UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for
Six Months Ended June 30, 1996
Commission File Number 0-27210
TECH ELECTRO INDUSTRIES, INC.
_____________________________
TEXAS 75-2408297
_____________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4300 Wiley Post Road, Dallas, Texas 75244-2131
______________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(214) 239-7151
Indicate by check mark whether the registrant (1) has
filed all reports to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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 at least the past 90 days. Yes_X___No____
As of June 30, 1996 the registrant had 1,308,275 shares
of common stock outstanding.
1
<PAGE>
TECH ELECTRO INDUSTRIES, INC.
INDEX
Page Number
Part I - Financial Information
Item 1 - Financial Statements (unaudited)
Consolidated Balance Sheets at
June 30, 1996 and 1995 3
Consolidated Statements of Operations
for the Periods Ended June 30, 1996
and 1995 5
Consolidated Statements of Cash Flows
for the Periods Ended June 30, 1996
and 1995 6
Notes to Consolidated Financial
Statements 7
Item 2 - Management's Discussions and
Analysis of Financial Condition and
Results of Operations 13
Part II - Other Information
Item 1 - Legal Proceedings 15
Signatures 16
2
<PAGE>
Part 1
Financial Information
Item 1 - Financial Statement
Tech Electro Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
___________________________
( Prepared from the books without verification by audit )
Periods Ended: June 30, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS
______
1996 1995
---- ----
CURRENT ASSETS
<S> <C> <C>
Cash 557,890 71,853
Certificate of Deposit 209,024 -0-
Marketable Securities 920,200 -0-
Accounts Receivable - Customers 449,238 379,660
Accounts Receivable - Other 17,060 8,282
Advance to Employee 93,000 -0-
Notes Receivable 62,968 34,421
Inventory, at Lower of Cost or Market 1,362,634 1,044,542
Deferred Federal Income Tax 19,377 7,801
Prepaid Federal Income Tax 8,410 7,000
Prepaid Expenses 296,042 74,499
_________ __________
TOTAL CURRENT ASSETS 3,995,843 1,628,058
PLANT & EQUIPMENT, at cost
Lab and Computer Equipment 309,222 253,514
Furniture and Fixtures 157,252 124,692
Automobiles 21,943 21,943
_________ ________
488,417 400,149
Less Accumulated Depreciation 303,573 279,511
_________ ________
TOTAL PLANT AND EQUIPMENT 184,844 120,638
OTHER ASSETS
Deferred Federal Income Tax 22,070 25,676
Investment in Bonds 2,000 2,000
_________ ________
24,070 27,676
TOTAL ASSETS 4,204,757 1,776,372
========= ==========
</TABLE>
3
<PAGE>
Tech Electro Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
___________________________
( Prepared from the books without verification by audit )
Period Ended: June 30, 1996 and 1995
LIABILITIES & STOCKHOLDERS' EQUITY
__________________________________
<TABLE>
<CAPTION>
1996 1995
---- ----
CURRENT LIABILITIES
<S> <C> <C>
Accounts Payable - Trade 171,717 136,495
Accounts Payable - Others 4,172 19
Accrued Liabilities 39,815 28,046
Federal Income Tax Payable -0- 7,153
Notes Payable - Banks 319,992 199,994
Notes Payable - Affiliates 245,000 -0-
Notes Payable - Others 50,703 3,539
_________ __________
TOTAL CURRENT LIABILITIES 831,399 375,246
LONG-TERM DEBT
Notes Payable - Affiliates -0- 145,000
Deferred Compensation Payable 99,651 99,651
_________ __________
TOTAL LONG-TERM DEBT 99,651 244,651
STOCKHOLDERS' EQUITY
Preferred Stock, $1.00 par value;
1,000,000 shares authorized;
65,000 Class B issued and out-
standing, liquidation preference
of $341,250; 300,000 Class A issued
and outstanding, liquidation pre-
ference of $1,575,000 365,000 -0-
Common Stock, $0.01 par value;
10,000,000 shares authorized,
1,308,275 shares issued and
outstanding 13,083 6,528
Additional Paid-in Capital 2,431,697 539,042
Retained Earnings 463,927 610,905
_________ __________
3,273,707 1,156,475
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 4,204,757 1,776,372
========= =========
</TABLE>
See notes to Consolidated Financial Statements
4
<PAGE>
Tech Electro Industries and Subsidiaries
Consolidated Statements of Operations
