UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10−Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2012

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________to _____________

Commission File Number: 000-53432

TEC TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware	13-4013027
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

Xinqiao Industrial Park
Jingde County
Anhui Province 242600
People’s Republic of China
(Address of principal executive offices, Zip Code)

(+86) 755 8323-2722
(Registrant’s telephone number, including area code)

_____________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

The number of shares outstanding of each of the issuer’s classes of common stock, as of May 17, 2012 is as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	30,181,552

TEC TECHNOLOGY, INC.

Quarterly Report on Form 10-Q

Period Ended March 31, 2012

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9

PART II
OTHER INFORMATION

Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Mine Safety Disclosures	11
Item 5.	Other Information	11
Item 6.	Exhibits	11

PART I
FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

TEC TECHNOLOGY, INC.
CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2012 AND 2011

Contents		Page(s)
Consolidated Balance Sheets		F-1
Consolidated Statements of Income and Comprehensive Income		F-2
Consolidated Statements of Cash Flows		F-3
Notes to Consolidated Financial Statements		F-4-F-24

TEC TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS

		March 31, 2012		December 31, 2011
		(Unaudited)		(Audited)

ASSETS
Current assets
Cash and cash equivalents	$	2,102,641	$	2,599,456
Restricted cash		2,912,802		217,884
Accounts receivable, net of allowance for doubtful accounts		22,666,765		22,073,636
Inventory		6,632,636		4,103,140
Deposits and prepaid expenses		6,845,062		3,424,272
Other receivables		4,077,168		5,383,315
Taxes recoverable		462,421		39,020
Total current assets		45,699,495		37,840,723
Property and equipment
Property and equipment, net of accumulated depreciation		4,106,506		3,830,076
Land use rights, net of accumulated amortization		8,118,052		8,092,235
Construction in progress		4,486,267		3,442,799
		16,710,825		15,365,110
Total assets	$	62,410,320	$	53,205,833

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable	$	9,007,334	$	6,572,945
Other payables and accrued expenses		6,158,672		4,632,845
Due to related parties		6,479,303		4,103,965
Taxes payables		45,566		475,061
Customer deposits		369,538		763,520
Notes payable		5,612,550		-
Short term borrowings		18,450,270		20,335,024
		46,123,233		36,883,360
Commitments and contingencies		-		-
Stockholders’ equity
Preferred stock: 10,000,000 authorized, none issued and outstanding $0.001 par value
Common stock: 300,000,000 authorized $0.001 par value 30,181,552 shares issued and outstanding March 31, 2012 and December 31, 2011, respectively		30,182		30,182
Additional paid in capital		1,105,454		1,105,454
Retained earnings		12,412,110		12,559,830
Accumulated other comprehensive income		1,332,251		1,228,817
Total TEC Technology, Inc. and subsidiaries stockholders’ equity		14,879,997		14,924,283
Non-controlling interests		1,407,090		1,398,190
Total stockholders’ equity		16,287,087		16,322,473
Total liabilities and stockholders’ equity	$	62,410,320	$	53,205,833

See accompanying notes of these consolidated financial statements

F-1

TEC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

		Three months			Three months
		ended			ended
		March 31, 2012			March 31, 2011
		(Unaudited)			(Unaudited)

Revenues	$	4,371,043		$	3,425,125
Cost of goods sold		3,520,528			2,415,828
Gross profit		850,515			1,009,297
Selling and marketing expenses		(235,990	)		(207,807	)
General and administrative expenses		(379,409	)		(225,657	)
Net income from operations		235,116			575,833
Other income (expenses)
Government grant		3,639			-
Other income		754			-
Interest expense		(378,172	)		(245,913	)
Net other income (expenses)		(373,779	)		(245,913	)
Net (loss) income before provision for income taxes		(138,663	)		329,920
Provision for income taxes		(9,056	)		(49,488	)
Net (loss) income		(147,719	)		280,432
Less: loss (income) attributable to the non-controlling interest		-			-
Net (loss) income attributable to the TEC Technology, Inc. and subsidiaries		(147,719	)		280,432
Other comprehensive income (loss)
Foreign currency translation gain/ (loss)		112,334			82,086
Comprehensive (loss) income		(35,385	)		362,518
Less: other comrehensive (income) attributable to the non-controlling interest		(8,900	)		-
Comprehensive (loss)/income attributable to the TEC Technology, Inc. and subsidiaries	$	(44,285	)	$	362,518
Weighted average numbers of common shares
Basic		30,181,552			30,181,552
Diluted		30,181,552			30,181,552
(Loss)/earnings per share
Basic	$	(0.01	)	$	0.01
Diluted	$	(0.01	)	$	0.01

See accompanying notes of these consolidated financial statements

F-2

TEC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three months			Three months
		ended			ended
		March 31, 2012			March 31, 2011
		(Unaudited)			(Unaudited)

Cash flows from operating activities
Net (loss) income for the period	$	(147,719	)	$	280,432
Adjustments to reconcile net ( loss) income to net cash (used in) provided by operating activites:
Depreciation		98,015			79,619
Amortization of land use rights		25,709			10,932
Stock based compensation		-			27,086
Changes in operating assets and liabilities
(Increase)/decrease in restricted cash		(2,694,918	)		997,479
(Increase) decrease in inventory		(2,529,496	)		(287,824	)
Increase in deposits and prepaid expenses		(3,420,790	)		(1,034,252	)
Increase in accounts receivable		(593,129	)		(336,175	)
Decrease (increase) in other receivables		1,306,147			(303,563	)
(Increase) decrease in taxes recoverable		(423,401	)		2,389
(Decrease) increase in taxes payable		(429,495	)		139,064
Increase (decrease) in accounts payable		2,434,389			(695,015	)
Decrease in customer deposits		(393,982	)		(60,370	)
Increase in other payables and accrued expenses		1,525,827			4,912,327
Net cash (used in) provided by operating activities		(5,242,843	)		3,732,129
Cash flows from investing activities
Purchases of property and equipment		(350,224	)		(91,561	)
Payment for construction in progress		(1,043,468	)		(133,132	)
Purchases of land use rights		-			(2,152,912	)
Net cash used in investing activities		(1,393,692	)		(2,377,605	)
Cash flows from financing activities
Proceeds from notes payable		5,612,550			-
Advances from related parties		2,375,338			-
Proceeds from short term borrowings		9,011,700			-
Repayment of short term borrowings		(11,032,868	)		(1,080,620	)
Net cash provided by (used in) financing activities		5,966,720			(1,080,620	)

Effects on exchange rate changes on cash		173,000			141,295
(Decrease) increase in cash and cash equivalents		(496,815	)		415,199
Cash and cash equivalents, beginning of period		2,599,456			2,526,710
Cash and cash equivalents, end of period	$	2,102,641		$	2,941,909
Supplementary disclosures of cash flow information:
Cash paid for interest	$	378,172		$	897,620
Cash paid for income taxes	$	152,547		$	2,196,414
Non cash transactions
Issuance of warrant	$	-		$	62,200
Acquisition of land use rights from deposits and prepaid expenses	$	-		$	3,628,868
Capital contributed by directors assuming debts of the Company	$	-		$	80,563

See accompanying notes of these consolidated financial statements

F-3

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	BUSINESS ORGANIZATION

	TEC Technology, Inc. (formerly known as Highland Ridge, Inc., Sea Green, Inc., Americom Networks Corp. and Americom Networks International, Inc.) was incorporated on July 22, 1988 in the State of Delaware, United States of America. (the “Company” or “TEC US”). On June 9, 2010, the Company changed its name from Highland Ridge, Inc. to TEC Technology, Inc.

