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

FORM 10–Q

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

For the quarterly period ended: June 30, 2010

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

For the transition period from _____________ to _____________

Commission File No. 000-53432

TEC TECHNOLOGY, INC.
(Name of Small Business Issuer in Its Charter)

Xinqiao Industrial Park
Jingde County, Anhui Province, 242600
Shenzhen, P.R. China
(Address of principal executive offices)

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

N/A
(Former name, 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 [   ]                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.

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 equity, as of August 13, 2010 is as follows:

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2010 AND 2009
OF
TEC TECHNOLOGY, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

TEC TECHNOLOGY, INC.
(Incorporated in the State of Delaware, United States of America)

CONSOLIDATED BALANCE SHEETS

See accompanying notes of these consolidated financial statements

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TEC TECHNOLOGY, INC.
(Incorporated in the State of Delaware, United States of America)

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

See accompanying notes of these consolidated financial statements
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TEC TECHNOLOGY, INC.
(Incorporated in the State of Delaware, United States of America)

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes of these consolidated financial statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Any gain or loss arising on the sale or disposal of the asset is included in the income statement in the period the item is sold or otherwise disposed. Maintenance and repairs of property and equipment are charged to operations when incurred.

Depreciation expense was $69,326 and $38,611 for the three months ended June 30, 2010 and June 30, 2009 respectively. Depreciation expense was $129,824 and $73,445 for the six months ended June 30, 2010 and June 30, 2009

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.

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Accounts receivable includes the amounts of $3,457,974 (12.31.2009: $1,333,972) that was factored to the Industrial and Commercial Bank, PRC for collection.

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Due from former sole stockholder and his affiliates and loan due from third parties are unsecured advances, interest free and without fixed terms of repayment and are for the specific business purposes. Due from employees are the amounts advanced for business transactions on behalf of the company and will be reconciled on the completion of business transactions.

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Provision for income taxes is as follows:

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Special Note Regarding Forward Looking Statements

This report contains forward-looking statements. The forward-looking statements are contained principally in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned "Risk Factors" in our Current Report on Form 8-K, filed with the SEC on May 10, 2010. In some cases, you can identify forward-looking statements by terms such as "anticipates," “appears,” "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "would" and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Use of Certain Defined Terms

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

• "TEC Technology, Inc.," the "Company," "we," "us," and "our" refer to the combined business of TEC Technology, Inc. (formerly Highland Ridge, Inc.) and its direct and indirect subsidiaries, TEC Technology Limited, or "TEC," a Hong Kong limited company, and its wholly owned subsidiaries, Anhui TEC Tower Co., Ltd., or "TEC Tower," a PRC limited Company, and Shuncheng Taida Technology Co., Ltd., "Shuncheng," a PRC limited company; and TEC Tower's wholly owned subsidiary, Zhejiang TEC Tower Co., Ltd., or "ZTEC," as the case may be;

• "Hong Kong" refers to the Hong Kong Special Administrative Region of the People's Republic of China;

• "Exchange Act" means the Securities Exchange Act of 1934, as amended;

• "PRC," "China," and "Chinese," refer to the People's Republic of China;

• "Renminbi" and "RMB" refer to the legal currency of China;

• "Securities Act" are to the Securities Act of 1933, as amended; and

• "U.S. dollars," "dollars" and "$" refer to the legal currency of the United States.

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Overview of Our Business

Through our indirect Chinese subsidiary, Anhui TEC Tower, 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 the projects for end customers. Our electric transmission towers currently support 35kv, 110kv, 220kv, and 500kv transmission lines and we plan to build towers that support Ultra High Voltage (UHV) tower lines of 750+kv DC or 1000+kv AC transmission lines. Our wireless communication towers include single-tube towers, 4-strut towers and roof top towers for the 2G, 3G, and microwave market. We plan to expand our business in the near future to enter the communication base station system integration market and to offer tower installation and maintenance services. Our towers are primarily made of steel, but some contain aluminum or other alloy materials.

Our revenues currently are, and historically have been, generated from the sale of our tower products. Our revenues increased from $4.73 million in the three months ended June 30, 2009, to $9.43 million in the three months ended June 30, 2010, representing a compounded growth rate of approximately 99.5% . In the future we expect to offer installation and maintenance services that we believe will generate an additional revenue stream. To date we have generated no material revenues from such services.

