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 the quarterly period ended September 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: 
							     (972) 239-7151
     
		    Check  whether the  registrant  (1)  filed all  reports
	    required to be filed by Section 13 or 15(d) of the Exchange Act
	    during the past 12 months ( or for such shorter period that the
	    registrant was required to file such reports ) and (2) has been
	    subject to such filing requirements for the past 90 days.
	    Yes_X___No____
	  
		    As of September 30, 1996 the  registrant  had 1,308,275
	    shares of common equity outstanding. 
	  
  


	
					1

<PAGE>
     
     
     
			     TECH ELECTRO INDUSTRIES, INC.
     
					 INDEX
     
								  Page Number
	    Part I - Financial Information
     
		Item 1 - Financial Statements (unaudited)
     
		     Consolidated   Balance    Sheets   at
		     September 30, 1996 and 1995                       3        
     
		     Consolidated Statements of Operations
		     for the Periods  Ended  September 30,
		     1996 and 1995                                     5
     
		     Consolidated Statements of Cash Flows
		     for the Periods  Ended  September 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                            14
     
     
	    Part II - Other Information
     
		Item 1 - Legal Proceedings                            17
     
     
	    Signatures                                                18
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     


					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 )         
									     
		       September 30, 1996 and 1995                           
<TABLE>
<CAPTION>
				   ASSETS                                    
				   ______                                    
							  1996        1995   
							  ____        ____   
    CURRENT ASSETS                                                           
    <S>                                                <C>         <C>
	Cash                                             487,040      40,294 
	Certificate of Deposit                           211,664     200,000 
	Marketable Securities                            930,150         -0- 
	Accounts and Notes Receivable                                        
	  Trade, net of allowances                       446,074     534,273 
	  Notes Receivable                               148,547      34,421 
	  Other Receivables                               14,772       8,815 
	  Federal Income Tax Receivable                    8,410      14,150 
	Inventory, at Lower of Cost or Market          1,457,111   1,115,079 
	Prepaid Expenses                                 133,527      70,250 
	Deferred Federal Income Tax                       26,814       7,801 
	Deferred IPO Cost                                    -0-      28,799 
						       _________   __________
    TOTAL CURRENT ASSETS                               3,864,109   2,053,882 
									     
									     
    PLANT & EQUIPMENT, at cost                                               
	Lab and Computer Equipment                       316,017     263,103 
	Furniture and Fixtures                           158,231     127,093 
	Automobiles                                       21,943      21,943 
						       _________     ________
							 496,191     412,139 
	Less Accumulated Depreciation                    310,190     284,309 
						       _________     ________
    TOTAL PLANT AND EQUIPMENT                            186,001     127,830 
									     
									     
    OTHER ASSETS                                                             
	Deferred Federal Income Tax                       22,070      25,676 
	Investment in Bonds                                2,000       2,000 
						       _________     ________
							  24,070      27,676 
									     
									     
    TOTAL ASSETS                                       4,074,180   2,209,388 
						       =========   ==========
</TABLE>
					3                                     
									     
<PAGE>
		  Tech Electro Industries, Inc. and Subsidiaries              
									      
			   Consolidated Balance Sheets                        
			   __________________________                         
									      
	     ( Prepared from the books without verification by audit )        
									      
			     September 30, 1996 and 1995                      
									      
			 LIABILITIES & STOCKHOLDERS' EQUITY                   
			 __________________________________                   
<TABLE>
<CAPTION>
							   1996         1995  
							   ____         ____  
     CURRENT LIABILITIES                                                      
     <S>                                                 <C>         <C>
	 Accounts Payable - Trade                           73,006     245,402
	 Accounts Payable - Others                             -0-          30
	 Accrued Liabilities                                60,132      40,800
	 Federal Income Tax Payable                            -0-      18,419
	 Notes Payable - Banks                             300,091     379,993
	 Notes Payable - Affiliates                        245,000     100,000
	 Notes Payable - Others                             77,975       2,212
							 _________  __________
     TOTAL CURRENT LIABILITIES                             756,204     786,856
									      
									      
     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      10,880
	 Additional Paid-in Capital                      2,431,697     534,690
	 Retained Earnings                                 408,545     632,311
							 _________   _________
							 3,218,325   1,177,881
									      
