**SECURITIES        AND EXCHANGE COMMISSION**

**FORM        10-QSB**

**ETERNAL        TECHNOLOGIES GROUP, INC.**

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

**-----------------------------------------------------------------**

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| **ETERNAL                  TECHNOLOGIES GROUP, INC.**            |
|------------------------------------------------------------------|
| **10-QSB                  FOR THE QUARTER ENDED MARCH 31, 2007** |
| **INDEX**                                                        |
|                                                             |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **PART                  I - FINANCIAL INFORMATION**              |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  1.                                         | Consolidated                  Financial Statements |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   | Unaudited                  Consolidated Condensed Balance Sheets at |   |   |   |   |   |   |   |
|                                                             |   |   |   | March                  31, 2007 and December 31, 2006 |   |   |   |   |   | 3 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   | Unaudited                  Consolidated Condensed Statements of Income |   |   |   |   |   |   |   |
|                                                             |   |   |   | for                  the three months ended March 31, 2007 and 2006 |   |   |   |   |   | 4 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   | Unaudited                  Consolidated Condensed Statement of |   |   |   |   |   |   |   |
|                                                             |   |   |   | Stockholders'                  Equity for the three months ended March 31, 2007 |   |   |   |   |   | 5 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   | Unaudited                  Consolidated Condensed Statements of Cash |   |   |   |   |   |   |   |
|                                                             |   |   |   | Flows                  for the three months ended March 31, 2007 and 2006 |   |   |   |   |   | 6 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   | Notes                  to Unaudited Consolidated Condensed Financial |   |   |   |   |   |   |   |
|                                                             |   |   |   | Statements |   |   |   |   |   | 7 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  2.                                         | Management                  Discussion and Analysis or Plan of Operations |   |   |   |   |   | 9  |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  3.                                         | Controls                  and Procedures |   |   |   |   |   | 10  |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **PART                  II - OTHER INFORMATION**                 |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  1.                                         | Legal                  Proceedings |   |   |   |   |   | 11 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  2.                                         | Unregistered                  Sale of Equity Securities and Use of Proceeds |   |   |   |   |   | 12  |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  3.                                         | Defaults                  Upon Senior Securities |   |   |   |   |   | 12  |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  4.                                         | Submission                  of Matters to a Vote of Security Holders |   |   |   |   |   | 12  |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  5.                                         | Other                  Information |   |   |   |   |   | 12  |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Item                  6.                                         | Exhibits |   |   |   |   |   | 12  |   |
|                                                             |   |   |   |   |   |   |   |   |   | 12  |   |
|                                                             |   |   |   | Signatures |   |   |   |   |   | 12  |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   | Certifications |   |   |   |   |   | 13-16 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |

