**Washington,      D.C. 20549**

----

| x | **QUARTERLY                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|---|------------------------------------------------------------------------------------------------------------------------------------------|

**For      the Quarterly Period Ended September 30, 2006**

| o | **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 1-9078**

----

| **Delaware**(State                or other jurisdiction ofincorporation                or organization)                                       | **22-1620387**(I.R.S.                Employer Identification No.) |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|
|                                                                                                                                          |                                                                   |
| **One                Meadowlands Plaza****East                Rutherford, New Jersey**(Address                of principal executive offices) | **07073**(Zip                code)                                     |
|                                                                                                                                          |                                                                   |

**201-549-4400**

----

*Indicate      the number of shares outstanding of each of the issuer's classes of common      stock, as of the latest practicable date. *

| **Class**                                   |   | **Outstanding                at November 1, 2006** |
|---------------------------------------------|--------|----------------------------------------------------|
| Common                Stock, $.10 Par Value |   | 11,193,809                                         |

----

**PART      I. FINANCIAL INFORMATION**

----

**THE      ALPINE GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**(in      thousands, except share data)**

**(unaudited)**

|                                                                                                                                                                                                                                           |   | **September                  30,****2006** |     | **December                  31,******2005**** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|----------|-----------------------------------------------|--------|
| **ASSETS**                                                                                                                                                                                                                                     |   |                                       |     |                                          |   |
| Current                assets:                                                                                                                                                                                                                 |   |                                       |     |                                          |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                                       |   | $                                          | 427      |                                          | $      | 642 |   |
| Marketable                securities, at fair value (Note 1)                                                                                                                                                                                   |   |                                       | 42,907   |                                          |   | 22,976 |   |
| Restricted                cash and marketable securities (Note 1)                                                                                                                                                                         |   |                                       | 2,810    |                                          |   | — |   |
| Accounts                receivable                                                                                                                                                                                                             |   |                                       | 2,729    |                                          |   | 1,802 |   |
| Inventories,                net (Note 2)                                                                                                                                                                                                       |   |                                       | 299      |                                          |   | 666 |   |
| Notes                receivable from affiliate (Note 1)                                                                                                                                                                                        |   |                                       | 5,083    |                                          |   | 1,399 |   |
| Current                assets of discontinued operations (Note 4)                                                                                                                                                                         |   |                                       | 1,609    |                                          |   | 89,683 |   |
| Other                current assets                                                                                                                                                                                                            |   |                                       | 2,082    |                                          |   | 2,317 |   |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| Total                current assets                                                                                                                                                                                                            |   |                                       | 57,946   |                                          |   | 119,485 |   |
| Property,                plant and equipment, net                                                                                                                                                                                              |   |                                       | 798      |                                          |   | 1,181 |   |
| Investment                in affiliate (Note 1)                                                                                                                                                                                                |   |                                       | 11,313   |                                          |   | — |   |
| Deferred                income taxes                                                                                                                                                                                                           |   |                                       | 2,635    |                                          |   | 2,635 |   |
| Assets                of discontinued operations (Note 4)                                                                                                                                                                                      |   |                                       | —  |                                          |   | 17,337 |   |
| Other                non-current assets                                                                                                                                                                                                        |   |                                       | 2,384    |                                          |   | 2,212 |   |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| Total                assets                                                                                                                                                                                                                    |   | $                                          | 75,076   |                                          | $      | 142,850 |   |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                        |   |                                       |     |                                          |   |   |   |
| Current                liabilities:                                                                                                                                                                                                            |   |                                       |     |                                          |   |   |   |
| Current                portion of long-term debt                                                                                                                                                                                               |   | $                                          | 65       |                                          | $      | — |   |
| Accounts                payable                                                                                                                                                                                                                |   |                                       | 780      |                                          |   | 1,022 |   |
| Accrued                expenses                                                                                                                                                                                                                |   |                                       | 2,737    |                                          |   | 4,021 |   |
| Deferred                income taxes and income taxes payable                                                                                                                                                                                  |   |                                       | 1,694    |                                          |   | 2,024 |   |
| Current                liabilities of discontinued operations (Note 4)                                                                                                                                                                         |   |                                       | 16,403   |                                          |   | 71,118 |   |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| Total                current liabilities                                                                                                                                                                                                       |   |                                       | 21,679   |                                          |   | 78,185 |   |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| Long-term                debt (Note 5)                                                                                                                                                                                                         |   |                                       | 400      |                                          |   | 2,456 |   |
| Other                long-term liabilities (Note 6)                                                                                                                                                                                            |   |                                       | 19,009   |                                          |   | 18,530 |   |
| Warrant                                                                                                                                                                                                                                        |   |                                       | —  |                                          |   | 1,311 |   |
| Minority                interest in subsidiary                                                                                                                                                                                                 |   |                                       | —  |                                          |   | 5,528 |   |
| Liabilities                of discontinued operations                                                                                                                                                                                          |   |                                       | —  |                                          |   | 2,322 |   |
| Mandatorily                redeemable series A cumulative preferred stock (12,357 and 13,955                shares                outstanding at                September 30, 2006 and December 31, 2005, respectively (Note                7) |   |                                       | 4,656    |                                          |   | 5,263 |   |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| Stockholders'                equity:                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| 9%                cumulative convertible preferred stock at liquidation                value                                                                                                                                                   |   |                                       | 177      |                                          |   | 177 |   |
| Common                stock, $.10 par value; (50,000,000 authorized; 26,623,695 and 25,239,696                shares issued                at September 30, 2006 and December 31, 2005, respectively)                                     |   |                                       | 2,662    |                                          |   | 2,524 |   |
| Capital                in excess of par value                                                                                                                                                                                                  |   |                                       | 170,138  |                                          |   | 169,156 |   |
| Accumulated                other comprehensive income (Note 3)                                                                                                                                                                                 |   |                                       | 858      |                                          |   | 219 |   |
| Accumulated                deficit                                                                                                                                                                                                             |   |                                       | (28,070  | )                                             |   | (48,827 | ) |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| Treasury                stock, at cost (17,431,952 and 10,873,427 shares at September 30,                2006 and                December                31, 2005, respectively)                                                          |   |                                       | (116,139 | )                                             |   | (93,648 | ) |
| Receivable                from stockholders                                                                                                                                                                                                    |   |                                       | (294     | )                                             |   | (346 | ) |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| Total                stockholders' equity                                                                                                                                                                                                      |   |                                       | 29,332   |                                          |   | 29,255 |   |
|                                                                                                                                                                                                                                           |   |                                       |     |                                          |   |   |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                                      |   | $                                          | 75,076   |                                          | $      | 142,850 |   |