									      
     TOTAL LIABILITIES & STOCKHOLDERS' EQUITY            4,074,180   2,209,388
							 =========   =========
</TABLE>
     See notes to Consolidated Financial Statements                           

							
					4                                     

<PAGE>
										
		      Tech Electro Industries and Subsidiaries                  
										
			Consolidated Statement of Operations                    
			____________________________________                    
										
	      ( Prepared from the books without verification by audit )         
										
       For the Three Months and Nine Months Ended September 30, 1996 and 1995   
<TABLE>
<CAPTION>
					     Quarter            Year to Date    
					 1996      1995      1996       1995   
					 ____      ____      ____       ____
     <S>                             <C>        <C>        <C>        <C>
     SALES                           1,106,225    953,736  2,950,616  2,772,715 
										
     COST OF GOODS SOLD                782,790    707,958  2,099,696  2,007,264 
				     _________  _________  _________  _________ 
										
     GROSS PROFIT                      323,435    245,778    850,920    765,451 
										
     GENERAL AND ADMINISTRATIVE        361,213    202,622    911,810    608,265 
				     _________  _________  _________  _________ 
										
     INCOME (LOSS) FROM OPERATIONS     (37,778)    43,156    (60,890)   157,186 
										
										
     OTHER INCOME (EXPENSE)                                                     
       Interest Income                  21,450      1,787     62,370      2,149 
       Interest Expense                (13,645)   (12,277)   (40,322)   (41,606)
				     _________  _________  _________  _________ 
										
     INCOME (LOSS) BEFORE TAX          (29,973)    32,666    (38,842)   117,729 
										
     INCOME TAX EXPENSE (BENEFIT)                                               
       Current                             -0-     11,266        -0-     31,642 
       Deferred                         (7,437)       -0-     (9,416)       -0- 
				     _________  _________  _________  _________ 
					(7,437)    11,266     (9,416)    31,642 
				     _________  _________  _________  _________ 
     NET INCOME (LOSS)                 (22,536)    21,400    (29,426)    86,087 
				     =========  =========  =========  ========= 
     Income (Loss) Attributable                                                 
       to Common Stockholders          (55,387)    21,400   (117,024)    86,087 
				     =========  =========  =========  ========= 
										
     EARNINGS (LOSS) PER SHARE            (.04)       .02       (.09)       .07 
				     =========  =========  =========  ========= 
					
</TABLE>                                        
     See notes to Consolidated Financial Statements                             

										
										
					5                                
										
<PAGE>
		    Tech Electro Industries, Inc. and Subsidiaries              
										
			 Consolidated Statements of Cash Flows                  
			 _____________________________________                  
										
	       ( Prepared from the books without verificaton by audit )         
										
			   September 30, 1996 and 1995                          
<TABLE>
<CAPTION>
							     1996        1995  
							     ____        ____
     CASH FLOWS FROM OPERATING ACTIVITIES                                       
       <S>                                               <C>          <C>  
       Net income (loss)                                   (29,426)     86,087 
       Adjustments to reconcile net income (loss) to                            
       cash provided (used) by operations                                       
	 Depreciation                                       21,300      12,657 
	 Provision for obsolete inventory                   12,600         -0- 
	 Deferred taxes                                     (9,416)     13,223 
	 Changes in operating assets and liabilities                            
	     (Increase) decrease in -                                           
		Marketable Securities                      (45,000)        -0- 
		Accounts receivable                        (67,583)   (134,674)
		Other receivable                            (4,206)     22,125 
		Advance to employee                        (84,000)        -0- 
		Inventory                                 (296,107)    181,303 
		Prepaid Federal Income Tax                     -0-     (14,150)
		Deferred IPO costs                             -0-     (28,799)
		Prepaid expenses                           (14,024)     (5,844)
		Interest earned on certificate of deposit   (7,821)        -0- 
	     Increase (decrease) in -                                           
		Accounts payable                          (224,634)   (121,056)
		Accrued liabilities                         40,642      28,757 
		Federal income tax payable                     -0-      18,419 
							 _________     _______ 
     NET CASH PROVIDED (USED) BY                                               
       OPERATING ACTIVITIES                               (707,675)     58,048 
										
