UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



|X| QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended March 31,
2011



OR



|_| 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: 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 or organization) Identification
No.)



4315 West Lovers Lane, Dallas, Texas 75209

(Address of principal executive offices) (Zip Code)



(214) 352-8674

(Registrant's telephone number, including
area code)



None

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



Securities registered pursuant to Section
12(b) of the Act:



None



Securities registered pursuant to Section
12(g) of the Act:

Common Stock, $0.01 Par Value

-----------------------------

(Title of Class)



Class A Preferred Stock, $1.00 Par Value

----------------------------------------

(Title of Class)



Units, consisting of one (1) share of Common
Stock and one (1)

share of Class A Preferred Stock

--------------------------------------------------

(Title of Class)



1













Indicate by check mark whether the registrant
(1) has filed all reports

required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of

1934 during the preceding 12 months (or for such shorter period
that the

registrant was required to file such reports), and (2) has been
subject to such

filing requirements for the past 90 days.

Yes [X] No [ ]



Indicate by check mark whether the registrant
is a large accelerated filer,

an accelerated filer, a non-accelerated filer, or a smaller reporting
company.

See definitions of "large accelerated filer, "accelerated
filer" and "smaller

reporting company" in Rule 12b-2 of the Exchange Act. Large
accelerated filer

[ ] Accelerated filer [ ] Non-accelerated filer [ ](Do not
check if a smaller

reporting company) Smaller reporting company [X]



Indicate by check mark whether the registrant
is a shell company (as

defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]



As of May 13, 2011, 9,733,527 shares of Common
Stock were outstanding.





DOCUMENTS INCORPORATED BY REFERENCE



None































































2







Zunicom, Inc.

INDEX



|                                                                                                                                         |   
|---------------------------------------------------------------------------------------------------------------------------------------- | --
|
|
|                                                                                                                                         |   
|Item 1. Financial Statements                                                                                                             |   
|                                                                                                                                         |   
|Unaudited Consolidated
Balance Sheet at March 31, 2011

and Consolidated Balance Sheet at December 31, 2010. . . .
.. . . . . . .        | 4 
|                                                                                                                                         |   
|Unaudited Consolidated Statements of Operations
    for the

three months ended March 31, 2011 and 2010 . . . . . . . .
.. . . . . . .   | 6 
|                                                                                                                                         |   
|Unaudited Consolidated Statements of Cash
    Flows for the

three months ended March 31, 2011 and 2010 . . . . . . . .
.. .             | 8 
|                                                                                                                                         |   
|Notes to Unaudited Consolidated Financial Statements. . . . . . . . . .                                                                  | 9 
|                                                                                                                                         |   
|Item 2. Management's Discussion and Analysis
    of Financial

Condition and Results of Operations. . . . . . . . . . . .
.. . . . . . . | 15
|                                                                                                                                         |   
|Item 3. Quantitative and Qualitative Disclosures About Market Risk . . .                                                                 | 17
|                                                                                                                                         |   
|Item 4. Controls and Procedures.
    . . . . . . . . . . . . . . . . . . . .                                                             | 17
|                                                                                                                                         |   
|PART II - Other Information                                                                                                              |   
|                                                                                                                                         |   
|Item 1. Legal Proceedings . . .
    . . . . . . . . . . . . . . . . . . . . .                                                            | 18
|                                                                                                                                         |   
|Item 6. Exhibits. . . . . . . .
    . . . . . . . . . . . . . . . . . .                                                                  | 18
|                                                                                                                                         |   
|Signature. . . . . . . . . . .
    . . . . . . . . . . . . . . . . . . .                                                                 | 20
|                                                                                                                                         |   
|Certifications                                                                                                                           |   
|                                                                                                                                         |   
|                                                                                                                                         |   

























3







PART I - FINANCIAL INFORMATION

----------------------------------

Item 1. Financial Statements



ZUNICOM, INC.

