S-1/A

As filed with the Securities and Exchange Commission on November 30, 2006

Registration No. 333-137265

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 3

to

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

UNIVERSAL POWER GROUP, INC.
(Exact name of Registrant as specified in its charter)

Texas	7389; 5063	75-1288690
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification No.)

Universal Power Group, Inc.
1720 Hayden Road
Carrollton, Texas 75006
(469) 892-1122
(469) 892-1201 Facsimile
(Address, including zip code, and telephone number, including area code, of Registrant’s executive offices)

Randy Hardin
Chief Executive Officer
Universal Power Group, Inc.
1720 Hayden Road
Carrollton, Texas 75006
(469) 892-1122
(469) 892-1201 Facsimile
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Please send copies of all communications to:
Joel J. Goldschmidt, Esq.	Norman R. Miller, Esq.
Morse, Zelnick, Rose & Lander LLP	Patton Boggs LLP
405 Park Avenue	2001 Ross Avenue
Suite 1401	Suite 3000
New York, New York 10022	Dallas, Texas 75201-8001
(212) 838-8269	(214) 758-6630
(212) 838-9190 Facsimile	(214) 758-1550 Facsimile

          Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box. x

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Proceeds (1)			Amount of Registration Fee
Common stock to be sold by the company	$	22,050,000.00	(2)	$	2,359.35
Common stock to be sold by the selling shareholder	$	9,000,000.00	(2)	$	963.00
Representatives’ warrants	$	100.00		$	.01
Common stock underlying the representatives’ warrants (3)(4)	$	3,105,000.00		$	332.24
Total	$	34,155,100.00		$	3,654.60
Amount previously paid				$	3,654.60
Balance				$	0

(1)	Estimated solely for purposes of calculating the amount of the registration fee paid pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).
(2)	Includes shares issuable upon exercise of underwriters’ over-allotment option.
(3)	The Representatives’ warrants cover 10% of the shares sold in the offering (other than shares sold pursuant to the exercise of the over-allotment option) and the exercise price will be 120% of the initial public offering price.
(4)	Pursuant to Rule 416 under the Securities Act, there are also being registered hereby such additional indeterminate number of shares as may become issuable pursuant to the anti-dilution provisions of the warrants.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Dated November 30, 2006

3,000,000 Shares

UNIVERSAL POWER GROUP, INC.

          This is our initial public offering. A total of 3,000,000 shares of common stock are being offered. We are offering 2,000,000 shares of common stock and our corporate parent, Zunicom, Inc. (“Zunicom”), is selling 1,000,000 shares of our common stock that it owns. We will not receive any of the proceeds from the sale of shares by Zunicom. Immediately before this offering, Zunicom owned 100% of our outstanding shares. Immediately after this offering, Zunicom owns 40% of our outstanding shares (without taking account any shares sold as a result of the exercise of the underwriter’s over-allotment option described below).

          We anticipate that the initial public offering price of the shares will be in the range of $7.00 - $9.00 per share.

          No public market currently exists for our common stock. We have applied to list our common stock on the American Stock Exchange under the symbol “UPG.”

          Investing in our shares involves significant risks. See “Risk Factors” beginning on page 9.

	Initial Public Offering Price	Underwriting Discounts and Commissions	Proceeds to Universal Power Group	Proceeds to Zunicom
Per Share
Total

          We have also agreed to pay the underwriters of this offering, a non-accountable expense allowance equal to _% of the aggregate public offering price for the 3,000,000 shares offered under this prospectus and to sell to the underwriters warrants to purchase up to an aggregate of 345,000 shares of common stock, at a price equal to $____ per share 120% of the initial public offering price per share.

          We have also granted the underwriters a 45-day option to purchase up to an additional 450,000 shares to cover over-allotments.

          Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the disclosures in this prospectus. Any representation to the contrary is a criminal offense.

          The underwriters expect to deliver shares to purchasers on or about ___________, 200_.

Ladenburg Thalmann & Co. Inc.	Wunderlich Securities, Inc.
The date of this prospectus is                                       , 2006

TABLE OF CONTENTS

	Page
Prospectus Summary	3
Summary Financial Information	6
Risk Factors	9
Special Note Regarding Forward-Looking Statements	19
Use of Proceeds	20
Dividend Policy	21
Capitalization	22
Dilution	23
Selected Financial Data	24
Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Business	36
Management	48
Certain Relationships and Related Party Transactions	54
Principal and Selling Shareholders	55
Description of Securities	56
Shares Eligible for Future Sales	58
Underwriting	59
Legal Matters	61
Experts	61
Where You Can Find More Information	61
Index to Financial Statements	F-1
Report of Independent Registered Public Accounting Firm	S-1
Valuation and Qualifying Accounts	S-2

          You may rely only on the information contained in this prospectus. Neither we nor the underwriters have authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. Under no circumstances should the delivery to you of this prospectus or any sale made pursuant to this prospectus create any implication that the information contained in this prospectus is correct as of any time after the date of this prospectus. Neither we nor the underwriters are making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.

          Until _________, 2007 (25 days after the date of this prospectus), all dealers that buy, sell or trade these securities, whether or not participating in the offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

          We own U.S. rights to a number of trademarks, trade names, service marks and service names that we use, some of which are registered. These marks and names include the following: UB Scootin^®, Adventure Power^®, Batteries & Beyond™, Charge N’ Start™, UNILOK™, Let Us Power You™ and UPG™.

[This Page Intentionally Left Blank]

PROSPECTUS SUMMARY

          This summary highlights key aspects of the information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the financial statements and the notes to the financial statements included elsewhere in this prospectus. Unless otherwise indicated, the information contained in this prospectus (i) assumes that the underwriters do not exercise their over-allotment option, (ii) does not take into account the issuance of any common stock upon exercise of warrants or stock options and (iii) gives retroactive effect to an increase in our authorized capital on November 8, 2006 and a 6.07404258-for-1 forward stock split that was effected on October 25, 2006. All references in this prospectus to “Universal Power Group,” “UPG,” “us,” “we,” and “our” refer to Universal Power Group, Inc. and its predecessors, unless the context otherwise indicates.

Overview

          We are (i) a third-party logistics company specializing in supply chain management and value-added services and (ii) a leading supplier and distributor of portable power supply products, such as batteries, security system components and related products and accessories. Our principal product lines include:

• batteries of a wide variety of chemistries, battery chargers and related accessories;

• portable battery-powered products, such as jump starters and 12-volt power accessories;

• security system components, such as alarm panels, perimeter access controls, horns, sirens, speakers, transformers, cabling and other components; and

• electro-magnetic devices, capacitors, relays and passive electronic components.

          We ensure that all the products that we sell, which are required to have safety approvals, are certified by the appropriate agency, such as Underwriters Laboratories (UL), Underwriters Laboratories Canada (CUL), Canadian Standards Associates (CSA), Community Europa (CE) and Technischer Uberwachungs Verein (TUV).

          Our supply chain management services include inventory sourcing, procurement, warehousing, distribution and fulfillment. Our value-added services include custom battery pack assembly, custom kitting and packing, private labeling, product design and engineering, graphic design and used battery pick-up and disposal. These services enable our customers to operate more efficiently and enhance their business by providing them with cost savings through effective sourcing, reducing inventory maintenance levels and streamlining distribution and order fulfillment. In addition, we also source and distribute batteries and portable power products under various manufacturers’ and private labels, as well as under our own proprietary brands, UPG™, Adventure Power^®, UB Scootin^®, Batteries & Beyond™, Charge N’ Start™ and UNILOK™. We believe that we have one of the largest inventories of batteries in the United States and are one of the leading domestic distributors of sealed, or “maintenance-free,” lead-acid batteries.

          Our customers include original equipment manufacturers (“OEMs”), distributors and retailers, both on-line and traditional. The products we manage and distribute are used in a diverse and growing range of industries, including automotive, marine, recreational vehicles, medical devices and instrumentation, consumer goods, electronics and appliances, marine and medical applications, computer and computer-related products, office and home office equipment, security and surveillance equipment, and telecommunications equipment and other portable communication devices. Our largest customer is Brink’s Home Security (“Brinks”), one of the largest installers of security systems in the United States. We function as one of Brinks’ principal supply chain managers and inventory fulfillment providers in the United States and Canada, handling and delivering to its branches and independent authorized dealers, many of the installation components and tooling required by their security system installers.

          In each of the last nine years we have achieved double digit growth in net sales. Over that nine-year period, our compound annual growth rate in net sales was 32.9%. Similarly, our income before taxes has grown in four of the last five years. Over that five-year period, our compound annual growth rate in income before taxes was 18.3%. For

3

2005, our net sales were $81.3 million, and our income before taxes was $1.9 million. For the nine months ended September 30, 2006, our net sales were $68.0 million, and our income before taxes was $2.0 million.

Competitive Advantages

          We believe that we are well-positioned to continue to provide cost-effective and efficient solutions to address the demands of the market place for third-party logistics services, particularly supply chain management and value-added services, and to continue to grow as a leading supplier and distributor of batteries and other portable power supply products. We further believe that our primary competitive advantages include the following:

• Well-established sourcing contacts. We have long-standing relationships with manufacturers in the Pacific Rim, principally in China. We were also one of the first authorized distributors of Panasonic batteries in the United States.

• Key customer relationships. Over the last two years we have had over 2,900 customers, including sole proprietors, small businesses, as well as many large, well-known national, regional and local distributors and retailers. Our customers include Brinks, RadioShack, Bass Pro Shops, Cabela’s, Pride Mobility, The Scooter Store, Protection One, Home Depot Supply, the U.S. Navy, and GE Security.

• Extensive inventory permits prompt response to customer needs. We stock a broad range of products according to our customers’ and seasonal needs. We had $19.1 million of inventory at December 31, 2005 and $20.8 million of inventory at September 30, 2006. Of these amounts, $8.3 million and $9.9 million, respectively, represented inventory held to fulfill our obligations to Brinks. The remaining inventory consists of commonly sold products dedicated to our entire customer base. We regularly carry over 75 classes of products, reflecting over 2,200 SKUs. We believe that we carry one of the largest inventories of sealed lead acid batteries. As a result, we are able to ship virtually anywhere in the United States within 24-48 hours of receipt of a purchase order.

• National distribution. Our primary logistics center and warehouse facility is located in Carrollton, Texas, part of the Dallas metroplex area. We also have regional logistics centers and retail outlets in Oklahoma City, Oklahoma and Las Vegas, Nevada.

• Value-added services. We offer an array of value-added services not commonly provided by other third-party logistics companies. These services include inventory sourcing, procurement and management, custom kitting and assembly, product development, private labeling, and coordinating customers with licensed, EPA approved handlers for their battery recycling needs. Also, we were one of the first authorized Panasonic modification centers in the United States.

• Broad industry experience; experienced management and support professionals. We have been in business for almost 40 years and have extensive knowledge of our markets and products. Our chief executive officer, Randy Hardin, has been in the battery distribution business for over 20 years. We also have a dedicated and experienced management team coupled with an excellent support staff.

• Reputation for quality. Since our inception, we have built a reputation based on the quality of our products, the timeliness of our deliveries, and our responsiveness to customer demands. We believe that our commitment to customer satisfaction and our sourcing expertise have earned us a reputation as a premier supplier of batteries and other portable power products and related accessories. We have had ISO 9001:2000 certification since October 2003. In addition, we ensure that we obtain safety approvals on our products where required by one or more of the following agencies: UL, CUL, CSA, CE and TUV.

Growth Strategy

          Our goals are to become (i) a leading provider of supply chain management, value-added and other logistics solutions to commercial, industrial and retail markets, and (ii) a leading supplier and distributor of portable power products, to meet increasing consumer needs for accessibility, portability and mobility. To attain these goals, we plan to execute on the following strategies:

4

• Expand our third-party logistics and value-added services. With our third-party logistics and supply chain expertise and our array of value-added services, we are identifying and aggressively pursuing new markets and new customers. We are marketing our third-party logistics and supply chain solutions to other markets, such as housewares, office supplies and toys. We plan to open new regional logistics centers in geographic areas where we have existing customer concentration. In connection with these new logistics centers, we will also add a fleet of delivery trucks to service customers in those areas, which could increase our visibility in the area, provide better service to our customers, and reduce our costs. In addition, each of these new logistics centers will include our branded retail outlet, “Batteries & Beyond™.” We believe that these retail operations can generate higher profit margins than either of our existing businesses.

• Enhance our information technology capabilities. We provide a customized web portal interface for Brinks that allows it to easily place orders online with access to and management of its fulfillment needs. We plan to develop similar systems for our other customers based on their particular needs. In addition, we have begun to develop a warehouse management system that will enable us to improve overall supply chain workflow and efficiency, provide greater visibility throughout the supply chain process, provide real-time data and effective decision-making capabilities.

• Expand into new markets and increase product offerings. Currently, our business focuses on portable power supply products and related products and accessories, such as batteries of a variety of chemistries, battery chargers and jump starters. We intend to expand into new markets for our existing products and expand our product lines. For example, through our sealed lead acid battery distribution, we have expanded to serve the medical scooter, jet-ski, motorcycle, hunting and marine markets. We also plan to expand our product lines to include a more comprehensive offering of: (i) consumer batteries and chargers for electronic devices, such as cell phones, laptops, camcorders, digital cameras and toys; (ii) sealed lead acid batteries for consumer, industrial, and customized applications; (iii) battery-powered and related consumer goods, such as battery chargers and maintainers, jumpstarters, portable power tools and accessories; (iv) security-related, access-control products; and (v) other new products.

• Development of proprietary products. We intend to develop other proprietary products synergistic to our business, to build added value and offerings to our customers. For example, we have a pending patent application on a battery cross-reference kiosk concept.

• Vertical integration. We believe that to remain competitive we must add manufacturing capability. We believe that this will enable us to accelerate our growth, reduce our costs, and protect and/or defend our position in the market.

• Expand into e-commerce operations. We plan to develop an online retail presence and enhance our e-commerce capabilities. We have rights to the domain names www.batteriesandbeyond.com, www.batteriesnbeyond.com and www.batteriesbeyond.com.

• Global expansion. We have a number of customers located in the United Kingdom, Australia, Ireland and Canada. Part of our growth strategy is to further develop new accounts in Europe and Latin America and to establish logistics centers in strategic global locations to service these accounts.

Corporate History and Information

          We were organized in July 1968 under the laws of Texas as Computer Components Corporation. In January 2003 we changed our name to Universal Battery Corporation, and in May 2003 we changed our name to Universal Power Group, Inc. Our principal executive office is located at 1720 Hayden Road, Carrollton, Texas 75006, and our telephone number is (469) 892-1122. Our web address is www.upgi.com. None of the information on our website is part of this prospectus.

          Currently, all of our stock is owned by Zunicom, a Texas corporation, whose stock is traded on the OTC Bulletin Board under the symbol “ZNCM.OB.” Zunicom also owns all of the issued and outstanding stock of AlphaNet Hospitality Systems, Inc. (“AlphaNet”), a company that develops and provides wireless connectivity, communication, and productivity systems to the hospitality industry and business travelers. Once this offering is

5

completed, Zunicom’s ownership interest in us will be 40% (36.7% if the over-allotment option is exercised in full). We also have three inactive wholly owned subsidiaries, two of which are incorporated in Texas and one of which is incorporated in Nevada.

The Offering

Common stock offered by us	2,000,000 shares
Common stock offered by Zunicom	1,000,000 shares
Common stock to be outstanding after this offering	5,000,000 shares
Proposed American Stock Exchange symbol	UPG
Use of proceeds	Working capital to expand our logistics and value-added services, build new logistics centers and retail outlets, fund expanded sales and marketing activities, investment in information technology, develop new products and acquire manufacturing capabilities.
Risk factors	Investing in our securities involves a high degree of risk. As an investor, you should be able to bear the loss of your entire investment. You should carefully consider the information set forth in the Risk Factors section beginning on page 9 of this prospectus in evaluating an investment in our securities.

          The number of shares outstanding immediately after this offering does not take into account any shares underlying the (i) underwriters’ over-allotment option, (ii) the warrants that we will issue to the representatives as part of their compensation and (iii) the 2006 Stock Option Plan.

SUMMARY FINANCIAL INFORMATION
(in thousands, except share and per share data)

Statement of operations data:

	Years ended December 31,						Nine months ended September 30,
	2003		2004		2005		2005		2006
	(audited)						(unaudited)
Net sales	$	58,670	$	67,160	$	81,275	$	59,961	$	68,017
Gross profit	$	9,105	$	8,804	$	10,315	$	7,773	$	9,674
Operating expenses	$	7,191	$	7,568	$	7,888	$	5,898	$	7,096
Operating income	$	1,914	$	1,236	$	2,426	$	1,876	$	2,578
Income before provision for income taxes	$	1,603	$	745	$	1,948	$	1,531	$	2,000
Net income	$	919	$	398	$	1,134	$	891	$	1,168
Net income per share – basic and diluted	$	0.31	$	0.13	$	0.38	$	0.30	$	0.39
Weighted average number of shares outstanding – basic and diluted		3,000,000		3,000,000		3,000,000		3,000,000		3,000,000

6

Pro forma information (unaudited):

          The unaudited pro forma financial data is set forth below for informational purposes only and is not indicative of actual results that would have been achieved had the events described below occurred on the dates or for the periods indicated, nor is such unaudited pro forma financial data necessarily indicative of the results to be expected for the full year or any future period. The unaudited pro forma financial data does not purport to predict results of operations, cash flows or other data as of any future dates or for any future period. The pro forma adjustments are based on estimates and currently available information and assumptions that we believe are reasonable. A number of factors may affect our results. See “Risk Factors” and “Forward-Looking Statements.” The unaudited pro forma financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and notes appearing elsewhere in this prospectus.

Pro forma statement of operations data:

	Year ended December 31, 2005		Nine months ended September 30, 2006
Net sales	$	81,275	$	68,017
Gross profit	$	10,315	$	9,674
Operating expenses	$	7,631	$	6,924
Operating income	$	2,684	$	2,750
Income before provision for income taxes	$	2,205	$	2,172
Net income	$	1,304	$	1,282
Net income per share – basic and diluted	$	0.43	$	0.43
Weighted average number of shares outstanding – basic and diluted		3,000,000		3,000,000

          Pro forma information reflects the following adjustments to our historical financial data:

• An increase in operating expenses of approximately $223,000 for the year ended December 31, 2005 and $188,000 for the nine months ended September 30, 2006. These increases reflect costs that were incurred by Zunicom on our behalf, including wages, approximately $138,000 for 2005 and $104,000 for the first nine months of 2006, and related payroll taxes, approximately $16,000 for 2005 and $13,000 for the first nine months of 2006, and audit fees, approximately $69,000 for 2005 and $71,000 for the first nine months of 2006. The wages and related payroll taxes were paid to or in connection with four individuals who were employed by both Zunicom and us. As of the date of this prospectus, these four individuals are our full-time employees and the adjustment represents the actual salaries we will pay them after the date of this prospectus and are derived from the salaries historically incurred by Zunicom. The additional audit fee is based on an estimate provided by our independent accountants for their services. All of these costs are expected to have a continuing impact on our future operations. The monthly management fee that we paid to Zunicom was intended to reimburse Zunicom for these costs.

• A decrease in management fees of $480,000 for the year ended December 31, 2005 and $360,000 for the nine months ended September 30, 2006, reflecting all management fees paid or accrued to Zunicom during those periods. This fee was paid to Zunicom in lieu of separate allocations for the above mentioned costs. As of the date of this prospectus, the management fee will no longer be payable to Zunicom. The elimination of the management fee will have a continuing impact on our future operations.

• An increase in the provision for income taxes of approximately $87,000 for the year ended December 31, 2005 and $58,000 for the nine months ended September 30, 2006 attributable to the changes in general and administrative expenses described above.

7

Pro forma balance sheet data:

	September 30, 2006
	Actual		Adjustments			Pro forma		Pro forma as adjusted
Current assets	$	31,234	$	(177	)	$	31,057	$	45,077
Working capital	$	3,926	$	3,388		$	7,314	$	21,334
Total assets	$	32,025	$	(177	)	$	31,848	$	45,868
Total liabilities	$	27,565	$	1,285		$	28,850	$	28,850
Shareholders’ equity	$	4,460	$	(1,462	)	$	2,998	$	17,018

          Pro forma information in the table above reflects (i) the elimination of a $177,000 current receivable due from AlphaNet which will be assigned to Zunicom as partial payment of a current payable to Zunicom, (ii) forgiveness of approximately $530,000 of the payable to Zunicom, (iii) the conversion of $2.85 million of short-term indebtedness owed to Zunicom to a long-term liability as evidenced by a note payable and (iv) an estimated $2 million dividend (assuming an initial public offering price per share of $8.00) that will be declared immediately before this offering is effective. The exact amount of the dividend will be determined immediately before the date of this prospectus and will equal the difference between $10 million and the gross proceeds realized by Zunicom from the sale of the UPG shares that it owns that are covered by this prospectus, or between $1 million and $3 million based on the anticipated range of $7-$9 per share.

          Pro forma as adjusted information in the table above also takes into account the estimated net proceeds of this offering.

	December 31, 2005
	Actual		Adjustments			Pro forma
Current assets	$	28,721	$	(121	)	$	28,600
Working capital	$	4,014	$	—		$	4,014
Total assets	$	29,252	$	(121	)	$	29,131
Total liabilities	$	24,707	$	—		$	24,707
Shareholders’ equity	$	4,256	$	—		$	4,256

          Pro forma information in the table above reflects the elimination of the current receivable due from AlphaNet of $121,000, which will be assigned to Zunicom as partial payment of a current payable to Zunicom.

8

RISK FACTORS

          This offering and an investment in our securities involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus, including our financial statements and the notes to those statements, before you purchase our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, could negatively impact our business, results of operations or financial condition in the future. If any of the following risks and uncertainties develops into actual events, our business, results of operations or financial condition could be adversely affected. In those cases, the trading price of our securities could decline, and you may lose all or part of your investment.

Risks Relating to Our Business

          A significant portion of our annual revenue is derived from a single customer. If this customer were to terminate its relationship with us or even reduce its level of business with us our operating results would suffer.

          For the years ended December 31, 2005, 2004 and 2003, one customer, Brinks, accounted for 56%, 51% and 50% of our net sales, respectively. For the nine months ended September 30, 2006 Brinks accounted for 59% of our net sales. At September 30, 2006 our Brinks receivable was $4.4 million, representing approximately 46% of our total accounts receivable as of that date, none of which was more than 30 days old as of that date. At any one time, we may carry as much as $10.0 million of inventory to fulfill our obligations to Brinks. If Brinks were to fail to purchase these items from us, we may not be able to find other buyers for these products. Our agreement with Brinks expires in November 2008 but Brinks has the right to terminate our agreement at any time by giving us 120 days prior written notice. If Brinks were to exercise this right or significantly reduce the level of business it does with us, our revenues and profitability would be adversely impacted. We cannot assure you that we will be able to extend our agreement with Brinks or, if we can, what the terms of that agreement will be. In addition, any adverse developments in Brinks’ business could have an adverse impact on our financial condition. The market price of our stock may be adversely affected because of this customer concentration.

          We depend on a limited number of suppliers and do not have written agreements with any of them. Any disruption in our ability to purchase products from them or any drastic changes in the prices we pay for our products could adversely affect our gross margins and profitability, which could have an adverse impact on our operating results.

          All of our products are manufactured and assembled by third-party manufacturers, many of which are located in the Pacific Rim region, principally China. We depend on these third-party manufacturers to supply us with quality products in a timely and efficient manner. If they fail to do so, we may have to find other sources to meet our inventory needs. This could result in increased costs which we may not be able to pass on to our customers, lost sales opportunities, and/or a decrease in customer satisfaction, which could damage our reputation.

          Our largest supplier is Honeywell Security and Custom Electronics (“HS&CE”), formerly known as Ademco, a division of Honeywell International, Inc., and the source of much of our Brinks inventory. In each of 2005 and 2004, we purchased 44% of our inventory from HS&CE. We do not have a written agreement with HS&CE, although Brinks does. Our second largest supplier is Zhongshan Hengli Electrical Appliance Factory (“Hengli”), which is based in the Guangdong province, People’s Republic of China. Hengli accounted for 22% and 19% of our inventory purchases in 2005 and 2004, respectively, and 80% of all of our battery purchases in 2005. We continue to rely on Hengli as our principal source for batteries because of price, the quality of its products, its ability to satisfy our need for a broad range of battery chemistries and its timely deliveries. We believe that we get competitive pricing from Hengli because of the volume of our purchases. If our relationship with Hengli was to terminate for any reason, we may have to source our purchases from multiple factories. This could have an adverse impact on the price we pay for batteries and other products that we carry and may also adversely impact other factors such as the quality of our products and the timeliness of our shipments. This could then adversely impact our ability to meet customer expectations and damage our reputation.

9

          Any disruption in our ability to move our goods from the manufacturers to our logistics centers or from our logistics centers to our customers could result in lost business.

          Other than some of the items we purchase to fulfill our obligations to Brinks, substantially all of our products are manufactured outside the United States, and most of our products are then shipped from one of our logistics centers to our customers. As a result, we depend on third parties, principally shippers and shipping brokers, freight forwarders, and customs brokers, to facilitate our transportation needs. Transportation delays or interruptions, such as those caused by labor strikes, natural disasters, terrorism, inspection delays, import restrictions, bad weather, or acts of war, could impede our ability to timely deliver our products to our customers. These delays could damage our reputation and materially and adversely affect our operations and financial condition. Also, these interruptions could increase our costs, if, for example, we were forced to ship our products via air rather than ocean freight or if insurance costs were to increase significantly as a result of terrorism or acts of war.

          We depend on foreign manufacturers, which exposes us to various financial, political and economic risks.

          For the years ended December 31, 2005 and 2004, we purchased approximately 30% and 39%, respectively, of our products through foreign sources, predominantly in China and other Pacific Rim countries. In some instances, particularly when we are dealing with a new supplier, we are required to finance a portion of the tooling cost and raw material purchases that the factory will incur to meet our requirements. Sometimes our customer will offset our exposure by paying us an upfront fee. However, this is not always the case and we are often at risk if the factory cannot deliver the goods to us. As a result, our ability to sell certain products at competitive prices could be adversely affected by any of the following:

• increases in tariffs or duties;

• changes in trade treaties;

• strikes or delays in air or sea transportation;

• future United States legislation with respect to pricing and/or import quotas on products imported from foreign countries;

• changes in local laws and regulations;

• wars, hostilities or other military activity;

• expropriation of private enterprises;

• currency limitations including restrictions on repatriation or transfer of funds; and

• turbulence in offshore economies or financial markets.

          Our ability to be competitive with respect to sales of imported components could also be affected by other governmental actions and policy changes, including anti-dumping and international antitrust legislation.

          Currency fluctuations could have a negative impact on financial performance, which may result in the loss of all or a portion of your investment in us.

          Although all of our transactions are recorded in U.S. dollars, adverse currency fluctuations could make components manufactured abroad more expensive, cause shortages due to unfavorable export conditions or cause our foreign suppliers to limit exports to the United States. Significant changes in the value of the Chinese Renminbi in relation to the U.S. dollar could increase the cost of goods and raw materials for Chinese manufacturers, which they would then look to incorporate into the price of goods that we purchase from them. As a result, we cannot assure you that currency fluctuations will not have a material adverse effect on our operating results in the future.

          Our industry is cyclical, which causes our operating results to fluctuate significantly.

          Many of the products that rely on portable power supply units and related products and accessories that we sell constitute discretionary purchases. Consumer spending is unpredictable and is affected by many factors, including interest rates, consumer confidence levels, tax rates, employment levels and prospects, and general

10

economic conditions. As a result, a recession in the general economy or other conditions affecting disposable consumer income and retail sales would likely reduce our sales.

          We cannot predict the timing or the severity of the cycles within our industry. In particular, it is difficult to predict how long and to what levels any industry upturn or downturn and/or general economic weakness will last or will be exacerbated by terrorism or war or other factors on our industry. The electronic components distribution industry has historically been affected by general economic downturns. These economic downturns have often had an adverse economic effect upon manufacturers, end-users of electronic components and electronic components distributors. Our industry also directly depends on the continued growth of the electronic components industry and indirectly on end-user demand for our customers’ products. The timing of new product developments, the life-cycle of existing electronic products, and the level of acceptance and growth of new products can also affect demand for electronic components. Due to changing conditions, our customers have experienced, and may in the future experience, periods of inventory corrections which could have a significant negative impact on our results. We have supported in the past and expect in the future to support new technologies and emerging markets. If these new technologies and emerging markets fail to be accepted or grow, our operating results could suffer significantly. Our operating results have significantly fluctuated in the past, and will likely fluctuate in the future, because of these market changes and factors.

          Our industry is susceptible to supply shortages and price volatility. Any delay or inability to obtain components or a significant increase in the price of components may have an adverse effect on our operating results.

          The electronics industry, in general, has been susceptible to supply shortages and price volatility. In part, these conditions are attributable to the price of lead and copper, the two principal raw materials used to manufacture electronic components, and the price of oil, which impacts both manufacturing costs and shipping costs. Over the past few years, prices for lead and copper have increased significantly. In the last 10 years, the price of oil has increased 260%, from approximately $20 per barrel to over $70 per barrel. These price increases could lead to supply shortages as manufacturers hold up or delay production in the hope that prices will come down or because they do not have the capital to continue purchasing raw materials at the same level. These shortages could adversely impact our ability to satisfy customer demands, impairing not only our financial performance but jeopardizing our ongoing relationships with our customers. In addition, it is not always possible to pass along these price increases to our customers, which would have an unfavorable impact on our gross margins and overall profitability. On the other hand, as a result of price decreases, which are also possible when dealing with commodity-based products, we may experience periods when our investment in inventory exceeds the market price of such products. This could have a negative impact on our sales and gross profit.

          Our business model assumes that distributors will continue to play a significant role in the electronics industry, as a traditional distributor, as a logistics provider or as both. A reversal of the trend for distributors to play an increasing role in the electronic components industry could adversely affect our business.

          Traditionally, distributors have played an important role in the electronics industry serving as the bridge between the component manufacturers and OEMs, wholesalers and retailers. In recent years, there has been a growing trend for OEMs and contract electronics manufacturers to outsource their procurement, inventory and materials management processes to third parties, particularly electronic component distributors. We believe this trend has contributed and will continue to contribute to our growth. However, as a result of the Internet and other recent developments contributing to the “global economy,” OEMs and retailers have the opportunity to contract directly with the component manufacturers, bypassing the distributors. If that direct contact becomes a trend, our sales would be materially adversely affected.

          Competition in our industry is intense, which creates significant pricing pressures on our products and services. If we cannot compete effectively, our gross margins and profitability would be adversely impacted, which could have an adverse impact on the market price of our stock.

          We compete with numerous, well-established companies, many, if not most of which are larger and have greater capital and management resources than we do. Our principal competitors include other logistics companies, shippers, such as UPS Supply Chain, FedEx and DHL who also provide supply chain management services, and battery distributors, such as Interstate Batteries, MK Battery and Dantona, as well as companies like us that are both logistics providers and distributors. In addition, we are increasingly finding that manufacturers,

11

particularly foreign manufacturers, are competing against us. We compete primarily on the basis of price, inventory availability, scope of services, quality of products and services, delivery time and customer relationships. We expect competition to intensify in the future. To the extent our competitors have superior financial resources, they may be better able to withstand price competition and can even implement extensive promotional programs. They may also be able to offer a broader range of services.

          Our ability to remain competitive will largely depend on our ability to continue to source the products we sell at competitive prices, control costs and anticipate and respond to various trends affecting the industry. These factors include new product introductions and pricing strategies, changes in customer preferences and requirements, consumer trends, demographic trends and international, national, regional and local economic conditions. New competitors or competitors’ price reductions or increased spending on marketing and product development, as well as any increases in the price of raw materials that our suppliers pass on would have a negative impact on our financial condition and our competitive position, as larger competitors will be in a better position to bear these costs and price increases. We cannot assure you that we will be able to compete successfully against existing companies or ones that will enter our market in the future.

          Our revolving credit agreement with Compass Bank contains restrictive covenants that could impede our growth and our ability to compete.

          Our working capital requirements are significant. To fund our operations we rely on cash flow from operations and a $16.0 million working capital revolving credit facility. At December 31, 2005, the outstanding balance on the credit line was $9.3 million and at September 30, 2006 the outstanding balance was $11.6 million. In addition, at those dates our total liabilities, including accounts payable, was $25.0 million and $27.6 million, respectively. The credit facility restricts us in many ways and these restrictions as well as the amount of the debt we carry at any one time may have an adverse impact on the price of our stock.

          First, the indebtedness under the credit facility is secured by all of our assets, including inventory and receivables. If we were to breach any of the terms of our agreement with the bank and the bank were to exercise its right to declare a default and a court of competent jurisdiction were to determine that we are in default, the bank could foreclose on its security interests. Any foreclosure action could cause us to seek protection under the federal bankruptcy code which, in turn, would have a material adverse effect on our ability to operate at a level required to maintain or achieve profitability, which, in turn, could adversely impact the price of our stock and your investment.

          Second, the indebtedness due under the facility matures in April 2007. We have not entered into any discussions with the bank about extending the facility nor have we entered into discussions with any other financial institution regarding replacing the facility. We cannot assure you that we will be able to extend the facility with the bank or enter into an agreement with another financial institution to replace the existing credit facility nor do we know what the terms would be of any such new facility. If we cannot extend the facility or replace it, we will have to look for other ways to repay the debt, which may include selling assets. This could have an adverse affect on our operations.

          Third, the credit agreement contains numerous negative covenants, such as restricting our ability to incur additional indebtedness, incur capital expenditures in excess of $100,000, and undertake any other financing transaction without the bank’s consent or prohibiting us from buying another business or assets having a purchase price in excess of $50,000 without the bank’s consent. For the year ended December 31, 2005 our capital expenditures totaled approximately $186,000, exceeding the allowable limit of $100,000, resulting in a default under our loan agreement. While the bank waived that default, we cannot assure that it will be willing to waive any other defaults in the future. The consequences of these restrictions may include one or more of the following:

• increasing our vulnerability to general adverse economic and industry conditions;

• limiting our ability to obtain additional financing;

• requiring that a substantial portion of our cash flows from operations be applied to pay principal and interest on our indebtedness and lease payments under our leases, thereby reducing cash flows available for other purposes;

12

• limiting our flexibility in planning for or reacting to changes in our business and the industry in which we compete; and

• placing us at a possible competitive disadvantage compared to competitors with less leverage or better access to capital resources.

          Fourth, the agreement requires us to maintain various financial ratios and satisfy various other financial and operating requirements and conditions, including a borrowing base computation. These ratios and the borrowing base computation limit our ability to draw on the facility. Also, failure to satisfy these ratios, requirements and conditions could result in a breach of the loan covenants, giving the bank the right to declare a default and commence proceedings to collect the debt. Our ability to satisfy these ratios, requirements and conditions may be affected by events that are beyond our control. These ratios, requirements and conditions together with the negative covenants may restrict or limit our operating flexibility, limit our flexibility in planning for and reacting to changes in our business and make us more vulnerable to economic downturns and competitive pressures.

          Fifth, our ratio of total liabilities to total market capitalization may exceed that of other companies in our industry. As a result, an investment in us could be perceived by the market as more risky than an investment in our competitors, which may have an adverse impact on the price of our stock. In addition, the total amount of our debt makes us particularly susceptible to changes in general economic conditions or even adverse changes in the financial condition in one or more of our significant customers. To meet our operating and debt service requirements, which are significant, we must take steps to assure that our existing customer base is comprised of businesses having financial resources sufficient to assure timely payment for our product shipments and that we identify creditworthy potential customers.

          Finally, a portion of the borrowings under our credit facility are and will continue to be at a variable rate based upon prevailing interest rates, which exposes us to risk of increased interest rates.

          Disruption in our logistics centers may prevent us from meeting customer demand and our sales and profitability may suffer as a result.

          We manage our product distribution in the continental United States through our operations in Carrollton, Texas, and two regional logistics centers, one in Oklahoma City and the other in Las Vegas. A serious disruption, such as earthquakes, tornados, floods, or fires, at any of our logistics centers could damage our inventory and could materially impair our ability to distribute our products to customers in a timely manner or at a reasonable cost. We could incur significantly higher costs and experience longer lead times associated with distributing our products to our customers during the time that it takes for us to reopen or replace a distribution center. As a result, any such disruption could have a material adverse effect on our business.

          As part of our long-term growth strategy, we may undertake strategic acquisitions. If we are unable to address the risks associated with these acquisitions our business operations may be disrupted and our financial performance may be impaired.

          Our long-term growth strategy includes building or acquiring a manufacturing facility. We also will consider acquiring other logistics companies or distributors if we believe such an acquisition would expand or complement our existing business. In pursuing acquisition opportunities, we may compete with other companies having similar growth and investment strategies. Competition for these acquisition targets could also result in increased acquisition costs and a diminished pool of businesses, technologies, services or products available for acquisition. Our long-term growth strategy could be impeded if we fail to identify and acquire promising candidates on terms acceptable to us. Assimilating acquired businesses involves a number of other risks, including, but not limited to:

• disrupting our business;

• incurring additional expense associated with a write-off of all or a portion of the related goodwill and other intangible assets due to changes in market conditions or the economy in the markets in which we compete or because acquisitions are not providing the expected benefits;

• incurring unanticipated costs or unknown liabilities;

• managing more geographically-dispersed operations;

13

• diverting management’s resources from other business concerns;

• retaining the employees of the acquired businesses;

• maintaining existing customer relationships of acquired companies;

• assimilating the operations and personnel of the acquired businesses; and

• maintaining uniform standards, controls, procedures and policies.

