SECURITIES & EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB/A
                                 Amendment No. 1
                                       to

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

                  For the quarterly period ended March 31, 1998

[ ]  TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

                          Commission File No. 0-27210

                          Tech Electro Industries, Inc.
                  ---------------------------------------------
                 (Name of Small Business Issuer in its Charter)

            Texas                                                75-2408297
------------------------------                                ---------------
State or other jurisdiction of                                I.R.S. Employer
incorporation or organization                                Identification No.

         2941 Main Street, Suite 300-B, Santa Monica, California 90405
         -------------------------------------------------------------
                 Address of principal executive office Zip Code

                   Issuer's telephone number: (310) 396-1782

Check  whether  the issuer has (1) filed all  reports  required by Section 13 or
15(d) of the  Exchange  Act during the past 12 months,  and (2) been  subject to
such filing requirements for the past ninety (90) days. Yes (X) No ( )

As of March 31, 1998, 3,778,176 shares of Common Stock were
outstanding.





                                       -1-


<PAGE>

THIS DOCUMENT IS PREPARED AND FILED UNDER THE  REQUIREMENTS OF REGULATION S-B OF
THE SECURITIES AND EXCHANGE COMMISSION, EFFECTIVE JULY 31, 1992.


                                      Index
Item                                                                       Page

Part I - Financial Statements

         Item 1 - Financial Statements
 
                  Consolidated Balance Sheets at
                  March 31, 1998 (unaudited) and December
                  31, 1997 ...................................................3
 
                  Consolidated Statements of Operations
                  (unaudited) for the Three Months Ended
                  March 31, 1998 and 1997.....................................5
 
                  Consolidated Statements of Cash Flows
                  (unaudited) for the Three Months Ended
                  March 31, 1998 and 1997.....................................6
 
                  Notes to Consolidated Financial Statements..................7
 
         Item 2 - Management's Discussion and
                  Analysis of Financial Condition and
                  Results of Operations......................................13
 
Part II - Other Information
 
         Item 1 - Legal Proceedings..........................................17
 
         Item 2.  Changes in Securities......................................17

         Item 3.  Defaults Upon Senior Securities............................17

         Item 4.  Submission of Matters to a
                  Vote of Securities Holders.................................17

         Item 5.  Other Information..........................................17

         Item 6.  Exhibits and Reports on Form 8-K...........................18
 
Signatures...................................................................19



                                       -2-




<PAGE>

PART I - FINANCIAL INFORMATION
 
Item 1.  Financial Statements.


                  Tech Electro Industries Inc., and Subsidiaries
                           Consolidated Balance Sheets


                                     ASSETS
                                    ---------
                                   
                                                  (unaudited)
                                                  Mar 31, 1998  Dec 31, 1997
                                                  ------------  ------------ 

CURRENT ASSETS
   Cash and cash equivalents                       $1,177,227    $1,918,754
   Marketable securities                              125,550        94,063
   Accounts and notes receivable
     Accounts receivable-trade, net of
       allowance for doubtful accounts of
       $444,952 and $16,000, respectively           3,321,006       974,602
     Notes                                            334,378       335,000
     Other                                             44,291        33,942
   Inventory                                        3,469,100     1,801,035
   Deferred sales costs                               196,581           -
   Prepaid expenses                                   512,945       211,351
                                                  -----------   -----------
TOTAL CURRENT ASSETS                                9,181,078     5,368,747
                                                  -----------   -----------

NET PROPERTY AND EQUIPMENT                            947,511       308,882
                                                  -----------   -----------

OTHER ASSETS
   Deposit on acquisition                                 -         500,000
   Contract rights                                  5,436,047           -  
   Deferred financing costs                           251,663           -  
   Goodwill                                         3,984,815           -  
   Notes receivable                                    67,708        77,150
   Other assets                                       226,720         2,288
                                                  -----------   -----------
TOTAL OTHER ASSETS                                  9,966,953       579,438
                                                  -----------   -----------
TOTAL ASSETS                                      $20,095,542    $6,257,067
                                                  ===========   ===========