_____________________________________
( Prepared from the books without verification by audit )
Periods Ended: June 30, 1996 and 1995
<TABLE>
<CAPTION>
Quarter Year to Date
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES 976,448 1,045,567 1,844,392 1,818,981
COST OF GOODS SOLD 699,508 726,241 1,316,906 1,299,308
_________ _________ _________ _________
GROSS PROFIT 276,940 319,326 527,486 519,673
GENERAL AND ADMINISTRATIVE 301,958 206,197 550,599 405,648
_________ _________ _________ _________
INCOME (LOSS) FROM OPERATIONS (25,018) 113,129 (23,113) 114,025
OTHER INCOME (EXPENSE)
Interest Income 22,568 289 40,920 362
Interest Expense (13,388) (11,135) (26,679) (29,330)
_________ _________ _________ _________
INCOME (LOSS) BEFORE TAX (15,838) 102,283 (8,872) 85,057
INCOME TAX EXPENSE (BENEFIT)
Current (1,046) 26,405 -0- 20,376
Deferred (1,979) -0- (1,979) -0-
_________ _________ _________ _________
(3,025) 26,405 (1,979) 20,376
_________ _________ _________ _________
NET INCOME (LOSS) (12,813) 75,878 (6,893) 64,681
========= ========= ========= =========
INCOME (LOSS) ATTRIBUTABLE
TO COMMON STOCKHOLDERS (45,663) 75,878 (61,643) 64,681
========= ========= ========= =========
EARNINGS (LOSS ) PER SHARE (.04) .06 (.05) .05
========= ========= ========= =========
See notes to Consolidated Financial Statements
</TABLE>
5
<PAGE>
Tech Electro Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
_____________________________________
( Prepared from the books without verificaton by audit )
Periods Ended: June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) (6,893) 64,681
Adjustments to reconcile net income (loss) to
cash provided (used) by operations
Depreciation 14,683 7,859
Provision for obsolete inventory 8,400 -0-
Deferred taxes (1,979) 13,223
Changes in operating assets and liabilities
(Increase) decrease in -
Marketable Securities (920,200) -0-
Accounts receivable (70,747) 19,939
Other receivable (6,494) 20,970
Advance to employee (93,000) -0-
Inventory (197,431) 251,840
Prepaid Federal Income Tax -0- (7,000)
Prepaid expenses (176,539) (10,093)
Increase (decrease) in -
Accounts payable (125,923) (229,948)
Accrued liabilities 24,497 15,978
Federal income tax payable -0- 7,153
_________ _______
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (1,551,626) 154,602
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (51,048) (32,391)
Additions to certificate of deposit (5,181) -0-
Advances on Note Receivable (31,482) -0-
Repayments on Note Receivable 5,000 -0-
_________ _______
NET CASH USED BY INVESTING ACTIVITIES (82,711) (32,391)
_________ _______
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term debt 50,703 3,539
Payments on short-term debt (60,000) (370,002)
Payments on related party borrowing -0- (191,341)
Proceeds from sale of preferred, common, warrants 2,103,891 387,34
Dividends paid (43,800) -0-
_________ _______
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 2,050,794 (170,464)
_________ _______
NET INCREASE (DECREASE) IN CASH 416,457 (48,253)
CASH AT BEGINNING OF PERIOD 141,433 120,106
_________ _______
CASH AT END OF PERIOD 557,890 71,853
========= =======
SUPPLEMENTAL INFORMATION
Interest paid 26,642 29,330
========= =======
Income taxes paid -0- 7,000
========= =======
Supplemental schedule of Non-Cash Investing Activity
Stock exchange with Vary Brite Technologies, Inc. 12,178 -0-
========= =======
</TABLE>
See notes to Consolidated Financial Statements
6
<PAGE>
TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions per
Item 310(b) of Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments ( consisting of normal
recurring adjustments ) considered necessary for a fair presentation
have been included. Operating results for the six month period ended
June 30, 1996 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1996.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the
accounts of the Company and its wholly-owned subsidiaries, Computer
Components Corporation and Vary Brite Technologies, Inc. All signifi-
cant intercompany transactions and balances have been eliminated in
consolidation.
