SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

            For the quarterly period ended September 30, 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 of organization)                             Identification No.)

            477 Madison Avenue, 24th Floor, New York, New Your 10022
            --------------------------------------------------------
                      Address of principal executive office


                                                          (212) 583-0900
                                                     ---------------------------
                                                     Issuer's telephone number

Check  whether  the issuer has (1) filed all  reports  required by Section 12 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 September 30, 1998, 4,398,203 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 (unaudited)

         Consolidated Balance Sheets at September 30, 1998 and
         December 31, 1997................................................3

         Consolidated Statements of Operations for
         the Periods Ended September 30, 1998 and 1997....................5

         Consolidated Statements of Cash Flows for the
         Periods Ended September 30, 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......................................23

         Item 2 - Changes in Securities..................................23

         Item 3 - Defaults Upon Senior Securities........................23

         Item 4 - Submission of Matters to a
                  Vote of Securities Holders.............................23

         Item 5 - Other Information......................................23

         Item 6 - Exhibits and Reports on Form 8-K.......................23

Signatures...............................................................24












                                        2

<PAGE>



PART I - FINANCIAL INFORMATION

Item 1. Financial Statements


                 Tech Electro Industries, Inc., and Subsidiaries
                           Consolidated Balance Sheets

                                     ASSETS


                                              (Unaudited)
                                             Sep 30, 1998        Dec 31, 1997
                                             ------------        ------------

CURRENT ASSETS
     Cash and cash equivalents               $  1,445,584        $  1,918,604
     Marketable securities                           -                 96,063
     Accounts and notes receivable
     Accounts receivable-trade, net of
       allowance for doubtful accounts of
       $505,277 and $16,000 respectively        2,252,673             974,604
     Notes                                        220,000             362,153
     Other                                        147,062              34,942
     Deferred sales costs                         238,668                -
     Inventories                                3,748,350           1,801,034
     Prepaid expenses                             667,005             211,351
                                             ------------        ------------
TOTAL CURRENT ASSETS                            8,719,342           5,398,751
                                             ------------        ------------
NET PROPERTY AND EQUIPMENT                        930,809             308,884
                                             ------------        ------------

OTHER ASSETS
     Contract rights, net of accumulated 
       amortization of $271,803                 5,164,244                -
     Deferred financing costs                     226,934                -
     Goodwill                                   3,826,484                -
     Notes receivable                              66,755              49,997
     Deposit on future acquisition                   -                500,000
     Other assets                                 288,587                 290
                                             ------------        ------------
TOTAL OTHER ASSETS                              9,573,004             550,287
                                             ------------        ------------
TOTAL ASSETS                                 $ 19,233,155        $  6,257,922
                                             ============        ============






                 See Notes to Consolidated Financial Statements

                                        3

<PAGE>

                 Tech Electro Industries, Inc., and Subsidiaries
                           Consolidated Balance Sheets

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                   (Unaudited)
                                                  Sep 30, 1998     Dec 31, 1997
                                                  ------------     ------------
CURRENT LIABILITIES
     Current portion of credit facility
       obligations                                $    334,668     $       -
     Current portion of notes payable                  274,678          425,000
     Current portion of long term debt                 182,041             -
     Accounts payable-trade                          3,142,355          467,822
     Accrued liabilities                             1,091,535          548,273
     Deferred service liability                      1,605,395             -
     Dividends payable                                    -              28,432
                                                  ------------      -----------
TOTAL CURRENT LIABILITIES                            6,630,672        1,469,527

LONG TERM LIABILITIES
     Credit facility obligations                     7,089,888             -
     Deferred lease incentive                           22,731             -
     Long term debt                                     78,529             -
                                                  ------------      -----------
TOTAL LIABILITIES                                   13,821,820        1,469,527

MINORITY INTEREST IN SUBSIDIARY                      2,030,631           29,202
STOCKHOLDERS' EQUITY 
     Preferred stock, $1.00 par value;                 186,338          319,934
       1,000,000 shares authorized, 65,000
       Class B issued and outstanding on
       December 31, 1997, liquidation
       preference of $341,250, zero shares
       outstanding on September 30, 1998;
       186,338 and 254,934 Class A issued
       and outstanding on September 30, 1998
       and December 31, 1997 respectively;
       liquidation preference $978,275 and
       $1,338,404 respectively
     Common stock, $.01 par value;                      43,982           34,985
       10,000,000 shares authorized, 4,398,203
       shares issued and outstanding on 
       September 30, 1998 and 3,498,407 shares
       issued and outstanding on December 31 1997
     Additional paid-in capital                      7,002,903        5,713,866
     Unrealized gains on marketable securities           -               24,624
     Subscriptions receivable                         (107,500)		   -
     Retained Earnings (Accumulated Deficit)        (3,755,019)      (1,334,216)
                                                  ------------     ------------
 Total stockholders' equity                          3,370,704        4,759,193
                                                  ------------     ------------
 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY         $ 19,223,155        6,257,922
                                                  ============     ============
                 See Notes to Consolidated Financial Statements

                                        4
<PAGE>


                 Tech Electro Industries, Inc., and Subsidiaries
                      Consolidated Statements of Operations
                                   (Unaudited)
                For the Periods Ended September 30, 1998 and 1997
<TABLE>
<CAPTION>

