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 September 30, 2006

                                       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.)

   1720 Hayden Road, Carrollton, Texas                        75006
(Address of principal executive offices)                    (Zip Code)

                                 (469) 892-1200
              (Registrant's telephone number, including area code)

                                      None
(Former name,former address and former fiscal year,if changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.           Yes [X]              No [ ]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [  ] Accelerated filer [  ]  Non-accelerated filer  [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 November 8, 2006, 8,882,239 shares of Common Stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


                                       i
<PAGE>
                                  Zunicom, Inc.
                                      INDEX

                                                                      Page
                                                                      ----

PART I - Financial Information

Item 1.  Financial Statements

Unaudited Consolidated Balance Sheets at September 30, 2006
and December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . .   2

Unaudited Consolidated Statements of Operations for the three
and nine months ended September 30, 2006 and 2005  . . . . . . . . .    4

Unaudited Consolidated Statements of Cash Flows for the
nine months ended September 30, 2006 and 2005  . . . . . . . . . . .    6

Notes to Unaudited Consolidated Financial Statements . . . . . . . .    8

Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations  . . . . . . . . . . . . . . . .   13

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

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


PART II - Other Information

Item 1.  Legal Proceedings   . . . . . . . . . . . . . . . . . . . .   20

Item 1A.  Risk Factors   . . . . . . . . . . . . . . . . . . . . . .   20

Item 6.  Exhibits  . . . . . . . . . . . . . . . . . . . . . . . . .   20

Signature  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22

Certifications
















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

                         ZUNICOM, INC. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEETS


                                     ASSETS
                                                    September 30,  December 31,
                                                        2006          2005
                                                        ----          ----
CURRENT ASSETS
 Cash and cash equivalents                          $  1,521,921   $    731,626
 Accounts receivable - trade, net
  of allowance for doubtful
  accounts of $269,891 and $226,931                    9,500,494      8,446,086
 Accounts receivable - other                              18,309        114,802
 Inventories - finished goods, net
  of allowance for obsolescence of
  $278,663  and $158,663                              20,785,276     19,144,410
 Prepaid expenses and other current assets               400,776        665,802
                                                    ------------   ------------
        Total current assets                          32,226,776     29,102,726
                                                    ------------   ------------
PROPERTY AND EQUIPMENT
 Business center equipment                               974,714        974,674
 Machinery and equipment                                 606,261        578,815
 Computer equipment                                      145,454        144,133
 Furniture and fixtures                                  321,755        272,937
 Leasehold improvements                                  311,056        303,597
 Vehicles                                                151,598        151,598
                                                    ------------   ------------
                                                       2,510,838      2,425,754
 Less accumulated depreciation
  and amortization                                    (1,818,333)    (1,698,786)
                                                    ------------   ------------
   Net property and equipment                            692,505        726,968
                                                    ------------   ------------
OTHER ASSETS                                             325,402         34,923
                                                    ------------   ------------
TOTAL ASSETS                                        $ 33,244,683   $ 29,864,617
                                                    ============   ============











            The accompanying footnotes are an integral part of these
                       consolidated financial statements.

                                       2
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                UNAUDITED CONSOLIDATED BALANCE SHEETS - Continued

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                    September 30,  December 31,
                                                        2006          2005
                                                        ----          ----

CURRENT LIABILITIES
 Line of credit                                     $ 11,621,516   $  9,261,435
 Current portion of notes
  payable - related party                                      -        217,128
 Current portion of long-term debt                        20,963         20,968
 Accounts payable                                     11,156,076     12,632,315
 Accrued liabilities                                   1,093,305        311,957
 Other current liabilities                                41,608         51,837
                                                    ------------   ------------
   Total current liabilities                          23,933,468     22,495,640
                                                    ------------   ------------
LONG-TERM DEBT, less current portion                       9,727         25,339
DEFERRED RENT, less current portion                      191,402        210,512

STOCKHOLDERS' EQUITY
 Preferred stock - $1.00 par value,
   1,000,000 shares authorized; 86,988 and
   88,988 Class A Preferred Shares issued
   and outstanding; liquidation preference
   of $456,687 as of September 30, 2006                   86,988         88,988
 Common stock - $0.01 par value;
   50,000,000 shares authorized; 8,882,239
   and 8,614,750 shares issued and out-
   standing                                               88,822         86,148
 Additional paid-in capital                           14,807,248     14,601,331
 Accumulated deficit                                  (5,872,972)    (7,643,341)
                                                    ------------   ------------
   Total stockholders' equity                          9,110,086      7,133,126
                                                    ------------   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 33,244,683   $ 29,864,617
                                                    ============   ============













            The accompanying footnotes are an integral part of these
                       consolidated financial statements.


                                       3
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<S>                                     <C>           <C>            <C>           <C>
                                        For the three months ended   For the nine months ended
                                        --------------------------   -------------------------
                                               September 30,               September 30,
                                              --------------               -------------
                                             2006         2005           2006         2005
                                             ----         ----           ----         ----
REVENUES
 Sales                                  $ 23,770,977  $ 22,111,952   $ 68,016,953  $ 59,960,761
 Service revenue                             413,750       455,924      1,321,706     1,391,429
                                        ------------  ------------   ------------  ------------
                                          24,184,727    22,567,876     69,338,659    61,352,190
COST OF REVENUES
 Cost of goods sold                       20,296,480    19,096,105     58,342,648    52,187,394
 Direct servicing costs                      110,156       134,039        396,428       362,345
                                        ------------  ------------   ------------  ------------
                                          20,406,636    19,230,144     58,739,076    52,549,739
                                        ------------  ------------   ------------  ------------
GROSS PROFIT                               3,778,091     3,337,732     10,599,583     8,802,451

OPERATING EXPENSES
 Selling, general and administrative       2,738,285     2,370,200      7,917,044     6,642,239
 Depreciation and amortization of
  property and  equipment                     70,234        53,757        223,325       214,339
                                        ------------  ------------   ------------  ------------
                                           2,808,519     2,423,957      8,140,369     6,856,578
                                        ------------  ------------   ------------  ------------
INCOME FROM OPERATIONS                       969,572       913,775      2,459,214     1,945,873

OTHER INCOME (EXPENSES)
 Interest expense (including $0, $27,089,
  $8,293 and $103,318 to related parties)   (194,104)     (153,578)      (605,325)     (450,049)
 Other, net                                   16,423        (3,449)        19,852       (13,195)
                                        ------------  -------------  ------------  ------------
                                            (177,681)      (157,027)     (585,473)     (463,244)
                                        ------------  -------------  ------------  ------------
INCOME BEFORE PROVISION FOR INCOME TAXES     791,891        756,748     1,873,741     1,482,629
PROVISION FOR INCOME TAXES                   (79,281)             -       (79,281)            -
                                        ------------  -------------  ------------  ------------
</TABLE>















            The accompanying footnotes are an integral part of these
                       consolidated financial statements.