----

**PART        I - FINANCIAL INFORMATION**

| **ETERNAL                  TECHNOLOGIES GROUP, INC.**                                                                                        |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **UNAUDITED                  CONSOLIDATED CONDENSED BALANCE SHEETS**                                                                         |   |
| **March                  31, 2007 and December 31, 2006**                                                                                    |   |
| **(Amounts                  in United States Dollars)**                                                                                      |   |
|                                                                                                                                         |   |    |   |    |   |
|                                                                                                                                         |   | **March                  31,** |   | **December                  31,** |   |
|                                                                                                                                         |   | **2007** |   | **2006** |   |
| **ASSETS**                                                                                                                                   |   |    |   |    |   |
| Current                  assets:                                                                                                             |   |   |   |   |   |   |   |
| Cash                  and Cash equivalents                                                                                                   |   | $ | 25,299,565 |   | $ | 16,024,123 |   |
| Short-term                  investments                                                                                                      |   |   | 15,502,073 |   |   | 15,350,176 |   |
| Accounts                  receivable                                                                                                         |   |   | 3,408,518 |   |   | 6,790,534 |   |
| Inventories                                                                                                                                  |   |   | 1,115,802 |   |   | 5,358,213 |   |
| Prepayments                  and deposits                                                                                                    |   |   | 6,240 |   |   | 200,705 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Total                  current assets                                                                                                        |   |   | 45,332,198 |   |   | 43,723,751 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Advances                  to distributors                                                                                                    |   |   | 1,059,308 |   |   | 1,048,929 |   |
| Investment                  in Changsha Hongyuan                                                                                             |   |   | 3,918,701 |   |   | - |   |
| Property                  and equipment, net of accumulated depreciation of                  $4,149,193                                      |   |   |   |   |   |   |   |
| and                  $3,943,592 at March 31, 2007 and December 31, 2006,                  respectively                                       |   |   | 6,786,127 |   |   | 6,882,175 |   |
| Land                  use rights, net of accumulated amortization of $1,760,854                                                              |   |   |   |   |   |   |   |
| and                  $1,647,961 at March 31, 2007 and December 31, 2006,                  respectively                                       |   |   | 4,702,507 |   |   | 4,722,362 |   |
| Intangible                  assets                                                                                                           |   |   | 1,666,473 |   |   | 1,688,520 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Total                  assets                                                                                                                |   | $ | 63,465,314 |   | $ | 58,065,737 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                    |   |   |   |   |   |   |   |
| Current                  liabilities:                                                                                                        |   |   |   |   |   |   |   |
| Notes                  Payable and convertible debt                                                                                          |   | $ | 443,366 |   | $ | 443,366 |   |
| Accounts                  payable and accrued liabilities                                                                                    |   |   | 2,305,060 |   |   | 532,037 |   |
| Amounts                  due to related parties                                                                                              |   |   | 215,218 |   |   | 216,175 |   |
| Foreign                  income taxes payable                                                                                                |   |   | 78,797 |   |   | 229,680 |   |
| Derivative                  financial instrument liability                                                                                   |   |   | 340,431 |   |   | 438,356 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Total                  current liabilities                                                                                                   |   |   | 3,382,872 |   |   | 1,859,614 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Commitments                  and contingencies                                                                                               |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Stockholders'                  equity:                                                                                                       |   |   |   |   |   |   |   |
| Preferred                  shares - $0.001 par value, 5,000,000 shares authorized,                  none                                     |   |   |   |   |   |   |   |
| issued                  or outstanding                                                                                                       |   |   | - |   |   | - |   |
| Common                  shares - $0.001 par value; 95,000,000 shares authorized;                                                             |   |   |   |   |   |   |   |
| 47,073,579                  and 43,567,300 shares issued and outstanding at March 31,                                                        |   |   |   |   |   |   |   |
| 2007                  and December 31, 2006, respectively                                                                                    |   |   | 47,073 |   |   | 43,567 |   |
| Additional                  paid - in capital                                                                                                |   |   | 17,232,326 |   |   | 14,931,217 |   |
| Subscription                  receivable                                                                                                     |   |   | - |   |   | (10,176 | ) |
| Retained                  earnings                                                                                                           |   |   | 39,316,447 |   |   | 38,097,409 |   |
| Accumulated                  other comprehensive income                                                                                      |   |   | 3,486,596 |   |   | 3,144,106 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Total                  stockholders' equity                                                                                                  |   |   | 60,082,442 |   |   | 56,206,123 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Total                  liabilities and stockholders' equity                                                                                  |   | $ | 63,465,314 |   | $ | 58,065,737 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these unaudited consolidated                  condensed financial statements |

----

| **ETERNAL                  TECHNOLOGIES GROUP, INC.**                                                                                        |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **UNAUDITED                  CONSOLIDATED CONDENSED STATEMENTS OF INCOME**                                                                   |   |
| **For                  the Three Months Ended March 31, 2007 and 2006**                                                                      |   |
| **(Amounts                  in United States Dollars)**                                                                                      |   |
|                                                                                                                                         |   |    |   |    |   |
|                                                                                                                                         |   | **2007** |   | **2006** |   |
|                                                                                                                                         |   |    |   |    |   |
|                                                                                                                                         |   |    |   |    |   |
| Revenue:                                                                                                                                     |   |   |   |   |   |   |   |
| Agricultural                  and genetics sales                                                                                             |   | $ | 5,726,797 |   | $ | 3,608,572 |   |
| Medical                  devices sales and services                                                                                          |   |   | 1,498,065 |   |   | 607,787 |   |
| Land                  lease                                                                                                                  |   |   | 297,245 |   |   | - |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Total                  revenue                                                                                                               |   |   | 7,522,107 |   |   | 4,216,359 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Cost                  of sales and services:                                                                                                 |   |   |   |   |   |   |   |
| Agricultural                  and genetics sales                                                                                             |   |   | 5,258,904 |   |   | 2,644,403 |   |
| Medical                  devices and services                                                                                                |   |   | 602,687 |   |   | 277,244 |   |
| Land                  lease                                                                                                                  |   |   | 137,856 |   |   | 132,988 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Total                  cost of sales and services                                                                                            |   |   | 5,999,447 |   |   | 3,054,635 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Gross                  profit                                                                                                                |   |   | 1,522,660 |   |   | 1,161,724 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Selling,                  general and administrative expenses                                                                                |   |   | 669,031 |   |   | 400,649 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Income                  from operations                                                                                                      |   |   | 853,629 |   |   | 761,075 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Other                  income (expense)                                                                                                      |   |   |   |   |   |   |   |
| Interest                  income                                                                                                             |   |   | 49,885 |   |   | 40,728 |   |
| Earnings                  on short-term investments                                                                                          |   |   | 347,430 |   |   |   |   |
| Loss                  on sale of property and equipment                                                                                      |   |   | (844 | ) |   | - |   |
| Change                  in value of derivative                                                                                               |   |   | (38,880 | ) |   | (221,649 | ) |
| Equity                  in earnings on investment in Changsha Hongyuan                                                                       |   |   | 96,508 |   |   | - |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Other                  income (expense), net                                                                                                 |   |   | 454,099 |   |   | (180,921 | ) |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Income                  before provision for foreign income taxes                                                                            |   |   | 1,307,728 |   |   | 580,154 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Provision                  for income taxes                                                                                                  |   |   | 88,690 |   |   | 39,355 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Net                  income                                                                                                                  |   | $ | 1,219,038 |   | $ | 540,799 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Net                  income per common share                                                                                                 |   |   |   |   |   |   |   |
| basic                  and diluted                                                                                                           |   | $ | 0.03 |   | $ | 0.01 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Weighted                  average number of                                                                                                  |   |   |   |   |   |   |   |
| common                  shares outstanding,                                                                                                  |   |   |   |   |   |   |   |
| basic                  and diluted                                                                                                           |   |   | 47,073,579 |   |   | 40,567,300 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these unaudited consolidated                  condensed financial statements |