                                                                     Three Months Ended                        Year to Date
                                                                     -----------------                         ------------
                                                              1998                1997                1998             1997
                                                    --------------       -------------       -------------     ------------
<S>                                                     <C>                  <C>                <C>               <C>         
Sales and service revenues                          $    7,033,198       $   2,184,170       $  17,012,622     $  4,753,654
Cost of sales and revenues and
     direct service expense                              5,577,262           1,587,858          13,443,753        3,474,045
                                                    --------------       -------------       -------------     ------------
Gross profit                                             1,455,936             596,312           3,568,869        1,279,609

Selling, general and
     administrative expenses                             2,313,120             705,230           5,467,518        1,827,790
                                                    --------------       -------------       -------------     ------------
Loss from operations                                      (857,184)           (108,918)         (1,898,649)        (548,181)

Other income (expense):
   Interest income                                          21,403              18,044              69,188           69,702
   Interest expense                                       (218,116)             (7,197)           (398,311)         (24,680)
   Other                                                  (151,663)               -               (151,663)            -
                                                    --------------       -------------       -------------     ------------
Total other income (expense)                              (348,376)             10,847            (480,786)          45,022

Minority share of subsidiary loss                             -                 13,316              29,201           29,541
                                                    --------------       -------------       -------------     ------------
Loss before provision for taxes                         (1,205,560)            (84,755)         (2,350,234)        (473,618)

Income tax expense:
   Current                                                   4,015                -                  7,320            7,455
                                                    --------------       -------------       -------------     ------------
Total income tax expense                                     4,015                -                  7,320            7,455
                                                    --------------       -------------       -------------     ------------
NET LOSS                                            $   (1,209,575)      $     (84,755)      $  (2,357,554)    $   (481,073)
                                                    ==============       =============       =============     ============
Loss attributable to
     common stockholders                            $   (1,226,345)      $    (117,605)      $  (2,423,117)    $   (579,623)
                                                    ==============       =============       =============     ============
Loss per share(base and diluted)                    $        (0.28)      $       (0.09)      $      (0.60)     $      (0.44)
                                                    ==============       =============       =============     ============
Number of weighted average
     shares of common shares
     outstanding                                         4,386,239           1,308,275           4,063,940        1,308,275
                                                    ==============       =============       =============     ============
</TABLE>

                 See Notes to Consolidated Financial Statements

                                        5

<PAGE>


                 Tech Electro Industries, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (unaudited)
                                                     Sep 30 1998     Sep 30 1997
                                                   -------------   -------------
CASH FLOW FROM OPERATING ACTIVITIES
     Net loss                                      $ (2,357,554)   $   (481,073)
     Adjustments to reconcile net  
      loss to cash used by
      operations 
     Depreciation and amortization adjustment           317,688          22,462
     Provision for slow moving inventory                348,666          56,117
     Minority interest share of subsidiary             (232,741)        (29,541)
     Deferred lease incentive                           (71,742)           -
Changes in operating assets and liabilities
     (Increase) decrease in:
               Accounts receivable-trade              1,100,225        (424,967)
               Other receivables                       (112,120)       (611,518)
               Inventory                               (538,140)       (415,363)
               Contract rights                          271,803            -
               Other assets                             (48,093)           -
               Deferred expenses                         24,729            -
               Deferred sales costs                     (42,087)           -
               Prepaid expenses                        (216,748)       (201,070)
         Increase (decrease) in:
               Accounts payable                       1,113,823          21,379
               Accrued liabilities                     (546,062)         82,294
               Deferred service liability                (8,922)           -
                                                   -------------   -------------
NET CASH USED BY OPERATING ACTIVITIES                  (997,275)     (1,981,280)
CASH FLOWS FROM INVESTING ACTIVITIES
     Additions to property and equipment               (138,874)       (112,670)
     Purchases of certificates of deposit                  -           (491,669)
     Advances on note receivable                        125,395          27,086
     Sale of marketable securities                       71,439         943,677
     Business acquisition, net of cash acquired        (415,127)           -
                                                   -------------   -------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES       (357,167)        366,424
CASH FLOWS FROM FINANCING ACTIVITIES
     Credit facility obligations                        814,493            -
     Payments on short term debt                           -            (72,772)
     Proceeds from long-term debt                          -           (247,939)
     Repayment of long-term debt                       (898,328)           -
     Proceeds from sale of preferred stock,
         common stock and warrants                      993,689       1,870,707
     Dividends paid                                     (28,432)        (59,945)
                                                   -------------   -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES               881,422       1,490,051
                                                   -------------   -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS              (473,020)       (124,805)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD           1,918,604         261,973
                                                   -------------   -------------
CASH AND EQUIVALENTS AT END OF PERIOD              $  1,445,584    $    137,168
                                                   =============   =============
                 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 nine month period ended September 30, 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.  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  pro forma  consolidated  results  for the  quarter and nine
months ending September 30, 1998 and 1997 assumes the USCG  acquisition
occurred as of January 1, 1997.

