SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q


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

          For the quarterly period ended September 30, 2004

     [ ]  TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 (No Fee Required)

                           Commission File No. 0-27210


                                     Zunicom, Inc.
              ----------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


                Texas                                   75-2408297
     -------------------------------              --------------------------
     (State or other jurisdiction of                  (I.R.S. Employer
      incorporation of organization)                 Identification No.)

                  1720 Hayden Road Carrollton, TX 75006
        ----------------------------------------------------------------
                   (Address of principal executive office)


                                 (469) 892-1122
                          ----------------------------
                           (Issuer's telephone number)

Check whether the issuer has (1) filed all reports required by Section 12 or
15(d) of the Exchange Act during the past 12 months, and 2) been subject to such
filing requirements for the past ninety (90) days. Yes [ X ] No [   ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes    No  X
                                               ---    ---

As of September 30, 2004, 8,476,464 shares of Common Stock were outstanding.













                                       1
<PAGE>
                                  Zunicom, Inc.
                                      INDEX


                                                                      Page
                                                                      ----
PART I - Financial Information

Item 1.  Financial Statements

Consolidated Balance Sheets at September 30, 2004 (unaudited)
and December 31, 2003. . . . . . . . . . . . . . . . . . . . . . . .    3

Consolidated Statements of Operations for the three and nine months
ended September 30, 2004 and 2003 (unaudited) . . . . . . . . . . . .   5

Consolidated Statements of Cash Flows for the nine months ended
September 30, 2004 and 2003 (unaudited). . . . . . . . . . . . . . .    7

Notes to Consolidated Financial Statements . .  . . . . . . . . . . .   9

Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . .   14

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.   19

Item 4.  Controls and Procedures. . . . . . . . . . . . . . . . . .    19


PART II - Other Information

Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . .   19

Item 2.  Changes in Securities, Use of Proceeds and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . .   19

Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . . . .   19

Item 4.  Submission of Matters to a Vote of Securities Holders . . .   20

Item 5.  Other Information . . . . . . . . . . . . . . . . . . . . .   20

Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . .   20

Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21

Certifications










                                       2
<PAGE>
PART  I  -  FINANCIAL  INFORMATION
----------------------------------
Item  1.  Financial  Statements

                         ZUNICOM, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                      (Unaudited)
                                                     September 30,  December 31,
                                                         2004           2003
                                                         ----           ----
CURRENT ASSETS
 Cash and cash equivalents                         $     698,387  $     659,350
 Accounts receivable - trade, net of
  allowance for doubtful accounts of
  $235,247 (unaudited) and $279,579                    8,478,696      6,718,931
 Accounts receivable - other                             127,882        130,194
 Inventories - finished goods, net of
  allowance for obsolescence of $774,893
  (unaudited) and $676,533                            12,007,425     10,574,381
 Prepaid expenses and other current assets               916,000        543,962
                                                   -------------  -------------
        Total current assets                          22,228,390     18,626,818
                                                   -------------  -------------
PROPERTY AND EQUIPMENT
 Facsimile and business center equipment                 984,927      2,348,629
 Machinery and equipment                                 699,879        697,130
 Computer equipment                                      240,573        237,608
 Furniture and fixtures                                  382,702        318,795
 Leasehold improvements                                  236,724        195,998
 Vehicles                                                140,676        140,676
                                                   -------------  -------------
                                                       2,685,481      3,938,836
 Less accumulated depreciation and
   amortization                                       (1,941,700)    (2,378,885)
                                                   -------------  -------------
        Net property and equipment                       743,781      1,559,951
                                                   -------------  -------------
OTHER ASSETS                                              50,372         49,702
                                                   -------------  -------------
TOTAL ASSETS                                       $  23,022,543  $  20,236,471
                                                   =============  =============












            The accompanying footnotes are an integral part of these
                       consolidated financial statements.
                                       3
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS - Continued

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                      (Unaudited)
                                                     September 30,  December 31,
                                                         2004           2003
                                                         ----           ----
CURRENT LIABILITIES
 Line of credit                                    $   9,017,878  $   5,252,310
 Current portion of notes payable - related party        860,128              -
 Current portion of long-term debt                        15,065         20,948
 Accounts payable                                      7,465,188      6,580,017
 Accrued liabilities                                     470,717      1,776,570
 Other current liabilities                                 9,200          9,200
                                                   -------------  -------------
        Total current liabilities                     17,838,176     13,639,045
                                                   -------------  -------------

NOTES PAYABLE - RELATED PARTY, less current portion            -        860,128
LONG-TERM DEBT, less current portion                      30,250         42,102

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
 Preferred stock - $1.00 par value, 1,000,000
   shares authorized; 114,588 Class A  shares
   issued and outstanding; liquidation preference
   of  $601,587                                          114,588        114,588
 Common stock - $0.01 par value; 50,000,000 shares
   authorized; 8,476,464 and 8,419,670 shares
   issued and outstanding                                 84,765         84,197
 Additional paid-in capital                           14,501,493     14,452,841
 Accumulated deficit                                  (9,546,729)    (8,956,430)
                                                   -------------  -------------
        Total stockholders' equity                     5,154,117      5,695,196
                                                   -------------  -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $  23,022,543  $  20,236,471
                                                   =============  =============















