10-Q

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: June 30, 2011

[ ] 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
Shenzhen 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 (§ 232.405 of this chapter) 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 August 15, 2011 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

Three and Six Months Ended June 30, 2011

TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8
Item 4.	Controls and Procedures	8
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	8
Item 1A.	Risk Factors	9
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3.	Defaults Upon Senior Securities	9
Item 4.	(Removed and Reserved)	9
Item 5.	Other Information	9
Item 6.	Exhibits	9

i

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

TEC TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2011 AND 2010

	PAGE
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

1

TEC TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

		June 30, 2011		December 31, 2010
		(Unaudited)		(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	2,698,412	$	2,526,710
Restricted cash		109,466		1,164,598
Accounts receivable, net of allowance for doubtful accounts		16,456,571		14,356,352
Inventory		6,923,196		5,235,074
Deposits and prepaid expenses		3,085,776		5,439,579
Other receivables		2,769,207		1,626,039
Taxes recoverable		1,294		2,389
Total current assets		32,043,922		30,350,741
Property and equipment
Property and equipment, net of accumulated depreciation		3,818,984		3,790,765
Land use rights, net of accumulated amortization		7,990,892		2,071,771
Construction in progress		935,947		473,355
		12,745,823		6,335,891
Total assets	$	44,789,745	$	36,686,632
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	7,713,005	$	8,313,633
Other payables and accrued expenses		5,253,965		3,494,358
Taxes payables		91,026		44,608
Customer deposits		33,339		80,331
Short term borrowings		19,136,662		12,938,582
		32,227,997		24,871,512
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    June 30, 2011 and December 31, 2010, respectively	$	30,182	$	30,182
Additional paid in capital		1,105,454		1,024,891
Retained earnings		10,443,848		10,077,006
Accumulated other comprehensive income		982,264		683,041
Total stockholders' equity		12,561,748		11,815,120
Total liabilities and stockholders' equity	$	44,789,745	$	36,686,632

See accompanying notes of these consolidated financial statements

F - 1

TEC TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

		Three months			Three months			Six months			Six months
		ended			ended			ended			ended
		June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	4,770,019		$	9,427,220		$	8,195,144		$	14,606,979
Cost of goods sold		3,368,433			6,443,918			5,784,261			9,957,895
Gross profit		1,401,586			2,983,302			2,410,883			4,649,084
Selling and marketing expenses		(418,562	)		(486,367	)		(626,369	)		(789,867	)
General and administrative expenses		(632,421	)		(363,402	)		(893,192	)		(644,948	)
Net income from operations		350,603			2,133,533			891,322			3,214,269
Other income (expenses)
Government grant		216,987			179,417			216,987			179,417
Other income		-			13,694						13,695
Interest expense		(414,264	)		(292,217	)		(660,177	)		(679,560	)
Net other income (expenses)		(197,277	)		(99,106	)		(443,190	)		(486,448	)
Net income before provision for income taxes		153,326			2,034,427			448,132			2,727,821
Provision for income taxes		(31,802	)		(209,868	)		(81,290	)		(386,861	)
Net income		121,524			1,824,559			366,842			2,340,960
Other comprehensive income (loss)
Foreign currency translation gain (loss)		217,077			20,048			299,163			40,986
Comprehensive income	$	338,601		$	1,844,607		$	666,005		$	2,381,946
Weighted average numbers of common shares
Basic		30,181,882			22,856,798			30,181,882			22,856,798
Diluted		30,181,882			22,859,798			30,181,882			22,856,798
Earnings per share
Basic	$	0.01		$	0.08		$	0.01		$	0.10
Diluted	$	0.01		$	0.08		$	0.01		$	0.10

See accompanying notes of these consolidated financial statements

 F - 2

TEC TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six months			Six months
		ended			ended
		June 30, 2011			June 30, 2010
		(Unaudited)			(Unaudited)
Cash flows from operating activities
Net income for the period	$	366,842		$	2,340,960
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		167,769			129,824
Loss on disposal of property and equipment		534			-
Amortization of land use rights		21,993			21,127
Stock based compensation		93,800			-
Changes in operating assets and liabilities
Decrease in restricted cash		1,055,132			-
Increase in inventory		(1,688,122	)		(2,716,346	)
(Increase)/decrease in deposits and prepaid expenses		(1,275,095	)		635,351
Increase in accounts receivable		(2,100,219	)		(8,703,430	)
(Increase) decrease in other receivables		(2,104,730	)		2,119,014
Decrease in taxes recoverable		1,095			4,889
Increase/(decrease) in taxes payable		46,418			(919,366	)
(Decrease) increase in accounts payable		(600,628	)		7,410,164
Decrease in customer deposits		(46,992	)		(51,711	)
Increase in other payables and accrued expenses		1,759,607			1,885,976
Net cash (used in) provided by operating activities		(4,302,596	)		2,156,452
Cash flows from investing activities
Purchases of property and equipment		(91,561	)		(455,446	)
Proceeds from sale of property and equipment		5,345
Payment for construction in progress		(462,592	)		-
Payment for purchase of land use rights		(2,188,275	)		-
Net cash used in investing activities		(2,737,083	)		(455,446	)
Cash flows from financing activities
Common stock issued		-			10,987
Additional paid in capital raised		-			10,521
Proceeds from short term borrowings		7,000,447
Repayment of short term borrowings		(1,098,370	)		(176,384	)
Net cash provided by (used in) financing activities		5,902,077			(154,876	)
Effects on exchange rate changes on cash		1,309,304			789
Increase in cash and cash equivalents		171,702			1,546,919
Cash and cash equivalents, beginning of period		2,526,710			161,133
Cash and cash equivalents, end of period		2,698,412			1,708,052
Supplementary disclosures of cash flow information:
Cash paid for interest		897,620			679,560
Cash paid for income taxes		2,196,414			386,861
Non cash financing activities
Issuance of warrant		94,120			-
Capital contributed by directors through assumption of debt		80,563			-
Non cash investing activities
Transfer from deposits and prepaid expenses to acquire land use rights
- Acquisition of land use rights		3,628,868			-

See accompanying notes of these consolidated financial statements

F - 3

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	BUSINESS ORGANIZATION
	Highland Ridge, Inc. (formerly known as Sea Green, Inc., Americom Networks Corp. and Americom Networks International, Inc.) was incorporated on July 22, 1988 in the State of a Delaware, United States of America. On June 9, 2010, the Company changed its name from Highland Ridge, Inc. to TEC Technology, Inc. (the “Company” or “HGHN”).
	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 its 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 HGHN as the acquired party. Upon completion of the exchange, TECT became a wholly owned subsidiary of HGHN. On the same date, Mr. Chun Lu, Chairman of the Board and Chief Executive Officer of HGHN, 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. The accounting treatment for this transaction is essentially recapitalization of TECT with HGHN’s common stock.
	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 operation 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. 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.
	The Company’s headquarter is located at Xinqiao Industrial Park, Jingde Country, Anhui Province, 242600, PRC.
2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	2.1	FISCAL YEAR
		The Company has adopted December 31 as its fiscal year end.

F - 4

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
	2.2	REPORTING ENTITIES
		The accompanying consolidated financial statements include the following entities:

Name of subsidiary	Place of incorporation	Date of incorporation	Percentage of interest	Principal activity
TEC Technology Limited	Hong Kong	November 11, 2009	100% directly	Investment holding
Anhui TEC Tower Co ., Limited	People's Republic of China	April 19, 2006	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
Shuncheng Taida Technology Co., Limited	People's Republic of China	January 20, 2010	100% directly	The company has not commenced its business of engineering consultancy and design 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.
	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 our 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,ZTEC and STT. 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 HGHN as the acquired party.
		Upon completion of the exchange, TECTbecame wholly owned subsidiaries of HGHN. On the same date, Mr. Chun Lu, Chairman of the Board and Chief Executive Officer of HGHN, 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 our 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 365 th day 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 HGHN has active business operatons. For reporting purposes, the Company has assumed that Mr. Lu exercised his option immediately and thus HGHN, TECT and ATEC are effectively under same control of Mr. Lu when the Company acquired ATEC. The acquisition transactions between (i) HGHN and TECT and (ii) TECT and ATEC are 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 acquirer and HGHN and TECT as the acquired party 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 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 stock exchange transaction.
		HGHN, TECT, ATEC, ZTEC and STT are hereafter referred to as the Company.
		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, 2010.
	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. For international sales, the revenue recognition criteria are generally satisfied under Free on Board (“FOB”) and Cost Insurance Freight (“CIF”) terms, in which the Company’s reponsibility ends once the goods clear the port of shipment.
		Technical consulting service income is recognized when the relevant service is rendered.
		Government grants represent local authority grants to the company for infrastructure development and the revenue is recognized on cash basis when the local authority approves the grant to the company.
		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 $226,765 and $149,852 for the three months June 30, 2011 and 2010, respectively. Shipping and handling costs amounted to $355,866 and $289,572 for the six months ended June 30, 2011 and June 30, 2010.
	2.8	ADVERTISING
		Advertising costs are expensed as incurred and totaled $0 and $1,539 for the three months June 30, 2011 and 2010, respectively. Advertising costs are expensed as incurred and totaled $0 and $2,582 for the six months June 30, 2011 and 2010, 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 June 31, 2011 and 2010 and for the six months ended June 30, 2011and 2010, 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, STT 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 $982,264 as of June 30, 2011 and $683,041 as of December 31, 2010. The balance sheet amounts with the exception of equity as of June 30, 2011 and December 31, 2010 were translated at RMB6.46 to $1.00 and RMB6.82 to $1.00, respectively. The average translation rates applied to the statements of income and of cash flows for the six months ended June 30, 2011 and June 30, 2010 were RMB6.55 to $1.00 and RMB6.82 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 statements 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 is 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, plant 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 INTANGBLE 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 June 30, 2011 and December 31, 2010, 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. Cost comprises 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 June 30, 2011 and December 31, 2010.
	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 June 30, 2011 and December 31, 2010.
		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 six months ended June 30, 2011 and June 30, 2010. The product warranty reserve was $0 as of June 30, 2011 and December 31, 2010.
	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 June 30, 2011 and December 31, 2010 amounted to $2,659,363 and $2,088,297, 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	Six months ended	Six months ended
	June 30, 2011	June 30, 2010	June 30, 2011	June 30, 2010
Customer A	47.21%	41.18%	53.55%	37.71%
Customer B	15.73%	-	15.73%	-
Customer C	27.04%	-	15.67%	-
Customer D	-	-	8.41%	-
Customer E	9.46%	-	5.48%	-
Customer F	0.51%	-	-	-
Customer G	-	38.60%	-	24.85%
Customer H	-	-	-	10.33%
Customer I	-	-	-	10.22%
Customer J	-	12.44%	-	8.01%
Customer K	-	2.91%	-	-
Customer L	-	2.35%	-	-
	99.95%	97.48%	98.84%	91.12%