Our headquarters are located in Anhui Province in southeastern China and our international sales network is operated from our branch office in the Shenzhen Special Economic Zone.

Executive Overview of Quarterly Results

The following summarizes certain key financial information for the second fiscal quarter.

• Revenue: Revenue was $9.43 million for the three months ended June 30, 2010, an increase of $4.70 million, or 99.5%, from $4.73 million for the same period last year.

• Gross Profit and Margin: Gross profit was $2.98 million for the three months ended June 30, 2010, an increase of $1.25 million, or 72.0%, from $1.73 million for the same period last year. Gross margin was 31.6% for the three months ended June 30, 2010 as compared to 36.7% for the same period last year, a 5% drop mainly due to slight downward price adjustment in the overall China power transmission industry and upward shift in material (steel) pricing.

• Net Income: Net income was $1.82 million for the three months ended June 30, 2010, an increase of $0.71 million, or approximately 64.5%, from $1.11 million for the same period of last year.

• Fully diluted net income per share: Fully diluted net income per share was approximately $0.08 for the three months ended June 30, 2010, based on 2,856,798 diluted common shares outstanding, as compared to approximately $0.06 for the same period last year, based on 30,181,582 diluted common shares outstanding.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

• Growth in the Chinese Economy. We operate our manufacturing facilities in China and derive over 50% of our revenues from sales to customers in China. Economic conditions in China, therefore, affect virtually all aspects of our operations, including the demand for our products, the availability and prices of our raw materials and our other expenses. Despite the global economic turmoil and economic slowdown during much of 2008 and 2009, China experienced economic growth, achieving a 8.7% growth in gross domestic product during 2009, with a fourth quarter rate of 10.7%. China appears to be emerging from the economic slowdown and is expected to experience continued growth. There are concerns and predictions of overheating in the high-end real estate market, which may slow down fixed asset investments in the real estate market, but such slow down is not expected to have a substantial adverse effect on investment in power transmission and communications markets which relate domestic infrastructure.

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• Product Development and Brand Recognition. We believe that in order to compete effectively in this market, we need to constantly improve the quality of our products and deliver new, innovative products. As such, we face the challenge of expanding our research and development capacity. We need to maintain a strong and sufficient research and development team and identify the right directions for our research and development. We also face the long-term challenge of developing our brand recognition. We plan to focus on building a reputation for quality and excellent customer service within our industry instead of on advertising. We believe that our sales and service team is key to developing the company's brand recognition and value.

• Growth of Transmission Projects. Sales of our tower products are dependent on the continued availability of transmission projects both in China and in emerging overseas markets. Growth in the domestic market depends primarily on China's continued investment in the electric transmission industry, in accordance with its 11^th 5-Year Plan, mainly through its investment in the state run electric transmission utility companies, State Grid Corporation of China and China Southern Power Grid, and in dozens of provincial level grid companies that supply regional and local grids. So far, China's investment in electric transmission has totaled over $100 billion, approximately 25% of which was spent on towers and related products and services, and we expect this investment to continue for the next 5-7 years. China's wireless communications market has also grown considerably in the past decade, with an estimated 700 million mobile phone users in China as of September 2009. Continued growth in the wireless communications market will depend on the success of planned service provider infrastructure investment of over $60 billion in the next five years, with the bulk of this amount expected to be allocated to tower and base station development. Continued growth in transmission projects in the developing overseas electric transmission and wireless communication markets will similarly depend on continued investments in these overseas markets, such as Africa's reported $3.2 billion annual investment in mobile communication infrastructure per year through 2010 and annual investments in the Middle East, Africa, and South America totaling over $15 billion a year, with annual growth rate of over 10%. We believe that if planned investments in electric and wireless communications projects in China and abroad continue, we will realize increased opportunities to sell our tower products and planned maintenance services.