                                       4
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
           UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

<TABLE>
<S>                                     <C>           <C>            <C>           <C>
                                        For the three months ended   For the nine months ended
                                        --------------------------   -------------------------
                                               September 30,               September 30,
                                              --------------               -------------
                                             2006         2005           2006         2005
                                             ----         ----           ----         ----

NET INCOME                              $    712,610  $     756,748  $  1,794,460  $  1,482,629
                                        ============  =============  ============  ============
Net income attributable to common
  stockholders                          $    704,973  $     747,008  $  1,770,369  $  1,453,782
                                        ============  =============  ============  ============
Net income per share attributable
  to common stockholders
       Basic                            $       0.08  $        0.09  $       0.20  $       0.17
                                        ============  =============  ============  ============
       Diluted                          $       0.07  $        0.07  $       0.18  $       0.15
                                        ============  =============  ============  ============
Number of weighted average shares of
  common stock outstanding
       Basic                               8,879,057      8,538,081     8,824,498     8,527,532
                                        ============  =============  ============  ============
       Diluted                             9,500,071     10,674,298     9,605,391     9,863,787
                                        ============  =============  ============  ============

</TABLE>



























            The accompanying footnotes are an integral part of these
                       consolidated financial statements.

                                       5
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
              For The Nine Months ended September 30, 2006 and 2005

                                                         2006          2005
                                                         ----          ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                          $  1,794,460   $  1,482,629
Adjustments to reconcile net income to net
 cash provided by (used in) operating activities:
   Depreciation and amortization
     of property and equipment                           223,325        214,339
   Provision for bad debts                               181,335        182,259
   Provision for obsolete inventory                      120,000        179,959
   Write-off of property and equipment                     7,121          5,275
   Change in operating assets and liabilities
    Accounts receivable - trade                       (1,235,743)    (2,072,270)
    Accounts receivable - other                           96,493        223,694
    Inventories                                       (1,760,866)      (722,762)
    Prepaid expenses and other current Assets            (25,454)      (170,706)
    Accounts payable                                  (1,476,230)       540,317
    Accrued liabilities                                  772,139      1,728,983
    Deferred rent                                        (20,139)        11,839
                                                    ------------   ------------
Net cash provided by (used in) operating activities   (1,323,559)     1,603,556
                                                    ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment                  (195,983)      (240,021)
                                                    ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net activity on line of credit                      2,360,081       (589,264)
   Proceeds from exercise of warrants                    182,500              -
   Repayment of notes payable - related party           (217,128)      (335,000)
   Repayment of long-term debt                           (15,616)       (15,906)
                                                    ------------   ------------
Net cash provided by (used in) financing activities    2,309,837       (940,170)
                                                    ------------   ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                790,295        423,365

Cash and cash equivalents at beginning of period         731,626        458,068
                                                    ------------   ------------
Cash and cash equivalents at end of period          $  1,521,921   $    881,433
                                                    ============   ============










            The accompanying footnotes are an integral part of these
                       consolidated financial statements.


                                       6
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
           UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
              For The Nine Months ended September 30, 2006 and 2005

                                                         2006          2005
                                                         ----          ----
SUPPLEMENTAL CASH FLOW INFORMATION

Interest paid                                       $    605,325   $    450,049
                                                    ============   ============
Income taxes paid                                   $     79,281   $          -
                                                    ============   ============
SUPPLEMENTAL SCHEDULE OF NONCASH
  INVESTING AND FINANCING ACTIVITIES:

  Preferred stock dividends paid through
    issuance of common stock                        $     24,091   $     28,847
                                                    ============   ============
  Conversion of preferred stock to common stock     $      2,000   $        700
                                                    ============   ============

































            The accompanying footnotes are an integral part of these
                       consolidated financial statements.


                                       7
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

The accompanying  unaudited consolidated 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, 2006 are not  necessarily  indicative  of the results that may be
expected  for the year ended  December  31,  2006.  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, 2005.

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  ("UPG"  or
"Universal")  incorporated  in 1968, is a leading  distributor of portable power
and  related synergistic  products, provider of third party logistics  services,
and custom  battery  pack  assembly  and  kitting  services to  a wide range  of
industries.   Zunicom's other  subsidiary,  AlphaNet  Hospitality  Systems  Inc.
("AlphaNet"), is a provider of guest  communication  services to the hospitality
market. In September 2006, UPG filed an S-1 registration statement with the U.S.
Securities and Exchange Commission for an underwritten initial public  offering.
The  registration  statement  was  amended  in October  2006.   As amended,  the
registration statement covers the sale of 3,000,000 shares of UPG's common stock
of which  2,000,000  will be sold by UPG and 1,000,000  will be sold by Zunicom.
The initial public offering price  per share is  expected  to be  between  $7.00
and  $9.00.  The registration  statement  has not yet become  effective  and the
Company cannot predict or determine when it will become effective, if ever.  The
securities covered by the registration statement  may not be sold nor may offers
for the  securities  covered by the registration  statement be accepted prior to
the time the registration statement becomes effective.

