| | UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q | OMB APPROVAL

OMB Number:	3235-0070

Expires:	January 31, 2013

Estimated average burden

hours per response . . ..... .187.2
| | ------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------











(Mark One)



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



For the quarterly period ended June
30, 2011

or



[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from to



Commission File Number: 0-27210



Zunicom, Inc.

(Exact name of registrant as specified
in its charter)







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



4315 West Lovers
Lane, Dallas, Texas

(Address of principal executive offices)



(214) 352-8674

(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 theSecurities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing
requirements for the past 90 days.

[ X ] Yes	[    ] No



Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).

[ X ] Yes	[    ] No



Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.







|Large accelerated filero | Accelerated filero        
|------------------------ | --------------------------
|Non-accelerated filero   | Smaller reporting companyþ











Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

[    ] Yes	[ X ] No



As of July 31, 2011, 9,901,255 shares of
Common Stock were outstanding.

































































































2













Zunicom, Inc.

INDEX





|                                                                                                                                          | Page
|----------------------------------------------------------------------------------------------------------------------------------------- | ----
|PART I - Financial Information                                                                                                            |     
|                                                                                                                                          |     
|Item 1.  Financial Statements                                                                                                             |     
|                                                                                                                                          |     
|Consolidated Balance Sheet at June 30, 2011 (unaudited) and Consolidated Balance Sheet at December 31, 2010.. . . . . . . . .             | 4   
|                                                                                                                                          |     
|Unaudited Consolidated Statements of Operations for the Three and six months ended June 30, 2011 and 2010. . . . . . . . . . .            | 6   
|                                                                                                                                          |     
|Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010. . . . . .. . . . . . . . . . . . . . . . | 8   
|                                                                                                                                          |     
|Notes to Unaudited Consolidated Financial Statements . . . . . . . . .                                                                    | 9   
|                                                                                                                                          |     
|Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . .          | 15  
|                                                                                                                                          |     
|Item 3.  Quantitative and Qualitative Disclosures About Market Risk. .                                                                    | 18  
|                                                                                                                                          |     
|Item 4.  Controls and Procedures . . . . . . . . . . . . . . . . . . .                                                                    | 18  
|                                                                                                                                          |     
|PART II - Other Information                                                                                                               |     
|                                                                                                                                          |     
|Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .                                                                    | 19  
|                                                                                                                                          |     
|Item 6.  Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                    | 19  
|                                                                                                                                          |     
|Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                    | 21  
|                                                                                                                                          |     
|Certifications                                                                                                                            |     









































3







PART I - FINANCIAL INFORMATION

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

Item 1. Financial Statements



ZUNICOM, INC.

CONSOLIDATED BALANCE SHEETS









|ASSETS                                                                                                |  |   | June 30, 2011 |  |   | December 31, 2010
|----------------------------------------------------------------------------------------------------- |  | - | ------------- |  | - | -----------------
|                                                                                                      |  |   | (unaudited)   |  |   | (audited)        
|CURRENT ASSETS                                                                                        |  |   |               |  |   |                  
|Cash and cash equivalents                                                                             |  | $ | 4,146,985     |  | $ | 4,427,227        
|                                                                                                      |  |   |               |  |   |                  
|Accounts receivable – trade, net of allowance for doubtful accounts of $6,323 and 6,323, respectively |  |   | 67,430        |  |   | 37,064           
|Inventory                                                                                             |  |   | 23,167        |  |   | -                
|Deferred costs                                                                                        |  |   | 17,345        |  |   | 69,034           
|Prepaid expenses and other current assets                                                             |  |   | 58,683        |  |   | 35,166           
|Total current assets                                                                                  |  |   | 4,313,610     |  |   | 4,568,491        
|                                                                                                      |  |   |               |  |   |                  
|PROPERTY AND EQUIPMENT                                                                                |  |   |               |  |   |                  
|Furniture and fixtures                                                                                |  |   | 10,000        |  |   | 10,000           
|                                                                                                      |  |   |               |  |   |                  
|Less accumulated depreciation                                                                         |  |   | (2,333)       |  |   | (1,333)          
|                                                                                                      |  |   |               |  |   |                  
|Net property and equipment                                                                            |  |   | 7,667         |  |   | 8,667            
|                                                                                                      |  |   |               |  |   |                  
|INTANGIBLE ASSETS – NET OF ACCUMULATED AMORTIZATION                                                   |  |   | 348,500       |  |   | 407,000          
|                                                                                                      |  |   |               |  |   |                  
|INVESTMENT IN UNCONSOLIDATED INVESTEE                                                                 |  |   | 4,704,717     |  |   | 4,489,039        
|                                                                                                      |  |   |               |  |   |                  
|TOTAL ASSETS                                                                                          |  | $ | 9,374,494     |  | $ | 9,473,197        





















(Continued)





4







ZUNICOM, INC.