            The accompanying footnotes are an integral part of these
                       consolidated financial statements.
                                       4
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
             For the Three and Nine Months Ended September 30, 2004 and 2003
                                   (Unaudited)
<TABLE>
<S>                                   <C>         <C>            <C>          <C>
                                      For the three months ended For the nine months ended
                                      -------------------------- -------------------------
                                           September 30,               September 30,
                                          --------------               -------------
                                          2004        2003           2004         2003
                                          ----        ----           ----         ----
REVENUES
 Sales                                $18,196,556 $16,068,039    $48,440,121  $42,823,962
 Service revenue                          479,782     599,406      1,546,179    1,969,197
                                      ----------- -----------    -----------  -----------
                                       18,676,338  16,667,445     49,986,300   44,793,159
COST OF REVENUES
 Cost of goods sold                    15,947,400  13,575,964     42,213,438   36,076,128
 Direct servicing costs                   118,780     190,894        381,783      597,530
                                      ----------- -----------    -----------  -----------
                                       16,066,180  13,766,858     42,595,221   36,673,658
                                       ---------- -----------    -----------  -----------

GROSS PROFIT                            2,610,158   2,900,587      7,391,079    8,119,501

OPERATING EXPENSES

 Selling, general and administrative    2,123,697   2,031,865      6,500,414    5,889,646
 Depreciation and amortization of
   property and equipment                 128,140     221,188        458,124      711,981
 Write off of property and equipment            -           -        507,990            -
                                      ----------- -----------    -----------  -----------
                                        2,251,837   2,253,053      7,466,528    6,601,627
                                      ----------- -----------    -----------  -----------
INCOME (LOSS) FROM OPERATIONS             358,321     647,534        (75,449)   1,517,874

OTHER EXPENSES
 Interest expense (including $44,444,
   $72,738, $132,057 and $241,198 to
   related parties)                      (152,059)   (146,254)      (445,224)    (474,763)
 Other, net                                (3,202)       (954)       (16,147)     134,492
                                      ----------- -----------    -----------  -----------
                                         (155,261)   (147,208)      (461,371)    (340,271)
                                      ----------- -----------    -----------  -----------
INCOME (LOSS) BEFORE PROVISION FOR
 INCOME TAXES                             203,060     500,326       (536,820)   1,177,603

PROVISION FOR INCOME TAXES                 22,229           -         22,229            -
                                      ----------- -----------    -----------  -----------
NET INCOME (LOSS)                     $   180,831 $   500,326    $  (559,049) $ 1,177,603
                                      =========== ===========    ===========  ===========

</TABLE>









            The accompanying footnotes are an integral part of these
                       consolidated financial statements.
                                       5
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
             For the Three and Nine Months Ended September 30, 2004 and 2003
                                   (Unaudited)
                                  (continued)
<TABLE>
<S>                                   <C>         <C>            <C>          <C>
                                      For the three months ended For the nine months ended
                                      -------------------------- -------------------------
                                           September 30,               September 30,
                                          --------------               -------------
                                          2004        2003           2004         2003
                                          ----        ----           ----         ----
Net income (loss) attributable to
   common stockholders                $   170,552 $   490,700    $  (590,299) $ 1,146,398
                                      =========== ===========    ===========  ===========
Net income (loss) per share
   attributable to common stockholders
   Basic                              $      0.02 $      0.06    $     (0.07) $      0.14
                                      =========== ===========    ===========  ===========
   Diluted                            $      0.02 $      0.05    $     (0.07) $      0.14
                                      =========== ===========    ===========  ===========
Number of weighted average shares of
   common stock outstanding
   Basic                                8,466,425   8,409,099      8,451,926    8,405,314
                                      =========== ===========    =========== ============
   Diluted                              8,727,024  10,662,965      8,451,926    8,634,490
                                      =========== ===========    =========== ============
</TABLE>






























            The accompanying footnotes are an integral part of these
                       consolidated financial statements.
                                       6
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               For the Nine Months Ended September 30, 2004 and 2003
                                   (Unaudited)
                                                         2004          2003
                                                         ----          ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                   $   (559,049) $  1,177,603
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
   Depreciation and amortization of
    property and equipment                               458,124       711,981
   Loss on disposal of property and equipment             19,055             -
   Provision for bad debts                               204,489       191,650
   Provision for obsolete inventory                       98,360       144,490
   Write off of property and equipment                   507,990             -
   Change in operating assets and liabilities
     Accounts receivable - trade                      (1,964,254)   (1,592,798)
     Accounts receivable - other                           2,312        85,213
     Inventories                                      (1,531,404)    1,204,765
     Prepaid expenses and other current assets          (372,038)      (77,629)
     Other assets                                           (669)      (15,453)
     Accounts payable                                    885,171      (408,399)
     Accrued liabilities                              (1,305,853)    1,042,854
                                                    ------------  ------------
Net cash provided by (used in) operating activities   (3,557,766)    2,464,277
                                                    ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                   (169,000)     (144,953)
                                                    ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net activity on line of credit                      3,765,568    (1,161,573)
   Proceeds from exercise of stock options                17,970             -
   Repayment of long-term debt ($0 and $385,146
     to related parties)                                 (17,735)     (744,222)
   Payment of preferred stock dividends                        -       (21,579)
                                                    ------------  ------------
Net cash provided by (used in)financing activities     3,765,803    (1,927,374)
                                                    ------------  ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                 39,037       391,950