<TABLE>
<CAPTION>

                                               Three Months Ended                         Nine Months Ended
                                      ---------------------------------          ----------------------------------
                                      Sep 30, 1998         Sep 30, 1997          Sep 30, 1998          Sep 30, 1997
                                      ------------         ------------          ------------          ------------
<S>                                     <C>                  <C>                   <C>                   <C>         
         Revenues                     $  7,033,198         $ 13,859,120          $ 17,012,622          $ 31,039,341
         Net loss  $(1,209,575)       $ (3,891,753)        $ (2,357,554)         $ (9,606,087)
         Loss per share
        (Basic and diluted)           $      (0.28)        $      (2.97)         $      (0.60)         $      (7.34)
</TABLE>


Note D - Dividends

     Dividends  were declared on August 19, 1998 for Class A Preferred  Stock at
$0.09 per share.  This dividend was paid in the form of common stock at the rate
of .048 shares of common for each share of  preferred.  The dividend was payable
on  September  30,  1998 to  stockholders  of record at the close of business of
August 31, 1998. In addition,  dividends paid during the quarter ended September
30, 1998 were $16,770.  No dividends  were paid for the quarter ended  September
30, 1997. No dividends were payable at September 30, 1998.

                                        8

<PAGE>
Note E - Inventories

Inventories consist of the following at September 30, 1998:

         Computer parts, electronic components and
           packing materials                               $4,567,616
         Less valuation reserves                              819,266
                                                           ----------
                                                           $3,748,350
                                                           ==========

Note F - Property and Equipment

Property and equipment consists of the following at September 30, 1998:

         Machinery and equipment                       $ 1,228,974
         Leasehold improvements                            320,510
         Furniture and fixtures                            407,109
         Automobiles                                       312,250
                                                        ----------
                                                         2,268,843
         Less accumulated depreciation & amortization    1,338,034
                                                        ----------
                                                         $ 930,809
                                                        ==========

     Included in property and  equipment  at  September  30, 1998 is $404,599 of
equipment and furniture acquired under capital leases.  Accumulated amortization
of such equipment and furniture was $236,834 at September 30, 1998.

Note G - Credit Facility Obligations

     On  September  9,  1997,  USCG  entered  into a loan  agreement  with Coast
Business Credit,  subsequently  amended on February 24, 1998 and March 19, 1998,
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  other  than
maintenance  contract  receivables  as  defined in the loan agreement, plus 4.25
times the average total monthly computer maintenance contract collections  to be
calculated on a trailing twelve month moving average,  as well as a term loan in
the  principal  amount   of  $500,000.    At  September  30,  1998,  the maximum
borrowings available were $7,581,000.  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.

     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 September 30, 1998, $6,420,233 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 September 30, 1998,  $986,000 was outstanding under
the term loan.


                                       9
<PAGE>



     The terms of the Agreement  provided 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 September  30, 1998,  covenants  relating to tangible net
worth and audited financial  statement deadlines were in default,  however,  the
financial institution has 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 amounts 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 September  30, 1998,  accounts  payable  includes  approximately  $147,440
related to this inventory financing.


Note H - Line of Credit

     During the third quarter, CCC increased  its  credit line  from $750,000 to
$1,000,000.  The line is payable  on  demand  with interest at prime plus one
half percent, maturing June 30,  1999  and  secured  by   accounts  receivable,
inventory,   machinery  and equipment and a $250,000 certificate of deposit.  At
September 30, 1998 and 1997 the outstanding balance was $210,000 and $275,000
respectively.


Note I - Deferred Service Liability

     The  deferred  service   liability  of  $  1,605,395  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 September  30,  1998,  the
Company had a service  maintenance  contract  base with an aggregate  balance of
approximately $ 15,852,894.

Note J - 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 basic
loss per  share is  identical.  Net loss per  share  for the nine  months  ended
September 30, 1998  and  1997  has  been  increased  for  accrued  dividends  on
preferred  stock totaling $65,563 and $98,550. There were no  accrued  dividends
as of September 30, 1998.

                                       10
<PAGE>



Note K - Long-Term Debt

As of September 30, 1998, long-term debt consists of the following:

         Capital lease obligations (a)                      $ 202,396
         Automobile loans (b)                                  58,174
                                                            ---------
                                                            $ 260,570

         Less current installments of long-term debt          182,041
                                                            ---------
                                                            $  78,529
                                                            =========

         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 L - Minority Interest

     Minority  interest of $ 2,030,631  at  September  30, 1998  represents  the
minority  interest in USCG's  series D and series E redeemable  preferred  stock
which remain outstanding at September 30, 1998.

     USCG's series D preferred  stock  outstanding  of $ 33,458 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 $ 33,458.

     In connection with the acquisition of USCG 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 M - 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  provide 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 expansions
and growth. At September 30, 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  September  30,  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 option proceeds are not subject to remittance to CCC.


Note N - Restricted Cash

     At September 30,  1998,  CCC  and  subsidiaries  maintained  cash  on  hand
totaling  $710,015.   These  funds  are restricted for use by CCC.  TEI may draw
upon this cash for certain specified  uses  including  the  payment of preferred
stock dividends or funding future acquisitions.






























