10QSB/A 1 fm10qsba2_93003.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A Amendment No. 2 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________to__________. Commission File No. 0-27929 ETERNAL TECHNOLOGIES GROUP, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Nevada 62-1655508 ---------------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) Suite 04-06, 28/F, Block A, Innotec Tower, 235 Nanjing Road, Heping District, Tianjin, 300100 ------------------------------------------------------------- (Address of principal executive offices) 011-86-22-2750-1802 ------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES __ NO X ---- As of November 14, 2003, 29,177,396 shares of Common Stock of the issuer were outstanding. Eternal Technologies Group, Inc. INDEX Page Number PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Balance Sheets - September 30, 2003 (unaudited) and December 31, 2002 3 Unaudited Consolidated Statements of Income - For the three months and nine months ended September 30, 2003 and 2002 4 Unaudited Consolidated Statements of Cash Flows- For the three months and nine months ended September 30, 2003 and 2002 5 Notes to Consolidated Financial Statements 6 Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION Signatures 12 Certifications 13
2 ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 (UNITED STATES DOLLARS) ASSETS September 30 December 31 2003 2002 --------------- --------------- (Unaudited) (Audited) CURRENT ASSETS Cash and bank balances $ 8,197,367 $ 7,135,559 Inventories 232,401 232,401 Deferred costs 5,500,000 - Accounts receivable - 4,483,855 Common stock subscribed 36,118 - Receivable due from related company 518,212 518,212 Prepayments and deposits 152,010 146,715 --------------- --------------- TOTAL CURRENT ASSETS 14,636,108 12,516,742 FIXED ASSETS (net of accumulated depreciation of $1,775,062 in 2003 and $1,320,907 in 2002 3,772,448 4,226,603 CONSTRUCTION IN PROGRESS 4,658,697 4,658,697 ESTIMATED FUTURE CONSTRUCTION COST UNDER CONTRACT 1,000,000 1,000,000 LAND USE RIGHTS (net of accumulated amortization of $744,873 in 2003 and $558,620 in 2002) 5,255,128 5,441,380 --------------- --------------- TOTAL ASSETS $ 29,322,381 $ 27,843,422 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable for construction $ 402,771 $ 348,193 Notes payable 503,857 782,733 Estimated payable for construction contracts not invoiced 1,000,000 1,000,000 Accounts payable and accrued expenses 613,202 711,572 Deferred Revenue 1,151,325 - Payable to related company 119,363 156,265 Amounts due to related parties 317,896 291,193 --------------- --------------- TOTAL CURRENT LIABILITIES 4,108,414 3,289,956 --------------- --------------- SHAREHOLDERS' EQUITY Preferred shares - 5,000,000 authorized $.001 par - none issued - - Common shares - 95,000,000 shares authorized, at $.001 par, 28,474,475 and 25,531,316 shares issued and outstanding at September 30, 2003 and December 31, 2002, respectively 28,474 25,531 Paid - in capital 7,492,549 5,825,735 Retained earnings 17,692,944 18,702,200 --------------- --------------- TOTAL SHAREHOLDERS' EQUITY 25,213,967 24,553,466 --------------- --------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 29,322,381 $27,843,422 =============== ===============
3 ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNTIED STATES DOLLARS) Three Months Ended Nine Months Ended September 30 September 30 ------------------------------ ------------------------------ 2003 2002 2003 2002 ---------- ----------- ---------- ------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) SALES $ - $ - $ 28,376 $ 843,373 COST OF SALES - - - 436,467 -------------- -------------- -------------- -------------- GROSS PROFIT - - $ 28,376 406,906 DEPRECIATION AND AMORTIZATION 213,469 250,432 640,407 687,039 RESEARCH AND DEVELOPMENT COSTS - - - 1,000,000 SELLING AND ADMINISTRATIVE EXPENSES 102,068 80,645 397,226 509,618 -------------- -------------- -------------- -------------- NET LOSS BEFORE INCOME TAXES (315,537) (331,077) (1,009,257) (1,789,751) INCOME TAXES - - - - -------------- -------------- -------------- -------------- NET LOSS $ (315,537) $ (331,077) $(1,009,257) $ (1,789,751) ============== ============== ============== ============== EARNINGS PER SHARE Basic and diluted Net loss ($0.01) $ (0.01) ($0.03) $ (0.07) ======= ======== ======= ======== Weighted average number of common shares outstanding Basic and diluted 26,917,661 25,531,316 * 26,238,287 25,531,316 * ============== ============== ============== ==============