CONSOLIDATED BALANCE SHEETS - Continued





|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                        |  |   | June 30, 2011 |  |   | December 31, 2010
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------------- |  | - | -----------------
|                                                                                                                                                                                            |  |   | (unaudited)   |  |   | (audited)        
|CURRENT LIABILITIES                                                                                                                                                                         |  |   |               |  |   |                  
|Accounts payable                                                                                                                                                                            |  |   | 373,935       |  |   | 406,185          
|Accrued liabilities                                                                                                                                                                         |  |   | 23,121        |  |   | 52,219           
|Customer deposits                                                                                                                                                                           |  |   | 41,990        |  |   | 52,586           
|Total current liabilities                                                                                                                                                                   |  |   | 439,046       |  |   | 510,990          
|                                                                                                                                                                                            |  |   |               |  |   |                  
|NON-CURRENT DEFERRED TAX LIABILITY                                                                                                                                                          |  |   | 2,473,416     |  |   | 2,424,863        
|TOTAL LIABILITIES                                                                                                                                                                           |  |   | 2,912,462     |  |   | 2,935,853        
|                                                                                                                                                                                            |  |   |               |  |   |                  
|STOCKHOLDERS' EQUITY                                                                                                                                                                        |  |   |               |  |   |                  
|                                                                                                                                                                                            |  |   |               |  |   |                  
|Preferred stock - $1.00 par value, 1,000,000 shares authorized; 60,208 and 60,208 Class A Preferred Shares   issued and outstanding; liquidation preference of $316,092 as of June 30, 2011 |  |   | 60,208        |  |   | 60,208           
|Common stock - $0.01 par value; 50,000,000 shares authorized; 9,901,255 and 9,733,527 shares issued and outstanding                                                                         |  |   | 99,013        |  |   | 97,335           
|Additional paid-in capital                                                                                                                                                                  |  |   | 9,186,283     |  |   | 9,153,520        
|Accumulated deficit                                                                                                                                                                         |  |   | (2,883,472)   |  |   | (2,773,719)      
|Total stockholders' equity                                                                                                                                                                  |  |   | 6,462,032     |  |   | 6,537,344        
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                  |  | $ | 9,374,494     |  | $ | 9,473,197        

































The accompanying footnotes are an integral part
of these unaudited

consolidated financial statements.



5





ZUNICOM, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months and Six Months Ended
June 30, 2011 and 2010







|                                                                                            |  | For
    the three months ended
June 30, |           | For
    the six months ended
June 30,
|------------------------------------------------------------------------------------------- |  | --------------------------------------- | --------- | -------------------------------------
|                                                                                            |  |                                         | 2011      |                                      
|REVENUES                                                                                    |  |                                         |           |                                      
|Sales revenue                                                                               |  | $                                       | 336,604   |                                      
|Service revenue                                                                             |  |                                         | 67,928    |                                      
|Total revenue                                                                               |  |                                         | 404,532   |                                      
|COST OF REVENUES                                                                            |  |                                         |           |                                      
|Cost of sales                                                                               |  |                                         | 168,384   |                                      
|Direct servicing costs                                                                      |  |                                         | 57,370    |                                      
|                                                                                            |  |                                         |           |                                      
|Total cost of revenues                                                                      |  |                                         | 225,754   |                                      
|                                                                                            |  |                                         |           |                                      
|GROSS PROFIT                                                                                |  |                                         | 178,778   |                                      
|                                                                                            |  |                                         |           |                                      
|OPERATING EXPENSES                                                                          |  |                                         |           |                                      
|Selling, general and  administrative                                                        |  |                                         | 304,726   |                                      
|Depreciation and amortization                                                               |  |                                         | 29,750    |                                      
|                                                                                            |  |                                         |           |                                      
|                                                                                            |  |                                         | 334,476   |                                      
|                                                                                            |  |                                         |           |                                      
|LOSS FROM OPERATIONS                                                                        |  |                                         | (155,698) |                                      
|                                                                                            |  |                                         |           |                                      
|OTHER INCOME (EXPENSES)                                                                     |  |                                         |           |                                      
|Interest income                                                                             |  |                                         | 3,218     |                                      
|Equity in earnings of investee                                                              |  |                                         | 51,368    |                                      
|Total other income                                                                          |  |                                         | 54,586    |                                      
|(LOSS) INCOME BEFORE PROVISION
        FOR INCOME TAXES AND
        DISCONTINUED OPERATIONS |  |                                         | (101,112) |                                      
|INCOME TAX (EXPENSE) BENEFIT                                                                |  |                                         | 15,402    |                                      
|(LOSS) INCOME FROM CONTINUING OPERATIONS                                                    |  | $                                       | (85,710)  |                                      
|LOSS FROM DISCONTINUED OPERATIONS NET OF TAXES                                              |  |                                         | --        |                                      
|NET (LOSS) INCOME                                                                           |  |                                         | (85,710)  |                                      
|Preferred stock dividend                                                                    |  |                                         | (5,419)   |                                      