Taxation

United States and Hong Kong

We are subject to United States tax at a tax rate of 34%. No provision for income taxes in the United States has been made as we have no income taxable in the United States. Our indirect subsidiary, TEC, was incorporated in Hong Kong and under the current laws of Hong Kong, is subject to Profits Tax of 16.5% . No provision for Hong Kong Profits Tax has been made as TEC HK has no taxable income.

China

Beginning January 1, 2008, the New EIT Law imposes a unified EIT of 25% on all domestic invested enterprises and FIEs, unless they qualify under certain limited exceptions. Under the New EIT Law, companies designated as High- and New-Technology Enterprises may enjoy a reduced national enterprise income tax of 15%. ATEC has applied for High- and New-Technology Enterprise designation and has received the certificate, and is entitled for 15% income tax rate from January, 2010. In addition to the changes to the current tax structure, under the New EIT Law, an enterprise established outside of China with "de facto management bodies" within China is considered a resident enterprise and will normally be subject to an EIT of 25% on its global income. The implementing rules define the term "de facto management bodies" as "an establishment that exercises, in substance, overall management and control over the production, business, personnel, accounting, etc., of a Chinese enterprise." If the PRC tax authorities subsequently determine that we should be classified as a resident enterprise, then our organization's global income will be subject to PRC income tax of 25%. For detailed discussion of PRC tax issues related to resident enterprise status, see "Risk Factors – Under the New EIT Law, we may be classified as a ‘resident enterprise' of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders."

In addition, the New EIT Law and its implementing rules generally provide that a 10% withholding tax applies to China-sourced income derived by non-resident enterprises for PRC enterprise income tax purposes unless the jurisdiction of incorporation of such enterprises' shareholder has a tax treaty with China that provides for a different withholding arrangement. TEC is considered an FIE and is directly held by our subsidiary in Hong Kong. According to a 2006 tax treaty between the Mainland and Hong Kong, dividends payable by an FIE in China to the company in Hong Kong who directly holds at least 25% of the equity interests in the FIE will be subject to a no more than 5% withholding tax. We expect that such 5% withholding tax will apply to dividends paid to TEC Tower by TEC, but this treatment will depend on our status as a non-resident enterprise.

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Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income and non-tax deductible expenses incurred. Our management carefully monitors these legal developments and will timely adjust our effective income tax rate when necessary.

Results of Operations

Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009

The following table sets forth key components of our unaudited results of operations for the periods indicated, both in dollars and as a percentage of our net sales.

Net sales. Our net sales are mainly generated from sales of our tower products. Our net sales increased $4.70 million, or 99.5%, to $9.43 million for the three months ended June 30, 2010 from $4.73 million during the same period in 2009. This increase in our net sales during the three months ended June 30, 2010, was mainly due to an increase in the number of large customers in the Chinese power industry and an increase in sales of our products to the overseas communications market. In response to market conditions, we modestly reduced the pricing of some of our power transmission tower products, but this was offset by the increase in sales volume. During the period, 56% of revenue came from the power industry, and 44% from the communications industry.

Cost of goods sold. Our cost of goods sold includes the direct costs of our raw materials, primarily steel, as well as the cost of labor and overhead. Our cost of goods sold increased $3.45 million, or 115.5%, to $6.44 million in the three months ended June 30, 2010, from $2.99 million during the same period in 2009. The increase in our cost of goods sold was primarily due to an increase in sales during the 2010 period. As a percentage of revenue, our cost of goods sold increased from 63.3% in the three months ended June 30, 2009, to 68.4% during the same period in 2010. The increase ratio of cost of goods sold to revenue reflected a recent slight downward adjustment in price in our power transmission tower products, combined with a slight increase in the price of steel in China.

Gross profit. Our gross profit is equal to the difference between our revenue and our cost of goods sold. Our gross profit increased $1.25 million, or 72.0%, to $2.98 million in the three months ended June 30, 2010, from $1.73 million during the same period in 2009. Gross profit as a percentage of revenue was 31.6% and 36.7% for three months ended June 30, 2010 and 2009, respectively.

Selling, 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, and our selling 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. In the three months ended June 30, 2010, our selling, general and administration expenses rose to $0.85 million, or 370.5%, from $0.18 million during the same period in 2009. The increase in costs was largely attributable to the establishment and expansion of our sales team in Shenzhen, and to increased costs incurred from generating additional sales.