	On May 4, 2010, the Company completed a reverse acquisition transaction pursuant to a share exchange agreement among the Company, TEC Technology Limited, a Hong Kong limited company (“TECT”) and TECT’s sole stockholder, Mr. Hua Peng Phillip Wong, whereby the Company acquired 100% of the issued and outstanding capital stock of TECT in exchange for 19,194,421 shares of the Company’s common stock, which constituted 63.6% of the Company’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of reverse acquisition. As a result of the acquisition of TECT, the Company now owns all of the issued and outstanding capital stock of TECT, which in turn owns Anhui TEC Tower Co., Ltd. (“ATEC”); and Shuncheng Taida Technology Co., Ltd. (“STT”). ATEC currently owns 90% of Zhejiang TEC Tower Co., Ltd. (“ZTEC”). For accounting purposes, the share exchange transaction with TECT was treated as a reverse acquisition and recapitalization of TECT, with TECT as the acquirer and TEC US as the acquired party. Upon completion of the exchange, TECT became a wholly owned subsidiary of TEC US. On the same date, Mr. Chun Lu, Chairman of the Board and Chief Executive Officer of TEC US, entered into an option agreement with TECT and Mr. Hua Peng Phillip Wong, the Company’s controlling stockholder, pursuant to which Mr. Lu was granted an option to acquire 17,797,372 shares of the Company’s common stock currently owned by Mr. Wong for an aggregate exercise price of $1,000,000. Mr. Lu may exercise this option, in whole but not in part, during the period commencing on the 365th day following of the date of the option agreement and ending on the second anniversary of the date thereof.

	TECT was organized as a private corporation, under the Companies Laws of the Hong Kong on November 11, 2009. It was principally established to serve as an investment holding company and its operations are carried out in Hong Kong. On February 22, 2010, TECT entered into an equity transfer agreement with Mr. Chun Lu, the sole shareholder of ATEC. The transfer was approved by the Department of Commerce of Anhui Province on March 2, 2010. This business combination was accounted for as entities under common control because the majority shareholders of TECT and ATEC were the same person.

	ATEC is a private corporation, incorporated under the laws of the People’s Republic of China (“PRC”) on July 3, 2007. ATEC’s principal activities are the development and manufacturing of mobile communication steel towers, microwave towers, angle steel towers, steel pipe towers and transmission cable towers.

	ZTEC was established on December 7, 2009 as a PRC limited company with ATEC owning 90% of equity interest and Ms. Yiping Zhu, an individual, owning the remaining 10% equity interest. ZTEC’s production facility is still under construction and it has not yet commenced operations. ZTEC’s main business will include the development and manufacturing of mobile communication steel towers, microwave towers, angle steel towers, steel pipe towers and transmission cable towers.

	STT was incorporated in the PRC on January 20, 2010. STT has not commenced operations and its main business will include engineering consultancy and design of mobile communication steel towers, microwave towers, angle steel towers, steel pipe towers and transmission cable towers. As a result of the reverse acquisition of TECT, the Company entered into new businesses. STT deregistered on November 30, 2011. The Company is primarily engaged, through its indirect Chinese subsidiaries, in the design, production and sale of transmission towers and related products used in high voltage electric power transmission and wireless communications.

	On December 5, 2011, the Company passed a resolution concerning a change of the Company’s domicile from Delaware to Nevada (the “Reincorporation”), to be accomplished by (i) incorporating a new wholly-owned subsidiary of the Company in Nevada to be named TEC Technology, Inc. (“TEC Nevada”) and (ii) merging the Company with and into TEC Nevada, with TEC Nevada, with TEC Nevada continuing as the surviving entity, pursuant to the terms set forth in an agreement and plan of merger to be entered between the Company and TEC Nevada (Plan of Merger).

	The Company is located at Xinqiao Industrial Park, Jingde Country, Anhui Province, 242600, People’s Republic of China.

F-4

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	2.1	FISCAL YEAR

		The Company has adopted December 31 as its fiscal year end.

	2.2	REPORTING ENTITIES

		The accompanying consolidated financial statements include the following entities:

	Place of	Date of	Percentage
Name of subsidiary	incorporation	incorporation	of interest	Principal activity

TEC Technology Limited	Hong Kong	November 24, 2009	100% directly	Investment holding
Anhui TEC Tower Co., Limited	People’s Republic of China	April 19, 2007	100% directly	Development, manufacturing and selling of mobile communication steel towers, microwave towers, angle steel towers, steel pipe towers, transmission cable towers, telecommunication equipment, scrap and provision for technical consulting service
Zhejiang TEC Tower Co., Limited	People’s Republic of China	December 7, 2009	90% directly	The company has not commenced its business of development and manufacturing of mobile communication steel towers, microwave towers, angle steel towers, steel pipe towers and transmission cable towers

	2.3	BASIS OF CONSOLIDATION AND PRESENTATION

		The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). In the opinion of management, the accompanying balance sheets, and statements of income, and cash flows include all adjustments, consisting only of normal recurring items, considered necessary to give a fair presentation of operating results for the periods presented. All material inter-company transactions and balances have been eliminated in consolidation.

		Interim results are not necessarily indicative of results for a full year. The information included in this interim report should be read in conjunction with the information included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2011.

		On February 22, 2010, TECT entered into an equity transfer agreement with Mr. Chun Lu, the sole shareholder of ATEC. The transfer was approved by the Department of Commerce of Anhui Province on March 10, 2010. The business combination were accounted for as entities in is acquisition was accounted for as entities under common control because the majority shareholders of TECT and ATEC were the same people.

F-5

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.3	BASIS OF CONSOLIDATION AND PRESENTATION (CONTINUED)

		On May 4, 2010, the Company completed a reverse acquisition transaction pursuant to a share exchange agreement among the Company, TECT and TECT’s sole stockholder, Mr. Hua Peng Phillip Wong, whereby the Company acquired 100% of the issued and outstanding capital stock of TECT in exchange for 19,194,421 shares of the Company’s common stock, which constituted 63.6% of the Company’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of reverse acquisition. As a result of the acquisition of TECT, the Company now owns all of the issued and outstanding capital stock of TECT, which in turn owns ATEC and STT. ATEC owns 90% equity interest in ZTEC. For accounting purposes, the share exchange transaction with TECT was treated as a reverse acquisition and recapitalization of TECT, with TECT as the acquirer and TEC US as the acquired party.

		Upon completion of the share exchange, TECT became a wholly owned subsidiary of TEC US. On the same date, Mr. Chun Lu, Chairman of the Board and Chief Executive Officer of TEC US, entered into an option agreement with TECT and Mr. Hua Peng Phillip Wong, the Company’s controlling stockholder, pursuant to which Mr. Lu was granted an option to acquire 17,797,372 shares the Company’s common stock owned by Mr. Wong for an aggregate exercise price of $1,000,000. Mr. Lu may exercise this option, in whole but not in part, during the period commencing on the 365 ^thday following of the date of the option agreement and ending on the second anniversary of the date thereof.

		Prior to the acquisition of ATEC by TECT, neither TECT nor TEC US had active business operations. For reporting purposes, the Company has assumed that Mr. Lu has exercised his option immediately and thus TEC US, TECT and ATEC were effectively under common control of Mr. Lu when the Company acquired ATEC. The acquisition transactions between (i) TEC US and TECT and (ii) TECT and ATEC are therefore accounted for as reverse mergers.

		For accounting purposes, the combination of the company and TECT was accounted for as a reverse merger with ATEC as the accounting acquirer and TEC US and TECT as the accounting acquiree and the acquisition of ZTEC and STT was accounted for under the acquisition method with TECT as the immediate parent corporation of both companies for legal purposes and the Company as the ultimate parent corporation. Accordingly the Company’s financial statements have been prepared on a consolidated basis for the periods presented and the consolidated balance sheets, consolidated statements of income and other comprehensive income, stockholders’ equity and cash flows were presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquired party from the date of share exchange transaction.