(Continued)

6





ZUNICOM, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months and Six Months Ended
June 30, 2011 and 2010

(Continued)





|                                                               | For
    the three months ended
June 30, |           | For
    the  six months ended
June 30,
|-------------------------------------------------------------- | --------------------------------------- | --------- | --------------------------------------
|                                                               |                                         | 2011      |                                       
|Net (loss)income attributable to common stockholders           | $                                       | (91,129)  |                                       
|                                                               |                                         |           |                                       
|Net (loss)income per share attributable to common stockholders |                                         |           |                                       
|Basic                                                          |                                         |           |                                       
|(Loss) income from
        Continuing operations               | $                                       | (0.01)    |                                       
|                                                               |                                         |           |                                       
|(Loss) from discontinued
        Operations                    | $                                       | --        |                                       
|                                                               |                                         |           |                                       
|Net loss per share                                             | $                                       | (0.01)    |                                       
|                                                               |                                         |           |                                       
|Diluted                                                        |                                         |           |                                       
|                                                               |                                         |           |                                       
|(Loss) income from
        Continuing operations               | $                                       | (0.01)    |                                       
|                                                               |                                         |           |                                       
|(Loss) from discontinued
        Operations                    | $                                       | --        |                                       
|                                                               |                                         |           |                                       
|Net loss per share                                             | $                                       | (0.01)    |                                       
|                                                               |                                         |           |                                       
|Number of weighted average shares of common stock outstanding  |                                         |           |                                       
|Basic                                                          |                                         | 9,744,586 |                                       
|                                                               |                                         |           |                                       
|Diluted                                                        |                                         | 9,744,586 |                                       















The accompanying footnotes are an integral part
of these unaudited

consolidated financial statements.