          For all these reasons, our pursuit of an overall acquisition or any individual acquisition could have a material adverse effect on our business, financial condition and results of operations. If we are unable to successfully address any of these risks, our business could be harmed.

          Rapid growth in our business could strain our managerial, operational, financial, accounting and information systems, customer service staff and office resources. If we fail to manage our growth effectively, our business may be negatively impacted.

          In order to achieve our growth strategy, we will need to expand all aspects of our business, including our computer systems and related infrastructure, customer service capabilities and sales and marketing efforts. We cannot assure you that our infrastructure, technical staff and technical resources will adequately accommodate or facilitate our expanded operations. To be successful, we will need to continually improve our financial and managerial controls, billing systems, reporting systems and procedures, and we will also need to continue to expand, train and manage our workforce. In addition, as we offer new products and services, we will need to increase the size and expand the training of our customer service staff to ensure that they can adequately respond to customer inquiries. If we fail to adequately train our customer service staff and provide staffing sufficient to support our new products and services, we may lose customers.

          Our success to date and our future success depend on our senior executives and other key personnel. If we lose the services of any of these individuals, our business will suffer.

          We depend substantially on the efforts and abilities of our senior executives. The loss or interruption of the full-time service of one or more of these executives could materially and adversely affect our business and operations. Even though we have employment agreements with these executives we cannot assure you that they will continue to work for us. If we were to lose the services of any of our senior executives and we were not able to replace them quickly and with people of comparable skills, our operations would be adversely impacted.

          If we become subject to product returns or product liability claims resulting from defects in our products, we may face an increase in our costs, a loss of customers, damage to our reputation, or a delay in the market acceptance of our products.

          The products that we sell are complex and may contain undetected defects or experience unforeseen failures. Recently, Dell Computer Corporation, Apple Computer Inc., Toshiba Corp. and IBM Corp and Lenovo Group announced multimillion dollar recalls of certain lithium-ion batteries manufactured by Sony Corporation (“Sony”) and included in their respective laptop computers. In total, over 9 million laptop computers are involved in the recalls. The recall was in response to reports that the subject batteries would overheat and catch fire. We carry lithium-ion batteries, although we do not purchase them from Sony. Nevertheless, we cannot assure you that the products we sell, despite any safety certification they may carry, are free of all defects. Even though we are not a manufacturer, as part of the supply chain we may be named as a defendant in a lawsuit for property damage or personal injury resulting from defects in the goods we handle. If that happens, we may be forced to undertake a product recall program, which could cause us to incur significant expenses and could harm our reputation and that of our products. In addition, a product liability claim brought against us, even if unsuccessful, would likely be time-consuming, diverting management’s attention from sales and product development efforts, and costly to defend. If successful, such claims could require us to make significant damage payments in excess of our insurance limits.

14

          If we are unable to protect our intellectual property, our ability to compete effectively in our markets could be harmed.

          We regard our trademarks, trade names, service marks, service names, trade secrets and other intellectual property rights important to our success. Unauthorized use of our intellectual property by third parties may adversely affect our business and reputation. We rely on trademark law, statutory and common law, trade secret protection and confidentiality agreements with our employees, and with our customers and vendors whenever possible, in order to protect our intellectual property rights. Not all of our customers and vendors agree to these provisions, and the scope and enforceability of these provisions is uncertain. In addition, even if our intellectual property rights are enforceable in the United States, they may not be enforceable in other countries where we do business. As a result, despite these precautions, it may be possible for third parties to obtain and use our intellectual property without authorization. Moreover, we may have to resort to litigation, which is expensive and time-consuming and will divert management’s attention from our core business.

          We may be required to incur substantial expenses and divert management attention and resources in defending intellectual property litigation against us or prosecuting others for their unauthorized use of our intellectual property.

          We cannot be certain that the products we purchase from our suppliers do not and will not infringe on issued patents or other proprietary rights of others. In fact, we are a named defendant in an action brought by Energizer Holdings, Inc. and Eveready Battery Company, Inc. against us and over 20 other respondents relating to the manufacture, importation and sale of certain alkaline batteries alleged to infringe one of their patents. Any claim, with or without merit, could result in significant litigation costs and diversion of resources, including the attention of management, and could require us to enter into royalty and licensing agreements, all of which could have a material adverse effect on our business. We may be unable to obtain such licenses on commercially reasonable terms, or at all, and the terms of any offered licenses may not be acceptable to us. If forced to cease using such intellectual property, we may not be able to develop or obtain alternative technologies. An adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing, using, or selling certain of our products, which could have a material adverse effect on our business.

          Furthermore, parties making such claims could secure a judgment awarding substantial damages as well as injunctive or other equitable relief that could effectively block our ability to make, use, or sell our products in the United States or abroad. A judgment like that could have a material adverse effect on our business. In addition, we are obligated under certain agreements to indemnify our customers or other parties if we infringe the proprietary rights of third parties. Any required indemnity payments under these agreements could have a material adverse effect on our business.

          We owe a significant amount of money to Zunicom, our corporate parent and controlling shareholder. Our obligation to repay a portion of this indebtedness may be accelerated upon circumstances beyond our control, which could strain our financial resources.

          On the date of this prospectus we will issue two notes to Zunicom, our corporate parent and controlling shareholder. One note, the dividend note, will have an original principal amount equal to the difference between $10 million and the gross proceeds realized by Zunicom from the sale of our shares that it owns that are covered by this prospectus, or between $1 million and $3 million based on the anticipated range of $7-$9 per share. The other note, the tax note, will have an original principal amount of $2.85 million. Both notes have a maturity date 66 months from the date of this prospectus. Interest only is payable during the first 18 months of the term. Thereafter, interest and principal will be payable in 16 equal quarterly installments. The dividend note must be repaid from the net proceeds to us from the sale of the shares covered by the over-allotment option. If the over-allotment option is not exercised or even if it is exercised but not in an amount sufficient to repay the note in full, we will owe a significant amount of money to Zunicom and the combined payments under both notes would adversely impact our working capital position and could strain our financial resources to the extent that we may have to reallocate resources from operations.

          We will incur increased costs as a result of being a public company, which may divert management attention from our business and impair our financial results.

          As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a wholly-owned subsidiary of Zunicom. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission and the American Stock Exchange, has required changes in corporate governance practices of public companies. We expect these new rules and

15

regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. In addition, we will incur additional costs associated with our public company reporting requirements. We also expect these new rules and regulations to make it more difficult and more expensive for us to obtain directors’ and officers’ liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

          Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our ability to produce accurate financial statements and on our stock price.

          Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (S-Ox 404), we are required to furnish a report on our internal controls over financial reporting. The internal control report must contain (a) a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting, (b) a statement identifying the framework used by management to conduct the required evaluation of the effectiveness of our internal control over financial reporting, (c) management’s assessment of the effectiveness of our internal control over financial reporting as of the end of our most recent fiscal year, including a statement as to whether or not internal control over financial reporting is effective and (d) a statement that our independent registered public accounting firm has issued an attestation report on management’s assessment of internal control over financial reporting. Our report must be completed in early 2008 and the attestation report must be completed by early 2009.

          To comply with S-Ox 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to dedicate internal resources, engage outside consultants and adopt a detailed work plan to (a) assess and document the adequacy of internal control over financial reporting, (b) take steps to improve control processes where appropriate, (c) validate through testing that controls are functioning as documented, and (d) implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, we can provide no assurance as to our, or our independent registered public accounting firm’s, conclusions with respect to the effectiveness of our internal control over financial reporting under S-Ox 404. There is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal controls over financial reporting are effective as required by S-Ox 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

          We are subject to various governmental regulations that could adversely affect our business.

          Like many businesses, our operations are subject to certain federal, state, and local regulatory requirements relating to environmental, product disposal, and health and safety matters. We could become subject to liabilities as a result of a failure to comply with applicable laws and incur substantial costs to comply with existing, new, modified, or more stringent requirements. The use of our products is also governed by a variety of state and local ordinances that could affect the demand for our products.

Risks Related to this Offering

          Currently, there is no public market for our common stock. If an active market does not develop for our securities, you may not be able to sell our common stock when you want.

          This is our initial public offering. As such, currently, there is no public trading market for our common stock. Even after this offering is completed, an active trading market in our common stock may never develop or continue. An illiquid market will make it more difficult for you to sell our stock should you desire or need to do so.

          Our stock price may fluctuate after this offering, which could result in substantial losses for investors.

          The market price for our common stock will vary from the initial public offering price after trading commences and may trade at a price below the initial public offering price. This could result in substantial losses for investors. Even more, the market price of our securities may be volatile, fluctuating significantly in response to a number of factors, some of which are beyond our control. These factors include:

16

• quarterly and seasonal variations in operating results;

• changes in financial estimates and ratings by securities analysts;

• announcements by us or our competitors of new product and service offerings, significant contracts, acquisitions or strategic relationships;

• publicity about our company, our services, our competitors or business in general;

• additions or departures of key personnel;

• fluctuations in the costs of materials and supplies;

• any future sales of our common stock or other securities; and

• stock market price and volume fluctuations of publicly-traded companies in general and in the electronic industry in particular.

          We may not be able to maintain our listing on the American Stock Exchange, which may adversely affect the ability of purchasers in this offering to resell their common stock in the secondary market.

          Although we plan to list our common stock on the American Stock Exchange, we cannot assure you that we will continue to meet the criteria for continued listing on the American Stock Exchange in the future. If we are unable to meet the continued listing criteria of the American Stock Exchange and became delisted, trading of our common stock could be conducted in the Over-the-Counter Bulletin Board. In such case, an investor would likely find it more difficult to dispose of our common stock or to obtain accurate market quotations. If our common stock is delisted from the American Stock Exchange, it will become subject to the SEC’s “penny stock rules,” which imposes sales practice requirements on broker-dealers that sell such common stock to persons other than established customers and “accredited investors.” Application of this rule could adversely affect the ability or willingness of broker-dealers to sell our common stock and may adversely affect the ability of purchasers in this offering to resell their common stock in the secondary market.

          After this offering, Zunicom will continue to control us, which may result in conflicts of interest, or the appearance of such conflicts, and may adversely impact our value and the liquidity of our stock.

          Immediately after this offering is completed, Zunicom will beneficially own 40.0% of our outstanding common stock (36.7% if the over-allotment option is exercised in full). William Tan, our chairman, is also the chairman of Zunicom and Ian Edmonds, our chief operating officer and a member of our board of directors (the “Board”) and the son-in-law of Mr. Tan, is also a member of the board of directors of Zunicom. In addition, at the time this offering is effective, Mr. Tan and Mr. Edmonds will have options, which, if exercised, would give each of them 6.7% of our issued and outstanding shares of common stock immediately after this offering (6.1% if the over-allotment option is exercised in full). These options have an exercise price equal to the initial public offering price per share. As a result, Mr. Tan and Mr. Edmonds, through Zunicom, will effectively control all matters requiring approval by our stockholders, including the election and removal of directors, any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. This concentration of control could be disadvantageous to other stockholders with interests different from those of Mr. Tan and Mr. Edmonds, which could result in reducing our profitability. In addition, this concentration of share ownership, and the appearance of conflicts, even if such conflicts do not materialize, may adversely affect the trading price for our common stock, because investors often perceive disadvantages in owning stock in companies with a significant concentration of ownership among a limited number of shareholders. We do not have a formal procedure for resolving any conflicts of interest.

          Future sales or the potential for sale of a substantial number of shares of our common stock could cause the trading price of our common stock to decline and could impair our ability to raise capital through subsequent equity offerings.

          Sales of a substantial number of shares of our common stock in the public markets, or the perception that these sales may occur, could cause the market price of our stock to decline and could materially impair our ability to raise capital through the sale of additional equity securities. Once this offering is completed, we will have 5,000,000 shares of common stock issued and outstanding, 5,450,000 shares if the over-allotment option is

17

exercised in full. In addition, we will have an additional 1,595,000 shares of common stock reserved for future issuance as follows:

• 1,250,000 shares reserved for issuance under our 2006 Stock Option Plan; and

• 345,000 shares underlying the representatives’ warrants.

          The 3,000,000 shares of common stock sold in this offering will be freely tradable without restriction. Following one year from the closing of this offering, or earlier upon the consent of the underwriters, all of the 2,000,000 shares of common stock owned by Zunicom after this offering and any shares issuable upon exercise of vested options may be publicly sold, subject to the volume restrictions of Rule 144(d) under the Securities Act of 1933. Future sales, or even the possibility of future sales, may depress our common stock price.

          Management will have broad discretion over the use of proceeds from this offering and may not apply them effectively or in the manner currently contemplated.

          We will have broad discretion in determining the specific uses of the proceeds from this offering. While we have general expectations as to the allocation of the net proceeds of this offering, that allocation may change in response to a variety of unanticipated events, such as differences between our expected and actual revenues from operations or availability of commercial financing opportunities, unexpected expenses or expense overruns or unanticipated opportunities requiring cash expenditures. We will also have significant flexibility as to the timing and the use of the proceeds. As a result, investors will not have the opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use the proceeds. You will rely on the judgment of our management with only limited information about their specific intentions regarding the use of proceeds. We may spend most of the proceeds of this offering in ways with which you may not agree. If we fail to apply these funds effectively, our business, results of operations and financial condition may be materially and adversely affected.

          We may issue shares of preferred stock in the future, which could depress the price of our stock.

          Our corporate charter authorizes us to issue shares of “blank check” preferred stock. The Board has the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further shareholder approval. As a result, the Board could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue such additional shares of preferred stock, the rights of the holders of our common stock could be impaired thereby, including, without limitation, with respect to liquidation.

          Texas law and provisions of our amended and restated articles of incorporation and bylaws could deter or prevent takeover attempts by a potential purchaser of our common stock that would be willing to pay you a premium for your shares of our common stock.

          Our amended and restated articles of incorporation and bylaws and the corporate laws of the State of Texas include provisions designed to provide the Board with time to consider whether a hostile takeover offer is in our and shareholders’ best interests, but could be utilized by the Board to deter a transaction that would provide shareholders with a premium over the market price of our shares. These provisions include the availability of authorized but unissued shares of common stock for issuance from time to time at the discretion of the Board; the availability of authorized shares of preferred stock, the number of which to be issued from time to time and their terms and conditions being solely in the discretion of the Board; bylaws provisions enabling the Board to increase the size of the board and to fill the vacancies created by the increase; and bylaw provisions establishing advance notice procedures with regard to business to be presented at shareholder meetings or to director nominations (other than those by or at the direction of the Board). The Texas Business Corporation Act also contains provisions intended to protect shareholders and prohibit or discourage various types of hostile takeover activities. These provisions may discourage potential acquisition proposals and could delay or prevent a change in control, including under circumstances where our shareholders might otherwise receive a premium over the market price of our shares. These provisions may also have the effect of making it more difficult for third parties to cause the replacement of our current management and may limit the ability of our shareholders to approve transactions that they may deem to be in their best interests.

18

          The initial public offering price of our common stock may not reflect our true fair market value.

          The public offering price for our common stock has been determined by negotiation between us and the underwriters and does not necessarily bear any direct relationship to our assets, results of operations, financial condition, book value or any other recognized criterion of value and, therefore, might not be indicative of prices that will prevail in the trading market. As such, we cannot assure that the price of a share of common stock sold in this offering will not decline immediately after the offering is completed.

          We do not anticipate paying dividends in the foreseeable future. This could make our stock less attractive to potential investors.

          We anticipate that we will retain all future earnings and other cash resources for the future operation and development of our business, and we do not intend to declare or pay any cash dividends in the foreseeable future. Future payment of cash dividends will be at the discretion of our board of directors after taking into account many factors, including our operating results, financial condition and capital requirements.

          Purchasers in this offering will experience immediate and substantial dilution in net tangible book value.

          The initial public offering price is substantially higher than the pro forma net tangible book value per share of our outstanding common stock. As a result, investors purchasing stock in this offering will incur immediate dilution of $4.60 per share or 57.5%, based on an assumed initial public offering price of $8.00 per share, the midpoint of the range. As a result of this dilution, investors purchasing shares of common stock in this offering will have contributed 90.9% of the total amount invested in us but will own only 60% of our outstanding common stock. In addition, the exercise of outstanding options and warrants and future equity issuances may result in further dilution to investors and current shareholders.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

          This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and elsewhere in this prospectus. In addition, our past results of operations do not necessarily indicate our future results.

          Other sections of this prospectus may include additional factors which could adversely affect our business and financial performance. Moreover, the logistics services business and the electronic supply and distribution business is very competitive and rapidly changing. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, and we cannot assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements.

          Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this prospectus, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus. Neither the Private Securities Litigation Reform Act of 1995 nor Section 27A of the Securities Act of 1933 provides any protection to us for statements made in this prospectus. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

19

USE OF PROCEEDS

          In this offering, we are selling 2,000,000 shares of our common stock and Zunicom is selling 1,000,000 shares of our common stock. In addition, we have granted the underwriters an option to purchase an additional 450,000 shares to cover over-allotments. We will not receive any of the proceeds attributable to the sale of shares by Zunicom. In addition, we have agreed to pay all of the expenses associated with this offering other than the underwriters’ discount and commission attributable to the shares sold by Zunicom.

          Assuming a public offering price of $8.00 per share, the midpoint of the range, 7% underwriting commissions and 2% non-accountable expense allowance, we estimate that the net proceeds to us from this offering will be approximately $14.0 million. Non-accountable expenses are expenses incurred by the representative in connection with this offering that are payable out of the proceeds of the offering, but for which it is not required to produce evidence of payment because we have agreed to pay a fixed percentage of the gross proceeds for this purpose. If the representative exercises the over-allotment option in full, we estimate that the net proceeds to us of the offering will be approximately $17.4 million.

          Based on the current status of our business, we intend to use the net proceeds that we receive from this offering for one or more of the following purposes:

• Develop and open new regional logistics centers and retail outlets. We plan to open five or six new regional logistics centers and retail outlets over the next two years. Based on our experience with our regional logistics centers in Oklahoma City and Las Vegas, we estimate the total cost of opening a new logistics center retail outlet is approximately $0.5 million to $1.0 million, including inventory purchases. The net proceeds that will be allocated for this purpose will be from $2.5 million to $6.0 million.

• Purchase and customize a warehouse management system and related hardware, such as computerized material handling equipment and carousels, and upgrade and improve our other critical information technology systems. We estimate the cost to develop a warehouse management system that meets our needs will be approximately $0.3 million, the hardware will be approximately $0.7 million, and the estimated cost of other information technology additions and improvements that we plan to make is $0.1 million to $0.2 million, for a total of approximately $1.2 million.

• Increase our sales and marketing department and efforts by adding sales representatives in the United States and abroad and by participating in a greater number of trade shows and other industry events. We estimate that approximately $0.25 million will be allocated for this purpose.

• Expand our inventory of product and service offerings. To do so, we may have to finance a portion of the tooling and raw material costs that factories will incur to meet our demands. We estimate that approximately $0.25 million will be allocated for this purpose.

• Expand into new markets, including international markets and the consumer market through retail outlets and online sales. We estimate that approximately $0.5 million will be allocated for this purpose.

• Develop or acquire manufacturing capability. We have no present commitments, understandings, or agreements as to any acquisition. We cannot estimate how much of the proceeds will be allocated to this use.

• Any portion of the net proceeds will be used for general corporate purposes. Pending their use, we intend to invest the net proceeds of this offering in interest-bearing, investment grade securities. Alternatively, we may use the net proceeds to temporarily pay down the balance on our working capital line of credit.

          We will retain broad discretion in the allocation of the net proceeds within the categories listed above. The amounts actually expended for these purposes may vary significantly and will depend on a number of factors, including cash generated by operations, other financing opportunities, evolving business needs, changes in customer demands and preferences, competitive developments, new strategic opportunities, cost of materials, general economic conditions and other factors that we cannot anticipate at this time.

If the underwriters exercise the over-allotment option, the net proceeds to us from the sale of those shares will be used to repay the note

20

evidencing the dividend declared immediately before this offering is effective. The dividend reflects a portion of our undistributed earnings through the date of this offering. The exact amount of the dividend will be determined immediately before the date of this prospectus and will equal the difference between $10 million and the gross proceeds realized by Zunicom from the sale of our shares that it owns that are covered by this prospectus, or between $1 million and $3 million based on the anticipated range of $7-$9 per share. The dividend will be evidenced by a note payable, which will have a maturity date 66 months from the date of issuance (the date of this prospectus) and which will bear interest at the rate of 6% per annum. Interest on the unpaid principal amount of this note is payable quarterly, in arrears, and the principal amount will be repaid to the extent of the net proceeds from the sale of shares covered by the over-allotment option and the balance in 16 equal quarterly installments beginning 21 months after the date of issuance.

          We expect that the net proceeds from this offering together with cash flow from operations will be sufficient to fund our operations and capital requirements for at least 12 months following this offering. We may be required to raise additional capital through the sale of equity or other securities sooner if our operating assumptions change or prove to be inaccurate. We cannot assure you that any financing of this type would be permissible under our existing credit facility or, if permitted, would be available or, if available, what the terms of such a financing would be.

DIVIDEND POLICY

          Since 1999 through the date of this prospectus, we have distributed approximately $7.0 million to Zunicom. This amount includes management fees and dividends. In addition, immediately before the effective date of this offering, we will declare a dividend in an amount equal to the difference between $10 million and the gross proceeds realized by Zunicom from the sale of our shares that it owns that are covered by this prospectus. The dividend will be evidenced by a note payable, which will have a maturity date 66 months from the date of issuance (the date of this prospectus) and which will bear interest at the rate of 6% per annum. Interest on the unpaid principal amount of this note is payable quarterly, in arrears, and the principal amount will be repaid to the extent of the net proceeds from the sale of shares covered by the over-allotment option and the balance in 16 equal quarterly installments beginning 21 months after the date of issuance. Finally, immediately before the date of this prospectus we will issue to Zunicom a note in the original principal amount of $2.85 million as evidence of a payable due to Zunicom. This note will bear interest at the rate of 6% per annum and will have a maturity date 66 months from the date of issuance (the date of this prospectus). Interest on the unpaid principal amount of this note is payable quarterly, in arrears, and the principal amount will be repaid in 16 equal quarterly installments beginning 21 months after the date of issuance.

          After this offering is completed, we will no longer pay Zunicom a management fee. In addition, we intend to retain any future earnings for use in the operation and expansion of our business. Any future decision to pay dividends on common stock will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and other factors our board of directors may deem relevant.

21

CAPITALIZATION

          The following table sets forth our capitalization as of September 30, 2006 on an actual basis, on a pro forma basis and pro forma as adjusted for this offering. The pro forma data takes into account:

• the elimination of the $177,000 receivable due from AlphaNet;

• forgiveness of approximately $530,000 of the payable to Zunicom recorded as paid-in-capital; and

• an estimated $2 million dividend that will be declared immediately before the effective date of this offering (assuming an initial public offering price of $8.00 per share). The exact amount of the dividend will be determined immediately before the date of this prospectus and will equal the difference between $10 million and the gross proceeds realized by Zunicom from the sale of our shares that it owns that are covered by this prospectus, or between $1 million and $3 million based on the anticipated range of $7-$9 per share.

          The pro forma as adjusted data also takes into account our receipt of $14.0 million, the estimated net proceeds from this offering.

	September 30, 2006
					Pro forma,
	Actual		Pro forma		as adjusted
	(unaudited; in thousands)
Shareholders’ equity:
Preferred stock, no shares authorized, actual; 5,000,000 shares, par value $.01 per share authorized, pro forma and pro forma adjusted; no shares issued and outstanding , actual pro forma and as adjusted	$	—	$	—	$	—
Common stock, $0.01 par value, 50,000,000 shares authorized; 3,000,000 shares issued and outstanding actual and pro forma; 5,000,000 shares issued and outstanding, pro forma as adjusted		30		30		50
Additional paid-in capital		3,823		2,361		16,361
Retained earnings		607		607		607
Total shareholders’ equity	$	4,460	$	2,998	$	17,018
Total capitalization	$	4,460	$	2,998	$	17,018

22

DILUTION

          If you purchase shares in this offering, your interest will be diluted to the extent of the excess of the public offering price per share of common stock over the as adjusted net tangible book value per share of common stock after this offering. The net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities, divided by the total number of shares of common stock outstanding.

          At September 30, 2006, we had a pro forma net tangible book value of approximately $3.0 million, or approximately $1.00 per share, based on 3,000,000 shares issued and outstanding. Our pro forma net tangible book value takes into account the following adjustments to our net tangible book value at September 30, 2006:

• the elimination of the $177,000 receivable due from AlphaNet;

• forgiveness of approximately $530,000 of the payable to Zunicom recorded as paid-in-capital; and

• an estimated $2 million dividend that will be declared immediately before the effective date of this offering, that will offset paid-in capital. The exact amount of the dividend will be determined immediately before the date of this prospectus and will equal the difference between $10 million and the gross proceeds realized by Zunicom from the sale of our shares that it owns that are covered by this prospectus, or between $1 million and $3 million based on the anticipated range of $7-$9 per share.

          After taking into account the estimated net proceeds from this offering of $14.0 million, our pro forma net tangible book value at September 30, 2006 would have been approximately $17.0 million, or $3.40 per share. This represents an immediate increase of $2.40 per share to existing shareholders and immediate dilution of $4.60 per share, or 57.5%, to the new investors who purchase shares in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share			$	8.00
Pro forma net tangible book value per share at September 30, 2006	$	1.00
Increase in pro forma net tangible book value per share to existing shareholders		2.40
Pro forma net tangible book value per share after the offering				3.40
Dilution per share to new investors			$	4.60

          The following table summarizes as of September 30, 2006 the differences between the existing shareholder and the new investors with respect to the number of shares purchased, the total consideration paid and the average price per share paid:

	Shares Purchased(1)					Total Consideration						Average Price Per Share
	Number(2)		Percent			Amount			Percent
Zunicom		2,000,000		40.0	%	$	2,390,737	(3)		9.1	%	$	1.20	(3)
New investors		3,000,000		60.0	%	$	24,000,000	(4)		90.9	%	$	8.00
Total		5,000,000		100.0	%	$	26,390,737			100.0	%

(1)	Does not include any shares underlying unexercised warrants and options.
(2)	Number of shares purchased reflects the fact that Zunicom is selling 1,000,000 shares in this offering.
(3)	Reflects the $538,140 forgiveness of a portion of the payable to Zunicom and an estimated $2 million dividend that will be declared immediately before the effective date of this offering (assuming an initial public offering price per share of $8.00). Does not take into account the $8 million of gross proceeds that Zunicom is realizing from the sale of shares in this offering.
(4)	Based on an initial public offering price of $8.00 per share, the mid-point of the range.

          If the underwriters exercise their over-allotment option in full, the new investors will purchase 3,450,000 shares of common stock, of which 2,450,000 will be sold by us and 1,000,000 will be sold by Zunicom. In that event, the gross proceeds from this offering will be $27.6 million, representing approximately 92.0% of the total consideration for 65.1% of the total number of shares of common stock outstanding. Based on estimated net proceeds of $17.4 million, the dilution to new investors would be $4.16 per share, or 52.0%.

23

SELECTED FINANCIAL DATA

          The selected financial data set forth below should be read together with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The statement of operations data for each of the years in the five-year period ended December 31, 2005, and the balance sheet data dated December 31, 2005, are derived from our financial statements, which have been audited by KBA Group LLP, independent registered public accounting firm. The statement of operations data for the nine month periods ended September 30, 2005 and 2006 and the balance sheet data at September 30, 2006 are derived from our unaudited financial statements. The unaudited financial statements have been prepared on substantially the same basis as the audited financial statements and, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results of operations for these periods. Historical results are not necessarily indicative of the results to be expected in the future. The statement of operations data for each of the years in the three-year period December 31, 2005 and for the nine month periods ended September 30, 2005 and 2006 and the balance sheet data at December 31, 2005 and September 30, 2006 are included elsewhere in this prospectus.

Consolidated statement of operations data (in thousands):

	Years ended December 31,															Nine months ended September 30,
	2001			2002			2003			2004			2005			2005			2006
																(unaudited)
Net sales	$	26,740		$	43,133		$	58,670		$	67,160		$	81,275		$	59,961		$	68,017
Cost of sales		22,007			36,351			49,565			58,356			70,960			52,187			58,343
Gross profit		4,733			6,782			9,105			8,804			10,315			7,773			9,674
Operating expenses		3,724			5,658			7,191			7,568			7,888			5,898			7,096
Operating income		1,009			1,124			1,914			1,236			2,427			1,876			2,578
Other expense		(167	)		(241	)		(310	)		(491	)		(478	)		(345	)		(578	)
Income before provision for income taxes		842			883			1,603			745			1,948			1,531			2,000
Provision for income taxes		(336	)		(384	)		(685	)		(347	)		(814	)		(640	)		(832	)
Net income	$	506		$	499		$	919		$	398		$	1,134		$	891		$	1,168
Net income per share – basic and diluted	$	0.17		$	0.17		$	0.31		$	0.13		$	0.38		$	0.30		$	0.39
Weighted average number of shares outstanding – basic and diluted		3,000,000			3,000,000			3,000,000			3,000,000			3,000,000			3,000,000			3,000,000

Pro forma information (in thousands and unaudited):

          The unaudited pro forma financial data set forth below is for informational purposes only and is not indicative of actual results that would have been achieved had the events described below occurred on the dates or for the periods indicated, nor is such unaudited pro forma financial data necessarily indicative of the results to be expected for the full year or any future period. The unaudited pro forma financial data does not purport to predict results of operations, cash flows or other data as of any future dates or for any future period. The pro forma adjustments are based on estimates and currently available information and assumptions that we believe are reasonable. A number of factors may affect our results. See “Risk Factors” and “Forward-Looking Statements.” The unaudited pro forma financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and notes appearing elsewhere in this prospectus.

Pro forma statement of operations data:

	Year Ended December 31, 2005			Nine months ended September 30, 2006
Net sales		$	81,275		$	68,017
Gross profit		$	10,315		$	9,674
Operating expenses		$	7,631		$	6,924
Operating income		$	2,684		$	2,750
Income before provision for income taxes		$	2,205		$	2,172
Net income		$	1,304		$	1,282
Net income per share – basic and diluted		$	0.43		$	0.43
Weighted average number of shares outstanding – basic and diluted			3,000,000			3,000,000

24

          Pro forma information reflects the following adjustments to our historical financial data:

• An increase in operating expenses of approximately $223,000 for the year ended December 31, 2005 and $188,000 for the nine months ended September 30, 2006. These increases reflect costs that were incurred by Zunicom on our behalf, including wages, approximately $138,000 for 2005 and $104,000 for the first nine months of 2006, related payroll taxes, approximately $16,000 for 2005 and $13,000 for the first nine months of 2006, and audit fees, approximately $69,000 for 2005 and $71,000 for the first nine months of 2006. The wages and related payroll taxes were paid to or in connection with four individuals who were employed by both Zunicom and us. As of the date of this prospectus, these four individuals are our full-time employees and the adjustment represents the actual salaries we will pay them after the date of this prospectus and are derived from the salaries historically incurred by Zunicom. The additional audit fee is based on an estimate provided by our independent accountants for their services. All of these costs are expected to have a continuing impact on our future operations. The monthly management fee that we paid to Zunicom was intended to reimburse Zunicom for these costs.

• A decrease in management fees of $480,000 for the year ended December 31, 2005 and $360,000 for the nine months ended September 30, 2006, reflecting all management fees paid or accrued to Zunicom during those periods. This fee was paid to Zunicom in lieu of separate allocations for the above mentioned costs. As of the date of this prospectus, the management fee will no longer be payable to Zunicom. The elimination of the management fee will have a continuing impact on our future operations.

• An increase in the provision for income taxes of approximately $87,000 for the year ended December 31, 2005 and $58,000 for the nine months ended September 30, 2006 attributable to the changes in general and administrative expenses described above.

Pro forma balance sheet data:

	September 30, 2006
	Actual		Adjustments			Pro forma
Current assets	$	31,234	$	(177	)	$	31,057
Working capital	$	3,926	$	3,388		$	7,314
Total assets	$	32,025	$	(177	)	$	31,848
Total liabilities	$	27,565	$	1,285		$	28,850
Shareholders’ equity	$	4,460	$	(1,462	)	$	2,998

          Pro forma information in the table above reflects (i) the elimination of a $177,000 current receivable due from AlphaNet, which will be assigned to Zunicom as partial payment of a current payable to Zunicom, (ii) forgiveness of approximately $530,000 of the payable to Zunicom, (iii) the conversion of $2.85 million of short-term indebtedness owed to Zunicom to a long-term liability as evidenced by a note payable and (iv) an estimated $2 million dividend (assuming an initial public offering price per share of $8.00) that will be declared immediately before this offering is effective. The exact amount of the dividend will be determined immediately before the date of this prospectus and will equal the difference between $10 million and the gross proceeds realized by Zunicom from the sale of our shares that it owns that are covered by this prospectus, or between $1 million and $3 million based on the anticipated range of $7-$9 per share.

	December 31, 2005
	Actual		Adjustments			Pro forma
Current assets	$	28,721	$	(121	)	$	28,600
Working capital	$	4,014	$	—		$	4,014
Total assets	$	29,252	$	(121	)	$	29,131
Total liabilities	$	24,707	$	—		$	24,707
Shareholders’ equity	$	4,256	$	—		$	4,256

          Pro forma information in the table above reflects the elimination of the $121,000 current receivable due from AlphaNet, which will be assigned to Zunicom as partial payment of a current payable to Zunicom.

25

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

General

          We are (i) a third-party logistics provider, specializing in supply chain management and value-added services and (ii) a leading supplier and distributor of portable power supply products, such as batteries, security system components and related products and accessories. Our principal product lines include:

• batteries of a wide variety of chemistries, battery chargers, and related accessories;

• portable battery-powered products, such as jump starters and 12-volt power accessories;

• security components, such as alarm panels, perimeter access controls, horns, sirens, speakers, transformers, and related installation components; and

• electro-magnetic devices, capacitors, relays and passive electronic components.

          We ensure that all the products that we sell, which are required to have safety approvals, are certified by the appropriate agency, such as UL, CUL, CSA, CE, and TUV.

          Our supply chain management services include inventory sourcing, procurement, warehousing, distribution and fulfillment. Our value-added services include custom battery pack assembly, custom kitting and packing, private labeling, product design and engineering, graphic design and used battery pick-up and disposal. These services enable our customers to operate more efficiently by providing them with cost savings through effective sourcing, reducing inventory maintenance levels, and streamlining distribution and order fulfillment. In addition, we also source and distribute batteries and portable power products under various manufacturers’ and private labels, as well as under our own proprietary brands, Universal Battery, Adventure Power^®, UB Scootin^®, Batteries & Beyond™, Starter-Up, Charge N’ Start™ and UNILOK™. We believe that we have one of the largest inventories of batteries in the United States and are one of the leading domestic distributors of sealed, or “maintenance-free,” lead-acid batteries.

          Our customers include OEMs, distributors, and retailers, both on-line and traditional. The products we manage and distribute are used in a diverse and growing range of industries, including automotive, consumer goods, electronics and appliances, marine and medical applications, computer and computer-related products, office and home office equipment, security and surveillance equipment, and telecommunications equipment and other portable communication devices. Our largest customer is Brinks, one of the largest installers of home security systems in the United States. We function as one of Brinks’ supply chain managers and inventory fulfillment providers in the United States and Canada, handling and delivering to its branches and authorized dealers many of the installation components and tooling required by their security system installers.

          Our business is a mixture of sales of both services and products but we operate as one business unit and financial performance is evaluated on a company-wide basis. Our original business was buying and selling batteries and other portable power units and related items. In 1997, we started selling batteries and related products to various residential security system companies. In 2002, we entered into an agreement with Brinks to provide Brinks with supply chain management and other value-added services including inventory procurement and sourcing, warehousing, packaging, assembly and shipping. That agreement was subsequently renewed in May 2004 for a new two-year term, which was extended until May 2007. We recently signed a new two-year agreement with Brinks that expires in November 2008. Like the previous agreements, the new agreement has an automatic extension and can be terminated by Brinks at any time after giving 120 days prior written notice.

          Under this agreement, we supply Brinks and its independent authorized dealers with many of the key components used in the installation of Brinks security systems, including batteries, alarm panels, speakers, sirens, transformers, key pads, and cabling. We purchase the required inventory, in some cases from Brinks-designated suppliers and in other cases from our own suppliers. Some of the products are assembled and packaged into kits. We ship these products and kits from our logistics centers to Brinks and independent Brinks authorized dealers. We then bill and collect either from Brinks or the dealers to whom we shipped the products. We charge Brinks for the cost of the components plus a fixed amount for shipping and handling. Brinks’ authorized dealers pay us cost

26

plus a fixed percentage of such costs. We bear the risk of loss with respect to the components until they are delivered to Brinks or to the independent Brinks authorized dealer who placed the order.