----

| **ETERNAL                  TECHNOLOGIES GROUP, INC.**                                                                                        |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **UNAUDITED                  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS**                                                               |   |
| **For                  the Three Months Ended March 31, 2007 and 2006**                                                                      |   |
| **(Amounts                  in United States Dollars)**                                                                                      |   |
|                                                                                                                                         |   |    |   |    |   |
|                                                                                                                                         |   |  **2007** |   |  **2006** |   |
|                                                                                                                                         |   |    |   |    |   |
| Cash                  flows from operating activities                                                                                        |   |   |   |   |   |   |   |
| Net                  income                                                                                                                  |   | $ | 1,219,038 |   | $ | 540,799 |   |
| Adjustments                  to reconcile net income to net cash                                                                             |   |   |   |   |   |   |   |
| provided                  by operating activities:                                                                                           |   |   |   |   |   |   |   |
| Equity                  in earnings on investment in Changsha Hongyuan                                                                       |   |   | (96,508 | ) |   | - |   |
| Depreciation                  and amortization                                                                                               |   |   | 274,738 |   |   | 264,946 |   |
| Common                  stock issued for service                                                                                             |   |   | 264,000 |   |   | - |   |
| Change                  in value of derivative financial instruments                                                                         |   |   | 38,879 |   |   | 221,649 |   |
| Changes                  in operating assets and liabilities:                                                                                |   |   |   |   |   |   |   |
| Inventories                                                                                                                                  |   |   | 4,295,433 |   |   | (33,143 | ) |
| Accounts                  receivable                                                                                                         |   |   | 3,218,448 |   |   | 3,660,793 |   |
| Prepayments                  and deposits                                                                                                    |   |   | 196,451 |   |   | - |   |
| Accounts                  payable and accrued expenses                                                                                       |   |   | 1,767,758 |   |   | (60,703 | ) |
| Account                  payable to related parties                                                                                          |   |   | - |   |   | 3,082 |   |
| Foreign                  income taxes payable                                                                                                |   |   | (153,156 | ) |   | - |   |
|                                                                                                                                         |   |   |  |   |   |  |   |
|  Net                  cash provided by operating activities                                                                             |   |   | 11,025,081 |   |   | 4,597,423 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Cash                  flows from investing activities:                                                                                       |   |   |   |   |   |   |   |
| Investment                  in Changsha Hongyuan                                                                                             |   |   | (1,918,382 | ) |   | - |   |
|                                                                                                                                         |   |   |  |   |   |  |   |
|  Net                  cash used by investing activities                                                                                 |   |   | (1,918,382 | ) |   | - |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Cash                  flows from financing activities:                                                                                       |   |   |   |   |   |   |   |
| Collection                  of subscription receivable                                                                                       |   |   | 10,176 |   |   | - |   |
|                                                                                                                                         |   |   |  |   |   |  |   |
|  Net                  cash provided by financing activities                                                                             |   |   | 10,176 |   |   | - |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Effect                  of exchange rate changes on cash                                                                                     |   |   | 158,567 |   |   | 129,766 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Net                  increase in cash and cash equivalents                                                                                   |   |   | 9,275,442 |   |   | 4,727,189 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Cash                  and cash equivalents, beginning of period                                                                              |   |   | 16,024,123 |   |   | 18,228,488 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| Cash                  and cash equivalents, end of period                                                                                    |   | $ | 25,299,565 |   | $ | 22,955,677 |   |
|                                                                                                                                         |   |   |  |   |   |  |   |
| Supplemental                  disclosure of cash flow information:                                                                           |   |   |   |   |   |   |   |
| Interest                  Paid                                                                                                               |   | $ | - |   | $ | - |   |
| Income                  taxes paid                                                                                                           |   |   | 141,836 |   |   | 39,355 |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
|                                                                                                                                         |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these unaudited consolidated                  condensed financial statements |

