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, 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)


           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
<PAGE>
     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No. [X]

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]

     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 March 31, 2006, 8,622,012 shares of Common Stock were outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None































                                       2
<PAGE>
                                  Zunicom, Inc.
                                      INDEX

                                                                      Page
                                                                      ----
PART I - Financial Information

Item 1.  Financial Statements

Unaudited Consolidated Balance Sheets at March 31, 2006
and December 31, 2005. . . . . . . . . . . . . . . . . . . . . . . .   4

Unaudited Consolidated Statements of Operations for the
three months ended March 31, 2006 and 2005 . . . . . . . . . . . . . . 6

Unaudited Consolidated Statements of Cash Flows for the
three months ended March 31, 2006 and 2005 . . . . . . . . . . . . . . 7

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

Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . .  12

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.  15

Item 4.  Controls and Procedures. . . . . . . . . . . . . . . . . .   15


PART II - Other Information

Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . .  15

Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . .  16

Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

Certifications




















                                       3
<PAGE>
PART  I  -  FINANCIAL  INFORMATION
----------------------------------
Item  1.  Financial  Statements




                         ZUNICOM, INC. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                      March 31,     December 31,
                                                         2006           2005
                                                    ------------   ------------
CURRENT ASSETS
 Cash and cash equivalents                          $    886,975   $    731,626
 Accounts receivable - trade, net of
  allowance for doubtful accounts of
  $223,891 and $226,931                                8,441,079      8,446,086
 Accounts receivable - other                              92,208        114,802
 Inventories - finished goods, net of
  allowance for obsolescence of
  $188,663  and $158,663                              18,963,307     19,144,410
 Prepaid expenses and other current assets               495,366        665,802
                                                    ------------   ------------
        Total current assets                          28,878,935     29,102,726
                                                    ------------   ------------
PROPERTY AND EQUIPMENT
 Facsimile and business center equipment                 998,480        974,674
 Machinery and equipment                                 578,815        578,815
 Computer equipment                                      144,857        144,133
 Furniture and fixtures                                  272,937        272,937
 Leasehold Improvements                                  311,056        303,597
 Vehicles                                                151,598        151,598
                                                    ------------   ------------
                                                       2,457,743      2,425,754
 Less accumulated depreciation
   and amortization                                   (1,755,966)    (1,698,786)
                                                    ------------   ------------
        Net property and equipment                       701,777        726,968
                                                    ------------   ------------
OTHER ASSETS                                              33,073         34,923
                                                    ------------   ------------
TOTAL ASSETS                                        $ 29,613,785   $ 29,864,617
                                                    ============   ============







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

                                       4
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                UNAUDITED CONSOLIDATED BALANCE SHEETS - Continued


                      LIABILITIES AND STOCKHOLDERS' EQUITY


                                                      March 31,     December 31,
                                                         2006           2005
                                                    ------------   ------------
CURRENT LIABILITIES
 Line of credit                                     $ 11,795,888   $  9,261,435
 Current portion of notes payable -
   related party                                               -        217,128
 Current portion of long-term debt                        21,260         20,968
 Accounts payable                                      9,070,136     12,632,315
 Accrued liabilities                                     667,488        311,957
 Other current liabilities                                55,497         51,837
                                                    ------------   ------------
        Total current liabilities                     21,610,269     22,495,640
                                                    ------------   ------------

LONG-TERM DEBT, less current portion                      19,913         25,339
DEFERRED RENT, less current portion                      206,892        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 March 31, 2006                        86,988         88,988
 Common stock - $0.01 par value;
  50,000,000 shares authorized; 8,622,012
  and 8,614,750 shares issued and out-
  standing                                                86,220         86,148
 Common stock pending issuance (250,000 shares)            2,500              -
 Additional paid-in capital                           14,792,066     14,601,331
 Accumulated deficit                                  (7,191,063)    (7,643,341)
                                                    ------------   ------------
        Total stockholders' equity                     7,776,711      7,133,126
                                                    ------------   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 29,613,785   $ 29,864,617
                                                    ============   ============









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



                                       5
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
               For the Three Months Ended March 31, 2006 and 2005

                                                       2006            2005
REVENUES                                           ------------    ------------
 Sales                                             $ 20,740,624    $ 17,402,572
 Service revenue                                        456,597         425,827
                                                   ------------    ------------
                                                     21,197,221      17,828,399
COST OF REVENUES
 Cost of goods sold                                  17,810,005      15,257,378
 Direct servicing costs                                 140,490         115,184
                                                   ------------    ------------
                                                     17,950,495      15,372,562
                                                   ------------    ------------
GROSS PROFIT                                          3,246,726       2,455,837