7





ZUNICOM, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS

For The Six Months Ended June 30, 2011 and
2010



|                                                                                    |   | 2011      |  |   | 2010       
|----------------------------------------------------------------------------------- | - | --------- |  | - | -----------
|                                                                                    |   |           |  |   |            
|CASH FLOWS FROM OPERATING ACTIVITIES                                                |   |           |  |   |            
|Net loss                                                                            | $ | (98,463)  |  | $ | (34,024)   
|Adjustments to reconcile net loss to net
        cash used in operating activities: |   |           |  |   |            
|Depreciation and amortization                                                       |   | 59,500    |  |   | 27,463     
|Write off of property and equipment                                                 |   | --        |  |   | 4,355      
|Equity in earnings of investee                                                      |   | (206,194) |  |   | (532,531)  
|Non-cash stock-based compensation                                                   |   | 24,956    |  |   | 25,496     
|Provision for income taxes - deferred                                               |   | 48,553    |  |   | 26,430     
|                                                                                    |   |           |  |   |            
|Change in operating assets and liabilities:                                         |   |           |  |   |            
|Accounts receivable – trade                                                         |   | (30,366)  |  |   | (51,516)   
|Inventory                                                                           |   | (23,167)  |  |   | --         
|Prepaid expenses and other current assets                                           |   | (23,516)  |  |   | (22,996)   
|Deferred costs                                                                      |   | 51,689    |  |   | --         
|Accounts payable                                                                    |   | (32,251)  |  |   | 74,408     
|Accrued liabilities                                                                 |   | (29,098)  |  |   | (47,739)   
|Customer deposits                                                                   |   | (10,596)  |  |   | 31,596     
|Net cash used in operating activities                                               |   | (268,953) |  |   | (499,058)  
|                                                                                    |   |           |  |   |            
|CASH FLOWS FROM INVESTING ACTIVITIES                                                |   |           |  |   |            
|                                                                                    |   |           |  |   |            
|Purchase of business assets                                                         |   | --        |  |   | (495,000)  
|                                                                                    |   |           |  |   |            
|CASH FLOWS FROM FINANCING ACTIVITIES                                                |   |           |  |   |            
|                                                                                    |   |           |  |   |            
|Dividends paid on preferred stock                                                   |   | (11,289)  |  |   | (11,289)   
|                                                                                    |   |           |  |   |            
|                                                                                    |   |           |  |   |            
|NET DECREASE IN CASH AND CASH
        EQUIVALENTS                                   |   | (280,242) |  |   | (1,005,347)
|Cash and cash equivalents at beginning of period                                    |   | 4,427,227 |  |   | 5,680,943  
|                                                                                    |   |           |  |   |            
|Cash and cash equivalents at end of period                                          |   | 4,146,985 |  |   | 4,675,596  
|                                                                                    |   |           |  |   |            
|SUPPLEMENTAL CASH FLOW INFORMATION                                                  |   |           |  |   |            
|Interest paid                                                                       | $ | --        |  | $ | 46         
|                                                                                    |   |           |  |   |            
|Restricted stock issued                                                             | $ | 64,309    |  | $ | --         









The accompanying footnotes are an integral part
of these unaudited

consolidated financial statements.

8









ZUNICOM, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS



NOTE A - ORGANIZATION



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



NOTE B - BASIS OF PRESENTATION



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

In the opinion of management, all adjustments
considered necessary for a fair presentation have been included for the three and six month periods ended June 30, 2011. The results
for the three and six month periods ended June 30, 2011 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2011. The unaudited consolidated financial statements included in this filing should be read in conjunction
with the Company's audited consolidated financial statements and notes thereto included in the Company's annual report on form
10-K for the year ended December 31, 2010.



NOTE C - STOCK-BASED COMPENSATION



Stock-based compensation expense recognized
in the statements of operations for the three and six months ended June 30, 2011 and 2010, of $12,114, $24,956, $12,819, and $25,496
respectively, represents the amortization of the restricted stock grant to the Company's chairman in 2007.



As of June 30, 2011, The 2007 grant
of restricted stock to the Company's chairman has been fully amortized.

Restricted Stock



On June 25, 2007, the Board of Directors approved
a grant of 996,940 restricted shares of the Company’s common stock to our chairman and certain officers and employees of
UPG. Several of the officers and employees of UPG had been officers and employees of the Company prior to the deconsolidation of
UPG in December 2006. The Company attributed a value of $205,801 to the restricted stock granted to our chairman and $377,392 to
the restricted stock granted to the officers and employees of UPG. The grant was made in recognition of past and future performance,
especially with regard to the initial public offering of UPG's common stock in which Zunicom was able to sell 1,000,000 shares
of UPG common stock resulting in an $0.80 dividend to shareholders paid in the first quarter of 2007. The restricted stock vested
in full on June 25, 2011, but was extended for three years pursuant to a new agreement as described below. Accordingly, the deferred
stock compensation to the Company’s chairman has been fully amortized and the unrecognized compensation cost to certain UPG
employees has been fully realized as of June 30, 2011.

9





NOTE C - STOCK-BASED COMPENSATION (CONTINUED)



On January 21, 2009, the chief executive officer of UPG resigned
and according to the terms of the restricted stock agreement, forfeited his restricted stock grant. Accordingly, his shares were
returned to the Company and the investment in UPG was reduced by $132,925. During 2010, two UPG employees resigned and according
to the terms of the restricted stock agreement, forfeited their restricted stock grant. Accordingly, their shares have been returned
to the Company and the investment in UPG has been reduced by $4,624.