CONSOLIDATED BALANCE SHEETS



ASSETS





|                                                    | March 31, 2011 |  | December 31,2010
|--------------------------------------------------- | -------------- |  | ----------------
|                                                    | (unaudited)    |  | (audited)       
|CURRENT ASSETS                                      |                |  |                 
|Cash and cash equivalents                           | $ 4,284,844    |  | $ 4,427,227     
|Accounts receivable – trade, net of $6,323          |                |  |                 
|allowance for doubtful accounts of                  |                |  |                 
|and $6,323                                          | 33,925         |  | 37,064          
|Inventory                                           | 45,965         |  | -               
|Deferred costs                                      | 27,345         |  | 69,034          
|Prepaid expenses and other current assets           | 26,008         |  | 35,166          
|Total current assets                                | 4,418,087      |  | 4,568,491       
|                                                    |                |  |                 
|PROPERTY AND EQUIPMENT                              |                |  |                 
|Furniture and fixtures                              | 10,000         |  | 10,000          
|                                                    |                |  |                 
|Less accumulated depreciation                       | (1,833)        |  | (1,333)         
|                                                    |                |  |                 
|Net property and equipment                          | 8,167          |  | 8,667           
|                                                    |                |  |                 
|Intangible assets – net of accumulated amortization | 377,750        |  | 407,000         
|                                                    |                |  |                 
|INVESTMENT IN UNCONSOLIDATED INVESTEE               | 4,643,866      |  | 4,489,039       
|                                                    |                |  |                 
|TOTAL ASSETS                                        | $ 9,447,870    |  | $ 9,473,197     
|                                                    |                |  |                 
|                                                    |                |  |                 































The accompanying footnotes are an integral
part of these unaudited

consolidated financial statements.



4









ZUNICOM, INC.

CONSOLIDATED BALANCE SHEETS - Continued



LIABILITIES AND STOCKHOLDERS' EQUITY









| | March 31, 2011                                                                                                                                                                                     | December 31,2010
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------
| |                                                                                                                                                                                                    | (unaudited)     
| | CURRENT LIABILITIES                                                                                                                                                                                |                 
| | Accounts payable                                                                                                                                                                                   | 347,435         
| | Accrued liabilities                                                                                                                                                                                | 23,926          
| | Customer deposits                                                                                                                                                                                  | 56,293          
| | Total current liabilities                                                                                                                                                                          | 427,654         
| | NON-CURRENT DEFERRED TAX LIABILITY                                                                                                                                                                 | 2,488,818       
| | TOTAL LIABILITIES                                                                                                                                                                                  | 2,916,472       
| |                                                                                                                                                                                                    |                 
| | STOCKHOLDERS' EQUITY                                                                                                                                                                               |                 
| |                                                                                                                                                                                                    |                 
| | Preferred stock - $1.00 par value, 1,000,000 shares authorized; 60,208 and 60,208 Class A Preferred Shares   issued
    and outstanding; liquidation preference of $316,092   as of March 31, 2011 | 60,208          
| | Common stock - $0.01 par value; 50,000,000 shares authorized; 9,733,527 and 9,733,527 shares issued and
    outstanding                                                                            | 97,335          
| | Additional paid-in capital                                                                                                                                                                         | 9,166,198       
| | Accumulated deficit                                                                                                                                                                                | (2,792,343)     
| | Total stockholders' equity                                                                                                                                                                         | 6,531,398       
| | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                         | $ 9,447,870     
| |                                                                                                                                                                                                    |                 



































Preferred stock - $1.00 par value, 1,000,000 shares   authorized; 60,208 and 60,208 Class A Preferred Shares   issued
    and outstanding; liquidation preference of $316,092   as of March 31, 2011







The accompanying footnotes are an integral
part of these unaudited

consolidated financial statements.