INCOME TAXES
The Company utilizes the asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets
and liabilities are computed annually for differences between the
financial statement and tax bases of assets and liabilities that will
result in taxable or deductible amounts in the future based on enacted
tax laws and rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are es-
tablished when necessary to reduce deferred tax assets to the amount
expected to be realized. Income tax expense is the tax payable or re-
fundable for the period plus or minus the change during the period in
deferred tax assets and liabilites.
INCOME (LOSS) PER SHARE
Income ( loss ) per share has been computed by dividing net income
(loss) adjusted for preferred stock dividends of $54,750 and $0.00
for the quarters ended June 30, 1996 and 1995 by the weighted aver-
age number of shares of common shares and common stock equivalents
outstanding. Common stock equivalents include the dilutive effect
of all warrants outstanding as though they had been outstanding for
7
<PAGE>
TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
all periods presented. Fully diluted loss per share for the quarter
and six month ending June 30, 1996 (which are the only periods for
which the preferred stock was issued and subject to conversion) the
same as primary loss per share since the assumed conversion of com-
mon stock warrants and preferred stock would be anti-dilutive.
DIVIDENDS
Dividends are accrued monthly on 300,000 shares of Class A Preferred
Stock and 65,000 shares of Class B Preferred Stock, $0.030625 per
share. Dividends paid during the quarter ended June 30, 1996 were
$34,800 and dividends payable at June 30, 1996 were $10,950. There
was no Class A Preferred declared during 1995 and the Class B Prefer-
red ( issued November, 1995 ) shareholders waived accrual or payment
of dividends until such time as the Class A Preferred shares were
issued.
MARKETABLE SECURITIES
Marketable securities consist of market debt and equity securities
and are classified as trading securities.
NOTE C - ACCOUNTS RECEIVABLE
The Company recognizes revenue upon shipment of goods and billing to
a customer and does not maintain any set policy regarding the cus-
tomer's right of return. Customer requests to return products for
refund or credit are handled on an individual basis at the discretion
of management. The refunds or credits in any given year are not sign-
ificant to the overall operations of the Company
In the normal course of business, the Company extends unsecured credit
to virtually all of its customers doing business in the manufacture
of various consumer and industrial electronic goods. The Company's
customers are located throughout the United States.
Because of the credit risk involved, management has provided an allow-
ance for doubtful accounts which reflects its opinion of amounts
which will eventually become uncollectible. In the event of complete
non-performance by the Company's customers, the maximum exposure to
the Company is the outstanding accounts receivable balance at the
date of non-performance.
8
<PAGE>
TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE D - INVENTORIES
A small portion of the inventory consists of materials which are
used in the assembly of batteries into packs. Inventory as of
June 30, 1996 and 1995, consisted of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Electronic Components $1,353,799 $1,010,249
Pack materials 60,735 52,081
Reserve for obsolescence <51,900> <17,788>
__________ __________
$1,362,634 $1,044,542
========== ==========
</TABLE>
NOTE E - PREPAID EXPENSES
Prepaid expenses at June 30, 1996 and 1995, consisted of the fol-
lowing:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Advance payments on overseas
inventory orders $182,976 $22,397
Prepaid two year consulting fees,
net of amortization 47,500 -0-
Prepaid insurance 10,027 10,784
Other prepaid expenses 55,539 41,318
________ _______
$296,042 $74,499
======== =======
</TABLE>
NOTE F - ADVANCE TO EMPLOYEE
During February, 1996 the Company advanced $105,000 to an employee.