OPERATING EXPENSES
 Selling, general and administrative                  2,516,139       1,985,072
 Depreciation and amortization of
    property and equipment                               75,827          83,784
                                                   ------------    ------------
                                                      2,591,966       2,068,856
                                                   ------------    ------------
INCOME FROM OPERATIONS                                  654,760         386,981

OTHER EXPENSES
 Interest expense (including $7,890 and
   $43,131 to related parties)                         (189,773)       (141,089)
 Other, net                                              (3,902)         (3,626)
                                                   ------------    ------------
                                                       (193,675)       (144,715)
                                                   ------------    ------------
INCOME BEFORE PROVISION FOR INCOME TAXES                461,085         242,266
                                                   ------------    ------------
PROVISION FOR INCOME TAXES                                    -               -
                                                   ------------    ------------
NET INCOME                                         $    461,085    $    242,266
                                                   ============    ============
Net income attributable to common
  stockholders                                     $    452,278    $    232,085
                                                   ============    ============
Net income per share attributable to
  common stockholders
      Basic                                        $       0.05    $       0.03
                                                   ============    ============
      Diluted                                      $       0.05    $       0.03
                                                   ============    ============
Number of weighted average shares of
  common stock outstanding
      Basic                                           8,718,896       8,516,186
                                                   ============    ============
      Diluted                                         9,518,023       9,168,261
                                                   ============    ============
            The accompanying footnotes are an integral part of these
                       consolidated financial statements.
                                       6
<PAGE>
                         ZUNICOM, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
               For The Three Months Ended March 31, 2006 and 2005

                                                       2006            2005
CASH FLOWS FROM OPERATING ACTIVITIES               -------------   ------------
Net income                                         $     461,085   $    242,266
Adjustments to reconcile net income to net
   cash used in operating activities:
 Depreciation and amortization of
   property and equipment                                 75,827         83,784
 Provision for bad debts                                  34,364         77,011
 Provision for obsolete inventory                         30,000         76,000
 Write off of property and equipment                         545            619
 Change in operating assets and liabilities:
    Accounts receivable - trade                          (29,357)      (721,823)
    Accounts receivable - other                           22,594        187,605
    Inventories                                          151,103       (293,439)
    Prepaid expenses and other current assets            170,436        (77,455)
    Other assets                                           1,850              -
    Accounts payable                                  (3,562,179)      (176,108)
    Accrued liabilities                                  355,531       (621,188)
    Deferred rent                                             40         (2,174)
                                                   -------------   ------------
Net cash used in operating activities                 (2,288,161)    (1,224,902)
                                                   -------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property and equipment                      (51,181)       (87,554)
                                                   -------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Net activity on line of credit                        2,534,453      1,548,525
 Proceeds from exercise of warrants                      182,500              -
 Repayment of notes payable - related party             (217,128)      (185,000)
 Repayment of long-term debt                              (5,134)        (5,996)
                                                   -------------   ------------
Net cash provided by financing activities              2,494,691      1,357,529
                                                   -------------   ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                155,349         45,073

Cash and cash equivalents at beginning of period         731,626        458,068
                                                   -------------   ------------
Cash and cash equivalents at end of period         $     886,975   $    503,141
                                                   =============   ============
SUPPLEMENTAL CASH FLOW INFORMATION

Interest paid                                      $     189,773   $    121,021
                                                   =============   ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
    AND FINANCING ACTIVITIES
Dividends paid through issuance of common stock    $       8,807   $     10,181
                                                   =============   ============



            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
the three month  period  ended March 31,  2006.  The results for the three month
period ended March 31, 2006 are not  necessarily  indicative of the results that
may be expected for the year ended December 31, 2006. The consolidated financial
statements  included  in this  filing  should  be read in  conjunction  with the
Company's  consolidated  financial  statements and notes thereto included in the
Company's annual report on form 10-K for the year ended December 31, 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,  third party fulfillment,  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 leading
provider of guest communication services to the hospitality market.