                 See Notes to Consolidated Financial Statements


                                       -3-


<PAGE>
                  Tech Electro Industries, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                     --------------------------------------
                                                      (unaudited)
                                                      Mar 31,1998   Dec 31,1997
                                                      -----------   -----------
CURRENT LIABILITIES 
   Current portion of credit facility obligations      $   70,000    $      -
   Current portion of notes payable                       236,626       425,000
   Current portion of long-term debt                      147,547           -  
   Accounts payable trade                               2,059,217       467,821
   Accrued liabilities                                  1,129,400       551,289
   Deferred service liabilities                         1,614,317           -  
   Dividends payable                                       31,025        25,563
                                                      -----------   -----------
     TOTAL CURRENT LIABILITIES                          5,288,132     1,469,673

LONG TERM LIABILITIES
   CREDIT FACILITY OBLIGATIONS                          7,102,063           -
   NOTE PAYABLE                                            38,950           -  
   LONG-TERM DEBT                                         198,453           -  
   DEFERRED LEASE INCENTIVE                                94,473           -  
                                                      -----------   -----------
     TOTAL LIABILITIES                                 12,722,071     1,469,673

MINORITY INTEREST IN SUBSIDIARY                         2,246,908        29,201

STOCKHOLDERS' EQUITY 
   Preferred stock, $1.00 par value;                      298,534       319,934
        1,000,000 shares authorized,
        65,000 Class B issued and out-
        standing on March 31, 1998
        and December 31, 1997,
        liquidation preference of
        $341,250; 233,534 and
        254,934 Class A issued and
        outstanding on March 31, 1998
        and December 31, 1997
        respectively; liquidation
        preference of $1,226,054, and
        $1,338,404, respectively
   Common stock, $.01 par value;                           37,782        34,985
        10,000,000 shares authorized,
        3,778,176 shares issued and
        outstanding on March 31, 1998 and
        3,498,407 shares issued and
        outstanding on December 31, 1997.
   Additional paid-in capital                           6,239,304     5,713,867
   Subscription receivable                                    -          (1,000)
   Unrealized Gains (Losses) on marketable securities      (1,250)       24,624
   Accumulated Deficit                                 (1,447,807)   (1,334,217)
                                                      -----------   -----------
 TOTAL STOCKHOLDERS' EQUITY                             5,126,563     4,758,193
                                                      -----------   -----------
 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY             $20,095,542    $6,257,067
                                                      ===========   ===========
 
                See Notes to Consolidated Financial Statements

                                       -4-
<PAGE>

                 Tech Electro Industries, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                                   (Unaudited)

 
                                                          Three Months Ended
                                                      Mar 31, 1998  Mar 31, 1997
                                                       -----------  -----------
Sales                                                   $1,996,589   $1,086,654
Cost of goods sold                                       1,355,537      798,938
                                                       -----------  -----------
Gross profit                                               641,052      287,716

General and administrative expenses                        756,086      523,336
                                                       -----------  -----------
Loss from operations                                      (115,034)    (235,620)

Other income (expense):
   Interest income                                          25,424       16,136
   Interest expense                                         (6,639)     (15,970)
                                                       -----------  -----------
Total other income (expense)                                18,785          166

Minority share of subsidiary loss                           16,463       14,468

                                                       -----------  -----------
Loss before provision for taxes                            (79,786)    (220,986)

                                                       -----------  -----------
Income tax expense                                               0            0

                                                       -----------  -----------
Net Loss                                                $  (79,786)  $ (220,986)
                                                       ===========  ===========
Net loss attributable to
 common shareholders                                    $ (110,980)  $ (253,837)
                                                       ===========  ===========
Basic and diluted net loss per share 
 attributable to common shareholders                        $(0.03)      $(0.13)
                                                       ===========  ===========
Number of weighted-average shares of
 common stock outstanding (basic and diluted)            3,638,292    1,907,164
                                                       ===========  ===========




                 See Notes to Consolidated Financial Statements



                                       -5-


<PAGE>

                 Tech Electro Industries, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (unaudited)