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Other income. Other income is mainly income generated from the recycling of scrap metal and grant from local government to incentivize TEC business growth.

Interest expense. Interest expense increased $0.12 million, to $0.29 million, or 71.7%, in the three months ended June 30, 2010, from $0.17 million during the same period in 2009. Our interest payment in 2010 is expected to be comparable to that of end of 2009; however, the total amount of short-term loan in the second quarter of 2009 was about half of the current level. In addition, interest expense also included the costs of TEC’s loan guarantees.

Income (loss) before Income Taxes. Our income before income taxes increased by $0.55 million, or 37.8%, to $2.03 million in the three months ended June 30, 2010, from a net income of $1.48 million during the same period in 2009.

Income Taxes. Our income tax provisions decreased by $0.16 million, or 42.8%, to $0.21 million in the three months ended June 30, 2010, from $0.37 million during the same period in 2009. Since January 2010, TEC has qualified as a government recognized high-tech enterprise and has since been enjoying tax rate reduction from 25% to 15%.

Net (Loss) Income. In the three months ended June 30, 2010, we generated a net income of $1.82 million, an increase of $0.71 million, or 64.5%, from $1.11 during the same period in 2009. This increase was attributable to TEC’s increased sales volume, which doubled from the same period last year, but was slightly offset by decreased prices of tower products in the China power market and the slight increase in material costs.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

The following table sets forth key components of our unaudited results of operations for the periods indicated, both in dollars and as a percentage of our net sales.

Net sales. Our net sales increased $8.19 million, or 128.0%, to $14.60 million for the six months ended June 30, 2010 from $6.41 million during the same period in 2009. The increase in our net sales was primarily attributable to increased sales to a larger customer base in the power transmission industry and an increased volume of sales to customers in the overseas communications market. The increased sales volume was modestly offset by a reduction in the per-unit pricing of transmission tower products due to industry pricing pressures. Approximately half of our revenue for the six month period ended June 30, 2010 was from the power industry, with the other half generated from sales to customers in the communications industry.

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Cost of goods sold. Our cost of goods sold increased $5.75 million, or 136.4%, to $9.96 million in the six months ended June 30, 2010, from $4.21 million during the same period in 2009. The increases were primarily due to and in line with increased sales volume during the six month period ended June 30, 2010. As a percentage of revenue, our cost of goods sold increased from 65.7% in the six months ended June 30, 2009, to 68.2% during the same period in 2010, due to downward shift in transmission product per unit price in the China power industry, and upward shift in the costs of steel.

Gross profit. Our gross increased $2.45 million, or 111.7%, to $4.65 million in the six months ended June 30, 2010, from $2.20 million during the same period in 2009. Gross profit as a percentage of revenue was 31.8% and 34.3% for six months ended June 30, 2010 and 2009, respectively. The increases in the gross profit reflected TEC’s continued success in marketing and sales to both China and international markets; while the 2.5% reduction in gross margin resulted from our increased cost of sales relative to revenue and a slight decrease in per unit pricing.

Selling, general and administrative expenses. In the six months ended June 30, 2010, our selling, general and administration expenses rose to $1.43 million, or 217.5%, from $0.45 million during the same period in 2009. The increase in our selling, general and administrative expenses was primarily attributable to our establishment of a dedicated sales office in Shenzhen in September 2009 and increased professional fees associated with our public reporting company status, which combined to result in an increase to selling, general and administrative expenses.

Other income. Other income is mainly generated from the recycling of scrap metal and one-time government grant in the amount of $0.18 million received by TEC in recognition of TEC’s growing business and to incentivize its further growth.

Interest expense. Interest expense increased $0.42 million, to $0.68 million, or 166.0%, in the six months ended June 30, 2010, from $0.26 million during the same period in 2009, reflecting TEC’s increase in short-term loans through the 2009 period, which have largely remained at $12 million since the end of 2009.

Income (loss) before Income Taxes. Our income before income taxes increased by $1.15 million, or 72.6%, to $2.73 million in the six months ended June 30, 2010, from a net income of $1.58 million during the same period in 2009.