On June 24, 2011, the Company offered an additional grant of restricted
shares to the grantees on condition that the grantees would agree that the original grant remain in escrow and subject to the original
restrictions until June 30, 2014. The new grant will also be subject to the same restrictions and remain in escrow for the same
period. All remaining grantees accepted the Company’s offer.



Accordingly, on June 24, 2011, the Company issued a grant of 87,952
restricted shares of common stock to the Company’s chairman and a grant of 99,536 restricted shares of common stock to certain
employees of UPG. These additional shares will vest on June 30, 2014 and will be held in escrow for the benefit of the grantee
subject to the same restrictions and risk of forfeiture as the original shares until the vesting date.



As of June 30, 2011, $164 of the restricted stock grant to the
Company’s chairman has been amortized and $30,004 remains unamortized and $110 of the restricted stock grant to UPG employees
has been amortized and $20,033 remains unamortized.



The Company accounted for the grant of the
new restricted shares to our chairman as stock based compensation. We accounted for the grant of the new restricted shares to UPG
officers and employees as a contribution of capital. The Company will amortize 59% of that capital contribution as additional equity
in earnings (loss) of the investee over the vesting period. The Company concluded that it is reasonable to discount the value of
these restricted shares by 30%. Of the 30% discount, the Company considers the risk of forfeiture to be 10% and illiquidity to
be 20%. The Company applied this discount to the grant date market value of a freely tradable share to arrive at the fair value
of a restricted share.



Valuation Assumptions



The fair values of option awards are
estimated at the grant date using a Black-Scholes option pricing model. There were no options granted in the six months ended June
30, 2011 or 2010.

Activity and Summary



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



|                                         |                  |  | Weighted Average
|---------------------------------------- | ---------------- |  | ----------------
|                                         | Number of Shares |  | Exercise Price  
|Options outstanding at December 31, 2010 | 125,000          |  | $ 0.71          
|Granted                                  | --               |  | $ --            
|Exercised                                | --               |  | $ --            
|Canceled, lapsed or forfeited            | --               |  | $ --            
|Options outstanding at June 30, 2011     | 125,000          |  | $ 0.71          

















10





NOTE C - STOCK-BASED COMPENSATION (CONTINUED)



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

stock option plans at June 30, 2011:



|                | Options Outstanding |             | Options Exercisable
|--------------- | ------------------- | ----------- | -------------------
|                |                     | Weighted    |                    
|                |                     | Average     |                    
|                |                     | Remaining   | Weighted           
|                | Number of           | Contractual | Average            
|Range of        | Options             | Life        | Exercise           
|Exercise Prices | Outstanding         | (in years)  | Price              
|$ 1.75          | 25,000              | 5.6         | $ 1.75             
|$ 0.45          | 100,000             | 1.8         | $ 0.45             
|$ 0.45 - $ 1.75 | 125,000             | 2.6         | $ 0.71             





At June 30, 2011, the aggregate intrinsic
value of options outstanding and exerciseable was $5,000. The aggregate intrinsic value is calculated as the difference between
the exercise price of the underlying awards and the quoted price of the Company's common stock for those awards that have an exercise
price currently below the quoted price. At June 30, 2011, all outstanding options were fully vested.



NOTE D - NET INCOME (LOSS) PER SHARE



Basic net income (loss) per share is
computed by dividing net income (loss) decreased (increased) by the preferred stock dividends of $5,419, $11,289, $5,419, and $11,289
for the three and six months ended June 30, 2011 and 2010,respectively, by the weighted average number of common shares outstanding
for the period.

Diluted net income (loss) per share
is computed by dividing net income decreased by the preferred stock dividends by the weighted average number of common shares and
common stock equivalents outstanding for the period. The Company's common stock equivalents include all common stock issuable upon
conversion of preferred stock and the exercise of outstanding stock options.

The dilutive effect of 100,000 in-the-money
options and the dilutive effect of the conversion of 60,208 shares of preferred stock into 120,416 shares of common stock have
not been included in the computation of dilutive net income per share for the three and six month periods ended June 30, 2011 or
for the six month period ended June 30, 2010, as the effect would be anti-dilutive.