 
                                                        Three Months Ended
                                                   Mar 31, 1998    Mar 31, 1997
                                                   ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                          $(79,786)       $(220,986)
   Adjustments to reconcile net loss to
      cash used by operations
         Deprecation and amortization                  14,076            7,424
         Provision for slow moving inventory           15,116           15,000
         Minority interest share of loss in
            subsidiary                                (16,463)         (14,468)
   Changes in operating assets and liabilities
     (Increase) decrease in:
         Accounts receivable-trade                     31,891         (246,525)
         Other receivables                             (9,727)           1,496
         Inventory                                     90,815           39,936
         Prepaid expenses                             (63,088)        (219,481)
     Increase (decrease) in:
         Accounts payable                              30,686          (12,659)
         Accrued liabilities                         (511,213)          28,217
                                                   -----------     -----------
NET CASH USED BY OPERATING ACTIVITIES                (497,693)        (622,046)
                                                   -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property and equipment                (10,280)         (18,129)
   Purchases of certificates of deposit                     0         (600,000)
   Advances on note receivable                          9,442            8,894
   Sale (purchase) of marketable securities           (57,361)           7,543
   Business acquisition, net of cash acquired        (415,127)               0
                                                   -----------     -----------
NET CASH USED BY INVESTING ACTIVITIES                (473,326)        (601,692)
                                                   -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from short-term debt                     (250,000)        (346,772)
   Proceeds from long-term debt                             0         (245,000)
   Proceeds from sale of preferred stock,
     common stock and warrants                        474,030        1,870,000
   Dividends paid                                       5,462          (32,491)
                                                   -----------     -----------
 NET CASH PROVIDED BY FINANCING ACTIVITIES            229,492        1,245,737
                                                   -----------     -----------
 NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                                  (741,527)          21,999
 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   1,918,754          261,973
                                                   -----------     -----------
 CASH AND EQUIVALENTS AT END OF PERIOD             $1,177,227       $  283,972
                                                   ===========     ===========

                 See Notes to Consolidated Financial Statements



                                       -6-
<PAGE>


                  Tech Electro Industries, Inc and Subsidiaries
                   Notes to Consolidated Financial Statements


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  SB.
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  three  month  period  ended  March 31, 1998 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 1998.

Note B - Organization

Tech Electro Industries, Inc. ("TEI" or the "Company") was formed on January 10,
1992 as a Texas  corporation.  On January 31,  1992,  TEI  acquired  100% of the
outstanding common stock of Computer Components  Corporation (CCC). In February,
1996,  TEI filed a Form  SB-2  Registration  Statement  and  completed  a public
offering the net proceeds of which amounted to $2,043,891 including warrants.

On June 1, 1996,  pursuant to a Stock Exchange  Agreement,  TEI acquired 100% of
the outstanding shares of Vary Brite Technologies,  Inc. (VBT) by issuing 50,000
shares of its common stock. The business combination was accounted for using the
pooling method.  The historical  consolidated  statements of operations prior to
the date of the combination  have not been adjusted to include the operations of
VBT as these  operations  are immaterial to the  consolidated  operations of the
Company.  Accordingly,  the accompanying  consolidated  statements of operations
include,  the  operations  of VBT from  June 1, 1996  forward.  The  assets  and
liabilities  acquired  were also immaterial to the consolidated balance sheet of
the Company.

On October 29, 1996, TEI incorporated  Universal Battery  Corporation (UBC) as a
67% owned subsidiary.

Effective  February 10, 1997,  pursuant to  Regulation S as  promulgated  by the
Securities  and Exchange  Commission,  TEI sold  1,100,000  shares of its common
stock  and  options  to acquire 1,000,000 shares of common stock for $1,870,000,
for a combined price of $1.70 net to the Company.  The options  were issued with
an exercise price of $2.15 per share and expire thirteen months from the date of
issuance.  In February 1998 the terms on the options were extended to March 1999
and the exercise price was increased to $2.50 per share.

                                       -7-
<PAGE>

Note C - Acquisition

On March 19, 1998,  the Company  completed the  acquisition of 51% of the issued
and outstanding common stock of U.S. Computer Group, Inc ("USCG").  The purchase
consideration  for the interest was $1,000,000 paid in cash. The acquisition has
been accounted for as a purchase,  however, USCG's results of operations for the
nine  business  days ending  March 31, 1998 were not material to the Company and
have not been included in the consolidated  statement of operations.  The excess
of the aggregate  purchase  price over the fair market value of assets  acquired
and liabilities assumed of $3,984,815 will be amortized over 15 years.  Contract
rights acquired of $5,436,047  will be amortized on a  straight-line  basis over
the respective contract lives.

The summary of  the fair value of assets acquired  and liabilities assumed is as
follows:

         Current assets                                    $ 4,672,250
         Fixed assets                                          642,408
         Contract rights and other assets                    5,912,160
         Goodwill                                            3,984,815
         Current liabilities                                (4,543,524)
         Long-term liabilities                              (7,433,939)
         Minority interest                                  (2,234,170)
                                                           ------------
                                                            $1,000,000
                                                           ============

The following proforma  consolidated  results of the operations  information for
the quarter ending March 31, 1998 and 1997 assumes the USCG acquisition occurred
as of January 1, 1997.