		STT deregistered on November 30, 2011.

		TEC US, TECT, ATEC, and ZTEC are hereafter collectively referred to as the Company.

	2.4	USE OF ESTIMATES

		The preparation of consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

	2.5	ECONOMIC AND POLITICAL RISK

		The Company’s business operations are conducted in the PRC and are subject to special considerations and risks not typically associated with companies in North America and Western Europe. China’s political, economic and legal environments may influence the Company’s business, financial condition and results of operations, including adverse effects by changes in governmental policies in laws and regulations, anti-inflationary measures, and rates and methods of taxation.

F-6

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.6	REVENUE RECOGNITION

		The Company’s revenue recognition policies are in compliance with ASC 605. Sales revenue is recognized when all of the following have occurred: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price is fixed or determinable, and (iv) the ability to collect is reasonably assured. These criteria are generally satisfied at the time of shipment when risk of loss and title passes to the customer.

		Technical consulting service income is recognized when the relevant service is rendered.

		Government grants are is recognized upon (i) the Company having substantially accomplished what must be done pursuant to the terms of the policies and terms of the grant that are established by the local government ; and (ii) the Company receives notification from the local government that the Company has satisfied all of the requirements to receive the government grants; and (iii) the amounts are received.

		The Company recognizes revenue when the goods are delivered and title has passed. Sales revenue represents the invoiced value of goods, net of a value-added tax (VAT). All of the Company’s products that are sold in the PRC are subject to a Chinese value-added tax at a rate of 17% of the gross sales price or at a rate approved by the Chinese local government. This VAT liability may be offset by the VAT paid by the Company on raw materials and other materials included in the cost of producing their finished product.

	2.7	SHIPPING AND HANDLING

		Shipping and handling costs related to costs of goods sold are included in cost of sales and selling and marketing expenses which totaled $223,371 and $128,510 for the three months ended March 31, 2012 and 2011, respectively.

	2.8	ADVERTISING

		Advertising costs are expensed as incurred and totaled $2,088 and $4,530 for the three months March 31, 2012 and 2011, respectively.

	2.9	RESEARCH AND DEVELOPMENT COSTS

		Research and development costs include costs incurred to develop new products and are charged to operations when incurred. These costs totaled $0 as incurred for the three months ended March 31, 2012 and 2011, respectively. The costs for development of new products and substantial enhancements to existing products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized.

	2.10	CASH AND CASH EQUIVALENTS

		Cash and cash equivalents comprise cash in bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired.

F-7

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.11	FOREIGN CURRENCY TRANSLATION AND OTHER COMPREHENSIVE INCOME

		The reporting currency of the Company is United States Dollars ($). The functional currency of the Company is United States Dollars ($) and the functional currency of its subsidiaries ATEC, ZTEC, and TECT is Chinese Renminbi (RMB).

		For those entities whose functional currency is other than the U.S. dollars, all assets and liabilities are translated into U.S. dollars at the exchange rate on the balance sheet date; shareholders’ equity is translated at historical rates and items in the statements of income and of cash flows are translated at the average rate for the period. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported in the statement of cash flows will not necessarily agree with changes in the corresponding balances in the balance sheet. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

		Foreign currency translation gain included in accumulated other comprehensive income amounted to $1,332,351 as of March 31, 2012 and $1,228,817 as of December 31, 2011. The balance sheet amounts with the exception of equity at March 31, 2012 and December 31, 2011 were translated at RMB6.33 to $1.00 and RMB6.36 to $1.00, respectively. The average translation rates applied to the statements of income and of cash flows for the three months years ended March 31, 2012 and 2011 were RMB6.32 to $1.00 and RMB6.59 to $1.00, respectively.

	2.12	BUSINESS COMBINATION

		The Company adopted the accounting pronouncements relating to business combinations (primarily contained in ASC Topic 805 “Business Combinations”), including assets acquired and liabilities assumed arising from contingencies. These pronouncements established principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquire as well as provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. In addition, these pronouncements eliminate the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria and require an acquirer to develop a systematic and rational basis for subsequently measuring and accounting for acquired contingencies depending on their nature. Our adoption of these pronouncements will have an impact on the manner in which we account for any future acquisitions.

	2.13	NON-CONTROLLING INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS

		The Company adopted the accounting pronouncement on non-controlling interests in consolidated financial statements, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance is primarily contained in ASC Topic “Consolidation”. The adoption of this standard has not had material impact on our consolidated financial statements.

F-8

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.14	PROPERTY AND EQUIPMENT

		Property and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. .

		Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets.

	Assets Classifications	Estimated useful life

	Buildings	50 years
	Plant and machinery	5 years
	Furniture, fixtures and office equipment	5 years
	Motor vehicles	5 years

		An item of property and equipment is removed from the accounts upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the sale or disposal of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated statement of income in the period the item is sold or otherwise disposed. Maintenance and repairs of property and equipment are charged to operations when incurred. Expenditures for maintenance and repairs are charged to expense as incurred, whereas major betterments are capitalized as additions to property and equipment. The Company reviews its property and equipment whenever events or changes in circumstances indicate that the carrying value of certain assets might not be recoverable. In these instances, the Company recognizes an impairment loss when it is probable that the estimated cash flows are less than the carrying value of the asset. To date, no such impairment losses have been recorded.

	2.15	LAND USE RIGHTS

		Land use rights represent acquisition of land use rights of industrial land from local government and are amortized on the straight line over their respective lease periods. The lease period of agriculture land is 50 years.

	2.16	CONSTRUCTION IN PROGRESS

		Construction in progress represents direct costs of construction as well as acquisition and design fees incurred. Capitalization of these costs ceases and the construction in progress is transferred to property, and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until construction is completed and the asset is ready for its intended use.

	2.17	IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLE ASSETS

		In accordance with ASC Topic 360,”Property, Plant and Equipment”, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company reviews the carrying amount of its long-lived assets, including intangibles, for impairment, each reporting period. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is considered not recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flow. As of March 31, 2012 and December 31, 2011, the Company determined no impairment charges were necessary.

F-9

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.18	CAPITALIZED INTERNAL-USE SOFTWARE

		The Company capitalizes certain costs incurred to purchase or create internal-use software in accordance with ASC Topic 350-40, “Internal Use Software”. To date, such costs have included external direct costs of materials and services incurred in the implementation of internal-use software and are included within computer hardware and software. Once the capitalization criteria have been met, such costs are classified as software and are amortized on a straight-line basis over five years once the software has been put into use. Subsequent additions, modifications, or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred.

	2.19	INVENTORY

		Inventory consists primarily of raw materials, work in progress, and finished goods. Raw materials are stated at cost. Costs comprise direct materials and, where applicable direct labor costs and applicable overhead costs that have been incurred in bringing the inventory to its present location and condition. Finished goods are stated at the lower of cost (determined on first in first out method) and net realizable value.

		Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

		The Company provides for inventory losses based on obsolescence and levels in excess of forecasted demand In these cases, inventory is reduced to estimated realizable value based on historical usage and expected demand. Inherent in the Company’s estimates of market value in determining inventory valuation are estimates related to economic trends, future demand for the Company’s products, and technical obsolescence of products.

	2.20	ACCOUNTS RECEIVABLE

		The Company maintains reserves for potential credit losses on accounts receivable. Management reviews he composition of accounts receivable and analyzes historical bad debts, customers concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are primarily on a specific identification basis.

		The standard credit period of the Company’s most of clients is three months. Management evaluates the collectability of the receivables at least quarterly. The estimated average collection period was 90 days as of March 31, 2012 and December 31, 2011.

	2.21	INCOME TAXES

		The Company accounts for income taxes under the provisions of Topic ASC 740 “Accounting for Income Taxes”. Under ASC 740, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using the tax bases of assets and liabilities using the enacted taxes rates in effect in the years in which the differences are expected to reverse.