NOTE C - STOCK-BASED COMPENSATION

On January 1, 2006, the Company adopted the modified  prospective method of SFAS
No. 123 (revised  2004),  "Share-Based  Payment"  ("SFAS No. 123R"),  which is a
revision of SFAS No. 123,  "Accounting for Stock-Based  Compensation"  (SFAS No.
123").  SFAS No.  123R  supersedes  APB  Opinion No. 25, and amends SFAS No. 95,
"Statement of Cash Flows".  SFAS No. 123R  requires all share based  payments to
employees,  including grants of employee stock options,  to be recognized in the
income  statement based on their fair values.  Pro forma disclosure is no longer
an alternative.  Under the modified  prospective  application,  SFAS No. 123R is
applied to new awards and to awards modified, repurchased or cancelled after the
effective date.  Compensation cost for the portion of awards for which requisite


                                       8
<PAGE>
service has not been rendered that are  outstanding  as of the effective date is
recognized as the requisite  service is rendered on or after the effective date.
The compensation cost for that portion of awards is based on the grant date fair
value of those awards as  calculated  for pro-forma  disclosures  under SFAS No.
123.  The  adoption  of SFAS 123R had no impact  on the  Company's  consolidated
financial statements as of and for the three and nine months ended September 30,
2006. In  accordance  with the modified  prospective  method,  the  consolidated
financial  statements  for the prior  periods have not been restated to reflect,
and do not include, the impact of SFAS No. 123R.

Stock-based  compensation  expense  recognized during the period is based on the
value of the  portion  of the  stock-based  payment  awards  that is  ultimately
expected to vest.  All options  outstanding at the beginning of the period ended
September  30,  2006  were  fully  vested;  therefore,  there is no  stock-based
compensation  expense  recognized  in the  consolidated  statement of operations
during the three and nine month periods ended  September 30, 2006. The aggregate
intrinsic value of the 1,059,500 stock options outstanding at September 30, 2006
totaled approximately  $833,000.  The aggregate intrinsic value is calculated as
the  difference  between the  exercise  price of the  underlying  awards and the
quoted price of Zunicom's common stock that were "in-the-money" at September 30,
2006.

Prior to  January  1, 2006,  the  Company  accounted  for  stock-based  employee
compensation arrangements in accordance with provisions of Accounting Principles
Board ("APB")  Opinion No. 25,  "Accounting  for Stock Issued to Employees," and
complied with the disclosure provisions of SFAS 123, as amended by SFAS No. 148,
"Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment
of FASB  Statement  No.  123"  ("SFAS  No.  148").  Under APB  Opinion  No.  25,
compensation  expense for employees is based on the excess,  if any, on the date
of grant,  of the fair value of the Company's  stock over the exercise price and
is recognized on a straight-line  basis over the vesting term of the option. Had
the Company determined compensation expense for the three and nine month periods
ended September 30, 2005 based on the fair value at the grant date for its stock
options  under SFAS 123,  as amended  by SFAS 148,  the pro forma  effect on net
income attributable to common stockholders and net income per share attributable
to common stockholders would have been as follows:


                                     For the three months   For the nine months
                                      ended September 30,   ended September 30,
                                             2005                  2005
                                             ----                  ----
Net income attributable to
common stockholders as
reported                             $    747,008           $  1,453,782

Add:  Stock-based employee
compensation expense included
in reported net income               $          -           $          -

Deduct:  Stock-based employee
compensation expense determined
under fair value based method            (643,207)              (643,207)
                                     ------------           ------------



                                       9
<PAGE>
Pro-forma net income attributable
to common stockholders               $    103,801           $    810,575
                                     ============           ============
Net income per share attributable
to common stockholders as reported

Basic                                $       0.09           $       0.17
                                     ============           ============
Diluted                              $       0.07           $       0.15
                                     ============           ============
Pro-forma net income per share
attributable to common stockholders

Basic                                $       0.01           $       0.10
                                     ============           ============
Diluted                              $       0.01           $       0.08
                                     ============           ============

NOTE D - NET INCOME PER SHARE

Basic net income per share is computed by dividing  net income  decreased by the
preferred  stock  dividends  of $7,637 and $9,740  for the three  month  periods
ending  September 30, 2006 and 2005,  respectively,  and $24,091 and $28,847 for
the nine month periods ending September 30, 2006 and 2005, 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. The Company's common stock
equivalents include all common stock issuable upon conversion of preferred stock
and the exercise of outstanding stock options and warrants.

For the three month period ending  September 30, 2006,  the dilutive  effects of
447,038 stock  options and 173,976  common  shares  issuable upon  conversion of
preferred  stock are  included in the diluted net income per share  calculation.
For the nine month period  ending  September  30, 2006,  the dilutive  effect of
557,143 stock options,  49,774 other common stock equivalents and 173,976 common
shares issuable upon  conversion of outstanding  preferred stock are included in
the diluted net income per share calculation.  For the three month period ending
September 30, 2005, the aggregate  number of common stock  equivalents that were
excluded  from the diluted net income per share  calculation  totaled  19,500 as
they are  anti-dilutive.  For the three month period ending  September 30, 2005,
the dilutive  effect of 1,897,932  stock options and warrants and 207,776 shares
issuable upon conversion of the outstanding  preferred stock are included in the
diluted  net income per share  calculation.  For the nine  month  period  ending
September 30, 2005, the aggregate  number of common stock  equivalents that were
excluded from the diluted net income per share  calculation  totaled  309,500 as
they are anti-dilutive. For the nine month period ending September 30, 2005, the
dilutive  effect of 1,091,008  stock  options and  warrants  and 208,134  common
shares issuable upon  conversion of outstanding  preferred stock are included in
the diluted net income per share calculation.