----

| **ETERNAL                  TECHNOLOGIES GROUP, INC.**                                                |
|------------------------------------------------------------------------------------------------------|
| **NOTES                  TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL                  STATEMENTS** |
| **For                  the Three Months Ended March 31, 2007 and 2006**                              |
| **(Amounts                  in United States Dollars)**                                              |

**1.        **
**REPORTING        ENTITY**

**2.        **
**CONDENSED        FINANCIAL STATEMENTS AND FOOTNOTES**

**Significant        Estimates**

**Principles        of Consolidation**

----

| **ETERNAL                  TECHNOLOGIES GROUP, INC.**                                                |
|------------------------------------------------------------------------------------------------------|
| **NOTES                  TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL                  STATEMENTS** |
| **For                  the Three Months Ended March 31, 2007 and 2006**                              |
| **(Amounts                  in United States Dollars)**                                              |

**3.        **
**CASH        AND CASH EQUIVALENTS**

**4.**
**PURCHASE        OF INVESTMENT IN **
**CHANGSHA        HONGYUAN**

**5.        **
**INCOME        TAXES**

----

| **ETERNAL                  TECHNOLOGIES GROUP, INC.**                                                |
|------------------------------------------------------------------------------------------------------|
| **NOTES                  TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL                  STATEMENTS** |
| **For                  the Three Months Ended March 31, 2007 and 2006**                              |
| **(Amounts                  in United States Dollars)**                                              |

**5.        **
**INCOME        TAXES, continued**

|                                                                              |   | 2007   |     |    |   | 2006      |    |
|-----------------------------------------------------------------------------------|--------|--------|----------|---------|--------|-----------|---------|
|                                                                              |   | Amount |     | Percent |   |      |    | Amount |   | Percent |   |
| Income                  taxes at federal statutory rate                           |   | $      | 384,318  |    |   | 34        | %       |   |   |   | $ | 170,491 |   |   | 34 | % |
| Effect                  of United States and British Virgin Island losses         |   |   | 23,992   |    |   | 2         | %       |   |   |   |   | 29,051 |   |   | 6 | % |
| Income                  tax exemption in the Peoples Republic of China            |   |   | (221,641 | )       |   | (20       | )%      |   |   |   |   | (190,882 | ) |   | (38 | )% |
|  Difference in United                States                and foreign rates |   |   | (97,979  |  ) |   | (9)  |  % |   |   |   |   | 30,695  |   |   | 6  |  % |
| Income                  tax expense                                               |   | $      | 88,690   |    |   | 7         | %       |   |   |   | $ | 39,355 |   |   | 8 | % |

**6.**
**SEGMENT        INFORMATION**

|                                           |   | Agricultural                  Genetics |       | Medical                  Devices |   | Corporate |   | Total  |      |
|------------------------------------------------|--------|----------------------------------------|------------|----------------------------------|--------|-----------|--------|--------|-----------|
| 2006                                           |   |                                   |       |                             |   |      |   |   |      |
| Revenues                                       |   | $                                      | 3,608,571  |                             | $      | 607,787   |   | $      | -         |   | $ | 4,216,359 |   |
| Income                  from operations        |   |                                   | 598,399    |                             |   | 259,513   |   |   | (96,837   | ) |   | 761,075 |   |
| Depreciation                  and amortization |   |                                   | 197,021    |                             |   | 67,925    |   |   | -         |   |   | 264,946 |   |
| Total                  assets                  |   |                                   | 45,162,078 |                             |   | 5,324,872 |   |   | 42,438    |   |   | 50,529,386 |   |
|  2007                                     |   |                                   |       |                             |   |      |   |   |      |   |   |   |   |
| Revenues                                       |   |                                   | 6,024,042  |                             |   | 1,498,065 |   |   |      |   |   | 7,522,107 |   |
| Income                  from operations        |   |                                   | 345,152    |                             |   | 588,450   |   |   | (79,974   | ) |   | 853,629 |   |
| Depreciation                  and amortization |   |                                   | 204,233    |                             |   | 70,505    |   |   | -         |   |   | 274,738 |   |
| Total                  assets                  |   |                                   | 52,798,077 |                             |   | 8,738,219 |   |   | 1,928,018 |   |   | 63,465,314 |   |