Cash and cash equivalents at beginning of period         659,350       648,415
                                                    ------------  ------------
Cash and cash equivalents at end of period          $    698,387  $  1,040,365
                                                    ============  ============










            The accompanying footnotes are an integral part of these
                       consolidated financial statements.
                                       7
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
       SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
              For the Nine Months Ended September 30, 2004 and 2003
                                   (Unaudited)

                                                       2004           2003
                                                       ----           ----
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
  AND FINANCING ACTIVITIES

  Preferred stock dividends paid through
   issuance of common stock                       $      31,250   $       9,626
                                                  =============   =============
  Conversion of preferred stock to common stock   $           -   $         500
                                                  =============   =============
  Acquisition of property and equipment
    through capital lease                         $           -   $      21,244
                                                  =============   =============





































            The accompanying footnotes are an integral part of these
                       consolidated financial statements.
                                       8
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting  principles for interim financial information
and in  accordance  with  the  instructions  to  Form  10-Q  and  Article  10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.

In the opinion of management,  all adjustments  (consisting of normal  recurring
adjustments) considered necessary for a fair presentation have been included for
all periods  presented.  The results for the three and nine month  periods ended
September  30, 2004 are not  necessarily  indicative  of the results that may be
expected  for the year ended  December  31,  2004.  The  consolidated  financial
statements  included  in this  filing  should  be read in  conjunction  with the
Company's  consolidated  financial  statements and notes thereto included in the
Company's annual report on form 10-K for the year ended December 31, 2003.

NOTE B - ORGANIZATION

Zunicom,  Inc., ("Zunicom" or the "Company") was formed on January 10, 1992 as a
Texas corporation.  Zunicom's  subsidiary,  Universal Power Group  ("Universal")
has,  since its  inception in 1968,  evolved from a  distributor  of  electronic
components  into a battery,  battery  powered  products  and  security  products
distributor  and supplier,  a  third-party  fulfillment  provider,  and a retail
distributor.  Zunicom's  other  subsidiary,  AlphaNet  Hospitality  Systems Inc.
("AlphaNet"),  provides  in-room  facsimile and business  center services to the
hotel industry through licensing agreements.

NOTE C - STOCK BASED COMPENSATION

The Company  accounts for  stock-based  employee  compensation  arrangements  in
accordance  with provisions of Accounting  Principles  Board ("APB") Opinion No.
25,  "Accounting  for Stock  Issued to  Employees."  Under APB  Opinion  No. 25,
compensation  expense for stock  options  granted to  employees  is based on the
excess,  if any, on the date of grant,  between the fair values of the Company's
stock over the option exercise price. The Company was not required to record any
compensation expense related to the issuance of stock options during the periods
ended September 30, 2004 and 2003. Had the Company determined compensation based
on the fair value at the grant date for its stock  options  under SFAS No.  123,
"Accounting  for  Stock-Based   Compensation,"  as  amended  by  SFAS  No.  148,
"Accounting for Stock-Based  Compensation-Transition and Disclosure-an amendment
of FASB  Statement  No.  123," net income  (loss)  would not have  significantly
differed from reported net income (loss).

The  Company  accounts  for  equity   instruments  issued  to  non-employees  in
accordance  with the  provisions  of SFAS No. 123 as amended by SFAS No. 148 and
Emerging  Issues Task Force  ("EITF")  Issue No. 96-18,  "Accounting  for Equity
Instruments  That Are  Issued  to Other  Than  Employees  for  Acquiring,  or in
Conjunction with Selling, Goods or Services." All transactions in which goods or
services are the consideration  received for the issuance of equity  instruments
are accounted for based on the fair value of the  consideration  received or the

                                       9
<PAGE>
NOTE C - STOCK BASED COMPENSATION (continued)

fair  value  of  the  equity  instrument  issued,  whichever  is  more  reliably
measurable.  The  measurement  date of the fair value of the  equity  instrument
issued is the  earlier of the date on which the  counterparty's  performance  is
complete or the date on which it is probable that performance will occur.

NOTE D - NET INCOME (LOSS) PER SHARE

Basic net income  (loss) per share is computed by  dividing  net income  (loss),
decreased by the preferred  stock  dividends of $10,279 and $9,626 for the three
month periods ending September 30, 2004 and 2003, respectively,  and $31,250 and
$31,205 for the nine months ending September 30, 2004 and 2003, respectively, by
the weighted average number of common shares outstanding for the period.