                                       10
<PAGE>
NOTE E - LINE OF CREDIT

Universal's  line of credit  agreement  with Compass Bank  provides for interest
payable  monthly at LIBOR Index rate plus 2.5% (7.82% at September 30, 2006) and
matures May 5, 2007. On July 25, 2005,  Universal entered into an agreement with
Compass  Bank  fixing  the  interest  rate at 6.99% on the first  $6,000,000  of
borrowings  and LIBOR  Index Rate plus 2.5% on the  balance  of the  outstanding
borrowings under Universal's line of credit. The line of credit is due on demand
and 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.  In  addition,  UPG must  maintain  certain
financial  covenants  including  ratios on fixed  charge  coverage  and  minimum
tangible  net  worth,  as well as,  maximum  debt to  tangible  net worth and an
interest  coverage  ratio.  On March 23,  2006,  UPG  entered  into  renewal and
modification  agreement on the line of credit  agreement  with Compass Bank. The
advance formula referenced in the Security Agreement as the "Borrowing Base" was
modified as follows:  eighty-five  percent (85.0%) of the  outstanding  value of
Borrower's Eligible Accounts Receivable (as defined in the Security  Agreement),
plus fifty  percent  (50.0%) of the value of Borrower's  Eligible  Inventory (as
defined  in the  Security  Agreement);  provided,  however  that  the  foregoing
sub-limit upon availability with respect to Borrower's  Eligible Inventory shall
not exceed  eighty-five  percent (85.0%) of the outstanding  value of Borrower's
Eligible Accounts Receivable at any one time outstanding. On April 18, 2006, UPG
entered into the second  renewal and  modification  agreement  with Compass Bank
which  increased  UPG's line of credit  from  $12,000,000  to  $16,000.000.  The
advance formula referenced in the Security Agreement as the "Borrowing Base" was
modified as follows:  eighty-five  percent (85.0%) of the  outstanding  value of
Borrower's Eligible Accounts Receivable (as defined in the Security  Agreement),
plus fifty  percent  (50.0%) of the value of Borrower's  Eligible  Inventory (as
defined  in  the  Security  Agreement).  Advances  against  Borrower's  Eligible
Inventory  shall not  exceed the  lesser of (a)  $8,500,000.00  or (b) an amount
equal  to the  product  of (i)  one  and  one-half  (1.5),  multiplied  by  (ii)
eighty-five  percent  (85%)  of the  outstanding  value of  Borrower's  Eligible
Accounts  Receivable  at any  one  time  outstanding.  At  September  30,  2006,
$11,621,516  was  outstanding  under the line of credit and $2,827,586  remained
available  for  borrowings  under  the line of  credit  based  on the  borrowing
formula.  UPG was in  compliance  with all of the  covenants  under  its line of
credit agreement as of and for the periods ended September 30, 2006.

NOTE F - NOTES PAYABLE - RELATED PARTY

AlphaNet had two notes payable to related party financing companies. One note in
the original principal amount of $1,525,000  payable to Appel Investments,  Inc.
of which Kim Yeow Tan,  William  Tan's  brother,  is an  officer,  director  and
shareholder.  The second note in the  original  principal  amount of  $1,000,000
payable  to AHS  Funding  LLC of which  Jenny  Jechart,  a  shareholder,  is the
principal shareholder. These notes were paid in full on March 9, 2006.

NOTE G - SEGMENTS

The  battery  and fulfillment  segment represents  the operations  of UPG.   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 the type of customers.


                                       11
<PAGE>
A summary of the segment financial  information  reported to the chief operating
decision maker is as follows:

                      Three months ended September 30, 2006
                      -------------------------------------

                                            Facsimile
                                            and
                                Battery and Business
                                Fulfillment Center      Adjustment  Consolidated
                                ----------- ----------  ----------  ------------
Revenue                         $23,770,977 $  413,750  $        -  $24,184,727
Depreciation and amortization        34,156     36,078           -       70,234
Segment profit (loss)               808,426     10,175    (105,991)     712,610
Segment assets                   31,530,897    365,676   1,348,110   33,244,683
Capital expenditures by segment      28,875     22,826           -       51,701

                      Three months ended September 30, 2005
                      -------------------------------------
                                            Facsimile
                                            and
                                Battery and Business
                                Fulfillment Center      Adjustment  Consolidated
                                ----------- ----------  ----------  ------------
Revenue                         $22,111,952 $ 455,924   $       -   $22,567,876
Depreciation and amortization        15,164    38,128         465        53,757
Segment profit (loss)               868,673   (17,463)    (94,462)      756,748
Segment assets                   24,399,302   419,020     607,938    25,426,260
Capital expenditures by segment      53,149    49,294           -       102,443

                      Nine months ended September 30, 2006
                      ------------------------------------
                                            Facsimile
                                            and
                                Battery and Business
                                Fulfillment Center      Adjustment  Consolidated
                                ----------- ----------- ----------  ------------
Revenue                         $68,016,953 $1,321,706  $       -   $69,338,659
Depreciation and amortization       115,215    107,864        246       223,325
Segment profit (loss)             2,287,104   (116,035)  (376,609)    1,794,460
Segment assets                   31,530,897    365,676  1,348,110    33,244,683
Capital expenditures by segment      83,724    112,260          -       195,983

                      Nine months ended September 30, 2005
                      ------------------------------------
                                            Facsimile
                                            and
                                Battery and Business
                                Fulfillment Center      Adjustment  Consolidated
                                ----------- ----------- ----------  ------------
Revenue                         $59,960,761 $1,391,429  $       -    $61,352,190
Depreciation and amortization        83,281    129,662      1,396        214,339
Segment income (loss)             1,890,782   (100,888)  (307,265)     1,482,629
Segment assets                   24,399,302    419,020    607,938     25,426,260
Capital expenditures by segment     120,972    119,049          -        240,021


                                       12
<PAGE>
The adjustments  represent  depreciation and  amortization  related to corporate
assets,  corporate expenses,  and corporate assets to reconcile segment balances
to consolidated balances.

NOTE H - CONCENTRATIONS

A significant portion of UPG's business is with one major customer, Brink's Home
Security,  which represented  approximately 58% and 59%, respectively,  of UPG's
revenues for the three and nine months ended September 30, 2006 and 57% and 58%,
respectively,  of Zunicom's  consolidated revenues for the three and nine months
ended September 30, 2006, respectively. At September 30, 2006, UPG had aggregate
accounts receivable from this customer in the amount of $4,438,568.  Through the
date of this  report,  substantially  this  entire  amount  has been  collected.
Similarly, a majority of UPG's inventory is purchased from two suppliers. One of
these  suppliers  accounted  for 40% and  43%,  respectively,  of  UPG's  entire
inventory  purchases for the three and nine months ended  September 30, 2006 and
the  other  supplier  accounts  for 31% and 26%,  respectively,  of all of UPG's
inventory purchases for the three and nine months ended September 30, 2006.