                                          Three Months Ended
                               March 31, 1998            March 31, 1997
                               --------------         ------------------
         Revenues               $ 7,516,589                $ 7,441,565
         Net loss               $  (719,101)               $(1,391,425)

         Loss per share (basic
           and diluted)         $     (0.20)               $     (0.73)




Note D - Dividends

Dividends were declared on March 6, 1998 for Class A and Class B Preferred Stock
at $0.0975 per share.  This dividend was paid in the form of common stock at the
rate of .04 shares of common  for each  share of  preferred.  The  dividend  was
payable on March 31, 1998 to  stockholders of record at the close of business of
February 28, 1998. In addition,  cash  dividends  paid during the quarters ended
March  31,  1998  and 1997  were  $28,432  and  $30,000  respectively.  The cash
dividends  of $28,432  were  declared  and  accrued  as of  December  31,  1997.
Dividends payable at March 31, 1998 were $33,894.


                                       -8-
<PAGE>

Note E - Inventories

Inventories consist of the following at March 31, 1998:

         Computer parts                                       $4,214,209
         Electronic components and packing materials           2,181,104
         Less valuation reserves                               2,926,213
                                                              ----------
                                                              $3,469,100
                                                              ==========

Note F - Property and Equipment

Property and equipment consists of the following at March 31, 1998:

         Machinery and equipment                              $ 363,694
         Leasehold improvements                                 286,461
         Furniture and fixtures                                 361,451
         Automobiles                                            312,250
                                                              ---------
                                                              1,323,856
         Less accumulated depreciation & amortization           376,345
                                                              ---------
                                                              $ 947,511
                                                              =========

Included in property  and  equipment  at March 31, 1998 is $404,561 of equipment
and furniture acquired under capital leases.   Accumulated  amortization of such
equipment and furniture was $202,141 at March 31, 1998.


Note G - Credit Facility Obligations

At March 31, 1998, the Company's  subsidiary,  USCG, maintained a revolving loan
("the  Agreement")  with a financial  institution,  with the maximum  borrowings
allowable equal to the lesser of $ 10,000,000 outstanding at any one time or the
sum of 80 percent of the amount of the USCG's eligible  receivables,  as defined
in the Agreement.  In addition to the revolving loan, USCG also maintains a term
loan with the same financial  institution  in the principle  amount of $ 500,000
("Term Loan").  Borrowings under the Agreement are secured by an interest in all
of USCG's owned accounts receivable,  inventory,  equipment, investment property
and general intangibles.

Borrowings  under the Agreement  bear interest at a rate equal to the prime rate
plus 2 percent  per year,  but in no event  less  than 9 percent  per year.  The
revolving loan matures on September 30, 2000, subject to automatic renewal terms
of one year each. As of March 31, 1998,  $6,672,063  was  outstanding  under the
revolving loan.

Interest  on the Term Loan is payable  beginning  on October  31,  1998 in equal
monthly  installments of $14,000 plus a payment of the unpaid principal  balance
on September 30, 2000. As of March 31, 1998,  $500,000 was outstanding under the
term loan.


                                       -9-
<PAGE>


The terms of the Agreement  provide for minimum monthly  interest  charges,  an
initial  loan fee of 1 percent  of the  maximum  dollar  amount of the loan,  an
anniversary  fee of .5  percent  of the  maximum  dollar  amount and a quarterly
facility  fee of  $5,000.  Certain  financial  and  nonfinancial  covenants  are
required to be met. At March 31, 1998,  covenants relating to tangible net worth
and  audited  financial  statement  deadlines  were  in  default,  however,  the
financial institution have provided waivers of such covenants.

In addition,  the USCG has a "floorplan"  credit line arrangement with a finance
corporation which provides for financing of up to $ 250,000 to support inventory
purchases from a specific  vendor.  The floorplan credit line agreement does not
provide for interest terms as amount outstanding are required to be paid timely.
As collateral security of the payment under the loan agreement, USCG granted the
finance  corporation a security interest in the assets of USCG.  As of March 31,
1998,  accounts  payable  includes  approximately  $93,380  related to this
inventory financing.