Diluted net income per share is computed by dividing net income decreased by the
preferred  stock  dividends by the weighted  average number of common shares and
common  stock  equivalents  outstanding  for the period,  including  the assumed
conversion of the preferred stock, stock options and warrants.

For the three month period ended  September 30, 2004,  the  aggregate  number of
common stock  equivalents that were excluded from the diluted net loss per share
calculation totaled 924,817 as they are anti-dilutive. For the nine month period
ended  September  30, 2004,  basic and diluted net loss per share is the same as
the Company incurred a net loss for this period.  The aggregate number of common
stock  equivalents  that  were  excluded  from the  diluted  net loss per  share
calculation for the nine month period ended September 30, 2004 totaled 4,985,757
as they are anti-dilutive.

For the three and nine month  periods ended  September  30, 2003,  the aggregate
number of common  stock  equivalents  that were  excluded  from the  diluted net
income  per  share  calculation   totaled  19,200  and  4,781,581  as  they  are
anti-dilutive.

The following table provides reconciliation between basic and diluted net income
(loss) per share attributable to common stockholders:





















                                       10
<PAGE>
                               Three Months Ended      Nine Months Ended
                                  September 30,           September 30,
                           ------------------------- ------------------------
                               2004         2003          2004        2003
                               ----         ----          ----        ----
Basic net income (loss)
  attributable to
  common stockholders:

Net income (loss)
  attributable to common
  stockholders             $   170,552  $   490,700  $  (590,299) $ 1,146,398

Weighted average number of
  shares outstanding
     Basic                   8,466,425    8,409,099    8,451,926    8,405,314
                           -----------  -----------  -----------  -----------
Basic net income (loss)
  attributable to
  common stockholders      $      0.02  $      0.06  $     (0.07) $      0.14
                           ===========  ===========  ===========  ===========

Diluted net income (loss)
  attributable to
  common stockholders:

Net income (loss)
  attributable to common
  stockholders             $   170,552  $   490,700  $  (590,299) $ 1,146,398

Preferred stock dividends       10,279        9,626            -       31,205
                           -----------  -----------  -----------  -----------
Numerator for diluted net
  income (loss) per share      180,831      500,326     (590,299)   1,177,603

Weighted average number
  of shares outstanding      8,466,425    8,409,099    8,451,926    8,405,314

Dilutive effect of common
  stock equivalents            260,599    2,253,866            -      229,176
                           -----------  -----------  -----------  -----------
Weighted average number
  of shares outstanding
  Diluted                    8,727,024   10,662,965    8,451,926    8,634,490
                           -----------  -----------  -----------  -----------
Diluted net income (loss)
  per share attributable
  to common stockholders   $      0.02  $      0.05  $     (0.07) $      0.14
                           ===========  ===========  ===========  ===========








                                       11
<PAGE>
NOTE E - LINE OF CREDIT

Universal has a $12,000,000 line of credit with a financing company,  payable on
demand, with interest payable monthly at the lender's prime plus 1.25%, maturing
March 2005.  The line of credit is secured by accounts  receivable,  inventories
and  equipment of  Universal.  The line's  availability  is based on a borrowing
formula  which  allows  for  borrowings  equal  to 85% of  Universal's  eligible
accounts  receivable  and a percentage of eligible  inventory.  On September 30,
2004, $9,017,878 of the line of credit was outstanding,  while $722,544 remained
available for borrowings under the line.

NOTE F - NOTES PAYABLE - RELATED PARTY

AlphaNet has two notes payable to related party financing companies. One note in
the original  principal  amount of $1,525,000  is payable to Appel  Investments,
Inc. of which Kim Yeow Tan is an officer, director and shareholder. William Tan,
Zunicom's  President  and CEO, is Kim Yeow Tan's  brother.  As of September  30,
2004,  AlphaNet owes $550,257 in principal on this note.  The second note in the
original  principal  amount of $1,000,000 is payable to AHS Funding LLC of which
Jenny  Jechart,  a Zunicom  shareholder,  is the  principal  shareholder.  As of
September  30, 2004,  AlphaNet  owes  $309,871 in principal on this note.  These
notes, which have interest rates of 20.5%,  payable monthly,  originally matured
on October 21, 2001 and have been  extended to March 27,  2005.  These notes are
secured by a first lien on all AlphaNet assets and a second lien on all AlphaNet
stock owned by Zunicom and are guaranteed by Zunicom.

NOTE G - SEGMENTS

The battery and fulfillment segment represents the operations of Universal.  The
facsimile and business  center  segment  represents  the operations of AlphaNet.
These segments were  identified  based on the different  nature of the services,
location, and, in general, the type of customers.