----

**THE      ALPINE GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

**(in      thousands, except per share data)**

**(unaudited)**

|                                                                                                                      |   | **Three                Months Ended****September                30,**  |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|
|                                                                                                                      |   | **2006**                                                                    |   | **2005** |   |
| Net                sales                                                                                                  |   | $                                                                           | 8,804  |   | $ | 3,356 |   |
| Cost                of goods sold                                                                                         |   |                                                                        | 8,768  |   |   | 3,262 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Gross                profit                                                                                               |   |                                                                        | 36     |   |   | 94 |   |
| Selling,                general and administrative expenses                                                               |   |                                                                        | 1,021  |   |   | 1,267 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Operating                loss                                                                                             |   |                                                                        | (985   | ) |   | (1,173 | ) |
| Interest                expense                                                                                           |   |                                                                        | (22    | ) |   | (211 | ) |
| Dividend                and interest income                                                                               |   |                                                                        | 434    |   |   | 165 |   |
| Realized                gains (losses) on sales of securities                                                             |   |                                                                        | (63    | ) |   | 362 |   |
| Other                income (expense), net                                                                                |   |                                                                        | 29     |   |   | (54 | ) |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Loss                before income taxes, equity in earnings of affiliate and discontinued                operations  |   |                                                                        | (607   | ) |   | (911 | ) |
| Income                tax benefit                                                                                         |   |                                                                        | 72     |   |   | 184 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Loss                before equity in earnings of affiliate and discontinued                operations                |   |                                                                        | (535   | ) |   | (727 | ) |
| Equity                in earnings of affiliate                                                                            |   |                                                                        | 1,313  |   |   | — |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Income                (loss) from continuing operations                                                              |   |                                                                        | 778    |   |   | (727 | ) |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Discontinued                operations (Note 4):                                                                          |   |                                                                        |   |   |   |   |   |
| Income                (loss) from operations of discontinued Essex Electric                                               |   |                                                                        | (124   | ) |   | 2,958 |   |
| Income                tax (provision) benefit                                                                             |   |                                                                        | 50     |   |   | (1,445 | ) |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Net                income (loss) on discontinued operations                                                               |   |                                                                        | (74    | ) |   | 1,513 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Net                income                                                                                                 |   |                                                                        | 704    |   |   | 786 |   |
| Preferred                stock dividends                                                                                  |   |                                                                        | (98    | ) |   | (111 | ) |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Net                income applicable to common stock                                                                 |   | $                                                                           | 606    |   | $ | 675 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Net                income (loss) per share of common stock:                                                               |   |                                                                        |   |   |   |   |   |
|                   Basic                                                                                         |   |                                                                        |   |   |   |   |   |
| Income                (loss) from continuing operations applicable to common stock                                   |   | $                                                                           | 0.06   |   | $ | (0.05 | ) |
| Income                (loss) from discontinued operations, net of tax                                                |   |                                                                        | (0.01  | ) |   | 0.09 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Net                income                                                                                            |   | $                                                                           | 0.05   |   | $ | 0.04 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Diluted                                                                                                                   |   |                                                                        |   |   |   |   |   |
| Income                (loss) from continuing operations applicable to common                stock                         |   | $                                                                           | 0.04   |   | $ | (0.05 | ) |
| Income                (loss) from discontinued operations, net of tax                                                     |   |                                                                        | (0.01  | ) |   | 0.09 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Net                income                                                                                            |   | $                                                                           | 0.03   |   | $ | 0.04 |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
|                                                                                                                      |   |                                                                        |   |   |   |   |   |
| Weighted                average shares outstanding:                                                                  |   |                                                                        |   |   |   |   |   |
| Basic                                                                                                                     |   |                                                                        | 11,116 |   |   | 15,961 |   |
| Diluted                                                                                                                   |   |                                                                        | 21,087 |   |   | 15,961 |   |

----

**THE      ALPINE GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS**

**(in      thousands, except per share data)**

**(unaudited)**

|                                                                                                                                        |   | **Nine                Months Ended****September                30,**  |    |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|---------|
|                                                                                                                                        |   | **2006**                                                                   |    | **2005** |   |
| Net                sales                                                                                                                    |   | $                                                                          | 22,872  |   | $ | 10,106 |   |
| Cost                of goods sold                                                                                                           |   |                                                                       | 22,859  |   |   | 9,752 |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Gross                profit                                                                                                                 |   |                                                                       | 13      |   |   | 354 |   |
| Selling,                general and administrative expenses                                                                                 |   |                                                                       | 3,268   |   |   | 3,557 |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Operating                loss                                                                                                               |   |                                                                       | (3,255  | ) |   | (3,203 | ) |
| Interest                expense                                                                                                             |   |                                                                       | (693    | ) |   | (615 | ) |
| Gain                on sale of stock of affiliate                                                                                           |   |                                                                       | 1,237   |   |   | — |   |
| Dividend                and interest income                                                                                                 |   |                                                                       | 1,422   |   |   | 502 |   |
| Realized                gains on sales of securities                                                                                        |   |                                                                       | 509     |   |   | 389 |   |
| Other                income (expense), net                                                                                                  |   |                                                                       | (18     | ) |   | 63 |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Loss                before income taxes, equity in earnings of affiliate and discontinued                operations                    |   |                                                                       | (798    | ) |   | (2,864 | ) |
| Income                tax benefit                                                                                                           |   |                                                                       | 304     |   |   | 581 |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Loss                before equity in earnings of affiliate and discontinued                operations                                  |   |                                                                       | (494    | ) |   | (2,283 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Equity                in earnings of affiliate                                                                                         |   |                                                                       | 1,313   |   |   | — |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Income                (loss) from continuing operations                                                                                |   |                                                                       | 819     |   |   | (2,283 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Discontinued                operations (Note 4):                                                                                            |   |                                                                       |    |   |   |   |   |
| Gain                (loss) from operations of discontinued Essex Electric (including                gain on                sale of $25,639) |   |                                                                       | 34,813  |   |   | (2,169 | ) |
| Income                tax (provision) benefit                                                                                               |   |                                                                       | (14,572 | ) |   | 614 |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Net                gain (loss) on discontinued operations                                                                                   |   |                                                                       | 20,241  |   |   | (1,555 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Net                income (loss)                                                                                                            |   |                                                                       | 21,060  |   |   | (3,838 | ) |
| Preferred                stock dividends                                                                                                    |   |                                                                       | (303    | ) |   | (335 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Net                income (loss) applicable to common stock                                                                            |   | $                                                                          | 20,757  |   | $ | (4,173 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Net                income (loss) per share of common stock:                                                                                 |   |                                                                       |    |   |   |   |   |
|                   Basic:                                                                                                          |   |                                                                       |    |   |   |   |   |
| Income                (loss) from continuing operations applicable to common stock                                                     |   | $                                                                          | 0.04    |   | $ | (0.16 | ) |
| Income                (loss) from discontinued operations, net of tax                                                                  |   |                                                                       | 1.52    |   |   | (0.10 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Net                income (loss)                                                                                                       |   | $                                                                          | 1.56    |   | $ | (0.26 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
|                   Diluted:                                                                                                        |   |                                                                       |    |   |   |   |   |
| Income                (loss) from continuing operations                                                                                |   | $                                                                          | 0.04    |   | $ | (0.16 | ) |
| Income                (loss) from discontinued operations                                                                              |   |                                                                       | 0.85    |   |   | (0.10 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Net                income (loss)                                                                                                       |   | $                                                                          | 0.89    |   | $ | (0.26 | ) |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
|                                                                                                                                        |   |                                                                       |    |   |   |   |   |
| Weighted                average shares outstanding:                                                                                    |   |                                                                       |    |   |   |   |   |
| Basic                                                                                                                                  |   |                                                                       | 13,272  |   |   | 15,790 |   |
| Diluted                                                                                                                                |   |                                                                       | 23,732  |   |   | 15,790 |   |