Note *Number of shares outstanding the date of the merger for comparison only. 4 ETERNAL TECHNOLOGIES GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (UNITED STATES DOLLARS) SEPTEMBER 30 --------------------------- 2003 2002 ---------- --------- (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $(1,009,257) $(1,458,674) Adjustments to reconcile net income to - net cash provided by operating activities: - Depreciation and amortization 640,407 436,607 (Increase) decrease in assets: - Inventories - (190,038) Deferred costs (5,500,000) - Accounts receivable 4,483,855 1,975,904 Receivable due from related parties - 68,218 Prepayments and deposits (5,295) 18,192 Increase (decrease) in liabilities: Accounts payable for construction work 54,578 (2,557,615) Notes payable - Accounts payable and accrued expenses (98,370) 94,843 Amounts advanced by related parties 26,703 64,500 Account payable to related company (36,902) (1,715,663) Deferred Revenue 1,151,325 - -------------- ------------- Net cash provided by operating activities (292,956) (3,263,726) -------------- ------------- - CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (905,665) Construction in progress - (639,510) -------------- ------------- Net cash used by investing activities - (1,545,175) -------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Issuance of capital shares 1,633,639 9,000 Payments on Notes Payable (278,876) -------------- ------------- Net cash provided by financing activities 1,354,763 NET INCREASE IN CASH AND BANK BALANCES 1,061,808 (4,799,901) Cash and bank balances, beginning of period 7,135,559 7,753,452 -------------- ------------- Cash and bank balances, end of period 8,197,367 2,953,551 ============== ============= SUPPLEMENTARY CASH FLOWS DISCLOSURES 1. Interest paid - - Taxes paid - - 2. During the nine months ended September 30, 2003, 2,943,159 shares were issued. Cost associated with the issues were $330,000
5 NOTES 1. Reporting entity Pursuant to an exchange agreement, Eternal Technologies Group, Inc., ("Company") formerly known as Waterford Sterling Corporation, completed its acquisition of 100% interest of Eternal Group Limited and Subsidiaries on December 12, 2002. The Company has treated the transaction as a reverse merger for accounting purposes. Following the acquisition, the former shareholders of Eternal Technology Group Limited, a British Virgin Islands limited liability company, now own approximately 85% of the issued and outstanding common shares of Eternal Technologies Group Inc. Eternal Phoenix Company Limited was incorporated in the British Virgin Islands with limited liability on March 3, 2000. Pursuant to a resolution passed on June 17, 2000 Eternal Phoenix Company Limited changed its name to ETERNAL TECHNOLOGY GROUP LTD., ("Eternal"). Eternal is a holding company for investments in operating companies. Eternal acquired a 100% equity interest in Willsley Company Limited ("Willsley"), a company incorporated in the British Virgin Island with limited liability on May 16, 2000. Willsley's principal activity is investments and owns 100% interest in Inner Mongolia Aershan Agriculture & Husbandry Technology Co., Ltd ("Aershan"). Aershan was incorporated in the People's Republic of China ("the PRC") with limited liability on July 11, 2000 and its principal activities are to run a breeding center, transplant embryos, and to propagate quality meat sheep and other livestock breeds in Inner Mongolia. 2. Condensed financial statements and footnotes The interim consolidated financial statements presented herein have been prepared by the Company and include the unaudited accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated in the consolidation. 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, 2002 and notes thereto included in the Company's Form 10-KSB. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2003, the results of operations for the three months ended June 30, 2003 and 2002 and the six months ended June 30, 2003 and 2003, respectively. Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations. 3. Segment reporting The Company currently is engaged in only one business segment. 4. Cash Approximately $7,300,000 of cash is reserved by the company for use in operations in the PRC. 6 5. The deferred costs of $5,500,000 are for the purchase of 2,000 cows at a cost of $2,700 each. These cattle were purchased under an agreement to sell them back to the original owner during 2004. The cattle are being used to harvest embryos. 