A summary of the segment financial  information  reported to the chief operating
decision maker is as follows:

                                    Nine months ended September 30, 2004
                                    ------------------------------------
                                            Facsimile
                                            and
                                Battery and Business
                                Fulfillment Center       Adjustment Consolidated
                                ----------- -----------  ---------- ------------
Revenue                         $48,440,121 $ 1,546,179  $        - $49,986,300
Depreciation and amortization        90,125     366,603       1,396     458,124
Segment income (loss)               695,038    (834,254)   (419,833)   (559,049)
Segment assets                   22,215,227     605,375     201,941  23,022,543
Capital expenditures by segment     107,379      61,621           -     169,000









                                       12
<PAGE>
NOTE G - SEGMENTS (continued)
                                    Nine months ended September 30, 2003
                                    ------------------------------------
                                            Facsimile
                                            and
                                Battery and Business
                                Fulfillment Center       Adjustment Consolidated
                                ----------- -----------  ---------- ------------
Revenue                         $42,823,962 $ 1,969,197  $       -  $44,793,159
Depreciation and amortization        84,051     623,524      4,406      711,981
Segment income (loss)             1,713,899    (291,607)   (244,689)  1,177,603
Segment assets                   16,375,428   2,210,874     126,862  18,713,164
Capital expenditures by segment      44,313     121,884           -     166,197

The adjustments  represent  corporate  assets and corporate  expenses  including
depreciation and amortization  related to corporate assets to reconcile  segment
balances to consolidated balances.

NOTE H - CONCENTRATIONS

A  significant  portion  of  Universal's  business  is with one major  customer,
Brink's Home Security,  which represented  approximately 59% of Universal's year
to date 2004 revenue and 57% of Zunicom's year to date revenue. At September 30,
2004,  Universal had  aggregate  accounts  receivable  from this customer in the
amount of $3,409,107. Through the date of this report, substantially all of this
amount has been collected.

NOTE I - SHAREHOLDERS' EQUITY

During the nine months ended  September 30, 2004,  the Company paid dividends of
$31,250 on the Series A Preferred Stock through the issuance of 31,794 shares of
the  Company's  common  stock.  Also during the nine months ended  September 30,
2004,  25,000  shares of the Company's  common stock were issued  pursuant to an
employee exercise of stock options for proceeds totaling $17,970.

NOTE J - WRITE OFF OF PROPERTY AND EQUIPMENT

The Company  wrote off  certain  property  and  equipment,  primarily  facsimile
equipment,  which  was  taken  out of  service  and is no  longer  in  use,  and
accordingly,  recognized an impairment  charge totaling $507,990 during the nine
months ended September 30, 2004. The charge represents the carrying value of the
assets at the time they were taken out of service  and is  presented  as a write
off of property and  equipment in the  accompanying  consolidated  statements of
operations.













                                       13
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


The  following  discussion  and  analysis  should  be read in  conjunction  with
Zunicom's Consolidated Financial Statements and notes thereto included elsewhere
in this Form 10-Q. Except for the historical  information  contained herein, the
discussion in this Form 10-Q contains  certain forward  looking  statements that
involve  risks  and  uncertainties,  such  as  statements  of  Zunicom's  plans,
objectives,  expectations and intentions. The cautionary statements made in this
Form 10-Q  should be read as being  applicable  to all  related  forward-looking
statements  wherever they appear in this Form 10-Q.  These  statements  include,
without limitation,  statements  concerning the potential operations and results
of the Company described below. Zunicom's actual results could differ materially
from these  discussed  here.  Factors  that could  cause or  contribute  to such
differences include,  without limitation,  those factors discussed herein and in
Zunicom's Annual Report on Form 10-K for the year ended December 31, 2003.


RESULTS OF OPERATIONS

The operations of Zunicom are conducted through its two subsidiaries,  Universal
and AlphaNet.

REVENUES

THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO SEPTEMBER 30, 2003

For the three month period ended  September 30, 2004,  Zunicom had  consolidated
revenues of $18,676,338  compared to $16,667,445 for the similar period in 2003,
an increase of $2,008,893 or 12%.

Universal had revenues of $18,196,556 for the three month period ended September
30, 2004, compared to revenues of $16,068,039 for the similar period in 2003, or
an increase of 13%. AlphaNet had revenues of $479,782 for the three month period
ended September 30, 2004 compared to revenues of $599,406 for the similar period
in 2003, or a decrease of 20%.

The $2,128,517  increase in Universal's  revenues is primarily  attributable  to
increased revenues from Brinks Home Security  ("Brinks").  Specifically,  Brinks
sales totaled  $10,427,294  for the three month period ended  September 30, 2004
and $8,475,355 for the three month period ended  September 30, 2003, an increase
of  $1,951,939.   Sales  of  battery  products  increased  by  $176,578  in  the
comparative period.

AlphaNet's  decrease in revenues of $119,624 is  attributable  to the  continued
decrease in usage of the InnFax  product due to  changing  consumer  preferences
partially  offset  by  usage  of  "The  Office"  product.  We  expect  continued
deterioration  of the  InnFax  revenues,  to be  partially,  if not  completely,
replaced by "The Office" revenues based upon new "Office" installations.







                                       14
<PAGE>
COST OF REVENUES

For the three month period ended September 30, 2004, Zunicom's consolidated cost
of revenues increased to $16,066,180 compared to cost of revenues of $13,766,858
for the similar period in 2003, an increase of $2,299,322 or 17%.