----

**THE      ALPINE GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY**

**(in      thousands, except share data)**

**(unaudited)**

|                                                                                                                                                                                         |   |  **Nine                Months Ended****September                30, 2006** |        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|-------------|
|                                                                                                                                                                                         |   | **Shares**                                                                      |        | **Amount** |   |
| Common                stock:                                                                                                                                                                 |   |                                                                            |        |   |   |   |   |
| Balance                at beginning of period                                                                                                                                                |   |                                                                            | 25,239,696  |   | $ | 2,524 |   |
| Shares                issued pursuant to Series A Preferred Stock conversion                                                                                                                 |   |                                                                            | 1,187,326   |   |   | 118 |   |
| Exercise                of stock options                                                                                                                                                     |   |                                                                            | 196,673     |   |   | 20 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Balance                at end of period                                                                                                                                                      |   |                                                                            | 26,623,695  |   |   | 2,662 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Capital                in excess of par value:                                                                                                                                               |   |                                                                            |        |   |   |   |   |
| Balance                at beginning of period                                                                                                                                                |   |                                                                            |        |   |   | 169,156 |   |
| Compensation                expense related to restricted stock and certain stock options, less                vested                shares released                from Treasury  |   |                                                                            |        |   |   | 335 |   |
| Shares                issued pursuant to Series A Preferred Stock conversion                                                                                                                 |   |                                                                            |        |   |   | 489 |   |
| Exercise                of stock options                                                                                                                                                     |   |                                                                            |        |   |   | 158 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Balance                at end of period                                                                                                                                                      |   |                                                                            |        |   |   | 170,138 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| 9%                cumulative convertible preferred stock:                                                                                                                                    |   |                                                                            |        |   |   |   |   |
| Balance                at beginning of period                                                                                                                                           |   |                                                                            | 177         |   |   | 177 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Balance                at end of period                                                                                                                                                 |   |                                                                            | 177         |   |   | 177 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Accumulated                other comprehensive income:                                                                                                                                       |   |                                                                            |        |   |   |   |   |
| Balance                at beginning of period                                                                                                                                                |   |                                                                            |        |   |   | 219 |   |
| Change                in unrealized losses on securities, (net of tax benefit of                $426)                                                                                        |   |                                                                            |        |   |   | 639 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Balance                at end of period                                                                                                                                                      |   |                                                                            |        |   |   | 858 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Accumulated                deficit:                                                                                                                                                          |   |                                                                            |        |   |   |   |   |
| Balance                at beginning of period                                                                                                                                                |   |                                                                            |        |   |   | (48,827 | ) |
| Net                income                                                                                                                                                                    |   |                                                                            |        |   |   | 21,060 |   |
| Dividends                on preferred stock                                                                                                                                                  |   |                                                                            |        |   |   | (303 | ) |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Balance                at end of period                                                                                                                                                      |   |                                                                            |        |   |   | (28,070 | ) |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Treasury                stock:                                                                                                                                                               |   |                                                                            |        |   |   |   |   |
| Balance                at beginning of period                                                                                                                                                |   |                                                                            | (10,873,427 | ) |   | (93,648 | ) |
| Stock                options and grants                                                                                                                                                 |   |                                                                            | 126,145     |   |   | 70 |   |
| Modified                Dutch Auction redemptions                                                                                                                                       |   |                                                                            | (6,684,670  | ) |   | (22,561 | ) |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Balance                at end of period                                                                                                                                                      |   |                                                                            | (17,431,952 | ) |   | (116,139 | ) |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Receivable                from stockholders:                                                                                                                                                 |   |                                                                            |        |   |   |   |   |
| Balance                at beginning of period                                                                                                                                                |   |                                                                            |        |   |   | (346 | ) |
| Forgiveness                of officer loans                                                                                                                                                  |   |                                                                            |        |   |   | 52 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Balance                at end of period                                                                                                                                                      |   |                                                                            |        |   |   | (294 | ) |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Total                stockholders' equity                                                                                                                                                    |   |                                                                            |        |   | $ | 29,332 |   |
|                                                                                                                                                                                         |   |                                                                            |        |   |   |   |   |
| Comprehensive                income                                                                                                                                                     |   |                                                                            |        |   | $ | 21,699 |   |