                                       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.
These  statements  include,   without  limitation,   statements  concerning  the
potential operations and results of the Company and information relating to Year
2000 matters,  described  below.  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

     The  financial  results of the  Company  for both the three and nine months
ended  September 30, 1998 were  significantly  impacted by the acquisition
(accounted for as a purchase) of a majority interest in US Computer Group, Inc.,
(USCG) which was consummated on March 19, 1998.  Because the acquisition of USCG
took place  during the final  portion of the quarter  ended March 31, 1998,  the
period ending  September 30, 1998 is the second  period in which the  operations
of USCG are reflected in the results of operations of the Company.

     During the period ended September 30, 1998, a number of other  developments
occurred  which had a significant  impact on the  operations  and results of the
Company, including the following:

     In  August of 1998,  the  Company  opened an office in New York.  Effective
November 1, 1998, this will be the Company's new headquarters.

     Effective  September  15,  1998,  USCG made  extensive  cuts in overhead to
better  align  costs  with  revenues.  USCG  laid off  approximately  15% of its
workforce.  This resulted in savings of  approximately  $87,000 per month.  As a
result of this  action, operations for the month of  September  1998  approached
break-even before  reorganization  costs relating to the layoff of approximately
$45,000.   While  there  can  be  no assurance  that such savings will continue,
the Company  believes  that these  changes  will  better  enable USCG to compete
effectively and operate more efficiently.









                                       13

<PAGE>


     In  October  1998,  Mr.  Alan R.  Andrus  assumed the position  of COO on a
full-time  basis  replacing  the interim COO. He brings  almost  thirty years of
experience  in the  computer  service  industry.  His career  started at Grumman
Corporation,  where he became President of Grumman Systems Support  Corporation,
an independent  service  organization,  servicing businesses  nationwide.  After
Grumman,  he became Senior Vice  President at  Computerland/Vanstar  and then at
Technology Service Solutions,  the joint venture between IBM & Kodak. Mr. Andrus
is  responsible  for managing and  overseeing  the day to day  operations of the
company  and has been  brought on board to  increase  operational  efficiencies,
reduce costs and oversee the integration of acquisitions.

     USCG  signed a contract  with Street  Technologies,  a provider of Internet
based training and launched the "USC Learning Center".  Investment has been made
in this new venture in the form of a  salesperson,  and the Learning  Center was
officially launched at the end of September.

     As earlier reported, the Company entered into an Agreement on July 10, 1998
for the  acquisition  of  DenAmerica  Corporation  ("DenAmerica"),  the  largest
franchisee of Denny's  restaurants  and the owner of the Black-eyed Pea chain of
restaurants.  The Company  agreed to pay to the holders of each share a total of
$4.90 in cash and newly issued preferred stock worth $0.90 per share. On October
1,  1998,  DenAmerica  announced  that it had  agreed to modify the terms of its
agreement with Tech Electro  Industries,  Inc. The modification  would allow the
Company the option to pay either $3.00 in cash and $1.90 in newly-issued Company
preferred  stock or $4.00 in cash and $0.90 in newly  issued  Company  preferred
stock, for each share of DenAmerica common stock.

     On  October  27,  1998,  Tech  Electro  Industries,   Inc.  announced   the
termination  of  the  proposed   Den America   acquisition,  citing  failure  of
certain  financial  contingencies.   The company  is  considering its options in
light of DenAmerica's decision.

     As part of the Company's  relocation of executive  office  functions to New
York,  the Company  announced on November 6, 1998 that David Kaye,  formerly the
Company's Chief Financial  Officer,  would no longer be employed by the Company.
The Company is currently considering potential successors to Mr. Kaye.


THREE-MONTHS  ENDED SEPTEMBER 30, 1998 COMPARED TO THREE-MONTHS  ENDED 
SEPTEMBER 30, 1997

Results of Operations

     As noted above,  the Company's  results of operations for the third quarter
of 1998,  compared to the third quarter of 1997, were significantly  impacted by
the operations of USCG, which was acquired by the Company on March 19, 1998 (the
end of the first  quarter) and is not included in the results of operations  for
the third quarter of 1997.

Revenues

     For the three month period ending September 30, 1998, the Company had sales
of $7,033,198,  an increase of $4,849,028 (222.01%) from sales of $2,184,170 for
the three month period ending September 30, 1997.

                                       14
<PAGE>



     The  significant  increase in revenues was due to sales  originated by USCG
and its  subsidiaries,  which  together  contributed  sales of $5,315,946 to the
Company's  revenues  for the three  month  period  ending  September  30,  1998.
Additionally  USCG gained new contracts or additional  business in the amount of
$765,427. However, USCG also had cancellations of contracts totaling $1,339,109,
thus, the net effect on USCG revenues for this period was a loss of $573,682.
USCG had significant  uplifts in major  contracts with New Jersey  Transit,  IBM
Business Recovery  Systems,  OAO Technology  Solutions,  National MS Society and
West  Hudson  Hospital.  USCG also  signed  new  contracts  with  HBO,  American
Institute of Physics,  Queensborough  Community  College and Temple  University.
However,  USCG  also  lost  significant  contracts  with OAO  Technology,  Perot
Systems, Gestetner Corporation,  Sun Chemical,  Brookhaven Science Laboratories,
Syosset Schools, Natwest Markets, and GlenCove Schools due to either the clients
no longer using the equipment  USCG  serviced or losing the contracts  when sent
out to bid.