Universal's  cost of revenues  totaled  $15,947,400  for the three month  period
ended September 30, 2004, compared to $13,575,964 in the similar period in 2003,
or an  increase  of  $2,371,436  or 17%.  AlphaNet's  cost of  revenues  totaled
$118,780  for the three  month  period  ended  September  30,  2004  compared to
$190,894 during the similar period last year, a decrease of $72,114 or 38%.

Cost of revenues as a  percentage  of revenues  for  Universal  increased to 88%
compared  to 84% for the  similar  period  in  2003.  This  increase  is  mainly
attributable to the lower margins earned on third party fulfillment  services to
Brinks as well as cost  increases  from battery  suppliers and freight  handlers
that were not passed on to the  customer.  The gross  margin for the three month
period  ended  September  30,  2004 from  fulfillment  services  for  Brinks was
approximately  10%  compared to average  gross margin of 15% from sales to other
customers.  Universal is examining  customer pricing based upon the product cost
increases and is beginning to implement pricing updates in the fourth quarter.

AlphaNet's direct servicing costs as a percentage of service revenues  decreased
to 25% for the three month period ending  September 30, 2004 compared to 32% for
the same period in 2003.  The  decrease is primarily  attributable  to inventory
reserves  taken in 2003 relating to the InnFax product that has been written off
during 2004.

OPERATING EXPENSES

For the three month period ended  September  30,  2004,  Zunicom's  consolidated
operating expenses,  consisting of selling,  general and administrative expenses
as well as  depreciation  and  amortization  and the write off of  property  and
equipment  decreased  slightly  to  $2,251,837  compared to  $2,253,053  for the
similar period in 2003, a decrease of $1,216.

The  operating  expenses of  Universal  totaled  $1,710,908  for the three month
period ended September 30, 2004, which is consistent with the operating expenses
of $1,683,837 for the similar period in 2003,  representing a slight increase of
2%. For the same periods AlphaNet's operating expenses were $412,452 compared to
$489,751,  a decrease of 16% and  Zunicom's  operating  expenses  were  $128,477
compared to $79,465, an increase of 62%.

The decrease in AlphaNet's  operating  expenses is attributable to the decreased
depreciation  expense from  $191,493 for the three month period ended  September
30,  2003 to $95,660  for the similar  period in 2004.  The $95,833  decrease is
attributable to the write off of certain property and equipment during 2004.

The increase in  Zunicom's  operating  expenses of $49,012 is  primarily  due to
increased  salaries,  investor relation services,  office equipment and supplies
and printing costs for the three month period ending September 30, 2004 compared
to the same period in 2003.





                                       15
<PAGE>
INTEREST EXPENSE

Zunicom's  consolidated interest expense was $152,059 for the three month period
ended September 30, 2004 compared to $146,254 for the similar period in 2003, an
increase of $5,805. The increase is attributable to increased  borrowings on the
Universal  line of credit  partially  offset by the  decrease in AlphaNet  notes
payable.

NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO SEPTEMBER 30, 2003

For the nine month period ended  September  30, 2004,  Zunicom had  consolidated
revenues of $49,986,300  compared to $44,793,159 for the similar period in 2003,
an increase of $5,193,141 or 12%.

Universal had revenues of $48,440,121  for the nine month period ended September
30, 2004,  compared to revenues of  $42,823,962  for the similar period in 2003.
AlphaNet had revenues of  $1,546,179  for the nine month period ended  September
30, 2004, compared to revenues of $1,969,197 for the similar period in 2003.

The $5,616,159 increase in Universal's revenues is attributable to revenues from
Brinks which offset a slight  decline in sales of battery,  battery  related and
battery  powered  products  of  $174,453.  Specifically,  Brinks  sales  totaled
$28,735,652  for the  nine  month  period  ended  September  30,  2004  and were
$22,945,040 for the nine month period ended September 30, 2003.

AlphaNet's  decrease in revenues of $423,018 is  attributable  to the  continued
decline in  facsimile  usage due to product  removal from hotel  properties  and
changing consumer preferences which has been partially offset by the increase in
usage of "The Office" products.

COST OF REVENUES

For the nine month period ended September 30, 2004, Zunicom's  consolidated cost
of revenues increased to $42,595,221 compared to cost of revenues of $36,673,658
for the similar period in 2003, an increase of $5,921,563 or 16%.

Universal's cost of revenues totaled $42,213,438 for the nine month period ended
September 30, 2004,  compared to $36,076,128  during the similar period in 2003.
AlphaNet's  cost of revenues  totaled  $381,783  for the nine month period ended
September 30, 2004 compared to $597,530 during the similar period in 2003.

Cost of revenues as a  percentage  of revenues  for  Universal  increased to 87%
compared  to 84% for the  similar  period  in  2003.  This  increase  is  mainly
attributable to the lower margins earned on third party fulfillment  services to
Brinks and increased  cost of product from  overseas  suppliers not passed on to
customers.  The gross margins for the nine month period ended September 30, 2004
from fulfillment  services for Brinks were approximately 10% compared to average
gross  margins  of 17% from sales to other  customers.  Universal  is  examining
customer  pricing  based upon the product  cost  increases  and is  beginning to
implement pricing updates in the fourth quarter.