NOTE I - SHAREHOLDERS' EQUITY

During the nine months ended  September 30, 2006,  the Company paid dividends of
$24,091 on the Class A Preferred  Stock through the issuance of 13,489 shares of
the  Company's  common stock,  and 2,000 shares of Class A Preferred  Stock were
converted into 4,000 shares of the Company's common stock. In addition,  on July
25,  2006,  250,000  shares  were issued to  Ventures  International  Limited in
conjunction  with Caspic  International,  Inc.'s exercise of 250,000 warrants on
February  23, 2006,  upon which,  the 250,000  shares were  assigned to Ventures
International  Limited, an affiliated company. Mr. Tan is a director and officer
of both Caspic International Inc. and Ventures International Limited.

NOTE J - LEGAL PROCEEDINGS

The  Company  is  subject  to legal  proceedings  and  claims  that arise in the
ordinary  course of  business.  Management  does not believe that the outcome of
these matters will have a material adverse effect on the Company's  consolidated
financial position,  operating results, or cash flows. However,  there can be no
assurance that such legal proceedings will not have a material impact.

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 in this Form 10-Q.  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, 2005.

                                       13
<PAGE>
RESULTS OF OPERATIONS

Currently, the operations of Zunicom are conducted through its two subsidiaries,
Universal  Power Group,  Inc.  ("UPG") and  AlphaNet  Hospitality  System,  Inc.
("AlphaNet").

REVENUES

THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO SEPTEMBER 30, 2005

For the three month period ended  September 30, 2006,  Zunicom had  consolidated
revenues of $24,184,727  compared to $22,567,876 for the similar period in 2005,
an increase of $1,616,851 or 7%.

UPG had revenues of $23,770,977  for the three month period ended  September 30,
2006,  compared to revenues of  $22,111,952  for the similar  period in 2005, an
increase of  $1,659,025  or 8%.  AlphaNet had revenues of $413,750 for the three
month period ended  September  30, 2006 compared to revenues of $455,924 for the
similar period in 2005, a decrease of $42,174 or 9%.

The $1,659,025  increase in UPG's revenues is mainly  attributable  to increased
revenues from battery product sales of $1,753,438  from the  comparative  period
due to price  increases,  sales to new customers and increased sales to existing
accounts. UPG anticipates continued growth in revenue from the sales of battery,
battery-powered  product lines and new products.  Sales to Brink's Home Security
("Brinks") were relatively consistent with the corresponding period in the prior
year,  totaling  $13,713,400 for the three month period ended September 30, 2006
and  $13,642,575  for the three month  period  ended  September  30,  2005.  UPG
anticipates  that  sales to Brinks  will grow in  future  periods  due to Brinks
growing inventory requirements.

AlphaNet's  decrease  in  revenues  of $42,174 is  primarily  attributable  to a
decline in customer  usage and  de-installations  of its InnFax  product as well
higher percentage of revenue sharing with hotels for The Office(TM) product.

COST OF REVENUES

For the three month period ended September 30, 2006, Zunicom's consolidated cost
of revenues increased to $20,406,636 compared to cost of revenues of $19,230,144
for the similar period in 2005, an increase of $1,176,492 or 6%.

UPG's cost of revenues  totaled  $20,296,480  for the three month  period  ended
September 30, 2006, compared to $19,096,105, or an increase of $1,200,375 or 6%.
AlphaNet's  cost of revenues  totaled  $110,156 for the three month period ended
September  30, 2006  compared to $134,039  during the similar  period in 2005, a
decrease of $23,883 or 18%.

Cost of revenues as a percentage of revenues for UPG remained fairly  consistent
at 85% compared to 86% in the similar  period in 2005.  UPG continues to monitor
customer  and vendor  pricing  due to raw  material  cost  increases  which  are
expected to continue in the near future.

AlphaNet's direct servicing costs as a percentage of service revenues  decreased
to 27% for the three month period ending  September 30, 2006 compared to 29% for
the same period in 2005. The decrease in costs is associated  with a decrease in
installations  and  a decrease  in  wireless  licensing  fees on  The Office(TM)
product.
                                       14
<PAGE>
OPERATING EXPENSES

For the three month period ended  September  30,  2006,  Zunicom's  consolidated
operating expenses,  consisting of selling,  general and administrative expenses
as well as depreciation and amortization of property and equipment  increased to
$2,808,519 compared to $2,423,957 for the similar period in 2005, an increase of
$384,562 or 16%.

UPG's selling, general and administrative expenses were $2,410,155 for the three
month period  ending  September  30, 2006  compared to  $2,020,692,  in the 2005
period an increase of $389,463 or 19%. Of this increase,  approximately  $90,000
was  attributable  to salaries and other employee  compensation  expenses due to
overall growth and related  additional  hires.  The balance of the  increase was
attributable to increases in sales and marketing expenses, most of which related
to the opening of a new Batteries and Beyond retail outlet in Las Vegas.

AlphaNet's  selling,  general and  administrative  expenses  for the three month
period ending September 30, 2006 were $287,403 compared to $307,269, in the 2005
period, a decrease of $19,866 or 6%. The decrease is attributable to a reduction
in employee related compensation expenses, property taxes and equipment rental.

Zunicom's  selling,  general  and  administrative  expenses  for the three month
period ending September 30, 2006 were $110,961 compared to $95,996,  in the 2005
period, an increase of $14,965,  or 16%. The increase is primarily  attributable
to increased accounting fees and travel expenses.

For the three month  period  ending  September  30, 2006,  the Company  incurred
$70,234 in depreciation and amortization expense compared to $53,757 in the 2005
period, an increase of $16,477.