     In light of the  revenues lost, USCG made  extensive  cuts in  overhead  to
better  align  costs  with  revenues.   As  discussed   above,   USCG  laid  off
approximately  15% of its  workforce on September  15, 1998. As a result of this
action,  operations for September were break-even  before  reorganization  costs
relating  to  the  layoff  of  approximately  $45,000.  While  there  can  be no
assurances that such savings will be continuing, the Company believes that these
changes will better enable USCG to operate more  efficiently  as well as compete
more effectively in the marketplace.

     Excluding the sales of USCG, the Company's other subsidiaries (comprised of
Computer Components Corporation,  ("CCC"), Universal Battery Corporation ("UBC")
and Vary Brite Technologies,  ("VBT") recorded sales of $1,717,252 for the three
month period  ending  September 30, 1998,  compared to $2,184,170  for the three
month period ending September 30, 1997, a decrease of $466,918 (21.38%).

     Computer  Components  Corporation  had  revenues of $732,360  for the three
months ended September 30, 1998,  compared to revenues of $1,459,643  during the
same period  ending  September  30,  1997,  a decrease of $727,283  (49.8%).  As
reported  in May  1998,  CCC was  advised  by  Sunbeam  Corporation  that it had
experienced  a change in management  and would no longer  require CCC's goods or
services. The significant drop in CCC revenues was a direct result of losing the
Sunbeam  Corporation as a customer,  who relocated their facilities to Asia. The
Company  expects  that the loss of this  customer  will result in a reduction in
sales during the remainder of the Company's fiscal year, however,  management at
CCC has taken measures in response to losing Sunbeam. In July 1998, in an effort
to increase operational efficiencies,  CCC began eliminating positions, reducing
current salaries and reducing overhead.  By realigning costs with revenues,  CCC
anticipates a reduction of general and administrative  expenses by approximately
$48,000 per month, by the end of calendar year 1998.

     UBC's  revenues  increased to $967,865 due to strong  battery sales for the
third  quarter of 1998,  compared to revenues of $551,520 for the same period in
1997,  an increase of $416,345  (75.5%).  VBT  reported  revenues  for the third
quarter of 1998 of $17,028,  compared to $174,009 for the same period in 1997, a
decrease  of $156,981  (90.2%).  The  decrease  in revenues of VBT was  directly
attributable to a delay in shipment of assembled goods to a major customer.


                                       15

<PAGE>



     The Company  recognized  a loss from  operations  of $857,184 for the three
month period ending  September 30, 1998,  compared to a loss of $108,918  during
the same period in the prior year, an increase in losses of $748,266 (687%). The
Company's  increased loss was due to USCG having a net loss in customer  service
contracts,  in  addition  to  increases  in cost of goods sold and  general  and
administrative  expenses. As discussed earlier, in May 1998, Computer Components
Corporation, a wholly owned subsidiary of the Company (CCC) was advised that the
Sunbeam Corporation had experienced a change in it management.  This development
caused CCC to record a reduction  in  inventory  of  $120,000 in June 1998.  The
Company  expects  that the loss of this  customer  will result in a reduction of
sales of $500,000 during the remainder of the Company's fiscal year.


Cost of Goods Sold

     The cost of goods  sold rose to  $5,577,262  in the third  quarter of 1998,
from  $1,587,858  in the  third  quarter  of 1997,  an  increase  of  $3,989,404
(251.24%).  The  increase  in  cost  of  goods  sold  can be  attributed  to the
consolidation of the operations of USCG and its subsidiaries,  which contributed
cost of  goods  sold of  $4,189,239  for the  third  quarter  of  1998,  with no
contribution  in the same period in 1997.  Excluding cost of goods sold by USCG,
CCC's cost of goods sold was  $1,388,023 in the third quarter of 1998,  compared
to  $1,587,858,  or a decrease of $199,835  (12.59%)  from the third  quarter of
1997.

     Cost of goods sold for the Company, as a percentage of sales rose to 79.30%
in the third  quarter of 1998 from  72.70% in the third  quarter  of 1997.  This
increase is attributable to the  acquisition of USCG and its  subsidiaries,  for
which the cost of goods as a percentage of sales was 78.81% in the third quarter
of 1998.  Cost of goods as a  percentage  of sales for CCC and its  subsidiaries
increased  to 80.8%  compared to 72.70%  during the same three  month  period in
1997.


Gross Profit

     The Company  recorded a gross  profit of  $1,455,936  for the three  months
ended  September 30, 1998.  This was an increase of $859,624  (144.16%) over the
gross  profit  recorded  during the three  months  ended  September  30, 1997 of
$596,312.

     Of the  $1,455,936  in  gross  profit,  the  addition  of USCG  contributed
$1,126,707 (77.4%).