----

**THE      ALPINE GROUP, INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(in      thousands)**

**(unaudited)**

|                                                                                                                              |   | **Nine                Months Ended****September                30,** |     |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|----------|
|                                                                                                                              |   | **2006**                                                             |     | **2005** |   |
| Cash                flows from operating activities:                                                                              |   |                                                                 |     |   |   |   |   |
| Net                income (loss)                                                                                                  |   | $                                                                    | 21,060   |   | $ | (3,838 | ) |
| Adjustments                to reconcile net income (loss) to net cash provided by (used for)                operating activities: |   |                                                                 |     |   |   |   |   |
| Gain                on sale of Essex Electric assets                                                                              |   |                                                                 | (25,639  | ) |   | — |   |
| Depreciation                                                                                                                      |   |                                                                 | 242      |   |   | 964 |   |
| Amortization                of deferred debt issuance costs and accretion of debt                discount                         |   |                                                                 | 605      |   |   | 375 |   |
| Compensation                expense related to stock options and grants                                                           |   |                                                                 | 449      |   |   | 605 |   |
| Loss                on sale of capital assets and subsidiary stock                                                                |   |                                                                 | 161      |   |   | 693 |   |
| Gain                on sale of stock of affiliate                                                                                 |   |                                                                 | (1,237   | ) |   | — |   |
| Realized                gains on investments in marketable securities                                                             |   |                                                                 | (509     | ) |   | (337 | ) |
| Equity                in earnings of affiliate                                                                                    |   |                                                                 | (1,313   | ) |   | — |   |
| Minority                interest in income (loss) of subsidiary                                                                   |   |                                                                 | 1,617    |   |   | (325 | ) |
| Loss                on purchase of minority interest in subsidiary                                                                |   |                                                                 | 43       |   |   | — |   |
| Decrease                in fair value of warrant                                                                                  |   |                                                                 | —  |   |   | 6 |   |
| Change                in assets and liabilities:                                                                                  |   |                                                                 |     |   |   |   |   |
| Accounts                receivable, net                                                                                           |   |                                                                 | 66,466   |   |   | (19,984 | ) |
| Inventories,                net                                                                                                   |   |                                                                 | 8,852    |   |   | 7,542 |   |
| Other                current and non-current assets                                                                               |   |                                                                 | 462      |   |   | 655 |   |
| Accounts                payable and accrued expenses                                                                              |   |                                                                 | (34,580  | ) |   | 4,769 |   |
| Income                taxes                                                                                                  |   |                                                                 | 2,663    |   |   | (6,728 | ) |
| Other,                net                                                                                                         |   |                                                                 | 481      |   |   | 575 |   |
|                                                                                                                              |   |                                                                 |     |   |   |   |   |
| Cash                flows provided by (used for) operating activities                                                             |   |                                                                 | 39,823   |   |   | (15,028 | ) |
|                                                                                                                              |   |                                                                 |     |   |   |   |   |
| Cash                flows from investing activities:                                                                              |   |                                                                 |     |   |   |   |   |
| Capital                expenditures                                                                                               |   |                                                                 | (161     | ) |   | (2,297 | ) |
| Proceeds                from sale of assets                                                                                       |   |                                                                 | 228      |   |   | 1,035 |   |
| Proceeds                from sale of investments                                                                                  |   |                                                                 | 85,689   |   |   | 15,264 |   |
| Advances                under loans to affiliate                                                                                  |   |                                                                 | (3,685   | ) |   | (1,773 | ) |
| Proceeds                from sale of Essex Electric assets, net of transaction                costs                               |   |                                                                 | 53,981   |   |   | — |   |
| Proceeds                from sale of stock of affiliate                                                                           |   |                                                                 | 1,237    |   |   | — |   |
| Purchase                of marketable securities                                                                                  |   |                                                                 | (106,862 | ) |   | (1,705 | ) |
| Purchase                of minority interest and warrant                                                                          |   |                                                                 | (8,500   | ) |   | — |   |
| Investment                in affiliate                                                                                            |   |                                                                 | (10,000  | ) |   | — |   |
|                                                                                                                              |   |                                                                 |     |   |   |   |   |
| Cash                flows provided by investing activities                                                                        |   |                                                                 | 11,927   |   |   | 10,524 |   |
|                                                                                                                              |   |                                                                 |     |   |   |   |   |
| Cash                flows from financing activities:                                                                              |   |                                                                 |     |   |   |   |   |
| Borrowings                (repayments) under revolving credit facilities, net                                                     |   |                                                                 | (26,725  | ) |   | 4,222 |   |
| Repayments                of long-term borrowings                                                                                 |   |                                                                 | (2,563   | ) |   | (387 | ) |
| Dividends                on preferred stock                                                                                       |   |                                                                 | (302     | ) |   | (334 | ) |
| Proceeds                from exercise of stock options                                                                            |   |                                                                 | 186      |   |   | — |   |
| Reverse                - forward split                                                                                            |   |                                                                 | —  |   |   | (17 | ) |
| Proceeds                from minority interest investment in subsidiary                                                           |   |                                                                 | —  |   |   | 1,241 |   |
| Common                stock redemptions from Modified Dutch Auction                                                               |   |                                                                 | (22,561  | ) |   | — |   |
|                                                                                                                              |   |                                                                 |     |   |   |   |   |
| Cash                flows provided by (used for) financing activities                                                             |   |                                                                 | (51,965  | ) |   | 4,725 |   |
|                                                                                                                              |   |                                                                 |     |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                                               |   |                                                                 | (215     | ) |   | 221 |   |
| Cash                and cash equivalents at beginning of period                                                                   |   |                                                                 | 642      |   |   | 611 |   |
|                                                                                                                              |   |                                                                 |     |   |   |   |   |
| Cash                and cash equivalents at end of period                                                                         |   | $                                                                    | 427      |   | $ | 832 |   |
|                                                                                                                              |   |                                                                 |     |   |   |   |   |
| Supplemental                disclosures:                                                                                          |   |                                                                 |     |   |   |   |   |
| Cash                paid for interest                                                                                             |   | $                                                                    | 449      |   | $ | 2,295 |   |
| Cash                paid for income taxes, net                                                                                    |   | $                                                                    | 11,039   |   | $ | 4,988 |   |

----

**THE      ALPINE GROUP, INC. AND SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER      30, 2006**

**(unaudited)**

**1.      General**

***Basis      of presentation and description of business***

*Consolidation      of All Majority - Owned Subsidiaries*

***Segment      Information***

***Marketable      securities***

*Accounting      for Certain Investments in Debt and Equity Securities*

|                                                 |   | **(in                  thousands)** |   |
|------------------------------------------------------|--------|-------------------------------------|--------|
|  Description                  of Securities     |   | CostBasis                           |   | UnrealizedGains |   | UnrealizedLosses* |   | FairValue |   |
| Money                  market funds                  |   | $                                   | 613    |   | $ | — |   | $ | — |   | $ | 613 |   |
| Marketable                  equity securities        |   |                                | 5,869  |   |   | 421 |   |   | (17 | ) |   | 6,273 |   |
| Municipal                  bonds and notes           |   |                                | 26,178 |   |   | 49 |   |   | — |   |   | 26,227 |   |
| Mutual                  funds                        |   |                                | 10,335 |   |   | 1,021 |   |   | — |   |   | 11,356 |   |
| Preferred                  securities                |   |                                | 250    |   |   | — |   |   | — |   |   | 250 |   |
| Government                  securities               |   |                                | 999    |   |   | — |   |   | (1 | ) |   | 998 |   |
| Subtotal                                             |   |                                | 44,244 |   |   | 1,491 |   |   | (18 | ) |   | 45,717 |   |
| Less:                  Restricted (See Note 1 below) |   |                                | (2,810 | ) |   | — |   |   | — |   |   | (2,810 | ) |
| Total                                                |   | $                                   | 41,434 |   | $ | 1,491 |   | $ | (18 | ) | $ | 42,907 |   |