		Provision for income taxes consist of taxes currently due plus deferred taxes. Since the Company had no operations within the United States there is no provision for US income taxes and there are no deferred tax amounts as of March 31, 2012 and December 31, 2011.

		Deferred income taxes are calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

F-10

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.21	INCOME TAXES (CONTINUED)

		The provision for income tax is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.

		Deferred income taxes are calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

		Topic ASC 740 also prescribes a more-likely-than-not threshold for financial statements recognition and measurement of a tax position taken, or expected to be taken, in a tax return. Topic ASC 740 also provide guidance related to, among other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest and penalties accrued related to unrecognized tax benefits will be recorded in tax expense.

	2.22	RELATED PARTIES

		Parties are considered to be related to the company if the company has the ability, directly or indirectly, to control the party, or exercise significant influence over the party in making financial and operating decisions, or where the company and the party are subject to common control. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities which are under the significant influence of related parties of the company.

	2.23	PRODUCT WARRANTIES

		Substantially all of the Company’s products are covered by a standard warranty of 1 to 2 years for products. In the event of a failure of products covered by this warranty, the Company must repair or replace the software or products or, if those remedies are insufficient, and at the discretion of the Company, provide a refund. The Company provides 0% of sales income for product warranties for the three months ended March 31, 2012 and 2011. The product warranty reserve was $0 as of March 31, 2012 and December 31, 2011.

	2.24	WEIGHTED AVERAGE NUMBER OF SHARES

		On May 4, 2010, the Company entered into a Share Exchange Agreement which has been accounted for as a reverse merger since there has been a change of control. The Company computes the weighted-average number of common shares outstanding in accordance with ASC Topic 805 “Business Combination” which states that in calculating the weighted average shares when a reverse merger takes place in the middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted average number of common shares of the legal acquiree (the accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement. The number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period.

F-11

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.25	ECONOMIC, POLITICAL AND BUSINESS RISK

		The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

	2.26	CONCENTRATIONS OF CREDIT RISK

		Cash includes demand deposits in accounts maintained at banks within the People’s Republic of China. Total cash in these banks as of March 31, 2012 and December 31, 2011 amounted to $2,058,459 and $2,575,714, of which no deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

		Accounts receivable are derived from revenue earned from customers located primarily in the People’s Republic of China. We perform ongoing credit evaluations of customers and have not experienced any material losses to date.

		The Company had 5 major customers whose revenue individually represented the following percentages of the Company’s total revenue:

	Three months ended	Three months ended
	March 31, 2012	March 31, 2011

Customer A	28.57%	15.74%
Customer B	23.55%	-
Customer C	17.74%	-
Customer D	13.30%	-
Customer E	9.50%	-
Customer F	-	62.30%
Customer G	-	20.00%
Customer H	-	0.91%
Customer I	-	0.80%
	92.66%	99.75%

F-12

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.26	CONCENTRATIONS OF CREDIT RISK (CONTINUED)

		The company had 5 major customers whose accounts receivable balance individually represented of the Company’s total accounts receivable as follows:

	March 31, 2012	December 31, 2011

Customer A	24.26%	20.21%
Customer B	18.91%	25.73%
Customer C	17.37%	19.19%
Customer D	7.43%	-
Customer E	6.66%	-
Customer F	-	11.24%
Customer G	-	5.64%
	74.63%	82.01%

	2.27	(LOSS) EARNINGS PER SHARE

		As prescribed in ASC Topic 260 “Earning per Share”, Basic Earnings per Share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants. The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company’s common stock at the average market price during the period.

		For the three months ended March 31, 2012 and 2011, basic and diluted (loss) earnings per share amount to $(0.01) and $0.01, respectively.

F-13

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.28	FAIR VALUE OF FINANCIAL INSTRUMENTS

		The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

		Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

		Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting.

		Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data.

		The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments.

		The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value as of March 31, 2012 or December 31, 2011, nor gains or losses are reported in the statement of income and other comprehensive income that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the fiscal periods ended March 31, 2012 or March 31, 2011.

	2.29	STOCK-BASED COMPENSATION

		The Company adopted ASC Topic 718, “Compensation – Stock Compensation” and ASC Topic 505-50 “Equity – Based Payments to Non-Employees” using the fair value method. Under ASC Topic 718 and ASC Topic 505-50, stock compensation expenses is measured at the grant date on the value of the option or restricted stock and is recognized as expenses, less expected forfeitures, over the requisite service period, which is generally the vesting period.

		On June 15, 2010, HGHN issued, a warrant to purchase 80,000 shares at a price of $2.00 per share. The warrant vests in four equal installments on June 30^th, September 30^th, December 31^st2010 and March 31^stof 2011. In the event that the agreement is terminated prior to the vesting date, such portion of the warrant shall not vest and the holder of the warrant shall not be entitled to exercise such unvested portion of the warrant. The warrant expires on June 15, 2015.

	2.30	RETIREMENT BENEFIT COSTS

		PRC state managed retirement benefit programs are defined contribution programs and the payments to these programs are charged as expenses when employees have rendered service entitling them to the contribution.

F-14

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

	2.31	ACCUMULATED OTHER COMPREHENSIVE INCOME

		ASC Topic 220 “Comprehensive Income” establishes standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income is defined as the change in stockholders’ equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The comprehensive income for all periods presented includes both the reported net income and net change in cumulative translation adjustments.

3.	RECENT ACCOUNTING PRONOUNCEMENTS

	In December 2011, the FASB issued ASU No. 2011-11, Topic 210 - Balance Sheet: Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU 2011-11 will be effective for fiscal years beginning on or after January 1, 2013, with retrospective application for all comparable periods presented. The Company does not expect the adoption of this guidance to have a material effect on the Company’s consolidated financial statements.

4.	INCOME TAXES

	No provision for income taxes in the United States has been made as the Company has no income taxable in the United States.

	No Hong Kong corporate income tax has been provided in the financial statements, as TECT did not have any assessable profits for the three months ended March 31, 2012 and 2011.

	Beginning January 1, 2008, the new Enterprise Income Tax (“EIT”) law replaced the existing laws for Domestic Enterprises (“DEs”) and Foreign Invested Enterprises (“FIEs”). The new standard EIT rate of 25% replaced the 33% rate currently applicable to both DEs and FIEs. Beginning January 1, 2008, China unified the corporate income tax rule on foreign invested enterprises and domestic enterprises. The unified corporate income tax rate is 25%.

	Provision for income tax of the company’s subsidiary ATEC is made at the unified EIT rate of 25% for the three months ended March 31, 2012 and 2011 but ATEC is entitled to a refund of 10% according to local preferential tax policy for manufacturing of high technology products for the three years from January 1, 2010 to December 31, 2013. Therefore, the provision for income tax ofthe company’s subsidiary ATEC is made at the local preferential EIT rate of 15% for the three months ended March 31, 2012 and 2011.

	The company’s subsidiaries ZTEC does not earn taxable income and STT have not commenced their business; therefore no provision for income taxes has been made for the three months ended March 31, 2012 and 2011.