The advance earns interest at 6%. In accordance with an employment
agreement the advance amount will be amortized as earned compensa-
tion evenly over the two year period of the employment agreement.
During the second quarter the Company reduced $9,000 in compensation.
9
<PAGE>
TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE G - MARKETABLE SECURITIES
The Company has placed a portion of its cash in security accounts
with Dean Witter and ComericA Securities. These accounts have
invested in various certificates of deposit, treasury bills and
equity securities with the intent to generate profits based on
short term price movements. Realized gains and losses and income
and expenses are reduced monthly and reflected in the income from
operations. Unrealized gains and losses at the balance sheet date
are also reduced and reflected in the statement of operations. For
the quarters ended June 30, 1996 and 1995, respectively, unrealized
losses of $10,466 and $-0- had been recorded.
In connection with the security account at Dean Witter, the Company
has incurred a margin loan with interest payable monthly at 9.125%.
At June 30, 1996, the margin loan balance was $50,703.
NOTE H - BANK DEBT
Bank debt as of June 30, 1996 and 1995, consisted of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
$200,000 term note to Nations Bank Texas NA,
dated December 29, 1995 and due March 31,
1997, with interest due monthly at 7.5% per
annum, secured by a $209,024 certificate of
deposit and personally guaranteed by the ma-
jority shareholder. $200,000 $ -0-
$119,992 term note to Bank One, Texas with
$6,666 principal due monthly plus interest
at base rate plus 1% maturing December 30,
1997 Secured by accounts receivable, inven-
tory, automotive equipment and personally
guaranteed by the major shareholder. 139,991 199,994
________ ________
$339,991 $199,994
======== ========
</TABLE>
NOTE I - NOTES PAYABLE TO AFFILIATES
Notes payable to related parties at June 30, 1996 and 1995, con-
sisted of the following.
10
<PAGE>
TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE I - NOTES PAYABLE TO AFFILIATES (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Unsecured note payable to Jacqueline G.
La Taste, a majority shareholder, interest
payable at 9.5% in monthly installments of
$792, with principal due March 31, 1997. $100,000 $ -0-
Unsecured note payable to Jacqueline G.
La Taste a majority shareholder, interest
payable at 10.25% in monthly installments
of $1,239.00, with princpal due
March 31, 1997. 145,000 145,000
________ ________
$245,000 $145,000
Less current portion 245,000 -0-
________ ________
Long term portion $ -0- $145,000
======== ========
</TABLE>
NOTE J - ORGANIZATION
On January 10, 1992, Electric & Gas Technology, Inc. (E>) formed a
Texas corporation, Tech Electro Industries, Inc. (TEI). E>
acquired 1,550,000 shares of common stock of TEI for $50,000. On
January 31, 1992, pursuant to an Agreement and Plan of Reorganiza-
tion, TEI issued to the shareholders of Computer Components Corp-
oration ( CCC ) ( a Texas corporation ) an aggregate of 4,198,192
shares of its common stock in exchange for 100% of the outstanding
shares of CCC. As a result of the issuance of said shares of TEI as
described above, the former shareholders of CCC became, as a group
(5 persons), the holders of 73% of the issued and outstanding shares
of TEI and the holdings of E> were reduced to 27%.
On February 3, 1992, E> declared a dividend consisting of approxi-
mately 1,200,000 of its TEI shares to be distributed to E> share-
holders of record as of March 10, 1992. After the distribution of
of the dividend shares, the holdings of E> were reduced to approxi-
mately 6.08% of the total issued and outstanding shares.