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:

	June 30, 2011	December 31, 2010
Customer A	26.91%	31.46%
Customer B	13.38%	9.89%
Customer C	10.30%	-
Customer D	9.79%	16.73%
Customer E	9.69%	12.57%
Customer F	-	7.82%
	70.07%	78.47%

2.27	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 June 30, 2011 and 2010, basic and diluted earnings per share amount to $0.01 and $0.04, respectively. For the six months ended June 30, 2011 and 2010, basic and diluted earnings per share amount to $0.01 and $0.04, respectively.

F - 14

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 June 30, 2011 or December 31, 2010, nor gains or losses are reported in the statement of income and 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 June 30, 2011 or June 30, 2010.
	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 30th, September 30th, December 31st 2010 and March 31st of 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 - 15

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 January 2010, FASB issued ASU No. 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash. The amendments in this Update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The Company adopted this standard and has determined the standard does not have material effect on the Company’s consolidated financial statements.
	In January 2010, FASB issued ASU No. 2010-02 regarding accounting and reporting for decreases in ownership of a subsidiary. Under this guidance, an entity is required to deconsolidate a subsidiary when the entity ceases to have a controlling financial interest in the subsidiary. Upon deconsolidation of a subsidiary, and entity recognizes a gain or loss on the transaction and measures any retained investment in the subsidiary at fair value. In contrast, an entity is required to account for a decrease in its ownership interest of a subsidiary that does not result in a change of control of the subsidiary as an equity transaction. This ASU clarifies the scope of the decrease in ownership provisions, and expands the disclosures about the deconsolidation of a subsidiary or de-recognition of a group of assets. This ASU is effective for beginning in the first interim or annual reporting period ending on or after December 31, 2009. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements In January 2010, FASB issued ASU No. 2010-02 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification. The amendments in this Update affect accounting and reporting by an entity that experiences a decrease in ownership in a subsidiary that is a business or nonprofit activity. The amendments also affect accounting and reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit activity for an equity interest in another entity. The amendments in this update are effective beginning in the period that an entity adopts SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51.” If an entity has previously adopted SFAS No. 160 as of the date the amendments in this update are included in the Accounting Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopted SFAS No. 160. The Company adopted this standard and has determined the standard does not have material effect on the Company’s consolidated financial statements.
	In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarify existing disclosures as follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3.The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU, however, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

F - 15

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.	RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
	In February 2010, the FASB issued Accounting Standards Update 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements,” or ASU 2010-09. ASU 2010-09 primarily rescinds the requirement that, for listed companies, financial statements clearly disclose the date through which subsequent events have been evaluated. Subsequent events must still be evaluated through the date of financial statement issuance; however, the disclosure requirement has been removed to avoid conflicts with other SEC guidelines. ASU 2010-09 was effective immediately upon issuance and was adopted in February 2010.
	In April 2010, the FASB issued Accounting Standards Update 2010-13, “Compensation—Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades,” or ASU 2010-13. ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial porting of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company does not expect the adoption of ASU 2010-17 to have a significant impact on its consolidated financial statements.
	In April 2010, the FASB issued Accounting Standard Update 2010-17, “Revenue Recognition—Milestone Method (Topic 605): Milestone Method of Revenue Recognition” or ASU 2010-17 . This Update provides guidance on the recognition of revenue under the milestone method, which allows a vendor to adopt an accounting policy to recognize all of the arrangement consideration that is contingent on the achievement of a substantive milestone (milestone consideration) in the period the milestone is achieved. The pronouncement is effective on a prospective basis for milestones achieved in fiscal years and interim periods within those years, beginning on or after June 15, 2010. The adoption of ASU 2010-17 does not have any significant impacts on the consolidated financial statements.
	In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” This update amends codification topic 310 on receivables to improve the disclosures that an entity provides about the credit quality of its financing receivables and the related allowance for credit losses. As a result of these amendments, an entity is required to disaggregate by portfolio segment or class certain existing disclosures and provide certain new disclosures about its financing receivables and related allowance for credit losses. This guidance is being phased in, with the new disclosure requirements for period end balances effective as of December 31, 2010, and the new disclosure requirements for activity during the reporting period are effective March 31, 2011. The troubled debt restructuring disclosures in this ASU have been delayed by ASU 2011-01 “Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20,” which was issued in January 2011.
	In December 2010, the FASB issued Accounting Standards Update 2010-28 which amend “Intangibles- Goodwill and Other” (Topic 350). The ASU modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting entities, they are required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. An entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The qualitative factors are consistent with the existing guidance in Topic 350, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances changes that would more likely than not reduce the faire value of a reporting unit below its carrying amount. ASU 2010-28 is effective for fiscal years, and interim periods within those years beginning after December 15, 2010. Early adoption is not permitted. The Company is currently evaluating the impact of this ASU; however, the Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.
	In December 2010, the FASB issued Accounting Standards Update 2010-29 which address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations (Topic 805). This ASU specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This ASU also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and expected the adoption of this ASU will have an impact on its future business combination.

F - 16

TEC TECHNOLOGY, INC.

NOTES TO 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 six months ended June 30, 2011 and 2010.
	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. The Company is currently evaluating the impact that the new EIT will have on its financial condition. 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 year ended December 31, 2010 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 of the company’s subsidiary ATEC is made at the local preferential EIT rate of 15% for the year ended December 31, 2010.
	The company’s subsidiaries ZTEC and STT have not commenced their business, therefore no provision for income taxes has been made for the six months ended June 30, 2011 and 2010.
	The following table reconciles the U.S statutory rates to the company’s effective tax rate for the June 30, 2011:

	2011
	$
U.S. Statutory rates	34%
Foreign income not recognized in USA	(34)%
Hong Kong profits tax	16.5%
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		Six months ended		Six months ended
		June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
Income tax
HGHN - US corporate tax	$	-	$	-	$	-	$	-
TECT - Hong Kong profits tax		-		-		-		-
ATEC - China EIT		31,802		209,868		81,290		386,861
ZTEC and STT - China EIT		-		-		-		-
Deferred tax		-		-		-		-
	$	31,802	$	209,868	$	81,290	$	386,861

F - 17

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. CASH AND CASH EQUIVALENTS

		June 30, 2011		December 31, 2010
Cash and bank balances	$	2,698,412	$	2,526,710

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 $109,466 and $1,164,598 as of June 30, 2011 and December 31, 2010, respectively.
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 and six months ended June 30, 2011and 2010. Bad debts written off for the three months and six months ended June 30, 2011 and 2010 are $0.
	Aging of accounts receivable is as follows:

		June 30, 2011			December 31, 2010
within 3 months	$	10,636,788		$	13,658,262
over 3 months and within 6 months		3,897,660			356,438
over 6 months and within 1 year		1,909,187			343,298
over 1 year		100,936			68,354
		16,544,571			14,426,352
Less: Allowance for doubtful accounts		(70,000	)		(70,000	)
	$	16,474,571		$	14,356,352

Accounts receivable includes the amounts of $5,557,348 (12.31.2010: $3,151,959) that were factored to the Industrial and Commercial Bank, PRC and China Construction Bank, PRC for collection.