5







ZUNICOM, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2011
and 2010





|                                                |  | 2011                    |  | 2010                        
|----------------------------------------------- |  | ----------------------- |  | ----------------------------
|REVENUES                                        |  |                         |  |                             
|Sales                                           |  | $            267,806    |  | $                          -
|Service revenue                                 |  | 71,300                  |  | -                           
|Total revenue                                   |  | 339,106                 |  | -                           
|                                                |  |                         |  |                             
|COST OF REVENUES                                |  |                         |  |                             
|Cost of goods sold                              |  | 93,380                  |  | -                           
|Direct servicing costs                          |  | 48,477                  |  | -                           
|Total cost of sales                             |  | 141,857                 |  | -                           
|GROSS PROFIT                                    |  | 197,249                 |  | -                           
|OPERATING EXPENSES                              |  |                         |  |                             
|Selling, general and administrative             |  | 263,920                 |  | 131,906                     
|Depreciation and amortization                   |  | 29,750                  |  | -                           
|Total operating expenses                        |  | 293,670                 |  | 131,906                     
|LOSS FROM OPERATIONS                            |  | (96,421)                |  | 131,906                     
|                                                |  |                         |  |                             
|OTHER INCOME (EXPENSE)                          |  |                         |  |                             
|Interest income                                 |  | 3,341                   |  | 6,408                       
|Equity in earnings of investee                  |  | 154,826                 |  | 197,069                     
|Total other income                              |  | 158,167                 |  | 203,477                     
|INCOME BEFORE PROVISION FOR INCOME TAXES        |  |                         |  |                             
|AND DISCONTINUED OPERATIONS                     |  | 61,746                  |  | 71,572                      
|                                                |  |                         |  |                             
|INCOME TAXES (EXPENSE) BENEFIT                  |  | (67,540)                |  | (51,841)                    
|                                                |  |                         |  |                             
|(LOSS) INCOME FROM CONTINUING OPERATIONS        |  | (5,794)                 |  | 19,730                      
|LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES |  | (6,960)                 |  | (61,984)                    
|NET LOSS                                        |  | (12,754)                |  | (42,254)                    
|                                                |  |                         |  |                             
|Preferred Stock Dividend                        |  | (5,870)                 |  | (5,870)                     
|                                                |  |                         |  |                             
|Net loss attributable to common stockholders    |  | $            (18,624)   |  | $              (48,124)     
|                                                |  |                         |  |                             
|Basic and diluted net loss per share            |  |                         |  |                             
|attributable to common stockholders:            |  |                         |  |                             
|                                                |  |                         |  |                             
|(Loss) income from continuing operations        |  | $                (0.00) |  | $                    0.00   
|                                                |  |                         |  |                             
|Loss from discontinued operations               |  | $                (0.00) |  | $                  (0.01)   
|                                                |  |                         |  |                             
|Net loss per share                              |  | $                (0.00) |  | $                  (0.01)   
|                                                |  |                         |  |                             







6









ZUNICOM, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUED)

For the Three Months Ended March 31, 2011
and 2010







|Number of weighted average shares of common stock |  |           |  |          
|------------------------------------------------- |  | --------- |  | ---------
|outstanding                                       |  |           |  |          
|Basic and diluted                                 |  | 9,733,527 |  | 9,733,527
|                                                  |  |           |  |          

































































The accompanying footnotes are an integral
part of these unaudited

consolidated financial statements.