----

***Notes      receivable from affiliate***

***Restricted      cash and marketable securities***

***Subsidiary      stock transactions***

***Related      party transactions***

***Recent      accounting standards***

----

**2.      Inventories**

|                           |   | **September                30,****2006** |   | **December 31,****2005** |   |
|--------------------------------|--------|------------------------------------------|--------|-------------------------------|--------|
|                           |   | **(in                thousands)**   |   |
| Raw                materials   |   | $                                        | 286    |                          | $      | 651 |   |
| Work                in process |   |                                     | 598    |                          |   | 393 |   |
|                           |   |                                     | 884    |                          |   | 1,044 |   |
| LIFO                reserve    |   |                                     | (585   | )                             |   | (378 | ) |
|                           |   | $                                        | 299    |                          | $      | 666 |   |

**3.      Comprehensive income (loss)**

|                                                                         |   | **Three                Months Ended****September                30,** |   |
|------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                                                         |   | **2006**                                                              |   | **2005** |   |
|                                                                         |   | **(in                thousands)**                                |   |
| Net                income                                                    |   | $                                                                     | 704    |   | $ | 786 |   |
| Change                in unrealized gains (losses) on securities, net of tax |   |                                                                  | 534    |   |   | (46 | ) |
|                                                                         |   |                                                                  |   |   |   |   |   |
| Comprehensive                income                                          |   | $                                                                     | 1,238  |   | $ | 740 |   |

|                                                                  |   | **Nine                    Months Ended September 30,** |   |
|-----------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                  |   | **2006**                                               |   | **2005** |   |
|                                                                  |   | **(in                  thousands)**                    |   |
| Net                  income (loss)                                    |   | $                                                      | 21,060 |   | $ | (3,838 | ) |
| Change                  in unrealized gains on securities, net of tax |   |                                                   | 639    |   |   | 137 |   |
| Comprehensive                  income (loss)                          |   | $                                                      | 21,699 |   | $ | (3,701 | ) |

**4.      Discontinued operations - Essex Electric**

----

*Accounting      for the Impairment or Disposal of Long-Lived Assets*

|                                                                            |   | **September                  30,****2006 ** |    | ****December                31,******2005** |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|---------------------------------------------|--------|
|                                                                            |   |  **(in                thousands)**          |    |
| **ASSETS**                                                                      |   |                                             |    |                                        |   |   |   |
| Current              assets:                                                    |   |                                             |    |                                        |   |   |   |
| Accounts                receivable                                              |   | $                                                | 5       |                                        | $      | 67,398 |   |
| Inventories,                net of LIFO reserve of $29,740 at December 31, 2005 |   |                                             | — |                                        |   | 20,758 |   |
| Other                current assets                                             |   |                                             | 1,604   |                                        |   | 1,527 |   |
|                                                                            |   |                                             |    |                                        |   |   |   |
| Total                current assets                                             |   | $                                                | 1,609   |                                        | $      | 89,683 |   |
| Property,                plant and equipment, net                               |   |                                             | — |                                        |   | 16,546 |   |
| Other                assets                                                     |   |                                             | — |                                        |   | 791 |   |
|                                                                            |   |                                             |    |                                        |   |   |   |
| Total                assets                                                     |   | $                                                | 1,609   |                                        | $      | 107,020 |   |
|                                                                            |   |                                             |    |                                        |   |   |   |
| **LIABILITIES**                                                                 |   |                                             |    |                                        |   |   |   |
| Current                liabilities:                                             |   |                                             |    |                                        |   |   |   |
| Revolving                credit facility                                        |   | $                                                | — |                                        | $      | 26,725 |   |
| Accounts                payable                                                 |   |                                             | 373     |                                        |   | 24,380 |   |
| Accrued                expenses                                                 |   |                                             | 1,631   |                                        |   | 11,355 |   |
| Deferred                income taxes and income taxes payable                   |   |                                             | 14,399  |                                        |   | 8,658 |   |
|                                                                            |   |                                             |    |                                        |   |   |   |
| Total                current liabilities                                        |   |                                             | 16,403  |                                        |   | 71,118 |   |
|                                                                            |   |                                             |    |                                        |   |   |   |
| Deferred                income taxes                                            |   |                                             | — |                                        |   | 2,322 |   |
|                                                                            |   |                                             |    |                                        |   |   |   |
| Total                liabilities                                                |   |                                             | 16,403  |                                        |   | 73,440 |   |
| Net                assets (liabilities)                                         |   | $                                                | (14,794 | )                                           | $      | 33,580 |   |

|                                |   | **Three                  Months Ended****September                  30,** |    | **Nine                  Months Ended****September                  30,** |   |
|-------------------------------------|--------|---------------------------------------------------------------------------|---------|--------------------------------------------------------------------------|--------|
|                                |   | **2006**                                                                  |    | **2005**                                                                 |   | **2006** |   | **2005** |   |
|                                |   | **(in                thousands)**                                         |    |
| Net                Sales            |   | $                                                                         | — |                                                                     | $      | 109,665 |   | $ | 60,066 |   | $ | 290,559 |   |
| Pretax                income (loss) |   |                                                                      | — |                                                                     |   | 3,234 |   |   | 17,304 |   |   | (2,494 | ) |

----

|                                             |   | **Total                expected to be incurred** |   | **Incurred                in three months ended September 30, 2006** |   | **Total                costs incurred through September 30, 2006** |   | **Liability                as of September 30, 2006** |   |
|--------------------------------------------------|--------|--------------------------------------------------|--------|----------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|-------------------------------------------------------|--------|
|                                             |   | **(in                thousands)**           |   |
| One                time termination benefits (a) |   | $                                                | 2,926  |                                                                 | $      | 146                                                                |   | $                                                     | 2,376  |   | $ | 387 |   |
| Contract                termination costs (b)    |   |                                             | 2,555  |                                                                 |   | 46                                                                 |   |                                                  | 2,555  |   |   | 391 |   |
| Write-down                of assets (c)          |   |                                             | 255    |                                                                 |   | —                                                            |   |                                                  | 255    |   |   | — |   |
| Transition                and other costs (d)    |   |                                             | 2,258  |                                                                 |   | (92                                                                | )      |                                                  | 1,287  |   |   | 50 |   |
|                                             |   |                                             |   |                                                                 |   |                                                               |   |                                                  |   |   |   |   |   |
| Totals                                           |   | $                                                | 7,994  |                                                                 | $      | 100                                                                |   | $                                                     | 6,473  |   | $ | 828 |   |

| (a)   | Certain                severance payments and transactional bonuses were accrued as of the                January 31, 2006 closing date of the Essex Electric Sale. The remaining                liability represents primarily unpaid severance for employees remaining                with the Company through a transitional phase which will be completed                in                2006. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                a prepayment penalty and other loan fees related to the revolving                credit                facility that was terminated concurrently with the sale, as well                as an                accrual for the present value of future lease obligations for discontinued                facilities, net of estimated income from sub-lease arrangements.                The                remaining liability represents the unamortized portion of the future                lease                obligations. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Represents                the write-down of certain assets that became surplus or obsolete                with the                sale. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Includes                personnel and other costs associated with the post - Essex Electric                Sale                transition period. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