INTEREST EXPENSE

Zunicom's  consolidated  interest  expense totaled  $194,104 for the three month
period ended  September 30, 2006 compared to $153,578 for the similar  period in
2005, an increase of $40,526.  The increase is due to increased borrowings under
the UPG line of credit at a higher  interest  rate offset by the decrease of the
principal amount due on AlphaNet loans. The average  outstanding loan balance on
the UPG line of credit for the 2006 and 2005  periods was $8.9  million and $7.1
million, respectively. The AlphaNet loans were fully paid on March 9, 2006.

NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO SEPTEMBER 30, 2005

For the nine month period ended  September  30, 2006,  Zunicom had  consolidated
revenues of $69,338,659  compared to $61,352,190 for the similar period in 2005,
an increase of $7,986,469 or 13%.

UPG had revenues of  $68,016,953  for the nine month period ended  September 30,
2006,  compared to revenues of $59,960,761 for the similar period in 2005, a 13%
increase.  AlphaNet had revenues of  $1,321,706  for the nine month period ended
September 30, 2006, compared to revenues of $1,391,429 for the similar period in
2005, a 5% decrease.

The  increase  in  UPG's  revenues  is  mainly  attributable to price increases,
increased  sales  to new customers and existing  accounts,  which  increased  by



                                       15
<PAGE>
$5,745,194 from the comparative  period.   UPG  anticipates  continued growth in
revenue  from  the sales  of  battery,  battery  powered product lines  and  new
products.  In addition,  sales  to  Brinks  totaled   $40,401,019   for the nine
month period ended September 30, 2006 compared to $37,925,970 for the nine month
period ended  September  30, 2005 and increase of  $2,475,049.  UPG  anticipates
continued growth in Brinks revenue due to Brinks growing inventory requirements.

The decrease in AlphaNet's  revenues is attributable to the continued decline in
revenue on the Innfax product as well higher  percentage of revenue sharing with
hotels for The Office(TM) product.

COST OF REVENUES

For the nine month period ended September 30, 2006, Zunicom's  consolidated cost
of revenues  increased to $58,739,076  compared to  $52,549,739  for the similar
period in 2005, an increase of $6,189,337 or 12%.

UPG's cost of  revenues  totaled  $58,342,648  for the nine month  period  ended
September 30, 2006,  compared to $52,187,394  during the similar period in 2005.
AlphaNet's  cost of revenues  totaled  $396,428  for the nine month period ended
September 30, 2006 compared to $362,345 during the similar period in 2005.

Cost of revenues as a percentage  of revenues for UPG decreased to 85.8% for the
nine month period  ending  September  30, 2006 compared to 87.0% for the similar
period  in 2005.  UPG is  monitoring  customer  and  vendor  pricing  due to raw
material cost increases which are expected to continue in the near future.

AlphaNet's direct servicing costs as a percentage of service revenues  increased
to 30% for the nine month period  ending  September 30, 2006 compared to 26% for
the  same period in 2005.  The  increase  in cost is  associated  with  cost  of
repairs  and  maintenance,  copier  leases  and  wireless  licensing fees on The
Office(TM) product.

OPERATING EXPENSES

For the nine month  period ended  September  30,  2006,  Zunicom's  consolidated
operating expenses,  consisting of selling,  general and administrative expenses
as well as depreciation and amortization of property and equipment, increased to
$8,140,369 compared to $6,856,578 for the similar period in 2005, an increase of
$1,283,791 or 19%.

UPG's selling,  general and administrative expenses were $6,736,116 for the nine
month period  ending  September  30, 2006  compared to  $5,537,549,  in 2005, an
increase of  $1,198,567  or 22%. Of this amount,  $421,000 was  attributable  to
increases in salaries, payroll taxes and employee insurance cost associated with
the Company's  improved  performance and additional  employees.  The balance was
attributable to increases in sales and marketing expenses, many of which related
to the opening of a new Batteries and Beyond retail outlet in Las Vegas,  Nevada
and expenses related to the closing of UPG's Kansas branch office in April.

AlphaNet's  selling,  general  and  administrative  expenses  for the nine month
period ending September 30, 2006 were $1,014,289 compared to $1,010,320, in 2005
an increase of $3,969. The increase is attributable to increased wage expense of
$42,731 due to the  conversion of the exchange rate and  commissions.  This cost
was offset by trade show costs of $21,000 and accounting costs of $11,000.


                                       16
<PAGE>
Zunicom's selling, general and administrative expenses for the nine month period
ending September 30, 2006 were $389,964 compared to $308,709 in the 2005 period,
an increase of $81,255 or 26%. The increase is  attributable  to increased legal
and accounting  fees and travel  expenses,  offset by a decrease in compensation
expense.

For the nine month  period  ending  September  30,  2006,  the Company  incurred
$223,325 in depreciation and amortization  expense compared to $214,339 in 2005,
an increase of $8,986.

INTEREST EXPENSE

Zunicom's  consolidated  interest expense was $605,325 for the nine month period
ended September 30, 2006 compared to $450,049 for the similar period in 2005, an
increase of $155,276.  The increase is due to increased borrowings under the UPG

line of credit at a higher interest rate. The average  outstanding  loan balance
on the UPG line of credit for the 2006 and 2005  periods  was $9.3  million  and
$6.6 million,  respectively.  In addition, the AlphaNet loans were fully paid in
March 2006.

LIQUIDITY

Zunicom,  on a consolidated  basis,  had cash and cash equivalents of $1,521,921
and $881,433 at September 30, 2006 and 2005, respectively.

For the nine month period ended  September 30, 2006,  net cash used in operating
activities  was  $1,323,559.  In  comparison,  for the nine month  period  ended
September 30, 2005, operating  activities provided net cash of $1,603,556.  This
change  of  approximately  $3,000,000  is due  primarily  to the  fact  that the
inventories  increased by more than  $1,000,000 to accommodate  increased  sales
during 2006 which also increased  our  accounts receivable - trade  by  approxi-
mately  $1,200,000  at  the end  of  the  nine month period.   Accounts  payable
decreased  by  more  than  $1,400,000 as  we made  payments  to  suppliers  with
borrowings  under  our  line  of  credit.  The changes in inventories,  accounts
payable and accounts receivable were offset,  in part, by an increase in accrued
liabilities  of  approximately $800,000.