7







ZUNICOM, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS

For The Three Months Ended March 31, 2011
and 2010





|                                                    |                 |  |              
|--------------------------------------------------- | --------------- |  | -------------
|2011                                                | 2010           
|                                                    |                 |  |              
|CASH FLOWS FROM OPERATING ACTIVITIES:               |                 |  |              
|Net profit (loss)                                   | $      (12,754) |  | $    (42,254)
|Adjustments to reconcile net loss to net cash       |                 |  |              
|used in operating activities:                      
|Depreciation and amortization                       | 29,750          |  | 4,340        
|Write off of property and equipment                 | --              |  | 2,918        
|Equity in earnings of investee                      | (154,827)       |  | (197,069)    
|Stock-based compensation                            | 12,678          |  | 12,678       
|Provision for income taxes                          | 63,955          |  | 19,910       
|Changes in operating assets and liabilities:        |                 |  |              
|Accounts receivable - trade                         | 3,139           |  | 7,723        
|Inventories                                         | (45,965)        |  | --           
|Prepaid expenses and other current assets           | 9,158           |  | 18,047       
|Accounts payable                                    | (58,750)        |  | 41,293       
|Accrued liabilities                                 | (28,293)        |  | (29,561)     
|Customer deposits                                   | 3,707           |  | --           
|Deferred costs                                      | 41,689          |  | --           
|Net cash used by operating activities               | (136,513)       |  | (161,975)    
|                                                    |                 |  |              
|CASH FLOWS FROM FINANCING ACTIVITIES:               |                 |  |              
|Dividends paid on preferred stock                   | (5,870)         |  | (5,870)      
|Net cash (used in) financing activities             | (5,870)         |  | (5,870)      
|                                                    |                 |  |              
|NET (DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS | (142,383)       |  | 167,845      
|Cash and cash equivalents at beginning of period    | 4,427,227       |  | 5,680,943    
|Cash and cash equivalents at end of period          | $ 4,284,844     |  | $ 5,513,098  



























The accompanying footnotes are an integral
part of these unaudited

consolidated financial statements.





8





ZUNICOM, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS



NOTE A
- ORGANIZATION



Zunicom,
Inc., ("Zunicom" or the "Company") was formed on January 10, 1992 as a Texas corporation. Zunicom's consolidated wholly-owned
subsidiary, AlphaNet Hospitality Systems Inc. ("AlphaNet"), has been a provider of guest communication services to the hospitality
market. AlphaNet discontinued this business as of August 31, 2010. Accordingly, the results of this discontinued operation are
presented in our Unaudited Consolidated Statements of Operation above. In April of 2010, AlphaNet purchased the assets and business
of Action Computer Systems and is now a reseller of point-of-sale software and hardware to restaurants in southern Connecticut,
Westchester County, New York, and New York City (Note K). Zunicom also holds a 41 percent ownership interest in Universal Power
Group, Inc. (UPG), a distributor and supplier to a diverse and growing range of industries of portable power and related synergistic
products, provider of third-party logistics services and a custom battery pack assembler.



NOTE B - BASIS OF PRESENTATION



The
accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required by United States generallyaccepted
accounting principles for complete financial statements.



In
the opinion of management, all adjustments considered necessary for a fairpresentation have been included for the three month period ended March 31, 2011. The results for the three month period ended
March 31, 2011 are not necessarily indicative of the results that may be expected for the year ended December 31, 2011. The
unaudited consolidated financial statements included in this filing should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto included in the Company's annual report on form 10-K for the year ended
December 31, 2010.



NOTE C - STOCK-BASED COMPENSATION



Stock-based
compensation expense recognized in the statements of operations for the three months ended March 31, 2011 and 2010, of
$12,678 and $12,678, respectively, represents the amortization of the restricted stock grant to the Company's chairman in
2007.



As
of March 31, 2011, $12,114 of the restricted stock grant to the Company's chairman remains unamortized.



Valuation Assumptions



The
fair values of option awards are estimated at the grant date using a Black-Scholes option pricing model. There were no options
granted in the three months ended March 31, 2011 or 2010.