          Our primary logistics center is located in Carrollton, Texas, a suburb of Dallas. We also have regional logistics centers in Oklahoma City, Oklahoma, and Las Vegas, Nevada to support additional and varying customer needs. Our regional logistics center in Nevada also houses our “Batteries & Beyond” retail outlet, offering many of our branded consumer batteries, including cellular and cordless phone batteries. We intend to use a portion of the proceeds of this offering to establish new regional logistics centers and retail outlets and also to develop or purchase a comprehensive warehouse management system. We estimate that the total cost of establishing these centers is from $0.5 million to $1.0 million each, including leasehold acquisition costs, leasehold improvements, inventory purchases and personnel costs and that the cost of the warehouse management system and related hardware and software upgrades will exceed $1.0 million. Under our revolving credit agreement with Compass Bank, we are required to obtain its consent for all capital expenditures in excess of $100,000. As a result, our ability to establish a new logistics center and retail outlet or to develop or purchase a warehouse management system may depend on our ability to get Compass’ consent, which is in its discretion. If we fail to get Compass’ consent or its consent is delayed for any reason, we may lose an opportunity to expand our operations or we may not be able to enlarge our operating efficiency and remain competitive.

          Our cost of sales includes the cost of acquiring the goods we source as well as shipping costs. The cost of batteries and other electronic components fluctuates in response to the cost of lead and copper, the two basic raw materials used to produce these items. In recent years, prices for these two commodities have increased significantly. For example, in 1993 the price for lead was under $0.25 per pound and the price for copper was under $1.00 per pound. In comparison, in 2005 the prices were over $0.50 and $3.50, respectively. Shipping costs have also increased as a result of rising fuel costs. One of the ways that we manage the fluctuations in shipping costs is by using shipping brokers and consolidators. Wherever possible, these price increases are passed along the supply chain all the way to the consumer. In some instances that is not always possible. For example, if a large customer refuses to accept a price increase, we may have no choice but to absorb it, resulting in reduced margins. In addition, some of our customer agreements have “most favored nations” pricing clauses, so if we cannot pass along price increases to one customer, the customer with the pricing agreement would also be entitled to the lower pricing. We have not engaged in any “hedging” or other financial transactions or trading strategies to protect us against price increases in these raw materials and fuel.

          Once this offering is complete, we will no longer pay Zunicom a management fee and we will only pay dividends as and when declared by our board of directors.

          We expect our operating expenses will increase once we become a public company as a result of additional, auditing, legal, insurance, printing and other expenses related to being a public company. Most significantly, in 2007 we will undertake a review and assessment of operating systems and controls as mandated by Sarbanes-Oxley. We have been advised that the cost of this effort for a company of our size located in the Dallas, Texas metroplex area could range from $150,000 to $350,000. In addition, once the report is completed, we are required to obtain an “attestation” from our auditors as to the findings or conclusions in the report. Our auditors have advised us, that the cost of an attestation will range from $50,000 to $100,000. The attestation expense will probably be incurred in 2008. These additional costs will directly impact our net income in 2007 and 2008.

          We measure our operations using both financial and other metrics. The financial metrics include net sales, gross margins, operating expenses and income from continuing operations. Other key metrics include (i) net sales by product class, (ii) net sales by customer, (iii) daily shipments; (iv) cash flows and (v) inventory turn-over.

          One of our key competitive advantages is our large and extensive inventory. At December 31, 2005, we were carrying $19.1 million in inventory and at September 30, 2006 we were carrying $20.8 million in inventory. Of these amounts, $8.3 million and $9.9 million, respectively, represented inventory held to fulfill our obligations to Brinks. The remaining inventory consists of commonly sold products dedicated to our entire customer base. In addition, at any one time we carry over 2,200 SKUs, representing over 75 classes of products. As a result, we are able to satisfy most customer requirements promptly. Most orders can be delivered anywhere in the United States within 24 - 48 hours of receipt of a purchase order. Generally, we do not purchase products for inventory unless it is a commonly sold item, there is an outstanding customer order to be filled, a special purchase is available, or it is an initial stocking package in connection with a new line of products. As a result, we believe we have limited

27

our inventory obsolescence risk. In the year ended December 31, 2005 our inventory turned approximately 5.0 times. For 2006 we expect that our inventory will have fewer turns because we are carrying more inventory for Brinks.

          We offer our distribution customers a limited warranty for replacement of finished goods that do not function properly or that are defective in other ways. The most common types of warranty complaints are batteries that leak or batteries that do not provide the voltage they are intended to supply. Our written warranty is limited to the replacement of the product purchased and does not cover the product in which the battery is used. Our replacement rate has historically been insignificant, less than 0.25% of total sales, and is therefore recorded as a reduction of sales when the warranty expense is incurred. If we determine that a shipment of product has a manufacturing defect, we believe we have recourse with the manufacturer to recover the replacement costs incurred. We bear the cost of isolated or individual instances of defects. We have no other post-shipment obligations. We do not offer any type of post-sale servicing.

Critical Accounting Policies

          Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could differ from those estimates. We believe the following are the critical accounting policies which could have the most significant effect on our reported results and require the most difficult, subjective or complex judgments by management.

     Revenue Recognition

          We recognize revenues in accordance with SEC Staff Accounting Bulletin No. 104, “Revenue Recognition,” when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed and determinable, and collectability is reasonably assured. We recognize sales of finished goods at the time the customer takes title to the product.

          As a distributor, we purchase both finished goods and components from domestic and international suppliers. We add value to products and components by packaging them in customer specified “kits” or tailor made units that are convenient for the customer to order and ship. Additionally, we have several customers that require specific battery solutions for inclusion in their own products. We obtain the battery and necessary components and configure a new finished good unit based upon customer specifications. We refer to this process as a value-added service.

          We sell products to several customers in bulk quantities. We obtain the order from the customer and arrange for the delivery of the product directly from the vendor to the customer to reduce freight costs and wear and tear on the product from excessive handling. We refer to these transactions as “drop shipments” because the product is shipped directly from our vendor to our customer. We also have an inventory fulfillment agreement with Brinks. We purchase, handle, assemble and deliver installation components and tooling directly to Brinks and to independent Brinks authorized dealers. We recognize revenue at the time the customer takes title to the product. We have evaluated the criteria outlined in Emerging Issues Task Force 99-19, “Reporting Revenue Gross as Principal versus Net as an Agent,” in determining whether it is appropriate under accounting principles generally accepted in the United States of America to record the gross amount of revenues and cost of revenues. We record gross revenues because, among other things, we (i) are the primary obligor in these transactions, (ii) bear the general and physical loss inventory risk, (iii) have reasonable latitude in establishing prices, (iv) bear credit risk and (v) in most cases have the right to select suppliers.

     Income Taxes

          We utilize the assets and liability approach to accounting and reporting for income taxes. Deferred income tax asset and liabilities are computed quarterly for differences between the financial and tax bases of assets and liabilities are computed annually for differences between the financial and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when

28

necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Historically, we have not paid income taxes because we file a consolidated return and have benefited from the use of the consolidated net operating loss. A tax payable for use of these losses in prior periods has been recorded as a liability due to Zunicom.

   Employee Stock Options

          In December 2004, the Financial Accounting Standards Board revised Statement of Financial Accounting Standards No. 123 (“FAS 123R”), Share-Based Payment, which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. On April 14, 2005, the U.S. Securities and Exchange Commission adopted a new rule amending the effective dates for FAS 123R. In accordance with the new rule, the accounting provisions of FAS 123R became effective for us on January 1, 2006.

          Under FAS 123R, share-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period. As of September 30, 2006, we have no outstanding stock options; however, upon the completion of this offering, stock options will be issued to some of our employees and will impact our operations in future periods.

Results of Operations

          The table below sets forth our operational data as a percentage of sales for the years ended December 31, 2003, 2004, and 2005, and for the nine months ended September 30, 2005 and 2006.

	Percentage of Revenue
	Years Ended December 31,									Nine months ended September 30,
	2003			2004			2005			2005			2006
	(audited)									(unaudited)
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		84.5			86.9			87.3			87.0			85.8
Gross profit margin		15.5			13.1			12.7			13.0			14.2
Operating expenses		12.3			11.3			9.7			9.8			10.4
Operating income		3.2			1.8			3.0			3.2			3.8
Other expenses		(0.5	)		(0.7	)		(0.6	)		(0.6	)		(0.9	)
Income before provision for income taxes		2.7			1.1			2.4			2.5			2.9
Provision for income taxes		(1.2	)		(0.5	)		(1.0	)		(1.0	)		(1.2	)
Net income		1.5			0.6			1.4			1.5			1.7

Comparison of nine months ended September 30, 2006 and 2005

          Net sales. Net sales for the nine month period ended September 30, 2006 were $68.0 million compared to sales of $60.0 million for the similar period in 2005, an increase of $8.0 million, or 13.4%. In the 2006 period net sales to Brinks was $40.4 million compared to $37.9 million in the 2005 period. The overall increase in net sales was attributable to increased sales of batteries and battery-related and battery-powered products, which increased by $5.7 million from the comparable 2005 period due to price increases, sales to new customers and increased sales to existing customers. We anticipate continued growth in net sales of batteries and battery powered product lines and new products.

          Cost of sales. Cost of sales is comprised of the base product cost, freight, duty and commissions where applicable. Cost of sales totaled $58.3 million for the nine month period ended September 30, 2006, compared to $52.2 million in the comparable 2005 period, an increase of $6.2 million, or 11.8%. Cost of sales as a percentage of sales decreased to 85.8% in the 2006 period from 87.0% for the comparable 2005 period. This decrease was attributable to higher margins on power products and batteries but offset by the lower margins earned on third-party logistics services for Brinks. Our gross margin for the nine month period ended September 30, 2006 was approximately 14.2% compared to gross margins of 13.0% for the comparable period in 2005. We will continue to

29

monitor customer and vendor pricing due to raw material and shipping cost increases, which are expected to continue in the near future.

          Operating expenses. Selling, general and administrative expenses were $7.1 million for the nine month period ending September 30, 2006, compared to $5.9 million in the comparable 2005 period, an increase of $1.2 million, or 20.3%. The increase in selling, general and administrative expenses was attributable to increases in salaries, employee bonuses, and payroll taxes of $421,000 associated with our improved performance. The balance of the increase was attributable to additional expenses incurred in connection with sales and marketing activities and increases in general operating expenses such as rent, insurance, computer services and supplies. Also, we incurred additional expenses in connection with closing our Kansas branch office in April 2006 and opening a new regional logistics center in Las Vegas, Nevada, in June 2006.

          For the nine month period ending September 30, 2006, we incurred $115,215 in depreciation and amortization expense compared to $101,641 in the 2005 period.

          Interest expense. Our interest expense totaled $596,000 for the nine month period ended September 30, 2006 compared to $347,000 for the comparable 2005 period, an increase of $250,000, or 72.0%. The increase is due to increased borrowings at a higher interest rate than the similar period. For the nine months ended September 30, 2006 the average outstanding loan balance was $9.3 million, compared to $6.6 million for the nine months ended September 30, 2005. We expect interest expense to continue to increase for the balance of 2006 as a result of rising interest rates and the higher level of debt on our working capital line.

Comparison of years ended December 31, 2005 and 2004

          Net sales. We had net sales of $81.3 million in 2005 compared to net sales of $67.2 million in 2004, an increase of $14.1 million, or 21.0%. This increase was primarily attributable to an $11.7 million increase in sales to Brinks, our largest customer. In addition, sales of batteries and battery-related and battery-powered products increased by $2.4 million over the previous year due to new customers, increased volume on existing accounts, and diversification into new product lines.

          Cost of sales. Cost of sales totaled $71.0 million in 2005, compared to $58.4 million in 2004. Cost of sales, as a percentage of sales, was 87.3% and 86.9%, respectively, for 2005 and 2004, as a result of increases in the cost of lead and copper and shipping costs.

          Operating expenses. Selling, general and administrative expenses totaled $7.9 million in 2005, compared to $7.6 million in 2004, an increase of $320,000, or 4.2%. This increase was attributable to increases in salary and bonus expense of $646,000 associated with our improved performance, insurance of $168,000, trade shows, travel and entertainment of $100,000, and contract labor of $84,000. Additionally, we made donations of battery products and cash of $44,000, for Hurricane Katrina charities and other organizations. These increases were offset by reductions in rent, utilities and property taxes of $204,000 due to the 2004 consolidation of facilities, legal costs of $150,000, bad debts of $126,000, sales representative commissions of $86,000, bank charges of $78,000, packaging design costs of $70,000 and consulting fees of $69,000.

          For the year ended December 31, 2005, we incurred $138,000 in depreciation and amortization expense compared to $131,000 for 2004, a decrease of $7,000, or 5.3%. The increase in depreciation and amortization expenses is primarily related to an increased average property and equipment balance due to continued purchases of property and equipment.

          Interest expense. Interest expense increased to $490,000 in 2005, compared to $446,000 in 2004, an increase of $44,000, or 9.9%. The increase is attributable to increased borrowings on our line of credit. The average outstanding loan balance was $7.8 million for 2005 compared to $7.4 million for 2004.

Comparison of year ended December 31, 2004 and 2003

          Net sales. We had net sales of $67.2 million in 2004 compared to $58.7 million in 2003, an increase of $8.5 million, or 14.5%. This increase was primarily attributable to an $8.2 million increase in sales to Brinks. In addition, sales of batteries and battery-related and battery-powered products increased by approximately $4.0 million, which offset the decline in drop shipment sales of $3.4 million in 2004.

30

          Cost of sales. Cost of sales totaled $58.4 million in 2004, compared to $49.6 million in 2003. The cost of sales, as a percentage of sales was 86.9% and 84.5%, respectively, for 2004 and 2003. Gross margin for 2004 was 13.1%, compared to 15.5% in 2003. This decrease was attributable to increases in our cost of goods resulting from increases in the cost of lead, and from increases in shipping costs. We did not anticipate these increases and failed to build them into our prices, resulting in lower gross margins in 2004. In addition, when we did recognize them, we made a strategic decision to maintain existing prices so as not to jeopardize existing customer relationships.

          Operating expenses. Selling, general and administrative expenses were $7.6 million in 2004, compared to $7.2 million in 2003, an increase of $370,000, or 5.2%. This increase was attributable to increases in consulting and contract labor fees of $180,000. Additionally, cost in catalogs and new package design increased by $132,000, commissions to sales representatives increased by $127,000, rent by $116,000, bank charges by $109,000, and property insurance by $65,000. These increases are attributed to the continued growth and marketing of our products and sales growth to Brinks. These increases were partially offset by the decrease in personnel costs of $348,000 and bad debt expense of $102,000, compared to the same period in 2003. The decrease in personnel costs was due to the fact that we did not achieve our targeted net income amount and therefore did not pay any bonuses for 2004.

          For the year ended December 31, 2004, we incurred $131,000 in depreciation and amortization expense compared to $110,000 for 2003, an increase of $21,000, or 19.1%. The increases in depreciation and amortization expense was primarily related to an increased average property and equipment balance due to continued purchases of property and equipment.

          Interest expense. Interest expense increased to $446,000 in 2004, compared to $311,000 in 2003, an increase of $135,000 or 43.4%. The increase was attributable to increased borrowings on our line of credit. The average outstanding loan balance for 2004 was $7.4 million compared to $5.0 million for 2003.

Liquidity and Capital Resources

          From December 31, 2003 through September 30, 2006, we have funded our operations primarily through cash flow from operations and borrowings under our line of credit. The balance outstanding under our line of credit increases as our sales increase because of additional inventory purchases and increases in our accounts receivable balances. We believe that our cash balances, cash generated from operations and the net proceeds of this offering as well as continued borrowings under our line of credit will be sufficient to meet our cash requirements for the next 12 months.

     Net Cash Provided By (Used In) Operating Activities

          Net cash provided by operating activities was $1.05 million in 2003 and $395,000 in 2005. The decrease in cash provided by operating activities was primarily a result of our relationship with Brinks. 2003 was the first full year of our relationship with Brinks and in 2005 our Brinks sales volume increased significantly for which we made significant purchases of inventory. In addition, our non-Brinks sales of batteries and related products grew significantly from 2003 through 2005. The increase in sales resulted in additional inventory purchases and higher accounts payable balances. Our increased sales have resulted in larger trade accounts receivable balances over the past several years. However, at the same time the credit quality of our customer base has improved as our provision for bad debts has remained relatively flat over the same period.

          Net cash used in operating activities for 2004 was approximately $3.5 million and was primarily the result of absorbing increases in battery prices from our suppliers resulting from increases in lead prices. We were unable to pass these price increases along to our customers until late in the year and, therefore, our net income for 2004 was much lower in comparison to 2003 and 2005. In addition, as sales increased, our inventory requirements increased and accounts receivable balances also increased.

          Net cash used in operating activities for the nine month period ended September 30, 2006 was approximately $1.4 million and was primarily the result of significant amounts of inventory purchases and supplier payments made during the period.

31

     Net Cash Used in Investing Activities

          Net cash used in investing activities was $37,000 in 2003, $114,000 in 2004, $186,000 in 2005, and $84,000 for the nine months ended September 30, 2006. All cash used in investing activities related to capital expenditures. Historically, we have not made major asset acquisitions.

     Net Cash Provided By (Used In) Financing Activities

          Fluctuations of cash provided by and used in financing activities is primarily due to the timing differences relating to when inventory is received and when payments to suppliers are due, which causes the balance outstanding under our line of credit to fluctuate. Other factors influencing cash provided by or used in financing activities include dividends paid to Zunicom and payment on capital lease obligations. Payment of dividends to Zunicom fluctuates depending on our financial and operating performance. Net cash used in financing activities was $868,000 in 2003 and $169,000 in 2005. Net cash provided by financing activities was $3.2 million in 2004 and $1.5 million for the nine months ended September 30, 2006.

     Capital Resources

          We finance our operations through cash flow from operations as well as proceeds of a credit facility. Our current line of credit agreement with the lender provides for interest payable monthly at LIBOR Index rate plus 2.5% (7.82% at September 30, 2006) and matures May 5, 2007. On July 25, 2005, we entered into an agreement with the lender fixing the interest rate at 6.99% on the first $6.0 million of borrowings and LIBOR Index Rate plus 2.5% on the balance of the outstanding borrowings under our line of credit. The line of credit is due on demand and is secured by our accounts receivable, inventories, and equipment. The line’s availability is based on a borrowing formula, which allows for borrowings equal to 85% of Borrower’s Eligible Accounts Receivable (as defined in the Security Agreement) and 50% of Eligible Inventory (as defined in the Security Agreement) not to exceed $5 million. On March 23, 2006, we entered into a renewal and modification agreement on the line of credit agreement. The advance formula referenced in the Security Agreement as the “Borrowing Base” was modified as follows: 85.0% of the outstanding value of “Borrower’s Eligible Accounts Receivable” plus 50.0% of the value of “Borrower’s Eligible Inventory”; provided, however that these sub-limits that are based on Borrower’s Eligible Inventory may not exceed 85.0% of the outstanding value of “Borrower’s Eligible Accounts Receivable” (as defined in the Security Agreement) at any one time outstanding.

          On April 18, 2006, we entered into the second renewal and modification agreement, which increased our line of credit from $12.0 million to $16.0 million. The advance formula referenced in the Security Agreement as the “Borrowing Base” was modified as follows: 85%) of the outstanding value of “Borrower’s Eligible Accounts Receivable” 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 may not exceed the lesser of (a) $8.5 million or (b) an amount equal to the product of (i) one and one-half (1.5), multiplied by (ii) 85.0% of the outstanding value of Borrower’s Eligible Accounts Receivable at any one time outstanding.

          Under our revolving credit loan agreement, we are required to maintain a variety of financial and other covenants. The financial covenants include the following:

• Financial Statements. We have to submit to the lender unaudited monthly financial statements including a balance sheet, an income statement, and a compliance certificate and audited fiscal year-end financial statements, including a balance sheet, an income statement, a reconciliation of stockholders’ equity, and a statement of cash flows, certified by an independent certified public accountant. In addition, we must provide the lender with Zunicom’s annual financial statements and our annual budget, in a monthly format, consisting of a balance sheet and related statements of income, retained earnings, and cash flow.

• Tangible Net Worth. We have to maintain a minimum Tangible Net Worth of not less than $5.1 million. Tangible Net Worth is tested by the lender on a monthly basis and is calculated by total shareholders’ equity less notes and other receivables, related party receivables, and intangibles.

• Total Debt to Tangible Net Worth Ratio. The ratio of “Total Debt” to Tangible Net Worth, measured on a monthly basis, may not exceed (a) 3.50 until December 30, 2006, and (b) 3.25 beginning December 31, 2006. Total Debt is calculated by Total Liabilities divided by Tangible Net Worth.

32

•	Fixed Charge Coverage Ratio (“FCCR”). We have to maintain a minimum FCCR of 1.50 to 1.00, which ratio is measured on a rolling twelve-month basis. Our FCCR is defined as the quotient of (i) the sum of (a) (1) our earnings before interest, tax, depreciation and amortization expenses (EBITDA), plus (2) our rent expenses paid, plus (3) our bonus that is accrued but not paid for 2004 only, plus (4) our non-recurring expenses of $100,000.00 for calendar year 2004 only, less (b) the sum of (1) capital expenditures not financed, plus (2) our dividends paid, plus (3) our cash taxes and distributions to Zunicom or other related parties; divided by (ii) the sum of (a) our regularly scheduled payments of principal paid, plus (b) our interest expenses paid, plus (c) our rent expenses paid, plus (d) our capital lease obligations and dividends paid or other distributions paid to our stockholders during the applicable measuring period.
•	Interest Coverage Ratio (“ICR”). We have to maintain a minimum ICR of 2.00 to 1.00, which ratio is measured on a rolling twelve-month basis. ICR is defined as the quotient of (a) our EBIT, divided by (b) our interest expenses paid during the applicable measuring period.
•	Capital Expenditures. On a consolidated basis, we are not permitted to make aggregate capital expenditures or contracts for capital expenditures together aggregating in excess of $100,000 except expenditures for equipment financed by purchase money security interest liens.
•	Dividends. We are not permitted to pay, make or declare any dividends, distributions, or other similar payments, or make any other advances of any nature, to our directors, managers, officers, employees, owners, parent, members, affiliates, subsidiaries or other related persons or entities, without our lender’s prior written consent. However, we may pay a monthly management fee to Zunicom of up to $40,000 per month and quarterly dividends equal to 50% of our net income for any fiscal quarter for cash, taxes, or other Zunicom expenses, provided that (a) no default exists as of the date any such payment is to be made or such payment would cause or result in a default, (b) there is at least $500,000 of borrowing availability under the credit line after any such payment, (c) no more than one dividend is paid per our fiscal quarter, and (d) any such dividend is paid thirty (30) days after the bank’s receipt of our financial statements for the end of our fiscal quarter. We are not permitted to redeem, purchase or in any manner acquire any of our outstanding shares without the bank’s prior written consent.
The other covenants include:
•	Loans to Related Parties and Affiliates. We are not permitted to make, extend or allow any outstanding loans or advances to or investments in our affiliates, parent, subsidiaries, owners, directors, employees, members, officers, managers or other related persons or entities that cause or would cause a violation or a further violation of any of the covenants. We do not currently have any such outstanding loans.
•	Liens. We cannot create or permit the creation of any lien upon any of the collateral except for permitted liens and the security interests granted to the lender.
•	Borrowings; Permitted Indebtedness. Except for borrowings under the credit facility, we cannot borrow any money other than (i) subordinated debt (but only to the extent such borrowings and loans shall be fully subordinated hereto), without lender’s prior written consent, or (ii) capital lease purchases not to exceed $50,000.00 in the aggregate at any given time, without lender’s prior written consent.
•	Acquiring Assets, Etc. of Other Entities. We can only purchase or acquire, directly or indirectly, any shares of stock, any substantial part of the assets of, any interest in, evidences of indebtedness, loans or other securities of any person, corporation or other entity, with lender’s written consent.
•	Dissolution, Mergers, Change in Nature. We are not permitted to (i) liquidate, discontinue or materially reduce our normal operations with intention to liquidate; (ii) cause, allow or suffer to occur (a) a merger or consolidation of or involving us into any corporation, partnership, or other entity, or (b) the sale, lease, transfer or other disposal of all or any substantial part of our assets, or any of our receivables; (iii) acquire any corporation, partnership or other entity (or any interest therein), whether by stock or asset purchase or acquisition or otherwise, without the prior written consent of the lender; (iv) enter into any lease that could be characterized as a capitalized lease; or (v) cause, allow, or suffer to occur any change in the ownership, nature, control of our corporate structure without the prior written consent of lender.

33

• Subordinated Debt. We are not permitted to make any payment upon any subordinated debt described in any subordination agreement delivered to lender.

• Insurance. We have to (i) maintain insurance in form, amount and substance acceptable to lender, including, extended multi-peril hazard, worker’s compensation, general liability insurance and insurance on our property, and all facets of our businesses; and (ii) name lender as additional insured and a lender loss payee as to all insurance covering the collateral, which, essentially, is all of our assets. All insurance proceeds, payments and other amounts paid to or received by lender under or in connection with any and all such policies may be retained by lender in whole or part as additional collateral.

• Compliance with Laws. We must immediately notify the bank of any and all actual, alleged or asserted violations of any laws, ordinances, rules or regulations.

• Notification of Defaults, Suits, Etc. We must promptly notify lender in writing of (i) any default or event of default under the credit agreement, (ii) any material change in our financial condition and/or prospects and/or (iii) any action, suit or proceeding at law or in equity by or before any governmental instrumentality or other agency.

          At September 30, 2006, $11.6 million was outstanding under the line of credit and $2.8 million remained available for borrowings under the line of credit based on the borrowing formula. We are not currently in default under any of the covenants.

          Since 1999, we have been paying Zunicom a management fee and, from time-to-time, based on cash availability and Zunicom’s working capital needs, dividends. Through September 30, 2006, our payments to Zunicom have totaled approximately $6.2 million.

          At September 30, 2006, we had a payable to Zunicom, all of which was reflected as a current liability, of approximately $3.7 million, of which $3.4 million reflected the tax benefit to us of Zunicom’s consolidated net operating losses and the balance reflected declared but unpaid dividends and other miscellaneous expenses. The dividend was paid in November 2006. In connection with this offering, Zunicom has agreed to forgive approximately $530,000 of this amount and to convert $2.85 million into a long-term liability that is evidenced by a note bearing interest at 6% per annum and maturing 66 months from the date of issuance (the date of this prospectus). Interest on the unpaid principal amount of this note is payable quarterly, in arrears, and the principal amount will be repaid in 16 equal quarterly installments of $178,125 beginning 21 months after the date of issuance.

          In addition, immediately before the effective date of this offering, we will declare a dividend, payable to Zunicom. The exact amount of the dividend will be determined immediately before the date of this prospectus and will equal the difference between $10 million and the gross proceeds realized by Zunicom from the sale of our shares that it owns that are covered by this prospectus, or between $1 million and $3 million based on the anticipated range of $7-$9 per share. The dividend will be evidenced by a note payable, which will have a maturity date 66 months from the date of issuance (the date of this prospectus) and which will bear interest at the rate of 6% per annum. Interest on the unpaid principal amount of this note is payable quarterly, in arrears, and the principal amount will be repaid to the extent of the net proceeds from the sale of shares covered by the over-allotment option and the balance in 16 equal quarterly installments beginning 21 months after the date of issuance.

          At September 30, 2006, we did not have any material commitments for capital expenditures and we do not expect any material changes in the need for capital expenditures. We have no off-balance sheet financing arrangements.

     Contractual Obligations

          The table below sets forth our contractual obligations at September 30, 2006.

	Payment Due By Period
	Total		Less Than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Capital Lease Obligations	$	30,690	$	20,963	$	9,727	$	—	$	—
Operating Leases	$	1,274,227	$	400,844	$	873,383	$	—	$	—
Total	$	1,304,917	$	421,807	$	883,110	$	—	$	—

34

Quantitative and Qualitative Disclosures About Market Risk

     Foreign Currency Exchange

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

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

     Interest Rates

          Our exposure to market rate risk for changes in interest rates is related primarily to our line of credit. A portion of the outstanding borrowings on the line of credit bears an interest rate of LIBOR plus 2.5%. A change in the LIBOR rate would have a material effect on interest expense.

Seasonality and Cyclicality

          Historically, our operating results have been subject to seasonal trends when measured on a quarterly basis. Our first and fourth fiscal quarters are traditionally weaker compared to the second and third fiscal quarters. This trend depends on numerous factors including the markets in which we operate, holiday seasons, climate and general economic conditions. Many of the products that we distribute are tied closely to consumer demands, which may be volatile and which are always impacted by general economic conditions. Our ability to predict these trends or estimate their impact on our business is limited. As a result, we cannot assure that these historical patterns will continue in future periods.

          The electronic components and the electronics distribution industries have historically been cyclical in nature with significant volatility within the cycles. We believe this cyclicality and volatility will continue.

35

BUSINESS

General

          We are (i) a third-party logistics company specializing in supply chain management and value-added services and (ii) a leading supplier and distributor of portable power supply products, such as batteries, security system components and related products and accessories. Our principal product lines include:

• batteries of a wide variety of chemistries, battery chargers and related accessories;

• portable battery-powered products, such as jump starters and 12-volt power accessories;

• security system components, such as alarm panels, perimeter access controls, horns, sirens, speakers, transformers, cabling and other components; and

• electro-magnetic devices, capacitors, relays and passive electronic components.

          Our third-party logistics services, principally supply chain management solutions and other value-added services, are designed to help customers optimize performance by allowing them to outsource supply chain management functions. Our supply chain management services include inventory sourcing and procurement, warehousing and fulfillment. Our value-added services include custom battery pack assembly, custom kitting and packing, private labeling, component design and engineering, graphic design, and sales and marketing. We also distribute batteries and portable power products under various manufacturers’ and private labels, as well as under our own proprietary brands. We are one of the leading domestic distributors of sealed, or “maintenance-free,” lead acid batteries. Our customers include OEMs, distributors and both online and traditional retailers. The products we source, manage and distribute are used in a diverse and growing range of industries, including automotive, consumer goods, electronics and appliances, marine and medical instrumentation, computer and computer-related products, office and home office equipment, security and surveillance equipment, and telecommunications equipment and other portable communication devices.

          We believe that the demand for third-party logistics services in general, and supply chain management solutions and value-added services in particular, is growing, particularly in the electronics industry. In general, businesses are increasingly focused on identifying ways to more efficiently manage their supply chain, an operational necessity as products are sourced and distributed globally and a financial requirement as organizations have discovered the fiscal benefits of streamlining their logistics processes, providing an increased demand and opportunity for organizations providing logistics services in general and supply chain management services in particular. Businesses increasingly strive to minimize inventory levels, reduce order and cash-to-cash cycle lengths, perform manufacturing and assembly operations in low-cost locations and distribute their products globally. Furthermore, businesses increasingly cite an efficient supply chain as a critical element to improve financial performance. To remain competitive, successful businesses need to not only achieve success in the core competencies, they must also execute quickly and accurately.

          To accomplish these goals, businesses are increasingly turning to organizations that provide a broad array of logistics services, including supply chain management solutions. The demand for these solutions has grown as businesses continue to outsource non-core competencies, globally source goods and materials, and focus on managing the overall cost of their supply chain. These trends have been further facilitated by the rapid growth of technology, including the growth of the Internet and the World Wide Web as an information tool and electronic interfaces between systems of service providers and their customers.

          The demand for electronic equipment and components is impacted by general economic conditions, technological developments, changes in consumer demand and preferences, the cost of lead and copper, the two principal raw materials used to manufacture electronic components and fuel costs, which impacts both manufacturing and shipping. We believe that technological change within the electronics industry drives growth as new product introductions accelerate sales and provide us with new opportunities. However, we further believe that our products are not affected by rapidly changing technology since they represent basic elements and portable power supplies common to a wide variety of existing electronic circuit designs. At the same time, we cannot assure you that advances and changes in technology, manufacturing processes, and other factors will not affect the market for our products. We do however continue to stay abreast of technological advances and changes in the electronics and portable power supply market.

36

Industry Background

          The electronics industry covers an array of products and components, which includes semiconductors and passive/electromechanical products and systems, computer components, portable power supplies such as batteries and related products. The electronics industry is one of the largest industries in the United States and is growing. According to the Freedonia Group, a leading international market research firm, the global market for batteries, non-rechargeable as well as rechargeable, is estimated at $52.6 billion in 2005 and is projected to increase 7.0% annually through 2010 to $74 billion. According to a recent article in the New York Times, portable rechargeable batteries are expected to be a $6.2 billion market this year and more than one billion batteries will be manufactured by some of the largest electronics companies in the world such as Sony, Sanyo, Matsushita and Samsung. We believe that the growth of the electronics industry has been driven in part by increased demand for new products incorporating sophisticated electronic components, such as cellular phones, laptop computers, handheld and PDA devices, security and surveillance equipment, a variety of consumer products and appliances and many other wireless products as well as increased utilization of electronic components in a wide range of industrial, automotive and military products. These products all require portable battery power to function in today’s market where consumers demand productivity, portability and mobility.

          Supply chain managers have become an integral part of the electronics industry. OEMs and many small contract electronic manufacturers that use electronic components choose to outsource their procurement, inventory and materials management processes to third parties in order to concentrate their resources, including management, personnel costs and capital investment, on their core competencies, which include product development and sales and marketing. Many large distribution companies not only fill these procurement and materials management roles but further serve as a single supply source for original equipment manufacturers and contract electronic manufacturers and retailers, offering a much broader line of products, rapid or scheduled deliveries, incremental quality control measures and more support and supply chain management services than individual electronic component manufacturers. We believe that original equipment manufacturers and many smaller contract electronic manufacturers and retailers will increase their dependence on distributors for these types of logistics and supply chain management services and will continue to demand greater service and to increase quality requirements.

          We believe that the third-party logistics industry in general will continue to grow because of the following factors:

• Outsourcing non-core activities. Businesses are increasingly relying on third-party logistics providers for “non-core” activities, such as sourcing and procurement, warehousing, assembling, “kitting,” shipping and distribution, so as to focus on their core competencies. We take over the tedious tasks of sourcing and storing inventory, taking and filling orders and shipping and delivering to the end customer.

• Globalization of trade. As barriers to international trade are reduced or eliminated, businesses are increasingly sourcing their parts, supplies and raw materials from the most competitive suppliers throughout the world. Businesses often find themselves getting involved in logistical matters which they are unfamiliar with and often are faced with unforeseen added overheads and other logistic costs, which take away from their competitive edge and bottom-line income. We believe with continued globalization businesses will increasingly turn to and rely on third-party logistics providers for all their sourcing, warehousing, inventory management, and distribution needs. We are able to offer our services at competitive rates due to our industry expertise and ability to consolidate products cost-effectively for our customers.

• Increased competition. Increasing competition means businesses have to operate more efficiently. Third party logistics providers allow businesses to reduce their costs by transferring overhead. In addition, because they buy in greater quantities, third party logistics providers can usually get better pricing from suppliers, which they can then pass along to their customers.

• Increased reliance on technology. Advances in technology are placing a premium on decreased transaction time and increased business-to-business activity. Businesses recognize the benefits of being able to transact commerce electronically.

37

Our Products and Services

          While we are both a logistics services provider and a distributor, the products we handle in both cases are principally the following:

•	Batteries, battery chargers and related accessories. We are one of the leading domestic distributors of sealed, or “maintenance-free,” lead acid (“SLA”), absorbent glass mat and gel batteries, all of which have been designated as non-hazardous by the U.S. Department of Transportation. We maintain a broad inventory of various sizes of SLA batteries in our brands and private labeled to sell to retailers and distributors for consumer and industrial applications, and to OEMs for use in the manufacture and sale of technology products, such as wheelchairs, uninterruptible power supply (UPS) systems and security equipment. We also stock and distribute a broad range of branded and private-labeled batteries including nickel-cadmium, lithium, nickel metal hydride, alkaline and carbon-zinc batteries, which are used primarily in consumer electronic products. Our brands include the names Universal Battery, Universal, Adventure Power®, Starter-Up, UB Scootin®, Charge N’ Start™ and UNILOK™. We currently private label our products for many large customers such as Home Depot Supply, RadioShack, Bass Pro, Cabela’s and others. We also stock components used in custom battery pack assembly. Finally, we are also an authorized Panasonic modification center that builds custom-designed battery packs comprised of Panasonic batteries for customers. We continue to develop new battery sizes for varying applications depending on customer and market needs.
	We have an expanding line of power supply inverters, battery chargers and maintainers for various applications such as automotive, marine, hunting, motorcycle and medical scooters.
•	Portable power products, such as jump-starters, 12-volt power accessories and other battery-powered tools and accessories. Our line of jump-starters, called Starter-Up™ and Starter-Up Marine™, are portable sources of 12-volt DC power used primarily as emergency starting power sources on failed automobile and marine batteries. These jump-starters may be used to power many accessories including cellular phones, laptops and radios. Our jump-starters are sold to retailers such as RadioShack, Bass Pro Shop and Cabela’s. We have also added our own expanding 12-volt DC accessory line which includes electric auto jacks, impact wrenches, handheld vacuums, cordless air compressors, warmers/coolers, spotlights, electric mugs and others that plug into cigarette lighter sockets or any 12-volt DC power source.
•	Security products, such as perimeter access controls, horns, sirens, speakers, transformers and related installation components. As a result of our relationship with Brinks, we carry a broad line of residential and commercial security products including alarm panels, perimeter access controls, transformers, sirens, horns, cabling and other related products.
•	Electro-magnetic devices, capacitors, relays and passive electronic components. We stock and distribute electronic components, such as resistors carbon or metal film, capacitors of varying types and relays for use in the manufacture, repair, and modification of electronic equipment.