Income taxes. Our income tax provisions decreased by $0.01 million, or 2.5%, to $0.39 million in the six months ended June 30, 2010, from $0.40 million during the same period in 2009. The amount of taxes paid stayed at the same level, as two factors offset each other: income before taxes increased by about 75% while the income tax rate has been dropped to 15% from 25% since January 2001 after TEC became qualified as a high technology enterprise.

Net (Loss) income. In the six months ended June 30, 2010, we generated a net income of $2.34 million, an increase of $1.16 million, or 97.7%, from $1.18 during the same period in 2009.

Liquidity and Capital Resources

The following table sets forth a summary of our cash flows for the periods indicated:

Cash Flow
(all amounts in millions U.S. dollars)

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Operating activities

Net cash provided in operating activities was $2.16 million for the six months ended June 30, 2010, as compared to $3.12 million net cash used by operating activities for the same period in 2009.  The change in net cash from operating activities from period to period was primarily attributable to the collection of $2.1 million in Other Receivables during the 2010 period, as compared to an increase in Accounts Receivable which resulted in negative operating cash flow during the 2009 period.

Investing activities

Net cash used in investing activities for the six months ended June 30, 2010 was $0.46 million, as compared to $1.98 million net cash used in the same period in 2009. The 77% decrease in net cash used in investment was mainly attributable to our purchase of $1.64 million in land use rights during the 2009 period. Our investment in equipment increased from $0.33 million to $0.46 million to further augment our production capabilities.

Financing activities

Net cash used in financing activities for the six months ended June 30, 2010 was $0.15 million, as compared to $5.15 million net cash provided in the same period in 2009. During the first half of 2009, we borrowed $4.9 million in a short term loan. During the first half of 2010, our short-term debt remained at the same level.

Capital Expenditures

Our capital expenditures for the six months ended June 30, 2010 and 2009 were $0.46 million and $1.98 million, respectively, representing the total amount of investment activities. Our capital expenditures during the second quarter of 2010 consisted solely of capital expenditures relating to the construction of additional production lines, as compared the second quarter of 2009 when we purchased and acquired land use rights. As of June 30, 2010, we had cash and cash equivalents of $1.71 million, primarily consisting of cash on hand and demand deposits.

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, including loans, 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 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.

Loan Commitments

As of June 30, 2010, we did not hold any long-term loans. Our short-term bank loans, totaling $12.6 million, are as follows:

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We have a RMB 10,000,000 (approximately $1,464,129) revolving line of credit with the Hefei Sipailou Branch of China Merchants Bank, pursuant to a crediting agreement, dated September 27, 2009, between TEC Tower and the bank. This revolving line of credit is guaranteed by Anhui Sea-Converge Guarantee Co., Ltd., an unaffiliated company. The crediting agreement will terminate on September 27, 2010.

We also have at our disposal a RMB 6,300,000 revolving line of credit with the Longshou Sub-branch of Xuancheng Branch of Industrial and Commercial Bank of China, pursuant to a Collateral Agreement between TEC Tower and the bank. The line of credit is secured by TEC Tower's land use rights. To date, the Company has only utilized RMB 2,000,000 (approximately $292,826) of the line of credit. The line of credit will terminate on October 7, 2011.

Obligations under Material Contracts

Except with respect to the loan obligations disclosed under the "Loan Commitments" heading, we have no obligations to pay cash or deliver cash to any other party.

Inflation

There is upward inflationary pressure in both material costs and labor costs in China; however, the overall inflation in China in 2010 seems to be confined – around 3% according to the China National Development and Reform Commission, and is predicted to remain at the level. Compared to the same period in 2009, material costs – mainly costs of steel – inched up in 2010, and contributed to narrowed gross profit margin. Our management will closely monitor the price change in travel industry and continually maintain effective cost control 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, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor 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.

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Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

• 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 and 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.

• Business Combinations. 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.

• 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." It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated financial statements. The adoption of this standard has not had material impact on our consolidated financial statements.

• 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.

• Allowance for doubtful accounts. The Company reduces gross trade accounts receivable by an allowance for doubtful accounts. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company reviews its allowance for doubtful accounts on a regular basis and all past due balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

• Impairment of long-lived assets. 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 December 31, 2009 and December 31, 2008, the Company determined no impairment charges were necessary.