9







NOTE C - STOCK-BASED COMPENSATION (CONTINUED)



Activity and Summary



Stock option activity under the 1999 and 2000 stock option plans
was as follows:







|                                         |                  | 
|---------------------------------------- | ---------------- | 
|                                         |                  | 
|                                         | Number of Shares | 
|Options outstanding at December 31, 2010 | 125,000          | 
|Granted                                  | --               | 
|Exercised                                | --               | 
|Canceled, lapsed or forfeited            | --               | 
|Options outstanding at March 31, 2011    | 125,000          | 





















The following table summarizes stock options outstanding under
the 1999 and 2000

stock option plans at March 31, 2011:







|                | Options Outstanding |             | Options Exercisable
|--------------- | ------------------- | ----------- | -------------------
|                |                     | Weighted    |                    
|                |                     | Average     |                    
|                |                     | Remaining   | Weighted           
|                | Number of           | Contractual | Average            
|Range of        | Options             | Life        | Exercise           
|Exercise Prices | Outstanding         | (in years)  | Price              
|$ 1.75          | 25,000              | 5.9         | $ 1.75             
|$ 0.45          | 100,000             | 2.0         | $ 0.45             
|$ 0.45 - $ 1.75 | 125,000             | 2.8         | $ 0.71             





























At
March 31, 2011, the aggregate intrinsic value of options outstanding was $20,000 and the aggregate intrinsic value of options
exercisable was $20,000. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying
awards and the quoted price of the Company's common stock for those awards that have an exercise price currently below the quoted
price. At March 31, 2011, all outstanding options were fully vested.



NOTE D - NET INCOME (LOSS) PER SHARE



Basic
net income (loss) per share is computed by dividing net income (loss) decreased (increased) by the preferred stock dividends of
$5,870 and $5,870 for the three months ended March 31, 2011 and 2010,respectively, by the weighted average number of common shares
outstanding for the period.



Diluted
net income (loss) 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. The Company's common stock equivalents include
all common stock issuable upon conversion of preferred stock and the exercise of outstanding stock options.





10







NOTE D - NET INCOME (LOSS) PER SHARE (CONTINUED)





The
dilutive effect of 100,000 in-the-money options and the dilutive effect of the conversion of 60,208 shares
of preferred stock into 120,416 shares of common stock have not been included in the computation of dilutive
net income per share for the three months ended March 31, 2011 or for the three month period ended March
31, 2010, as the effect would be anti-dilutive.



NOTE E - UNCONSOLIDATED INVESTEE



The
Company's investment in UPG is accounted for under the equity method of accounting for the three month period ended March 31,
2011 and 2010. Following is a summary of financial information of UPG for the three months ended March 31, 2011 and 2010:













|                                                       | Three Months Ended March 31,
|------------------------------------------------------ | ----------------------------
|                                                       | 2011                        
|                                                       | ($ in thousands)            
|Net revenues                                           | $ 21,587                    
|Cost of revenues                                       | 17,278                      
|Gross profit                                           | 4,309                       
|Operating expenses                                     | 3,536                       
|Income from operations                                 | 773                         
|Interest expense                                       | (141)                       
|Income from operations 
   before income tax provision | 632                         
|Income tax provision                                   | (229)                       
|Net income                                             | $ 403                       













































Following is a summary of the balance sheets for UPG as of March
31, 2011

and December 31, 2010.





|                       | March 31, 2011   | December 31, 2010
|---------------------- | ---------------- | -----------------
|                       | ($ in thousands)
|Current assets         | 42,754           | 46,126           
|Noncurrent assets      | 1,345            | 1,485            
|Current liabilities    | 21,406           | 25,177           
|Noncurrent liabilities | 79               | 267              
|Shareholders' equity   | 22,614           | 22,167           





















11





NOTE F - FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES





The
Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation
techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:





|o |  | Level
1: consists of financial instruments whose value is based on quoted market prices for identical financial
instruments in an active market
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------



|o |  | Level
2: consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that
are observable either directly or indirectly; Level 2 inputs include (i) quoted prices for similar assets or liabilities in active
markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, (iii) pricing models
whose inputs are observable for substantially the full term of the financial instrument and (iv) pricing models whose inputs are
derived principally from or corroborated by observable market data through correlation or other means for substantially the full
term of the financial instrument
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|o |  | Level 3: consists of financial instruments whose values are determined using pricing models that
utilize significant inputs that are primarily unobservable, discounted cash flow methodologies, or similar
techniques, as well as instruments for which the determination of fair value requires significant management
judgment or estimation
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation
of financial instruments and their classification within the fair value hierarchy. Financial instruments are classified in their
entirety based on the lowest level of input that is significant to the fair value measurement. There have been no changes in the
classification of any financial instruments within the fair value hierarchy.