7 Item 2. Management discussion and Analysis of Financial Condition and Result of Operations Our operations are conducted through our wholly-owned subsidiary, Eternal Technologies Group Ltd. ("Eternal Technologies - BVI"), a British Virgin Islands company, and its subsidiaries. Eternal Technologies - BVI was incorporated in the British Virgin Islands in March 2000. In May 2000, Eternal Technologies - BVI acquired 100% of Willsley Company Limited. Willsley is a holding company that owns 100% of Inner Mongolia Aershan Agriculture & Husbandry Technology Co., Ltd. ("Aershan Agriculture"). Aershan Agriculture operates a farm and breeding center focused on the propagation of superior breeds of sheep and livestock in the Inner Mongolia region of China. In January, 2003, we supplemented our research and development embryo transfer capabilities by establishing a relationship with Beijing AnBo Embryo Biotech Center ("AnBo Biotech Center"), a biotech research and development and embryo transfer center located in Beijing. Our operations are focused on developing superior livestock breeds in order to improve the quality and yield of livestock in China and the profitability of livestock operations. We initially imported embryos from Australia and the United States. We are utilizing our facilities and expertise to develop a herd of "carrier animals" in order to produce a domestic supply of embryos, eliminating our dependence on third party foreign embryo suppliers and reducing our cost of embryos. Under that program, we (1) breed, own and manage a herd of sheep on our farm and (2) purchase dairy cattle, inject our bio-engineered embryo into the "host animals", and, after birth, retain the offspring to serve as breeder stock and sell the "host animal" back to the original owner. We utilize our genetically engineered livestock embryos and our breeding and biotech expertise to offer a range of livestock breeding services and products, including sale of embryos, artificial insemination and embryo transplant services, both at our facilities and on-site, and related products and services designed to improve production, quality and profitability of Chinese livestock operators. Our initial operations focused on the production and sale of bio-engineered embryo and services targeted to sheep growers. In 2003, we expanded our operations to include the dairy cattle market. In late 2003, we began implementation of a mutton production and sale program focused on the processing and sale of mutton from our higher yielding, higher quality genetically-engineered stock. In implementing our mutton production and sales strategy, we utilize our farm in Inner Mongolia to raise a heard of sheep for ultimate processing and sale. Because of changes in government policy relating to plowing in Inner Mongolia, we have determined that we may have impediments to the ongoing economic use of our farm for grazing. Pending a final determination with respect to the economic viability of using our farm for grazing, we continue to carry out our mutton production and sale strategy supplemented through purchases from our clients of sheep raised from our genetically-engineered embryo, with meat processing contracted to slaughter houses and sale of processed meat to wholesale purchasers in and around Beijing. Depending on the outcome of our evaluation of the economic viability of our farm, we may attempt to sell the farm and rely on purchases of sheep from clients to support mutton production or evaluate other best-economic uses of the farm. The company's business is highly seasonal with all of its revenues and earnings occurring during the fourth quarter of the company's fiscal year (October- December). The results for both the three months and nine months ended September 30, are not indicative of the anticipated results for the full fiscal year. While the company has began to carry out measures which will reduce the seasonality of its operations, for the near future, the business of the company will be highly seasonal. 8 Results of Operation - Three Months Ended September 30, 2003 compared to Three months Ended September 30, 2002 Revenues - There were no revenues for either the three months ended September 30, 2003 or 2002. Cost of Sales - Because there were no revenues, there were no identifiable costs of sales for either the three months ended September 30, 2003 or 2002. Depreciation and Amortization - Depreciation and amortization expense decreased by $36,963 or 14.76% to $213,469 for the three months ended September 30, 2003 from $250,432 for the three months ended September 30, 2002. Depreciation expense was higher for the same quarter in 2002 primarily because certain assets placed into service at the end of 2001 were not depreciated properly in the first quarter of 2002. Research and Development Costs - There were no identifiable research and development costs for either the three months ended September 30, 2003 or 2002. Selling and Administrative Expenses - Selling and administrative expenses for the three months ended September 30, 2003 increased by $21,423 or 26.56% to $102,068 from $80,645 for the same period in 2002, principally because of increased public relations and professional expenses. Net Income (Loss) As a result of the foregoing, the Company incurred a net operating loss of $315,537 for the three months ended September 30, 2003 compared to a net loss of $331,077 for the three months ended September 30, 2002. Nine Months Ended September 30, 2003 Compared To Nine Months Ended September 30, 2002. Revenues - Revenues decreased by $814,997 or 97% to $28,376 for the nine months ended September 30, 2003 from $843,373 for the nine months ended September 30, 2002. The decrease was primarily due to sales made in 2001, but delivery of which did not take place until 2002. Without this aberration, revenues for 2003 would have been slightly higher than those of 2002. Cost of Sales - There were no identifiable costs of sales for the nine months ended September 30, 2003. Cost of sales totaled $436,467 for the nine months ended September 30, 2002 representing costs directly associated with the delivery of embryos and transplants during the period. 9 Depreciation and Amortization - Depreciation and amortization decreased by $46,632 or 6.79% to $640,407 for the nine months ended September 30, 2003 from $687,039 during the nine months ended September 30, 2002. Research and Development Costs - Research and development costs decreased by $1,000,000 or 100% to $0 at September 30, 2003. Although research is on going, no identifiable additional costs have been incurred during 2003. Selling and Administrative Expenses - Selling and administrative expenses decreased by $112,392 or 22.05% to $397,226 for the nine months ended September 30, 2003 as compared to the same period in 2002. The decrease is primarily attributable to lower public relations and professional expenses incurred which although higher for the three months ended September 30, 2003 were lower for the year to date. Net Income (Loss) - As a result of the foregoing, the net loss decreased by $780,494 or 44% to $1,009,257 for the nine months ended September 30, 2003 from a loss of $1,789,751 at September 30, 2002. This reduction is the result of decreased expenditures for research and development. Liquidity and Capital Resources - The Company had $8,197,367 in cash at September 30, 2003 compared to $3,104,761 at September 30, 2002. The Company's working capital was $10,527,694 at September 30, 2003 compared to $9,226,786 at December 31, 2002. Cash used in operating activities totaled $292,956 for the nine months ended September 30, 2003. This compares with cash used in operating activities of $3,263,726 for the nine months ended September 30, 2002. The reduction is the use of cash resulted from a decrease in the net operating loss by $449,417, the collection of all trade receivables outstanding at December 31, 2002 of $4,483,855, an increase in deferred costs of $5,500,000, an increase in deferred revenue of $1,151,325 a decrease in liabilities of $332,867. There were no investing activities by the Company during the nine months ended September 30, 2003. During the corresponding period of the prior year the Company used $1,545,173 in investing activities for the purchase of fixed assets and for construction costs. Cash flows from financing activities totaled $1,354,763 for the nine months ended September 30, 2003 compared to $9,000 for the corresponding period in 2002. All cash flows from financing activities for 2002 were from the sale of the Company's common stock. A total of 647,146 warrants for the purchase of common stock were issued during the third quarter of 2003. The exercise price on these warrants is $1.54 per share. The warrants are exercisable for a period of five years with the expiration dates ranging from September 4, 2008 to October 8, 2008. The warrants include certain registration rights and have a cashless exercise provision. The Company paid $278,876 in cash during the nine month period ended September 30, 2003 to reduce the principal outstanding on notes payable. Although the Company has a cash and bank balance of $8,197,367, all but $897,367 is restricted for certain uses within the People's Republic of China. Therefore, if the Company is to expand in 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 its business objectives for the next twelve (12) months. 