8. INVENTORY

		June 30, 2011		December 31, 2010
Raw materials	$	1,788,574	$	2,590,642
Consumables		52,678		-
Work in progress		5,081,944		2,644,432
	$	6,923,196	$	5,235,074

F - 18

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. DEPOSITS AND PREPAID EXPENSES

		June 30, 2011		December 31, 2010
Guarantee and utility deposits	$	961,562	$	828,170
Deposit for acquistion of land use rights		-		518,753
Land levelling, design fees and stamp duty prepaid expenses		-		3,110,145
Prepaid expenses		332,523		91,091
Advances to suppliers and services providers		710,935		874,436
Prepayment for purchase of property and equipment		744,885		2,269
Advances to logistic service providers		335,871		14,715
	$	3,085,776	$	5,439,579

	Guarantee deposits are provided to financial institutions in return for the issuance of a corporate guarantee to financiers. Advances to suppliers are down payments or deposits for inventory purchases. ZTEC acquired land use rights of new land in the PRC and paid deposits for the acquisition of land use rights,
10.	OTHER RECEIVABLES

		June 30, 2011		December 31, 2010
Due from employees	$	1,366,369	$	963,416
Due from third parties		1,402,838		661,156
Others		-		1,467
	$	2,769,207	$	1,626,039

Due from employees are the amounts advanced for business transactions on behalf of the Company and will be reconciled on the completion of the business transactions. Due from third parties are unsecured advances, interest free and without fixed terms of repayment and are for specific business purposes.

11. TAXES RECOVERABLE

		June 30, 2011		December 31, 2010
VAT recoverable	$	1,294	$	2,389

F - 19

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. PROPERTY AND EQUIPMENT

		June 30, 2011			December 31, 2010
Buildings	$	2,727,010		$	2,584,596
Plant and machinery		1,271,792			1,351,729
Furniture, fixtures and office equipment		309,805			123,716
Motor vehicles		257,376			294,812
		4,565,983			4,354,853
Less: Accumulated depreciation		(746,999	)		(564,088	)
Net book value	$	3,818,984		$	3,790,765

Depreciation expense was $87,718 and $69,326 for the three months ended June 30, 2011 and 2010, respectively. Depreciation expense was $167,769 and $129,824 for the six months ended June 30, 2011 and 2010, 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 $5,781,780 and the leases expire in 2061.

		June 30, 2011			December 31, 2010
Cost	$	8,122,093		$	2,178,255
Less: Accumulated amortization		(131,201	)		(106,484	)
Net book value	$	7,990,892		$	2,071,771

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.

Amortization expense was $10,932 and $10,564 for the three months ended June 30, 2011 and 2010, respectively. Amortization expense was $10,932 and $10,564 for the six months ended June 30, 2011 and 2010, respectively

14. CONSTRUCTION IN PROGRESS

		June 30, 2011		December 31, 2010
Construction of office building and workshops	$	935,947	$	473,355

F - 20

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.	OTHER PAYABLES AND ACCRUED EXPENSES
			June 30, 2011		December 31, 2010
	Due to former sole stockholder and his affiliates	$	3,249,273	$	2,789,568
	Due to third parties		1,701,897		603,824
	Due to employees		198,104		8,359
	Accrued expenses		104,691		92,607
		$	5,253,965	$	3,494,358

Due to former sole stockholder and his affiliates, due to third parties and employees are unsecured, interest free and without a fixed term of repayment and are for unspecific business purposes.

16. TAXES PAYABLE

		June 30, 2011		December 31, 2010
Enterprise income tax payable	$	31,921	$	42,557
VAT payable		52,800		-
Individual income tax payable		6,305		2,051
	$	91,026	$	44,608

17.	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		June 30, 2011			December 31, 2010
Industrial and Commercial Bank,		From September 16,
Longshou Branch, PRC	6.06% - 6.66%	2011 to March 23, 2012	$	3,937,115	*	$	3,864,182
China Merchant Bank, Heifei branch, PRC	6.94%	October 29, 2011		1,547,000	+		1,512,400
China Everbright Bank, Heifei branch, PRC	5.56%	November 22, 2011		4,641,000			4,537,200
Huishang Bank, Xuancheng branch, PRC	7.88%	February 16, 2011		2,011,100	*		3,024,800
Huishang Bank, Xuancheng branch, PRC	8.20%	April 11, 2012		4,641,000	*		-
China Construction Bank, Jingde branch, PRC	5.85%	November 3, 2011		2,359,447			-
			$	19,136,662		$	12,938,582

*	secured by land use rights
+	secured by third party’s guarantee

F - 21

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18.	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 June 30, 2011 and December 31, 2010, customer deposits amounted to $33,339 and $80,331, respectively.
19.	COMMON STOCK
	The Company has authorized Preferred stock of 10,000,000 shares with a par value of $0.001. As of March 31, 2011 and December 31, 2010, 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 June 30, 2011, and December 31, 2010, the Company has outstanding 30,181,552 issued common shares with a par value of $0.001 per share respectively.
20.	COMMITMENTS AND CONTINGENCIES
	Total lease expenses for the three months ended June 30, 2011 and 2010 was $20,183 and $3,225, respectively. Total lease expenses for the six months ended June 30, 2011 and 2010 was $23,633 and $5,343, respectively.
	The future minimum lease payments as of June 30, 2011 and December 31, 2010 were $0.
	From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. As of June 30, 2011 and December 31, 2010, 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:

		June 30, 2011		December 31, 2010
Liquidated damages for - investment relation service with CCG	$	90,000	$	90,000

F - 22

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21.	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 30th, September 30th, December 31th 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. The Company calculated a stock based compensation of $93,800 and recognized $93,800 in stock based compensation expense for the six months ended June 30, 2011. As of June 30, 2011 and December 31, 2010, the prepaid compensation expense amount was $0 and $31,600, respectively

	Number of shares
			Exercise Price
	entitled to purchase			Expiration date
Issued June 15, 2010	80,000	$	2.00	June 15, 2015
Balance as of June 30, 2011	80,000	$	2.00
Warrants exercised	-		2.00
Warrants expired	-		2.00
Total outstanding as of June 30, 2011	80,000		2.00	June 15, 2015

.Utilizing the Black Scholes option-pricing model, the share based compensation expense for the three months ended June 30, 2011 and 2010; the amounts were $39,628 and $0, respectively. The share based compensation expense for the six months ended June 30, 2011 and 2010; the amounts were $93,800 and $0, respectively.

F - 23

TEC TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22.	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 June 30, 2011 and December 31, 2010, CCG had not exercised the warrant.
23.	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:

		Three months ended		Three months ended		Six months ended		Six months ended
		June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
Domestic sales
Communication towers	$	2,702,957	$	3,935,310	$	4,837,967	$	7,077,759
Electricity supply towers		2,064,890		5,150,696		2,629,828		6,925,361
		4,767,847		9,086,006		7,467,795		14,003,120
Export sales
Communication towers		-		223,727		716,702		236,098
Electricity supply towers		2,053		117,487		2,044		367,761
		2,053		341,214		718,746		603,859
Technical service income		119		-		8,603		-
	$	4,770,019	$	9,427,220	$	8,195,144	$	14,606,979

24.	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.
	On January 13, 2010, the Company entered into and closed a share purchase agreement with Mr. Michael Anthony, the CEO of the Company at the time, and certain accredited purchasers signatory thereto, pursuant to which the Company sold an aggregate of 10,880,000 shares of common stock of the Company for a total of $225,000. Simultaneously with and as a condition to the closing of the share purchase agreement, the Company re-purchased 10,880,000 common shares from Corporate Services International Profit Sharing and Century Capital Partners, LLC, which are both beneficially owned by Mr. Anthony, for an aggregate purchase price of $225,000.

Name of related party	Nature of transactions
Mr. Chun Lu, former stockholder and his affiliates	Included in other payable, due to former stockholder and its affiliates are $3,429,273 and $2,789,568 as of June 30, 2011 and December 31, 2010, 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, 2010, 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, ZTEC and STT;

• “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;

• “STT” refers to Shuncheng Taida Technology 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.

2

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, we have not yet 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 the Shenzhen Special Economic Zone and Beijing.

Second Quarter Financial Performance Highlights

The following summarizes certain key financial information for the second quarter of 2011:

• Revenues: Revenues were $4.77 million for the three months ended June 30, 2011, a decrease of $4.66 million, or 49.4%, from $9.43 million for the same period last year.

• Gross Profit and Margin: Gross profit was $1.40 million for the three months ended June 30, 2011, a decrease of $1.58 million, or 53.0%, from $2.98 million for the same period last year. Gross margin was 29.38% for the three months ended June 30, 2011, as compared to 31.65% for the same period last year.

• Net Income: Net income was $121,524 for the three months ended June 30, 2011, a decrease of $1.70 million, or 93%, from $1.82 million for the same period of last year.

• Fully diluted net income per share: Fully diluted net income per share for the three months ended June 30, 2011 was $0.01, as compared to $0.08 for the same period last year.

Results of Operations

Comparison of Three Months Ended June 30, 2011 and June 30, 2010

The following table shows key components of our results of operations during the three months ended June 30, 2011 and 2010, in both dollars and as a percentage of our revenues.

