allow for timely  decisions  regarding
required  disclosure.  In designing and evaluating  the disclosure  controls and
procedures,  management  recognizes that any controls and procedures,  no matter
how well  designated  and  operated,  can provide only  reasonable  assurance of
achieving the desired control objectives and management  necessarily is required
to apply its judgment in evaluating the  cost-benefit  relationship  of possible
controls. Our former independent  accountants,  Thomas Leger & Co. LLP conducted
audits of our financial  statements for 2002,  2003 and 2004. In connection with
the issuance of its report of the independent registered public accounting firm,
Thomas  Leger  & Co.  LLP  reported  to our  Board  of  Directors  two  material
weaknesses  under  standards   established  by  the  Public  Company  Accounting
Oversight Board regarding some elements of our system of internal controls. They
noted the following material deficiencies:

(i) The Company  lacked  certain  procedures  and required  expertise  needed to
properly  account for  non-routine  transactions  (such as acquisitions of other
businesses) and preparation of its required  financial  statement  disclosure in
accordance with U.S. G.A.A.P. and SEC rules and regulations.

(ii) The Company has restated its consolidated financial statements for the year
ended December 31, 2002 to reflect merger costs of $867,411 as  post-acquisition
activity.  This  restatement  adjustment is considered a material  weakness over
financial reporting as defined by the PCAOB.

We have  conducted  a review of the errors  requiring  restatement,  including a
separate  review by our board of directors to determine  what remedial  measures
were  necessary.  We believe  our  management  has taken or is in the process of
taking the steps necessary to correct the errors and avoid similar errors in the
future.

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 and Chief Financial  Officer,  the effectiveness of the design
and  operation  of our  disclosure  controls  and  procedures.  Based  upon that
evaluation,  the Chief Executive Officer, Chief Financial Officer concluded that
our disclosure  controls and procedures are  effectively in timely alerting them
to material information relating to us (including our subsidiaries)  required to
be included in our periodic SEC filings.

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.

                                       12
<PAGE>

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  external
auditors.  As a result, it is likely that additional changes will be made to our
internal controls.


                                        PART II. OTHER INFORMATION

 Item 1. Legal Proceedings.

As of September 30, 2005, we were a party to two legal proceedings. The first is
a lawsuit brought by Limestreet  Securities.  This cause of action seeks payment
of $500,942 on two outstanding promissory notes plus accrued interest since July
11, 2004,  attorney's fees, cost of collection and other court costs. This cause
of action was filed in Federal Court in the Eastern  District of Louisiana.  The
Company challenged the venue of this action and was granted a motion to transfer
for  lack of  jurisdiction/improper  venue.  The  cause of  action  has now been
transferred  to Federal  Distirict  Court for the Southern  District of Texas in
Houston, Texas. The Company intends to challenge the validity of these notes.

The second  cause of action was filed in State Court in New York City by Bristol
Investments  Limited  against  the  company  and is seeking  the  payment of the
penalty due under their  original  investment for failure to have a registration
effective within a stated period of time.  Bristol is currently  seeking $53,000
in principal plus penalties,  interest and attorney fees.  Bristol has refused a
settlement  offer of a convertible  promissory  note and continues to pursue the
litigation.  While the Company  acknowledges the principal,  it believes that it
has valid defenses to the remaining claims for compensation.

As of November 14, 2005 we are not a party to any other pending  litigation  and
were not aware of any threatened litigation.

 Item 2. Changes in Securities

During the three month period ended  September 30, 2005 we issued 233,901 shares
of  common  stock  all  for  the  conversion  of a  portion  of our  outstanding
convertible notes.

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 2002
 31.2      Certification Pursuant to 18 U.S.C Section 1350, as adopted Pursuant
           to Section 302 of the Sarbanes-Oxley
           Act of 2002
 32.1      Certification Pursuant to 18 U.S.C Section 1350, as adopted Pursuant
           to Section 906 of the Sarbanes-Oxley
           Act of 2002
 32.2      Certification Pursuant to 18 U.S.C Section 1350, as adopted Pursuant
           to Section 906 of the Sarbanes-Oxley
           Act of 2002

                                       13
<PAGE>

 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/
                                       -------------------------------------
November 14,  2005                     Jiansheng Wei,  Chief Executive Officer


                                      /s/
November 14,  2005                      -------------------------------------
                                      Shen Zheng, Chief Financial Officer



                                       14
<PAGE>


                      Exhibit 31.1

 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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: November 14, 2005
                                            _______________________
                                            Jiansheng  Wei
                                            Chief Executive Officer



                                       15
<PAGE>

                                                                 Exhibit 31.2

CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER PURSUNAT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shen Zheng, 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: November 14, 2005
                                            _______________________
                                            Shen Zheng
                                            Chief Financial Officer

                                       16
<PAGE>

                                                                    Exhibit 32.1

              CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
        18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           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 September 30, 2005 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
November 14, 2005



                                       17
<PAGE>




                                  Exhibit 32.1
              CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
        18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002



I, Shen Zheng, 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
September  30, 2005 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: Shen Zheng
Title: Chief Financial Officer
November 14, 2005