AlphaNet's direct servicing costs as a percentage of service revenues  decreased
to 25% for the nine month period  ending  September 30, 2004 compared to 30% for
the same period in 2003.  The  decrease is primarily  attributable  to inventory
reserves and  de-installation  costs recorded in 2003 relating to InnFax revenue
assets that have been written off during 2004.

                                       16
<PAGE>
OPERATING EXPENSES

For the nine month  period ended  September  30,  2004,  Zunicom's  consolidated
operating expenses,  consisting of selling,  general and administrative expenses
as well as  depreciation  and  amortization  and the write off of  property  and
equipment  increased to $7,466,528 compared to $6,601,627 for the similar period
in 2003, an increase of $864,901 or 13%.

The operating expenses of Universal totaled $5,229,199 for the nine month period
ended September 30, 2004, compared to $4,800,337 for the similar period in 2003,
or an  increase  of 9%.  For the same  periods,  AlphaNet's  operating  expenses
totaled  $1,848,625  compared to  $1,581,840  or an  increase of 17%.  Zunicom's
operating expenses totaled $388,704 compared to $219,450 or an increase of 77%.

The  increase in  Universal's  operating  expenses in 2004 is  primarily  due to
approximate  increases  in  consulting  of  $103,000,  payroll  and  benefits of
$115,000, commissions of $43,000, rent of $70,000, supplies of $69,000, legal of
$47,000 and  increased  participation  in trade shows and related  marketing  of
$156,000,  partially  offset by a reduction in accrued bonuses of $189,000 based
upon revised estimates for 2004 bonus payments.

The increase in AlphaNet's  operating expenses is primarily  attributable to the
$507,990  write off of  property  and  equipment  that was taken out of  service
during the nine months ended September 30, 2004, partially offset by the related
reduction in depreciation.

The  increase in  Zunicom's  operating  expenses is  primarily  due to the costs
associated with an investor  relations  service,  increased  payroll,  increased
franchise  tax expense and  increases  in travel costs for the nine month period
ending September 30, 2004 compared to the same period in 2003.

INTEREST EXPENSE

Zunicom's  consolidated  interest expense was $445,224 for the nine month period
ended  September 30, 2004 compared to $474,763 for the similar period in 2003, a
decrease  of  $29,539.  The  decrease in  interest  expense is  attributable  to
payments  made by AlphaNet on  outstanding  debt during  2003.  The  decrease in
AlphaNet  notes  payable  at  interest  rates of 20.5% is  partially  offset  by
increased borrowings on the Universal line of credit, which has an interest rate
of the lender's prime plus 1.25% (5.75% at September 30, 2004).

OTHER INCOME

Zunicom's  consolidated  other income for the nine month period ended  September
30, 2003 of $134,492 is primarily related to the sale of a patent by AlphaNet.

LIQUIDITY

Zunicom,  on a consolidated basis, had cash and cash equivalents of $698,387 and
$1,040,365 at September 30, 2004 and 2003, respectively.

Net cash used in  operations  was  $3,557,766  for the nine month  period  ended
September 30, 2004 compared to cash provided by operations of $2,464,277 for the
similar  period  in  2003.  The cash  used in  operating  activities  in 2004 is
primarily related to net losses of $559,049,  a decrease in accrued  liabilities


                                       17
<PAGE>
of  $1,305,853  and  increases  in accounts  receivable  - trade of  $1,964,254,
inventory of $1,531,404,  and prepaid expenses of $372,038,  partially offset by
an increase in accounts  payable of $885,171,  depreciation  and amortization of
property and equipment of $458,124,  the  provisions  for bad debts of $204,489,
obsolete  inventory  of  $98,360  and the write off of  property  and  equipment
totaling $507,990.

The cash  provided by operating  activities in 2003 was related to net income of
$1,177,603, depreciation and amortization of property and equipment of $711,981,
the provisions for bad debts of $191,650, obsolete inventory $144,490, decreases
in inventory of $1,204,765,  decrease in accounts  receivable - other of $85,213
and  increases  in accrued  liabilities  of  $1,042,854  offset by a decrease in
accounts  payable of $408,399,  an increase in accounts  receivables  - trade of
$1,592,798 as well as increases in other assets of $15,453 and prepaid  expenses
of $77,629.

Net cash used by investing  activities for the nine month period ended September
30, 2004, was $169,000  compared to $144,953 for the similar period in 2003. The
cash  used in 2004  and  2003  was  related  to the  purchase  of  property  and
equipment.

Net cash  provided  by  financing  activities  for the nine month  period  ended
September 30, 2004 was $3,765,803 compared to cash used in financing  activities
of $1,927,374 for the similar period in 2003. The net cash provided by financing
activities  for 2004 was primarily  comprised of net borrowings on the Universal
line of credit of  $3,765,568,  while the cash used in financing  activities  in
2003 was  primarily  related to repayments on long term debt of $744,222 and the
Universal line of credit totaling $1,161,573.