		Three Months Ended					Three Months Ended
		June 30, 2011					June 30, 2010
				Percent of					Percent of
		Dollars		Revenues			Dollars		Revenues
Revenues	$	4,770,019		100%		$	9,427,220		100%
Cost of good sold		3,368,433		70.62%			6,443,918		68.35%
Gross profit		1,401,586		29.38%			2,983,302		31.65%
Selling and marketing expenses		(418,562	)	(8.77%	)		(486,367	)	(5.16)%
General and administrative expenses		(632,421	)	(13.26%	)		(363,402	)	(3.85)%
Net income from operations		350,603		7.35%			2,133,533		22.63%
Other income (expenses)
Government grant		216,987		4.55%			179,417		1.90%
Other income		-		-			13,694		0.15%
Interest expense		(414,264	)	(8.68%	)		(292,217	)	(3.10)%
Net other income (expenses)		(197,277	)	(4.14%	)		(99,106	)	(1.05)%
Net income before provision for income taxes		153,326		3.21%			2,034,427		21.58%
Provision for income taxes		(31,802	)	(0.67%	)		(209,868	)	(2.23)%
Net income		121,524		2.55%			1,824,559		19.35%
Foreign currency translation gain		217,077		4.55%			20,048		0.21%
Comprehensive income	$	338,601		7.10%		$	1,844,607		19.57%

Revenues. Our revenues are mainly generated from sales of our tower products. Our revenues decreased $4.66 million, or 49.4%, to $4.77 million for the three months ended June 30, 2011 from $9.43 million during the same period in 2010. For the three month period ended June 30, 2011, approximately 43.3% of our revenues were generated from sales to customers in the energy industry and approximately 56.7% were generated from sales to communications industry customers. The period-over-period decrease in revenues resulted mainly from a decrease of approximately 60.8% in sales revenue generated by sales of energy transmission towers compared to the same period in 2010, and a decrease of approximately 35.0% in sales revenue generated by sales of communications towers. In the second quarter of 2011, the price of tower products in China markedly decreased due to the rising steel prices, competition, decreased demand and other factors. We also reserved capacity and inventory for anticipated orders from overseas customers which may require immediate production and delivery. As overseas orders generally tend to offer higher prices, we made a strategic decision to forego some domestic orders with comparatively lower prices in the second quarter 2011 and redeployed personnel and resources to maintain our production lines, train new employees and prepare for the anticipated overseas orders. Because our targeted overseas customers decided to postpone the production and delivery of products, our sales and revenues decreased in the three months ended June 30, 2011 as compared to the same period last year. We expect to start generating revenues from our overseas orders in the third quarter of 2011.

3

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 decreased $3.07 million, or 47.73%, to $3.37 million in the three months ended June 30, 2011, from $6.44 million during the same period in 2010. The decrease in cost of goods sold was mainly due to the decrease in sales volume and revenues. As a percentage of revenues, our cost of goods sold increased to 70.62% in the three months ended June 30, 2011 from 68.35% for the same period last year, mainly because of the continuing increase of the price of steel, which is our primary raw material. Some orders produced during this quarter were priced in the previous fiscal quarter prior to the increase in the cost of raw materials, so previously priced orders did not reflect the increased cost of raw materials, compressed our margins and resulted in an increased percentage of cost of goods sold. We are closely monitoring our pricing policy in an effort to reduce the risk of inflation and fluctuation 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 $1.58 million, or 53.02%, to $1.4 million in the three months ended June 30, 2011, from $2.98 million during the same period in 2010. The decrease was mainly due to the decrease of sales and revenues. Gross profit as a percentage of revenue (gross margin) was 29.38% and 31.65% for three months ended June 30, 2011 and 2010, respectively. The decrease in gross margin was mainly due to the increased price of steel as discussed above.

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 decreased $67,805, or 13.94%, to $418,562 in the three months ended June 30, 2011, from $486,367 during the same period in 2010. Such decrease was largely attributable to reduced operations in our sales and marketing department.

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, bad debts reserve and other expenses incurred in connection with general operations. Our general and administrative expenses increased $269,019, or 74.03%, to $632,421 in the three months ended June 30, 2011, from $363,402 during the same period in 2010. Such increase was mainly attributable to expenses associated with being a public company.

Interest expense. Interest expense increase $122,047, or 41.76%, to $414,264 for the three months ended June 30, 2011, from $292,217 during the same period in 2010. Such increase was mainly due to the increase in our outstanding short term loans and annual interest rate.

Income before income taxes. Our income before income taxes decreased $1.88 million, or 92.46%, to $153,326 in the three months ended June 30, 2011, from $2.03 million during the same period in 2010, as a result of the factors described above.

Provision for income taxes. Our income tax provisions decreased $178,066, or 84.84%, to $31,802 in the three months ended June 30, 2011, from $209,868 during the same period in 2010, mainly due to decrease in taxable income.

Net income. We generated a net income of $121,524 in the three months ended June 30, 2011, a decrease of $1.70 million, or 93.33%, from $1.82 million during the same period in 2010, as a cumulative effect of all factors discussed above.

Comparison of Six Months Ended June 30, 2011 and June 30, 2010

The following table shows key components of our results of operations during the six months ended June 30, 2011 and 2010, in both dollars and as a percentage of our revenues.

4

		Six Months Ended					Six Months Ended
		June 30, 2011					June 30, 2010
				Percent of					Percent of
		Dollars		Revenues			Dollars		Revenues
Revenues	$	8,195,144		100%		$	14,606,979		100%
Cost of good sold		5,784,261		70.58%			9,957,895		68.17%
Gross profit		2,410,883		29.42%			4,649,084		31.83%
Selling and marketing expenses		(626,369	)	(7.64%	)		(789,867	)	(5.41)%
General and administrative expenses		(893,192	)	(10.90%	)		(644,948	)	(4.42)%
Net income from operations		891,322		10.88%			3,214,269		22.01%
Other income (expenses)
Government grant		216,987		2.65%			179,417		1.23%
Other income		-		-			13,695		0.09%
Interest expense		(660,177	)	(8.06%	)		(679,560	)	(4.65)%
Net other income (expenses)		(443,190	)	(5.14%	)		(486,448	)	(3.33)%
Net income before provision for income taxes		448,132		5.47%			2,727,821		18.67%
Provision for income taxes		(81,290	)	(0.99%	)		(386,861	)	(2.65)%
Net income		366,842		4.48%			2,340,960		16.03%
Foreign currency translation gain		299,163		3.65%			40,096		0.27%
Comprehensive income	$	666,005		8.13%		$	2,381,056		16.30%

Revenues. Our revenues decreased $6.41 million, or 43.89%, to $8.20 million for the six months ended June 30, 2011 from $14.61 million during the same period in 2010. For the six month period ended June 30, 2011, approximately 32.12% of our revenues were generated from sales to customers in the energy industry and approximately 67.78% were generated from sales to communications industry customers. The period-over-period decrease in revenues resulted mainly from a decrease of approximately 63.91% in sales revenue generated by sales of energy transmission towers compared to the same period in 2010, and a decrease of approximately 24.05% in sales revenue generated by sales of communications towers. In the first half of 2011, the price of tower products in China markedly decreased due to the rising steel prices, competition, decreased demand and other factors. We also reserved capacity and inventory for anticipated orders from overseas customers which may require immediate production and delivery. As overseas orders generally tend to offer higher prices, we made a strategic decision to forego some domestic orders with comparatively lower prices in the first half of 2011 and redeployed personnel and resources to maintain our production lines, train new employees and prepare for the anticipated overseas orders. Because our targeted overseas customers decided to postpone the production and delivery of products, our sales and revenues decreased in the six months ended June 30, 2011 as compared to the same period last year.

Cost of goods sold. Our cost of goods sold decreased $4.17 million, or 41.87%, to $5.78 million in the six months ended June 30, 2011, from $9.96 million during the same period in 2010. The decrease in cost of goods sold was mainly due to the decrease in sales volume and revenues. As a percentage of revenues, our cost of goods sold increased to 70.58% in the six months ended June 30, 2011 from 68.17% for the same period last year, mainly because the price of steel increased. We are closely monitoring our pricing policy in an effort to reduce the risk of inflation and fluctuation of raw material prices.

Gross profit and gross margin. Our gross profit decreased $2.24 million, or 48.17%, to $2.41 million in the six months ended June 30, 2011, from $4.65 million during the same period in 2010. The decrease was mainly due to the decrease of sales and revenues. Gross profit as a percentage of revenue (gross margin) was 29.42% and 31.83% for six months ended June 30, 2011 and 2010, respectively. The decrease in gross margin was mainly due to the increased price of steel as discussed above.

Selling and marketing expenses. Our selling and marketing expenses decreased $163,498, or 20.25%, to $626,369 in the six months ended June 30, 2011, from $789,867 during the same period in 2010. Such decrease was largely attributable to reduced operations in our sales and marketing department.

General and administrative expenses. Our general and administrative expenses decreased $248,244, or 38.49%, to $893,192 in the six months ended June 30, 2011, from $644,948 during the same period in 2010. Such increase was primarily attributable to expenses associated with being a public company.