The Company closed on a Form SB-2 Registration Statement on February
1, 1996, to issue 300,000 units, of which each unit comprised 1
common share and 1 class A preferred share. The offering price was
$8.25 per unit resulting in an aggregate offering price of $2,475,000
before underwriting fees and other costs ( excluding underwriters'
11
<PAGE>
TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE J - ORGANIZATION (CONTINUED)
over-allotment option of 45,000 units). In connection with the offer-
ing, 300,000 warrants (excluding underwriters' over-allotment option)
were also separately offered at $0.10 per warrant exercisable at
$3.50 per share. A net offering price of $2,178,315 was received for
the units and the warrants at closing and the Company incurred addi-
tional offering costs of $138,338 which were netted against the
proceeds. In addition, the Company sold at $0.10 per warrant an
additional 1,600,000 warrants to purchase 1,600,000 common shares at
an exercise price of $3.50 per share. In March of 1996, the under-
writer purchased the 45,000 over-allotment warrants for a net price
of $3,915 after a 10% discount and the 3% expense allowance, to make
a total of 1,945,000 warrants outstanding.
On June 1, 1996, pursuant to a Stock Exchange Agreement, TEI issued
an aggregate of 50,000 shares of its common stock in exchange for 100%
of the outstanding shares of Vary Brite Technologies, Inc. ( VBT ), a
Texas corporation. The acquisition has been accounted for on a pool-
ing basis, whereby the assets and liabilities of the acquired company
( VBT ) would be included in the historical financial information of
the acquiring company ( TEI ) as if the acquisition had been consum-
mated at the beginning of the earliest period shown, however, due to
the immateriality of the activities of VBT prior to acquisition by
TEI, these consolidated financail statements include the operations
of VBT from June 1, 1996.
The assets, liabilities and equity of VBT at the date of acquisition
were as follows.
<TABLE>
<CAPTION>
<S> <C>
Assets 51,020
Liabilities <38,842>
Capital <60,318>
Accumulated Deficit 48,140
12
<PAGE>
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
Management concluded a successful trip to the Orient in
April 1996 visiting mainland China, Taiwan, Japan and Hong
Kong. Samples of new available products were obtained for
evaluation prior to the submission to customers of the
Company presently purchasing these products from other sources.
Additionally, in Hong Kong, the Company established its Far
East office for quality control, production scheduling and
local business affairs. This office is now fully operational.
The Company is now in a position to place orders from its Hong
Kong office directly with manufacturers in the Far East at
advantageous prices because of the avoidance of using the manu-
manufacturer's United States representatives and offices.
In June, 1996 the Company completed its purchase of Vary
Brite Technologies, Inc. ( "VBT" ) a design engineering and
manufacturing company specializing in developing products that
incorporate recent advances in technolgies related to Light
Emitting Diodes (LED's). VBT is presently involved in several
projects developing uniquely packaged LED modules which maxi-
mizes and customizes light output. Sales to date have been
minimal, in the main consisting of product designs.
For the three months ending June 30, 1996 the Company had
sales of $976,448 a decrease of 6.6% over sales of $1,045,567
for the period ending June 30, 1995. For the six month period
ending June 30, 1996 sales were $1,844,392 a 1.4% increase
over sales of $1,818,981 for the first six months of 1995.
This increase was attributable to increased battery sales and
the sales of imported products.
For the second quarter of Fiscal 1996 gross profit mar-
gins were 28.4% as compared to 30.5% in the second quarter of
Fiscal 1995. For the six months period of 1996 there was no
change from the 28.6% gross profit margin for the same period
of 1995. No single factor was paramount to the decrease in the
gross profit margin.
General and administrative expenses for the three months
ended June 30, 1996 were $301,958 compared to $206,197 for the
period in 1995 or an increase of 46.4%. For the six months
ended June 30, 1996 general and administrative expenses were
$550,599 as compared to $405,648 for same period in Fiscal
1995 or an increase of 35.7%. Included in operational expenses
for the period were several non-recurring expense items i.e.:
Bad debt write-off of $3,100; cost of trip to Orient $7,500;
financial public relation services $7,500; $5,200 in connec-
tion with the acquisition of Vary Brite Technologies, Inc.