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
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 months  ended March 31, 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


                                       8
<PAGE>
expected to vest.  All options  outstanding at the beginning of the period ended
March  31,  2006  were  fully  vested;   therefore,   there  is  no  stock-based
compensation  expense  recognized  in the  consolidated  statement of operations
during the first quarter of 2006. The aggregate intrinsic value of the 1,059,500
stock options  outstanding at March 31, 2006 totaled  approximately  $1 million.
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 March 31, 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 for the period ended March 31, 2005 based on
the fair  value at the  grant  date for its stock  options  under  SFAS 123,  as
amended  by SFAS  148,  net  income  and net  income  per  share  would not have
significantly differed from reported net income.

NOTE D - NET INCOME PER SHARE

Basic net income per share is computed by dividing  net income  decreased by the
preferred  stock  dividends  of $8,807 and $10,181  for the three month  periods
ending March 31, 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 March 31, 2006 the aggregate  number of common
stock  equivalents  that were  excluded  from the  diluted  net income per share
calculation  totaled  173,976  as they are  anti-dilutive.  For the three  month
period  ending March 31, 2006 the dilutive  effect of 799,127  stock options and
other common stock  equivalents are included in the diluted net income per share
calculation.  For the  period  ended  March  31,  2005 the  dilutive  effect  of
4,317,081  stock options and warrants are included in the diluted net income per
share  calculation.  The aggregate number of common stock  equivalents  excluded
from the diluted  net income per share  calculation  for the three month  period
ending March 31, 2005 totaled 517,276, as they are anti-dilutive.

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%  (7.13% at March 31,  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


                                       9
<PAGE>
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,  Universal 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 second renewal and modification agreement which modified the line's
availability base borrowing formula, as more fully described in Note K. At March
31,  2006,  $11,795,888  was  outstanding  under the line of credit and $204,112
remained  available  for  borrowings  under  the  line of  credit  based  on the
borrowing formula.

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, in general, the type of customers.

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

                                       Three Months Ended March 31, 2006

                                           Facsimile
                                            and
                               Battery and  Business
                               Fulfillment  Center    Adjustment   Consolidated
                               ----------- ---------  ----------   ------------
Revenue                        $20,740,624 $ 456,597  $        -    $21,197,221
Depreciation and amortization       39,841    35,740         246         75,827
Segment profit (loss)              669,703   (80,519)   (128,099)       461,085
Segment assets                  28,487,179   405,989     720,617     29,613,785
Capital expenditures by segment      7,460    43,721           -         51,181




                                       10
<PAGE>
                                       Three Months Ended March 31, 2005

                                           Facsimile
                                            and
                               Battery and  Business
                               Fulfillment  Center     Adjustment   Consolidated
                               ----------- ---------   ----------   ------------
Revenue                        $17,402,572 $ 425,827  $       -    $17,828,399
Depreciation and amortization       35,590    47,729        465         83,784
Segment profit (loss)              423,124   (97,522)   (83,336)       242,266
Segment assets                  22,647,694   436,342    337,311     23,421,347
Capital expenditures by segment     47,160    40,394          -         87,554

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  Universal's  business  is with one major  customer,
Brink's Home Security, which represented  approximately 63% of Universal's first
quarter  of 2006  revenue  and 61% of  Zunicom's  consolidated  March  31,  2006
revenue.  At March 31, 2006,  UPG had aggregate  accounts  receivable  from this
customer  in the  amount  of  $4,117,712.  Through  the  date  of  this  report,
substantially this entire amount has been collected.

NOTE I - SHAREHOLDERS' EQUITY

During the three  months ended March 31,  2006,  the Company  paid  dividends of
$8,807 on the Class A Preferred  Stock  through the  issuance of 3,262 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,  a
related party  exercised  warrants to purchase  250,000  shares of the Company's
common stock. These shares are pending issuance at March 31, 2006.

NOTE J - LEGAL PROCEEDINGS

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

NOTE K - SUBSEQUENT EVENTS

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.

                                       11
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The  following  discussion  and  analysis  should  be read in  conjunction  with
Zunicom's  Consolidated  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 these discussed here.  Factors that could cause or
contribute  to such  differences  include,  without  limitation,  those  factors
discussed  herein and in Zunicom's Annual Report on Form 10-K for the year ended
December 31, 2005.


RESULTS OF OPERATIONS

Currently, the operations of Zunicom are conducted through its two subsidiaries,
UPG and AlphaNet.

REVENUES

For the three month  period  ended  March 31,  2006,  Zunicom  had  consolidated
revenues of $21,197,221  compared to $17,828,399 for the similar period in 2005,
an increase of $3,368,822 or 19%.