Interest expense. Interest expense decreased $19,383, or 2.85%, to $660,177 for the six months ended June 30, 2011, from $679,560 during the same period in 2010. Such decrease was mainly due to the lower interest expenses in the first quarter of 2011. Our total outstanding short-term bank loan was $11.9 million and $19.0 million as of March 31, 2011 and June 30, 2011, respectively.

5

Income before income taxes. Our income before income taxes decreased $2.28 million, or 83.57%, to $448,132 in the six months ended June 30, 2011, from $2.73 million during the same period in 2010, as a result of the factors described above.

Provision for income taxes. Our income tax provisions decreased $305,571, or 84.33%, to $81,290 in the six months ended June 30, 2011, from $386,861 during the same period in 2010, mainly due to decrease in taxable income.

Net income. We generated a net income of $366,842 in the six months ended June 30, 2011, a decrease of $1.97 million, or 84.33%, from $2.34 million during the same period in 2010, as a cumulative effect of all factors discussed above.

Liquidity and Capital Resources

As of June 30, 2011, we had cash and cash equivalents of approximately $2.70 million, primarily consisting of cash on hand and demand deposits. The following table provides a summary of our net cash flows from operating, investing, and financing activities.

Cash Flow

		Six Months Ended June 30,
		2011			2010
Net cash (used in) provided by operating activities	$	(4,302,596	)	$	2,156,452
Net cash (used in) investing activities		(2,737,083	)		(455,446	)
Net cash provided by (used in) financing activities		5,902,077			(154,876	)
Effects of exchange rate changes in cash		1,309,304			789
Net increase in cash and cash equivalents		171,702			1,546,919
Cash and cash equivalents at beginning of the period		2,526,710			161,133
Cash and cash equivalent at end of the period	$	2,698,412		$	1,708,052

Operating Activities

Net cash used in operating activities was $4.30 million for the six months ended June 30, 2011, as compared to net cash provided by operating activities of $2.16 million for the same period in 2010. The increase in net cash used in operating activities was primarily attributable to the outflow associated with increase in accounts receivable, other receivables, inventory and deposits and prepaid expenses levels which more than offset the cash inflow associated with the increase in other payable and accrued expenses and decrease in restricted cash in the six months ended June 30, 2011. We increased our inventory reserve level in anticipation of the increased orders in the coming quarters. In addition, our strategic decision to reduce our production this period by turning down comparatively lower margin domestic orders also contributed to the increased inventory.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2011 was $2.74 million, as compared to $455,446 during the same period in 2010. We spent approximately $2.18 million as installment payment for land use right and approximately $462,592 in construction of our Zhejiang facilities and Anhui administration office, and upgrade of our production facilities.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2011 was $5.90 million, as compared to net cash used in financing activities of $154,876 for the same period in 2010. The increase in net cash provided by financing activities was mainly attributable to a $5.90 million increase in net short term borrowings.

6

Loan Commitments

As of June 30, 2011, we did not hold any long-term loans. Our short-term bank loans, totaling $19.0 million, are as follows:

Bank		Amount	Interest	Maturity Date	Duration
		(in millions)*	Rate
Industrial and Commercial Bank, Longshou Branch	$	0.3	6.06%	March 22, 2012	12 months
Industrial and Commercial Bank, Longshou Branch		0.4	6.16%	September 16, 2011	6 months
Industrial and Commercial Bank, Longshou Branch		0.8	6.16%	September 16, 2011	6 months
Industrial and Commercial Bank, Longshou Branch		0.3	6.67%	March 21, 2012	12 months
Industrial and Commercial Bank, Longshou Branch		0.9	6.67%	March 23, 2012	12 months
Industrial and Commercial Bank, Longshou Branch		1.2	6.44%	December 15, 2011	6 months
Huishang Bank, Xuancheng Branch		2.0	7.88%	February 16, 2012	12 months
Huishang Bank, Xuancheng Branch		4.6	8.20%	April 11, 2012	12 months
China Merchants Bank, Hefei Branch		1.5	6.94%	October 29, 2011	12 months
China Construction Bank, Jingde Branch		2.4	5.85%	May 3, 2011	6 months
China Everbright Bank, Hefei Branch		4.6	5.56%	November 22, 2011	12 months
Total	$	19.0

* Calculated based on the exchange rate of $1 = RMB 6.46*

Capital Expenditures

Our capital expenditures for the six months ended June 30, 2011 and 2010 were approximately $6.37 million and $0.46 million, respectively, representing the total amount of investment activities.

To date, we have financed our operations primarily through cash flows from operations, augmented by short-term bank loans and equity contributions by our stockholders. 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, 2010.

7

Recent Accounting Pronouncements

See Note 3 to our unaudited consolidated financial statements included elsewhere in this report.

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, Mr. Yuhua Yang, of the effectiveness of the design and operation of our disclosure controls and procedures, as of June 30, 2011. Based upon, and as of the date of this evaluation, Messrs. Lu and Yang, 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, 2010, which we are still in the process of remediating as of June 30, 2011, 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, 2010 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, 2010, our management concluded that we still need to hire qualified accounting personnel and enhance the supervision, monitoring and review of the financial statements preparation processes. Although our accounting staff is professional and experienced in accounting requirements and procedures generally accepted in the PRC, management has determined that they require additional training and assistance in U.S. GAAP. We are actively searching for additional personnel with relevant accounting experience, skills and knowledge in the preparation of financial statements in accordance with of U.S. GAAP and financial reporting disclosure requirements under SEC rules. In addition, we plan to establish an audit committee and appoint qualified committee members to strengthen our internal control over financial reporting.

Other than the foregoing changes, there were no changes in our internal controls over financial reporting during the second quarter of 2011 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.

8

ITEM 1A. RISK FACTORS.

Not Applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. (REMOVED AND RESERVED).

ITEM 5. OTHER INFORMATION.

We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report, 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 following exhibits are filed as part of this report or incorporated by reference:

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

9

SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 15, 2011	TEC TECHNOLOGY, INC.
	By:	/s/ Chun Lu
		Chun Lu, Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Yuhua Yang
		Yuhua Yang, Chief Financial Officer
		(Principal Financial Officer and Principal
		Accounting Officer)

10

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Chun Lu, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of TEC Technology, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 15, 2011

/s/ Chun Lu

Chun Lu

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Yuhua Yang, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of TEC Technology, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 15, 2011

/s/ Yuhua Yang

Yuhua Yang

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

     The undersigned, Chun Lu, the Chief Executive Officer of TEC TECHNOLOGY, INC. (the “Company”), DOES HEREBY CERTIFY that:

     1. The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

     2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

     IN WITNESS WHEREOF, each of the undersigned has executed this statement this 15^th day of August, 2011.

/s/ Chun Lu

Chun Lu

Chief Executive Officer

(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to TEC Technology, Inc. and will be retained by TEC Technology, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

     The undersigned, Yuhua Yang, the Chief Financial Officer of TEC TECHNOLOGY, INC. (the “Company”), DOES HEREBY CERTIFY that:

     1. The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

     2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

     IN WITNESS WHEREOF, each of the undersigned has executed this statement this 15^th day of August, 2011.

/s/ Yuhua Yang

Yuhua Yang

Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to TEC Technology, Inc. and will be retained by TEC Technology, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

XML



CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Preferred Stock, Par Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Common Stock, Par Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	300,000,000	300,000,000
Common Stock, Shares, Issued	30,181,552	30,181,552
Common Stock, Shares, Outstanding	30,181,552	30,181,552

XML



CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues	$ 4,770,019	$ 9,427,220	$ 8,195,144	$ 14,606,979
Cost of goods sold	3,368,433	6,443,918	5,784,261	9,957,895
Gross profit	1,401,586	2,983,302	2,410,883	4,649,084
Selling and marketing expenses	(418,562)	(486,367)	(626,369)	(789,867)
General and administrative expenses	(632,421)	(363,402)	(893,192)	(644,948)
Net income from operations	350,603	2,133,533	891,322	3,214,269
Other income (expenses)
Government grant	216,987	179,417	216,987	179,417
Other income		13,694		13,695
Interest expense	(414,264)	(292,217)	(660,177)	(679,560)
Net other income (expenses)	(197,277)	(99,106)	(443,190)	(486,448)
Net income before provision for income taxes	153,326	2,034,427	448,132	2,727,821
Provision for income taxes	(31,802)	(209,868)	(81,290)	(386,861)
Net income	121,524	1,824,559	366,842	2,340,960
Other comprehensive income (loss)
Foreign currency translation gain (loss)	217,077	20,048	299,163	40,986
Comprehensive income	$ 338,601	$ 1,844,607	$ 666,005	$ 2,381,946
Weighted average numbers of common shares
Basic	30,181,882	22,856,798	30,181,882	22,856,798
Diluted	30,181,882	22,859,798	30,181,882	22,856,798
Earnings per share
EPS Basic	$ 0.01	$ 0.08	$ 0.01	$ 0.1
EPS Diluted	$ 0.01	$ 0.08	$ 0.01	$ 0.1