Note H - Deferred Service Liability

The deferred service  liability of $ 1,614,317 on the accompanying  consolidated
balance  sheet  represents  maintenance  contract  revenues  billed  but not yet
earned. The terms of the Company's service  maintenance  contracts provide for a
period of service ranging from one to twelve months. Contracts are automatically
renewed  by  the  Company  unless  the  customer  provides  90  days  notice  of
termination.  The deferred  service  liability  is amortized on a  straight-line
basis over the term of the related contracts.  As of March 31, 1998, the Company
had  a  service   maintenance   contract  base  with  an  aggregate  balance  of
approximately $ 16,398,000.


Note I - Loss per Share

The Company adopted SFAS NO. 128, "Earnings Per Share", in 1997, which, requires
the  disclosure  of basic and  diluted  net income  (loss) per share.  Basic net
income  (loss)  per share is  computed  by  dividing  net  income  (loss) by the
weighted average number of common shares outstanding for the period. Diluted net
loss per share is computed by dividing net income (loss) by the weighted average
number of common shares and common stock equivalents outstanding for the period.
The Company's common stock  equivalents are not included in the diluted loss per
share for 1998 and 1997 as they are antidilutive. Therefore, diluted and primary
loss per share is identical.   Net  loss  per  share  for the three months ended
March 31, 1998 and 1997  has been  increased for accrued dividends  on preferred
stock totaling $33,894 and $10,950 respectively.


Note J - Stock and Options Issued to Two Employees

On February  25, 1998 225,000  common  shares were issued to two  employees  for
payment of accrued  1997  compensation.  In addition to the shares  issued,  the
Company also issued a total of 150,000 options to purchase the Company's  common
stock at an exercise price of $5.00.  The options will expire 24 months from the
February 6, 1998 date of grant.

                                      -10-
<PAGE>

Note K - Subsequent Event

In April 1998,  the Company  commenced a private  placement of 375,000 shares of
the Company's common stock for gross proceeds of $750,000 or $2.00 per share.


Note L - Long-Term Debt

As of March 31, 1998, long-term debt consists of the following:

         Capital lease obligations (a)                          $ 273,758
         Automobile loans (b)                                      72,242
                                                                ---------
                                                                $ 346,000

         Less current installments of long-term debt              147,547
                                                                ---------
                                                                $ 198,453
                                                                =========

         a) Various capital lease  obligations  with interest ranging from 10 to
         12.22 percent payable in monthly  installments through August 2000. The
         capital  lease  obligations  are  secured  by  the  related  underlying
         equipment and furniture.

         b) Various  automobile  loans with interest  rates ranging from 9.89 to
         11.5 percent payable in monthly installments through February 2001. The
         monthly loan payments,  including interest,  range from $ 324 to $ 522.
         The automobile loans are secured by the related automobiles.


Note M - Minority Interest

Minority  interest  at March  31,  1998  consists  of $ 12,738  relating  to the
minority  interest  in the  common  stock of UBC.  The  remaining  $  2,234,170,
represents  the  minority  interest in USCG's  series D and series E  redeemable
preferred stock which remain outstanding at March 31, 1998.

USCG's  series D  preferred  stock  outstanding  of $  234,170  are  cumulative,
non-voting  shares that were  originally  issued in  connection  with a business
acquisition.  In  September,  1997, a redemption  agreement  was signed with the
preferred shareholder, which calls for 14 monthly payments of $ 33,452 or 22,668
shares of series E  Preferred  stock  which  will fully  redeem all  outstanding
preferred  shares by  October,  1998.  Cumulative  dividends  of 8 percent  will
continue to be paid on the  remaining  balance.  The  liquidation  preference of
series  D  preferred  stock  is equal  to the  remaining  redemption  price of $
234,170.

In connection  with USCG's  acquisition  by the Company,  USCG also issued 2,000
shares of series E  redeemable  preferred  stock with a par value of $ 1,000 per
share. Cumulative dividends are payable on the stock annually beginning December
31,  1998,  in cash at a rate of 7 percent per share or 12  percent,  if paid in
additional  shares of series E preferred  stock. The series E preferred stock is
redeemable  by the  Company  at any  time.  The  liquidation  preference  of the
preferred stock is equal to the remaining redemption price of $ 2,000,000.