F-15

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.	INCOME TAXES (CONTINUED)

	The following table reconciles the U.S statutory rates to the company’s effective tax rate for the March 31, 2012: Provision for income taxes is as follows:

			Three months ended
			March 31, 2012
			$
	U.S. Statutory rates		34%
	Foreign income not recognized in USA		(34)%
	Hong Kong profits tax		16.50%
	Offshore income not recognized in Hong Kong		(16.5)%
	China Enterprise income taxe rate for high technology		15%
			15%

Provision for income taxes is as follows:

		Three months ended		Three months ended
		March 21, 2012		March 21, 2011

Income tax
TECT US - US corporate tax	$	-	$	-
TECT - Hong Kong profits tax		-		-
ATEC - China EIT		9,056		49,488
ZTEC - China EIT		-		-
Deferred tax		-		-
	$	9,056	$	49,488

5.	CASH AND CASH EQUIVALENTS

		March 31,2012		December 31, 2011
		-		-
Cash and bank balances	$	2,102,641	$	2,599,456

6.	RESTRICTED CASH

	The Company’s restricted cash consists of bank time deposits in the bank as security deposits for the completion of certain projects of the company. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. Restricted cash amounted to $2,912,802 and $217,884 as of March 31, 2012 and December 31, 2011, respectively.

F-16

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.	ACCOUNTS RECEIVABLE

	The Company has performed an analysis on all of its accounts receivable and determined that all amounts are probable of collection within one year. As such, all trade receivables are reflected as a current asset and no additional allowance for doubtful debt has been recorded for the three months ended March 31, 2012. Bad debts written off for the three months ended March 31, 2012 and March 31, 2011 are $0.

	Aging of accounts receivable is as follows:

		March 31, 2012		December 31, 2011

within 3 months	$	20,490,669	$	19,042,331
over 3 months and within 6 months		2,176,096		2,495,223
over 6 months and within 1 year		-		536,082
over 1 year		-		-
	$	22,666,765	$	22,073,636

	During the three months March 31, 2012 and March 31, 2011, the Company entered into factoring agreements with three banks to factor some of the accounts receivable of the Company. These receivables are factored to the bank “with recourse”, which means that the company has pledged these factored receivable as collateral for the banks to advance funds to the Companyunder a line of credit arrangement. As of March 31, 2012 and December 31, 2011, accounts receivable includes the amounts of $1,248,139 (12.31.2011: $6,603,143) that was factored to China Construction Bank, PRC (12.31.2011: Industrial and Commercial Bank, PRC) for collection.

8.	INVENTORY

		March 31, 2012		December 31, 2011

Raw materials	$	3,907,057	$	2,000,478
Work in progress		2,725,579		2,007,258
Finished goods		-		95,404
	$	6,632,636	$	4,103,140

F-17

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.	DEPOSITS AND PREPAID EXPENSES

		March 31, 2012		December 31, 2011

Guarantee and utility deposits	$	1,454,299	$	1,252,489
Advance to builders		2,646,362		-
Prepaid expenses		1,319,951		873,539
Advances to suppliers and services providers		875,750		1,245,406
Prepayment for purchase of property and equipment		21,979		27,964
Advances to logistic service providers		343,253		24,874
Others		183,468		-
	$	6,845,062	$	3,424,272

	Guarantee deposits are provided to financial institutions in return for issuance of a corporate guarantee to financiers. Advances to suppliers are down payments or deposits for inventory purchases. The inventory and services are normally delivered and rendered within one to two months after the payments have been made.

10.	OTHER RECEIVABLES

		March 31, 2012		December 31, 2011

Due from employees	$	2,921,757	$	1,803,342
Due from third parties		1,155,411		3,572,672
Others		-		7,301
	$	4,077,168	$	5,383,315

	Due from employees are the amounts advanced for business transactions on behalf of the company and will be reconciled on the completion of business transactions. Due from third parties are unsecured advances, interest free and have no fixed terms of repayment and are for specific business purposes.

11.	TAXES RECOVERABLE

		March 31, 2012		December 31, 2011

VAT recoverable	$	462,419	$	39,020
Individual income tax recoverable		2		-
	$	462,421	$	39,020

F-18

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.

PROPERTY AND EQUIPMENT

		March 31, 2012			December 31, 2011

Buildings	$	2,701,829		$	2,684,739
Plant and machinery		1,874,239			1,518,712
Furniture, fixtures and office equipment		420,897			434,036
Motor vehicles		158,679			137,757
		5,155,644			4,775,244
Less: Accumulated depreciation		(1,049,138	)		(945,168	)
Net book value	$	4,106,506		$	3,830,076

	Depreciation expense was $98,015 and $79,619 for the three months ended March 31, 2012 and 2011, respectively.

13.	LAND USE RIGHTS

	Private ownership of land is not permitted in the PRC. The Company has leased three lots of land at Xinqiao Industrial Park, Jingde Country, Anhui Province. The total cost of these land use rights of ATEC was $2,112,867 and the leases expire in 2056, 2058, and 2058 respectively. The Company has leased additional lots of land at Songxi Village, Xindeng Town, Fuyang City, Hangzhou City, Zhejiang Province. The total cost of these land use rights of ZTEC was $5,886,384 and the leases expire in 2061.

	Land use rights are amortized on the straight line basis over their respective lease periods. The lease period of land use rights located in an industrial park zone is 50 years.

		March 31, 2012			December 31, 2011

Cost	$	8,300,600		$	8,248,098
Less: Accumulated amortization		(182,548	)		(155,863	)
Net book value	$	8,118,052		$	8,092,235

	Amortization expense was $25,709 and $10,932 for the three months ended March 31, 2012 and 2011, respectively.

14.	CONSTRUCTION IN PROGRESS

		March 31, 2012		December 31, 2011

Construction of office building	$	732,299	$	678,511
Construction of workshops		3,753,968		2,764,288
	$	4,486,267	$	3,442,799

F-19

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.

OTHER PAYABLES AND ACCRUED EXPENSES

		March 31, 2012		December 31, 2011

Due to third parties	$	5,625,588	$	3,394,045
Due to employees		4,044		3,928
Due to sundry service providers		4,142		404,001
Guarantee deposits		145,452		309,487
Accrued expenses		379,446		499,261
Others		-		22,123
	$	6,158,672	$	4,632,845

	Due to third parties and employees are unsecured, interest free and have no fixed term of repayment and are for unspecific business purpose.

16.	NOTES PAYABLE

	Note payables are secured by a coporate guarantee from Hangzhou TianYe Communication Equipment Co., Limited controlled by Mr. Chun Lu's family and repayable within 6 months.

17.	DUE TO RELATED PARTIES

	Due to related parties are unsecured, interest free and have no fixed term of repayment.

18.	TAXES PAYABLE

		March 31, 2012		December 31, 2011

Enterprise income tax payable	$	9,050	$	152,541
VAT payable		-		321,267
Individual income tax payable		691		1,253
Land use tax payable		35,825		-
	$	45,566	$	475,061

F-20

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19.	SHORT TERM BORROWINGS

	There are no provisions in the Company’s bank borrowings that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business. Under certain agreements, the Company has the option to retire debt prior to maturity, either at par or at a premium over par.

	Interest rate	Maturity date		March 31, 2012			December 31, 2011

Industrial and Commercial Bank, Longshou Branch, PRC	6.06% - 6.71%	From February 10, 2012
		to March 23,2012	$	-		$	2,670,700
China Merchant Bank, Heifei branch, PRC	7.32%	February 10, 2012		-			2,356,500
Huishang Bank, Xuancheng branch, PRC	6.835% - 7.107%	From April 11, 2012			*
		to March 12, 2013		7,905,000	+^		7,855,000
China Constuction Bank, Jingde Country branch, PRC	5.85% - 6.10%	From May 21, 2012			*
		to August 1, 2012		3,162,000	^		2,739,824
Shanghai Pudong Development Bank Limited, PRC	8.10%	January 16, 2013		2,640,270	#		-
The Export Import Bank of China, Anhui Province, PRC	4.76%	December 16, 2012		4,743,000	+		4,713,000
			$	18,450,270		$	20,335,024

	* secured by land use rights + secured by third party’s guarantee # secured by letter of credit ^ secured by accounts receivable and restricted cash

20.	CUSTOMER DEPOSITS

	Customer deposits represent amounts advanced by customers for orders of product. The products normally are shipped within three months after receipt of the advance payment and the related sale is recognized in accordance with the Company’s revenue recognition policy. As of March 31, 2012 and December 31, 2011, customer deposits amounted to $369,538 and $763,520, respectively.