          We continue to actively review sources for new and innovative products to add to our spectrum of product offerings.

          Our logistics services include the following:

• Inventory sourcing and procurement. As a result of our relationship with manufacturers in the Pacific Rim, we believe we can effectively source products for our customers and at the same time help lower their costs. We see this as a competitive advantage that will help us secure long-term customer relationships. In order to accommodate the needs of our customers, we can have the manufacturer ship directly to them. Alternatively, we can purchase and stock inventory for a customer in our warehouse according to their inventory needs and deliver to its customers as required. In this situation, we own the inventory unlike a traditional logistics and fulfillment provider that merely warehouses and distributes the products while leaving the ownership of the inventory to the customer. We believe that our ability to purchase and stock products for our customers is a competitive advantage that helps our customers manage their cash flows.

38

• Warehousing and distribution. We can take delivery of inventory items either for our own account or for the account of a customer, and ship out of one of our distribution centers. Our primary distribution center is located in Carrollton, Texas, a suburb of Dallas, which is a designated Foreign Trade Zone. We also benefit from Carrollton’s Triple Freeport Exemption from local tax authorities on certain inventory brought into Carrollton and then reshipped out of Texas within a specified period. This prime location allows easy access to national and international markets, and enables us to facilitate efficient, quick delivery and fulfillment of products nationwide. We also have regional logistics centers in Oklahoma City, Oklahoma, and Las Vegas, Nevada, which provides another distribution point to support additional and varying customer needs.

• Engineering design assistance, custom assembly and kitting. We offer engineering design assistance services for product lines, such as battery assembly systems, security and battery powered products as well as custom battery pack assembly and kitting. As an example, we have the ability to design and assemble custom battery packs consisting of assembled groups of batteries combined electrically into a single unit. These battery packs are typically used for cell phones, cordless phones, door lock and flashlight stick applications. For customers that require specific battery solutions for inclusion in their own products, we obtain the battery and necessary components and configure a new finished good unit based upon the customer’s specifications. We have specialized equipment such as electric welders, sonic welders, computer-aided design programs, computer-driven battery analyzers, battery chargers, heat-shrink ovens and strip-chart recorders to support custom assembly, design and engineering needs. In addition to providing the services necessary to produce battery packs, we supply materials such as wiring, connectors, and casings. Completed battery packs are assembled to order in nearly all instances. We add value to products and components by packaging them in customer specified kits or tailor-made units that are convenient for the customer to order. We may purchase, in bulk quantities, batteries, wiring harnesses, control panels and similar items necessary to install a residential security system. Each security system installation may require only one or two of the items purchased in bulk by us. As a value added service we will pick the small quantities of components from the bulk supply and repackage them into a single shippable unit for the convenience of our customer. We then market and sell the single shippable unit as a complete product to its customer. We provide this service to a number of our customers including Brinks.

• Graphic design and marketing. We offer branding, packaging design and marketing services to assist customers in bringing their product from development to finished product. In some instances, we will help promote and sell the finished product through our sales and marketing department.

• Disposal. As an additional value-added service to our customers, and in ensuring that we contribute to environmental conservation, we help coordinate pick up of all their used or “spent” sealed lead acid batteries with EPA authorized haulers who will then deliver them to EPA authorized smelters.

Growth Strategy

          Our objective is to become a leading provider of third-party logistics services, particularly supply chain management solutions, and the leading supplier and distributor of portable power supply products, security system components and other products. Our long-term growth strategy includes the following:

• Expand our logistics and value-added services offerings. As part of our overall growth strategy, we are seeking to replicate our Brinks model and have begun marketing our logistics and supply chain management capabilities. We believe that one of the most efficient ways to attract new customers and expand relationships with existing customers is to expand our logistics service. To date, our focus has been on developing supply chain management services. With our logistics and supply chain expertise, which includes sourcing, warehousing, shipping, kitting and distribution, and our array of value-added services, we are identifying and aggressively pursuing new markets and new customers who are not necessarily within the scope of portable power, security and electronic related products. We are marketing our third party logistics and supply chain solutions to other markets, whether it be warehousing, inventory management and distribution of housewares, office supplies or toys. Similarly, through our sealed lead-acid battery distribution, we have expanded to serve medical scooter, jet-ski, motorcycle, hunting, and marine markets. In the future, we may also seek to develop other logistics such as freight forwarding and

39

	shipping, customs and brokerage, real-time inventory pricing information, electronic order entry and rapid order processing.
•	Enhance information technology capabilities. We provide a customized web portal interface for Brinks that allows it to easily place orders online with access to and management of its fulfillment needs. We plan to develop similar systems for our other customers based on their particular needs. We believe that in the coming years an increasing number of transactions in this industry will be processed online. As a result, we plan to further expand the functionality and utilization of our website in such a way that it will become more accessible and user-friendly. In addition, we have begun to review warehouse management systems and related hardware, such as material handling equipment and carousels, that will enable us to improve overall supply chain workflow and efficiencies, increase fulfillment capacity, provide greater visibility throughout the supply chain processes and provide real-time data and effective decision-making.
•	Increase our product offerings. Another effective means of attracting new customers and expanding relationships with existing customers is to increase the number and breadth of our product offerings. Our intention is to carry new products that complement those already within our portfolio as well as other electronic products such as semiconductors and computer equipment. In addition, we may also establish a base of operations in Asia so we can further develop relationships with low-cost manufacturers throughout the region. We intend to expand our product lines to include a more comprehensive offering of (i) consumer batteries and chargers for applications such as cell phones, laptops, camcorders, digital cameras and toys, (ii) sealed lead-acid batteries for consumer, industrial and customized applications, (iii) battery-powered and related consumer goods, such as battery chargers and maintainers, jumpstarters, portable power tools and accessories, (iv) security-related access-control products, and (v) other new products. In order achieve this goal, we will seek to expand our relationship with existing suppliers and consultants, and/or forge relationships with new suppliers using our contacts throughout the Pacific Rim.
•	Identify new customers and new markets. We intend to pursue new customers and new markets through traditional sales and marketing activities. We believe that the trend of consolidation in the electronics industry will continue and that, as a result, new customers and new markets will become available to us. New markets include domestic as well as international. We currently serve customers in Canada, England, Ireland and Australia and we have a salesperson based in Spain. Part of our growth strategy is to further develop new accounts in Europe and Latin America and to establish distribution centers in strategic global locations to service these accounts. In addition, we have recently begun to offer many of our products at retail through our retail store called “Batteries & Beyond” located in our Nevada regional logistics center. We are also planning to tap into the retail market by developing a new website for consumers. We have reserved the domain names “www.batteriesbeyond.com,” “www.batteriesandbeyond.com” and “www.batteriesnbeyond.com” for this purpose.
•	Develop proprietary products. We intend to develop other proprietary products synergistic to our business to build added value and offerings to our customers. For example, we are developing a battery data base cross referencing system that will have a database of all batteries, their applications, the products in which they can be used and their attributes. The different attributes of a battery include chemistry, category, brand, brand model, manufacturer and battery model. The system will be installed on free-standing kiosks in retail venues and consumers, regardless of their level of battery knowledge, will be able to search for a battery based on application, the product they are using or the battery attributes. The system will then identify one of our products that the user can either choose to purchase at the retail location if available or the user may have the option of placing the order at the kiosk and have the battery delivered directly to the consumer.
•	Vertical integration. We believe that the extent of our future success will depend, in part, on our ability to control our source of products. To that end, we are contemplating either building or purchasing a factory that manufactures batteries and that also has injection molding capabilities. While either option presents its own challenges and its own set of risks, we believe that having manufacturing capability has a number of benefits that override these risks. These benefits would include (i) reducing or, in some cases, even eliminating the risk of depending on an unrelated third party as the single source for our most important line of products, (ii) reducing our costs and improving our margins, and (iii) enabling us to expand our business by supplying other distributors. At the present time, we are not a party to any agreement

40

involving building or purchasing a factory. However, we have held preliminary informal discussions with a representative of Hengli, our principal source of batteries, about buying that facility. Since we did not have the capital to purchase that factory those discussions were by necessity general in nature and inconclusive. At this time, we cannot say that it is likely that we will buy all or a portion of this factory. Once this offering is complete, we may enter into more serious and substantive discussions with this factory and/or its representative. We also plan to assess the different options that may be available to us, including building our own factory or purchasing an existing factory in China, Mexico or anywhere else. We cannot assure you that we will ever build or buy a factory. Any decision to build or buy a factory, whether in China or elsewhere, will be made after this offering is completed by our board of directors, a majority of whom will be “independent.” Similarly, as discussed above, we are expanding into the retail market and we also plan to develop an online retail presence and enhance our e-commerce capabilities.

Quality Controls and ISO Certification

          We adhere to a quality management system that ensures that our operations are performed within the confines of increasing strictness in quality control programs and traceability procedures. As a result, our distribution facility has successfully completed procedure and quality audits and earned a certification under the international quality standard of ISO 9001:2000. This quality standard was established by the International Standards Organization (ISO), created by the European Economic Community (EEC). The ISO created uniform standards of measuring a company’s processes, traceability, procedures and quality control in order to assist and facilitate business within the EEC. This voluntary certification is a testimony of our commitment to demonstrate our ability to consistently provide products that meet customer and applicable regulatory requirements, and enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable regulatory requirements.

          Product safety is a top priority for us and all of our products that have electrical or mechanical concerns are safety tested and approval listed by UL, CUL, CSA, CE, TUV, or other standards agencies as required by and relevant to the customer’s business location. These agency listings ensure that our products adhere to specific quality and consistency standards.

Customers

          Our customers include OEMs, contract electronic manufacturers, distributors, retailers and electronics manufacturing service providers that serve a broad range of industries including: automotive industrial; marine; medical mobility and other medical equipment; security and surveillance; consumer goods, electronics, appliances and other products; computers and related equipment and accessories; telecommunications; and distributors of portable power supply units, principally batteries, that are used in a broad range of commercial and consumer products. In total, our customer list included over 2,900 active accounts in 2005. We define an active account as anyone who has purchased goods from us within the last two years. Our largest customer is Brinks for whom we function as a supply chain manager throughout the United States and Canada. Under our agreement with Brinks, which expires in November 2008, we purchase various components for Brinks’ security systems, some of which we purchase from Brinks’ designated suppliers. Some of the components we assemble and pack into kits. We sell and ship the components and the kits to Brinks and to independent Brinks authorized dealers. Brinks is our only customer that accounts for more than 10% of our net sales. In 2005 Brinks accounted for approximately 56% of our net sales. Because of this concentration, adverse conditions affecting this customer could have an adverse impact on our business. We expect that demand for our services and, consequently, our results of operations will continue to be sensitive to domestic and global economic conditions and other factors we cannot directly control. As such, our focus will remain on diversification of our product lines and service offerings and overall expansion of business with current customers and adding new accounts through our field and global sales and marketing teams.

Sources and Availability of Products

          We purchase products from both domestic and foreign component manufacturers. In 2005, we purchased products from approximately 130 suppliers. Approximately, 68% of our 2005 purchases were from domestic suppliers and 32% were from foreign suppliers. For the first nine months of 2006, approximately 62% of our purchases were from domestic suppliers and 38% were from foreign suppliers. We do not have supply agreements

41

with any of these sources, although Brinks has a written agreement with HS&CE, which accounts for approximately 44% of our inventory purchases. In addition, even though we purchase 80% of our batteries from a single source, Hengli, we believe that if that relationship was to terminate we would be able to re-source those products from other suppliers fairly quickly, although our costs may be higher. Other than HS&CE and Hengli, we do not depend on any single source for the products that we stock and sell.

          We have significant long-term relationships with manufacturers located in the Pacific Rim, principally China. Other suppliers are located in Taiwan, Japan and Malaysia. These relationships, many exceeding a decade, are managed either directly by us and or indirectly through a third-party consultant, who has extensive expertise in importing batteries, portable power accessories, and related products, particularly from China. Through this relationship, we have the capability to effectively procure products according to customer needs including “hard-to-find” items to obtain lower project and product costs and to offer a wide and expanding range of synergistic portable power solutions such as chargers and 12-volt accessories. Under our agreement with this consultant, we pay a commission if we purchase goods from a factory that it introduced to us. The commission is based on the total dollar value of the transaction and ranges from 3% to 6%, depending on the factory. Approximately 30% of our product purchases are covered by this agreement, including purchases from our largest overseas supplier which represented approximately 22% of our total product purchases and 80% of our battery purchases in 2005.

Competition

          We compete with numerous, well-established companies, many, if not most of which are larger and have greater capital and management resources and greater name recognition than we do. Our competitors include international, national, regional and local companies in a variety of industries.

          One group of actual competitors includes traditional logistics service providers. The major companies in this industry include C.H. Robinson Worldwide, Inc., EGL, Inc., Stonepath Group and UTI Worldwide, Inc. In general, these companies provide freight transportation services but could also provide supply chain management solutions. In comparison, we do not provide freight transportation services. This could make us a less attractive alternative to some potential customers. However, we do engage a freight forwarding company to work with us on consolidating and securing price competitive freight transportation services.

          Second, in the logistics business we also compete directly with the large overnight shipping companies, such as UPS, FedEx and DHL who have to begun to market themselves as supply chain management service providers.

          Third, in the distribution business, we compete with battery and other electronic component distributors, such as Interstate Batteries, MK Battery, Dantona, Arrow Electronics, Avnet, WESCO International, Jaco Electronics and All American Semiconductor. Companies like Arrow Electronics, Avnet, WESCO, Jaco and All-American also have multiple product lines and many also provide supply chain management services. Over the past five years this industry has experienced rapid consolidation driven in part, we believe, by the advances in online capabilities and the availability of more precise supply chain software and systems. While we do not believe that we have the capital resources to compete directly with these companies, we do believe that as a smaller company we can be more opportunistic in terms of developing niche markets and in terms of responding to customer needs, market changes and other trends.

          Finally, we are increasingly finding that manufacturers, particularly foreign manufacturers, are competing against us, marketing and selling their products directly to original equipment manufacturers, distributors and retailers, importers, brokers and e-commerce companies. Foreign manufacturers, particularly those located in low-cost jurisdictions such as Latin America and Asia, generally have a price advantage but are less knowledgeable about the domestic market and lack the infrastructure to properly serve the market.

          We compete primarily on the basis of price, inventory availability, flexibility, scope of services, quality of products and services, delivery time and customer relationships. As such, our ability to remain competitive will largely depend on our ability to (i) continue to source products cheaply and efficiently, (ii) develop new and alternative sources that are comparable in terms of price and quality, and (iii) anticipate and respond to customer demands and preferences and trends affecting the industry, such as new product introductions and pricing strategies, consumer and demographic trends, international, national, regional and local economic conditions

42

including those affecting prices of raw materials and shipping.

          We believe we can differentiate ourselves from other logistics companies in our overall knowledge, experience and understanding of the electronics industry and the market for portable power and related products and in our existing supply-side relationships, which include direct relationships with factories and relationships with factory representatives. We further believe that our most important competitive advantages include the following:

• Well-established sourcing contacts. We have long-standing relationships with manufacturers in the Pacific Rim, principally China. Also, we were one of the first authorized distributors of Panasonic batteries in the United States. We also have long-standing relationships with independent third-parties who have extensive contact with manufacturers throughout Asia. We believe that we can bring additional value to our customers by locating alternate suppliers of the same product of comparable quality at significantly lower prices.

• Key customer relationships. Over the last two years we have had over 2,900 customers, from sole proprietors and small businesses to many large, well-known national, regional and local distributors and retailers. Our customers include Brinks, RadioShack, Bass Pro Shops, Cabela’s, Pride Mobility, The Scooter Store, Protection One, Home Depot Supply, the U.S. Navy, and GE Security.

• Extensive inventory permits prompt response to customer needs. We stock a broad range of products according to customer and seasonal needs. With almost $20 million of inventory on hand at any given time, covering 75 classes of products and more than 2,200 SKU’s, we can satisfy most customer demands immediately. Up to 50% of our inventory at any particular time may consist of products that we stock in order to make timely deliveries to Brinks under our agreement with Brinks.

• National distribution. Our primary logistics center and warehouse facility is located in Carrollton, Texas, part of the Dallas metroplex area. We also have regional logistics centers in Oklahoma City, Oklahoma, and Las Vegas, Nevada. The Nevada facility also houses our “Batteries & Beyond” retail store.

• Value-added services. We offer value-added services not commonly provided by other third-party logistics or supply chain service providers, such as sourcing, custom kitting, battery pack assembly, product development, private labeling, and coordinating customers with licensed, EPA approved handlers for their battery recycling needs. Also, we were one of the first authorized Panasonic modification centers in the United States. Unlike traditional third party logistics providers that usually only take possession of a customer’s inventory, we actually purchase and stock the inventory for our clients. In a conventional service relationship, the customer purchases the goods from the supplier and directs the supplier to deliver the goods to the logistics company, which then packs and ships the goods to the end-user. We would similarly look to reduce our exposure with new logistics customers through guaranteed buy-backs, letters of credit or other techniques, although we cannot assure you that any potential customers would be amenable to such an arrangement.

• Broad industry experience; experienced management and support professionals. We have been in business for almost 40 years and have extensive knowledge of our markets and products. Our chief executive officer, Randy Hardin, has been in the battery distribution business for over 20 years. We also have a dedicated and experienced management team coupled with an excellent support staff.

• Reputation for quality. Since our inception, we have built a reputation based on the quality of our products, the timeliness of our deliveries and our responsiveness to customer demands. We believe that our commitment to customer satisfaction and our sourcing expertise have helped us in the industry as a premier supplier of batteries and other portable power products and related accessories. We have had ISO 9001:2000 certification since October 2003. In addition, we ensure that we obtain safety approvals on our products where required by one or more of the following agencies: UL, CUL, CSA, CE and TUV.

Marketing and Sales

          We employ a total of 33 in marketing, sales and sales support to actively pursue new business opportunities and retain and grow existing accounts. We also engage 41 outside sales representatives. We use a variety of

43

techniques to market our products including: (i) direct marketing through personal visits to customers by management, field sales people and sales representatives supported by a staff of inside sales personnel who handle quoting, accepting, processing and administration of sales orders; (ii) general advertising, sales referrals and marketing support from component manufacturers; (iii) telemarketing; (iv) active participation in industry tradeshows throughout the year; and (v) our website. We have undertaken minimal advertising in trade publications, though we foresee pursuing more advertising avenues including direct mail, additional trade and magazine publications and online advertising.

          Our sales organization continues to be one of our differentiating factors in the marketplace. Our senior management supports our sales people with an active and targeted selling approach. Our managers are responsible for customer service and the daily execution of customer requirements focusing on a level of service that we believe will exceed our customers’ expectations. This includes proactively managing existing customer requirements as well as coordinating and communicating customer requirements. Our managers are empowered to make decisions to support our customers.

          Customer retention and strengthening current relationships to participate in new business opportunities is important to us, and we emphasize this throughout our organization. Our logistics revenues continue to be a critical part of our revenue base and we will continue to market, design and execute supply chain management solutions aimed at reducing our customers’ delivery costs and strengthening our customer alliances. For instance, we have a dedicated customer service team to handle Brinks’ daily service matters, to ensure focused support and continued customer satisfaction. We continue to emphasize the development of national and global accounts while aggressively targeting local accounts where we can leverage our array of services. The larger, more complex accounts typically have many requirements ranging from very detailed standard operating and product approval procedures to customized information technology integration requirements. We believe our consistent growth, cost optimization and adaptability to customer needs has enabled us to more effectively compete for and obtain many new accounts.

Intellectual Property

          We own a number of trademarks, trade names, service marks and service names that we use, some of which are registered. These marks and names include the following: Starter-Up™, UB Scootin^®, Adventure Power^®, Batteries & Beyond™, Charge N’ Start™, UNILOK™, Let Us Power You™ and UPG™. We believe that these marks are important and have helped us develop a brand identity in certain markets and in connection with certain products. In addition, we also rely on trade secrets and other proprietary information regarding customers and suppliers, which we try to protect through the use of confidentiality and non-competition agreements.

          We have a patent-pending on a battery cross-reference system and method that enables users of all levels of knowledge to search for a battery, based on different attributes of a battery. The different attributes of a battery include its chemistry, category, brand of category, brand model, manufacturer and battery model. This concept will be housed in a stand-alone kiosk setting, and our objective is to place these kiosks at retailers. This store within a store concept will enable consumers to browse a comprehensive battery cross-reference database and cross applications of other brands to one of our batteries. The system will then allow the consumer to either locate the product within that retail location, or choose to order the product from the kiosk and have the battery delivered to his or her home. We believe that this patent will help us gain new business at retailers and at the same time, offer retailers a competitive advantage and a value-added service.

Technology

          Our information technology infrastructure is designed to facilitate a distributed operations business model with backend servers for a more centralized and efficient management environment. This infrastructure hosts a true 32-bit client/server Enterprise Resource Planning (ERP) software application (SYSPRO™) on Microsoft^® Windows platform, where most of the daily business activities/transactions are processed. SYSPRO™ is a fully integrated solution that gives us complete control over the planning and management of all facets of our operations, including assembly, distribution and accounting. Each function is then broken into several modules but all within the same ERP system. Assembly is supported by these modules: (i) bill of material and (ii) work in progress. Distribution is supported by the following modules: (i) inventory control, (ii) purchasing, (iii) sales, (iv) returns and

44

(v) point of sales. Accounting is supported by the following modules: (i) accounts receivable, (ii) accounts payable, (iii) general ledger, (iv) cash book and (v) fixed assets. Additionally, the recent deployment of SYSPRO™ Customer Relations Management software (CRM) has allowed us to better track and manage all customer and supplier touch points. SYSPRO™ CRM enables sales, marketing, engineering and customer support operations to work collaboratively while providing a complete and transparent view of all records and correspondences.

          With access to easy-to-view real-time information, SYSPRO™ gives us the ability to respond rapidly to changing circumstances, react quickly to customer demands, and reduce operating costs through streamlined processes. Additionally, SYSPRO™’s ability to integrate with other “best-of-breed” solutions, such as warehouse management systems, transportation management systems and electronic data interface systems, easily extends control to our entire supply chain. The modular nature of SYSPRO™ allows us to select those functions needed to increase operational control and effectiveness while avoiding unnecessary expense.

          As a result of increasing advances in technology, we recognize that our computer and communication systems need to be continuously upgraded and enhanced if we are to remain competitive. For instance, in an effort to anticipate and meet the increasing demands of customers and suppliers and to maintain “state-of-the-art” capabilities, we have identified the need for a true warehouse management system (WMS) and related hardware such as material handling equipment (MHE) and carousels. MHE may include conveyors, sorters, weigh-in motion scales, and other components. Successfully implementing these solutions would help us meet today’s fulfillment challenges and adapt for tomorrow’s challenges. We have begun to review various WMS and MHE solutions and a portion of the proceeds of this offering is earmarked to pay for developing or purchasing and installing such a system and purchasing such equipment. By implementing “best-of-breed” WMS and MHE solutions, we aim to improve on the following areas of our operations:

• intelligent work direction (radio frequency (RF) directed processes);

• improve pick efficiency;

• avoid costly mistakes;

• improve overall workflow;

• accurate real-time inventory to facilitate better decision-making;

• detailed audit trail;

• better visibility throughout our supply chain processes;

• automatic monitoring and reporting of quality measures;

• ability to effectively and efficiently perform third-party logistics functions such as activity based billing by customer, automatic order inputs, custom pick tickets, packing slips and shipping labels per owner; and

• increase overall facility throughput.

          We cannot assure you, however, that any upgrades that have been made or that will be made in the future will result in increased sales or reduced operating costs or increased customer satisfaction.

          We own the majority of the equipment used in our design and assembly operations. We own the computer hardware and software required for our accounting, sales and inventory functions and the office furniture and equipment as necessary to operate our business. This equipment consists of readily available items and can be replaced without significant cost or disruption to business activities.

Warranties

          We offer warranties of various lengths on most of our products. These warranties range from as little as 90 days to as long as three years. In addition, we pass along the manufacturer’s warranty, if any. In most cases, there is no manufacturer’s warranty. The most notable exception is products purchased for Brinks, some of which have a manufacturer’s warranty that extends for up to five years. Our warranty is only for defects in the product. In the event a productive is defective, our only recourse is to return it the manufacturer and demand a credit against future purchases. To date, we have only had minimal warranty claims asserted against us.

45

Government Regulation and Environmental Matters

          Except for usual and customary business licenses, permits and regulations, our business is not subject to governmental regulations or approvals. We believe that we comply with all relevant federal, state and local environmental regulations and do not expect to incur any significant costs to maintain compliance with such regulations in the foreseeable future. Failure to comply with the applicable regulations or to maintain required permits or licenses could result in substantial fines or revocation of our permits or authorities. We cannot give assurance as to the degree or cost of future regulations on our business.

          All of our sealed lead-acid batteries are non-hazardous Class 60 batteries, and therefore are not subject to laws, rules and regulations that deal with the handling of hazardous materials. However, we do offer to our customers as a value-added service, coordination of used sealed lead-acid battery pick up by EPA authorized haulers to dispose of the used batteries at EPA authorized smelters. Our lithium batteries are designated as Class 9 or hazardous. We ensure that we work with manufacturers certified in handling and packaging these batteries in compliance with laws, rules or regulations that deal with handling of hazardous materials that relate to Class 9. When the lithium batteries arrive at our facility, they are warehoused in a separate area, and shipped out to customers as needed. We do not make any modifications to lithium batteries or their packaging.

Property

          Our executive offices and principal logistics center are located at 1720 Hayden Drive, Carrollton, Texas where we lease approximately 150,000 square feet. The lease expires December 31, 2009 and the monthly rent is currently approximately $37,000, including basic rent and additional charges for operating expenses. The space is sufficient for our current needs. However, in order to accommodate our anticipated growth, we believe that we may need to expand our principal distribution center and warehouse facility within six to 12 months following this offering.

          On April 30, 2003, we entered into a lease agreement for approximately 5,000 square feet of retail and warehouse space in Oklahoma City, Oklahoma. We are leasing this space for approximately $1,500 per month. The lease expires July 31, 2008.

          We entered into a lease agreement for approximately 9,550 square feet of retail and warehouse space in Las Vegas, Nevada. We are leasing this space for approximately $9,550 per month. The lease was effective as of January 1, 2006 and expires December 31, 2008.

Employees

          As of September 30, 2006, we had a total of 65 employees, of which 57 people are based in our Texas facility, four were based in each of our regional logistics centers in Oklahoma City, Oklahoma and Las Vegas, Nevada. We have four senior executives, 33 marketing, sales and sales support personnel (including the employees in our regional logistics centers), 13 information technology, accounting, administrative and purchasing personnel, five engineering and packing personnel and 10 people in our warehouse and shipping department. All of our employees are full-time. We do not have collective bargaining agreements with respect to any of our employees. We have not experienced any work stoppages and consider our relations with employees to be good.

Legal Proceedings

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

46

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

47

MANAGEMENT

Executive Officers and Directors

          The names, ages and titles of our executive officers and directors, as of November 1, 2006, are as follows:

Name	Age	Positions
William Tan	63	Chairman of the board
Randy Hardin	46	Chief executive officer, President and Director
Ian Colin Edmonds	34	Executive vice president, Chief operating officer and Director
Julie Sansom-Reese	43	Chief financial officer and Treasurer
Mee Mee “Mimi” Tan	32	Vice president business development and marketing and Secretary
Leslie Bernhard	62	Director Nominee (1)
Marvin I. Haas	64	Director Nominee (1)
Garland P. Asher	62	Director Nominee (1)
Robert M. Gutkowski	58	Director Nominee (1)

(1) The Director-Nominees will take office on the date of this prospectus.

          WILLIAM TAN has been chairman of the Board since January 1999. He has served as the chairman of Zunicom, our corporate parent, since February 1997 and of AlphaNet since October 1999. Mr. Tan’s principal business has been private investments. Mr. Tan has been active as an entrepreneur in the fields of finance, general insurance, property development and management. He has held senior executive positions in a number of financing, insurance, textile, property development and related businesses. Mr. Tan is the father of Mimi Tan and the father-in-law of Ian Edmonds.

          RANDY HARDIN has been our president since October 1996 and was appointed chief executive officer in January 1999. He has also been a director since January 1999. Mr. Hardin was appointed as director of AlphaNet in September 2001. From 1982 to 1991 Mr. Hardin was employed at Interstate Batteries. From 1991 to 1996, Mr. Hardin was the National Sales Manager of MK Battery, Inc., a distributor of sealed batteries. Mr. Hardin is a graduate of Texas A&M University where he received a Bachelor of Arts in Political Science in 1982.

          IAN COLIN EDMONDS has been a director since January 1999, our chief operating officer since May 2002 and our Executive Vice President since October 2006. He is responsible for overall operations, corporate finance, M&A and planning activities, and risk management. Since July 1997 Mr. Edmonds has also served as a director and an officer of Zunicom. From July 1997 through March 2003 he was a vice president and since April 2003 he has also been the executive vice president of Zunicom. Since October 1999 he has also been a director of AlphaNet. Mr. Edmonds holds a Bachelors Degree in Marketing with a Minor in Statistics from the University of Denver. Mr. Edmonds is the husband of Mimi Tan and the son-in-law of William Tan.

          JULIE SANSOM-REESE has been employed by us since 1986. She was appointed as our chief financial officer in 1991. She was named interim chief financial officer of Zunicom in November 1999. In November 2000, Ms. Sansom-Reese assumed this role on a permanent basis. Since October 2003, Ms. Sansom-Reese also served as chief financial officer of AlphaNet. Ms. Sansom-Reese earned a Bachelor of Arts in Business from Texas Tech University in May 1986.

          MEE MEE “MIMI” TAN was appointed as our corporate secretary in February 1998 and as our vice president of business development & marketing in May 2002. Her responsibilities include new business development and projects, corporate marketing and overall branding strategies. She has also seved as Zunicom’s director of operations and corporate secretary since February 1998 and as AlphaNet’s corporate secretary since October 1999. Ms. Tan graduated cum laude from the University of Denver in November 1996 with a Bachelor’s Degree in Marketing and a Minor in Statistics. She is the daughter of William Tan and the wife of Ian Edmonds.

          Once this offering is completed, Mr. Edmonds, Ms. Tan and Ms. Sansom-Reese will resign as officers of Zunicom and AlphaNet. Mr. Tan and Mr. Edmonds will continue as directors of Zunicom and Mr. Tan, Mr. Edmonds and Mr. Hardin will continue as directors of AlphaNet.

48

          None of Messrs. Tan, Hardin and Edmonds is “independent” as required under the rules and regulations that apply to a company listed on the American Stock Exchange. However, it is our intent that the Director-Nominees will be “independent”.

Director-Nominees

          LESLIE BERNHARD, is a co-founder of AdStar, Inc. (Nasdaq: ADST), provider of technology services to the newspaper classified advertising industry. She has been a director of AdStar since its inception in 1986 and its President and Chief Executive Officer since 1991. Ms. Bernhard also serves on the board of directors of Milestone Scientific, Inc., (OTCBB: MLSS.OB): a developer and manufacturer of medical and dental equipment. Ms. Bernhard holds a B.S. degree from St. John’s University.

          MARVIN HAAS, served as president and chief executive officer of Chock Full O’Nuts Corporation (NYSE: CHF) from 1993 through 1999 when Chock was sold to Sara Lee Corporation. Since his retirement from Chock Full O’Nuts, Mr. Haas has been a private investor. Mr. Haas received a B.A. from Northeastern University and an MBA from its Graduate School of Business.

          GARLAND P. ASHER is the founder and principal of G. Parker Holdings, Inc., which specializes in financial consulting and investment management services. In addition, from September 1999 through June 2004, Mr. Asher was the President and Chief Operating Officer of Integration Concepts, Inc., a software development company. From 1991 through 1992 he was the Chief Financial Officer of Intelligent Electronics, Inc., a distributor of personal computers, and from 1986 through 1991 he was the Chief Financial Officer of Intertan, Inc. an electronics retailer. Mr. Asher is currently serving on the City of Fort Worth audit committee. Mr. Asher is a certified financial analyst and received an MBA in International Finance from the Wharton School of Commerce and Finance, University of Pennsylvania in May 1970.

          ROBERT M. GUTKOWSKI is the founder, president and chief executive officer of Marketing Group International, a provider of consulting services to businesses in the sports and entertainment industries. He advised the New York Yankees in regard to the creation of the YES Network, a regional sports and entertainment network. He previously served as chief executive officer of the Marquee Group, Inc., a worldwide sports and entertainment firm that managed, produced and marketed sports and entertainment events and provided representation for athletes, entertainers and broadcasters. From 1991 until 1994, he was President of Madison Square Garden, Inc. where he was responsible for the operations of the New York Knickerbockers basketball team, the New York Rangers hockey club and MSB Communications, which included the MSG Television Network. Mr. Gutkowski was a member of the Board of Directors of EuroTrust A/S, (Nasdaq: EURO) from May 2004 through May 2006.

          Under our bylaws, the Board must consist of a minimum of three and a maximum of 11 directors. Following this offering, the Board will have seven members. Directors are elected annually at the annual meeting of shareholders to hold office for one year or until their successors are duly elected and qualified. We have not yet set the date for the first annual meeting of shareholders following this offering. Board vacancies resulting from resignations, retirements, removals or newly created seats resulting from an increase in the number of directors, may be filled by a majority vote of the directors then in office, even if less than a quorum or by the sole remaining director. The executive officers are appointed by the Board and serve at its discretion.

Committees of the Board of Directors

          The Board has established three standing committees: an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. Each committee will be made up entirely of independent directors.

          Audit Committee. The Audit Committee oversees our accounting and financial reporting processes, internal systems of accounting and financial controls, relationships with auditors and audits of financial statements. Specifically, the Audit Committee’s responsibilities include the following:

• selecting, hiring and terminating our independent auditors;

• evaluating the qualifications, independence and performance of our independent auditors;

• approving the audit and non-audit services to be performed by the independent auditors;

• reviewing the design, implementation and adequacy and effectiveness of our internal controls and critical policies;

49

• overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and other accounting matters;

• with management and our independent auditors, reviewing any earnings announcements and other public announcements regarding our results of operations; and

• preparing the report that the Securities and Exchange Commission requires in our annual proxy statement.

          Following this offering, Garland P. Asher will be chairman of the Audit Committee and the other members of the Audit Committee will be Robert M. Gutkowski and Leslie Bernhard. The Board has determined that Garland P. Asher is an “audit committee financial expert,” as that term is defined in Item 401(h) of Regulation S-K, and “independent” for purposes of Nasdaq listing standards and Section 10A(m)(3) of the Securities Exchange Act of 1934.

          Compensation Committee. The Compensation Committee assists the Board in determining the development plans and compensation of our officers, directors and employees. Specific responsibilities include the following:

• approving the compensation and benefits of our executive officers;

• reviewing the performance objectives and actual performance of our officers; and

• administering our stock option and other equity and incentive compensation plans.

          Following this offering, the chairman of the Compensation Committee will be Marvin I. Haas and the other members of the Compensation Committee will be Leslie Bernhard and Garland P. Asher.

          Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee assists the Board by identifying and recommending individuals qualified to become members of the Board, reviewing correspondence from our shareholders and establishing and overseeing our corporate governance guidelines. Specific responsibilities include the following:

• evaluating the composition, size and governance of our Board and its committees and making recommendations regarding future planning and the appointment of directors to our committees;

• establishing a policy for considering shareholder nominees to our Board;

• reviewing our corporate governance principles and making recommendations to the Board regarding possible changes; and

• reviewing and monitoring compliance of our code of ethics and insider trading policy.

          Following this offering, the chairman of the Corporate Governance and Nominating Committee will be Leslie Bernhard and the other members of the committee will be Marvin I. Haas and Robert M. Gutkowski.

          As of the date of this prospectus, we have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer and other persons performing similar functions, as well as all of our other employees and directors. This Code of Ethics will be posted on our website at www.upgi.com.

Compensation of Directors

          Once this offering is effective, our “independent” directors will receive an annual fee of $5,000, payable in equal quarterly installments, and $500 plus reimbursement for actual out-of-pocket expenses in connection with each board meeting attended in person or $200 for each board meeting attended telephonically. In addition, the chairman of the audit committee will receive an annual fee of $1,000, payable in equal quarterly installments, and each Committee member will receive $500 plus reimbursements for all out-of-pocket expenses they incur for each committee meeting they attend in person or $200 for each committee meeting attended telephonically, unless the committee meeting immediately follows or precedes a board meeting, in which case he will receive $200 for attending in person or $100 for attending telephonically.