                                       16

<PAGE>



     CCC and its subsidiaries  contributed $329,229 towards gross profit for the
three month  period  ending  September  1998,  compared to $596,314 for the same
three month period in 1997, a decrease of $267,085  (44.79%).  Gross profit as a
percentage  of sales  for CCC and its  subsidiaries  decreased  to 19.2% for the
three months ended September 30, 1998,  compared to 27.3% for the same period in
1997. The  decreasing  gross profit margin of CCC is largely  attributable  to a
major customer,  Sunbeam  Corporation,  unexpectedly  moving their manufacturing
facilities  to Asia,  leaving  CCC with  significant  inventories  upon  which a
"reserve" of over $56,000 was  established  for potential  write-offs.  As noted
above,  in June 1998, CCC recorded an additional  $120,000 in cost of goods sold
as a write-off  of  inventory  resulting  from the  reduction  in business  from
Sunbeam Corporation.  These items purchased by Sunbeam from CCC were specialized
products used only by Sunbeam and could not be sold to other CCC  customers.

     Changes in the Asian currency  markets also adversely  affected UBC's gross
margin.  UBC was forced to reduce its sales price of some products  based upon a
reduced replacement cost of inventory purchased from Asia.


Selling, General and Administrative Expenses

     The Company's  selling,  general and  administrative  expenses,  consisting
primarily of wages,  benefits and related  expenses rose to  $2,313,120  for the
three month period  ending  September 30, 1998 from $705,230 for the same period
in 1997,  an increase of  $1,607,890  (228%).  The increase was due primarily to
costs associated with operations of USCG and its subsidiaries, which contributed
general and administrative expenses of $1,109,767 for the third quarter of 1998,
with  no  contribution  in the  same  period  in  1997.  Excluding  general  and
administrative expenses of USCG, the Company recorded general and administrative
expenses of $642,907 in the third quarter of 1998,  compared to $539,765,  or an
increase of $103,142  (5.23%) from the third quarter of 1997.  Selling,  general
and administrative expenses as a percentage of sales at CCC and its subsidiaries
increased to 37.4% from 24.7% during the same period in 1997. As discussed above
the company has acted accordingly to adjust selling,  general and administrative
expenses due to the loss of this Sunbeam.


Inventory

     CCC  increased  its  inventory  allowance  to $207,365 in the three  months
ended September 30, 1998  compared to  $151,003 in the  corresponding  period of
1997.  The  increase of $56,362  was, as stated  above,  a result of the Sunbeam
Corporation  moving their  manufacturing  facilities  to Asia,  leaving CCC with
significant inventories upon which a reserve had to be established for potential
write-offs.






                                       17

<PAGE>



Purchase Order Backlog

     As  of  September   30,  1998,   Company's   purchase   order  backlog  was
approximately  $2,405,189,  compared to  $1,940,858  on September  30, 1997,  an
increase of $464,331  (23.9%).  Of the purchase  order  backlog on September 30,
1998,  $103,866  (4.32%) was  attributable  to USCG and $2,301,323  (95.68%) was
attributable  to the  rest of the  Company.  Two of  CCC's  significant  clients
accounted  for the  majority of the  increase  in the  purchase  order  backlog.
Generally,  the purchase order backlog represents orders received from customers
but not shipped,  typically at the request of the customer. The Company monitors
its  purchase  order  backlog to help  analyze  sales trends and to gauge future
sales potential.

Interest Expense

     The Company incurred $218,116 in interest expenses during the third quarter
of 1998,  compared to $7,197  during the third  quarter of 1997,  an increase of
$210,919   (2930.65%).   The  significant   increase  in  interest   expense  is
attributable to USCG and its  subsidiaries,  which incurred $210,651 in interest
expenses during the third quarter of 1998.

NINE-MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE-MONTHS ENDED SEPTEMBER 30,
1997

Results of Operations

     The  Company's  results for  operations  for the first nine months of 1998,
compared to the first nine months of 1997,  were  significantly  impacted by the
operations of USCG, which was acquired during the first quarter of 1998, and for
which there are no comparable results in the first nine months of 1997.

Revenues

     For the nine month period ending  September 30, 1998, the Company had sales
of $17,012,622,  an increase of $12,258,968 (257.89%),  from sales of $4,753,654
for the nine month period ending September 30, 1997. The significant increase in
revenues  was due to  sales  originated  by USCG  and  its  subsidiaries,  which
together contributed sales of $11,229,225 to the Company's revenues for the nine
month period ending September 30, 1998.

     The Company  recognized a loss from  operations of $1,898,649  for the nine
month period ending  September 30, 1998,  compared to a loss of $548,181  during
the same period in the prior year, an increase in losses of $1,350,468 (246.4%).
The  Company's  increased  loss was due to  increases  in cost of goods sold and
general  and   administrative   expenses  from  both  USCG  and  CCC  and  their
subsidiaries.  The cost of goods  sold rose to  $13,443,753  in the  first  nine
months of 1998 from  $3,474,045  during the same period in 1997,  an increase of
$9,969,708 (287.0%).  The Company's general and administrative  expenses rose to
$5,467,518 for the first nine months ending  September 30, 1998, from $1,827,790
for the same period in 1997,  an increase of  $3,639,728 (199.1%).  The increase
in both cost of goods  sold  and  general  and  administrative  expenses  can be
attributed to the consolidation of USCG and its subsidiaries,  which contributed
cost of goods sold of  $9,092,734  and  general and  administrative  expenses of
$2,291,194 for the first nine months of 1998.