21.	COMMON STOCK

	The Company has authorized Preferred stock of 10,000,000 shares with a par value of $0.001. As of March 31, 2012 and December 31, 2011, the company has not issued any preferred shares.

	The Company has authorized common stock of 300,000,000 shares with a par value of $0.001.

	On May 4, 2010, the Company issued 19,194,421 shares of common stock to the shareholders of TECT. The total consideration for the 19,194,421 shares was 10,000 shares of TECT, which is all the issued and outstanding capital stock of TEC.

	As a result of the reverse merger, the equity account of the Company, prior to the share exchange date, has been retroactively restated so that the ending outstanding share balance as of the share exchange date is equal to the number of post share-exchange shares.

	As of March 31, 2012, and December 31, 2011, the Company has outstanding 30,181,552 issued common shares with a par value of $0.001 per share respectively.

F-21

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22.	COMMITMENTS AND CONTINGENCIES

	The future minimum lease payments as of March 31, 2012 were as follow:

		March 31, 2012

Year ended December 31, 2012	$	86,955
Year ended December 31, 2013		95,651
	$	182,606

From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. As of March 31, 2012 and December 31, 2011, the Company did not have any pending claims, charges, or litigation that it expects would have a material adverse effect on its consolidated balance sheets, consolidated statements of income or cash flows.

The Company has entered into two separate agreements that would require the Company to pay liquidated damages if the Company failed to perform under the agreements. The amount of the potential damages are listed below:

		March 31, 2012		December 31, 2011

Liquidated damages for
- investment relation service with CCG	$	90,000	$	90,000

23.	STOCK OPTIONS & WARRANTS

	The Company accounts for its stock options and warrants in accordance with ASC Topic 718, “Compensation – Stock Compensation” and ASC Topic 505-50 “Equity – Based Payments to Non-Employees” which were adopted by the Company on June 15, 2010. The company issued a warrant to a third party for the purchase of 80,000 shares of the Company’s common stock at an exercise price of $2.00 per share. The warrant vests in four equal installations on June 30, September 30, December 31 of 2010 and March 31, 2011. The warrant expires on June 15, 2015.

	The Company determines the estimated fair value of share-based awards using the Black-Scholes option-pricing model. The Black-Scholes model is affected by the Company’s stock price as well as by assumptions regarding certain complex and subjective variables. These variables include, but are not limited to; the Company’s expected stock price volatility over the term of the awards and the actual and projected option exercise behaviors.

F-22

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

23.	STOCK OPTIONS & WARRANTS (CONTINUED)

	The initial value of the warrants was determined using the Black-Scholes model using the following assumptions:

	Expected volatility of 125%

	Risk-free interest rate of 3%

	Year to maturity of 5 years

	Market price at issuance date of $3.50 per share

	Strike price of $2.00

	The value of the warrants was based on the Company’s common stock price of $3.50 on the date the warrants were issued. The warrants were valued at $248,800 when they vested in four equal installations on June 30, September 30, December 31 of 2010 and March 31, 2011.

	Number of shares entitled to purchase		Exercise Price	Expiration date

Issued on June 15, 2010	80,000	$	2.00	June 15, 2015

Balance as of March 31, 2012	80,000	$	2.00

Warrants exercised	-		2.00
Warrants expired	-		2.00

Total outstanding as of March 31, 2012	80,000	$	2.00	June 15, 2015

	Utilizing the Black Scholes option-pricing model, the share based compensation expense for the three months ended March 31, 2012 and 2011; the amounts were $0 and $27,086, respectively.

24.	OBLIGATION UNDER MATERIAL CONTRACTS

	CCG was issued a warrant to purchase up to 80,000 shares of the Company’s stock, at a price of $2.00 per share, pursuant to the terms and conditions of a letter agreement, dated June 20, 2010, between the Company and CCG. CCG’s right to exercise its warrant will vest in four equal portions, with the first portion vesting on June 20, 2010, and the remaining portions vesting on September 30, 2010, December 31, 2010 and March 31, 2011, respectively. The warrant shall have a term of 5 years and expires on June 15, 2015 and contains $90,000 liquidated damages provision for breach of such exclusivity. As of March 31, 2012 and December 31, 2011, CCG had not exercised the warrant.

25.	PRODUCT LINE INFORMATION

	.

	The Company sells towers, which are used by customers in various industries. The production process, class of customer, selling practice and distribution process are the same for all towers. The Company’s chief operating decision-makers (i.e. chief executive officer and other members of management) review financial information presented on a consolidated basis, accompanied by disaggregated information about revenues by product lines for purposes of allocating resources and evaluating financial performance. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. The Company considers itself to be operating within one reportable segment. The Company does not have long-lived assets located in foreign countries. The Company’s net revenue from external customers by main product lines is as follows:

F-23

TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

25.

PRODUCT LINE INFORMATION (CONTINUED)

		Three months ended		Three months ended
		March 31, 2012		March 31, 2011

Domestic sales
Communication towers	$	94,203	$	2,133,866
Electricity supply towers		2,585,114		570,347
		2,679,317		2,704,213
Export sales
Communication towers		413,283		712,478
Electricity supply towers		1,278,443		-
		1,691,726		712,478
Technical service income		-		8,434
	$	4,371,043	$	3,425,125

26.	RELATED PARTIES TRANSACTIONS

	In addition to the transactions and balances as disclosed elsewhere in these consolidated financial statements, the Company had no other significant related party transactions.

	Name of related parties	Nature of transactions

	Mr. Chun Lu, Chairman and his affiliates	Included in other payable, due to Chairman and its affiliates are $6,479,303 and $4,103,965 as of March 31, 2012 and December 31, 2011, respectively. The amounts are unsecured, interest free and have no fixed term of repayment.

	Hangzhou TianYe Communication Equipment Co., Limited controlled by Mr. Chun Lu’s family	During the three months ended March 31, 2012, the Company purchases steel hardware from Hangzhou TianYe Communication Equipment Co., Limited for $482,205.

		As of March 31, 2012, Hangzhou TianYe Communication Equipment Co., Limited provided corporate guarantee for note payable of $5,612,550 .

		Included in accounts receivable, due from related party is $61,955 and $0 as of March 31, 2012 and December 31, 2011, respectively. The amounts are unsecured, interest free and has no fixed term of repayment.

F-24

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2011, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Terms

Except where the context otherwise requires and for the purposes of this report only:

the “Company,” “we,” “us” and “our” refer to the combined business of TEC Technology, Inc., a Delaware corporation, and its consolidated subsidiaries TEC HK, TEC Tower and ZTEC;
“TEC HK” refers to TEC Technology Limited, a Hong Kong limited company;
“TEC Tower” refers to Anhui TEC Tower Co., Ltd., a PRC limited company;
“ZTEC” refers to Zhejiang TEC Tower Co., Ltd., a PRC limited company;
“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;
“PRC” and “China” refer to the People’s Republic of China;
“SEC” refers to the Securities and Exchange Commission;
“Exchange Act” refers the Securities Exchange Act of 1934, as amended;
“Securities Act” refers to the Securities Act of 1933, as amended;
“Renminbi” and “RMB” refer to the legal currency of China; and
“U.S. dollars,” “dollars” and “$” refer to the legal currency of the United States.