NOTE E - UNCONSOLIDATED INVESTEE



The Company's investment in UPG is accounted
for under the equity method of accounting for the three and six month periods ended June 30, 2011 and 2010. Following is a summary
of financial information of UPG for the three and six months ended June 30, 2011 and 2010:



Three
and Six Months Ended June 30,



($
in thousands)



|             |   | 2011   |  |   | 2010   |  |   | 2011   |  |   | 2010  
|------------ | - | ------ |  | - | ------ |  | - | ------ |  | - | ------
|Net revenues | $ | 21,665 |  | $ | 28,394 |  | $ | 43,252 |  | $ | 54,429







11





NOTE E - UNCONSOLIDATED INVESTEE (CONTINUED)

|                                                           |   |        |  |   |        |  |   |        |  |  |       
|---------------------------------------------------------- | - | ------ |  | - | ------ |  | - | ------ |  |  | ------
|Cost of revenues                                           |   | 17,275 |  |   | 23,333 |  |   | 34,554 |  |  | 44,935
|                                                           |   |        |  |   |        |  |   |        |  |  |       
|Gross profit                                               |   | 4,390  |  |   | 5,061  |  |   | 8,698  |  |  | 9,494 
|                                                           |   |        |  |   |        |  |   |        |  |  |       
|Operating expenses                                         |   | 3,992  |  |   | 3,657  |  |   | 7,528  |  |  | 7,131 
|                                                           |   |        |  |   |        |  |   |        |  |  |       
|Income from operations                                     |   | 398    |  |   | 1,404  |  |   | 1,170  |  |  | 2,363 
|                                                           |   |        |  |   |        |  |   |        |  |  |       
|Interest expense                                           |   | (151)  |  |   | (237)  |  |   | (291)  |  |  | (398) 
|Income from operations
        before income tax provision |   | 247    |  |   | 1,167  |  |   | 879    |  |  | 1,965 
|                                                           |   |        |  |   |        |  |   |        |  |  |       
|Income tax provision                                       |   | (122)  |  |   | (323)  |  |   | (351)  |  |  | (616) 
|                                                           |   |        |  |   |        |  |   |        |  |  |       
|Net income                                                 | $ | 125    |  | $ | 844    |  | $ | 528    |  |  | 1,349 





Following is a summary of the balance sheets for UPG as of

June 30, 2011 and December 31, 2010.



|                       | ($ in thousands)
|---------------------- | ----------------
|                       | June 30,        
|                       | 2011            
|Current assets         | 45,420          
|Noncurrent assets      | 3,369           
|Current liabilities    | 25,735          
|Noncurrent liabilities | 287             
|Shareholders' equity   | 22,767          



NOTE F - FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES



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

|o |  | Level 1: consists of financial instruments whose value is based on quoted market prices for identical financial instruments in an active market                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|o |  | Level 2: consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that are observable either directly or indirectly; Level 2 inputs include (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, (iii) pricing models whose inputs are observable for substantially the full term of the financial instrument and (iv) pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument
|o |  | Level 3: consists of financial instruments whose values are determined using pricing models that utilize significant inputs that are primarily unobservable, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation                                                                                                                                                                                                                                                                                                                                                             

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



12





NOTE G - SHAREHOLDERS' EQUITY



During the three and six month periods
ended June 30, 2011 and 2010, the Company paid a cash dividend of $5,419, $11,289, $5,419 and $11,289, respectively, to the holders
of its class A Preferred Stock.

NOTE H - LEGAL PROCEEDINGS



The Company is subject to legal proceedings
and claims that arise in the ordinary course of business. As of June 30, 2011, the Company is not subject to any ongoing legal
proceedings.



NOTE I - PURCHASE OF BUSINESS



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



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



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



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



NOTE J – DISCONTINUED OPERATIONS



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



The asset related to discontinued operations
in the six months ended June 30, 2011 is a deposit of $5,000. The liability related to discontinued operations in 2011 and 2010
is accounts payable of $282,725 and $289,102 respectively.