                                      -11-
<PAGE>



Note N - Warrants and Stock Options

During  February  1997,  in  connection  with  common stock issued for cash, the
Company entered into an agreement which called for  the  reorganization  of  its
subsidiaries.   The agreement  provides that Tech Electro Industries, Inc. remit
eighty four percent  of all proceeds  received from the exercise of warrants and
options  existing  at that time to its subsidiary, CCC, for funding of expansion
and growth.  At March 31, 1998, 1,945,000 warrants subject to the agreement were
outstanding with an exercise price of $3.30 per warrant.  The warrants expire on
January 26, 2000.   In addition, at March 31, 1998, 1,000,000 options subject to
the agreement were outstanding.  The options have an exercise price of $2.50 per
share  and will expire on March 10, 1999.   In December 1997, the Company issued
an additional 1,000,000 options  to  purchase  common  stock at $1.75 per share.
These options are not subject to remittance to CCC.





                                      -12-
<PAGE>

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

         The following  discussion  and analysis  should be read in  conjunction
with the Company's  Consolidated Financial Statements and notes thereto included
elsewhere in this Form 10-QSB.  Except for the historical  information contained
herein,  the discussion in this Form 10-QSB  contains  certain  forward  looking
statements  that involve  risks and  uncertainties,  such as  statements  of the
Company's  plans,  objectives,   expectations  and  intentions.  The  cautionary
statements  made in this Form 10-QSB  should be read as being  applicable to all
related  forward- looking  statements  wherever they appear in this Form 10-QSB.
The Company's actual results could differ  materially from those discussed here.
Factors that could cause or  contribute  to such  differences  include,  without
limitation, those factors discussed herein and in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997.

         Recent Developments

         On  January  19,  1998,  the  Company  appointed  David  Kaye as  Chief
Financial Officer of the Company.  Mr. Kaye replaced Sadasuke Gomi, who had held
this  position  on a temporary  basis.  Mr. Gomi  resigned as  secretary  of the
Company on February 16, 1998 but remains a director.  Mee Mee Tan was  appointed
to replace Mr. Gomi in the position of secretary of the Company.  Ms. Tan is the
daughter of Mr. Kim Wah Tan, Chairman, President, and CEO of the Company.

         On May 1, 1998,  the Company  entered  into a Letter of Intent to merge
with  DenAmerica  Corporation  (DEN).  Under  the  terms  of the  agreement  the
shareholders  of Den  will  receive  $ 4.00 in cash  and $ .90 in  newly  issued
preferred  stock in the  Company.  The  proposed  merger is  subject  to various
contingencies including financing, regulatory approvals and other matters.

         In March of 1998,  the  Company  opened an office at 2941 Main  Street,
Suite 300B, in Santa Monica, California.

         On March 19, 1998, the Company  completed the acquisition of 51% of the
issued and outstanding  common stock of U.S.  Computer Group,  Inc. The purchase
considerations for the interest was $1,000,000 paid in cash. The acquisition has
been accounted for as a purchase.

         Results of Operations

         Currently,   the  Company's   operations  are  conducted   through  its
subsidiaries,  Computer  Components  Corporation  (CCC), Very Brite Technologies
(VBT), Universal Battery Corporation (UBC), and US Computer Group, Inc. (USCG).

         The  Company's  results for  operations  for the first three  months of
1998,  compared to the first three months of 1997 were impacted primarily by the
increase in sales by the Company's subsidiaries CCC and UBC. USCG's contribution
to  operations  of the  Company  were not  significant, due to the fact that the
Company's purchase of USCG was not consummated until March 19, 1998.



                                      -13-


<PAGE>

         Revenues

         For the three months  ending  March 31, 1998,  the Company had recorded
sales of  $1,996,588  compared  to sales of $  1,086,565  for the same period in
1997,  an  increase  of 84%.  This  increase  can be  attributable  to  enhanced
marketing  efforts  on the  part of the  Company.  The  increase  in  sales  was
primarily attributable to increased sales by UBC, which recorded a 555% increase
in sales from $ 100,376 to $657,409 in the same  period of 1998.  CCC  generated
revenues  of $  1,295,316  for the three  month  period  ending  March 31,  1998
compared  to $ 972,136 for the same  period in 1997,  an  increase  of 34%.  VBT
recorded  increased  sales of $ 14,143 to $ 43,867  for the three  month  period
ending March  31,1998 over the same period in 1997,  an increases of 211%.  This
relatively  high  percentage  increases  in sales by UBC and VBT from the period
ending March 31, 1997 to the same period for 1998 are  attributable  to the fact
that both operations could be characterized as start-ups in 1997.