Overview of our Business

We are primarily engaged in the design, production and sale of transmission towers and related products used in high voltage electric power transmission and wireless communications. We sell our tower products to prime contractors on large transmission projects for electric utility companies or telecommunications service providers, who are developing and constructing projects for end customers. Our electric transmission towers currently support 35kv, 110kv, 220kv, and 500kv transmission lines and we plan to build towers that support Ultra High Voltage (UHV) tower lines of 750+kv DC or 1000+kv AC transmission lines. Our wireless communication towers include single-tube towers, 4-strut towers and roof top towers for the 2G, 3G, and microwave market. We plan to expand our business in the near future to enter the communication base station system integration market and to offer tower installation and maintenance services. Our towers are primarily made of steel, but some contain aluminum or other alloy materials.

Our revenues currently are, and historically have been, generated from the sale of our tower products. In the future, we expect to offer installation and technical services that we believe will generate an additional revenue stream; however, to date, we have not generated material revenues from such services.

Our headquarters are located in Anhui Province in southeastern China and our international sales network is primarily operated from our branch offices in Shenzhen and Beijing.

First Quarter Financial Performance Highlights

The following summarizes certain key financial information for the first quarter of 2012:

Revenues: Revenues were $4.37 million for the three months ended March 31, 2012, an increase of $0.95 million, or 27.62%, from $3.42 million for the same period in 2011.
Gross profit and margin: Gross profit was $0.85 million for the three months ended March 31, 2012, a decrease of $0.16 million, or 15.73%, from $1.01 million for the same period in 2011. Gross margin was 19.46% for the three months ended March 31, 2012, as compared to 29.47% for the same period in 2011.
Net (loss) income: Net loss was $0.15 million for the three months ended March 31, 2012, a decrease of $0.43 million, or 150%, from net income of $0.28 million for the same period in 2011.
Fully diluted net (loss) income per share: Fully diluted net loss per share for the three months ended March 31, 2012 was $(0.01), as compared to $0.01 for the same period in 2011.

Results of Operations

The following table shows key components of our results of operations during the three months ended March 31, 2012 and 2011, in both dollars and as a percentage of our revenues.

		Three Months Ended					Three Months Ended
		March 31, 2012					March 31, 2011
				% of					% of
		Dollars		Revenues			Dollars		Revenues
Revenues	$	4,371,043		100.00%		$	3,425,125		100.00%
Cost of good sold		3,520,528		80.54%			2,415,828		70.53%
Gross profit		850,515		19.46%			1,009,297		29.47%
Selling and marketing expenses		(235,990	)	(5.40%	)		(207,807	)	(6.07)%
General and administrative expenses		(379,409	)	(8.68%	)		(225,657	)	(6.59)%
Net income from operations		235,116		5.38%			575,833		16.81%
Other income (expenses)
Government grant		3,639		0.08%			-		0%
Other income		754		0.02%			-		0%
Interest expense		(378,172	)	(8.65)%			(245,913	)	(7.18)%
Net other income (expenses)		(373,779	)	(8.55)%			(245,913	)	(7.18)%
Net income before provision for income taxes		(138,663	)	(3.17)%			329,920		9.63%
Provision for income taxes		(9,056	)	(0.21)%			(49,488	)	(1.44)%
Net (loss)/ income		(147,719	)	(3.38)%			280,432		8.19%
Foreign currency translation gain		112,334		2.57%			82,086		2.40%
Comprehensive (loss)/ income	$	(35,385	)	(0.81%	)	$	362,518		10.58%

Revenues. Our revenues are mainly generated from sales of our tower products. For the three months ended March 31, 2012, our revenues increased by $0.94 million, or 27.62%, to $4.37 million from $3.43 million for the same period in 2011. The increase in our revenues was mainly attributable to the increase in both selling prices and sales volume of our products. Our sales volume increased by 550 tons, or 16.38%, to 3,908 tons in the three months ended March 31, 2012, from 3,358 tons for the same period in 2011. In addition, our average selling price increased by $152/ton to $1,169/ton in the three months ended March 31, 2012, from $1,017/ton in the same period in 2011, to offset the price inflation of operating costs including wages cost, energy cost, transportation and steel price fluctuation. In the three months ended March 31, 2012, approximately 88.39% of our revenues were generated from sales to customers in the energy industry and approximately 11.61% were generated from sales to customers in the communication industry. As we emphasized overseas sales efforts, revenues generated from sales of energy transmission towers increased by approximately 577.4% while sales of communications towers decreased by approximately 82.17% period over period.

Cost of goods sold. Our cost of goods sold includes the direct costs of our raw materials, primarily steel, as well as the cost of labor and overhead. Our cost of goods sold increased by $1.10 million, or 45.72%, to $3.52 million for the three months ended March 31, 2012, from $2.42 million for the same period in 2011. As a percentage of revenues, our cost of goods sold increased to 80.45% for the three months ended March 31, 2012, from 70.53% for the same period in 2011. The increase in cost of goods sold was mainly due to the significant increase in per ton price of steel and galvanization cost per ton in the 2012 period. According to Shanghai Nonferrous Metals Net, in the three months ended March 31, 2012, the per ton price of our major raw material, steel, fluctuated in the range between $649 and $846, as compared to the three months ended March 31, 2011, when the per ton price of steel fluctuated in the range between $659 and $764. We are closely monitoring our pricing policy in an effort to reduce the risk of inflation and fluctuations of raw material prices.

Gross profit and gross margin. Our gross profit is equal to the difference between our revenue and our cost of goods sold. Our gross profit decreased by $0.16 million, or 15.73%, to $0.85 million for the three months ended March 31, 2012, from $1.01 million for the same period in 2011. The decrease was mainly due to the increase of cost of goods sold noted above. As a result, our gross profit as a percentage of revenues (gross margin) decreased to 19.46% for the three months ended March 31, 2012, as compared to 29.47% for the three months ended March 31, 2011.

Selling and marketing expenses. Our selling and marketing expenses consist primarily of compensation and benefits to our sales and marketing staff, sales commission, cost of advertising, promotion, business travel, after-sale support, transportation costs and other sales related costs. Our selling and marketing expenses increased by $0.03 million, or 13.56%, to $0.24 million for the three months ended March 31, 2012, from $0.21 million for the same period in 2011. Such increase was mainly attributable to the increased shipping costs of our expanded overseas sales.

General and administrative expenses. General and administrative expenses consist primarily of compensation and benefits to our general management, finance and administrative staff, professional advisor fees and other expenses incurred in connection with general operations. Our general and administrative expenses increased by $0.15 million, or 68.14%, to $0.38 million for the three months ended March 31, 2012, from $0.23 million for the same period in 2011. Such increase was primarily attributable to the increased travelling expenses for overseas promotion and business negotiation.

Government grant. Government grants are financial incentives offered by the local government to conduct business in certain areas. Our government grant was $3,639 for the three months ended March 31, 2012 as investment incentive for investing in Jinde County, Anhui Province as compared to $0 for the same period in 2011. No present or future obligation arises from the receipt of such government grants.

Interest expense. Interest expense increased by $0.13 million, or 53.78%, to $0.38 million for the three months ended March 31, 2012, from $0.25 million for the same period in 2011. Such increase was mainly due to the increase in our outstanding short term loans by $6.51 million and annual interest rates.

(Loss) income before income taxes. Our income before income taxes decreased by $0.47 million, or 124.96%, to $(0.14) million for the three months ended March 31, 2012, from $0.33 million for the same period in 2011, as a result of the factors described above.

Provision for income taxes. Our income tax provisions decreased by $0.04 million, or 81.70%, to $0.01 million for the three months ended March 31, 2012, from $0.05 million for the same period in 2011, mainly due to the decrease in taxable income. TEC Tower is subject to the income tax at a rate of 25%. Since January 2010, TEC Tower has qualified as a government recognized High- and New-Technology Enterprise and is entitled to a 10% refund of income tax according to local preferential tax policy for manufacturing of high technology products .