**5.**
**      Long-term debt**

|                                                                                                                                                                             |   | **September                  30,****2006** |   | **December                31,****2005** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|-----------------------------------------|--------|
|                                                                                                                                                                             |   | **(in****thousands****)**             |   |
| 6%                Junior Subordinated Notes, net of $0.1 and $0.6 million                discount, at                September 30, 2006 and December 31, 2005, respectively |   | $                                          | 465    |                                    | $      | 2,456 |   |
| 6%                Less current portion of long-term debt                                                                                                                    |   |                                       | (65    | )                                       |   | — |   |
|                                                                                                                                                                             |   | $                                          | 400    |                                    | $      | 2,456 |   |

----

**6.      Other long-term liabilities**

|                                                 |   | **September                  30,****2006** |   | **December                  31,****2005** |   |
|------------------------------------------------------|--------|--------------------------------------------|--------|-------------------------------------------|--------|
|                                                 |   | **(in                  thousands)**        |   |
| Tax                  contingency reserve   |   | $                                          | 17,616 |                                      | $      | 17,106 |   |
| Other                  long-term liabilities    |   |                                       | 1,393  |                                      |   | 1,424 |   |
|                                                 |   | $                                          | 19,009 |                                      | $      | 18,530 |   |

**7.      Series A Cumulative Convertible Preferred Stock**

----

**8.      Earnings Per Share**

|                                                                                                                                             |   |  **Three                  Months Ended September 30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|--------|
|                                                                                                                                             |   |  **2006**                                              |   | **2005** |   |
|                                                                                                                                             |   | **Net                  Income (loss)**                      |   | **Weighted**** ****Average****Shares** |   | **Per                  Share****Amount** |   | **Net                  Income****(loss)** |   | **Weighted                  Average****Shares** |   | **Per                  Share****Amount** |   |
| **Basic                  earnings (loss) per share**                                                                                             |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss) from continuing operations                                                                                    |   | $                                                           | 778    |   |   | 11,116 |   | $ | 0.07 |   | $ | (727 | ) |   | 15,961 |   | $ | (0.04 | ) |
| Adjustments:                                                                                                                                     |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred                  stock dividends                                                                                                       |   |                                                        | (98    | ) |   | 11,116 |   |   | (0.01 | ) |   | (111 | ) |   | 15,961 |   |   | (0.01 | ) |
| Income                  (loss) attributable to common stock from continuing                  operations                                          |   | $                                                           | 680    |   |   | 11,116 |   | $ | 0.06 |   | $ | (838 | ) |   | 15,961 |   |   | (0.05 | ) |
| Loss                  from discontinued operations, net of tax                                                                                   |   |                                                        | (74    | ) |   | 11,116 |   |   | (0.01 | ) |   | 1,513 |   |   | 15,961 |   |   | 0.09 |   |
| Net                  income (loss) applicable to common stock per basic common                  share                                            |   | $                                                           | 606    |   |   | 11,116 |   | $ | 0.05 |   | $ | 675 |   |   | 15,961 |   | $ | 0.04 |   |
| **Diluted                  earnings (loss) per share**                                                                                           |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss) from continuing operations applicable to common                  stock                                        |   | $                                                           | 680    |   |   |   |   | $ | 0.06 |   | $ | (838 | ) |   | 15,961 |   | $ | (0.05 | ) |
| Effect                  of dilutive securities:                                                                                                  |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted                  stock plans                                                                                                          |   |                                                        |   |   |   | 318 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                  option plans                                                                                                              |   |                                                        |   |   |   | 450 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible                  preferred stock                                                                                                     |   |                                                        | 98     |   |   | 9,203 |   |   |   |   |   |    |   |   |   |   |   |    |   |
| Income                  (loss) attributable to common stock from continuing operations                  and assumed                  conversions |   |                                                        | 778    |   |   | 21,087 |   | $ | 0.04 |   |   | (838 | ) |   | 15,961 |   |   | (0.05 | ) |
| Loss                  from discontinued operations                                                                                               |   |                                                        | (74    | ) |   | 21,087 |   |   | (0.01 | ) |   | 1,513 |   |   | 15,961 |   |   | 0.09 |   |
| Income                  (loss) attributable to common stock per diluted common                  share                                            |   | $                                                           | 704    |   |   | 21,087 |   | $ | 0.03 |   | $ | 675 |   |   | 15,961 |   | $ | 0.04 |   |

----

|                                                                                                                                               |   |  **Nine                  Months Ended September 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                                                                                                               |   |  **2006**                                             |   | **2005** |   |
|                                                                                                                                               |   | **Net                  Income (loss)**                     |   | **Weighted**** ****Average****Shares** |   | **Per                  Share****Amount** |   | **Net                  Income (loss)** |   | **Weighted                  Average****Shares** |   | **Per                  Share****Amount** |   |
| **Basic                  earnings (loss) per share**                                                                                               |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss) from continuing operations                                                                                      |   | $                                                          | 819    |   |   | 13,272 |   | $ | 0.06 |   | $ | (2,283 | ) |   | 15,790 |   | $ | (0.14 | ) |
| Adjustments:                                                                                                                                       |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred                  stock dividends                                                                                                         |   |                                                       | (303   | ) |   | 13,272 |   |   | (0.02 | ) |   | (335 | ) |   | 15,790 |   |   | 0.02 |   |
| Net                  income (loss) applicable to common stock from continuing                  operations                                          |   |                                                       | 516    |   |   | 13,272 |   |   | 0.04 |   |   | (2,618 | ) |   | 15,790 |   |   | (0.16 | ) |
| Net                  income from sale of Essex Electric, net of tax                                                                                |   |                                                       | 15,383 |   |   | 13,272 |   |   | 1.16 |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from discontinued operations, net of tax                                                                            |   |                                                       | 4,858  |   |   | 13,272 |   |   | 0.36 |   |   | (1,555 | ) |   | 15,790 |   |   | (0.10 | ) |
| Net                  income (loss) applicable to common stock per basic and diluted                  common                  share                 |   | $                                                          | 20,757 |   |   | 13,272 |   | $ | 1.56 |   | $ | (4,173 | ) |   | 15,790 |   | $ | (0.26 | ) |
| **Diluted                  earnings (loss) per share**                                                                                             |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss) from continuing operations applicable to common                  stock                                          |   | $                                                          | 516    |   |   | 13,272 |   | $ | 0.04 |   | $ | (2,618 | ) |   | 15,790 |   | $ | (0.16 | ) |
| Effect                  of dilutive securities:                                                                                                    |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted                  stock plans                                                                                                            |   |                                                       |   |   |   | 370 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                  option plans                                                                                                                |   |                                                       |   |   |   | 501 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible                  preferred stock                                                                                                       |   |                                                       | 303    |   |   | 9,589 |   |   |   |   |   |    |   |   |   |   |   |    |   |
| Net                  income (loss) applicable to common stock from continuing operations                  and                  assumed conversions |   |                                                       | 819    |   |   | 23,732 |   | $ | 0.04 |   |   | (2,618 | ) |   | 15,790 |   |   | (0.16 | ) |
| Income                  from sale of Essex Electric                                                                                                |   |                                                       | 15,383 |   |   | 23,732 |   | $ | 0.65 |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from discontinued operations                                                                                        |   |                                                       | 4,858  |   |   | 23,732 |   |   | 0.20 |   |   | (1,555 | ) |   | 15,790 |   |   | (0.10 | ) |
| Income                  (loss) applicable to common stock per diluted common share                                                                 |   | $                                                          | 21,060 |   |   | 23,732 |   | $ | 0.89 |   | $ | (4,173 | ) |   | 15,790 |   | $ | (0.26 | ) |