Executive Compensation

          Summary compensation. The following table sets forth information regarding compensation awarded to, earned by, or paid to our chief executive officer and our other most highly compensated executive officers whose compensation exceeded $100,000 in 2005 for all services rendered to us in all capacities during the last three completed fiscal years.

50

Summary Compensation Table

Name and Principal Position	Year	Salary(1)		Bonus		Other Compensation
Randy Hardin,	2005	$	203,077	$	135,243	$	20,971(2	)
Chief Executive Officer	2004	$	207,692	$	171,819	$	21,145(2	)
and President	2003	$	200,000	$	152,338	$	25,751(2	)
Ian C. Edmonds,	2005	$	143,077	$	30,000	$	21,909(2	)
Chief Operating Officer	2004	$	145,384	$	17,000	$	21,965(2	)
	2003	$	160,417	$	14,000	$	19,812(2	)
Mimi Tan,	2005	$	115,523	$	28,000	$	4,896(3	)
Vice President of Business	2004	$	116,261	$	16,400	$	4,953(3	)
Development and	2003	$	116,277	$	16,400	$	2,160(3	)
Marketing and Secretary

(1)	Does not reflect $36,000 and $32,000 paid by Zunicom to Ian Edmonds and Mimi Tan, respectively, for services rendered to Zunicom.
(2)	Car lease, medical insurance and long-term disability insurance payments.
(3)	Medical and long-term disability insurance payments.

Cash Bonus Plan

          Historically, the Board has allocated 20% of our annual pre-tax income to a cash bonus pool that is allocated among all of our employees provided we achieve a targeted pre-tax income amount set by the Board. Half of this amount is paid to our chief executive officer, Randy Hardin, pursuant to his employment agreement. Targeted pre-tax income is net income less taxes and management fees. The Board determines the targeted pre-tax income amount based on our historical performance and financial forecasts prepared by management. For 2005, the targeted pre-tax income amount was $1.3 million and for 2006, it is $2.4 million.

Options Held by Named Executives

          None of our executive officers held any options as of December 31, 2005. In connection with this offering, we plan to grant options to our executive officers and other key employees covering 1,250,000 shares of our common stock, approximately 25% of our issued and outstanding shares after completion of the offering. The planned option grants will include grants covering 475,000 shares to Randy Hardin and 356,250 shares to each of William Tan and Ian Edmonds, all of which will be exercisable at the initial public offering price of the shares offered under this prospectus.

Stock Option Plan

          In _____, 2006, we adopted and our shareholders approved and ratified our 2006 Stock Option Plan, the purpose of which is to attract and retain the personnel necessary for our success. The 2006 Stock Option Plan gives the Board the ability to provide incentives through grants of stock options, restricted stock awards and other types of equity-based incentive compensation awards to our key employees, consultants and directors (other than directors that are not compensated for their time by us or receive only a director’s fee). After this offering is completed, the plan will be administered by the Compensation Committee. Except as may otherwise be provided in the plan, the Compensation Committee will have complete authority and discretion to determine the terms of awards.

          A total of 1,250,000 shares of our common stock, representing 25% of the total number of shares issued and outstanding immediately after this offering without taking into account any shares that may be issued upon exercise of the over-allotment option, are reserved for issuance under the plan. If an award expires or terminates unexercised or is forfeited to us, or shares covered by an award are used to fully or partially pay the exercise price of an option granted under the plan or shares are retained by us to satisfy tax withholding obligations in connection with an option exercise or the vesting of another award, those shares will become available for further awards under the plan.

51

          The 2006 Stock Option Plan authorizes the granting of options, including options that satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended. The Compensation Committee will determine the period of time during which a stock option may be exercised, as well as any vesting schedule, except that no stock option may be exercised more than 10 years after its date of grant. The exercise price for shares of our common stock covered by an incentive stock option cannot be less than the fair market value of our common stock on the date of grant; provided that that exercise of an incentive stock option granted to an eligible employee that owns more than 10% of the voting power of all classes of our capital stock must be at least 110% of the fair market value of our common stock on the date of grant. The aggregate fair market value of shares subject to an incentive stock option exercisable for the first time by an option holder may not exceed $100,000 in any calendar year.

          The plan also authorizes the grant of restricted stock awards on terms and conditions established by the Compensation Committee. The terms and conditions will include the designation of a restriction period during which the shares are not transferable and are subject to forfeiture.

          The Board may terminate the plan without shareholder approval or ratification at any time. Unless sooner terminated, the plan will terminate in ___________, 2016. The Board may also amend the plan, provided that no amendment will be effective without approval of our shareholders if shareholder approval is required to satisfy any applicable statutory or regulatory requirements.

Employment Agreements

          We have entered into an employment agreement with Ian Edmonds, effective as of the date of this offering and expiring December 31, 2009. Under the agreement, Mr. Edmonds will continue to serve as our Chief Operating Officer. After the expiration of the term, the employment agreement continues on a month-to-month basis with the same terms and conditions. Under the agreement, Mr. Edmonds will receive a base salary of $195,000, which may be increased from time to time at the discretion of the Board. In addition, Mr. Edmonds is eligible for an incentive bonus to be paid annually, determined solely by the Board at the end of each year, and is entitled to receive options to purchase such number of shares as shall equal 7.5% of the number of our issued and outstanding shares immediately after this offering is completed. The employment agreement with Mr. Edmonds allows for severance compensation in the event a third party purchases substantially all the assets of the business, or if we choose to end the contract without “cause”. The severance compensation is for a twelve month period at the then current salary plus continued coverage of any medical and health benefits, and any incentive bonus as determined by the Board. In addition, if Mr. Edmonds dies or is incapacitated during the term of this agreement the severance provisions are eligible for himself or his designated beneficiaries as the case may be. Mr. Edmonds is bound by confidentiality and non-compete provisions of the agreement.

          We have entered into an employment agreement with Randy Hardin, effective as of the date of this offering and expiring on December 31, 2009. Under the agreement, Mr. Hardin will continue to serve as our President and Chief Executive Officer. After the expiration of the term, the employment agreement continues on a month-to-month basis with the same terms and conditions. Under the agreement, Mr. Hardin will receive a base salary of $220,000, which may be increased from time to time at the discretion of the Board. In addition, Mr. Hardin is entitled to receive annual incentive bonuses equal to 10% of our pre-tax income for that year, provided that our pre-tax income for that year exceeds a targeted amount previously established by the Board. However, in no event may the bonus exceed $650,000 for 2007, $750,000 for 2008 and $850,000 for 2009. Mr. Hardin is also entitled to receive options to purchase such number of shares as shall equal 10% of the number of our shares actually issued and outstanding immediately after this offering. The employment agreement with Mr. Hardin allows for severance compensation in the event a third party purchases all or substantially all of our assets or if we choose to end the contract without “cause”. The severance compensation is for a twelve month period at the then current salary plus continued coverage of any medical and health benefits, and any incentive bonus as determined by the Board. In addition if Mr. Hardin dies or is incapacitated during the term of the agreement the severance provisions are eligible for himself or his designated beneficiaries as the case may be. Mr. Hardin is bound by confidentiality and non-compete provisions of the agreement.

          We have entered into a three-year employment agreement with Mimi Tan, effective as of the date of this offering and expiring December 31, 2009. Under the agreement, Ms. Tan will continue to serve as our Vice President of Business Development and Marketing as well as our Corporate Secretary. The employment agreement

52

automatically renews month-to-month with the same terms and conditions. Under the agreement, Ms. Tan will receive a base salary of $161,200, which may be increased from time to time at the discretion of the Board. In addition, Ms. Tan is eligible for an incentive bonus to be paid annually, determined solely by the Board at the end of each year. The employment agreement with Ms. Tan allows for severance compensation in the event a third party purchases substantially all the assets of the business, or if we choose to end the contract without “cause”. The severance compensation is for a twelve month period at the then current salary plus continued coverage of any medical and health benefits, and any incentive bonus as determined by the Board. In addition, if Ms. Tan dies or is incapacitated during the term of this agreement, the severance provisions are eligible for herself or her designated beneficiaries as the case may be. Ms. Tan is bound by confidentiality and non-compete provisions of the agreement.

          We have not entered into any other employment agreements.

401(k) Plan

          We established and continue to maintain a 401(k) and Profit-Sharing Plan intended to qualify under sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. All of our employees who are at least 18 years of age are eligible to participate in the plan. There is no minimum service requirement to participate in the plan. Under the plan, an eligible employee can elect to defer a minimum from 1% to 85% of his salary. We may, at our sole discretion, contribute and allocate to a plan participant’s account, a percentage of the plan participant’s contribution. We have not made any contributions to this plan.

Indemnification and Limitations of Directors’ Liability

          Our amended and restated articles of incorporation provide generally that we shall indemnify and hold harmless each of our directors and executive officers and may indemnify any other person acting on our behalf in connection with any actual or threatened action, proceeding or investigation, subject to limited exceptions. For example, we will not indemnify any person from or against expenses, liabilities, judgments, fines, penalties or other payments resulting from:

• an administrative proceeding in which civil money penalties are imposed by an appropriate regulatory agency; or

• other matters for which the person is determined to be liable for willful or intentional misconduct in the performance of his or her duty to the corporation, unless and only to the extent that a court shall determine indemnification to be fair despite the adjudication of liability.

          Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons pursuant to our amended and restated articles of incorporation, bylaws and the Texas Business Corporation Law, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

          In addition, to the extent that indemnification for liabilities arising under the Securities Act of 1933, may be permitted to our directors, officers and controlling persons, we have been advised that, in the opinion of the Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Limitation of Liability

          Our amended and restated articles of incorporation limit the personal liability of our directors and officers in actions brought on our behalf or on behalf of our shareholders for monetary damages as a result of a director’s or officer’s acts or omissions while acting in a capacity as a director or officer, with certain exceptions. Consistent with the Texas Business Corporation Act, our amended and restated articles of incorporation do not limit the personal liability of our directors and officers in connection with:

• a breach of a director’s duty of loyalty to the corporation or its shareholders;

53

• an act or omission not in good faith that constitutes a breach of the duty of the director to the corporation or an act or omission that involves intentional misconduct or a knowing violation of the law;

• a transaction from which a director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director’s office; or

• an act or omission for which the liability of a director is expressly provided for by statute.

          Our amended and restated articles of incorporation also contain a provision that, in the event that Texas law is amended in the future to authorize corporate action further eliminating or limiting the personal liability of directors or eliminating or limiting the personal liability of officers, the liability of a director or officer of the corporation will be eliminated or limited to the fullest extent permitted by law. Our amended and restated articles of incorporation do not eliminate or limit our right or the right of our shareholders to seek injunctive or other equitable relief not involving monetary damages.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

          From January 1, 2003 through November 30, 2006, we engaged in the following related party transactions:

• We have distributed an aggregate of approximately $4.6 million to Zunicom, including management fees of $1.9 million and dividends of $2.7 million. The management fees, payable at the rate of $40,000 per month, were $480,000 in each of 2003, 2005 and 2006 and $440,000 in 2004. The management fee is intended to reimburse Zunicom for various services it performs and costs it incurs on our behalf. The services Zunicom performs includes accounting, tax preparation and shareholder and investor relations. Some of the costs Zunicom incurs on our behalf include personnel costs, audit fees, legal fees and filing fees. In 2003, we declared and paid a cash dividend of $566,850. In 2004, we declared a cash dividend of $185,000. In 2005, we declared cash dividends of $966,671 and paid dividends of $882,491. In 2006, we declared cash dividends of $964,000 and paid dividends of $1,233,180.

• Immediately before the date of this prospectus, we declared a dividend payable to Zunicom. The exact amount of the dividend will be determined immediately before the date of this prospectus and will equal the difference between $10 million and the gross proceeds realized by Zunicom from the sale of our shares that it owns that are covered by this prospectus, or between $1 million and $3 million based on the anticipated range of $7-$9 per share. The dividend will be evidenced by a note payable, which will have a maturity date 66 months from the date of issuance (the date of this prospectus) and which will bear interest at the rate of 6% per annum. Interest on the unpaid principal amount of this note is payable quarterly, in arrears, and the principal amount will be repaid to the extent of the net proceeds from the sale of shares covered by the over-allotment option and the balance in 16 equal quarterly installments beginning 21 months after the date of issuance.

• At September 30, 2006 we owed Zunicom approximately $3.7 million, reflecting the tax benefit of the consolidated losses used to offset our taxable income, declared but unpaid dividends and miscellaneous expenses. The dividend was paid in November 2006. Of the balance, Zunicom has agreed to forgive approximately $530,000 and to convert $2.85 into a long-term liability evidenced by a note bearing interest at 6% per annum and maturing 66 months from the date of issuance (the date of this prospectus). Interest on the unpaid principal amount of this note is payable quarterly, in arrears, and the principal amount will be repaid in 16 equal quarterly installments of $178,125 beginning 21 months after the date of issuance.

• At September 30, 2006, AlphaNet owed us approximately $177,000, which amount is being assigned to Zunicom as part of a partial payment of a current payable to Zunicom. AlphaNet is considered a related party as it is also a wholly-owned subsidiary of Zunicom. The amounts owed relate to various costs we paid on behalf of AlphaNet, including insurance, accounting, and other operating costs. The balance owed to us has never exceeded $177,000 and does not bear interest.

          The Board has adopted a resolution that, in the future, any transactions between us and another person or entity who is deemed to be an “affiliate” or a related party must be approved by a majority of our disinterested directors.

54

PRINCIPAL AND SELLING SHAREHOLDERS

          The following table sets forth information regarding the beneficial ownership of our common shares as of the date of this prospectus by the following:

• the selling shareholder;

• each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

• each of our directors and director nominees;

• each executive officer named in the Summary Compensation Table above; and

• all of our directors and executive officers as a group.

          The table below does not take into account any shares of common stock sold as a result of the exercise of the underwriters’ over-allotment option. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all of the shares owned by them. The individual shareholders have furnished all information concerning their respective beneficial ownership to us.

	Shares Beneficially Owned Prior to Offering(2)					Shares Being Offered		Shares Beneficially Owned After Offering(2)
Name of Beneficial Owner(1)	Number		Percent(3)					Number		Percent(3)
Zunicom, Inc.(4)		3,000,000		100.0	%		1,000,000		2,000,000		40.0	%
William Tan(5)		3,000,000		100.0	%		0		2,356,250		44.0	%
Randy Hardin(6)		—		—			0		475,000		8.7	%
Ian Edmonds(7)		3,000,000		100.0	%		0		2,356,250		44.0	%
Mimi Tan(8)		—		—			0		—		—
Julie Sansom-Reese		—		—			0		—		—
Leslie Bernhard(9)		—		—			0		—		—
Marvin I. Haas(9)		—		—			0		—		—
		—		—			0		—		—
		—		—			0		—		—
All directors, director nominees and executive officers as a group (9) persons(10)		3,000,000		100.0	%				3,187,500		51.5	%

*        Less than 1%

(1)	Unless indicated otherwise, all addresses are c/o Universal Power Group, 1720 Hayden Road, Carrollton, Texas 75006.
(2)	According to the rules and regulations of the Securities and Exchange Commission, shares that a person has a right to acquire within 60 days of the date of this prospectus are deemed to be outstanding for the purpose of computing the percentage ownership of that person but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
(3)	Based on 3,000,000 shares issued and outstanding immediately before this offering and 5,000,000 shares issued and outstanding immediately after this offering.
(4)	Selling stockholder.
(5)	Shares beneficially owned prior to and after the offering includes the shares owned by Zunicom over which Mr. Tan has voting and investment power. Shares beneficially owned after the offering also includes 356,250 shares underlying options that are currently exercisable at a price equal to the initial public offering of the shares sold in this offering.
(6)	Includes 475,000 shares underlying options that are currently exercisable at a price equal to the initial public offering of the shares sold in this offering.
(7)	Shares beneficially owned prior to and after the offering includes the shares owned by Zunicom over which Mr. Edmonds has voting and investment power. Shares beneficially owned after the offering includes 356,250 shares underlying options that are currently exercisable at a price equal to the initial public offering of the shares sold in this offering.
(8)	Ms. Tan is the wife of Ian Edmonds and daughter of William Tan. Ms. Tan disclaims ownership of any shares owned beneficially by Mr. Edmonds.
(9)	Director-nominee.
(10)	According to the rules and regulations of the Securities and Exchange Commission, where more than one beneficial owner is listed for the same securities, in computing the aggregate number of shares owned by directors and officers as a group, the same shares are not counted more than once.

55

DESCRIPTION OF SECURITIES

          Our authorized capital stock consists of 50,000,000 shares of common stock, par value $.01 per share and 5,000,000 shares of undesignated preferred stock, par value $.01 per share. After this offering, we will have 5,000,000 shares of common stock issued and outstanding (5,450,000 shares if the over-allotment option is exercised in full) and no shares of preferred stock issued and outstanding. Immediately before this offering is effective, we will have 3,000,000 shares of common stock outstanding held of record by one shareholder. The following description summarizes the most important terms of our capital stock. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our amended and restated articles of incorporation and our bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part and to the provisions of Texas law.

Common Stock

          Subject to the rights specifically granted to holders of any shares of our preferred stock we may issue in the future, holders of our common stock are entitled to vote together as a class on all matters submitted to a vote of our shareholders and are entitled to any dividends that may be declared by our board of directors. Holders of our common stock do not have cumulative voting rights. Upon our dissolution, liquidation or winding up, holders of our common stock are entitled to share ratably in our net assets after payment or provision for all liabilities and any preferential liquidation rights of any shares of our preferred stock we may issue in the future. Holders of our common stock have no preemptive rights to purchase shares of our common stock. The issued and outstanding shares of our common stock are not subject to any redemption provisions and are not convertible into any other shares of our capital stock. All outstanding shares of our common stock are, upon payment therefore, fully paid and non-assessable. The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may issue in the future.

Preferred Stock

          Our authorized capital includes 5,000,000 shares of undesignated preferred stock par value $.01 per share.

          Under our amended and restated articles of incorporation, the Board has the authority, without further action by the shareholders, to issue from time to time shares of preferred stock in one or more series. The Board may fix the number of shares, designations, preferences, powers and other special rights of each series of the preferred stock. The issuance of preferred stock could decrease the amount of earnings and assets available for distribution to holders of common stock, affect adversely the rights and powers, including voting rights, of the holders of common stock, or have the effect of delaying, deferring or preventing a change in control in us. The rights and preferences may include, but are not limited to:

• the title of the preferred stock;

• the maximum number of shares of the series;

• the dividend rate or the method of calculating the dividend, the date from which dividends will accrue and whether dividends will be cumulative;

• any liquidation preference;

• any redemption provisions;

• any sinking fund or other provisions that would obligate us to redeem or purchase the preferred stock;

• any terms for the conversion or exchange of the preferred stock for other securities of us or any other entity;

• any voting rights; and

• any other preferences and relative, participating, optional or other special rights or any qualifications, limitations or restrictions on the rights of the shares.

56

          In some cases, the issuance of preferred stock could delay or discourage a change in control of us. Any shares of preferred stock we issue will be fully paid and nonassessable. We do not have any outstanding shares of preferred stock at the date of this prospectus.

Authorized but Unissued Shares

          The authorized but unissued shares of common stock and preferred stock are available for future issuance without shareholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public or private offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued common or preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

          The Texas Business Corporation Act provides generally that the affirmative vote of two-thirds of the shares entitled to vote on any matter is required to amend a corporation’s articles of incorporation, unless the corporation’s articles of incorporation requires a lower percentage, but not less than a majority. Our amended and restated articles of incorporation do not impose any supermajority vote requirements.

Transfer Agent, Warrant Agent and Registrar

          The transfer agent, warrant agent and registrar for our common stock will be Corporate Stock Transfer, Inc., 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209.

57

SHARES ELIGIBLE FOR FUTURE SALE

          After this offering is completed we expect to have 5,000,000 shares of common stock outstanding (5,450,000 shares if the underwriters’ over-allotment is exercised in full). Of these shares, the 3,000,000 shares of common stock issued in this offering (3,450,000 shares if the over-allotment option is exercised in full) will be freely tradable without restrictions or further registration under the Securities Act of 1933, except that any shares purchased by our “affiliates,” as that term is defined under the Securities Act, may generally only be sold in compliance with the limitations of Rule 144 under the Securities Act.

          The remaining 2,000,000 outstanding shares of common stock will be restricted securities within the meaning of Rule 144 and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemption from registration offered by Rule 144. The holders of these shares have agreed not to sell or otherwise dispose of any of their shares of common stock for a period of one year after completion of this offering, without the prior written consent of Ladenburg Thalmann & Co. Inc. (“Ladenburg”), the managing underwriter of this offering, except that sales or transfers may be made in private transactions which are exempt from registration under the Securities Act, if the proposed purchaser or transferee agrees to be bound by the provisions hereof. After the expiration of the lock-up period, or earlier with the prior written consent of Ladenburg, all of the outstanding restricted shares may be sold in the public market pursuant to Rule 144.

          Without taking into account the lock-up agreements, all of the shares of restricted common stock would be eligible for sale under Rule 144 90 days after the date of this prospectus. In general, under Rule 144, as currently in effect, beginning 90 days after the date of this prospectus, a person who has beneficially owned restricted shares for at least one year, including a person who may be deemed to be our affiliate, may sell within any three-month period a number of shares of common stock that does not exceed a specified maximum number of shares. This maximum is equal to the greater of 1% of the then outstanding shares of our common stock or the average weekly trading volume in the common stock during the four calendar weeks immediately preceding the sale. Sales under Rule 144 are also subject to restrictions relating to manner of sale, notice and availability of current public information about us. In addition, under Rule 144(k) of the Securities Act, a person who is not our affiliate, has not been an affiliate of ours within three months prior to the sale and has beneficially owned shares for at least two years would be entitled to sell such shares immediately without regard to volume limitations, manner of sale provisions, notice or other requirements of Rule 144.

Representatives’ Warrants

          In connection with this offering, we have agreed to sell to Ladenburg and Wunderlich Securities, Inc. (“Wunderlich”), the representatives of the underwriters, collectively, warrants to purchase up to an aggregate of 345,000 shares of our common stock at a price equal to 120% of the initial public offering price per share as set forth on the cover page of this prospectus (the “Representatives’ Warrants”). The Representatives’ Warrants are exercisable at any time beginning 365 days after the effective date of this offering until the fifth anniversary of the effective date. The warrants contain cashless exercise provisions and anti-dilution provisions. In the event a holder of the warrants elects the cashless exercise option, the value of our stock will calculated using the volume weighted average price of our stock over the 20-day trading period ending on the trading date immediately before the exercise date. Neither the Representatives’ Warrants nor the underlying shares may be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 365 days immediately following the date of effectiveness of the offering, except to any underwriter participating in the offering and its officers or partners, and only if all securities so transferred remain subject to the 365-day lock-up restriction for the remainder of the lock-up period.

58

UNDERWRITING

          The underwriters of this offering, for whom Ladenburg and Wunderlich are the representatives, have agreed on the terms and are subject to the conditions of the underwriting agreement, to purchase from us and from Zunicom, and we and Zunicom have agreed to sell to the underwriters, all of the shares issued in this offering as follows:

	Shares of Common Stock
Ladenburg Thalmann & Co. Inc.
Wunderlich Securities, Inc.
Total:

          In this offering, we will sell 2,000,000 shares of our common stock and Zunicom will sell 1,000,000 shares of our common stock that it owns. The underwriters are committed severally to purchase and pay for all of the shares on a “firm commitment” basis if they purchase any shares. The underwriters have advised us that they propose to offer the shares to the public at the initial public offering price set forth on the cover page of this prospectus for which they will receive a commission equal to _% of the selling price for the shares.

          We have also granted an option to the underwriters, exercisable during the 45-day period from the effective date of the registration statement, to purchase up to 450,000 additional shares at the public offering price set forth on the cover page of this prospectus, less the underwriting discount, for the sole purpose of covering over-allotments.

          We have agreed to pay to Ladenburg a non-accountable expense allowance of _% of the aggregate public offering price of all shares sold, excluding any shares sold pursuant to the underwriters’ over-allotment option. To date, we have paid $25,000 against this non-accountable expense allowance. If this offering is terminated, the advance will be applied against actual expenses, with the balance, if any, returned to us.

          We have applied to the American Stock Exchange to have our shares listed for trading on the Amex.

Indemnification

          The underwriting agreement provides that we will indemnify the underwriters against certain liabilities that may be incurred in connection with this offering, including liabilities under the Securities Act of 1933, or to contribute payments that the underwriters may be required to make in respect thereof.

Electronic Delivery

          One or more of the underwriters participating in this offering may make prospectuses available in electronic (PDF) format. A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters or syndicate members, if any, participating in this offering, and one or more of the underwriters participating in this offering may distribute such prospectuses electronically. Other than the prospectuses being made available in electronic (PDF) format, the underwriters do not intend to use any other forms of prospectuses in electronic format, such as CD ROMS or videos. The representative may agree to allocate a number of shares to underwriters and selling group members for sale to their own online brokerage account holders. Internet distributions will be allocated to underwriters and selling group members that will make Internet distributions on the same basis as other allocations.

59

Stabilization and Short Positions

          In connection with this offering, the underwriters may engage in transactions that stabilize, maintain, or otherwise affect the price of our common stock. Specifically, the underwriters may over-allot in connection with this offering by selling more shares than are set forth on the cover page of this prospectus. This creates a short position in our common stock for the underwriter’s own account. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. To close out a short position or to stabilize the price of our common stock, the underwriter may bid for, and purchase, common stock in the open market. The underwriters may also elect to reduce any short position by exercising all or part of the over-allotment option. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriter sells more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

          The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for distributing our common stock in this offering because the underwriter repurchases that stock in stabilizing or short covering transactions.

          Finally, the underwriters may bid for, and purchase, shares of our common stock in market making transactions. These activities may stabilize or maintain the market price of our common stock at a price that is higher than the price that might otherwise exist in the absence of these activities. The underwriter is not required to engage in these activities, and may discontinue any of these activities at any time without notice. These transactions may be effected on the American Stock Exchange or otherwise.

Warrants

          In connection with the offering, we have agreed to sell to Ladenburg and Wunderlich, for nominal consideration, warrants entitling them or their assigns to purchase up to an aggregate of 345,000 shares of our common stock at a price equal to 120% of the public offering price per share. The warrants have been deemed compensation by the NASD. As such, they are exercisable at any time beginning 365 days after the effective date of the offering until December ___, 2011 and will contain cashless exercise provisions and anti-dilution provisions as are acceptable to Ladenburg and Wunderlich. In the event a holder of the warrants elects the cashless exercise option, the value of our stock will be calculated using the volume weighted average price of our stock over the 20-day trading period ending on the trading date immediately before the exercise date.

Rule 144 Sales

          We have agreed that, during the two year period following the effective date of the Registration Statement, Ladenburg shall have the right to purchase for its account or to sell for the account of any person who was a shareholder prior to the date of this prospectus and who owns, immediately after this offering is completed, at least 1.0% of our outstanding shares of common stock any securities sold pursuant to Rule 144 under the Securities Act of 1933. Each of these people has agreed to give notice to Ladenburg of its intent to offer for sale of any shares of common stock. Ladenburg will have 48 hours excluding Saturdays, Sundays and holidays when the New York Stock Exchange is closed to make an offer for the entire number of shares covered by the notice. Assuming that Ladenburg makes such an offer within 48 hours, the 144 seller will have 48 hours to sell the entire number of shares through or to another broker-dealer for the net price which is better than the price offered by Ladenburg. If it does so, then Ladenburg will have no rights to purchase for its account or sell for the account of the 144 Seller the shares covered by the notice.

60

Determination of Offering Price

          Prior to the offering, there was no public market for our common stock. The initial public offering of our shares was based upon negotiations between the underwriters and us and the factors considered in determining the initial public offering price were:

• the valuation multiples of publicly traded logistics and supply chain management service companies that the underwriters believe to be comparable to us;

• our historical financial information and an assessment of our future cash flows, revenue and earnings;

• the history of, and the prospects for, our company and the electronics; and

• the underwriters’ assessment of our management based upon our past operations and performance.

LEGAL MATTERS

          The validity of the common shares offered by this prospectus will be passed upon for us by Morse, Zelnick, Rose & Lander LLP, New York, New York. Patton Boggs LLP, Dallas, Texas, will pass upon certain matters for the underwriters named in this prospectus in connection with this offering.

EXPERTS

          KBA Group LLP, an independent registered public accounting firm, has audited financial statements as of and for the years ended December 31, 2003, 2004 and 2005 as set forth in their reports. We have included these financial statements in this prospectus, and in the registration statement, of which this prospectus is a part, in reliance on KBA’s reports, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

          In connection with the units offered by this prospectus, we have filed a registration statement on Form S-1 under the Securities Act with the Securities and Exchange Commission. This prospectus, filed as part of the registration statement, does not contain all of the information included in the registration statement and the accompanying exhibits. For further information with respect to our units, shares and warrants, and us you should refer to the registration statement and the accompanying exhibits. Statements contained in this prospectus regarding the contents of any contract or any other document are not necessarily complete, and you should refer to the copy of the contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by the actual contents of the contract or other document referred to. You may inspect a copy of the registration statement and the accompanying exhibits without charge at the Securities and Exchange Commission’s public reference facilities, Room 1580, 100 F Street, N.E., Washington, D.C. 20549, and at its regional offices located at 233 Broadway, 16th Floor, New York, New York 10279, and you may obtain copies of all or any part of the registration statement from those offices for a fee. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a website that contains registration statements, reports, proxy and information statements and other information regarding registrants that file electronically. The address of the site is http://www.sec.gov.

          We intend to furnish our shareholders with annual reports containing financial statements audited by an independent registered public accounting firm.

61

UNIVERSAL POWER GROUP, INC.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Financial Statements
Balance Sheets at December 31, 2004, 2005 and September 30, 2006 (unaudited)	F-3
Statements of Income for the years ended December 31, 2003, 2004, and 2005 and for the periods ended September 30, 2005 and 2006 (unaudited)	F-5
Statement of Shareholder’s Equity for the years ended December 31, 2003, 2004, and 2005 and for the period ended September 30, 2006 (unaudited)	F-6
Statements of Cash Flows for the years ended December 31, 2003, 2004, and 2005 and for the periods ended September 30, 2005 and 2006 (unaudited)	F-7
Notes to Financial Statements	F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
Universal Power Group, Inc.

          We have audited the accompanying balance sheets of Universal Power Group, Inc. (the “Company”) as of December 31, 2004 and 2005 and the related statements of income, shareholder’s equity, and cash flows for each of the years in the three-year period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

          We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have nor were we engaged to perform, audits of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

          In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Universal Power Group, Inc., as of December 31, 2004 and 2005, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.

/s/ KBA GROUP LLP
Dallas, Texas


February 24, 2006, except for Note D to which the date is April 18, 2006
and Note L to which the date is October 25, 2006

F-2

UNIVERSAL POWER GROUP, INC.

BALANCE SHEETS

ASSETS

	December 31,
							September 30,
	2004			2005			2006
							(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	135,949		$	176,295		$	140,762
Accounts receivable:
Trade, net of allowance for doubtful accounts of $196,502, $200,002 and $265,002		7,348,488			8,405,089			9,483,439
Other (including $63,888, $121,086 and $176,536 from related party)		312,661			235,305			194,845
Inventories – finished goods, net of allowance for obsolescence of $263,313, $150,715 and $270,715		13,253,171			19,110,278			20,761,303
Current deferred tax asset		173,337			187,300			314,019
Prepaid expenses and other current assets		392,044			606,281			340,124
Total current assets		21,615,650			28,720,548			31,234,492
PROPERTY AND EQUIPMENT
Machinery and equipment		422,111			557,683			585,129
Furniture and fixtures		207,314			239,639			288,457
Leasehold improvements		175,364			181,232			188,691
Vehicles		140,676			151,597			151,598
		945,465			1,130,151			1,213,875
Less accumulated depreciation and amortization		(495,379	)		(633,356	)		(748,572	)
Net property and equipment		450,086			496,795			465,303
OTHER ASSETS		37,647			34,923			325,402
TOTAL ASSETS	$	22,103,383		$	29,252,266		$	32,025,197

The accompanying notes are an integral part of these financial statements.

F-3

UNIVERSAL POWER GROUP, INC.

BALANCE SHEETS (Continued)

LIABILITIES AND SHAREHOLDER’S EQUITY

	December 31,
					September 30,
	2004		2005		2006
					(Unaudited)
CURRENT LIABILITIES
Line of credit	$	8,526,903	$	9,261,435	$	11,621,516
Accounts payable		7,082,274		12,387,887		10,936,927
Accrued liabilities		165,340		224,151		963,553
Due to parent (including $1,689,267, $2,500,749 and $3,388,140 for income taxes)		1,874,267		2,769,929		3,723,916
Current portion of capital lease obligations		20,977		20,977		20,963
Current portion of deferred rent		39,901		42,637		41,608
Total current liabilities		17,709,662		24,707,016		27,308,483
CAPITAL LEASE OBLIGATIONS, less current portion		46,307		25,339		9,727
NON-CURRENT DEFERRED TAX LIABILITY		37,464		53,728		55,604
DEFERRED RENT, less current portion		221,942		210,510		191,402
Total liabilities		18,015,375		24,996,593		27,565,216
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER’S EQUITY
Common stock - $0.01 par value, 50,000,000 shares authorized, 3,000,000 shares issued and outstanding		30,000		30,000		30,000
Additional paid-in capital		3,822,597		3,822,597		3,822,597
Retained earnings		235,411		403,076		607,384
Total shareholder’s equity		4,088,008		4,255,673		4,459,981
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY	$	22,103,383	$	29,252,266	$	32,025,197

The accompanying notes are an integral part of these financial statements.

F-4

UNIVERSAL POWER GROUP, INC.

STATEMENTS OF INCOME

	Year Ended December 31,									Nine Months Ended September 30,
	2003			2004			2005			2005			2006
										(Unaudited)
Net sales	$	58,669,741		$	67,159,545		$	81,275,175		$	59,960,761		$	68,016,953
Cost of sales		49,564,588			58,355,712			70,960,235			52,187,394			58,342,648
Gross profit		9,105,153			8,803,833			10,314,940			7,773,367			9,674,305
Operating expenses (including $480,000, $440,000, $480,000, $360,000 and $360,000 to parent)		7,191,613			7,568,134			7,888,475			5,897,549			7,096,116
Operating income		1,913,540			1,235,699			2,426,465			1,875,818			2,578,189
Other income (expense)
Interest expense		(310,504	)		(445,860	)		(490,096	)		(346,634	)		(596,178	)
Interest income		371			3,092			1,599			1,598			18,032
Other, net		(30	)		(48,133	)		10,151			—			—
Total other expense		(310,163	)		(490,901	)		(478,346	)		(345,036	)		(578,146	)
Income before provision for income taxes		1,603,377			744,798			1,948,119			1,530,782			2,000,043
Provision for income taxes		(684,850	)		(347,139	)		(813,783	)		(640,057	)		(831,735	)
Net income	$	918,527		$	397,659		$	1,134,336		$	890,725		$	1,168,308
Net income per share	$	0.31		$	0.13		$	0.38		$	0.30		$	0.39
Weighted average shares outstanding		3,000,000			3,000,000			3,000,000			3,000,000			3,000,000

The accompanying notes are an integral part of these financial statements.

F-5

UNIVERSAL POWER GROUP, INC.

STATEMENT OF SHAREHOLDER’S EQUITY

	Common Stock				Additional Paid-in Capital		Retained Earnings (Deficit)
	Shares		Amount							Total
Balances at January 1, 2003		3,000,000	$	30,000	$	3,822,597	$	(329,195	)	$	3,523,402
Dividends declared		—		—		—		(566,580	)		(566,580	)
Net income for 2003		—		—		—		918,527			918,527
Balances at December 31, 2003		3,000,000		30,000		3,822,597		22,752			3,875,349
Dividends declared		—		—		—		(185,000	)		(185,000	)
Net income for 2004		—		—		—		397,659			397,659
Balances at December 31, 2004		3,000,000		30,000		3,822,597		235,411			4,088,008
Dividends declared		—		—		—		(966,671	)		(966,671	)
Net income for 2005		—		—		—		1,134,336			1,134,336
Balances at December 31, 2005		3,000,000		30,000		3,822,597		403,076			4,255,673
Dividends declared (unaudited)		—		—		—		(964,000	)		(964,000	)
Net income for nine months ended September 30, 2006 (unaudited)		—		—		—		1,168,308			1,168,308
Balances at September 30, 2006 (unaudited)		3,000,000	$	30,000	$	3,822,597	$	607,384		$	4,459,981

The accompanying notes are an integral part of these financial statements.

F-6

UNIVERSAL POWER GROUP, INC.