XML



SHORT TERM BORROWINGS

3 Months Ended

Jun. 30, 2011

SHORT TERM BORROWINGS [Text Block]

17.	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		June 30, 2011			December 31, 2010
Industrial and Commercial Bank,		From September 16,
Longshou Branch, PRC	6.06% - 6.66%	2011 to March 23, 2012	$	3,937,115	*	$	3,864,182
China Merchant Bank, Heifei branch, PRC	6.94%	October 29, 2011		1,547,000	+		1,512,400
China Everbright Bank, Heifei branch, PRC	5.56%	November 22, 2011		4,641,000			4,537,200
Huishang Bank, Xuancheng branch, PRC	7.88%	February 16, 2011		2,011,100	*		3,024,800
Huishang Bank, Xuancheng branch, PRC	8.20%	April 11, 2012		4,641,000	*		-
China Construction Bank, Jingde branch, PRC	5.85%	November 3, 2011		2,359,447			-
			$	19,136,662		$	12,938,582

*	secured by land use rights
+	secured by third party’s guarantee

XML



Document and Entity Information	3 Months Ended
	Jun. 30, 2011	Aug. 15, 2011
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Trading Symbol	hghn
Entity Registrant Name	TEC Technology, Inc.
Entity Central Index Key	0001101246
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		30,181,552
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2

XML



COMMITMENTS AND CONTINGENCIES

3 Months Ended

Jun. 30, 2011

COMMITMENTS AND CONTINGENCIES [Text Block]

20.	COMMITMENTS AND CONTINGENCIES
	Total lease expenses for the three months ended June 30, 2011 and 2010 was $20,183 and $3,225, respectively. Total lease expenses for the six months ended June 30, 2011 and 2010 was $23,633 and $5,343, respectively.
	The future minimum lease payments as of June 30, 2011 and December 31, 2010 were $0.
	From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. As of June 30, 2011 and December 31, 2010, 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:

		June 30, 2011		December 31, 2010
Liquidated damages for - investment relation service with CCG	$	90,000	$	90,000

XML



RESTRICTED CASH

3 Months Ended

Jun. 30, 2011

RESTRICTED CASH [Text Block]

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 $109,466 and $1,164,598 as of June 30, 2011 and December 31, 2010, respectively.

XML



STOCK OPTIONS & WARRANTS

3 Months Ended

Jun. 30, 2011

STOCK OPTIONS & WARRANTS [Text Block]

21.	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 th , September 30 th , December 31 th 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. The Company calculated a stock based compensation of $93,800 and recognized $93,800 in stock based compensation expense for the six months ended June 30, 2011. As of June 30, 2011 and December 31, 2010, the prepaid compensation expense amount was $0 and $31,600, respectively

	Number of shares
			Exercise Price
	entitled to purchase			Expiration date
Issued June 15, 2010	80,000	$	2.00	June 15, 2015
Balance as of June 30, 2011	80,000	$	2.00
Warrants exercised	-		2.00
Warrants expired	-		2.00
Total outstanding as of June 30, 2011	80,000		2.00	June 15, 2015

Utilizing the Black Scholes option-pricing model, the share based compensation expense for the three months ended June 30, 2011 and 2010; the amounts were $39,628 and $0, respectively. The share based compensation expense for the six months ended June 30, 2011 and 2010; the amounts were $93,800 and $0, respectively.

XML



COMMON STOCK

3 Months Ended

Jun. 30, 2011

COMMON STOCK [Text Block]

19.	COMMON STOCK
	The Company has authorized Preferred stock of 10,000,000 shares with a par value of $0.001. As of March 31, 2011 and December 31, 2010, 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 June 30, 2011, and December 31, 2010, the Company has outstanding 30,181,552 issued common shares with a par value of $0.001 per share respectively.

XML



TAXES RECOVERABLE

3 Months Ended

Jun. 30, 2011

TAXES RECOVERABLE [Text Block]

11. TAXES RECOVERABLE

		June 30, 2011		December 31, 2010
VAT recoverable	$	1,294	$	2,389

XML



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Jun. 30, 2011

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Text Block]

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:

Name of subsidiary	Place of incorporation	Date of incorporation	Percentage of interest	Principal activity
TEC Technology Limited	Hong Kong	November 11, 2009	100% directly	Investment holding
Anhui TEC Tower Co ., Limited	People's Republic of China	April 19, 2006	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
Shuncheng Taida Technology Co., Limited	People's Republic of China	January 20, 2010	100% directly	The company has not commenced its business of engineering consultancy and design 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.
	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.

	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 our 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,ZTEC and STT. 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 HGHN as the acquired party.
	Upon completion of the exchange, TECTbecame wholly owned subsidiaries of HGHN. On the same date, Mr. Chun Lu, Chairman of the Board and Chief Executive Officer of HGHN, 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 our 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 365 th day 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 HGHN has active business operatons. For reporting purposes, the Company has assumed that Mr. Lu exercised his option immediately and thus HGHN, TECT and ATEC are effectively under same control of Mr. Lu when the Company acquired ATEC. The acquisition transactions between (i) HGHN and TECT and (ii) TECT and ATEC are 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 acquirer and HGHN and TECT as the acquired party 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 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 stock exchange transaction.
	HGHN, TECT, ATEC, ZTEC and STT are hereafter referred to as the Company.
	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, 2010.
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.

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. For international sales, the revenue recognition criteria are generally satisfied under Free on Board (“FOB”) and Cost Insurance Freight (“CIF”) terms, in which the Company’s reponsibility ends once the goods clear the port of shipment.
	Technical consulting service income is recognized when the relevant service is rendered.
	Government grants represent local authority grants to the company for infrastructure development and the revenue is recognized on cash basis when the local authority approves the grant to the company.
	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 $226,765 and $149,852 for the three months June 30, 2011 and 2010, respectively. Shipping and handling costs amounted to $355,866 and $289,572 for the six months ended June 30, 2011 and June 30, 2010.
2.8	ADVERTISING
	Advertising costs are expensed as incurred and totaled $0 and $1,539 for the three months June 30, 2011 and 2010, respectively. Advertising costs are expensed as incurred and totaled $0 and $2,582 for the six months June 30, 2011 and 2010, 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 June 31, 2011 and 2010 and for the six months ended June 30, 2011and 2010, 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.

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, STT 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 $982,264 as of June 30, 2011 and $683,041 as of December 31, 2010. The balance sheet amounts with the exception of equity as of June 30, 2011 and December 31, 2010 were translated at RMB6.46 to $1.00 and RMB6.82 to $1.00, respectively. The average translation rates applied to the statements of income and of cash flows for the six months ended June 30, 2011 and June 30, 2010 were RMB6.55 to $1.00 and RMB6.82 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.

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 statements 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 is 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, plant 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 INTANGBLE 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 June 30, 2011 and December 31, 2010, the Company determined no impairment charges were necessary.

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. Cost comprises 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 June 30, 2011 and December 31, 2010.
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 June 30, 2011 and December 31, 2010.
	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.

	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 six months ended June 30, 2011 and June 30, 2010. The product warranty reserve was $0 as of June 30, 2011 and December 31, 2010.
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.

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 June 30, 2011 and December 31, 2010 amounted to $2,659,363 and $2,088,297, 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	Six months ended	Six months ended
	June 30, 2011	June 30, 2010	June 30, 2011	June 30, 2010
Customer A	47.21%	41.18%	53.55%	37.71%
Customer B	15.73%	-	15.73%	-
Customer C	27.04%	-	15.67%	-
Customer D	-	-	8.41%	-
Customer E	9.46%	-	5.48%	-
Customer F	0.51%	-	-	-
Customer G	-	38.60%	-	24.85%
Customer H	-	-	-	10.33%
Customer I	-	-	-	10.22%
Customer J	-	12.44%	-	8.01%
Customer K	-	2.91%	-	-
Customer L	-	2.35%	-	-
	99.95%	97.48%	98.84%	91.12%

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

	June 30, 2011	December 31, 2010
Customer A	26.91%	31.46%
Customer B	13.38%	9.89%
Customer C	10.30%	-
Customer D	9.79%	16.73%
Customer E	9.69%	12.57%
Customer F	-	7.82%
	70.07%	78.47%

2.27	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 June 30, 2011 and 2010, basic and diluted earnings per share amount to $0.01 and $0.04, respectively. For the six months ended June 30, 2011 and 2010, basic and diluted earnings per share amount to $0.01 and $0.04, respectively.

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 June 30, 2011 or December 31, 2010, nor gains or losses are reported in the statement of income and 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 June 30, 2011 or June 30, 2010.
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 st 2010 and March 31 st of 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.

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.

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INVENTORY

3 Months Ended

Jun. 30, 2011

INVENTORY [Text Block]

8. INVENTORY

		June 30, 2011		December 31, 2010
Raw materials	$	1,788,574	$	2,590,642
Consumables		52,678		-
Work in progress		5,081,944		2,644,432
	$	6,923,196	$	5,235,074

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LAND USE RIGHTS

3 Months Ended

Jun. 30, 2011

LAND USE RIGHTS [Text Block]

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 $5,781,780 and the leases expire in 2061.