                                       18
<PAGE>


     CCC's  revenues  for  the  nine  months  ended   September  30,  1998  were
$5,783,397, compared to $4,756,454 for the same period ended September 30, 1997,
an increase of $1,026,943 (21.59%).  This increase in revenues was primarily due
to  the  increased battery sales at the CCC subsidiary,  UBC, which has been its
primary area  of growth.   Battery sales  at  UBC  have increased  by $1,442,050
(143.69%) to $2,445,607, compared to sales of $1,003,557 during the same  period
ending September 30, 1997.  In contrast, sales at VBT dropped $127,921  (56.08%)
to  $100,177  during  the  nine-months  ended  September 30, 1998,  compared  to
$228,098  during  the  same  period  ending  September  30, 1997.  Sales  at CCC
decreased by $287,184  (8.15%) to $3,237,615 for the nine-months ended September
30, 1998  compared  to  $3,524,799  during  the same period ending September 30,
1997.

Cost of Goods Sold

     The  Company's  cost of goods  sold rose to  $13,443,753  in the first nine
months of 1998  compared  to  $3,474,045  during  the same  period  in 1997,  an
increase of $9,969,708 (286.98%). The increase was due to the impact of USCG and
its subsidiaries, which contributed $9,082,734 to the cost of goods sold for the
first nine months of 1998, with no contribution in the same period in 1997.

     Cost of goods as a  percentage  of sales  rose to 79.02% in the first  nine
months of 1998,  from 73.08%  during the same period in 1997.  This  increase is
attributable  to USCG and its  subsidiaries,  for  which  the cost of goods as a
percentage of sales was 80.97% in the first nine months of 1998.

     At CCC,  the  costs  of goods  sold  increased  by  $876,974  (25.24%),  to
$4,351,019 for the nine-months ended September 30, 1998,  compared to $3,474,045
for the same period in 1997.

Selling, General and Administrative Expenses

     The Company's  selling,  general and  administrative  expenses,  consisting
primarily of wages,  benefits and related  expenses, rose  to $5,467,518 for the
first nine month period ending  September 30, 1998, from $1,827,790 for the same
period in 1997,  an increase of $3,639,728  (199.13%).  The increase in selling,
general and administrative  expenses was due to costs associated with operations
of USCG and its  subsidiaries,  which  contributed  general  and  administrative
expenses of $2,291,194 for the first nine months of 1998,  with no  contribution
during the same period in 1997.

     CCC's selling,  general and  administrative  expenses increased by $418,121
(28.18%),  to $1,901, 963 for the nine months ended September 30, 1998, compared
to  $1,483,842  during the same period ended  September  30,  1997.  This is due
primarily to an increase in salaries and wages, commissions, and related selling
expenses.

Interest Expense

     The Company  incurred  $398,311 in interest  expense  during the first nine
months of 1998,  compared to $24,680 during the same period in 1997, an increase
of  $373,631  (1513.90%).  The  significant  increase  in  interest  expense  is
attributable to USCG and its  subsidiaries,  which incurred $372,688 in interest
expense during the first nine months of 1998,  with no  contribution  during the
same period in 1997.

                                       19
<PAGE>



Liquidity

     As of September  30,  1998,  the Company had cash and cash  equivalents  of
$1,445,584.  By comparison on September 30, 1997, the Company had  approximately
$952,696 in cash and cash equivalents, marketable securities and certificates of
deposits.  The  change in the  Company's  investment  in cash,  certificates  of
deposit, and securities reflects not only the cash and cash equivalents of USCG,
but also the liquidation of marketable securities (bonds) to fund the cash needs
of the Company, as well as the sale of all marketable  securities.  The proceeds
from this sale were  $120,363.  The  Company  used  these  proceeds  to pay down
various lines of credit for the existing operations of CCC, UBC and VBT.

     On  September  9,  1997,  USCG  entered  into a loan  agreement  with Coast
Business Credit,  subsequently  amended on February 24, 1998 and March 19, 1998,
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  other  than
maintenance  contract  receivables  as  defined in the loan agreement, plus 4.25
times the average total monthly computer maintenance contract collections  to be
calculated on a trailing twelve month moving average,  as well as a term loan in
the  principal  amount   of  $500,000.    At  September  30,  1998,  the maximum
borrowings available were $7,581,000.  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 plus a payment of the unpaid  principal
balance  on  September  30,  2000.  As  of  September  30,  1998,  $986,000  was
outstanding under a  bridge  term  loan  extended  to  USCG  shortly  after  its
acquisition by the Company,  in addition to $6,420,233 for a total of $7,406,233
outstanding.

     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.

     Concurrently with the reorganization of TEI, TEI agreed that cash then held
by CCC and it's subsidiaries, or realized upon the exercising of certain options
and  warrants  as  described  below ,  would  be  restricted  for use by CCC and
it subsidiaries.  At September 30, 1998 cash on hand at CCC and its subsidiaries
totaled $710,015. This cash may be used by the parent for certain specified uses
including  the  payment  of  preferred   stock   dividends  or  funding   future
acquisitions.  While  TEI  maintains  voting  control  of CCC,  a  wholly  owned
subsidiary, day to day control of CCC's cash and operations are maintained by
CCC's current management.