• Property, plant and equipment, net. 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 life of the assets. Any gain or loss arising on the sale or disposal of the asset is included in the income statement in the period the item is sold or otherwise disposed. Maintenance and repairs of property and equipment are charged to operations when incurred.

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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.



• 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. 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 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.
  

• 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 $6,507 and $Nil as incurred for the years ended December 31, 2009 and December 31, 2008, 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.
  

• Foreign currency translation. Reporting currency of the Company is the U.S. dollars. The functional currency of the Company is the Chinese Renminbi (RMB). For those entities whose functional currency is other than the US 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.

Recent Accounting Pronouncements

In June 2009, the FASB approved the "FASB Accounting Standards Codification" (the "Codification") as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. The Codification is effective for interim and annual periods ending after September 15, 2009.

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-04 "Accounting for Redeemable Equity Instruments - Amendment to Section 480-10-S99" which represents an update to section 480-10-S99, distinguishing liabilities from equity, per EITF Topic D-98, Classification and Measurement of Redeemable Securities . The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-05 "Fair Value Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair Value," which provides amendments to subtopic 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: (1) a valuation technique that uses (a) the quoted price of the identical liability when traded as an asset or (b) quoted prices for similar liabilities or similar liabilities when traded as assets; (2) another valuation technique that is consistent with the principles of Topic 820, such as a present value technique, which is an income approach, or a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability, which is a market approach. The amendments in this update clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments in this update also clarify that both a quoted price in an active market for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

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In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-08 "Earnings Per Share –Amendments to Section 260-10-S99", which represents technical corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share for a Period that includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock . The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-09 "Accounting for Investments - Equity Method and Joint Ventures and Accounting for Equity-Based Payments to Non-Employees." This update represents a correction to Section 323-10-S99-4, Accounting by an Investor for Stock-Based Compensation Granted to Employees of an Equity Method Investee. Additionally, it adds observer comment Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees to the Codification. The Company does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-12 "Fair Value Measurements and Disclosures Topic 820 – Investment in Certain Entities That Calculate Net Assets Value Per Share (or Its Equivalent)," which provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). The amendments in this update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity's measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this update, such as the nature of any restrictions on the investor's ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be make by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in U.S. GAAP on investments in debt and equity securities in paragraph 320-10-50-1B. The disclosures are required for all investments within the scope of the amendments in this update regardless of whether the fair value of the investment is measured using the practical expedient. The Company does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.

In October 2009, the Financial Accounting Standards Board issued an Accounting Standards Update ("ASU") regarding accounting for own-share lending arrangements in contemplation of convertible debt issuance or other financing. This ASU requires that at the date of issuance of the shares in a share-lending arrangement entered into in contemplation of a convertible debt offering or other financing, the shares issued shall be measured at fair value and be recognized as an issuance cost, with an offset to additional paid-in capital. Further, loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the basic and diluted earnings-per-share calculation. This ASU is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years for arrangements outstanding as of the beginning of those fiscal years. The Company is currently assessing the impact of this ASU on its consolidated financial statements.

In December 2009, FASB issued ASU No. 2009-16, Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 166, Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140. The amendments in this Accounting Standards Update improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance and the exception that permitted sale accounting for certain mortgage securitizations when a transferor has not surrendered control over the transferred financial assets. In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets. Comparability and consistency in accounting for transferred financial assets will also be improved through clarifications of the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

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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.

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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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEMS 4 AND 4A(T). 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) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our management, including Mr. Chun Lu, our Chief Executive Officer and Mr. Yuhua Yang, our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2010. Based on that evaluation, Messrs. Lu and Yang concluded that as of June 30, 2010, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective in accordance with Rule 13a-15(e).

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended June 30, 2010, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

Not applicable.

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

We have not sold any equity securities during the quarter ended June 30, 2010 which sale was not previously disclosed in a current report on Form 8-K filed during that period.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION

We have no information to include that was required to be but was not disclosed in a report on Form 8-K during the period covered by this Form 10-Q. 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:

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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EXHIBIT INDEX

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