NOTE H - SHAREHOLDERS' EQUITY





During
the three months ended March 31, 2011 and 2010, the Company paid a cash dividend of $5,870 and $5,870, respectively, to the holders
of its class A Preferred Stock.





NOTE I - LEGAL PROCEEDINGS





The
Company is subject to legal proceedings and claims that arise in the ordinary course of business. As of March 31, 2011, the Company
is not subject to any ongoing legal proceedings.



























12









NOTE J - PURCHASE OF BUSINESS



On
March 30, 2010, AlphaNet entered into a binding agreement to acquire the business and the assets of Advanced Computer Software,
Inc., a New York corporation, doing business as Action Computer Systems for a purchase price of $495,000. Action Computer Systems
is a reseller of point-of-sale software to restaurants in the New York metropolitan area and southern Connecticut. The software,
Restaurant Manager, was developed by Action Systems Inc., Silver Spring, Maryland. On April 23, 2010, AlphaNet closed on the acquisition
and now provides point-of-sale software, hardware systems and maintenance and support to restaurants in the New York metropolitan
area and southern Connecticut.





The
Company accounted for this purchase under the acquisition method of accounting. The following represents
the purchase price allocation at the date of the acquisition:





|Customer Lists          | $335,000
|----------------------- | --------
|Covenant not to compete | 150,000 
|Fixed Assets            | 10,000  
|Purchase price          | $495,000















Supplemental
pro-forma information regarding the results of the combined entity for the comparative periods presented in these consolidated
financial statements has not been presented, as the financial information of the business prior to acquisition is not available,
and it is impracticable for management to reasonably estimate the effect for such disclosure.



























































13





NOTE K – DISCONTINUED OPERATIONS





In
August 2010, the Company discontinued its guest communications services business. The Company chose to abandon the assets associated
with this business and accordingly has written these assets off in the consolidated statements of operations for the year ended
December 31, 2010.



The
asset related to discontinued operations in the three months ended March 31, 2011 is a deposit of $5,000.
For the same period in 2010, assets related to discontinued operations included cash of $6,493, inventory
of $6,226, deposits of $5,653 and prepaid expenses of $4,972. The liability related to discontinued operations
in 2011 and 2010 is accounts payable of $289,102.







NOTE L - ECONOMIC DEPENDENCE





With
the purchase of the business of Action Computer Systems in April 2010, the Company is now a reseller for Action Systems Inc. (ASI)
in Silver Spring, Maryland, the developer of Restaurant Manager, a point-of-sale computer software system designed for restaurants.
Should ASI fail to develop and issue improvements for the Restaurant Manager software to keep pace with technological developments
and the operational needs of restaurants, Restaurant Manager's competitive position could be diminished and the Company's business
would be harmed.



Should
ASI cease operation of its business, the Company would be forced to identify other point-of-sale software that it could offer
to the restaurant industry. The Company has an effective sales and marketing, and service and support infrastructure in place
and an installed system base in excess of 450 customers which could make it an attractive reseller for one of the many point-of-sale
software systems offered to restaurants. However, there is no guarantee that the Company would be able to identify such a replacement
system or, if identified, complete an arrangement satisfactory to the Company or to the system developer.







NOTE
M - INVENTORY



Beginning
with the period ended March 31, 2011, management is performing a monthly inventory of components and parts to be sold and installed
in POS systems. Accordingly, the balance sheet as of March 31, 2011, includes inventory valued at cost.



