		June 30, 2011			December 31, 2010
Cost	$	8,122,093		$	2,178,255
Less: Accumulated amortization		(131,201	)		(106,484	)
Net book value	$	7,990,892		$	2,071,771

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.

Amortization expense was $10,932 and $10,564 for the three months ended June 30, 2011 and 2010, respectively. Amortization expense was $10,932 and $10,564 for the six months ended June 30, 2011 and 2010, respectively

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DEPOSITS AND PREPAID EXPENSES

3 Months Ended

Jun. 30, 2011

DEPOSITS AND PREPAID EXPENSES [Text Block]

9. DEPOSITS AND PREPAID EXPENSES

		June 30, 2011		December 31, 2010
Guarantee and utility deposits	$	961,562	$	828,170
Deposit for acquistion of land use rights		-		518,753
Land levelling, design fees and stamp duty prepaid expenses		-		3,110,145
Prepaid expenses		332,523		91,091
Advances to suppliers and services providers		710,935		874,436
Prepayment for purchase of property and equipment		744,885		2,269
Advances to logistic service providers		335,871		14,715
	$	3,085,776	$	5,439,579

Guarantee deposits are provided to financial institutions in return for the issuance of a corporate guarantee to financiers. Advances to suppliers are down payments or deposits for inventory purchases. ZTEC acquired land use rights of new land in the PRC and paid deposits for the acquisition of land use rights,

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ACCOUNTS RECEIVABLE

3 Months Ended

Jun. 30, 2011

ACCOUNTS RECEIVABLE [Text Block]

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 and six months ended June 30, 2011and 2010. Bad debts written off for the three months and six months ended June 30, 2011 and 2010 are $0.
	Aging of accounts receivable is as follows:

		June 30, 2011			December 31, 2010
within 3 months	$	10,636,788		$	13,658,262
over 3 months and within 6 months		3,897,660			356,438
over 6 months and within 1 year		1,909,187			343,298
over 1 year		100,936			68,354
		16,544,571			14,426,352
Less: Allowance for doubtful accounts		(70,000	)		(70,000	)
	$	16,474,571		$	14,356,352

Accounts receivable includes the amounts of $5,557,348 (12.31.2010: $3,151,959) that were factored to the Industrial and Commercial Bank, PRC and China Construction Bank, PRC for collection.

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Statement of Stockholders Equity (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Beginning Balance			$ 11,815,120
Net income for the year	121,524	1,824,559	366,842	2,340,960
Issuance of warrant			94,120
Ending Balance	$ 12,561,748		$ 12,561,748

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Jun. 30, 2011

RECENT ACCOUNTING PRONOUNCEMENTS [Text Block]

3.	RECENT ACCOUNTING PRONOUNCEMENTS
	In January 2010, FASB issued ASU No. 2010-01, Accounting for Distributions to Shareholders with Components of Stock and Cash. The amendments in this Update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The Company adopted this standard and has determined the standard does not have material effect on the Company’s consolidated financial statements.
	In January 2010, FASB issued ASU No. 2010-02 regarding accounting and reporting for decreases in ownership of a subsidiary. Under this guidance, an entity is required to deconsolidate a subsidiary when the entity ceases to have a controlling financial interest in the subsidiary. Upon deconsolidation of a subsidiary, and entity recognizes a gain or loss on the transaction and measures any retained investment in the subsidiary at fair value. In contrast, an entity is required to account for a decrease in its ownership interest of a subsidiary that does not result in a change of control of the subsidiary as an equity transaction. This ASU clarifies the scope of the decrease in ownership provisions, and expands the disclosures about the deconsolidation of a subsidiary or de-recognition of a group of assets. This ASU is effective for beginning in the first interim or annual reporting period ending on or after December 31, 2009. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements In January 2010, FASB issued ASU No. 2010-02 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification. The amendments in this Update affect accounting and reporting by an entity that experiences a decrease in ownership in a subsidiary that is a business or nonprofit activity. The amendments also affect accounting and reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit activity for an equity interest in another entity. The amendments in this update are effective beginning in the period that an entity adopts SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51.” If an entity has previously adopted SFAS No. 160 as of the date the amendments in this update are included in the Accounting Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopted SFAS No. 160. The Company adopted this standard and has determined the standard does not have material effect on the Company’s consolidated financial statements.
	In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarify existing disclosures as follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3.The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU, however, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In February 2010, the FASB issued Accounting Standards Update 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements,” or ASU 2010-09. ASU 2010-09 primarily rescinds the requirement that, for listed companies, financial statements clearly disclose the date through which subsequent events have been evaluated. Subsequent events must still be evaluated through the date of financial statement issuance; however, the disclosure requirement has been removed to avoid conflicts with other SEC guidelines. ASU 2010-09 was effective immediately upon issuance and was adopted in February 2010.

In April 2010, the FASB issued Accounting Standards Update 2010-13, “Compensation—Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades,” or ASU 2010-13. ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial porting of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company does not expect the adoption of ASU 2010-17 to have a significant impact on its consolidated financial statements.

In April 2010, the FASB issued Accounting Standard Update 2010-17, “Revenue Recognition—Milestone Method (Topic 605): Milestone Method of Revenue Recognition” or ASU 2010-17 . This Update provides guidance on the recognition of revenue under the milestone method, which allows a vendor to adopt an accounting policy to recognize all of the arrangement consideration that is contingent on the achievement of a substantive milestone (milestone consideration) in the period the milestone is achieved. The pronouncement is effective on a prospective basis for milestones achieved in fiscal years and interim periods within those years, beginning on or after June 15, 2010. The adoption of ASU 2010-17 does not have any significant impacts on the consolidated financial statements.

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” This update amends codification topic 310 on receivables to improve the disclosures that an entity provides about the credit quality of its financing receivables and the related allowance for credit losses. As a result of these amendments, an entity is required to disaggregate by portfolio segment or class certain existing disclosures and provide certain new disclosures about its financing receivables and related allowance for credit losses. This guidance is being phased in, with the new disclosure requirements for period end balances effective as of December 31, 2010, and the new disclosure requirements for activity during the reporting period are effective March 31, 2011. The troubled debt restructuring disclosures in this ASU have been delayed by ASU 2011-01 “Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20,” which was issued in January 2011.

In December 2010, the FASB issued Accounting Standards Update 2010-28 which amend “Intangibles- Goodwill and Other” (Topic 350). The ASU modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting entities, they are required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. An entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The qualitative factors are consistent with the existing guidance in Topic 350, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances changes that would more likely than not reduce the faire value of a reporting unit below its carrying amount. ASU 2010-28 is effective for fiscal years, and interim periods within those years beginning after December 15, 2010. Early adoption is not permitted. The Company is currently evaluating the impact of this ASU; however, the Company does not expect the adoption of this ASU will have a material impact on its consolidated financial statements.

In December 2010, the FASB issued Accounting Standards Update 2010-29 which address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations (Topic 805). This ASU specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This ASU also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and expected the adoption of this ASU will have an impact on its future business combination.

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INCOME TAXES

3 Months Ended

Jun. 30, 2011

INCOME TAXES [Text Block]

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 six months ended June 30, 2011 and 2010.
	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. The Company is currently evaluating the impact that the new EIT will have on its financial condition. 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 year ended December 31, 2010 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 of the company’s subsidiary ATEC is made at the local preferential EIT rate of 15% for the year ended December 31, 2010.
	The company’s subsidiaries ZTEC and STT have not commenced their business, therefore no provision for income taxes has been made for the six months ended June 30, 2011 and 2010.
	The following table reconciles the U.S statutory rates to the company’s effective tax rate for the June 30, 2011:

	2011
	$
U.S. Statutory rates	34%
Foreign income not recognized in USA	(34)%
Hong Kong profits tax	16.5%
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		Six months ended		Six months ended
		June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
Income tax
HGHN - US corporate tax	$	-	$	-	$	-	$	-
TECT - Hong Kong profits tax		-		-		-		-
ATEC - China EIT		31,802		209,868		81,290		386,861
ZTEC and STT - China EIT		-		-		-		-
Deferred tax		-		-		-		-
	$	31,802	$	209,868	$	81,290	$	386,861

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OBLIGATION UNDER MATERIAL CONTRACTS

3 Months Ended

Jun. 30, 2011

OBLIGATION UNDER MATERIAL CONTRACTS [Text Block]

22.

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 June 30, 2011 and December 31, 2010, CCG had not exercised the warrant.

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RELATED PARTIES TRANSACTIONS

3 Months Ended

Jun. 30, 2011

RELATED PARTIES TRANSACTIONS [Text Block]

24.	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.
	On January 13, 2010, the Company entered into and closed a share purchase agreement with Mr. Michael Anthony, the CEO of the Company at the time, and certain accredited purchasers signatory thereto, pursuant to which the Company sold an aggregate of 10,880,000 shares of common stock of the Company for a total of $225,000. Simultaneously with and as a condition to the closing of the share purchase agreement, the Company re-purchased 10,880,000 common shares from Corporate Services International Profit Sharing and Century Capital Partners, LLC, which are both beneficially owned by Mr. Anthony, for an aggregate purchase price of $225,000.