10 Deferred Costs - The deferred costs of $5,500,000 are for the purchase of 2,000 cows at a cost of $2,700 each. These cattle were purchased under an agreement to sell them back to the original owner during 2004. The cattle are being used to harvest embryos. Prepayments Liability - The prepayment liability of $1,151,325 is for an advance payment from the sale of a sheep embryo transfer contract. According to the sales contract, the total amount is $1,518,072 and the prepayment is 70% of the total amount. The contract should be concluded during the fourth quarter of the current fiscal year. The remaining $91,084 represents a prepayment for embryo transfers to be performed in the 4th quarter. Item 3. Controls and Procedures (a) Evaluation of disclosure controls and procedures. Our chief executive officer and our chief financial officer, after evaluating the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the "Evaluation Date") within 90 days before the filing date of this quarterly report, have concluded that as of the Evaluation Date, our disclosure controls and procedures were adequate and designed to ensure that material information relating to us and our consolidated subsidiaries would be made known to them by others within those entities. (b) Changes in internal controls. There were no significant changes in our internal controls or to our knowledge, in other factors that could significantly affect our disclosure controls and procedures subsequent to the Evaluation Date. PART II. OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities None Item. 3. Defaults Upon Senior Securities None Item 4. Submissions of Matters to a Vote of Security Holders None Item 5. Other Information During the three months ended September 30, 2003, the Company issued 2,297,429 shares of its common stock for cash. Stock warrants totaling 657,146 were issued to purchasers of the companies stock. The warrants are exercisable at $1.54 per share. 11 Item 6. Exhibits and Reports on Form 8-K a) Exhibits None b) Reports on Form 8-K None None Signatures 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/ Jiansheng Wei ------------------------------------- August 29, 2005 Jiansheng Wei, Chief Executive Officer /s/ Xingjian Ma August 29, 2005 ------------------------------------- Xingjian Ma, Chief Financial Officer 12 CERTIFICATION PURSUANT TO 15 U.S.C. SECTION 10A, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, JiJun Wu, certify that: 1. I have reviewed this quarterly report on Form 10-Q 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 respect the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer 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)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) [omitted in accordance with SEC Release Nos. 33-8238 and 34-47986]; 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 e) 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 that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 35 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: August 29, 2005 /s/ Jiansheng Wei ------------------------------------- Jiansheng Wei, Chief Executive Officer CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND 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, 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-Q for the quarterly period ended September 30, 2003 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-Q fairly presents in all material respects the financial condition and results of operations of Eternal Technologies Group, Inc. By: /s/ Jiansheng Wei -------------------------- Name: Jiansheng Wei Title: Chief Executive Officer August 29, 2005 CERTIFICATION PURSUANT TO 15 U.S.C. SECTION 10A, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Xingjian Ma, certify that: 1. I have reviewed this quarterly report on Form 10-Q 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 respect the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer 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)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) [omitted in accordance with SEC Release Nos. 33-8238 and 34-47986]; 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 that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 35 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: August 29, 2005 /s/ Xingjian Ma --------------------------------- Xingjian Ma, Chief Financial Officer 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, Xingjian Ma, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Eternal Technologies Group, Inc. on Form 10-Q for the quarterly period ended September 30, 2003 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-Q fairly presents in all material respects the financial condition and results of operations of Eternal Technologies Group, Inc. By: /s/Xingjian Ma ---------------------------- Name: Xingjian Ma Title: Chief Financial Officer August 29, 2005