         The  Company  recognized  a net loss of $ 79,786  for the  three  month
period  ending March 31,  1998,  compared to a loss of $ 220,110 for the similar
period of 1997.  This reduction in losses in 1998 is attributed  primarily to an
increase in CCC's gross profit margins from 27% in the three months ending March
31, 1997 to 40% for the same period of 1998.  Increases in profit margins can be
attributed to CCC's ability to negotiate more favorable sales terms with various
of its suppliers. CCC's general & administrative (G&A) expenses also declined as
a percentage  of sales from 39% in the three month period  ending March 31, 1997
to 27% in the same period of 1998.  Interest expenses were also reduced in 1998,
as CCC reduced outstanding indebtedness in March 1997. Profits before taxes as a
percentage of sales for the  Company's  operating  subsidiaries  were 3% for the
three months ending March 31, 1998 versus (20%) for the same period of 1997.

         Cost of Goods Sold

         The Company's  cost of goods sold,  consisting  primarily of inventory,
increased  from $ 798,939  during the three  months  ending  March 31, 1997 to $
1,355,537  for the same period of 1998.  Cost of goods as a percentage  of sales
decrease  from 74% in the three months  ending March 31, 1997 to 68% in the same
period of 1998.

         General and Administrative Expenses

         The Company's  general and  administrative  (G&A) expenses,  consisting
primarily of wages,  benefits and related expenses,  increased from $ 522,370 in
the three months ending March 31, 1997 to $ 756,086 for the same period of 1998.
Approximately  $  95,000  is  attributable  to  increased  G&A at the  Company's
subsidiary  level.  Approximately  $ 138,000 of the G&A is  attributable  at the
parent


                                      -14-


<PAGE>

         level.  As a  percentage  of  sales,  the G&A at the  subsidiary  level
decreased  from 46% for the three month period  ending March 31, 1997 to 30% for
the same period of 1998.

         Purchase Order Backlog

         As  of  March  31,  1998,   Company's   purchase   order   backlog  was
approximately $ 1,155,000,  compared to $ 1,568,000 for the same period of 1997.
A reduction of  approximately  26.3% Generally order backlog  represents  orders
received  from  customers  but  not  shipped  typically  at the  request  of the
customer.  The Company  believes that the reduction of purchase order backlog is
due to the  acceleration  of delivery  dates by certain  customers.  The Company
monitors its purchase backlog to help analyze sales trends.

         Interest Expense

         The Company incurred $ 6,639 in interest  expenses for the three months
ending  March 31,  1998.  For the same period of 1997,  the Company had interest
expense  of $  15,970.  This  reduction  was  due  to  a  repayment  of  certain
outstanding indebtedness in March of 1997.

         Liquidity

         As of March 31, 1998,  the Company had cash and cash  equivalents  of $
1,177,227 and marketable  securities of $ 125,550. At March 31, 1997 the Company
had cash  and cash  equivalents  of $  223,467,  certificates  of  deposit  of $
1,695,287,  and  marketable  securities  of $ 94,063.  The  change in  Company's
investment  in cash,  certificates  of  deposit,  and  securities  reflects  the
liquidation  of  certificates  of deposit to fund cash needs of the Company,  as
well as cash and cash equivalents held by US Computer Group,  Inc.  ("USCG"),  a
majority  interest of which was acquired by the Company on March 19,  1998.  The
Company  expects to use these funds as required for maintenance and expansion of
existing operations of CCC, UBC, and VBT.

         On  September  9,  1997,  USCG  entered  into a loan  agreement  with a
financial  institution  which  provides  for a  revolving  loan with the maximum
borrowings  allowable equal to the lesser of $10,000,000  outstanding at any one
time  or the  sum  of 80  percent  of  the  amount  of  the  Company's  eligible
receivables,  as defined in the loan agreement,  other than maintenance contract
receivables,  plus 4.25 times the average  total  monthly  computer  maintenance
contract collections to be calculated on a trailing twelve month moving average,
plus a term loan in the principal amount of $500,000.  Borrowings under the loan
agreement are secured by an interest in all of USCG's owned accounts receivable,
inventory, equipment, investment property and general intangibles. The revolving
loan matures on September  30, 2000,  subject to automatic  renewal terms of one
year each.  The  interest on the Term Loan is payable  beginning  on October 31,
1998 in equal monthly installments of $14,000


                                     -15-


<PAGE>

plus a payment of the unpaid principal balance on September 30, 2000.
As of February 28, 1998, $500,000 was outstanding under the term loan.