13
<PAGE>
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
- continued -
The Company commencing in February 1996 has expensed
monies paid to the Underwriter in the sum of $2,500 per month.
Corporate counsel and financial advisory services were also
added expenses for the 1996 Fiscal period which did not exist
in 1995.
For the second quarter of 1996 the Company incurred a
loss of <$12,831> compared to a profit of $75,828 for the same
period in 1995. For the six months ending June 30, 1996 the
Company lost <$6,893> as compared to a profit of $64,681.
The July, 1996 sales of $377,873 as compared to the July,
1995 sales of $267,975 show an increase of 41% for the month.
Booked backlog as at June 30, 1996 were $1,494,998 as compared
to June 30, 1995 backlog of $1,029,000 an increase of 45.3%.
(None of the computations contained in this paragraph include
any financial data of Vary Brite Technologies, Inc. which was
acquired in June, 1996).
In the first quarter of fiscal 1996 the Company reported
the incorporation into its product line of a 120 volt AC wall
transformer rated at 20VA and 25VA. This product is used for
the generation of low voltage AC power. The immediate sales of
these products have been to "security systems" used in busi-
ness, homes and apartments. These transformers have received
"UL" and "CSA" ( Underwriters Laboratories and Canadian Stand-
ards ) approval. At the request of very large potential
customer-users of a higher rated transformer, the Company and
its supplier of these transformers have worked in developing a
transformer rated at 40 Volt Amperage. Samples of this new
product have been received for customer evaluation as to design
and the meeting of various specifications. This larger size
transformer has been submitted for UL and CSA approval which
will allow the Company to meet the requirements of a larger
segment of the security industry.
For the year 1995 and the years prior thereto the Company
relied upon bank loans as well as personal loans from its
principal shareholder and cash generated from operations to
meet all of its cash requirements in the business. On February
1, 1996 the Company received a cash infusion of over One Mil-
lion Nine Hundred Thousand Dollars from the sale of its equity
securities. This available cash more than meets the Company's
immediate cash operating and capital requirements as well as
in the foreseeable near future term. The Company has obtained
a line of credit of $750,000 from a local Dallas bank at a rate
of 1/2% over prime.
14
<PAGE>
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
- continued -
On June 7, 1996, Jack S. Kilby, a director of the Company
since its inception tendered his resignation as a Director be-
cause of his pressing business requirements. A successor has
not yet been selected to fill the vacancy caused by Mr. Kilby's
departure.
Management's emphasis will be on a continuation of in-
creased sales activity through the addition of sales personnel,
advertising and customer service activity. These increased
expenses will have a negative impact on the last half profits
while raising the expectations of improved future years growth
and profits.
Part II
Other Information
Item 1 - Legal Proceedings
None.
15
<PAGE>
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TECH ELECTRO INDUSTRIES, INC.
August 14, 1996 /s/ Craig D. La Taste
__________________ _____________________________
Date Craig D. La Taste
Chairman of the Board and
President
August 14, 1996 /s/ Julie Sansom-Reese
__________________ ______________________________
Date Julie Sansom-Reese
Chief Financial Officer
16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000886912
<NAME> TECH ELECTRO INDUSTRIES, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 766,914
<SECURITIES> 920,200
<RECEIVABLES> 622,266
<ALLOWANCES> 0
<INVENTORY> 1,362,634
<CURRENT-ASSETS> 3,995,843
<PP&E> 488,417
<DEPRECIATION> 303,573
<TOTAL-ASSETS> 4,204,757
<CURRENT-LIABILITIES> 831,399
<BONDS> 2,000
0
0
<COMMON> 1,308,275
<OTHER-SE> 365,000
<TOTAL-LIABILITY-AND-EQUITY> 4,204,757
<SALES> 976,448
<TOTAL-REVENUES> 999,016
<CGS> 699,508
<TOTAL-COSTS> 301,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,388
<INCOME-PRETAX> (15,338)
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