STATEMENTS OF CASH FLOWS

	Year Ended December 31,									Nine Months Ended September 30,
	2003			2004			2005			2005			2006
										(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	918,527		$	397,659		$	1,134,336		$	890,725		$	1,168,308
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment		109,580			130,852			137,978			101,641			115,215
Provision for bad debts		276,126			173,744			48,187			95,983			99,160
Provision for obsolete inventory		36,680			90,000			55,962			171,000			120,000
Deferred income taxes		(28,076	)		(54,275	)		2,301			(62,565	)		(124,843	)
Loss on disposal of property and equipment		—			25,909			962			962			—
Change in operating assets and liabilities:
Accounts receivable – trade		(444,138	)		(970,143	)		(1,104,788	)		(1,997,922	)		(1,177,510	)
Accounts receivable – other		83,811			(179,404	)		77,356			103,649			40,460
Inventories		(2,813,520	)		(2,824,793	)		(5,913,069	)		(719,574	)		(1,771,025	)
Prepaid expenses and other current assets		(5,317	)		137,492			(214,237	)		(149,856	)		266,157
Other assets		28,526			12,055			2,724			—			(290,479	)
Accounts payable		1,161,615			(1,305,087	)		5,305,613			1,514,215			(1,450,960	)
Accrued liabilities		934,750			510,544			58,811			794,387			739,402
Due to parent		789,131			277,747			811,482			702,622			879,167
Deferred rent		—			127,204			(8,696	)		(6,521	)		(20,137	)
Net cash provided by (used in) operating activities		1,047,695			(3,450,496	)		394,922			1,438,746			(1,407,085	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(37,140	)		(114,259	)		(185,649	)		(120,974	)		(83,723	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net activity on line of credit		(284,440	)		3,274,593			734,532			(589,264	)		2,360,081
Payments on capital lease obligations		(17,209	)		(24,726	)		(20,968	)		(15,914	)		(15,626	)
Payment of dividends to parent		(566,580	)		—			(882,491	)		(574,491	)		(889,180	)
Net cash provided by (used in) financing activities		(868,229	)		3,249,867			(168,927	)		(1,179,669	)		1,455,275
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		142,326			(314,888	)		40,346			138,103			(35,533	)
Cash and cash equivalents at beginning of period		308,511			450,837			135,949			135,949			176,295
Cash and cash equivalents at end of period	$	450,837		$	135,949		$	176,295		$	274,052		$	140,762

The accompanying notes are an integral part of these financial statements.

F-7

UNIVERSAL POWER GROUP, INC.

STATEMENTS OF CASH FLOWS (Continued)

	Year Ended December 31,						Nine Months Ended September 30,
	2003		2004		2005		2005		2006
							(Unaudited)
SUPPLEMENTAL DISCLOSURES
Income taxes paid	$	39,286	$	76,880	$	74,243	$	47,000	$	72,939
Interest paid	$	310,504	$	445,860	$	490,096	$	346,634	$	596,178
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Acquisition of property and equipment through capital lease	$	21,244	$	28,960	$	—	$	—	$	—
Capitalized lease incentives	$	—	$	134,639	$	—	$	—	$	—
Dividends due to parent	$	—	$	185,000	$	269,180	$	260,500	$	344,000

The accompanying notes are an integral part of these financial statements.

F-8

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE A. ORGANIZATION AND BASIS OF PRESENTATION

Organization

          Universal Power Group, Inc. (the “Company”), a Texas corporation, is a wholly-owned subsidiary of Zunicom, Inc. (“Zunicom”). The Company is a distributor and supplier to a diverse and growing range of industries of portable power and related synergistic products, a provider of third-party fulfillment and logistics services and a custom battery pack assembler. The Company’s primary logistics center is located in Carrollton, Texas and regional logistic centers are located in Oklahoma City, Oklahoma and Las Vegas, Nevada. The Company’s customers are primarily located in the United States. However, a small portion of the Company’s sales are to customers located in the United Kingdom, Australia, Ireland and Canada. The Company’s growth strategy is to further develop new business in Europe and Latin America and to establish logistics centers in strategic domestic and global locations to service these accounts.

Unaudited Interim Financial Information

          The interim financial information as of September 30, 2006 and for the nine months ended September 30, 2005 and 2006 are unaudited. This unaudited interim financial information has been prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, the unaudited interim financial information includes all adjustments which are of a normal recurring nature and are necessary for a fair presentation of the financial position and results of operations for the periods presented. Results for the nine months ended September 30, 2006 are not necessarily indicative of results to be expected for the year ending December 31, 2006.

NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

          The Company considers all unrestricted highly-liquid investments with original maturities of three months or less to be cash and cash equivalents.

Accounts Receivable

          Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectibility of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.

Inventories

          Inventories consist of finished goods, primarily of batteries and security products related to the Company’s third party fulfillment services and materials used in the assembly of batteries into “packs”. All items are stated at the lower of cost, determined using the average cost method by specific part, or market. The Company performs periodic evaluations, based upon business trends, to specifically identify obsolete, slow moving and non-salable inventory. Inventory allowances are evaluated periodically to ensure they reflect current business trends.

          The Company is a significant supplier for Brink’s Home Security, Inc. (“Brinks”). In order to meet its obligations to Brinks, the Company maintains certain inventory levels at all times. Inventory held related to the Company’s relationship with Brinks, primarily security products, totaled approximately $5,800,000, $8,500,000

F-9

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

and $9,900,000, respectively, at December 31, 2004, December 31, 2005 and September 30, 2006. Brinks is obligated to purchase from the Company any and all remaining inventory held by the Company pursuant to an agreement with Brinks (including inventory in transit) and reimburse the Company for any applicable cancellation fees to the manufacturer upon early termination of the relationship.

Property and Equipment

          Property and equipment are carried at cost. Depreciation and amortization of property and equipment is provided for using the straight-line method over the estimated useful lives of the assets ranging from three to ten years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the related asset. Equipment leased under capital leases is amortized over the service life of the related asset or the term of the lease, whichever is shorter.

          At December 31, 2004, 2005 and September 30, 2006, property and equipment includes $112,085, $112,085 and $112,085, respectively, of assets which have been financed under capital leases. The accumulated amortization related to these assets at December 31, 2004, 2005 and September 30, 2006 totaled $35,991, $56,706 and $72,191, respectively. Amortization expense related to these assets during the years ended December 31, 2003, 2004, and 2005 totaled $13,653, $15,286, and $20,715, respectively. Amortization expense related to these assets during the nine month periods ended September 30, 2005 and 2006 totaled $15,536 and $15,485, respectively.

          Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

Income Taxes

          The Company is included in the consolidated federal income tax return filed by Zunicom. Income taxes are calculated as if the Company filed on a separate return basis. Current income tax receivable/payable, if any, is recorded as a due from/to Parent and deferred tax assets and liabilities are recorded separately.

          The Company utilizes the asset and liability approach to accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

Long-Lived Assets

          The Company accounts for the impairment and disposition of long-lived assets in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” In accordance with SFAS No. 144, long-lived assets are reviewed when events or changes in circumstances indicate that their carrying value may not be recoverable. These evaluations include comparing the future undiscounted cash flows of such assets to their carrying value. If the carrying value exceeds the future undiscounted cash flows, the assets are written down to their fair value using discounted cash flows. For the years ended December 31, 2003 and 2005 and for the nine month periods ended September 30, 2005 and 2006 there was no impairment of the value of such assets. For the year ended December 31, 2004, the Company wrote off certain fixed assets, primarily leasehold improvements from a prior lease. The related impairment charges recognized in 2004 totaled approximately $26,000.

F-10

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred Rent

          The Company’s operating lease for its primary office and warehouse space contains a free rent period and contains predetermined fixed increases of the minimum rental rate during the initial lease term. For this lease, the Company recognizes rental expense on a straight-line basis over the minimum lease term and records the difference between the amounts charged to expense and the rent paid as deferred rent. In addition, the landlord provided certain allowances for leasehold improvements on this office and warehouse space which have been recorded as deferred rent and leasehold improvements. The deferred rent will be amortized as an offset to rent expense over the remaining term of the related lease.

Revenue Recognition

          The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104 when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed and determinable and collectibility is reasonably assured.

          The Company is a distributor who purchases both finished goods and components from domestic and international suppliers. The Company adds value to products and components by packaging them in customer specified “kits” or tailor made units that are convenient for the customer to order and ship. Additionally, the Company has several customers that require specific battery solutions for inclusion in their own products. The Company will obtain the battery and necessary components and configure a new finished good unit based upon customer specifications. The Company refers to this process as a “value added service”. The Company recognizes sales of finished goods at the time the customer takes title to the product.

          The Company sells products to several customers in bulk quantities. The Company obtains the order from the customer and arranges for the delivery of the product directly from the Company’s vendor to the customer to reduce freight costs and wear and tear on the product from excessive handling. The Company refers to these transactions as “drop shipments” because the product is shipped directly from the Company’s vendor to the Company’s customer. The Company also has an inventory fulfillment agreement with Brinks. The Company purchases, handles, assembles and delivers installation components and tooling to Brinks and to independent Brinks authorized dealers. Revenues from drop shipment transactions and pursuant to the agreement with Brinks are recognized on a gross basis at the time the customer takes title to the product based on the Company’s analysis of the criteria defined in Emerging Issues Task Force (“EITF”) Issue No. 99-19 for gross revenue reporting. Specifically, (i) the Company is the primary obligor; (ii) the Company has general and physical loss inventory risk; (iii) the Company has credit risk; (iv) in most cases, the Company has discretion in supplier selection and product specifications; and (v) the Company has reasonable latitude within economic constraints to negotiate prices and terms with its customers.

Post Shipment Obligations

          The Company offers its customers a limited warranty for replacement of finished goods that do not function properly. Generally, the limited warranty period is for one year. The most common types of warranty claims are batteries that leak or batteries that do not provide the voltage they are intended to supply. The Company’s written warranty is limited to the replacement of the product purchased and does not cover the product the battery is intended to power. The Company’s replacement rate is insignificant, and is therefore recorded as a reduction of sales when the warranty expense is incurred. If the Company determines that a shipment of product had a manufacturing defect, the Company has recourse with the manufacturer to recover the replacement costs incurred. The costs of isolated or individual instances of defects are borne by the Company. At December 31, 2004, 2005 and September 30, 2006, the Company has a warranty reserve of approximately $10,000.

F-11

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Advertising costs

          Advertising costs are charged to operations when incurred. Advertising expense was approximately $99,000, $102,000, and $95,000 for the years ended December 31, 2003, 2004, and 2005, respectively. Advertising expense was approximately $68,000 and $142,000 for the nine months ended September 30, 2005 and 2006, respectively.

NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Shipping and Handling Costs

          Shipping and handling costs are charged to cost of sales in the accompanying statements of income.

Earnings Per Share

          Basic earnings per common share is computed by dividing income applicable to common shareholders by the weighted average number of common shares outstanding during each period. There are no common stock equivalents that would affect earnings per share for any period presented.

Use of Estimates and Assumptions

          Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could vary from the estimates that were used.

Fair Value of Financial Information

          In accordance with the reporting requirements of SFAS No. 107, Disclosures About Fair Value of Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this statement and includes this additional information in the notes to the financial statements when the fair value is different than carrying value of these financial instruments. The estimated fair value of cash equivalents, accounts receivable, prepaid expenses and other current assets, line-of-credit, accounts payable, and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. The estimated fair value of capital lease obligations approximates the carrying amounts since they bear market rates of interest. None of these instruments are held for trading purposes.

Impact of Recently Issued Accounting Standards

          In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock Based Compensation, and superseded by Accounting Principles Bulletin (“APB”) Opinion 25, Accounting for Stock Issued to Employees. SFAS No. 123R focuses primarily on share-based payments for employee services, requiring these payments to be recorded using a fair-value-based method. The use of APB No. 25’s intrinsic value method of accounting for employee stock options has been eliminated. As a result, the fair value of stock options granted to employees in the future will be required to be expensed. The impact on the results of operations for the Company will be dependent on the number of options granted and the fair value of those options. For the Company, SFAS No. 123R is effective in 2006. The Company has not granted stock-based compensation in the past but intends to do so in the future.

F-12

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE C. INVENTORIES

          Inventories at December 31, 2004, 2005 and September 30, 2006 consist of the following:

	December 31,
							September 30,
	2004			2005			2006
Battery and related inventory	$	6,750,060		$	9,973,047		$	10,634,661
Security related inventory		5,948,172			8,581,729			10,071,030
Electronic components inventory		818,252			706,217			326,327
Inventory obsolescence reserve		(263,313	)		(150,715	)		(270,715	)
	$	13,253,171		$	19,110,278		$	20,761,303

NOTE D. LINE OF CREDIT

          The Company has a line of credit agreement with a bank which provides for interest payable monthly at LIBOR Index rate plus 2.5% (6.79% at December 31, 2005) and matures May 5, 2007. On July 25, 2005, the Company entered into an agreement with the 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 the line of credit. The line of credit is due on demand and is secured by accounts receivable, inventories, and equipment of the Company. The line’s availability is based on a borrowing formula, which allows for borrowings equal to eighty-five percent (85.0%) of the Company’s eligible accounts receivable and a percentage of eligible inventories. In addition, the Company 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, the Company entered into a renewal and modification agreement on the line of credit agreement with the 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, the Company entered into the second renewal and modification agreement with the bank which increased the Company’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 or (b) an amount equal to the product of (i) one and one-half (1.5), multiplied by (ii) eighty-five percent (85.0%) of the outstanding value of Borrower’s Eligible Accounts Receivable at any one time outstanding. At December 31, 2004 and 2005, $8,526,903 and $9,261,435, respectively, was outstanding under the line of credit and $3,473,097 and $2,231,019, respectively, remained available for borrowings under the line of credit based on the borrowing formula.

          The interest rate on borrowings above $6,000,000 was 7.82% at September 30, 2006. At September 30, 2006, $11,621,516 was outstanding under the line of credit and $2,827,586 remained available for borrowings under the line of credit based on the borrowing formula.

F-13

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE E. CAPITAL LEASE OBLIGATIONS

          Minimum future lease payments under capital leases and the present value of the minimum lease payments as of December 31, 2005 are as follows:

2006	$	22,988
2007		19,572
2008		6,721
Less amount representing interest		(2,965	)
Present value of minimum lease payments		46,316
Less current portion		(20,977	)
	$	25,339

NOTE F. RELATED PARTY TRANSACTIONS

          The Company paid management fees to Zunicom, its parent, of $480,000, $440,000, and $480,000 during the years ended December 31, 2003, 2004, and 2005, respectively. The Company paid management fees to Zunicom of $360,000 and $360,000 for the nine months ended September 30, 2005 and 2006, respectively.

          The Company declared $566,580 of dividends payable to Zunicom and paid cash dividends of $566,580 to Zunicom during the year ended December 31, 2003. The Company declared $185,000 of dividends payable to Zunicom during the year ended December 31, 2004. This amount was recorded as a payable and was included in the due to parent amount in the accompanying 2004 balance sheet. The Company declared $966,671 of dividends payable to Zunicom and paid cash dividends of $882,491 to Zunicom during the year ended December 31, 2005. At December 31, 2005 the balance due to Zunicom included a dividend payable of $269,180.

          The Company declared cash dividends totaling $964,000 during the nine months ended September 30, 2006 of which $344,000 is payable to Zunicom as of September 30, 2006. This payable is included in the due to parent amount in the accompanying balance sheet. The Company paid cash dividends to Zunicom of $889,180 during the nine months ended September 30, 2006.

          At December 31, 2004, 2005 and September 30, 2006, the Company was due $63,888, $117,626 and $176,536, respectively, from a related party entity that is also a subsidiary of Zunicom. These amounts due are related to expenses paid by the Company on behalf of the related party.

          At December 31, 2004, 2005 and September 30, 2006, the due to parent on the accompanying balance sheet includes $1,689,267, $2,500,749 and $3,388,140, respectively, of income taxes payable to Zunicom related to the Company’s allocation of current income tax expense.

F-14

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE G. INCOME TAXES

          Deferred tax assets and liabilities at December 31, 2004, 2005 and September 30, 2006 consist of the following:

	December 31,
							September 30, 2006
	2004			2005
Deferred tax assets:
Inventory obsolescence	$	89,526		$	51,243		$	92,043
Allowance for doubtful accounts		66,811			68,001			90,101
Accrued liabilities		17,000			68,056			131,875
Current deferred tax asset	$	173,337		$	187,300		$	314,019
Non-current deferred tax liability	$	(37,464	)	$	(53,728	)	$	(55,604	)

          The non-current deferred tax liability arises from the different useful lives and depreciation methods for depreciating assets for federal income tax purposes.

          The Company’s income tax expense for the years ended December 31, 2003, 2004 and 2005 is comprised as follows:

	2003			2004			2005
Deferred income tax expense (benefit)	$	(28,076	)	$	(54,275	)	$	2,301
Current income tax expense		712,926			401,414			811,482
Income tax expense	$	684,850		$	347,139		$	813,783

          The Company’s income tax expense for the years ended December 31, 2003, 2004, and 2005 differed from the statutory federal rate of 34 percent as follows:

	2003		2004		2005
Statutory rate applied to income before income taxes	$	545,148	$	253,231	$	662,360
Amounts not deductible for income tax purposes		42,704		46,990		56,575
State income taxes, net of federal income tax effect		83,329		46,918		94,848
Change in previous year estimate		13,669		—		—
Income tax expense	$	684,850	$	347,139	$	813,783

NOTE H. CREDIT CONCENTRATIONS AND SIGNIFICANT CUSTOMERS

          Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

          Cash and cash equivalents are at risk to the extent that they exceed Federal Deposit Insurance Corporation insured amounts. To minimize this risk, the Company places its cash and cash equivalents with high credit quality financial institutions.

          In the normal course of business, the Company extends unsecured credit to virtually all of its customers. Because of the credit risk involved, management has provided an allowance for doubtful accounts which reflects its estimate of amounts which may become uncollectible. In the event of complete non-performance by the Company’s customers, the maximum exposure to the Company is the outstanding accounts receivable balance at the date of non-performance.

F-15

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE H. CREDIT CONCENTRATIONS AND SIGNIFICANT CUSTOMERS (Continued)

          At December 31, 2004, 2005 and September 30, 2006, the Company had receivables due from a significant customer who comprised approximately 46%, 48% and 46%, respectively, of total trade receivables. During the years ended December 31, 2003, 2004, and 2005, the Company had one customer who accounted for 50%, 51%, and 56%, respectively, of net sales, and another customer who during the year ended December 31, 2003 accounted for 10% of net sales. During the nine month periods ended September 30, 2005 and 2006, the Company had one customer who accounted for 64% and 59%, respectively, of net sales. The loss of this significant customer would materially decrease the Company’s net sales.

          A significant portion of the Company’s inventory purchases are from two suppliers, representing approximately 37% and 22% for the year ended December 31, 2003, 44% and 19% for the year ended December 31, 2004, and approximately 44% and 22% for the year ended December 31, 2005. The Company purchased approximately 61%, 61%, and 70%, respectively, of its product through domestic sources with the remainder purchased from international sources, predominately in the Pacific Rim and mainland China, for the years ended December 31, 2003, 2004, and 2005. The majority of the Company’s international purchases are coordinated through an independent consultant. The Company does not anticipate any changes in the relationships with these suppliers or the independent consultant; however, if such a change were to occur, the Company believes it has alternative sources available.

NOTE I. COMMITMENTS AND CONTINGENCIES

Litigation

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

Operating Leases

          The Company leases certain office and warehouse facilities under various non-cancelable operating leases. On February 1, 2002, the Company entered into a lease for a warehouse facility. The Company entered into an amendment to the lease to extend the terms of the lease from February 1, 2004 to December 31, 2009. This amendment included increased rental space, a rent holiday for six months during 2004, leasehold incentives including build-out of the facility that totaled approximately $134,000, and rent price escalation throughout the term of the lease. Minimum future payments on these leases as of December 31, 2005 are as follows:

Years ending December 31,
2006	$	386,469
2007		400,793
2008		434,992
2009		334,890
	$	1,557,144

          Rent expense for the years ended December 31, 2003, 2004, and 2005 totaled approximately $360,000, $464,000, and $451,000, respectively. Rent expense for the nine month periods ended September 30, 2005 and 2006 totaled approximately $340,953 and $433,422, respectively.

F-16

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE I. COMMITMENTS AND CONTINGENCIES (Continued)

Employment Agreements

          The Company has employment agreements with two key officers of the Company. The agreements call for severance compensation in the event the officers employment is terminated by reason of (i) the death, illness or incapacity of the officer; (ii) the termination of the officer’s employment by the Company for any reason other than act of breach; or (iii) the termination of the officer’s employment by the officer because of a substantial breach of the employment agreement by the Company. If severance compensation is required, the Company will pay the officer a lump sum equal to twelve months of the officer’s current salary plus twelve months of Cobra insurance coverage for the officer and the officer’s family. One of the key officers is also entitled to an annual incentive bonus on a target net income amount based upon the Company’s annual operating budget as more thoroughly defined in his employment agreement. This bonus is payable annually and is payable for the calendar year in which the officer is terminated. This officer is also entitled to receive an option to purchase 10% of the outstanding common stock of the Company upon the closing of a spin-off or public offering of the Company. The other key officer may be paid an annual incentive bonus to be determined solely by the Board of Directors of the Company at the end of each year. This officer is also entitled to receive an option to purchase 7.5% of the outstanding common stock of the Company upon the closing of a spin-off or public offering of the Company. Both employment agreements state that any options granted to these two key officers will be fully vested and immediately exercisable for a period of five years at a per share exercise price equal to the average market price for the shares of common stock of the Company during the four-week period following the closing of the spin-off or public offering. Both agreements contain anti-dilution provisions.

NOTE J. EMPLOYEE BENEFIT PLAN

          The Company established and continues to maintain a 401(k) Plan intended to qualify under sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. All employees who are at least 18 years of age are eligible to participate in the plan. There is no minimum service requirement to participate in the plan. Under the plan, an eligible employee can elect to defer from 1% to 85% of his salary. The Company may, at its sole discretion, contribute and allocate to plan participant’s account a percentage of the plan participant’s contribution. There were no Company contributions for the nine month periods ended September 30, 2005 and 2006 or the years ended December 31, 2003, 2004, and 2005.

NOTE K. QUARTERLY FINANCIAL INFORMATION (Unaudited)

          Selected quarterly financial information (unaudited) for the years ended December 31, 2004 and 2005 is set forth below:

2004	Net Sales		Gross Profit		Net Income (Loss)			Net Income (Loss) Per Share				Weighted Average Shares Outstanding
First quarter	$	14,075,664	$	1,947,897	$	(40,966	)		$	(0.08	)		493,905
Second quarter	$	16,167,901	$	2,029,630	$	74,606			$	0.15			493,905
Third quarter	$	18,196,556	$	2,249,156	$	166,599			$	0.34			493,905
Fourth quarter	$	18,719,424	$	2,577,150	$	197,420			$	0.40			493,905
For the year	$	67,159,545	$	8,803,833	$	397,659			$	0.81			493,905

F-17

UNIVERSAL POWER GROUP, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE K. QUARTERLY FINANCIAL INFORMATION (Unaudited) (Continued)

2005	Net Sales		Gross Profit		Net Income		Net Income Per Share			Weighted Average Shares Outstanding
First quarter	$	17,402,572	$	2,145,194	$	176,509		$	0.36		493,905
Second quarter	$	20,446,237	$	2,612,326	$	278,914		$	0.56		493,905
Third quarter	$	22,111,952	$	3,015,847	$	435,952		$	0.88		493,905
Fourth quarter	$	21,314,414	$	2,541,573	$	242,961		$	0.49		493,905
For the year	$	81,275,175	$	10,314,940	$	1,134,336		$	2.30		493,905

NOTE L. SUBSEQUENT EVENTS

          On September 12, 2006, the Company filed a registration statement on Form S-1 with the United States Securities and Exchange Commission for an underwritten initial public offering of the Company’s common stock. The registration statement was amended on September 14, 2006 and October 26, 2006. The registration statement is not yet effective. The securities covered by the registration statement may not be sold nor may offers for the securities covered by the registration statement be accepted prior to the time the registration statement becomes effective. Nothing contained herein constitutes an offer to sell or the solicitation of an offer to purchase the securities covered by the registration statement. A written prospectus, when available, may be obtained from the managing underwriter of the offering, Ladenburg Thalmann & Co. Inc., 153 East 53rd Street, New York, New York 10022.

          As currently contemplated, immediately before the effective date of the registration statement, approximately $530,000 of the $3,723,916 balance recorded as due parent at September 30, 2006 will be forgiven by Zunicom. A portion of the balance totaling $2.85 million will be evidenced by an unsecured promissory note to be issued by the Company to Zunicom and the remaining balance will be paid to Zunicom. The note will bear interest at 6% per annum and will mature 66 months from the date of issuance. Interest on the unpaid principal amount of this note will be payable quarterly, in arrears, and the principal amount will be repaid in 16 equal quarterly installments of $178,125 beginning 21 months after the date of issuance.

          In addition, as currently contemplated, immediately before the effective date of the registration statement, the Company will declare a dividend payable to Zunicom. The exact amount of the dividend will be determined immediately before the effective date of the registration statement and will equal the difference between $10 million and the gross proceeds realized by Zunicom from the sale of the Company’s shares that it owns that are covered by the registration statement. The dividend will be evidenced by a note payable, which will have a maturity date 66 months from the date of issuance (the date of this prospectus) and which will bear interest at the rate of 6% per annum. Interest on the unpaid principal amount of this note will be payable quarterly, in arrears, and the principal amount will be repaid to the extent of the net proceeds from the sale of shares covered by the over-allotment option and the balance in 16 equal quarterly installments beginning 21 months after the date of issuance.

          On October 25, 2006 the Company’s Board of Directors authorized a forward stock split of 6.07404258 shares for each share of common stock outstanding on such date. As a result, the number of shares of common stock issued and outstanding increased from 493,905 to 3,000,000. All information in these statements gives retroactive effect to the stock split.

F-18

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
  Universal Power Group, Inc.

          Under date of February 24, 2006, except for Note D to which the date is April 18, 2006 and Note L to which the date is October 25, 2006, we reported on the balance sheets of Universal Power Group, Inc. as of December 31, 2004 and 2005, and the related statements of income, shareholder’s equity and cash flows for each of the years in the three-year period ended December 31, 2005, which are included in this Registration Statement and Prospectus. In connection with our audits of the aforementioned financial statements, we also audited the related financial statement schedule in this Registration Statement and Prospectus. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.

          In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ KBA GROUP LLP
Dallas, Texas
February 24, 2006

S-1

UNIVERSAL POWER GROUP, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
For three Years Ended December 31, 2005

Description	Balance at Beginning of Period		Additions Charged to Expense or other		Deductions			Balance at End of Period
Inventory obsolescence reserve:
Year ended:
December 31, 2003	$	175,164	$	36,680	$	—		$	211,844
December 31, 2004	$	211,844	$	90,000	$	(38,531	)	$	263,313
December 31, 2005	$	263,313	$	55,962	$	(168,560	)	$	150,715
Accounts receivable reserve:
Year ended:
December 31, 2003	$	97,602	$	276,126	$	(165,344	)	$	208,384
December 31, 2004	$	208,384	$	173,744	$	(185,626	)	$	196,502
December 31, 2005	$	196,502	$	48,187	$	(44,687	)	$	200,002

S-2

UNIVERSAL POWER GROUP, INC.

3,000,000
Shares of Common Stock

PROSPECTUS

Ladenburg Thalmann & Co. Inc. Wunderlich Securities, Inc.

___________, 200_

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

          The following are the expenses of the issuance and distribution of the securities being registered, other than underwriting commissions and expenses, all of which will be paid by us. Other than the SEC registration fee and the NASD filing fees all of such expenses are estimated.

SEC Registration fee	$	3,655
NASD fee	$	3,916
American Stock Exchange listing fee	$	50,000	*
Printing expenses	$	65,000	*
Accounting fees and expenses	$	115,000	*
Legal fees and expenses	$	255,000	*
Transfer agent and registrar fees and expenses	$	2,000	*
“Road Show” and miscellaneous other expenses	$	45,429	*
Total	$	540,000	*

* Estimated

Item 14. Indemnification of Directors and Officers

          Article 2.02-1 of the Texas Business Corporation Act (the “TBCA”) provides that any director or officer of a Texas corporation may be indemnified against judgments, penalties, fines, settlements and reasonable expenses actually incurred by him in connection with or in defending any action, suit or proceeding in which he was, is, or is threatened to be made a named defendant by reason of his position as director or officer, provided that he conducted himself in good faith and reasonably believed that, in the case of conduct in his official capacity as a director or officer of the corporation, such conduct was in the corporation’s best interests; and, in all other cases, that such conduct was at least not opposed to the corporation’s best interests. In the case of a criminal proceeding, a director or officer may be indemnified only if he had no reasonable cause to believe his conduct was unlawful. If a director or officer is wholly successful, on the merits or otherwise, in connection with such a proceeding, such indemnification is mandatory.

          Under our amended and restated articles of incorporation, (the “Articles of Incorporation”), no director of the registrant will be liable to the registrant or any of its stockholders for monetary damages for an act or omission in the director’s capacity as a director, except for liability (i) for any breach of the director’s duty of loyalty to the registrant or its stockholders, (ii) for acts or omission not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for any transaction for which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director’s office, (iv) for acts or omissions for which the liability of a director is expressly provided by statute, or (v) for acts related to an unlawful stock repurchase or dividend payment. The Articles of Incorporation further provide that, if the statutes of Texas are amended to further limit the liability of a director, then the liability of the company’s directors will be limited to the fullest extent permitted by any such provision.

          Our bylaws provide for indemnification of officers and directors of the registrant and persons serving at the request of the registrant in such capacities for other business organizations against certain losses, costs, liabilities, and expenses incurred by reason of their positions with the registrant or such other business organizations. We also have policies insuring its officers and directors and certain officers and directors of its wholly owned subsidiaries against certain liabilities for actions taken in such capacities, including liabilities under the Securities Act of 1933, as amended (the “Act”).

II-1

          Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons pursuant to our amended and restated articles of incorporation, bylaws and the Texas Business Corporation Act, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable.

          The Underwriting Agreement provides for reciprocal indemnification between us and our controlling persons, on the one hand, and the underwriters and their respective controlling persons, on the other hand, against certain liabilities in connection with this offering, including liabilities under the Securities Act.

Item 15. Recent Sales of Unregistered Securities.

          None

Item 16. Exhibits

Exhibits No.	Description
1	Form of Underwriting Agreement**
3(i)	Amended and Restated Certificate of Formation (including Amended and Restated Articles of Incorporation)
3(ii)	Amended and Restated Bylaws**
4.1	Specimen stock certificate*
4.2	Form of representatives’ warrant**
5	Form of opinion of Morse, Zelnick, Rose & Lander, LLP
10.1(a)	Form of 2006 Stock Option Plan
10.1(b)	Form of Stock Option Agreement
10.2	Form of Randy Hardin Employment Agreement
10.3	Form of Ian Edmonds Employment Agreement
10.4	Form of Mimi Tan Employment Agreement
10.5	(a) Revolving Credit and Security Agreement with Compass Bank(1)
	(b) Renewal and Modification Agreement, dated March 23, 2006(2)
	(c) Renewal and Modification Agreement, dated April 18, 2006
	(d) First Amendment to Master Revolving Promissory Note
10.6	Purchase Agreement, dated June 1, 2004, with Brinks Home Security†**
10.7	Real Property Lease for 1720 Hayden Road, Carrollton, Texas**
10.8	Real Property Lease for 11605-B North Santa Fe, Oklahoma City, Oklahoma**
10.9	Real Property Lease for Las Vegas, Nevada**
10.10	Agreement with Import Consultants
10.11(a)	Form of Promissory Note in the amount of $2,850,000 payable to Zunicom
10.11(b)	Form of Promissory Note in the amount of $2,000,000 payable to Zunicom
10.12	Director-Nominee Consents
	a) Leslie Bernhard**
	b) Marvin I. Haas**
	c) Garland P. Asher**
	d) Robert M. Gutkowski**
10.13	Third Party Logistics & Purchase Agreement, dated as of November 20, 2006, with Brinks Home Security†
21.1	Subsidiaries**
23.1	Consent of KBA Group LLP
23.2	Consent of Morse, Zelnick, Rose & Lander, LLP**
24	Power of Attorney (included in signature page)**

*	To be filed by amendment.
**	Previously filed.
†	Portions omitted pursuant to a request for confidential treatment.
(1)	Incorporated by reference to Exhibit 10.11 to Zunicom Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 filed on March 31, 2005.
(2)	Incorporated by reference to Exhibit 10.13 to Zunicom Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 filed on March 30, 2006.

II-2

Item 17. Undertakings

          A. The undersigned Registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)	To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)	To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement,
(iii)	To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

          (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

          (4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

          (i) If the registrant is relying on Rule 430B:

          (A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

          (B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of this registration statement, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in this registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in this registration statement or a prospectus that is part of this registration statement or made in a document incorporated or deemed incorporated by reference into this registration statement or prospectus that is part of this registration statement will, as to a purchaser with a time of contract of sale prior to such first use,

II-3

supersede or modify any statement that was made in this registration statement or prospectus that was part of this registration statement or made in any such document immediately prior to such date of first use.

          (5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)	Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii)	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

          (6) To provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

          (7) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

          (8) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

          (9) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4

SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Carrollton, State of Texas, on November 30, 2006.

UNIVERSAL POWER GROUP, INC.

by: /s/ RANDY HARDIN

Chief Executive Officer

          Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and the dates indicated.

Signature	Title	Date
/s/ RANDY HARDIN	Chief Executive Officer (Principal Executive Officer), President and Director	November 30, 2006
Randy Hardin
/s/ JULIE SANSOM-REESE	Chief Financial Officer (Principal Financial and Accounting Officer)	November 30, 2006
Julie Sansom-Reese
/s/ WILLIAM TAN*	Chairman of the Board	November 30, 2006
William Tan
/s/ IAN C. EDMONDS	Director	November 30, 2006
Ian Edmonds

*By:	IAN C. EDMONDS
	Ian C. Edmonds
	Attorney-in-fact

II-5

EXHIBIT INDEX

Exhibits No.	Description
1	Form of Underwriting Agreement**
3(i)	Amended and Restated Certificate of Formation (including Amended and Restated Articles of Incorporation)
3(ii)	Amended and Restated Bylaws**
4.1	Specimen stock certificate*
4.2	Form of representatives’ warrant**
5	Form of opinion of Morse, Zelnick, Rose & Lander, LLP
10.1(a)	Form of 2006 Stock Option Plan
10.1(b)	Form of Stock Option Agreement
10.2	Form of Randy Hardin Employment Agreement
10.3	Form of Ian Edmonds Employment Agreement
10.4	Form of Mimi Tan Employment Agreement
10.5	(a) Revolving Credit and Security Agreement with Compass Bank(1)
	(b) Renewal and Modification Agreement, dated March 23, 2006(2)
	(c) Renewal and Modification Agreement, dated April 18, 2006
	(d) First Amendment to Master Revolving Promissory Note
10.6	Purchase Agreement, dated June 1, 2004, with Brinks Home Security†**
10.7	Real Property Lease for 1720 Hayden Road, Carrollton, Texas**
10.8	Real Property Lease for 11605-B North Santa Fe, Oklahoma City, Oklahoma**
10.9	Real Property Lease for Las Vegas, Nevada**
10.10	Agreement with Import Consultants
10.11(a)	Form of Promissory Note in the amount of $2,850,000 payable to Zunicom
10.11(b)	Form of Promissory Note in the amount of $2,000,000 payable to Zunicom
10.12	Director-Nominee Consents
	a) Leslie Bernhard**
	b) Marvin I. Haas**
	c) Garland P. Asher**
	d) Robert M. Gutkowski**
10.13	Third Party Logistics & Purchase Agreement, dated as of November 20, 2006, with Brinks Home Security†
21.1	Subsidiaries**
23.1	Consent of KBA Group LLP
23.2	Consent of Morse, Zelnick, Rose & Lander, LLP**
24	Power of Attorney (included in signature page)**

*	To be filed by amendment.
**	Previously filed.
†	Portions omitted pursuant to a request for confidential treatment.
(1)	Incorporated by reference to Exhibit 10.11 to Zunicom Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 filed on March 31, 2005.
(2)	Incorporated by reference to Exhibit 10.13 to Zunicom Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005 filed on March 30, 2006.

II-6

EX-3.(I)

Exhibit 3(i)

AMENDED AND RESTATED
CERTIFICATE OF FORMATION OF
UNIVERSAL POWER GROUP, INC.

     Pursuant to the provisions of 3.057 -3.063 of the Texas Business Organizations Code (the "TBOC"), the undersigned Corporation adopts the following Amended and Restated Certificate of Formation.

Article I.

     The name of the Corporation is Universal Power Group, Inc.

Article II.

     The filing entity is a for-profit corporation.

Article III.

     The date of formation of the entity is July 22, 1968.

Article IV.

     The file number issued by the Secretary of State is 24967800.

Article V.

     The following amendment to the Restated Articles of Incorporation was adopted on November 1, 2006, in a manner required by the TBOC and the governing documents of the Corporation. Articles One through Nine of the Restated Articles of Incorporation are amended to read as follows, and said Restated Certificate of Formation, as amended, does not contain any other change in the Restated Articles of Incorporation except for information omitted under the TBOC.

     We, the undersigned natural persons of the age of eighteen (18) years or more, acting as Organizers of a corporation under the Texas Business Organizations Code, do hereby adopt the following Certificate of Formation for such Corporation.

Article I.

The name of the Corporation is Universal Power Group, Inc.

Article II.