Name of related party	Nature of transactions
Mr. Chun Lu, former stockholder and his affiliates	Included in other payable, due to former stockholder and its affiliates are $3,429,273 and $2,789,568 as of June 30, 2011 and December 31, 2010, respectively. The amounts are unsecured, interest free and has no fixed term of repayment.

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PROPERTY AND EQUIPMENT

3 Months Ended

Jun. 30, 2011

PROPERTY AND EQUIPMENT [Text Block]

12. PROPERTY AND EQUIPMENT

		June 30, 2011			December 31, 2010
Buildings	$	2,727,010		$	2,584,596
Plant and machinery		1,271,792			1,351,729
Furniture, fixtures and office equipment		309,805			123,716
Motor vehicles		257,376			294,812
		4,565,983			4,354,853
Less: Accumulated depreciation		(746,999	)		(564,088	)
Net book value	$	3,818,984		$	3,790,765

Depreciation expense was $87,718 and $69,326 for the three months ended June 30, 2011 and 2010, respectively. Depreciation expense was $167,769 and $129,824 for the six months ended June 30, 2011 and 2010, respectively.

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CASH AND CASH EQUIVALENTS

3 Months Ended

Jun. 30, 2011

CASH AND CASH EQUIVALENTS [Text Block]

5. CASH AND CASH EQUIVALENTS

		June 30, 2011		December 31, 2010
Cash and bank balances	$	2,698,412	$	2,526,710

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OTHER PAYABLES AND ACCRUED EXPENSES

3 Months Ended

Jun. 30, 2011

OTHER PAYABLES AND ACCRUED EXPENSES [Text Block]

15. OTHER PAYABLES AND ACCRUED EXPENSES

		June 30, 2011		December 31, 2010
Due to former sole stockholder and his affiliates	$	3,249,273	$	2,789,568
Due to third parties		1,701,897		603,824
Due to employees		198,104		8,359
Accrued expenses		104,691		92,607
	$	5,253,965	$	3,494,358

Due to former sole stockholder and his affiliates, due to third parties and employees are unsecured, interest free and without a fixed term of repayment and are for unspecific business purposes.

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PRODUCT LINE INFORMATION

3 Months Ended

Jun. 30, 2011

PRODUCT LINE INFORMATION [Text Block]

23.

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:

		Three months ended		Three months ended		Six months ended		Six months ended
		June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
Domestic sales
Communication towers	$	2,702,957	$	3,935,310	$	4,837,967	$	7,077,759
Electricity supply towers		2,064,890		5,150,696		2,629,828		6,925,361
		4,767,847		9,086,006		7,467,795		14,003,120
Export sales
Communication towers		-		223,727		716,702		236,098
Electricity supply towers		2,053		117,487		2,044		367,761
		2,053		341,214		718,746		603,859
Technical service income		119		-		8,603		-
	$	4,770,019	$	9,427,220	$	8,195,144	$	14,606,979

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities
Net income for the period	$ 366,842	$ 2,340,960
Adjustments to reconcile net income to net cash (used in) provided by operating activites:
Depreciation	167,769	129,824
Loss on disposal of property and equipment	534
Amortization of land use rights	21,993	21,127
Stock based compensation	93,800
Changes in operating assets and liabilities
Decrease in restricted cash	1,055,132
Increase in inventory	(1,688,122)	(2,716,346)
(Increase)/decrease in deposits and prepaid expenses	(1,275,095)	635,351
Increase in accounts receivable	(2,100,219)	(8,703,430)
(Increase) decrease in other receivables	(2,104,730)	2,119,014
Decrease in taxes recoverable	1,095	4,889
Increase/(decrease) in taxes payable	46,418	(919,366)
(Decrease) increase in accounts payable	(600,628)	7,410,164
Decrease in customer deposits	(46,992)	(51,711)
Increase in other payables and accrued expenses	1,759,607	1,885,976
Net cash (used in) provided by operating activities	(4,302,596)	2,156,452
Cash flows from investing activities
Purchases of property and equipment	(91,561)	(455,446)
Proceeds from sale of property and equipment	5,345
Payment for construction in progress	(462,592)
Payment for purchase of land use rights	(2,188,275)
Net cash used in investing activities	(2,737,083)	(455,446)
Cash flows from financing activities
Common stock issued		10,987
Additional paid in capital raised		10,521
Proceeds from short term borrowings	7,000,447
Repayment of short term borrowings	(1,098,370)	(176,384)
Net cash provided by (used in) financing activities	5,902,077	(154,876)
Effects on exchange rate changes on cash	1,309,304	789
Increase in cash and cash equivalents	171,702	1,546,919
Cash and cash equivalents, beginning of period	2,526,710	161,133
Cash and cash equivalents, end of period	2,698,412	1,708,052
Supplementary disclosures of cash flow information:
Cash paid for interest	897,620	679,560
Cash paid for income taxes	2,196,414	386,861
Non cash financing activities
Issuance of warrant	94,120
Capital contributed by directors through assumption of debt	80,563
Non cash investing activities
Transfer from deposits and prepaid expenses to acquire land use rights
- Acquisition of land use rights	$ 3,628,868

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TAXES PAYABLE

3 Months Ended

Jun. 30, 2011

TAXES PAYABLE [Text Block]

16. TAXES PAYABLE

		June 30, 2011		December 31, 2010
Enterprise income tax payable	$	31,921	$	42,557
VAT payable		52,800		-
Individual income tax payable		6,305		2,051
	$	91,026	$	44,608

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CUSTOMER DEPOSITS

3 Months Ended

Jun. 30, 2011

CUSTOMER DEPOSITS [Text Block]

18. 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 June 30, 2011 and December 31, 2010, customer deposits amounted to $33,339 and $80,331, respectively.

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BUSINESS ORGANIZATION

3 Months Ended

Jun. 30, 2011

BUSINESS ORGANIZATION [Text Block]

1.	BUSINESS ORGANIZATION
	Highland Ridge, Inc. (formerly known as Sea Green, Inc., Americom Networks Corp. and Americom Networks International, Inc.) was incorporated on July 22, 1988 in the State of a Delaware, United States of America. On June 9, 2010, the Company changed its name from Highland Ridge, Inc. to TEC Technology, Inc. (the “Company” or “HGHN”).
	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 its 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 HGHN as the acquired party. Upon completion of the exchange, TECT became a wholly owned subsidiary of HGHN. On the same date, Mr. Chun Lu, Chairman of the Board and Chief Executive Officer of HGHN, 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. The accounting treatment for this transaction is essentially recapitalization of TECT with HGHN’s common stock.
	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 operation 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. 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.
	The Company’s headquarter is located at Xinqiao Industrial Park, Jingde Country, Anhui Province, 242600, PRC.

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OTHER RECEIVABLES

3 Months Ended

Jun. 30, 2011

OTHER RECEIVABLES [Text Block]

10. OTHER RECEIVABLES

		June 30, 2011		December 31, 2010
Due from employees	$	1,366,369	$	963,416
Due from third parties		1,402,838		661,156
Others		-		1,467
	$	2,769,207	$	1,626,039

Due from employees are the amounts advanced for business transactions on behalf of the Company and will be reconciled on the completion of the business transactions. Due from third parties are unsecured advances, interest free and without fixed terms of repayment and are for specific business purposes.

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CONSTRUCTION IN PROGRESS

3 Months Ended

Jun. 30, 2011

CONSTRUCTION IN PROGRESS [Text Block]

14. CONSTRUCTION IN PROGRESS

		June 30, 2011		December 31, 2010
Construction of office building and workshops	$	935,947	$	473,355

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CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2011	Dec. 31, 2010
Current assets
Cash and cash equivalents	$ 2,698,412	$ 2,526,710
Restricted cash	109,466	1,164,598
Accounts receivable, net of allowance for doubtful accounts	16,456,571	14,356,352
Inventory	6,923,196	5,235,074
Deposits and prepaid expenses	3,085,776	5,439,579
Other receivables	2,769,207	1,626,039
Taxes recoverable	1,294	2,389
Total current assets	32,043,922	30,350,741
Property and equipment
Property and equipment, net of accumulated depreciation	3,818,984	3,790,765
Land use rights, net of accumulated amortization	7,990,892	2,071,771
Construction in progress	935,947	473,355
Total non-current assets	12,745,823	6,335,891
Total assets	44,789,745	36,686,632
Current liabilities
Accounts payable	7,713,005	8,313,633
Other payables and accrued expenses	5,253,965	3,494,358
Taxes payables	91,026	44,608
Customer deposits	33,339	80,331
Short term borrowings	19,136,662	12,938,582
Total current liabilities	32,227,997	24,871,512
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 June 30, 2011 and December 31, 2010, respectively	30,182	30,182
Additional paid in capital	1,105,454	1,024,891
Retained earnings	10,443,848	10,077,006
Accumulated other comprehensive income	982,264	683,041
Total stockholders' equity	12,561,748	11,815,120
Total liabilities and stockholders' equity	$ 44,789,745	$ 36,686,632