     CASH FLOWS FROM INVESTING ACTIVITIES                                       
       Purchase of property and equipment                  (58,822)    (44,381)
       Advances on Note Receivable                         (33,061)        -0- 
       Repayments on Note Receivable                         5,000         -0- 
       Purchase of Marketable Securities                  (885,150)   (201,688)
							 _________     _______ 
     NET CASH USED BY INVESTING ACTIVITIES                (972,033)   (246,069)
							 _________     _______ 
     CASH FLOWS FROM FINANCING ACTIVITIES                                       
       Proceeds from short-term debt                       191,301     203,539 
       Payments on short-term debt                        (193,227)    (61,330)
       Payments on related party borrowing                     -0-    (134,000)
       Proceeds from related party borrowing                   -0-     100,000 
       Proceeds from sale of preferred, common, warrants 2,103,891         -0- 
       Dividends paid                                      (76,650)        -0- 
							 _________     _______ 
     NET CASH PROVIDED BY FINANCING                                             
       ACTIVITIES                                        2,025,315     108,209 
							 _________     _______ 
										
     NET INCREASE (DECREASE) IN CASH                       345,607     (79,812)
										
     CASH AT BEGINNING OF PERIOD                           141,433     120,106 
							 _________     _______ 
     CASH AT END OF PERIOD                                 487,040      40,294 
							 =========     ======= 
     SUPPLEMENTAL INFORMATION                                                   
       Interest paid                                        40,406      42,675 
       Income taxes paid                                       -0-      14,150 
							 =========     ======= 
     SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITY                                 
       Stock exchange with Vary Brite Tech., Inc.           12,178         -0- 
							 =========     =======
       Common stock issued for debt cancellation               -0-     387,341 
							 =========     =======
</TABLE>
     See notes to Consolidated Financial Statements                             

					6                                 
										
										
<PAGE>

		   TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES

			    NOTES TO FINANCIAL STATEMENTS

				 September 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 nine month period ended
	September 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 $87,600 and $0.00
	for the quarters ended September 30, 1996 and 1995, by the weighted
	average number of shares of common shares and common  stock equiva-
	lents outstanding.   Common stock equivalents include the  dilutive
	effect of all warrants outstanding as though they had been outstand-



					 7


<PAGE>

		   TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES

			    NOTES TO FINANCIAL STATEMENTS

				 Septmeber 30, 1996 
	 

	NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	ing for all periods presented. Fully diluted loss per share for the
	quarter and nine month ending September 30, 1996 (which are the only
	periods for  which the  preferred  stock was issued and  subject to
	conversion ) is the same as primary loss per share since the assumed
	conversion of common 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  September 30, 1996
	were $32,850 and dividends payable at September 30, 1996 were $10,950.
	There was no Class A Preferred  declared during 1995 and the Class B
	Preferred ( 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 or  available-for-sale 
	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.

	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

				  September 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
	September 30, 1996 and 1995, consisted of the following:
<TABLE>
<CAPTION>               
						  1996         1995
						  ----         ----
	   <S>                                <C>           <C> 
	   Electronic Components              $1,414,183    $1,065,678
	   Pack materials                         56,879        51,697
	   Reserve for obsolescence              <13,951>      < 2,296>
					      __________    __________
					      $1,457,111    $1,115,079
					      ==========    ==========
</TABLE>
	NOTE E - PREPAID EXPENSES

	Prepaid expenses at September 30, 1996 and 1995, consisted of the fol-
	lowing:
<TABLE>
<CAPTION>
						   1996         1995
						   ----         ----
	   <S>                                   <C>          <C>
	   Advance payments on overseas
	     inventory orders                    $ 57,027     $31,491

	   Prepaid two year consulting fees, 
	     net of amortization                   40,000         -0-

	   Prepaid insurance                        7,532      26,031

	   Other prepaid expenses                  28,968      12,728
						 ________     _______
						 $133,527     $70,250
						 ========     =======
</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 third quarter the Company reduced the note by $9,000 in
	compensation.






					 9


<PAGE>

		   TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES

			    NOTES TO FINANCIAL STATEMENTS

				 September 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 equity securities with the intent to  generate
	profits based on short term price movements  (trading securities),
	and in various  certificates of  deposit and treasury  securities,
	( available-for-sale securites ).   Realized gains and losses  and
	income and expenses are recorded monthly and  reflected in the in-
	come from operations.