**9.      Stock based compensation plans**

----

|                                                   |   | **Deferred                Stock Account Plan**  |    | **Non-Employee                Directors Plan**       |   | **1984                Restricted Stock Plan**  |   |
|--------------------------------------------------------|--------|------------------------------------------------------|---------|-----------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                   |   | **Shares**                                           |    | **Weighted                Average Grant Date Fair Value** |   | **Shares**                                          |   | **Weighted                Average Grant Date****Fair                Value** |   | **Shares** |   | **Weighted                Average Grant Date Fair Value** |   |
| Nonvested                balance at December 31, 2005  |   |                                                 | 137,763 |                                                      | $      | 0.86                                                |   |   | 139,345 |   | $ | 1.08 |   |   | 29,670 |   | $ | 1.65 |   |
| Granted                                                |   |                                                 | — |                                                      |   | —                                             |   |   | 5,031 |   |   | 2.76 |   |   | — |   |   | — |   |
| Vested                                                 |   |                                                 | (20,000 | )                                                         |   | 0.86                                                |   |   | (19,569 | ) |   | 0.63 |   |   | (5,833 | ) |   | 2.01 |   |
| Forfeited                                              |   |                                                 | — |                                                      |   | —                                             |   |   | — |   |   | — |   |   | (14,169 | ) |   | 1.67 |   |
| Nonvested                balance at March 31, 2006     |   |                                                 | 117,763 |                                                      |   | 0.86                                                |   |   | 124,807 |   |   | 1.21 |   |   | 9,668 |   |   | 1,41 |   |
|                                                   |   |                                                 |    |                                                      |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Granted                                                |   |                                                 | 155,359 |                                                      |   | 3.40                                                |   |   | 4,340 |   |   | 3.20 |   |   | — |   |   | — |   |
| Vested                                                 |   |                                                 | (94,429 | )                                                         |   | 0.85                                                |   |   | (20,763 | ) |   | 0.60 |   |   | (4,168 | ) |   | 0.76 |   |
| Forfeited                                              |   |                                                 | — |                                                      |   | —                                             |   |   | — |   |   | — |   |   | (5,000 | ) |   | 2.01 |   |
| Nonvested                balance at June 30, 2006      |   |                                                 | 178,693 |                                                      |   | 3.07                                                |   |   | 108,384 |   |   | 1.41 |   |   | 500 |   |   | 0.91 |   |
|                                                   |   |                                                 |    |                                                      |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Granted                                                |   |                                                 | — |                                                      |   |                                                |   |   | 3,610 |   |   | 3.01 |   |   | — |   |   |   |   |
| Vested                                                 |   |                                                 | — |                                                      |   |                                                |   |   | (21,347 | ) |   | 0.65 |   |   | — |   |   |   |   |
| Forfeited                                              |   |                                                 | — |                                                      |   |                                                |   |   | — |   |   |   |   |   | — |   |   |   |   |
| Nonvested                balance at September 30, 2006 |   |                                                 | 178,693 |                                                      | $      | 3.07                                                |   |   | 90,647 |   | $ | 1.65 |   |   | 500 |   | $ | 0.91 |   |
|                                                   |   |                                                 |    |                                                      |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrecognized                Compensation Costs         |   | $                                                    | 422,221 |                                                      |   |                                                |   | $ | 71,635 |   |   |   |   | $ | 12 |   |   |   |   |
| Weighted                Average Period Remaining       |   |                                                 | 2.7     |                                                      |   | Years                                               |   |   | 2.0 |   |   | Years |   |   | 0.1 |   |   | Years |   |

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|                                                           |   | **Shares****Outstanding** |      | **Weighted-****Average                      Exercise****Price** |   | **Weighted****Average****Remaining****Contractual****Terms                      (in years)** |   | **Aggregate****Intrinsic****Value** |   |
|----------------------------------------------------------------|--------|---------------------------|-----------|-----------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
| Outstanding                      at December 31, 2005          |   |                      | 1,295,793 |                                                            | $      | 1.17                                                                                         |   |                                | 7.32   |   |   |   |   |
| Exercised                                                      |   |                      | (240,368  | )                                                               |   | 0.81                                                                                         |   |                                |   |   |   |   |   |
| Canceled                                                       |   |                      | (69,334   | )                                                               |   | 1.37                                                                                         |   |                                |   |   |   |   |   |
| Granted                                                        |   |                      | 13,206    |                                                            |   | 2.71                                                                                         |   |                                |   |   |   |   |   |
| Outstanding                      at March 31, 2006             |   |                      | 999,297   |                                                            | $      | 1.26                                                                                         |   |                                | 7.06   |   | $ | 2,088,983 |   |
| Exercised                                                      |   |                      | (1,667    | )                                                               |   | 0.76                                                                                         |   |                                |   |   |   |   |   |
| Canceled                                                       |   |                      | (33,171   | )                                                               |   | 2.81                                                                                         |   |                                |   |   |   |   |   |
| Granted                                                        |   |                      | 9,603     |                                                            |   | 3.26                                                                                         |   |                                |   |   |   |   |   |
| Outstanding                      at June 30, 2006              |   |                      | 974,062   |                                                            | $      | 1.23                                                                                         |   |                                | 6.93   |   | $ | 1,902,068 |   |
| Exercised                                                      |   |                      | —   |                                                            |   | —                                                                                      |   |                                |   |   |   |   |   |
| Canceled                                                       |   |                      | (1,668    | )                                                               |   | 0.76                                                                                         |   |                                |   |   |   |   |   |
| Granted                                                        |   |                      | 9,028     |                                                            |   | 3.10                                                                                         |   |                                |   |   |   |   |   |
| Outstanding                      at September 30, 2006         |   |                      | 981,422   |                                                            | $      | 1.25                                                                                         |   |                                | 6.71   |   | $ | 1,280,458 |   |
| Options                      exercisable at September 30, 2006 |   |                      | 758,372   |                                                            | $      | 1.17                                                                                         |   |                                | 6.37   |   | $ | 1,048,095 |   |