14





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 Unaudited Consolidated Interim 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 those 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, 2010.



RESULTS
OF OPERATIONS



Currently,
the operations of Zunicom are conducted through its wholly-owned subsidiary, AlphaNet. AlphaNet has been a provider of guest communication
services to the hospitality market. AlphaNet discontinued this business as of August 31, 2010. Accordingly, the results of this
discontinued operation are presented in our Unaudited Consolidated Statements of Operation above. In April 2010, AlphaNet purchased
the assets and business of Action Computer Systems and is now a reseller of point of sale software and hardware to restaurants
in southern Connecticut, Westchester County, New York, and New York City.

Three
months ended March 31, 2011



REVENUE



For
the three month period ended March 31, 2011, Zunicom, through its wholly owned subsidiary Alphanet which, until August 31, 2010,consisted
of two product lines, had consolidated revenues from continuing operations of $339,106 compared to $0 for the same period in 2010.
This revenue is from Action Computer Systems which was acquired in April 2010.



COST OF
REVENUE



For
the three month period ended March 31, 2011, Action Computer Systems had cost of revenue from continuing
operations of $141,857, compared to $0 for the same period in 2010.



OPERATING
EXPENSES



For
the three month period ended March 31, 2011, Zunicom's consolidated operating expenses from continuing operations, consisting
of selling, general and administrative expenses and depreciation and amortization of property and equipment increased to $293,670
compared to $131,906 for the same period in 2010, an increase of $161,764 or 122.6%. The increase is due to Action Computer Systems
operating expenses, depreciation, and amortization for the three month period ended March 31, 2011, of $195,937, offset by a decrease
in Zunicom's expenses of $34,173.





15











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

OF
OPERATIONS (CONTINUED)



Zunicom's
selling, general and administrative expenses for the three month period ended March 31, 2011 were $97,733 compared to $131,906
for the same period in 2010, a decrease of $34,173 or 25.9%. The decrease is primarily attributable to decreased legal and consulting
fees related to the wind down of the Office (TM) product and the acquisition of Action Computer Systems.



For
the three month period ended March 31, 2011, the Company recorded $29,750 in depreciation and amortization expense from continuing
operations compared to $0.0 in 2010. The increase is due to depreciation and amortization of the assets acquired in the acquisition
of Action Computer Systems.



OTHER
INCOME / EXPENSE



Zunicom's
consolidated interest income for the three month period ended March 31, 2011 was $3,341 compared to interest income of $6,408
for the same period in 2010, a decrease of $3,067, or 47.9%. The decrease is due to lower cash balances and lower interest rates.



Equity
in earnings of investee of $154,826 represents Zunicom's share of UPG's net income for the three month
period ended March 31, 2011 recorded in accordance with the equity method of accounting for an unconsolidated
investee.



Zunicom
recorded a loss from discontinued operations of $6,960 for the three months ended March 31, 2011 compared to $61,984 for the same
period in 2010. The Office (TM) product line was discontinued as of August 31, 2010.



LIQUIDITY



Zunicom,
on a consolidated basis, had cash and cash equivalents of $4,284,844 at March 31, 2011.



Net
cash used in operating activities was $136,513 for the three month period ended March 31, 2011 as compared to $161,975 for the
same period in 2010. The cash used in operating activities is attributable to the net loss of $12,754 plus depreciation of $29,750,
stock based compensation of $12,678, provision for income taxes of $63,955 less equity in earnings of investee of $154,827, and
a decrease in working capital of $75,317.



For
the three months ended March 31, 2011 there was no cash flow used in investing activities.



Net
cash used in financing activities for the three month period ended March 31, 2011 was $5,870 representing payment of a cash dividend
on the Company's preferred stock.



Zunicom
management believes that cash on hand will be sufficient to meet its operational needs over the next
year.