Cash used in investing  activities for the nine month period ended September 30,
2006, was $195,983 compared to $240,021 for the similar period in 2005. The cash
used in 2006 and 2005 was related to the purchases of property and equipment.

Net cash  provided  by  financing  activities  for the nine month  period  ended
September  30, 2006 was  $2,309,837  compared  to cash used of $940,170  for the
similar period in 2005.  The net cash provided by financing  activities for 2006
was  primarily  comprised of net  borrowings on UPG line of credit of $2,360,081
and proceeds from the exercise of warrants of $182,500,  as well as cash used of
$217,128 for the repayment of long term debt to related  parties and $15,616 for
the repayment of other long-term debt. Net cash used in financing activities for
the nine month period ended  September 2005 was related to net repayments on the
UPG line of credit of  $589,264.  Additional  cash was used on the  repayment of
long term debt to a related party totaling  $335,000 as well as $15,906 on other
long term debt.

AlphaNet had two notes payable to related party financing companies. One note in
the original  principal  amount of $1,525,000 was payable to Appel  Investments,

                                       17
<PAGE>
Inc. of which Kim Yeow Tan, William Tan's brother,  is an officer,  director and
shareholder.  The second note in the original principal amount of $1,000,000 was
payable  to AHS  Funding  LLC of which  Jenny  Jechart,  a  shareholder,  is the
principal shareholder.  These notes bore interest at  20.5%,  originally matured
on October 21, 2002 and were paid in full on March 9, 2006.

UPG's line of credit  agreement with Compass Bank provides for interest  payable
monthly at LIBOR Index rate plus 2.5% (7.82% at September  30, 2006) and matures
May 5, 2007. On July 25, 2005,  UPG entered into an agreement  with Compass Bank
fixing the interest  rate at 6.99% on the first  $6,000,000  of  borrowings  and
LIBOR Index Rate plus 2.5% on the balance of the  outstanding  borrowings  under
UPG's  line of  credit.  The line of credit is due on demand  and is  secured by
accounts receivable,  inventories, and equipment of UPG. The line's availability
is based on a borrowing  formula,  which allows for  borrowings  equal to 85% of
UPG's eligible accounts  receivable and a percentage of eligible  inventory.  In
addition,  UPG must maintain  certain  financial  covenants  including ratios on
fixed charge  coverage and minimum  tangible net worth, as well as, maximum debt
to tangible net worth and an interest  coverage  ratio.  On March 23, 2006,  UPG
entered into renewal and modification  agreement on the line of credit agreement
with Compass Bank. The advance formula  referenced in the Security  Agreement as
the "Borrowing Base" was modified as follows: eighty-five percent (85.0%) of the
outstanding value of Borrower's  Eligible Accounts Receivable (as defined in the
Security  Agreement),  plus fifty  percent  (50.0%)  of the value of  Borrower's
Eligible  Inventory (as defined in the Security  Agreement);  provided,  however
that the  foregoing  sub-limit  upon  availability  with  respect to  Borrower's
Eligible  Inventory  shall  not  exceed  eighty-five   percent  (85.0%)  of  the
outstanding  value of Borrower's  Eligible  Accounts  Receivable at any one time
outstanding.  On April  18,  2006,  UPG  entered  into the  second  renewal  and
modification  agreement with Compass Bank which  increased  UPG's line of credit
from $12,000,000 to $16,000.000.  The advance formula referenced in the Security
Agreement as the "Borrowing Base" was modified as follows:  eighty-five  percent
(85.0%) of the outstanding value of Borrower's  Eligible Accounts Receivable (as
defined in the Security  Agreement),  plus fifty percent (50.0%) of the value of
Borrower's Eligible Inventory (as defined in the Security  Agreement).  Advances
against  Borrower's  Eligible  Inventory  shall  not  exceed  the  lesser of (a)
$8,500,000.00  or (b) an amount  equal to the  product  of (i) one and  one-half
(1.5),  multiplied by (ii) eighty-five percent (85%) of the outstanding value of
Borrower's  Eligible  Accounts  Receivable  at  any  one  time  outstanding.  At
September 30, 2006,  $11,621,516  was  outstanding  under the line of credit and
$2,827,586  remained  available for borrowings under the line of credit based on
the borrowing formula. UPG was in compliance with all of the covenants under its
line of credit agreement as of and for the periods ended September 30, 3006.

Zunicom  believes that cash provided by its operations and cash available  under
the UPG line of credit will be sufficient to meet its operational needs over the
next year.

In  September  2006  UPG  filed  an S-1  registration  statement  with  the U.S.
Securities and Exchange  Commission for an  underwritten  public  offering.  The
registration statement was amended in October 2006. As amended, the registration
statement  covers 3,000,000 shares of UPG's common stock of which 2,000,000 will
be sold by UPG and  1,000,000  will be  sold  by  Zunicom.  The  initial  public
offering  price per share is expected  to be between  $7.00 and $9.00 per share.
The registration statement has not yet become effective and we cannot predict or
determine when it will become effective,  if ever. The securities covered by the


                                       18
<PAGE>
registration statement may not be sold nor may offers for the securities covered
by the  registration  statement be accepted  prior to the time the  registration
statement becomes  effective.  Nothing contained in this report shall constitute
an offer to sell or the  solicitation  of an offer to  purchase  the  securities
covered by the registration statement. A written prospectus, when available, may
be obtained from Ladenburg  Thalman & Co. Inc., 153 East 53rd Street,  New York,
New York 10022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange

Our customers are primarily located in the U.S.  However,  many of our suppliers
are located  outside the U.S.  and our  financial  results  could be impacted by
foreign  currency  exchange rates and market  conditions  abroad.  However,  the
aggregate impact of any likely exchange rate fluctuations would be immaterial as
most payments are made in U.S. dollars. We have not used derivative  instruments
to hedge our foreign exchange risks though we may choose to do so in the future.