         In addition, the Company has a "floorplan" credit line arrangement with
a finance  corporation which provides for financing of up to $250,000 to support
inventory  purchases from a specific vendor. The floorplan credit line agreement
does not provide for interest  terms as amounts  outstanding  are required to be
paid in approximately thirty days. As collateral security for the payments under
the loan  agreement,  the Company  granted the  finance  corporation  a security
interest in the assets of the Company.

         On  April  17,  1998,  USCG  announced  that  it  had  entered  into  a
non-binding  letter of intent to raise up to $20  million  in a firm  commitment
initial public  offering of its common stock.  The proceeds of the offering will
be  used  to,  among  other  things,   finance  selected   acquisitions,   repay
indebtedness and provide additional working capital.

         On April 8, 1998, the Company  commenced a private placement of 375,000
shares of Company  common stock for $ 750,000.  The  proceeds  from this private
placement are expected to be used for working capital.


         Inflation

         Company  has not been  materially  effected  by  inflation,  while  the
Company  does not  anticipate  inflation  affecting  the  Company's  operations,
increases in labor and supplies could impact the Company's ability to compete.




                                      -16-



<PAGE>

         PART II - OTHER INFORMATION

         Item 1.   Legal Proceedings

                           None

         Item 2.   Changes in Securities

         (a)       In April 8, 1998, the Company  commenced a private  placement
of up to 375,000 shares of the Company's  common stock for $ 2.00 per share. All
shares are to be sold  through  officers  and  directors of the Company with all
proceeds going to the Company.

         (b)       On February 20, 1998, the Company issued to Mr. Steven Scott,
Executive Vice President of the Company,  50,000 shares of common stock,  valued
at $ 2.25 per share,  as  consideration  for  services  rendered to the Company.
Concurrently with the issuance of the foregoing  shares,  the Company granted to
Mr.  Scott  options to  acquire  an  additional  50,000  shares of common  stock
exercisable over a period of two years from the date of issuance, at an exercise
price of $ 5.00.

         (c)       On February 20, 1998, the Company issued to Mr. Tan Kim Wah,
Chairman of the Board, President and Chief Executive Officer,  100,000 shares of
common stock,  valued at $ 2.25 per share,  in lieu of accrued but unpaid salary
for fiscal  1997.  An  additional  75,000  shares of common stock were issued in
repayment of expenses and advances incurred by Mr. Tan on behalf of the Company.
Concurrently with the issuance of the foregoing  shares,  the Company granted to
Mr. Tan options to acquire  100,000  shares of common  stock,  which options are
excercisable  over a  period  of two  years  from the  date of  issuance,  at an
exercise price of $ 5.00 per share.


         Item 3.   Defaults Upon Senior Securities

                   None

         Item 4.   Submission of Matters to a Vote of Securities Holders

                   None

         Item 5.   Other Information

                   None



                                      -17-
<PAGE>

         Item 6.   Exhibits and Reports on Form 8-K

                   (a)     Exhibits

                           27.1 Financial Data Schedule

                   (b)     Reports on Form 8-K


         On  January  19,  1998,  the  Registrant  filed a  Report  on Form  8-K
reporting  that it had determined  not to retain  Deloitte & Touche,  LLP as its
independent public accounts, as previously reported on June 27, 1997, but rather
to continue  with its current  independent  public  accountants,  King Griffin &
Adamson, P.C. In this filing it was also reported that the Company had appointed
David Kaye as Chief Financial Officer of the Company,  replacing  Sadasuke Gomi,
the Company's secretary, who had held that office on a temporary basis.

         On March 19, 1998, the Registrant  filed a Report on Form 8-K reporting
that it had consummated the acquisition of 51% of newly-issued  shares of common
stock of US Computer Group, Inc. of Farmingdale, New York.



                                      -18-


<PAGE>

                                   Signatures

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


Tech Electro Industries, Inc.




Date:  June 5, 1998                         /s/ DAVID KAYE                   
                                            -----------------------
                                            David Kaye
                                            Chief Financial Officer and
                                            Principal Accounting Officer



                                      -19-