	For trading securities, unrealized gains and losses at the balance
	sheet date are  recorded and reflected in the  statement of opera-
	tions.   For the  quarters  ended  September  30, 1996  and  1995,
	respectively,  unrealized losses of $36,286 and $-0- had  been re-
	corded.

	Cost and fair value of the various categories of available-for-sale
	securities and for the trading securities at September 30, 1996 are
	as follows.  There were no such securities at September 30, 1995.
<TABLE>
<CAPTION>
					  Amortized             Unrealized
					    Cost       Value      Losses
					    ____       _____      ______
	<S>                              <C>         <C>         <C>
	Available-for-Sale                    
	   Treasury Notes (mature 7-98)  $ 98,500    $ 98,500       -0-
	   Treasury Bills (mature 4-97)   486,650     486,650       -0-
	   Cash Equivalents               300,000     300,000       -0-
					 ________    ________     _______
					 $885,150    $885,150       -0-
	Trading 
	   Equity Securities               81,286      45,000    $(36,286)
					 ________    ________    _________
					 $966,436    $930,150    $(36,286)
					 ========    ========    =========
</TABLE>
	Trading securities valued at $885,150 were transferred to available-
	for-sale securities at September 30, 1996.   The related unrealized
	gain or  loss on these  securities through that  date was $0.00 and
	the gain or loss recognized at the date of transfer $0.00.

	In connection with the security account at Dean Witter, the Company
	has incurred a margin loan with interest payable monthly at 9.125%.
	At September 30, 1996, the margin loan balance was $77,975.


					10
				
<PAGE>

		   TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES

			    NOTES TO FINANCIAL STATEMENTS

				 September 30, 1996 


	NOTE H - BANK DEBT

	Bank debt as of September 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 $211,664 certificate  of
	   deposit and personally guaranteed by the ma-
	   jority shareholder.                           $200,000   $200,000

	   $750,000 line of  credit with Texas  Central
	   Bank  payable on  demand  with  interest  at 
	   prime plus 1/2%, maturing June 30, 1997, and
	   secured  by accounts  receivable,  inventory
	   and automotive equipment.
							  100,091        -0-
	   $113,326 term  note to Bank One,  Texas with 
	   $6,666 principal due  monthly plus  interest
	   at base rate plus 1%.  The note was paid off
	   on July 31, 1996.                                  -0-    179,993
							 ________   ________
							 $300,091   $379,993
							 ========   ========
</TABLE>
	NOTE I - NOTES PAYABLE TO AFFILIATES

	Notes payable to related parties at September 30, 1996 and 1995, con-
	sisted of the following.
<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     $100,000

	   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     $245,000

	   Less current portion                          245,000      100,000
							________     ________
	   Long term portion                            $    -0-     $145,000
							========     ========
</TABLE>
					11


<PAGE>

		   TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES

			    NOTES TO FINANCIAL STATEMENTS

				 September 30, 1996 



	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'
	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 



					12

<PAGE>  

		   TECH ELECTRO INDUSTRIES, INC. AND SUBSIDIARIES

			    NOTES TO FINANCIAL STATEMENTS

				 September 30, 1996 


	NOTE J - ORGANIZATION ( CONTINUED )

	( 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  financial 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
</TABLE>






























					13


<PAGE>

	Item 2.  Managements Discussion and Analysis of Financial 
		    Condition and Results of Operations


	GENERAL

	In June, 1996 the Company  acquired 100% of Vary Brite  Technologies
	(VBT), a company which is principally engaged in research,  develop-
	ment and marketing custom light sources  utilizing solid state light
	emanating  diode arrays  towit:   Light Emitting Diodes ( "LED's" ).  
	While sales revenue for 1996 should approximate one hundred thousand
	( $100,000 ) dollars, the Company  anticipates that this  subsidiary
	in calendar 1997, as indicated by  customer inquires, should develop
	substantial  sales.  During the balance of fiscal 1996,  product re-
	search and development will be continued.   Management believes that
	VBT will be a niche supplier of LED products to  various industries.
	VBT also  permits the  Company to have  its own line of  proprietary
	products as distinguised from its distribution operations in electric
	components.