Net (loss) income. We incurred a net loss of $0.15 million for the three months ended March 31, 2012, a decrease of $0.43 million, or 153.57%, from a net income of $0.28 million for the same period in 2011, as a cumulative effect of all factors discussed above.

Liquidity and Capital Resources

As of March 31, 2012, we had cash and cash equivalents of approximately $2.10 million and restricted cash of $2.91 million.

We have entered into factoring agreements with three banks to factor some of our accounts receivable. These receivables are factored to the bank “with recourse,” which means that we have pledged these receivable as collateral for the banks to advance funds to us under a line of credit arrangement. As of March 31, 2012, accounts receivable in an amount of $1.25 million was factored to the China Construction Bank to secure banking loan facilities. We continue to carry the receivables on our balance sheet as we did not satisfy the sale criteria of ASC 860-10-40-5. We have effective control over factored portion of accounts receivable.

The following table provides a summary of our cash flows for the periods indicated.

Cash Flow

		Three Months Ended March 31,
		2012			2011
Net cash (used in) provided by operating activities	$	(5,242,843	)	$	3,732,129
Net cash used in investing activities		(1,393,692	)		(2,377,605	)
Net cash provided by (used in) financing activities		5,966,720			(1,080,620	)
Effects of exchange rate change in cash		173,000			141,295
Net (decrease) increase in cash and cash equivalents		(496,815	)		415,199
Cash and cash equivalents at beginning of the period		2,599,456			2,526,710
Cash and cash equivalent at end of the period	$	2,102,641		$	2,941,909

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2012 was $5.24 million, as compared to $3.73 million net cash provided by operating activities for the same period in 2011. The decrease in net cash provided by operating activities was primarily attributable to the cash outflow associated with increased inventory to hedge against increasing steel price and the net loss in the 2012 period.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2012 was $1.39 million, as compared to $2.38 million for the same period in 2011. During the three months ended March 31, 2012, we invested approximately $1.39 million for the construction of our Zhejiang facilities and Anhui administration office, and the upgrade of production facilities.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2012 was $5.97 million, as compared to $1.08 million net cash used in financing activities for the same period in 2011. The increase in net cash provided by financing activities was mainly attributable to increased net notes payable of $5.61 million and advances from related parties of $2.38 million.

Loan Commitments

As of March 31, 2012, we did not hold any long-term loans. Our short-term bank loans, totaling $18.45 million, were as follows:

Amount

Interest

Bank

(in millions)*

Rate

Maturity Date

Duration

Huishang Bank, Xuancheng branch

2.06

6.84%

March 12, 2013

12 months

Huishang Bank, Xuancheng branch

4.74

6.84%

April 11, 2012

12 months

Huishang Bank, Xuancheng branch

1.11

7.11%

August 5, 2012

12 months

China Construction Bank, Jingde Country branch

2.01

5.85%

May 21, 2012

6 months

China Construction Bank, Jingde Country branch

1.15

6.10%

August 1, 2012

6 months

Shanghai Pudong Development Bank limited

2.64

8.10%

January 16, 2013

12 months

The Export Import Bank of China, Anhui Province

4.74

4.76%

December 16, 2012

12 months

Total

18.45

_____________________
* Calculated based on the exchange rate of $1 = RMB 6.33

We maintain a RMB 50,000,000 (approximately $7.91 million) revolving line of credit with Huishang Bank, Sub-branch of Xuancheng Branch. This line of credit is secured by TEC Tower’s land use rights in Anhui, our restricted cash and third party’s guarantee. We have utilized RMB 50,000,000 (approximately $7.91 million) of the line of credit as of March 31, 2012.

We maintain a RMB 20,000,000 (approximately $3.16 million) revolving line of credit with China Construction Bank, Jindge Branch. This line of credit is secured by TEC Tower’s land use rights in Anhui and our restricted cash and accounts receivable. We have utilized RMB 20,000,000 (approximately $3.16 million) of the line of credit as of March 31, 2012.

We maintain a RMB 16,700,000 (approximately $2.64 million) line of credit with Shanghai Pudong Development Bank Limited. This line of credit is secured by letter of credit. We have utilized RMB 16,700,000 (approximately $2.64 million) of the line of credit as of March 31, 2012.

We also maintain a RMB 30,000,000 (approximately $4.74 million) line of credit with Export Import Bank of China, Anhui Province. This line of credit is secured by third party’ guarantee. We have utilized RMB 30,000,000 (approximately $4.74 million) of the line of credit as of March 31, 2012.

The above loan agreements contained regular provisions requiring timely repayment of principals and accrued interests, payment of default interest in the event of default without specific financial covenants. We believe we are in material compliance with the terms of these loan agreements.

Capital Expenditures

Our capital expenditures for the three months ended March 31, 2012 and 2011 were $1.39 million and $2.38 million, respectively, representing the total amount of investment activities.

To date, we have financed our operations primarily through proceeds from notes payable and advance from third parties. We believe that our cash on hand and cash flow from operations will meet a portion of our present cash needs and we will require additional cash resources to meet our expected capital expenditures and working capital requirements for the next 12 months. We may, however, in the future, require additional cash resources due to changed business conditions, implementation of our strategy to expand our marketing efforts and increase brand awareness, or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

Inflation

Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in the Chinese economy and our industry and continually maintain effective cost controls in operations.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

Seasonality

Our operating results and operating cash flows historically have been subject to seasonal variations. Our revenues usually increase over each quarter of the calendar year with the first quarter usually the slowest quarter because fewer projects are undertaken during and around the Chinese spring festival.

Critical Accounting Policies

Critical accounting policies are those we believe are most important to portraying our financial conditions and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. There have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Recent Accounting Pronouncements

In December 2011, the FASB issued ASU No. 2011-11, Topic 210 - Balance Sheet: Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU 2011-11 will be effective for fiscal years beginning on or after January 1, 2013, with retrospective application for all comparable periods presented. The Company does not expect the adoption of this guidance to have a material effect on the Company’s consolidated financial statements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer, Mr. Chun Lu, and Chief Financial Officer, Dr. Peter Lim Boon-Lum, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2012. Based upon that evaluation, Mr. Lu and Dr. Lim determined that, because of the material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2011, which we are still in the process of remediating as of March 31, 2012, our disclosure controls and procedures were not effective. Investors are directed to Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2011 for the description of these weaknesses.

Changes in Internal Control over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

During its evaluation of the effectiveness of internal control over financial reporting as of December 31, 2011, our management identified material weaknesses relating to: (1) our internal audit function, which are management determined to be significantly deficient due to insufficient qualified resources and appropriate system to perform such function; and (2) our lack of sufficient accounting personnel with an appropriate understanding of United States generally accepted accounting principles and SEC reporting disclosure requirements. As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011, our management has identified the steps necessary to address the material weakness, and in the first quarter of 2012, we continued to implement these remedial procedures.

Other than in connection with the implementation of the remedial measures described above, there were no changes in our internal controls over financial reporting during the first quarter of 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

ITEM 1A.

RISK FACTORS.

Not applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We have not sold any equity securities during the first quarter of 2012 that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the quarter.

No repurchases of our common stock were made during the first quarter of 2012.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.

OTHER INFORMATION.

We have no information to disclose that was required to be in a report on Form 8-K during the first quarter of 2012, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

ITEM 6.

EXHIBITS.

The list of exhibits in the Exhibit Index to this report is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1935, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 21, 2012	TEC TECHNOLOGY, INC.

	By:	/s/ Chun Lu
		Chun Lu, Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Peter Lim Boon-Lum
		Peter Lim Boon-Lum, Chief Financial Officer
		(Principal Financial Officer and Principal
		Accounting Officer)

EXHIBIT INDEX

Exhibit No.		Description
31.1		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Interactive data files pursuant to Rule 405 of Regulation S-T (furnished herewith).

TEC Technology, Inc. 10-Q