NOTE K - ECONOMIC DEPENDENCE



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

13





NOTE K - ECONOMIC DEPENDENCE (CONTINUED)



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



NOTE L - INVENTORY

Beginning with the period ended March
31, 2011, management is performing a monthly inventory of components and parts to be sold and installed in POS systems. Accordingly,
the balance sheet as of June 30, 2011, includes inventory valued at the lower of cost or market.





















































































14





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

OF OPERATIONS



The following discussion and analysis should be read in conjunction
with Zunicom's Unaudited Consolidated Interim Financial Statements and notes thereto included elsewhere in this Form 10-Q. Except
for the historical information contained herein, the discussion in this Form 10-Q contains certain forward looking statements that
involve risks and uncertainties, such as statements of Zunicom's plans, objectives, expectations and intentions. The cautionary
statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. These statements include, without limitation, statements concerning the potential operations and results of
the Company described below. Zunicom's actual results could differ materially from those discussed here. Factors that could cause
or contribute to such differences include, without limitation, those factors discussed herein and in Zunicom's Annual Report on
Form 10-K for the year ended December 31, 2010.



RESULTS OF OPERATIONS



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



Three months ended June 30, 2011



REVENUES



For the three month period ended June 30, 2011, Zunicom, through
its wholly owned subsidiary Alphanet had consolidated revenues of $404,532 compared to $241,235 for the same period in 2010, an
increase of $163,297 or 67.7%. The increase is due primarily to the short period in 2010, only two months of revenue from the acquisition
date, April 23, 2010, until June 30, 2010.



COST OF REVENUES



For the three month period ended June 30, 2011, cost of revenue
was $225,754 compared to $128,270 for the same period in 2010, an increase of $97,484 or 76.0%.



OPERATING EXPENSES



For the three month period ended June 30,
2011, Zunicom's consolidated operating expenses, consisting of selling, general
and administrative expenses and depreciation and amortization of property and equipment increased to $334,476 compared to $320,252 for the same period
in 2010, an increase of $14,224 or 4.4%. The increase is due to an increase
in operating expenses of AlphaNet of $41,824, offset by a decrease in Zunicom's
expenses of $27,600.



AlphaNet's selling, general and administrative
expenses for the three month period ended June 30, 2011 were $156,013 compared to $124,105 for the same period in 2010, an increase
of $31,908 or 25.7%. The increase is attributable to the purchase of Action Computer Systems at the end of April 2010. The three
month period ended June 30, 2010 only includes two months of activity while the same period in 2011 includes three months.





15





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

OF OPERATIONS (CONTINUED)



Zunicom's selling, general and administrative expenses for the
three month period ended June 30, 2011 were $148,714 compared to $176,314 for the same period in 2010, a decrease of $27,600 or
15.7%. The decrease is primarily attributable to decreased legal fees and travel expenses.



For the three month period ended June 30, 2011, the Company recorded
$29,750 in depreciation and amortization expense compared to $19,833 in 2010. The increase is due to the two months of activity
in 2010 as opposed to three months in 2011.



OTHER INCOME / EXPENSE



Zunicom's consolidated interest income for the three month period
ended June 30, 2011 was $3,218 compared to interest income of $5,563 for the same period in 2010, a decrease of $2,345, or 42.2%. The decrease is due to
a declining cash balance.



Equity in earnings of investee of $51,368 represents Zunicom's
share of UPG's net income for the three month period ended June 30, 2011 recorded in accordance with the equity method of accounting
for an unconsolidated investee.



Six months ended June 30, 2011



REVENUES



For the six month period ended June 30, 2011, Zunicom, through
its wholly owned subsidiary Alphanet, had consolidated revenues of $743,638 compared to $241,235 for the same period in 2010, an
increase of $502,403 or 208.3%. The increase is due to the acquisition of Action Computer Systems at the end of April 2010. The
six month period ended June 30, 2010 includes two months of activity while the same period in 2011 includes six months.



COST OF REVENUES



For the six month period ended June 30, 2011, Zunicom's consolidated
cost of revenues is $367,611 compared to $128,270 for the same period in 2010, an increase of $238,341 or 186.6%. This increase
is due to the acquisition of Action Computer Systems at the end of April 2010.



OPERATING EXPENSES



For the six month period ended June 30, 2011, Zunicom's consolidated
operating expenses, consisting of selling, general and administrative expenses and depreciation and amortization of property and
equipment increased to $638,691 compared to $452,157 for the same period in 2010, an increase of $186,534 or 41.2%. The increase
is due to a decrease in operating expenses of Zunicom of $61,774, offset by an increase in AlphaNet's expenses of $248,308.