UPG had revenues of $20,740,624 for the three month period ended March 31, 2006,
compared to  revenues  of  $17,402,572  for the  similar  period in 2005,  or an
increase of 19%.  AlphaNet  had  revenues of $456,597 for the three month period
ended March 31, 2006, compared to revenues of $425,827 for the similar period in
2005, or an increase of 7%.

The $3,338,052  increase in UPG's revenues is attributable to increased revenues
from Brink's Home  Security  ("Brinks")  and to increased  revenues from battery
product  sales.  Specifically,  Brinks sales totaled  $13,024,178  for the three
month  period  ended March 31, 2006 and  $11,304,565  for the three month period
ended March 31,  2005,  an increase of  $1,719,613.  UPG  anticipates  continued
growth in revenue  from  Brinks due to Brinks  growing  inventory  requirements.
Battery product sales increased by $1,631,883 from the comparative period due to
price increases and sales to new customers.  UPG anticipates continued growth in
revenue  from the  sales of  battery,  battery  powered  product  lines  and new
products.

AlphaNet's  increase in revenues of $30,770 is attributable to increase installs
and usage of The Office(TM).

COST OF REVENUES

For the three month period ended March 31, 2006, Zunicom's  consolidated cost of
revenues  increased to  $17,950,495  compared to cost of revenues of $15,372,562
for the similar period in 2005, an increase of $2,577,933 or 17%.


                                       12
<PAGE>
UPG's cost of revenues  totaled  $17,810,005  for the three month  period  ended
March 31, 2006,  compared to  $15,257,378  in the similar  period in 2005, or an
increase of $2,552,627 or 17%.  AlphaNet's cost of revenues totaled $140,490 for
the three month  period  ended March 31,  2006  compared to $115,184  during the
similar period last year, an increase of $25,306 or 22%.

Cost of revenues as a percentage  of revenues for UPG  decreased to 86% compared
to 88% for the similar period in 2005.  This decrease is  attributable to higher
margin on power products and batteries but offset by the lower margins earned on
third party fulfillment  distribution to Brinks.  The gross margin for the three
month  period  ended March 31,  2006 from  fulfillment  services  for Brinks was
approximately  11%  compared to average  gross margin of 19% from sales to other
customers.

AlphaNet's direct servicing costs as a percentage of service revenues  increased
to 31% for the three month period  ending March 31, 2006 compared to 27% for the
same period in 2005.  The  increase  is  primarily  attributable  to the cost of
installing new office centers, license fees and repairs and maintenance.

OPERATING EXPENSES

For the  three  month  period  ended  March  31,  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
$2,591,966 compared to $2,068,856 for the similar period in 2005, an increase of
$532,110 or 25%.

The selling,  general and administrative expenses of UPG were $2,080,178 for the
three month period  ending  March 31, 2006  compared to  $1,625,785,  in 2005 an
increase  of  $454,393  or  28%.   UPG's   increase  in  selling,   general  and
administrative  expenses  was  attributable  to an increase in bonus  expense of
$135,000  and  salaries  of  $81,044  associated  with  the  Company's  improved
performance,  increased  expenses  associated  with  trade  shows and travel and
entertainment  of $62,716,  increased  repairs  and  maintenance  and  utilities
expenses of $45,069,  additional  contract  labor expense of $24,829,  and other
increases  in  warehouse  supplies  of  $22,269,  insurance  of $15,730 and bank
charges of $12,295.  Additionally, UPG made cash donations of $30,392 to various
organizations  and had  increased  rent  expense of  $21,462  due to a Las Vegas
branch for which other expenses will be incurred  starting in the second quarter
of 2006.

AlphaNet's increase selling,  general and administrative  expenses for the three
month period ending March 31, 2006 were $382,207  compared to $359,816,  in 2005
an  increase  of  $22,391 or 6%.  The  increase  is  primarily  attributable  to
increased rent expense of $20,000. Increased franchise tax expense of $8,080 and
equipment rental of $6,647 also  contributed to the increase.  These were offset
by the reduction in trade show costs of $11,561.

Zunicom's increase in selling, general and administrative expenses for the three
month period ending March 31, 2006 were $129,581 compared to $83,255, in 2005 an
increase of $46,326 or 56%. The  increase is  attributable  to  increased  legal
expenses of $30,894, wages of $47,779 and payroll costs of $4,070.

For the three month period ending March 31, 2006, the Company  incurred  $75,827
in depreciation and  amortization  expense compared to $83,784 in 2005, a slight
decrease of $7,957.