The period of its duration is perpetual.

Article III.

     The purpose for which the Corporation is organized is to transact any business and to do and perform any and all acts and things authorized by the Texas Business Organizations Code, as amended (the "TBOC"), or which may be authorized in the future by amendment thereto.

Article IV.

     1. For any matter, other than the election of directors or a matter for which the TBOC requires the vote of a specified portion of the shares entitled to vote, the act of the shareholders is determined by the affirmative vote of a majority of the shares entitled to vote and represented in person or by proxy at a meeting of shareholders at which a quorum is present; and

     2. With respect to the election of directors, a plurality of the votes cast by shareholders entitled to vote at a meeting of shareholders at which a quorum is present will govern.

Article V.

     The power to adopt, alter, amend or repeal the Bylaws of the Corporation shall be vested in the Board of Directors.

Article VI.

     Cumulative voting is expressly prohibited. At each election of directors, every shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote; no shareholder shall be entitled to cumulate his votes by giving one candidate as many votes as the number of such directors multiplied by his shares shall equal, or by distributing such votes on the same principle among any number of such candidates.

Article VII.

     No holder of any stock of the Corporation shall be entitled as a matter of right to purchase or subscribe for any part of any stock of the Corporation authorized by this Certificate or of any additional stock of any class to be issued by reason of any increase of the authorized shares of the Corporation or of any bonds, certificates of indebtedness, debentures, warrants, options or other securities convertible into any class of stock of the Corporation, but any shares authorized by this Certificate or any such additional authorized issue of any shares or securities convertible into any shares may be issued and disposed of by the Board of Directors to such persons, firms, corporations or associations for such consideration and upon such terms and in such manner as the Board of Directors may in its discretion determine without offering any thereof on the same terms or on any terms to the shareholders then of record or to any class of shareholders, provided only that such issuance may not be inconsistent with any provision of law or with any of the provisions of this Certificate.

Article VIII.

     Any contract or other transaction between the Corporation and one or more of its directors, or between the Corporation and any firm of which one or more of its directors are members or employees, or in which they are interested, or between the Corporation and any corporation or association of which one or more of its directors are shareholders, members, directors, officers, or employees, or in which they are interested, shall be valid for all purposes, notwithstanding the presence of the director or directors at the meeting of the Board of Directors of the Corporation that acts upon, or in reference to, the contract or transaction, and notwithstanding his or their participation in the action, if the facts of such interest shall be disclosed or known to the Board of Directors and the Board of Directors shall, nevertheless, authorize or ratify the contract or transaction, the interested director or directors to be counted in determining whether a quorum is present and to be entitled to vote on such authorization of ratification. This Article shall not be construed to invalidate any contract or

EX-5

Exhibit 5

MORSE,ZELNICK ,ROSE &LANDER
A   L I M I T E D   L I A B I L I T Y   P A R T N E R S H I P

     405 PARK AVENUE
NEW YORK, NEW YORK 10022-2605
212-838-1177
FAX – 212-838-9190

November 20, 2006

WRITER’S DIRECT LINE
(212) 838-1177

Universal Power Group, Inc.
17200 Hayden Road
Carrollton, Texas 75006

Dear Sirs:

            We have acted as counsel to Universal Power Group, Inc., a Texas corporation (the “Company”), in connection with the preparation of a registration statement on Form S-1, as amended from time to time (the “Registration Statement”) filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act”), to register (a) 3,450,000 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock), including shares to be sold upon exercise by the underwriters of their over-allotment option, of which 2,300,000 shares of Common Stock are being registered on behalf of the Company and 1,150,000 shares are being registered on behalf of Zunicom, Inc. (“Zunicom”); (b) the warrants to be issued to the representative of the several underwriters to purchase up to 345,000 shares of Common Stock (the “Representatives’ Warrants”); (c) 345,000 shares of Common Stock underlying the Representatives’ Warrants; and (d) any additional securities issued pursuant to Rule 462(b) of the Act. The securities described in clauses (a) through (d) above are hereinafter referred to as the “Securities.”

            In this regard, we have reviewed the Company’s Amended and Restated Articles of Incorporation, resolutions adopted by the Company’s Board of Directors, the Registration Statement, the exhibits to the Registration Statement and such other records, documents, statutes and decisions, as we have deemed relevant in rendering this opinion. Based upon the foregoing, we are of the opinion that the Securities (i) have been duly and validly authorized for issuance; (ii) when issued as contemplated by the Registration Statement and, in the case of those shares underlying the Representatives’ Warrants, when issued in accordance with the terms of those Warrants, will be legally issued, fully paid and non-assessable. The Representatives’ Warrants will, when issued as contemplated in the Underwriting Agreement and the Representatives’ Warrant, attached as exhibits to the Registration Statement, be validly issued and constitute a legally valid and binding obligation of the Company. This opinion is limited to (i) the federal laws of the United States of America, including statutory provisions and reported judicial decisions interpreting those laws and (ii) the laws of the State of Texas, including statutory provisions, applicable provisions of the Texas Constitution and reported judicial decisions interpreting those laws.

            We hereby consent to the use of this opinion as Exhibit 5 to the Registration Statement and to the reference to our firm in the related prospectus under the heading “Legal Matters.” In giving such opinion, we do not thereby admit that we are acting within the category of persons whose consent is required under Section 7 of the Act or the rules or regulations of the Securities and Exchange Commission thereunder.

Very truly yours, 

/s/ MORSE, ZELNICK, ROSE & LANDER, LLP

MORSE, ZELNICK, ROSE & LANDER, LLP 

EX-10.1(A)

Exhibit 10.1(a)

UNIVERSAL POWER GROUP, INC.

2006 STOCK OPTION PLAN

	UNIVERSAL POWER GROUP, INC.
	2006 STOCK OPTION PLAN
	Section	Page
1.	Purpose; Types of Awards; Construction.	1
2.	Definitions.	1
3.	Administration.	5
4.	Eligibility.	6
5.	Stock Subject to the Plan.	6
6.	Specific Terms of Awards.	7
7.	General Provisions.	9

UNIVERSAL POWER GROUP, INC.

2006 STOCK OPTION PLAN

          1.Purpose; Types of Awards; Construction.

          The purposes of the Universal Power Group, Inc. 2006 Stock Option Plan (the "Plan") are to afford an incentive to Non-Employee Directors, selected officers and other employees, advisors and consultants of Universal Power Group, Inc. (the "Company"), or any Parent or Subsidiary of the Company that now exists or hereafter is organized or acquired, to continue as Non-Employee Directors, officers or employees, advisors or consultants, as the case may be, to increase their efforts on behalf of the Company and its Subsidiaries and to promote the success of the Company's business. The Plan provides for the grant of Options, including "incentive stock options" and "nonqualified stock options". The Plan is designed so that Awards granted hereunder intended to comply with the requirements for "performance-based compensation" under Section 162(m) of the Code may comply with such requirements, and the Plan and Awards shall be interpreted in a manner consistent with such requirements.

          2.Definitions.

          For purposes of the Plan, the following terms shall be defined as set forth below:

               (a)"Award" means any Option granted under the Plan.

               (b)"Award Agreement" means any written agreement, contract, or other instrument or document evidencing an Award.

               (c)"Board" means the Board of Directors of the Company.

               (d)"Change in Control" means a change in control of the Company, which will be deemed to have occurred if:

     (i)any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or (C) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Stock, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representingone-third (33 1/3%) or more of the combined voting power of the Company's then outstanding voting securities;

     (ii)the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals

who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended;

     (iii)there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the Board, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof; or

     (iv)the stockholders of the Company approve a plan of complete liquidation of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets (or any transaction having a similar effect), other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed of or, if such entity is a subsidiary, the ultimate parent thereof.

Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by virtue of (x) a Public Offering or (y) the consummation of any transaction or series of integrated transactions immediately following which the holders of the Stock immediately prior to such transaction or series of transactions continue to havesubstantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

               (e)"Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

               (f)"Committee" means the Compensation Committee of the Board or any other committee established by the Board to administer the Plan, the composition of which shall at all times satisfy the provisions of Rule 16b-3 promulgated under the Exchange Act as in effect from time to time and Section 162(m) of the Code.

               (g)"Company" means Universal Power Group, Inc., a corporation organized under the laws of the State of Texas, or any successor corporation.

2

               (h)"Effective Date" means_________, 2006, the date that the Plan was adopted by the Board.

               (i)"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder.

               (j)"Fair Market Value" means, with respect to Stock or other property, the fair market value of such Stock or other property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee in good faith, the per share Fair Market Value of Stock as of a particular date shall mean (i) the mean between the highest and lowest reported sales price per share of Stock on the national securities exchange on which the Stock is principally traded, for the last preceding date on which there was a sale of such Stock on such exchange, or (ii) if the shares of Stock are then traded in an over-the-counter market, the average of the closing bid and asked prices for the shares of Stock in such over-the-counter market for the last preceding date on which there was a sale of such Stock in such market, or (iii) if the shares of Stock are not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee, in its sole discretion, shall determine.

               (k)"Grantee" means a person who, as a non-employee director, officer or other employee of the Company or a Parent or Subsidiary of the Company, has been granted an Award under the Plan.

               (l)"ISO" means any Option intended to be and designated as an incentive stock option within the meaning of Section 422 of the Code.

               (m)"Non-Employee Director" means any director of the Company who is not also employed by the Company or any of its Subsidiaries.

               (n)"NQSO" means any Option that is not designated as an ISO.

               (o)"Option" means a right, granted to a Grantee under Section 6(b), to purchase shares of Stock. An Option may be either an ISO or an NQSO, provided that ISOs may be granted only to employees of the Company or a Parent or Subsidiary of the Company.

               (p)"Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code.

               (q)"Performance Goals" means performance goals based on one or more of the following criteria,determined in accordance with generally accepted accounting principles where applicable: (i) earnings before or after interest, taxes, depreciation, amortization, or extraordinary or special items; (ii) net income, before or after extraordinary or special items; (iii) return on equity (gross or net), before or after extraordinary or special items; (iv) earnings per share, before or after extraordinary or special items; and (v) stock price. Where applicable, the Performance Goals may be

3

expressed in terms of attaining a specified level of the particular criterion or the attainment of an increase or decrease (expressed as absolute numbers of a percentage) in the particular criterion, and may be applied to one or more of the Company or a Parent or Subsidiary of the Company, or a division or strategic business unit of the Company, all as determined by the Committee. The Performance Goals may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be paid (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Each of the foregoing Performance Goals shall be evaluated in accordance with generally accepted accounting principles, where applicable, and shall be subject to certification by the Committee. The Committee shall have the authority to make equitable adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting the Company or any Parent or Subsidiary of the Company or the financial statements of the Company or any Parent or Subsidiary of the Company, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles.

               (r)"Plan" means this Universal Power Group, Inc. 2006 Stock Option Plan, as amended from time to time.

               (s)"Plan Year" means a calendar year.

               (t)"Public Offering" means an offering of securities of the Company that is registered with the Securities and Exchange Commission.

               (u)"Stock" means shares of common stock, par value $0.01 per share, of the Company.

               (v)"Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code.

     3.Administration.

     The Plan shall be administered by the Board or by such Committee that the Board may appoint for this purpose. If a Committee is appointed to administer the Plan, all references herein to the "Committee" shall be references to such Committee. If no Committee is appointed by the Board to administer the Plan, all references herein to the "Committee" shall be references to the Board. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to grant Awards; to determine the persons to whom and the time or times at which Awards shall be granted; to determine the type and number of Awards to be granted, the number of shares of Stock to which an Award may relate and the terms, conditions, restrictions and performance criteria relating

4

to any Award, including but not limited to the effect of a Change in Control upon any Award; to determine, at the time of grant or thereafter, whether and to what extent the vesting or payment of any Award may be accelerated;to determine Performance Goals no later than such time as required to ensure that an underlying Award which is intended to comply with the requirements of Section 162(m) of the Code so complies; and to determine whether, to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged, or surrendered; to make adjustments in the terms and conditions of, and the Performance Goals (if any) included in, Awards; to construe and interpret the Plan and any Award; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the Award Agreements (which need not be identical for each Grantee but which shall be substantially in the form attached hereto as Exhibit A); and to make all other determinations deemed necessary or advisable for the administration of the Plan. Notwithstanding the foregoing, neither the Board, the Committee nor their respective delegates shall have the authority to reprice (or cancel and regrant) any Option or, if applicable, other Award at a lower exercise, base or purchase price without first obtaining the approval of the Company's stockholders.

     The Committee may appoint a chairperson and a secretary and may make such rules and regulations for the conduct of its business as it shall deem advisable, and shall keep minutes of its meetings. All determinations of the Committee shall be made by a majority of its members either present in person or participating by conference telephone at a meeting or by written consent. The Committee may delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. All decisions, determinations and interpretations of the Committee shall be final and binding on all persons, including but not limited to the Company, any Parent or Subsidiary of the Company or any Grantee (or any person claiming any rights under the Plan from or through any Grantee) and any stockholder.

     No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Award granted hereunder.

     4.Eligibility.

     Awards may be granted to selected Non-Employee Directors, officers and other employees, advisors or consultants of the Company or any Parent or Subsidiary of the Company, in the discretion of the Committee. In determining the persons to whom Awards shall be granted and the type of any Award (including the number of shares to be covered by such Award), the Committee shall take into account such factors as the Committee shall deem relevant in connection with accomplishing the purposes of the Plan.

5

     5.Stock Subject to the Plan.

     The maximum number of shares of Stock reserved for the grant of Awards under the Plan shall be1,250,000,subject to adjustment as provided herein. No more than 500,000 shares of Stock may be made subject to Options to a single individual in a single Plan Year, subject to adjustment as provided herein. Determinations made in respect of the limitations set forth in the immediately preceding sentence shall be made in a manner consistent with Section 162(m) of the Code. Such shares may, in whole or in part, be authorized but unissued shares or shares that shall have been or may be reacquired by the Company in the open market, in private transactions or otherwise. If any shares subject to an Award are forfeited, cancelled, exchanged or surrendered or if an Award terminates or expires without a distribution of shares to the Grantee, or if shares of Stock are surrendered or withheld as payment of either the exercise price of an Award and/or withholding taxes in respect of an Award, the shares of Stock with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, withholding, termination or expiration, again be available for Awards under the Plan. Upon the exercise of any Award granted in tandem with any Awards such related Awards shall be cancelled to the extent of the number of shares of Stock as to which the Award is exercised and, notwithstanding the foregoing, such number of shares shall no longer be available for Awards under the Plan.

     In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, stock, or other property), recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, affects the Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Grantees under the Plan, then the Committee shall make such equitable changes or adjustments as it deems necessary or appropriate to any or all of (i) the number and kind of shares of Stock or other property (including cash) that may thereafter be issued in connection with Awards, (ii) the number and kind of shares of Stock or other property (including cash) issued or issuable in respect of outstanding Awards, (iii) the exercise price, grant price, or purchase price relating to any Award; provided, that, with respect to ISOs, such adjustment shall be made in accordance with Section 424(h) of the Code; and (iv) the Performance Goals applicable to outstanding Awards.

     6.Specific Terms of Awards.

               (a)General. The Committee is authorized to grant the Awards described in this Section 6, under such terms and conditions as deemed by the Committee to be consistent with the purposes of the Plan. Each Award granted under the Plan shall be evidenced by an Award Agreement containing such terms and conditions applicable to such Award as the Committee shall determine at the date of grant or thereafter. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Parent or Subsidiary of the Company upon the grant, maturation, or exercise of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter, including, without limitation, cash, Stock, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis.

6

The Committee may make rules relating to installment or deferred payments with respect to Awards, including the rate of interest to be credited with respect to such payments. In addition to the foregoing, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter, such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine.

               (b)Options. The Committee is authorized to grant Options to Grantees on the following terms and conditions:

     (i)Type of Award. The Award Agreement evidencing the grant of an Option under the Plan shall designate the Option as an ISO or an NQSO.

     (ii)Exercise Price. The exercise price per share of Stock purchasable under an Option shall be determined by the Committee, but in no event shall the exercise price of any Option be less than the Fair Market Value of a share of Stock on the date of grant of such Option. The exercise price for Stock subject to an Option may be paid in cash or by an exchange of Stock previously owned by the Grantee for at least six months (if acquired from the Company), through a "broker cashless exercise" procedure approved by the Committee (to the extent permitted by law), or a combination of the above, in any case in an amount having a combined value equal to such exercise price. An Award Agreement may provide that a Grantee may pay all or a portion of the aggregate exercise price by having shares of Stock with a Fair Market Value on the date of exercise equal to the aggregate exercise price withheld by the Company.

     (iii)Term and Exercisability of Options. The date on which the Committee adopts a resolution expressly granting an Option shall be considered the day on which such Option is granted. Options shall be exercisable over the exercise period (which shall not exceed ten years from the date of grant), at such times and upon such conditions as the Committee may determine, as reflected in the Award Agreement; provided, that the Committee shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate. An Option may be exercised to the extent of any or all full shares of Stock as to which the Option has become exercisable, by giving written notice of such exercise to the Committee or its designated agent.

     (iv)Termination of Relationship. An Option may not be exercised unless the Grantee is then a director of, in the employ of, or otherwise providing services to the Company or a Parent or Subsidiary of the Company, and unless the Grantee has remained continuously so employed, or continuously maintained such relationship, since the date of grant of the Option; provided, that the Award Agreement may contain provisions extending the exercisability of Options, in the event of

7

specified terminations, to a date not later than the expiration date of such Option.

     (v)Other Provisions. Options may be subject to such other conditions including, but not limited to, restrictions on transferability of the shares acquired upon exercise of such Options, as the Committee may prescribe in its discretion or as may be required by applicable law.

7.General Provisions.

               (a)Nontransferability. Unless otherwise provided in an Award Agreement, Awards shall not be transferable by a Grantee except by will or the laws of descent and distribution and shall be exercisable during the lifetime of a Grantee only by such Grantee or his guardian or legal representative.

               (b)No Right to Continued Employment, etc. Nothing in the Plan or in any Award, any Award Agreement or other agreement entered into pursuant hereto shall confer upon any Grantee the right to continue in the employ of or to continue as a director of the Company or any Parent or Subsidiary of the Company or to be entitled to any remuneration or benefits not set forth in the Plan or such Award Agreement or other agreement or to interfere with or limit in any way the right of the Company or any such Parent or Subsidiary to terminate such Grantee's employment, or director or independent contractor relationship.

               (c)Taxes. The Company or any Parent or Subsidiary of the Company is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Stock, or any other payment to a Grantee, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Grantees to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Grantee's tax obligations. The Committee may provide in the Award Agreement that in the event that a Grantee is required to pay any amount to be withheld in connection with the issuance of shares of Stock in settlement or exercise of an Award, the Grantee may satisfy such obligation (in whole or in part) by electing to have a portion of the shares of Stock to be received upon settlement or exercise of such Award equal to the minimum amount required to be withheld.

          (d)Stockholder Approval; Amendment and Termination.

          (i)The Plan shall take effect upon its adoption by the Board but the Plan (and any grants of Awards made prior to the stockholder approval mentioned herein) shall be subject to the requisite approval of the stockholders of the Company. In the event that the stockholders of the Company do not ratify the Plan at a meeting of the stockholders at which such issue is considered and voted upon, then upon

8

such event the Plan and all rights hereunder shall immediately terminate and no Grantee (or any permitted transferee thereof) shall have any remaining rights under the Plan or any Award Agreement entered into in connection herewith.

     (ii)The Board may at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in part; provided, however, that unless otherwise determined by the Board, an amendment that requires stockholder approval in order for the Plan to continue to comply with Section 162(m) or any other law, regulation or stock exchange requirement shall not be effective unless approved by the requisite vote of stockholders. Notwithstanding the foregoing, no amendment to or termination of the Plan shall affect adversely any of the rights of any Grantee, without such Grantee's consent, under any Award theretofore granted under the Plan.

               (e)Expiration of Plan. Unless earlier terminated by the Board pursuant to the provisions of the Plan, the Plan shall expire on the tenth anniversary of the Effective Date. No Awards shall be granted under the Plan after such expiration date. The expiration of the Plan shall not affect adversely any of the rights of any Grantee, without such Grantee's consent, under any Award theretofore granted.

               (f)Deferrals. The Committee shall have the authority to establish such procedures and programs that it deems appropriate to provide Grantees with the ability to defer receipt of cash, Stock or other property payable with respect to Awards granted under the Plan.

               (g)No Rights to Awards; No Stockholder Rights. No Grantee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Grantees. Except as provided specifically herein, a Grantee or a transferee of an Award shall have no rights as a stockholder with respect to any shares covered by the Award until the date of the issuance of a stock certificate to him for such shares.

               (h)Unfunded Status of Awards. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any Award shall give any such Grantee any rights that are greater than those of a general creditor of the Company.

               (i)No Fractional Shares. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

9                (j)Regulations and Other Approvals.

     (i)The obligation of the Company to sell or deliver Stock with respect to any Award granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws and the applicable laws, rules and regulations of non-U.S. jurisdictions, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Committee.

     (ii)Each Award is subject to the requirement that, if at any time the Committee determines, in its absolute discretion, that the listing, registration or qualification of Stock issuable pursuant to the Plan is required by any securities exchange or under any state or federal law or any applicable law, rule or regulation of a non-U.S. jurisdiction, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Stock, no such Award shall be granted or payment made or Stock issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Committee.

     (iii)In the event that the disposition of Stock acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act and is not otherwise exempt from such registration, such Stock shall be restricted against transfer to the extent required by the Securities Act or regulations thereunder, and the Committee may require a Grantee receiving Stock pursuant to the Plan, as a condition precedent to receipt of such Stock, to represent to the Company in writing that the Stock acquired by such Grantee is acquired for investment only and not with a view to distribution.

     (iv)The Committee may require a Grantee receiving Stock pursuant to the Plan, as a condition precedent to receipt of such Stock, to enter into a stockholder agreement or "lock-up" agreement in such form as the Committee shall determine is necessary or desirable to further the Company's interests.

               (k)Governing Law. The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Texas without giving effect to the conflict of laws principles thereof.

10

EX-10.1(B)

Exhibit 10.1(b)

FORM OF STOCK OPTION AGREEMENT

     STOCK OPTION AGREEMENT (hereinafter called this "Agreement") made as of this ____ day of _________ , 20__ between Universal Power Group, Inc., a Texas corporation (hereinafter called the "Corporation"), and ______________ (hereinafter called the "Optionee").

     WHEREAS, in accordance with the Universal Power Group, Inc. 2006 Stock Option Plan (the "Plan"), a copy of which has been delivered to the Optionee, the Corporation desires, in connection with the [employment of the Optionee] [the services provided by Optionee to the Corporation], to provide the Optionee with an opportunity to acquire shares of the Corporation's common stock, par value $.01 per share (hereinafter called the "Common Stock"), on favorable terms and thereby increase his or her proprietary interest in the continued progress and success of the business of the Corporation;

     NOW, THEREFORE, in consideration of the premises, the mutual covenants herein set forth and other good and valuable consideration, the Corporation and the Optionee hereby agree as follows:

     1. Confirmation of Grant of Option.

          (a) In accordance with the Plan, the Corporation hereby irrevocably grants to the Optionee on _________, 20__ (the "Date of Grant") the right to purchase (hereinafter called the "Option") an aggregate of up to ________ shares of Common Stock (the “Option Shares”), subject to adjustment as provided in Section 5 of the Plan.

          (b) The Option [is] [is not] intended to constitute and qualify as “an incentive stock option” as such term is defined in Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code"). [For ISO grants: The Optionee represents that he or she does not own stock possessing more than 10% of the combined voting power of all classes of stock of the Corporation. The Option shall constitute a “non-qualified option” to the extent this option does not meet the criteria of an incentive stock option as defined in Section 422(b) of the Code or to the extent that the aggregate fair market value of the Common Stock with respect to which incentive stock options are exercisable for the first time by the Optionee during any calendar year under all plans of the Corporation and its Subsidiaries (as defined below) exceeds $100,000.]

     2. Exercise Price. The Optionee shall have the right to purchase the Option Shares from the Corporation at a price of $_____ per share, subject to adjustment as provided in Section 5 of the Plan (the "Exercise Price"), such amount being the Fair Market Value (as defined in the Plan) of a share of Common Stock on the Date of Grant.

     3. Exercise of Option. Alternative 1: Subject to earlier termination or cancellation as provided in this Agreement or the Plan, the Option may be exercised from time to time, in whole or in

part, on or prior to ________ __, 20__ (the "Expiration Date") in accordance with the following vesting and exercise schedule:

[TO BE INSERTED]

     Alternative 2: Subject to earlier termination or cancellation as provided in this Agreement or the Plan, the Option may be exercised from time to time, in whole or in part, on or prior to __________
, ____ (the "Expiration Date") and shall only become exercisable on the date on which ____________ (the "Performance Goal"). If the Performance Goal does not occur on or prior to the Expiration Date, the Option shall become null and void.

     The Option shall be exercised as provided in this Section 3 by notice and payment to the Corporation as provided in Sections 7, 11 and 12 hereof.

     4. Term and Rights as Shareholder. Subject to earlier termination or cancellation as provided in this Agreement or the Plan, the Option will be exercisable only (a) on or prior to the Expiration Date and (b) except as otherwise provided in Section 6 hereof, if the Optionee shall, at any time of exercise, be [an employee] [a director] of the Corporation or of a Subsidiary or a Parent (as such terms are defined in the Plan). The holder of the Option will not have any right to dividends or any other rights of a shareholder with respect to a share of the Common Stock subject to the Option until such share shall have been issued to him or her following exercise of the Option. Such issuance shall be evidenced by the appropriate entry on the books of the duly authorized transfer agent of the Corporation, provided that the date of issue shall not be earlier than the Exercise Date (as hereinafter defined in Section 7(b) hereof) with respect to such share.

     5. Non-transferability of Option. The Option will not be transferable otherwise than by will or by the laws of descent and distribution, and the Option may be exercised during the lifetime of the Optionee only by him or her or, in the case of the Optionee's certified incompetency, his or her duly authorized legal representative(s). More particularly, but without limiting the generality of the foregoing, the Option may not be assigned, transferred (except as provided in the preceding sentence) or otherwise disposed of, or pledged or hypothecated in any way (whether by operation of law or otherwise), and shall not be subject to execution, attachment, or other process. Any assignment, transfer, pledge, hypothecation or other disposition of the Option attempted contrary to the provisions of this Agreement, or any levy of execution, attachment or other process attempted upon the Option, will be null and void and without effect. Any attempt to make any such assignment, transfer, pledge, hypothecation or other disposition of the Option or any attempt to make any such levy of execution, attachment or other process will cause the Option to terminate immediately upon the happening of any such event if the Corporation should, at any time, in its sole discretion, so elect by written notice to the Optionee (or to the person then entitled to exercise the Option under the provisions of the Plan); provided, however, that any such

2

termination of the Option under the foregoing provisions of this Section 5 will not prejudice any rights or remedies which the Corporation or any Subsidiary or Parent may have under this Agreement or otherwise.

     [Alternative 1: 6. Exercise Upon Termination of Employment.

          (a) If the Optionee ceases to be an employee of the Corporation or any Parent or Subsidiary because of his or her discharge for Cause (as defined below), the Option will forthwith terminate. If, however, the Optionee for any other reason (other than death, disability or normal retirement) ceases to be such an employee, the Option may, subject to the provisions of Section 5 hereof, be exercised, to the extent the Optionee would have been entitled under Section 3 hereof to exercise the Option on the date of such cessation of employment, at any time within 60 days after such cessation of employment, at the end of which period the Option will terminate unless terminated sooner as a result of the Expiration Date occurring prior thereto.

          (b) (i) If the reason for cessation of employment is disability within the meaning of Section 22(e)(3) of the Code or normal retirement, the Option may, subject to the provisions of Section 5 hereof, be exercised, to the extent the Optionee would have been entitled under Section 3 hereof to exercise the Option on the date of such cessation of employment, at any time within 12 months after such cessation of employment, at the end of which period the Option will terminate unless terminated sooner as a result of the Expiration Date occurring prior thereto.

               (ii) If the reason for cessation of employment is disability not within the meaning of Section 22(e)(3) of the Code, the Option may, subject to the provisions of Section 5 hereof, be exercised, to the extent the Optionee would have been entitled under Section 3 hereof to exercise the Option on the date of such cessation of employment, at any time within six months after such cessation of employment, at the end of which period the Option will terminate unless terminated sooner as a result of the Expiration Date occurring prior thereto[For ISO grants: ; provided, however, that, if the Optionee exercises the Option more than three months after the cessation of employment, the shares issued upon any such exercise shall not be deemed to be shares of the Common Stock issued upon the exercise of an incentive stock option as such term is defined in Section 422 of the Code].

          (c) If the Optionee dies while he or she is employed by the Corporation or a Subsidiary or Parent or within the period after the termination of his or her employment during which he or she is entitled to exercise the Option under the provisions of subsections (a) and (b) of this Section 6, the Option may, subject to the provisions of Section 5 hereof, be exercised, to the extent the Optionee would have been entitled under Section 3 hereof to exercise the Option on the date of such cessation of employment, by the estate of the Optionee, or the duly appointed representative, or beneficiary who acquires the Option by will or by the laws of descent and distribution, at any time within one year after

3

the date of death, at the end of which period the Option will terminate unless terminated sooner as a result of the Expiration Date occurring prior thereto.

          (d) In no event set forth in this Section 6 may the Option be exercised after the Expiration Date.

          (e) The term "Cause" shall have the definition set forth in an individual employment, severance or other similar agreement between Optionee and the Corporation or a Subsidiary or Parent, or if there is no such agreement or no such definition in any such agreement, Cause shall mean (i) the continued failure by the Optionee substantially to perform his or her duties and obligations to the Corporation or any of its affiliates, including without limitation repeated refusal to follow the reasonable directions of the Optionee's employer, knowing violation of law in the course of performance of the duties of Optionee's employment with the Corporation or any of its affiliates, repeated absences from work without a reasonable excuse, and intoxication with alcohol or illegal drugs while on the Corporation's premises or that of any of the Corporation's affiliates during regular business hours (other than any such failure resulting from his or her incapacity due to physical or mental illness); (ii) fraud or material dishonesty against the Corporation or any of its Subsidiaries or its Parent; or (iii) a conviction or plea of guilty or nolo contendre for the commission of a felony or a crime involving material dishonesty. Determination of Cause shall be made by the Corporation in its sole discretion.

          (f) The Option will not be affected by any change of duties or position of the Optionee so long as he or she continues to be an employee of the Corporation or any Subsidiary or Parent. If the Optionee is granted a temporary leave of absence (including leave to enter the employ of a government, or any department, agency or instrumentality thereof), such leave of absence will be deemed a continuation of his or her employment by the Corporation or any Subsidiary or Parent, but only if and so long as the employing corporation consents thereto. Retirement will be deemed to be a termination of employment for all purposes of this Agreement.

          (g) If there shall have occurred a Change in Control with respect to the Corporation at any time while this Agreement is in effect, the Optionee shall have the right to exercise the Option in whole or in part as to such number of additional Option Shares then subject to the Option and not then exercisable as the Corporation may, in its sole discretion, permit on the effective date of such sale, merger, consolidation or reorganization or transfer.]

     [Alternative 2: 6. Exercise Upon Termination of Relationship.

          (a) Except as otherwise provided in this Section 6(a) below, if the Optionee ceases to be a director of the Corporation or any Parent or Subsidiary, the Option may, subject to the provisions of Section 5 hereof, be exercised, to the extent the Optionee would have been entitled under Section 3 hereof

4

to exercise the Option on the date of such termination, at any time within 90 days after such termination, at the end of which period the Option will terminate unless terminated sooner as a result of the Expiration Date occurring prior thereto. Notwithstanding the foregoing, if Optionee is removed for cause by the shareholders of the Corporation or the Board, the Option shall terminate immediately upon his or her removal.

          (b) If there shall have occurred a Change in Control with respect to the Corporation at any time while this Agreement is in effect, the Optionee shall have the right to exercise the Option in whole or in part as to such number of additional Option Shares then subject to the Option and not then exercisable as the Corporation may, in its sole discretion, permit on the effective date of such sale, merger, consolidation or reorganization or transfer.]

     7. Method of Exercise of Option.

          (a) Subject to the terms and conditions of this Agreement and the Plan, the Option will be exercisable by notice and payment to the Corporation in accordance with the procedure prescribed herein. Each such notice, which may be in the form of Exhibit A hereto, shall:

     (i) state the election to exercise the Option and the number of shares of the Common Stock in respect of which it is being exercised;

     (ii) be signed by the person or persons entitled to exercise the Option, including the address to which share certificates are to be delivered, and, if the Option is being exercised by any person or persons other than the Optionee, be accompanied by proof, satisfactory to counsel for the Corporation, of the right of such person or persons to exercise the Option;

     (iii) be accompanied by payment in full of the purchase price for the Option Shares covered by the notice in the form of a [Alternative 1: check, bank draft or money order in an amount equal to the aggregate purchase price of such Option Shares payable to the Corporation] [Alternative 2: check, bank draft or money order in an amount equal to the aggregate par value of the Option Shares covered by the notice and a fully recourse promissory note bearing interest at a rate no less than the “applicable federal rate” as defined in Section 1274 of the Code and otherwise in a form acceptable to the Corporation for the balance of the purchase price] [Alternative 3: any other manner permitted by the Plan and approved by the Corporation]; and

     (iv) make such arrangements, if requested by the Corporation and in form and substance satisfactory to counsel to the Corporation, with respect to any applicable withholding tax requirements.

     (b) Upon receipt of a notice in accordance with subsection (a) of this Section 7 (such date and time of receipt being herein called the "Exercise Date"), the Option will be deemed to have been exercised with respect to such particular shares of the Common Stock if, and only if, the provisions of subsection (a) of this Section 7 and the provisions of Section 10 hereof shall have been complied with. Notwithstanding anything in this Agreement to the contrary, any notice of exercise given pursuant to the provisions of this Section 7 will be void and of no effect if all the provisions of subsection (a) of this

5

Section 7 and the provisions of Section 10 shall not have been complied with. The certificate or certificates representing the shares of the Common Stock as to which the Option shall be exercised will be registered in the name of the person or persons exercising the Option and will be delivered, as soon as practicable after the Exercise Date, to the person or persons exercising the Option at the place specified in the notice of exercise of the Option, but only upon compliance with all of the provisions of this Agreement.

          (c) In the event that the Optionee shall exercise the Option for less than the total number of Option Shares subject to the Option, this Agreement shall be deemed automatically amended to reflect the reduced number of shares post-exercise, without the necessity of the Optionee surrendering this Agreement for issuance of a new agreement reflecting the reduced number of shares then still subject to the Option. To evidence such amendment, the Corporation shall deliver to the Optionee (or such other permissible person executing the Option) a notice in the form of Exhibit B hereto.

     8. Registration.

          (a) [Alternative 1: The Optionee understands that the Option Shares have been registered under the Securities Act of 1933, as amended (the "Securities Act"), in a Registration Statement on Form S-8; however, the Option has not been registered under the Securities Act on the Date of Grant nor will it ever be.] [Alternative 2: The Optionee understands that neither the Option nor the Option Shares have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may never be registered.] The Optionee represents that the Option is [and the Option Shares are] being acquired by him or her for investment for his or her account and not with a view to, or in connection with, the sale or other distribution thereof.

          (b) In the event that, at the Exercise Date, the Optionee is required by the Securities Act, if he or she desires to sell the Option Shares, to deliver a reoffer prospectus complying with Section 10(a) of the Securities Act, the certificate or certificates for the Underlying Shares shall bear the following legend:

"The shares evidenced by this certificate have been registered on Form S-8 under the Securities Act of 1933, as amended (the "Securities Act"); however, the holder is required under the Securities Act to use a reoffer prospectus to resell the shares. Accordingly, the shares may not be sold or transferred unless there is delivered an opinion of counsel to the Company that either (1) there is in effect a current prospectus meeting the requirements of Section 10(a) of the Securities Act which is being or will be delivered to the purchaser or transferee at or prior to the time of delivery of such shares for sale or transfer, or (2) such shares may be sold without violating Section 5 of the Securities Act."

6

     9. Notices. Each notice relating to this Agreement will be in writing and delivered in person or by registered or certified mail or by express courier service to the proper address. All notices to the Corporation shall be addressed to it at its principal office, now at ____________________________ , Attention: Chief Executive Officer (or Executive Vice President, if the Optionee is the Chief Executive Officer). All notices to the Optionee or other person or persons then entitled to exercise the Option shall be addressed to the Optionee or such other person or persons at the address set forth below the Optionee's name following the Corporation's signature. Anyone to whom a notice may be given under this Agreement may designate a new address by notice to that effect given in accordance with this Section 9.

     10. Approval of Counsel. The exercise of the Option and the issuance and delivery of the Option Shares pursuant thereto shall be subject to approval by the Corporation's counsel of all legal matters in connection therewith, including compliance with the requirements of the Securities Act, or corresponding provision of future law, and the Exchange Act, or corresponding provision of future law, and the rules and regulations thereunder, and the requirements of any stock exchange upon which the Common Stock may then be listed or, if applicable, of The Nasdaq Stock Market, Inc. In furtherance thereof, such counsel may request that the Optionee or other permissible person exercising the Option deliver such investment representation or other documents as such counsel deems necessary or appropriate.