----

**Item        2. Management Discussion and Analysis or Plan of Operation**

**Three        Months Ended March 31, 2007 compared to the Three Months Ended March 31,        2006**

**Revenues**

|                         |   | Three                  Months Ended   |      |
|------------------------------|--------|---------------------------------------|-----------|
| Category                     |   |  March                  31, 2007 |      |  March                  31, 2006 |   |
| Lamb                  Meat   |   | $                                     | 1,724,923 |   | $ | 3,608,572 |   |
| Embryo’s               |   |                                  | 4,001,874 |   |   | - |   |
| Land                  Lease  |   |                                  | 297,245   |   |   | - |   |
| E-Sea                        |   |                                  | 1,498,065 |   |   | 607,787 |   |
| Total                  sales |   | $                                     | 7,522,107 |   | $ | 4,216,359 |   |

**Cost        of Sales**

|                                 |   | Three                  Months Ended   |      |
|--------------------------------------|--------|---------------------------------------|-----------|
| Category                             |   |  March                  31, 2007 |      |  March                  31, 2006 |   |
| Lamb                  Meat           |   | $                                     | 1,321,369 |   |   | 2,644,403 |   |
| Embryos                              |   |                                  | 3,937,535 |   |   | - |   |
| Land                  Lease          |   |                                  | 137,856   |   |   | 132,988 |   |
| E-Sea                                |   |                                  | 602,687   |   |   | 277,244 |   |
| Total                  Cost of Sales |   | $                                     | 5,999,447 |   | $ | 3,054,635 |   |

**Gross        Profits**

|                        |   | Three                  Months Ended |   |
|-----------------------------|--------|-------------------------------------|--------|
| Category                    |   | March                  31, 2007     |   |  March                  31, 2006 |   |
| Lamb                  Meat  |   |                                | 23     | % |   | 27 | % |
| Embryos                     |   |                                | 2      | % |   | - |   |
| Land                  Lease |   |                                | 54     | % |   |   |   |
| E-Sea                       |   |                                | 40     | % |   | 54 | % |
| Overall                     |   |                                | 20     | % |   | 28 | % |

**Depreciation        and Amortization**

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**Selling,        General and Administrative Expenses**

**Other        Income (Expense)**

**Income        Taxes**

**Net        Income **

**Liquidity        and Capital Resources**

**Item        3. Controls and Procedures**

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**PART        II. OTHER INFORMATION**

**Item        1. Legal Proceedings**

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

**Item.        3. Defaults Upon Senior Securities**

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

**Item        5. Other Information**

**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 |

**SIGNATURES**

|                                                  |                                              |                                  |
|-------------------------------------------------------|---------------------------------------------------|---------------------------------------|
|                                                  | ETERNAL                  TECHNOLOGIES GROUP, INC. |
|                                             |                                         |                             |
| Date: May                15,                2007 | By:                                     | /s/ Jiansheng                Wei |
|                                                  | Jiansheng                Wei                      |
|                                                  | Chief                Executive Officer            |
|  Date:                May 15, 2007               |                                              |
|                                                  |  /s/ Zheng Shen Zheng                Shen    |
|                                                  |  Chief Financial                Officer      |

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**CERTIFICATIONS**

**EXHIBIT        31.1**

**CERTIFICATION        BY JIANSHENG WEI PURSUANT TO SECURITIES EXCHANGE ACT RULE        13A-14(A)**

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

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

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

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

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

----

**EXHIBIT        31.2**

**CERTIFICATION**

**BY        ZHENG SHEN PURSUANT TO SECURITIES EXCHANGE ACT RULE        13A-14(A)**

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

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

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

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

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

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** **
**EXHIBIT        32.1**

**CERTIFICATION        OF PERIODIC FINANCIAL REPORT PURSUANT TO 18 U.S.C. SECTION        1350**

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**EXHIBIT        32.2**

**CERTIFICATION        OF PERIODIC FINANCIAL REPORT PURSUANT TO 18 U.S.C. SECTION        1350**