16







ITEM 3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Foreign Currency Exchange



All
of our customers and suppliers are in the United States and we are not subject to any foreign currency risk.



Interest Rates



We
currently have no direct borrowings and therefore are not exposed to market rate risk for changes in
interest rates.



ITEM 4. CONTROLS
AND PROCEDURES



The
Company's management, including the Company's principal executive officer and principal financial officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures (as defined in Rules 13(a) - 15(e) and 15(d) - 15(e) under the Securities
Exchange Act of 1934) as of the three months ended March 31, 2011. Based upon that evaluation, the Company's principal executive
officer and principal financial officer have concluded that the disclosure controls and procedures were effective as of March
31, 2011 to insure that the information required to be disclosed by us in the reports filed or submitted by us under the Securities
Exchange Act of 1934, as amended, was recorded, processed, summarized or reported within the time periods specified in the rules
and regulations of the SEC, and included controls and procedures designed to ensure that information required to be disclosed
by us in such reports was accumulated and communicated to management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required disclosures.



There
were no changes in the Company's internal control over financial reporting that occurred during the Company's
last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.











































17













PART II - OTHER INFORMATION



Item 1. Legal
Proceedings. None



Item 6. Exhibits.

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



3.1  
Articles of Incorporation, as amended (incorporated by reference to

the
Company's Registration Statement on Form SB-2, Commission File

No.
33-98662, filed on October 30, 1995 and amended on January 5,

1996
and January 23, 1996).



3.2  
                                                                                                                                                                       Certificate of Designation (incorporated by reference to the

Company's
Registration Statement on Form SB-2, Commission File No.

33-98662,
filed on October 30, 1995 and amended on January 5, 1996

and
January 23, 1996).



3.2A
Amended Certificate of Designation (incorporated by reference to

the
Company's Registration Statement on Form SB-2, Commission File

No.33-98662,
filed on October 30, 1995 and amended on January 5,

1996
and January 23, 1996).



3.3  
Bylaws (incorporated by reference to the Company's Registration

Statement
on Form SB-2, Commission File No. 33-98662, filed on

October
30, 1995 and amended on January 5, 1996 and January 23,

1996).



10.1
Second Amended and Restated Creditors Subordination Agreement

(incorporated
by reference to the Company's Quarterly Report on

Form
10-Q for the Quarter ended June 30, 2008, Commission File No.

0-27210,
filed August 14, 2008)



10.2
Purchase and Sale agreement between AlphaNet Hospitality Systems,

Inc.
Advanced Computer Software, Inc. dated March 30, 2010

(incorporated
by reference to the Company's Annual Report on Form

10-K
for the Fiscal year ended December 31, 2009, Commission File

No.
000-27210, filed April 7, 2010)



14.1
Code of Ethics and Business Conduct as adopted March 30, 2004

(incorporated
by reference to the Company's Annual Report on Form

10-K
for the Fiscal Year ended December 31, 2003, Commission File

No.
0-27210, filed March 31, 2004)



31.1
Certification of Chief Executive Officer Pursuant to Section 302 of

the
Sarbanes-Oxley Act of 2002*



31.2
Certification of Chief Financial Officer Pursuant to Section 302 of

the
Sarbanes-Oxley Act of 2002*



32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C.

Section
1350, as adopted Pursuant to Section 906 of the

Sarbanes-Oxley
Act of 2002*





18









32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C.

Section
1350, as adopted Pursuant to Section 906 of the Sarbanes-

Oxley
Act of 2002*

-----------------------

* Filed
herewith.









































































































19











Signature

---------



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







|                   | Zunicom,
    Inc.            
|------------------ | -----------------------------
|                   | (Registrant)                 
|Date: May 16, 2011 | /s/ John C. Rudy             
|                   | John C. Rudy                 
|                   | Chief Financial Officer      
|                   | (principal financial officer)































































































20