	In the area of distribtion of electronic components, the Company has
	continued its philosophy of  increasing its line of product  as well
	as its customer base. In his visit to Taiwan, Hong Kong and Mainland
	China during the second quarter of Fiscal 1996, the President of the
	Company selected several new products to add to the Company's product
	line.  Arrangements have been made to have samples of these products
	sent to the Company's Hong Kong  office for testing and quality con-
	trol evaluation.  In the selection of new products the Company seeks
	to make available to its existing customer base, products which these
	customers  presently  purchase from other suppliers.   This approach
	permits the Company to take advantage of its position as an existing
	supplier of quality products, but does not preclude the Company from
	expanding into new products to increase its customer base. An example
	of this  approach is the introduction to the security  industry of a
	40 Volt transformer for  OEM utilization as well as for the replace-
	ment market.   Previously, the Company only offered the 20 Volt con-
	figuration.

	To expand its market share in the battery and battery products (power
	packs) market, the Company in November  1996 formed a new subsidiary,
	Universal  Battery Corporation.   This company will  concentrate  its
	efforts in the main battery and battery products OEM market.  To head
	this division the Company has  employed a Vice President in charge of
	marketing and  sales with over thirteen years experience wholly with-
	in the battery industry.

	The  Company in all its areas of  operations is  seeking to  increase
	sales through new products and increased marketing activities.






					14


<PAGE>


	Item 2.  Managements Discussion and Analysis of Financial 
		    Condition and Results of Operations

				   - continued -

	RESULTS OF OPERATIONS

	Three Months Ended September 30, 1996 and 1995

	Revenues.   Net revenues in the third quarter of $1,106,225 represent
	a nearly 16% increase over the third quarter in the prior fiscal year.
	The increase was  predominately in the area of import products and is 
	due not only to increased marketing of existing products, but also to
	the introduction of additional imported product lines.  Management is
	continuing its focus on the profitable area of import products  while
	decreasing the Company's distribution sales.  Although this change in
	emphasis will continue in future periods,  management  does see a
	decline in the customer  sales order backlog from $1,350,000 at the
	beginning of 1996 to $1,004,000 at the end of the third quarter.   
	Consequently, this sales increase may not further increase though year
	end.

	Cost of Sales. Cost of sales as a percentage of net revenues decreased
	for the third quarter as compared to the prior fiscal year.  This im-
	provement in gross  profit to 29.2% of  sales from 25.8% of  sales is
	attributable to a combination of  factors and reflects  managements's
	goal of  operating with a gross  profit of 25% to 28% through  better
	controls of foreign currency exchange rates, better control of foreign
	products purchasing and choice of products  which offer better market
	sales conditions.   Management plans to maintain these gross  profits
	within the stated rates and does not anticipate any problem.

	General and Administrative.  General and administrative expenses as a
	percentage of net revenues increased for the third quarter to 32.7% as
	compared to 21.1% for the prior fiscal period.  While this seems like
	an alarming  increase,  much of it is  attributable to the  increased
	costs associated with the use of public offering proceeds received in
	the first  quarter of 1996.   The Company is in the process of  using
	these offering proceeds to increase its marketing and advertising base
	and has  expended  additional  funds in the area of  enhanced  public
	relations and in consulting, accounting and legal  fees paid in assoc-
	ation with its growth and expansion plans. The Company has also incur-
	red a short-term loss in the value of its trading securities which is
	included in general  and administrative expenses but  expects this to
	turn around before year end.  Many of these added costs will continue
	through the next quarter and into the next fiscal year, but management
	expects to reap the benefit of these  expenses through additional 
	sales  markets and through acquistions of new products and product
	lines.

	Other Income and Expense.   Interest income  increased more than ten-
	fold during the third quarter due primarily to the short therm invest-
	ment of offering  proceeds  until such time as they  will be used for

					15

<PAGE>


	Item 2.  Managements Discussion and Analysis of Financial 
		    Condition and Results of Operations

				   - continued -

	expansion. Interest expense has remained fairly consistent as compared
	to the prior fiscal  period and will  probably decrease as the  fixed
	periods loans of the Company are retired.

	Quarterly Results.  While the net loss of $22,537 for the third quar-
	ter is a disappointment as compared to the prior fiscal period, which
	reflected a net gain of $21,400 management continues to feel that its
	long range  goals of expanded sales  through increased  marketing and
	advertising will eventually pay off. The continued emphasis on import
	product sales and improvement in  controlling general and administra-
	tive  costs, other  than  those  that are  increasing as a  result of
	expansion, will  potentially help improve the results for  the coming
	quarter.