                                       13
<PAGE>
INTEREST EXPENSE

Zunicom's  consolidated  interest  expense totaled  $189,773 for the three month
period ended March 31, 2006 compared to $141,089 for the similar period in 2005,
an increase of $48,684.  The increase is due to increased  borrowings  under the
UPG line of credit at a higher  interest  rate  than the  similar  period in the
prior year offset by the decrease of the principal amount due on AlphaNet loans.
The AlphaNet loans were fully paid on March 9, 2006.

LIQUIDITY

Zunicom,  on a consolidated  basis, had cash and cash equivalents of $886,975 at
March 31, 2006.

Net cash used in  operations  was  $2,288,161  for the three month period ending
March 31,  2006.  The cash used in  operating  activities  in 2006 is  primarily
attributable to reductions in accounts  payable of $3,562,179.  This decrease is
partially  offset by net  income  of  $461,085  and by an  increase  in  accrued
liabilities of $355,531,  decreases in prepaid expenses and other current assets
of $170,436 and inventories of $151,103 as well as depreciation and amortization
of  property  and  equipment  of $75,827  and the  provisions  for bad debts and
obsolete inventory of $34,364 and $30,000, respectively.

Net cash used by investing activities for the three month period ended March 31,
2006, related to purchases of property and equipment was $51,181.

Net cash provided by financing activities for the three month period ended March
31, 2006 was $2,494,691.  The net cash provided by financing activities for 2006
was  primarily  comprised  of net  borrowings  on the  UPG  line  of  credit  of
$2,534,453  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
$5,134 for the repayment of 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,
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.

As provided  for in the UPG line of credit  agreement,  UPG may,  under  certain
conditions,  borrow  under  the  line  to  upstream  funds  to  Zunicom,  to pay
AlphaNet's  indebtedness  mentioned above,  assuming borrowing  availability and
certain  fixed  charge  coverage  ratio  tests are met.  UPG may borrow for this
purpose up to 50% of its net income  quarterly until the notes are retired.  For
the quarter ended March 31, 2006 UPG borrowed  $217,128 in which Zunicom used to
pay off the AlpaNet loans.

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





                                       14
<PAGE>
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 three
months ended March 31, 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

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 quarter
ended  March 31,  2006.  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,  2006 to
provide reasonable  assurance that material  information relating to the Company
is made known to management including the CEO and CFO.

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.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Energizer  Holdings,  Inc.  and Eveready  Battery  Company,  Inc.  (collectively
"Eveready")  have initiated  legal  proceedings  against the Company 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. The Company has denied infringement and has 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


                                       15
<PAGE>
Circuit.  On January 25, 2006,  the Federal  Circuit  reversed the  Commission's
holding of  invalidity  and has  remanded for further  proceedings  based on its
construction  of  Eveready's  patent.  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 Universal
filed an action in the District Court of Dallas County,  Texas against Universal
and  Zunicom  claiming  damages for breach of contract in the amount of $430,722
and all reasonable and necessary  attorney fees. In relation to this matter, the
Company is defending  itself and considers the claim without  merit.  Management
does 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  the  Company,  or the  costs of
settlement or  litigation,  the Company's  future  results of operations or cash
flows could be materially adversely affected.

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

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

       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).

       10.11 Revolving Credit and Security Agreement by and between Compass Bank
       and UPG, December 14, 2004.

       10.12 Purchase  Agreement by and between Brink's Home Security and UPG as
       adopted June 1, 2004.

       10.13 Renewal and Modification  Agreement by and between Compass Bank and
       UPG on March 23, 2006.

       10.14 Renewal and Modification  Agreement by and between Compass Bank and
       UPG on April 18, 2006.

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


                                       16
<PAGE>
       21.1 Subsidiaries of Issuer

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

       31.2 Certification related to Quarterly Report Form 10-Q disclosures

       32.1 Certification  pursuant to Rule 13a-14(b) of the Exchange Act and 18
       U.S.C.   Section  1350,  as  enacted  pursuant  to  Section  906  of  the
       Sarbanes-Oxley Act of 2003.

       32.2 Certification  pursuant to Rule 13a-14(b) of the Exchange Act and 18
       U.S.C.   Section  1350,  as  enacted  pursuant  to  Section  906  of  the
       Sarbanes-Oxley Act of 2003.


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

       None.






































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

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



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


Date:  May 12, 2006                    /s/ Julie Sansom-Reese
                                       --------------------------------
                                       Julie Sansom-Reese
                                       Chief Financial Officer
                                       (principal financial officer)







































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