Our  international  business  is  subject to risks  typical of an  international
business, including, but not limited to: differing economic conditions,  changes
in  political   climate,   differing  tax  structures,   other  regulations  and
restrictions  and foreign  exchange  rate  volatility.  Accordingly,  our future
results  could be  materially  adversely  affected  by changes in these or other
factors.  The effect of foreign exchange rate fluctuations on us during the nine
months ended September 30, 2006 was not material.

Interest Rates

Our exposure to market rate risk for changes in interest rates relates primarily
to UPG's line of credit. A portion of the outstanding  borrowings on the line of
credit  bear  interest  at LIBOR plus 2.5%.  A change in the LIBOR  would have a
material effect on interest expense.

ITEM 4. CONTROLS AND PROCEDURES

Our management,  with the participation of our Chief Executive Officer and Chief
Financial  Officer,  has evaluated the effectiveness of our disclosure  controls
and procedures (as such term is defined in rules  13a-15(e) and 15d-15(e)  under
the Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this report.  Based on that  evaluation,  our Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end
of such period,  our disclosure  controls and procedures are effective to ensure
that  information  required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded,  processed,  summarized and reported,
within the time  periods  specified  in the SEC's  rules and forms.  Information
required  to be  disclosed  by us in the  reports  we file or  submit  under the
Exchange Act is  accumulated  and  communicated  to  management,  including  our
principal executive and principal  financial  officers,  as appropriate to allow
timely decisions regarding required disclosure.

There have not been any changes in our internal control over financial reporting
(as such term is defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange
Act) that occurred during the period covered by this report that have materially
affected,  or are reasonably likely to materially  affect,  our internal control
over financial reporting.

                                       19
<PAGE>
PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Energizer  Holdings,  Inc.  and Eveready  Battery  Company,  Inc.  (collectively
"Eveready")  have  initiated  legal  proceedings  against  us and  over 20 other
respondents  relating  to the  manufacture,  importation  and  sale  of  certain
alkaline  batteries alleged to infringe U.S. Patent No.  5,464,709.  Eveready is
seeking a general  exclusion  order with respect to future  importation of these
batteries.  We have denied infringement and have been vigorously  defending this
action. The International Trade Commission ruled against Eveready and the matter
was appealed to the United States Court of Appeals for the Federal  Circuit.  On
January  25,  2006,  the  Federal  Circuit  reversed  the  International   Trade
Commission's  holding of  invalidity  and has remanded  for further  proceedings
based on its construction of Eveready's  patent. The parties are waiting for the
International Trade Commission ot rule on the issue of whether the investigation
should be terminated. For more information, see In re Certain Zero-Mercury-Added
Alkaline Batteries,  Parts Thereof and Products  Containing Same,  Investigation
No. 337-TA-493, in the United States International Trade Commission.

In September of 2005, A.J. Gilson, a former sales representative of UPG filed an
action in the District  Court of Dallas  County,  Texas  against UPG and Zunicom
claiming  damages  for  breach of  contract  in the amount of  $430,722  and all
reasonable  and  necessary  attorney  fees.  The  plaintiff is alleging that UPG
failed to pay him sales  commissions  to which he was  entitled.  In relation to
this matter,  UPG and Zunicom are  defending  themselves  and consider the claim
without  merit.  We do not expect the final  resolution  of this claim to have a
material  adverse effect on our financial  position.  However,  depending on the
amount and timing of an unfavorable  resolution of claim against Zunicom, or the
costs of settlement or  litigation,  Zunicom's  future  results of operations or
cash flows could be materially and adversely affected.

Item 1A.  Risk Factors

There are no material changes to the risk factors set forth in Item 1A of Part 1
of our Form  10-K for the year  ended  December  31,  2005  filed  with the U.S.
Securities and Exchange Commission on March 30, 2006.

Item 6. Exhibits.

         The  following  exhibits  are  furnished  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).





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<PAGE>
         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).

         10.11  Revolving  Credit and Security  Agreement by and between Compass
         Bank and UPG,  December 14, 2004  (incorporated by reference to Exhibit
         10.11 to the  Company's  Annual  Report on Form 10-K for the year ended
         December 31, 2004 filed on March 31, 2005).

         10.12 Purchase  Agreement by and between  Brink's Home Security and UPG
         as adopted September 1,  2004(incorporated by reference to Exhibit 10.6
         to  UPG's  Registration  Statement  on Form  S-1,  Commission  File no.
         333-137265,  filed on  September  12,  2006,  as amended on October 26,
         2006).

         10.13 Renewal and  Modification  Agreement by and between  Compass Bank
         and UPG on March 23, 2006  (incorporated  by reference to Exhibit 10.13
         to the Company's Annual Report on Form 10-K for the year ended December
         31, 2005 filed on March 30, 2006).

         10.14 Renewal and  Modification  Agreement by and between  Compass Bank
         and UPG on April 18, 2006 (incorporated by reference to Exhibit 10.5(c)
         to  UPG's  Registration  Statement  on Form  S-1,  Commission  File no.
         333-137265,  filed on  September  12,  2006,  as amended on October 26,
         2006.)

         10.15   First   Amendment   to   Master   Revolving   Promissory   Note
         (incorporated  by reference to Exhibit  10.5(d)  to UPG's  Registration
         Statement  on Form  S-1,  Commission  File  no.  333-137265,  filed  on
         September 12, 2006, as amended on October 26, 2006.)

         31.1   Certification  of  Chief  Executive  Officer  pursuant  to  Rule
         13a-14(a) of the Exchange Act.

         31.2   Certification  of  Chief  Financial  Officer  pursuant  to  Rule
         13a-14(a) of the Exchange Act.

         32.1   Certification  of  Chief  Executive  Officer  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 2003.

         32.2   Certification  of  Chief  Financial  Officer  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 2003.








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

         Pursuant to 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.
                                    -----------------------------


Date:  November 13, 2006            /s/ William Tan
                                    --------------------------------
                                    William Tan
                                    Principal Executive Officer


Date:  November 13, 2006            /s/ Julie Sansom-Reese
                                    --------------------------------
                                    Julie Sansom-Reese
                                    Chief Financial Officer
                                    (principal financial and accounting officer)



































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