     TEI is obligated to remit to CCC eighty-four  percent (84%) of the proceeds
received  from the  exercise of certain  warrants and options  outstanding.  The
1,945,000  warrants subject to the agreement have an exercise price of $3.30 per
share and expire on January 26, 2000. In addition  1,000,000 options are subject
to the agreement  which have an adjusted  exercise  price of $2.50 per share and
expire on March 10, 1999.
                                       20
<PAGE>



     On April 8, 1998,  the  Company  commenced a private  placement  of 375,000
shares  of  Company  common  stock for gross proceeds of $750,000.  Net proceeds
raised to date total $642,500 have been used for general working capital.

Inflation

     The  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.

International Currency Fluctuation

     Since the majority of goods that CCC  purchases  are from Asia, it has been
subject, like its competitors,  to international  currency fluctuation since the
company's inception. The management of CCC does not believe that the fluctuation
in currency presents a serious threat to company's operations.

Risks Relating to Year 2000:  USCG

     There  is  worldwide  concern  that  Year  2000  technology   problems  may
materially  and adversely  impact a variety of businesses,  local,  national and
global economies.  USCG, in response to this effort,  has commenced a process of
identifying  operating and application software systems that will be impacted by
the Year 2000.  The Company's  preliminary  analysis  indicates that the Company
will require  enhancements of software in older systems, as well as updating and
enhancing various  accounting and other systems.  The most significant year 2000
upgrade will be USCG's accounting  software  package,  which must be upgraded to
become compliant.  USCG plans to have the upgraded  accounting  package in place
and  operational  by the first  quarter of 1999. If USCG's  accounting  software
package is not on line by November 1999, accounting functions can be temporarily
duplicated  in an off the shelf  accounting  package  or  managed  manually.  In
addition,  USCG's  network  operating system  must be upgraded.  Some of USCG's
server  hardware  may also  have to be  upgraded  to  become  compliant.
Finally,  some internet software packages may have to be upgraded. However, USCG
will not incur charges for these internet software package upgrades.

     USCG's  risk of not being  ready by the year 2000 is very low.  The company
has generated a time line to ensure that all systems are year 2000 compliant. In
the case  where  certain  issues  arise  which  were not  uncovered  during  the
assessment  phase, the appropriate  personnel will be allocated to remediate the
issue. Accordingly,  USCG plans to devote the necessary resources to resolve all
year 2000  issues in a time  conscious  manner.  USCG  plans to have  changes to
critical  systems  completed by the first quarter of 1999.  Based on information
currently available from USCG's internal assessment of modifications that can be
made and  conversions  which are not  available,  the Company  believes that the
likelihood of a materially adverse impact to the Company as a result of internal
year 2000 problems is remote. While USCG believes that it will complete upgrades
of its operating and application  software  systems  prior  to  the  year  2000,
competition  for  goods  and  services  relating  to  such  upgrades,  including
computer   equipment   and   installation   expertise,   may   cause  delays  in
implementation.


                                       21

<PAGE>



     The estimated  cost to remediate the year 2000 issues is  anticipated to be
less than  $200,000, which  will be funded  out of the  working  capital  of the
Company.  This  expense  is not  anticipated  to be  material  to the  Company's
financial  position or future  results of  operations,  although there can be no
assurance that presently unforeseen difficulties will arise.


Risk Relating to Year 2000: Customers and Vendors

     USCG has not conducted a systematic  evaluation of the Year 2000 compliance
of its  customers  and vendors.  As a result,  it is possible that USCG's future
performance may be adversely impacted by financial  difficulties  experienced by
customers and by shipping,  fulfillment and accounting difficulties  experienced
by vendors.  USCG  believes that it has  sufficient  resources,  including  cash
reserves  and  inventory  supplies,  to  maintain  operations  during  delays in
customer  payments  or the  supply of  inventories.  The  company  is aware that
extended  difficulties  by larger  vendors or customers  may have a  significant
impact;  however,  it is unable,  at this time, to anticipate  the extent of any
such impact, should it occur.

     Because USCG has a large base of customers with equipment and software that
may be upgrading their systems in  anticipation of the year 2000 change,  USCG's
maintenance  operations  could  be  adversely  affected.  However,  the  Company
believes  that any upgrades by USCG's  clients  could  positively  impact USCG's
resale and computer solutions operations.

Risks Relating to Year 2000:  CCC

     CCC  believes  that it has  addressed the year 2000 issue and will not face
significant  operational  problems. In 1997,  they  hired a  Director  of MIS to
address  these  issues.  Specifically,  CCC has  upgraded  most of its  computer
hardware.  During  November 1998,  CCC management will begin  implementing a new
accounting software package which is fully year-2000 compliant and believes that
it will be fully compliant well before the beginning of the year 2000.




















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<PAGE>



PART II - OTHER INFORMATION

Item 1.         Legal Proceedings.

                None.

Item 2.         Changes in Securities

                None.

Item 3.         Defaults Upon Senior Securities.

                None.

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

                None.

Item 5.         Other Information.

                None.

Item 6.         Exhibits and Reports on Form 8-K.

                (a)            Exhibits.

                               None.

                (b)            Reports on Form 8-K

























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<PAGE>



                                    Signature

     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: November 14,1998                            /s/ Donna L. Gilbert
                                                  -----------------------------
                                                  Donna L. Gilbert
                                                  Chief Accounting Officer






































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