AlphaNet has two notes payable to related party financing companies. One note in
the original  principal  amount of $1,525,000  is payable to Appel  Investments,
Inc. of which Kim Yeow Tan is an officer, director and shareholder. William Tan,
Zunicom's  President  and CEO, is Kim Yeow Tan's  brother.  As of September  30,
2004,  AlphaNet owes $550,257 in principal on this note.  The second note in the
original  principal  amount of $1,000,000 is payable to AHS Funding LLC of which
Jenny Jechart, a shareholder,  is the principal shareholder. As of September 30,
2004,  AlphaNet owes $309,871 in principal on this note. These notes, which have
interest  rates of  20.5%,  originally  matured  on  October  21,  2001 and were
extended  to March 27,  2005.  These  notes are  secured  by a first lien on all
AlphaNet  assets,  a second lien on all AlphaNet  stock owned by Zunicom and are
guaranteed by Zunicom.

As provided for in the Universal line of credit agreement discussed in Note E in
the interim financial statements found elsewhere in this report,  Universal may,
under certain conditions, borrow under the line to upstream funds to Zunicom, to
pay AlphaNet's  indebtedness  assuming borrowing  availability and certain fixed
charge coverage ratio tests are met. Universal may borrow for this purpose up to
50% of its quarterly net income until the notes are retired. For the nine months
ended  September  30,  2004  Universal  did not  upstream  funds to Zunicom  for
repayment on the AlphaNet notes payable.

Zunicom  believes that cash provided by its operations and cash available  under
the Universal line of credit will be sufficient to meets its  operational  needs
over the next year.  However,  it may not be  sufficient to retire the Appel and
AHS Funding indebtedness mentioned above.


                                       18
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk due to changes in U.S.  interest  rates. We do not
engage in financial  transactions for trading or speculative purposes. We have a
$12  million  line of credit.  Amounts  borrowed  under the line of credit  bear
interest based on prime rate plus 1.25%.  Borrowings  under this credit facility
were  approximately $9.0 million as of September 30, 2004. An increase of 10% to
20% in the interest paid for the line of credit would not have a material effect
on  our  operating  results.  We do not  manage  the  risk  through  the  use of
derivative instruments.

Since the majority of goods that Universal purchases are from Asia, and AlphaNet
conducts business in Canada, we have market risk arising from changes in foreign
currency exchange rates. At this time, we do not manage the risk through the use
of derivative  instruments as Universal  negotiates its purchases in US Dollars.
Therefore, a 10% adverse exchange-rate  fluctuation would not have a significant
short term impact on our results of operations or financial position.


ITEM 4. CONTROLS AND PROCEDURES

We  have  carried  out  an  evaluation,  under  the  supervision  and  with  the
participation  of  our  principal  executive  officer  and  principal  financial
officer,  of the  effectiveness  of the design and  operation of our  disclosure
controls and  procedures  as of September 30, 2004,  pursuant to Rule  13a-15(b)
under the  Exchange  Act.  Based on this  evaluation,  our  principal  executive
officer and principal  financial officer concluded that our disclosure  controls
and  procedures  are  effective  in  ensuring  that  information  required to be
disclosed is recorded, processed, summarized and reported in a timely manner.

We  have  carried  out  an  evaluation   under  the  supervision  and  with  the
participation  of  our  principal  executive  officer  and  principal  financial
officer,  of any changes in our internal controls over financial  reporting that
have occurred  during the three month period ended  September 30, 2004,  and our
principal  executive officer and principal financial officer have concluded that
there was no change  during the three months ended  September  30, 2004 that has
materially  affected or is reasonably expected to materially affect our internal
control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities.

None.

Item 3. Defaults upon Senior Securities.

None.




                                       19
<PAGE>
Item 4. Submission of Matters to a Vote of Securities Holders.

None.

Item 5. Other Information.

None.

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

a.      The following exhibits are filed as part of this report or incorporated
        herein as indicated.

        31.1 Certification related to Quarterly Report Form 10-Q disclosures.

        31.2 Certification related to Quarterly Report Form 10-Q disclosures

        32.1 Certification pursuant to Rule 13a-14(b) of the Exchange Act and 18
             U.S.C. Section  1350, as enacted  pursuant  to  Section  906 of the
             Sarbanes-Oxley Act of 2002.

        32.2 Certification pursuant to Rule 13a-14(b) of the Exchange Act and
             18 U.S.C.  Section 1350,  as enacted pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002.

b.      The following reports on Form 8-K were filed or required to be filed for
        the last quarter.

           None.




























                                       20
<PAGE>
                                    Signature
                                    ---------

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



                                    Zunicom, Inc.
                                    -----------------------------


Date:  November 15, 2004            /s/ Julie Sansom-Reese
                                    --------------------------------
                                    Julie Sansom-Reese
                                    Chief Financial Officer
                                    (principal financial and accounting officer)







































                                       21