AlphaNet's selling, general and administrative expenses for the
six month period ended June 30, 2011 were $332,765 compared to $124,105 for the same period in 2010, an increase of $208,660 or
168.1%. The increase is attributable to the two months of activity in 2010 as opposed to six months in 2011.



16







ITEM 2.	MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)



Zunicom's selling, general and administrative expenses for the
six month period ended June 30, 2011 were $246,426 compared to $308,219 for the same period in 2010, a decrease of $61,793 or 20.1%.
The decrease is primarily attributable to decreased legal fees, and travel expenses.



For the six month period ended June 30, 2010, the Company recorded
$59,500 in depreciation and amortization expense compared to $19,833 in 2010. The increase is due to the two months of activity
in 2010 as opposed to six months in 2011.



OTHER INCOME / EXPENSE



Zunicom's consolidated interest income for the six month period
ended June 30, 2011 was $6,559 compared to interest income of $11,971 for the same period in 2010, a decrease of $5,412, or 45.2%.
The decrease is due to a declining cash balance.



Equity in earnings of investee of $206,194 represents Zunicom's
share of UPG's net income for the six month period ended June 30, 2011 recorded in accordance with the equity method of accounting
for an unconsolidated investee.



LIQUIDITY



Zunicom, on a consolidated basis, had cash and cash equivalents
of $4,146,985 at June 30, 2011.



Net cash used in operating activities was $268,953 for the six
month period ended June 30, 2011 as compared to $499,058 for the same period in 2010. The cash used in operating activities is
primarily attributable to the net loss of $98,463 offset by depreciation of $59,500, non-cash stock based compensation of $24,956,
provision for federal income taxes of $48,553, and a decrease in working capital of $97,305, and a decrease in equity in earnings
of investee of $206,194.



Net cash used in financing activities for the six month period
ended June 30, 2011 was $11,289 representing payment of a cash dividend on the Company's

preferred stock.



Zunicom management believes that cash on hand will be sufficient
to meet its

operational needs over the next year.





































17





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



Interest Rates



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



ITEM 4. CONTROLS AND PROCEDURES



The Company's management, including the Company's principal executive
officer and principal financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as
defined in Rules 13(a) - 15(e) and 15(d) - 15(e) under the Securities Exchange Act of 1934) as of the six months ended June 30,
2011. Based upon that evaluation, the Company's principal executive officer and principal financial officer have concluded that
the disclosure controls and procedures were effective as of June 30, 2011 to insure that the information required to be disclosed
by us in the reports filed or submitted by us under the Securities Exchange Act of 1934, as amended, was recorded, processed, summarized
or reported within the time periods specified in the rules and regulations of the SEC, and included controls and procedures designed
to ensure that information required to be disclosed by us in such reports was accumulated and communicated to management, including
our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.



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























































18





PART II - OTHER INFORMATION



Item 1. Legal Proceedings. None



Item 6. Exhibits.

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

herein as indicated.



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

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

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

1996 and January 23, 1996).



3.2 Certificate of Designation (incorporated
by reference to the

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

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

and January 23, 1996).



3.2A Amended Certificate of Designation (incorporated
by reference to

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

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

1996 and January 23, 1996).



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

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

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

1996).



10.1 Second Amended and Restated Creditors
Subordination Agreement

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

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

0-27210, filed August 14, 2008)



10.2 Purchase and Sale agreement between
AlphaNet Hospitality Systems,

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

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

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

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



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

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

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

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



31.1 Certification of Chief Executive Officer
Pursuant to Section 302 of

the Sarbanes-Oxley Act of 2002*



31.2 Certification of Chief Financial Officer
Pursuant to Section 302 of

the Sarbanes-Oxley Act of 2002*



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

Section 1350, as adopted Pursuant to Section
906 of the

Sarbanes-Oxley Act of 2002*









19







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

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

Oxley Act of 2002*

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

* Filed herewith.









































































































20







Signature



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







|                      | Zunicom, Inc.                                                       
|--------------------- | --------------------------------------------------------------------
|                      | (Registrant)                                                        
|                      |                                                                     
|Date: August 14, 2011 | /s/ John C. Rudy                                                    
|                      | John C. Rudy

Chief Financial Officer

(principal financial officer)

















































































21