|                                                              |   | **Options                  Outstanding**                 |    | **Options                  Exercisable**                                             |   |
|-------------------------------------------------------------------|--------|----------------------------------------------------------|---------|--------------------------------------------------------------------------------------|--------|
| **Range                  Of****Exercise                  Prices** |   | **Number****Of                  Options****Outstanding** |    | **Weighted****Average****Remaining****Contractual****Life                  (Years)** |   | **Weighted****Average****Exercise****Price** |   | **Number****Of                  Options****Exercisable** |   | **Weighted****Average****Exercise****Price** |   |
| $0.450-$0.650                                                     |   |                                                     | 180,040 |                                                                                 |   | 6.45 |   | $ | 0.600 |   |   | 147,745 |   | $ | 0.589 |   |
| $0.76                                                        |   |                                                     | 360,853 |                                                                                 |   | 6.73 |   |   | 0.760 |   |   | 360,853 |   |   | 0.760 |   |
| $0.875—$2.700                                          |   |                                                     | 383,939 |                                                                                 |   | 6.89 |   |   | 1.289 |   |   | 219,985 |   |   | 1.201 |   |
| $3.100—$9.813                                          |   |                                                     | 45,384  |                                                                                 |   | 6.98 |   |   | 4.311 |   |   | 18,583 |   |   | 5.965 |   |
| $10.438—$17.938                                        |   |                                                     | 11,206  |                                                                                 |   | 2.81 |   |   | 13.329 |   |   | 11,206 |   |   | 13.329 |   |
|                                                              |   |                                                     | 981,422 |                                                                                 |   | 6.71 |   |   | 1.245 |   |   | 758,372 |   |   | 1.168 |   |

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|                                   |   | **Three                and nine months ended September 30,**  |   |
|----------------------------------------|--------|--------------------------------------------------------------------|--------|
|                                   |   | **2006**                                                           |   | **2005** |   |
| Risk                free interest rate |   |                                                               | 4.6    | % |   | 4.2 | % |
| Expected                life           |   |                                                               | 2.0    |   |   | 2.0 |   |
| Expected                volatility     |   |                                                               | 145    | % |   | 166 | % |
| Expected                dividend yield |   |                                                               | 0      | % |   | 0 | % |

**Pro      forma Information for Periods Prior to the Adoption of FAS      123R**

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|                                                                                                                                                                                                   |   | **Three Months Ended****September                30, 2005** |   | **Nine Months Ended****September                30, 2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
| Net                income (loss), as reported                                                                                                                                                          |   | $                                                                     | 786    |                                                                 | $      | (3,838 | ) |
| Add                stock-based employee compensation expense included in reported net                income                (loss), net                of tax                                           |   |                                                                  | 259    |                                                                 |   | 351 |   |
| Deduct                total stock-based employee compensation expense determined under                fair                value based                method for all awards, net of related tax effects |   |                                                                  | (293   | )                                                                    |   | (485 | ) |
|                                                                                                                                                                                                   |   |                                                                  |   |                                                                 |   |   |   |
| Pro                forma net income (loss)                                                                                                                                                             |   |                                                                  | 752    |                                                                 |   | (3,972 | ) |
|                                                                                                                                                                                                   |   |                                                                  |   |                                                                 |   |   |   |
|                                                                                                                                                                                                   |   |                                                                  |   |                                                                 |   |   |   |
| Preferred                stock dividends                                                                                                                                                               |   |                                                                  | (111   | )                                                                    |   | (335 | ) |
| Proforma                net income (loss) - applicable to common stock                                                                                                                            |   | $                                                                     | 641    |                                                                 | $      | (4,307 | ) |
| Net                income (loss) per share:                                                                                                                                                            |   |                                                                  |   |                                                                 |   |   |   |
| Basic                -                as                reported                                                                                                                                       |   | $                                                                     | 0.04   |                                                                 | $      | (0.26 | ) |
| Basic                -                pro                forma                                                                                                                                         |   | $                                                                     | 0.04   |                                                                 | $      | (0.27 | ) |
| Diluted                -                as                reported                                                                                                                                     |   | $                                                                     | 0.03   |                                                                 | $      | (0.26 | ) |
| Diluted                -                pro                forma                                                                                                                                       |   | $                                                                     | 0.03   |                                                                 | $      | (0.27 | ) |

**10.      Superior Cables Ltd. **

**11.      Modified “Dutch Auction” Tender Offer**

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**General**

**Results      of Operations**
**—**
**Quarter      Ended September 30, 2006 as Compared to the Quarter Ended September 30,      2005**

**Results      of Operations**
**—Nine**
**      Month Period Ended September 30, 2006 as Compared to the Nine Month period      Ended      September 30, 2005**

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**Liquidity      and Capital Resources**

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***Recent      accounting standards***

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*Evaluation      of Controls and Procedures*

*Except      for the historical information herein, the matters discussed in this quarterly      report on form 10-Q include forward-looking statements that may involve a      number of risks and uncertainties. Actual results may vary significantly based      on a number of factors, including, but not limited to, risks related to changing      economic conditions, including changes in short term interest rates and other      risk factors detailed in the Company’s most recent filings with the Securities      and Exchange Commission.*

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**PART      II. OTHER INFORMATION**

**(a)          **

| 31.1* | Certification                of the Company's Chief Executive Officer pursuant to 18 U.S.C.                Section 1350, as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002.                             |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2* | Certification                of the Company's Chief Financial Officer pursuant to 18 U.S.C.                Section 1350, as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002.                             |
| 32*   | Certification                of the Company's Chief Executive Officer and Chief Financial Officer                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002. |

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| * | Filed                herewith |
|---|-------------------------------|

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**SIGNATURES**

|                                   |                                                                                                                                                                       |                                             |
|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|
|                                   | THE                ALPINE GROUP, INC.                                                                                                                                      |
|                              |                                                                                                                                                                  |                                        |
| Date:                November 14, 2006 | By:                                                                                                                                                                        | /s/ David              A.              Owen |
|                                   | David                A. Owen*Chief                Financial Officer*(duly                authorized officer and principal financial and accounting                officer) |

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