	Nine Months Ended September 31, 1996 and 1995

	Revenues.  The Company's net sales year to date have increased some 6%
	to $2,950,617 as compared to the prior  fiscal quarter of $2,772,715.
	Again, this increase is due to the continued management belief in its
	import  product  line and  the  phasing  out of  distribution  sales.  
	Although the Company is currently  working on an increased  marketing
	and advertising  campaign to  increase its  product  sales, it is not
	anticipated that the benefit of this strategy will be realized  until
	next year.  Sales through calendar 1996 are expected to maintain only
	this slight increase over 1995.

	Cost of Sales.   The Company's cost of  sales as a  percentage of net
	revenues has decreased slightly to 71.5% as compared to 72.4% for the
	prior fiscal period.   This gross profit percentage of  approximately
	28.5% year to date is in the normal range that management attempts to
	maintain. There is no indication that the gross profit percentage will
	fluctuate for the remaining quarter of 1996.

	General and Administrative.  General and administrative expenses year
	to date have  increased to approximately 31% of net  revenues as com-
	pared to 22% for the  prior year to date.   As previously  discussed,
	this  result is due  mainly to the  increased  costs  relative to the
	Company's  growth plans  through expanded  marketing and  advertising
	activities and the  additional use of  outside  consultants and legal
	fees in  association with  expansion and potential  acquistion of new
	products  and operations.   Although these costs will  continue to be
	higher than in previous years, the Company anticipates that they will
	be down to 28% of net revenue by the end of the year.

	Other Income and Expenses.  Interest income has increased drastically
	year to date to $62,370 from $2,149 for the prior year to date.  This
	increase is due  primarily to the short term  investment of  offering


					16


<PAGE>


	Item 2.  Managements Discussion and Analysis of Financial 
		    Condition and Results of Operations

				   - continued -

	proceeds until such time as they will be used in operations. Interest
	expense has remained fairly consistent with the prior year to date and
	is expected to decrease as the Company's notes are paid.

	Year to  Date Results.   The Company has incurred a net  loss year to
	date of $29,424 as compared to a net income of $86,087 for the  prior
	fiscal period due primarily to the increase in general and administr-
	ative expense incurred this year. Company management feels that these
	expenditures are  necessary in order to  ensure future  growth of the
	Company and believes that the benefit of these expenses will be real-
	ized in future years.


	LIQUIDITY AND CAPITAL RESOURCES

	Cash flow used by operations year to date is $707,675 as  compared to
	cash generated by  operations of $58,048 for the  prior year to date.
	This cash  used by  operations is  primarily  due  to an  increase in
	inventory and in trade accounts receivable year to date along with an
	accompanying decrease in accounts payable to date.

	Along with this loss  from operations, the Company has  used cash for
	investing activities of $972,033 year to date as compared to $246,069
	for the prior fiscal year.   The investing activities  consist mainly
	of the investment of offering proceeds in short term securites.

	This use of a combined $1.6 million to cover operations and investing
	activities has not negatively  impacted the overall cash  position of
	the  Company because these funds were provided from financing activi-
	ties through the  proceeds of the public  offering received in  early
	1996.   The Company  anticipates that the use of these  proceeds will
	eventually  enable increased  sales and operating  profitability  and
	positive cash flow from operations.

	The current cash and short term investments on hand should prove suf-
	ficient to supply the  cash needs of the Company in the  foreseeable
	future, however, the Company has recently established a new $750,000
	bank line of credit which is well beyond any projected cash require-
	ments at this time.  Initially, the new line of credit has been used
	to replace the  Bank One note which was  paid in full with  proceeds
	from the new loan.

				       Part II

				  Other Information

	Item 1.  Legal Proceedings.

		None

					17

<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.
     
	    November 13, 1996                /s/ Craig D. La Taste
	    __________________               _____________________________
	    Date                             Craig D. La Taste
					     Chairman of the Board and
					     President
     
     
	    November 13, 1996                /s/ Julie Sansom-Reese
	    __________________               ______________________________
	    Date                             Julie Sansom-Reese
					     Chief Financial Officer
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

     
     
     
     


     
     
     
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