     11. Reservation of Shares. The Corporation shall at all times during the term of the Option reserve and keep available such number of shares of the class of stock then subject to the Option as will be sufficient to satisfy the requirements of this Agreement.

     12. Disputes; Construction. Any dispute or disagreement which arises under, or as a result of, or in any way relates to, the interpretation, construction or application of this Agreement will be resolved by the Committee. Any such resolution made hereunder shall be final, binding and conclusive for all purposes upon all persons. In the event of a difference between the terms and conditions of this Agreement and those of the Plan, the terms and conditions of the Plan shall govern. Any capitalized term not defined herein shall have the meaning as defined in the Plan.

     13. Limitation of Action. The Optionee agrees that every right of action accruing to him or her and arising out of, or in connection with, this Agreement against the Corporation will, irrespective of the place where an action may be brought, cease and be barred by the expiration of three years from the date of the act or omission in respect of which such right of action arises.

     14. Benefits of Agreement. This Agreement will inure to the benefit of, and be binding upon, each successor and assign of the Corporation. All obligations imposed upon the Optionee and all rights granted to the Corporation under this Agreement will be binding upon the Optionee's heirs, legal representatives and successors.

7

     15. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas without giving effect to the conflict of laws principles thereof.

8

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the day, month and year first above written.

UNIVERSAL POWER GROUP, INC.

By:

Name:

Title:

OPTIONEE:

Name (Print):

Address:

9

EXHIBIT A
ELECTION TO PURCHASE

To Universal Power Group, Inc.:

Attention: Chief Executive Officer

     The undersigned hereby irrevocable elects to exercise the foregoing Option to purchase _____ shares of the Common Stock issuable upon the exercise of the Option and requests that a certificate for such shares shall be issued in the name of

(Name)

(Address)

(Taxpayer Social Security Number)

and be delivered to

(Name)

at

(Address)

Dated: ___________ , ____

Name of holder of Option:

(please print) 

10

(Address) 

(Signature) 

Note:	The above signature must correspond with the name as written upon the face of the
	Option in every particular, without alteration or enlargement or any change whatever.

11

EXHIBIT B

NOTICE AS TO PARTIAL EXERCISE
BY
_____________________

To:		Date:
	(Address)

     WHEREAS, you are the named Optionee in a Stock Option Agreement dated as of ________________ to purchase ________ shares of the Common Stock and have exercised the Option as to
_______ shares;

     PLEASE TAKE NOTICE that the Stock Option Agreement is, by its terms, automatically amended so it now covers only shares.

Universal Power Group, Inc.
By:
	(Title)

12

EX-10.2

EX-10.2

EMPLOYMENT AGREEMENT

     In consideration of the employment, or continued employment, of Randy Hardin (hereinafter referred to as "Employee") by Universal Power Group, Inc., a Texas corporation (hereinafter referred to as "Company") and the attendant benefits to the Employee as a result thereof, Company and Employee agree as follows:

1.     Definitions. For purposes of this Agreement, the following definitions shall apply:

(a) "Inventions" shall mean:
	(1) All inventions, improvements, modifications, and enhancements, whether or not patented, made by Employee during Employee's employment by the Company, and
	(2) All inventions, improvements, modifications and enhancements made by Employee, during a period of one year after any suspension or termination of Employee's employment by the Company, which relate, directly or indirectly, to the past, present or future business of the Company.
(b) "Work Product" shall mean all documentation, software, creative works, know-how and information created, in whole or in part, by Employee during Employee's employment by the Company, whether or not copyrightable or otherwise is protected.
(c) "Trade Secrets" shall mean all documentation, software, know-how and information relating to the past, present or future business of the Company or any plans therefore, or relating to the past, present or future business of a third party or plans therefore that are disclosed to the Company, which the Company does not disclose to third parties without restrictions on use or further disclosure.

          2.     Employment. The Company hereby employs Employee and Employee hereby accepts employment with the Company and agrees to serve the Company in the capacities hereinafter set forth and such other capacities as determined by the Company’s Board of Directors (the “Board”), for the term and compensation, and upon and subject to the terms and conditions as hereinafter set forth.

          3.1     Capacities. Employee shall serve in the capacities and shall have such responsibilities and duties as are set forth in Exhibit A attached hereto and incorporated herein by reference; provided, however, that Employee shall perform and discharge such other or further duties as may be assigned to Employee from time to time by the Board.

          3.2     Full-time Nature. Employee agrees that during and throughout the term of this Agreement, Employee will be a full-time employee of the Company and member of its Board of Directors and devote such time and energies as are reasonably necessary or may reasonably be required to execute, discharge and perform the duties and responsibilities incumbent upon Employee as specifically delineated herein or by reason of the nature of employment of Employee. The Company, in its sole discretion, shall provide Employee an office, staff, facilities and services that are suitable to the position and appropriate for the performance of the Employee’s duties.

          4.1     Amount. As consideration for the services of Employee rendered or to be rendered to the Company in the capacities herein above set forth, or in such other or future capacities as may be assigned to Employee by the Board, Employee shall be compensated by the Company as provided in Exhibit A attached hereto and incorporated herein for all purposes. The Company shall reimburse Employee for all

EMPLOYMENT AGREEMENT
Randy Hardin
Page 1 of 7

reasonable accountable expenses incurred in the performance of Employee’s duties and responsibilities, e.g. travel, entertainment, etc. for the Company. Employee will be reimbursed upon submission of an itemized account of such expenditures with receipts where practicable.

          4.2     Payment. The Company and Employee agree that the compensation provided for herein shall be payable in accordance with the Company's customary payroll policies and provided further that the compensation provided for herein may be increased from time to time at the discretion of the Board.

          4.3     Other Compensation. Employee shall receive such other remuneration and benefits as determined by the Board.

          5.1     Term. The term of this Agreement shall be effective as of the jnitial public offering of the Company (hereinafter referred to as the “Commencement Date”), and shall terminate December 31, 2009 (“Initial Term”) unless sooner terminated by the following events:

          (i)     Employee's death; or,

          (ii)     The Company or Employee shall terminate this Agreement as hereinafter provided.

At the expiration of the Initial Term, Employee’s employment by the Company shall continue on a month-to-month basis and shall otherwise be subject to all of the terms and conditions of this Agreement.

          5.2     Act of Breach. An "Act of Breach,” as that term is used herein, shall be deemed to mean and consist of any one (1) or more of the following:

(i)	Employee's fraud, dishonesty or gross dereliction in the performance of Employee's obligations hereunder; or,
(ii)	Employee's failure to perform and execute any of Employee's duties hereunder or those duties as may reasonably be assigned to him by the Board after receiving written notice of such failure and Employee does not cure such failure within 30 days thereafter; or
(iii)	Employee's breach of any of the fiduciary obligations inherent in and resulting from the employment relationship established by this Agreement; or,
(iv)	Employee's failure to observe or obey any of Employee's covenants or agreements hereunder, after receiving written notice of such failure and Employee does not cure such failure within 30 days thereafter.

          5.3     Termination for Cause, Illness or Incapacity. The Company may at any time after the Commencement Date, by giving to Employee thirty (30) days' prior written notice, terminate this Agreement upon the Company's making a good faith determination (i) that Employee has committed an Act of Breach or, (ii) that Employee has become so physically and/or mentally impaired or incapacitated as to preclude or impair Employee's ability to act in capacities and discharge the duties and obligations set forth herein.

          5.4     Severance Compensation. In the event a third party purchases the Company’s stock or substantially all of its assets or business, the Company may terminate this Agreement without cause by giving the Employee thirty day’s (30) prior written notice. In this event the Company shall pay the Employee (i) a lump sum severance pay equal to twelve (12) months of Employee’s then monthly salary, plus (ii) twelve (12) months of Cobra insurance premiums for Employee’s then existing, health and major

EMPLOYMENT AGREEMENT
Randy Hardin
Page 2 of 7

medical insurance coverage for Employee and his family, plus (iii) incentive bonus for that calendar year as so provided for in Exhibit A hereto (collectively “severance compensation”). In addition, Employee shall be entitled to such severance compensation from the Company as outlined herein, in the event his employment is terminated by reason of (i) the death, illness or incapacity of the Employee as defined in this Agreement; (ii) the termination of the Employee’s employment by the Company for any reason other than an Act of Breach; or (iii) the termination of the Employee’s employment by the Employee because of a substantial breach of this Agreement by the Company as provided in section 5.6 hereof. The Employee may designate in writing the beneficiary of such severance compensation in the event of his death, otherwise, all such payments shall be paid to the duly appointed representative of his Estate. In the event Employee’s employment is terminated by reason of his death, illness or incapacity, as defined in the Agreement, the severance compensation shall be payable in equal monthly installments over a 36 month period beginning no later than 30 days from the date Employee’s employment is terminated.

          5.5     Effect of Delay. Any failure or delay by the Company to exercise the Company’s right to terminate Employee's employment under this Agreement with respect to any one (1) or more of the matters referred to in Section 5.3 hereof, shall not be deemed to be a waiver by the Company of the Company’s right of termination of this Agreement in respect of that Act of Breach or incapacity (provided it shall be continuing) or of any subsequent Act of Breach or incapacity.

          5.6     Employees Right to Terminate. Employee may, upon substantial breach of this Agreement by the Company, terminate this Agreement (i) after giving thirty (30) days prior written notice to the Company of such breach, and (ii) the Company’s failure to cure such breach prior to the expiration of the 30 day period. In such event, the Company will pay the Employee’s salary due and owing until the date of such termination and the Company shall also pay the severance compensation as set forth in section 5.4, provided the Employee performs in good faith Employee’s obligations hereunder to the date of such termination. In the event the Employee terminates his employment for any reason other than a substantial breach by the Company, then the Company shall only owe the Employee any accrued but unpaid salary due through the date of such termination and provided that Employee fully performs Employee's obligations hereunder to the date of such termination and provided further that Employee gives Company ninety (90) days written notice of termination.

          5.7     Effect of Delay. Any failure or delay by the Employee to exercise the Employee’s right to terminate his employment under this Agreement because of a substantial breach of this Agreement by the Company, shall not be deemed a waiver by the Employee of his right of termination in respect of such breach (provided it shall be continuing) or any subsequent breach.

          5.8     Employee's obligations concerning inventions and work product

                    (a) Employee shall promptly disclose to the Company all Inventions and keep accurate records relating to the conception and reduction to practice of all Inventions. Such records shall be the sole and exclusive property of the Company, and the Employee shall surrender possession of such records to the Company upon any suspension or termination of the Employee's employment with the Company.

                    (b) Employee hereby assigns to the Company, without additional consideration to the Employee, the entire right, title and interest in and to the Inventions and Work Product, in and to all proprietary rights therein or based thereon. The Employee agrees that the Work Product shall be deemed to be a "work made for hire.” The Employee shall execute all such assignments, oaths, declarations and other documents as may be prepared by the Company to effect the foregoing.

                    (c) Employee shall provide the Company with all information, documentation, and assistance the Company may request to perfect, enforce, or defend the proprietary rights in or based on the Inventions, Work Product or Trade Secrets. The Company, in its sole discretion, shall determine the

EMPLOYMENT AGREEMENT
Randy Hardin
Page 3 of 7

extent of the proprietary rights, if any, to be protected in or based on the Inventions and Work Product. All such information, documentation, and assistance shall be provided at no additional expense to the Company, except for out-of-pocket expenses, which the Employee incurred at the Company's request.

          6.     Employee obligations concerning trade secrets.

(a) During the term of his employment with the Company and thereafter for twelve months employee shall treat Trade Secrets on a confidential basis and not disclose them to others without the prior written permission of the Company, or use Trade Secrets for any purpose, other than for the performance of services for the Company.
(b) Employee acknowledges that Trade Secrets are the sole and exclusive property of the Company. The Employee shall surrender possession of all Trade Secrets to the Company upon any suspension or termination of Employee's employment with the Company. If after the suspension or termination of Employee's employment, Employee becomes aware of any Trade Secrets in his possession, Employee shall immediately surrender possession thereof to the Company.
7.	Competitive activities.
(a) During the term of Employee's employment with the Company, Employee shall not:                       (1) Perform any services, directly or indirectly, for any person or entity competing, directly or indirectly, with the Company;                       (2) Own, directly or indirectly, an interest in any entity competing, directly or indirectly, with the Company except Employee may own less that 1% of a publicly traded company that competes with the Company.                      (3) Compete, directly or indirectly, with any products or services marketed or offered by the Company; and                      (4) Engage in any activities which could be deemed to be a conflict of interest.                      (b) During the period of twelve months after any suspension or termination of Employee's employment hereunder, Employee shall not contact, directly or indirectly, any customer of the Company with whom Employee had contact during the last 12 months of Employee's employment hereunder nor employ, directly or indirectly, any employee of the Company during the last 12 months of Employee’s employment by the Company.

          8.     Employee's performance of agreement. Except for such restrictions as may be expressly set forth in any exhibit annexed hereto and made a part hereof, Employee warrants and represents that he has the ability to enter into this Agreement and perform all obligations hereunder, and that there are no restrictions or obligations to third parties which would in any way detract from or affect the Employee's performance hereunder.

          9.     Governing law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas.

EMPLOYMENT AGREEMENT
Randy Hardin
Page 4 of 7

          10.     Unenforceability. Ifany provision of this Agreement is determined to be invalid and/or unenforceable by a final decision of a court of competent jurisdiction, it shall not effect the remainder of the Agreement, which shall survive and remain in full force and effect.

          11.     Survival of certain provisions. Any termination or expiration of this Agreement or suspension or termination of Employee's employment by the Company notwithstanding, the provisions of this Agreement which are intended to continue and survive shall so continue and survive, including, but not limited to, the provisions of Paragraphs 5, 6, 7, 8, 11, 12 and 17. This Agreement and all rights hereunder shall inure to the benefit of the Company, its successors and assigns.

          12.     Cumulative remedies. All rights and remedies of the Company and Employee shall be cumulative and the Company and Employee shall have the right to obtain specific performance for the enforcement of this Agreement.

          13.     Arbitration. Any controversy, dispute or claim between the Employee and the Company arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement after 30 days written notice of same, shall be settled by submission by either party to the controversy, claim or dispute to binding arbitration in Dallas County, Texas (unless the parties agree in writing to a different location) before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. In any such arbitration preceding the parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.

          14.     Death Benefit. In the event Employee dies during the term of employment, the Company shall pay to the Employee’s estate the salary that would otherwise be payable to the end of the month in which the Employee died plus the severance compensation provided for in section 5.4 hereof.

          15.     Notice. Any notice required to be given shall be either (1) personally delivered or (2) sent by U.S. Postal Service, postage pre-paid Certified Mail, Return Receipt Requested to the Company at the place of employment and to the Employee at the last residence address given to and on file with Company.

          16.     Integrated Agreement. This Agreement, into which all prior discussions, understandings and agreements merge, constitutes the entire agreement between the parties hereto with respect to the employment of Employee by the Company, and may be amended only by a written instrument duly executed by all the parties hereto.

          17.     Ownership Interest in the Company. If for any reason the Employee’s employment is terminated during the Initial Term of this Agreement, Employee must sell back to the Company any ownership interest he has in the Company for the fair market value thereof. Fair market value shall be determined by the parties at least 10 days prior to termination and paid within 30 days of termination. If the parties cannot agree on the fair market value of Employee’s ownership interest, it shall be submitted to arbitration in accordance with the provisions of Paragraph 13 of this Agreement. This provision does not apply if the Company’s stock is publicly traded.

          18.     Supercedes Agreement of August 2002. This Agreement supercedes and replaces the Employment Agreement between the Company and the Employee executed by the parties in August 2002 and amended by the parties in August 2003.

EMPLOYMENT AGREEMENT
Randy Hardin
Page 5 of 7

          Employee has read and understands the foregoing and agrees to be bound thereby. Further, Employee has consulted with and retained his own counsel to advise him concerning the terms and conditions of this Agreement.

Employee 

Randy Hardin 

Date: _________________, 2006 

     The foregoing was executed by the Employee in the presence of and accepted on behalf of the Company.

Universal Power Group, Inc., a Texas corporation 

By: 

William Tan 

Chairman of the Board 

Date: August 1, 2006 

By:

Julie Sansom-Reese, 

Chief Financial Officer 

Date: _________________ , 2006

EMPLOYMENT AGREEMENT
Randy Hardin
Page 6 of 7

Exhibit A to Randy Hardin Employment Agreement with Universal Power Group, Inc., a Texas corporation

Salary
$220,000 annually.

Vacation
4 weeks per year.

Car allowance
Employee shall be provided an annual company leased current model executive car, such as a Mercedes S550 or equivalent.

Other
Medical and other employee benefits comparable to that provided to all full time employees of the Company.

Duties
Randy Hardin shall be the President and Chief Executive Officer of the Company. He shall perform and be responsible for those duties and obligations of the President and Chief Executive Officer of the Company as set forth in the Bylaws of the Company. In addition, Randy Hardin shall perform those duties as may reasonably be assigned to him by the Board of Directors of the Company.

Incentive Bonus
In addition to his salary as set forth above and subject to the conditions set forth below, Randy Hardin shall be paid an annual incentive bonus, computed as follows:

1)	By April of each year during the term of this Employment Agreement, the Board of Directors of the Company shall review and approve an operating budget for that year. The budget shall include a projected pre-tax targeted net income amount for the Company approved by the Board for that year. (“Target Net Income Amount”).
2)	If for the 12 months ended December 31 of that year the audited pre-tax net income of the Company equals or exceeds Target Net Income Amount for that year, Randy Hardin shall receive, as an incentive bonus, 10% of the audited pre-tax net income of the Company for that year; provided, however, in no event shall the amount of the annual incentive bonus under this paragraph (2) exceed (i) $650,000 for the year ending December 31, 2007, (ii) $750,000 for the year ending December 31, 2008 and (iii) $850,000 for the year ending December 31, 2009.
3)	In the event the Company’s audited pre-tax net income for any year during the term of this Employment Agreement does not equal or exceed the Target Net Income Amount for that year, Randy Hardin shall not be paid the incentive bonus amount described in paragraph (2) above.
4)	Nothing contained herein to the contrary shall preclude the Board, in its sole and absolute discretion, from awarding Randy Hardin an additional bonus in excess of the amount set forth in paragraph (2) above.

Stock Options
Simultaneously with the execution of this employment agreement, Randy Hardin has been granted an option to purchase up to ____ shares of the Company’s common stock, par value $.01 per share, at a price of $____ per share. The options will be exercisable at any time beginning on the date of the grant and ending on the 10th anniversary of the date of the grant. The options are being granted pursuant to and shall be governed by the terms of the Company’s 2006 Stock Option Plan and the related option agreement. The granting of this option satisfies all previous obligations of the Company to Randy Hardin regarding the granting of stock options.

EMPLOYMENT AGREEMENT
Randy Hardin
Page 7 of 7

EX-10.3

EX-10.3

EMPLOYMENT AGREEMENT

     In consideration of the employment, or continued employment, of Ian C. Edmonds (hereinafter referred to as "Employee") by Universal Power Group, Inc., a Texas corporation (hereinafter referred to as "Company") and the attendant benefits to the Employee as a result thereof, Company and Employee agree as follows:

          1.      Definitions. For purposes of this Agreement, the following definitions shall apply:

(a)	"Inventions" shall mean:
	(1)	All inventions, improvements, modifications, and enhancements, whether or not patented, made by Employee during Employee's employment by the Company, and
	(2)	All inventions, improvements, modifications and enhancements made by Employee, during a period of one year after any suspension or termination of Employee's employment by the Company, which relate, directly or indirectly, to the past, present or future business of the Company.
(b)	"Work Product" shall mean all documentation, software, creative works, know-how and information created, in whole or in part, by Employee during Employee's employment by the Company, whether or not copyrightable or otherwise is protected.
(c)	"Trade Secrets" shall mean all documentation, software, know-how and information relating to the past, present or future business of the Company or any plans therefore, or relating to the past, present or future business of a third party or plans therefore that are disclosed to the Company, which the Company does not disclose to third parties without restrictions on use or further disclosure.

          2.      Employment. The Company hereby employs Employee and Employee hereby accepts employment with the Company and agrees to serve the Company in the capacities hereinafter set forth and such other capacities as determined by the Company’s Board of Directors (the “Board”), for the term and compensation, and upon and subject to the terms and conditions as hereinafter set forth.

          3.1      Capacities. Employee shall serve in the capacities and shall have such responsibilities and duties as are set forth in Exhibit A attached hereto and incorporated herein by reference; provided, however, that Employee shall perform and discharge such other or further duties as may be assigned to Employee from time to time by the Board.

          3.2      Full-time Nature. Employee agrees that during and throughout the term of this Agreement, Employee will be a full-time employee of the Company members of its Board of Directors and devote such time and energies as are reasonably necessary or may reasonably be required to execute, discharge and perform the duties and responsibilities incumbent upon Employee as specifically delineated herein or by reason of the nature of employment of Employee. The Company, in its sole discretion, shall provide Employee an office, staff, facilities and services that are suitable to the position and appropriate for the performance of the Employee’s duties.

          4.1      Amount. As consideration for the services of Employee rendered or to be rendered to the Company in the capacities herein above set forth, or in such other or future capacities as may be assigned to Employee by the Board, Employee shall be compensated by the Company as provided in Exhibit A attached hereto and incorporated herein for all purposes. The Company shall reimburse Employee for all reasonable accountable expenses incurred in the performance of Employee’s duties and responsibilities, e.g. travel, entertainment, etc. for the Company. Employee will be reimbursed upon submission of an itemized account of such expenditures with receipts where practicable.

EMPLOYMENT AGREEMENT
Ian Edmonds
Page 1 of 6

          4.2      Payment. The Company and Employee agree that the compensation provided for herein shall be payable in accordance with the Company's customary payroll policies and provided further that the compensation provided for herein may be increased from time to time at the discretion of the Board.

          4.3      Other Compensation. Employee shall receive such other remuneration and benefits as determined by the Board.

          5.1      Term. The term of this Agreement shall be effective as of the initial public offering of the Company (hereinafter referred to as the “Commencement Date”), and shall terminate December 31, 2009 (“Initial Term”) unless sooner terminated by the following events:

(i)	Employee’s death; or,
(ii)	The Company or Employee shall terminate this Agreement as hereinafter provided.

At the expiration of the Initial Term, Employee’s employment by the Company shall continue on a month-to-month basis and shall otherwise be subject to all of the terms and conditions of this Agreement.

          5.2      Act of Breach. An "Act of Breach,” as that term is used herein, shall be deemed to mean and consist of any one (1) or more of the following:

(i)	Employee’s fraud, dishonesty or gross dereliction in the performance of Employee's obligation's hereunder; or,
(ii)	Employee’s failure to perform and execute any of Employee's duties hereunder after receiving written notice of such failure and Employee does not cure such failure within 30 days thereafter; or
(iii)	Employee’s breach of any of the fiduciary obligations inherent in and resulting from the employment relationship established by this Agreement; or,
(iv)	Employee’s failure to observe or obey any of Employee's covenants or agreements hereunder after receiving written notice of such failure and Employee does not cure such failure within 30 days thereafter.

          5.3      Termination for Cause, Illness or Incapacity. The Company may at any time after the Commencement Date, by giving to Employee thirty (30) days' prior written notice, terminate this Agreement upon the Company's making a good faith determination (i) that Employee has committed an Act of Breach or, (ii) that Employee has become so physically and/or mentally impaired or incapacitated as to preclude or impair Employee's ability to act in capacities and discharge the duties and obligations set forth herein.

          5.4      Severance Compensation. In the event a third party purchases the Company’s stock or substantially all of its assets or business, the Company may terminate this Agreement without cause by giving the Employee thirty day’s (30) prior written notice. In this event the Company shall pay the Employee a lump sum severance pay equal to twelve (12) months of Employee’s then monthly salary, plus twelve (12) months of Cobra insurance premiums for Employee’s then existing, health and major medical insurance coverage for Employee and his family, plus bonus for that calendar year as so provided for in Exhibit A hereto. In addition, Employee shall be entitled to such severance compensation in the event his employment is terminated hereunder because of illness or incapacity as set forth in section 5.4 hereof during the term of this Agreement. Also, Employee’s estate shall be entitled to such severance compensation in the event of his death during the term of this Agreement

          5.5      Effect of Delay. Any failure or delay by the Company to exercise the Company’s right to terminate Employee's employment under this Agreement with respect to any one (1) or more of the matters referred to in Section 5.3 hereof, shall not be deemed to be a waiver by the Company of the

EMPLOYMENT AGREEMENT
Ian Edmonds
Page 2 of 6

Company’s right of termination of this Agreement in respect of that Act of Breach or incapacity (provided it shall be continuing) or of any subsequent Act of Breach or incapacity.

          5.6      Employees Right to Terminate. Employee may, upon substantial breach of this Agreement by the Company, terminate this Agreement by giving thirty (30) days' prior written notice to the Company, in which event the Company is under no duty to pay any sums to Employee other than accrued but unpaid salary owing Employee as of the date of termination established by Employee's notice, plus the severance compensation provided for in section 5.4 hereof and provided that Employee fully performs Employee's obligations hereunder to the date of such termination.

          5.7      Employee's obligations concerning inventions and work product

               (a) Employee shall promptly disclose to the Company all Inventions and keep accurate records relating to the conception and reduction to practice of all Inventions. Such records shall be the sole and exclusive property of the Company, and the Employee shall surrender possession of such records to the Company upon any suspension or termination of the Employee's employment with the Company.

               (b) Employee hereby assigns to the Company, without additional consideration to the Employee, the entire right, title and interest in and to the Inventions and Work Product, in and to all proprietary rights therein or based thereon. The Employee agrees that the Work Product shall be deemed to be a "work made for hire.” The Employee shall execute all such assignments, oaths, declarations and other documents as may be prepared by the Company to effect the foregoing.

               (c) Employee shall provide the Company with all information, documentation, and assistance the Company may request to perfect, enforce, or defend the proprietary rights in or based on the Inventions, Work Product or Trade Secrets. The Company, in its sole discretion, shall determine the extent of the proprietary rights, if any, to be protected in or based on the Inventions and Work Product. All such information, documentation, and assistance shall be provided at no additional expense to the Company, except for out-of-pocket expenses, which the Employee incurred at the Company's request.

          6.      Employee obligations concerning trade secrets.

     (a) During the term of his employment with the Company and thereafter for 10 years employee shall treat Trade Secrets on a confidential basis and not disclose them to others without the prior written permission of the Company, or use Trade Secrets for any purpose, other than for the performance of services for the Company.

     (b) Employee acknowledges that Trade Secrets are the sole and exclusive property of the Company. The Employee shall surrender possession of all Trade Secrets to the Company upon any suspension or termination of Employee's employment with the Company. If after the suspension or termination of Employee's employment, Employee becomes aware of any Trade Secrets in his possession, Employee shall immediately surrender possession thereof to the Company.

          7.      Competitive activities.

     (a) During the term of Employee's employment with the Company, Employee shall not:

     (1) Perform any services, directly or indirectly, for any person or entity competing, directly or indirectly, with the Company;

     (2) Own, directly or indirectly, an interest in any entity competing, directly or indirectly, with the Company except Employee may own less that 5% of a publicly traded company;

EMPLOYMENT AGREEMENT
Ian Edmonds
Page 3 of 6

     (3) Compete, directly or indirectly, with any products or services marketed or offered by the Company; and

     (4) Engage in any activities which could be deemed to be a conflict of interest.

     (b) During the period of eighteen months after any suspension or termination of Employee's employment by the Company, Employee shall not contact, directly or indirectly, any customer of the Company with whom Employee had contact during the last 12 months of Employee's employment hereunder.

          8.      Employee's performance of agreement. Except for such restrictions as may be expressly set forth in any exhibit annexed hereto and made a part hereof, Employee warrants and represents that he has the ability to enter into this Agreement and perform all obligations hereunder, and that there are no restrictions or obligations to third parties which would in any way detract from or affect the Employee's performance hereunder.

          9.      Governing law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas.

          10.      Unenforceability. Ifany provision of this Agreement is determined to be invalid and/or unenforceable by a final decision of a court of competent jurisdiction, it shall not effect the remainder of the Agreement, which shall survive and remain in full force and effect.

          11.      Survival of certain provisions. Any termination or expiration of this Agreement or suspension or termination of Employee's employment by the Company notwithstanding, the provisions of this Agreement which are intended to continue and survive shall so continue and survive, including, but not limited to, the provisions of Paragraphs 5, 6, 7, 8, 11, 12 and 17. This Agreement and all rights hereunder shall inure to the benefit of the Company, its successors and assigns.

          12.      Cumulative remedies. All rights and remedies of the Company and Employee shall be cumulative and the Company and Employee shall have the right to obtain specific performance for the enforcement of this Agreement.

          13.      Arbitration. Any controversy, dispute or claim between the Employee and the Company arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement after 30 days written notice of same, shall be settled by submission by either party to the controversy, claim or dispute to binding arbitration in Dallas County, Texas (unless the parties agree in writing to a different location) before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. In any such arbitration preceding the parties agree to provide all discovery deemed necessary by the arbitrator. The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.

          14.      Death Benefit. In the event Employee dies during the term of employment, the Company shall pay to the Employee’s estate the salary that would otherwise be payable to the end of the month in which the Employee died, plus the severance compensation provided for in section 5.4 hereof.

          15.      Notice. Any notice required to be given shall be either (1) personally delivered or (2) sent by U.S. Postal Service, postage pre-paid Certified Mail, Return Receipt Requested to the Company at the place of employment and to the Employee at the last residence address given to and on file with Company.

          16.      Integrated Agreement. This Agreement, into which all prior discussions, understandings and agreements merge, constitutes the entire agreement between the parties hereto with respect to the

EMPLOYMENT AGREEMENT
Ian Edmonds
Page 4 of 6

employment of Employee by the Company, and may be amended only by a written instrument duly executed by all the parties hereto.

          17.      Ownership Interest in the Company. If for any reason the Employee’s employment is terminated during the Initial Term of this Agreement, Employee must sell back to the Company any ownership interest he has in the Company for the fair market value thereof Fair market value should be determined by the parities at least 10 days prior to termination and paid within 30 days of termination. If the parties cannot agree on the fair market value of Employee’s ownership interest, it shall be submitted to arbitration in accordance with the provisions of Paragraph 13 of this Agreement. This provision does not apply if the Company’s stock is publicly traded.

          18.      Supercedes Agreement of August 2002. This Agreement supercedes and replaces the Employment Agreement between the Company and the Employee executed by the parties in August 2002.

     Employee has read and understood the foregoing and agrees to be bound thereby. Further, Employee has retained his own counsel to advise him concerning the terms and conditions of this Agreement.

Ian Edmonds 

Date: August 1, 2006 

     The foregoing was executed by the Employee in the presence of and accepted on behalf of the Company.

Universal Power Group, Inc., a Texas corporation 

By: 

       William Tan 

       Chairman of the Board 

Date: ____________________, 2006 

By: 

       Julie Sansom-Reese, 

       Chief Financial Officer 

Date: ____________________, 2006 

EMPLOYMENT AGREEMENT
Ian Edmonds
Page 5 of 6

Exhibit A to Ian C. Edmonds Employment Agreement with Universal Power Group, Inc., a Texascorporation

Salary
$ 195,000 annually.

Vacation
4 weeks per year.

Car allowance
Employee shall be provided an annual company leased current model executive car such as aMercedes S550 or equivalent.

Other
Medical and other employee benefits comparable to that provided to all full time executive management of the Company.

Duties
Ian C. Edmonds shall be the Executive Director and Chief Operating Officer of the Company. He shall perform and be responsible for those duties and obligations of the Executive Director and Chief Operating Officer of the Company as set forth in the Bylaws of the Company. In addition, Ian C. Edmonds shall perform those duties as may reasonably be assigned to him by the Board of Directors of the Company.

Incentive Bonus
In addition to his salary as set forth above and subject to the conditions set forth below, Ian C. Edmonds may be paid an annual incentive bonus to be determined solely by the Board at the end of the year.

Stock Options
Simultaneously with the execution of this employment agreement, Ian C Edmonds has been granted an option to purchase up to ____ shares of the Company’s common stock, par value $.01 per share, at a price of $____ per share. The options will be exercisable at any time beginning on the date of the grant and ending on the 10th anniversary of the date of the grant. The options are being granted pursuant to and shall be governed by the terms of the Company’s 2006 Stock Option Plan and the related option agreement. The granting of this option satisfies all previous obligations of the Company to Ian C. Edmonds regarding the granting of stock options.

EMPLOYMENT AGREEMENT
Ian Edmonds
Page 6 of 6

EX-10.4

EX-10.4

EMPLOYMENT AGREEMENT

     In consideration of the employment, or continued employment, of Mee Mee Tan (hereinafter referred to as "Employee") by Universal Power Group, Inc., a Texas corporation (hereinafter referred to as "Company") and the attendant benefits to the Employee as a result thereof, Company and Employee agree as follows:

          1.      Definitions. For purposes of this Agreement, the following definitions shall apply:

(a)	"Inventions" shall mean:
	(1)	All inventions, improvements, modifications, and enhancements, whether or not patented, made by Employee during Employee's employment by the Company, and
	(2)	All inventions, improvements, modifications and enhancements made by Employee, during a period of one year after any suspension or termination of Employee's employment by the Company, which relate, directly or indirectly, to the past, present or future business of the Company.
(b)	"Work Product" shall mean all documentation, software, creative works, know-how and information created, in whole or in part, by Employee during Employee's employment by the Company, whether or not copyrightable or otherwise is protected.
(c)	"Trade Secrets" shall mean all documentation, software, know-how and information relating to the past, present or future business of the Company or any plans therefore, or relating to the past, present or future business of a third party or plans therefore that are disclosed to the Company, which the Company does not disclose to third parties without restrictions on use or further disclosure.

          2.      Employment. The Company hereby employs Employee and Employee hereby accepts employment with the Company and agrees to serve the Company in the capacities hereinafter set forth and such other capacities as determined by the Company’s Board of Directors (the “Board”), for the term and compensation, and upon and subject to the terms and conditions as hereinafter set forth.

          3.1      Capacities. Employee shall serve in the capacities and shall have such responsibilities and duties as are set forth in Exhibit A attached hereto and incorporated herein by reference; provided, however, that Employee shall perform and discharge such other or further duties as may be assigned to Employee from time to time by the Board.

          3.2      Full-time Nature. Employee agrees that during and throughout the term of this Agreement, Employee will be a full-time employee of the Company members of its Board of Directors and devote such time and energies as are reasonably necessary or may reasonably be required to execute, discharge and perform the duties and responsibilities incumbent upon Employee as specifically delineated herein or by reason of the nature of employment of Employee. The Company, in its sole discretion, shall provide Employee an office, staff, facilities and services that are suitable to the position and appropriate for the performance of the Employee’s duties.

          4.1      Amount. As consideration for the services of Employee rendered or to be rendered to the Company in the capacities herein above set forth, or in such other or future capacities as may be assigned to Employee by the Board, Employee shall be compensated by the Company as provided in Exhibit A attached hereto and incorporated herein for all purposes. The Company shall reimburse Employee for all

EMPLOYMENT AGREEMENT
Mimi Tan Edmonds
Page 1 of 6

reasonable accountable expenses incurred in the performance of Employee’s duties and responsibilities, e.g. travel, entertainment, etc. for the Company. Employee will be reimbursed upon submission of an itemized account of such expenditures with receipts where practicable.

           4.2      Payment. The Company and Employee agree that the compensation provided for herein shall be payable in accordance with the Company's customary payroll policies and provided further that the compensation provided for herein may be increased from time to time at the discretion of the Board.

           4.3      Other Compensation. Employee shall receive such other remuneration and benefits as determined by the Board.

           5.1      Term. The term of this Agreement shall be effective as of the initial public offering of the Company (hereinafter referred to as the “Commencement Date”), and shall terminate December 31, 2009 (“Initial Term”) unless sooner terminated by the following events:

(i)	Employee's death; or,
(ii)	The Company or Employee shall terminate this Agreement as hereinafter provided.

At the expiration of the Initial Term, Employee’s employment by the Company shall continue on a month-to-month basis and shall otherwise be subject to all of the terms and conditions of this Agreement.

           5.2      Act of Breach. An "Act of Breach,” as that term is used herein, shall be deemed to mean and consist of any one (1) or more of the following:

(i)	Employee's fraud, dishonesty or gross dereliction in the performance of Employee's obligation's hereunder; or,
(ii)	Employee's failure to perform and execute any of Employee's duties hereunder after receiving written notice of such failure and Employee does not cure such failure within 30 days thereafter; or
(iii)	Employee's breach of any of the fiduciary obligations inherent in and resulting from the employment relationship established by this Agreement; or,
(iv)	Employee's failure to observe or obey any of Employee's covenants or agreements hereunder after receiving written notice of such failure and Employee does not cure such failure within 30 days thereafter.

          5.3      Termination for Cause, Illness or Incapacity. The Company may at any time after the Commencement Date, by giving to Employee thirty (30) days' prior written notice, terminate this Agreement upon the Company's making a good faith determination (i) that Employee has committed an Act of Breach or, (ii) that Employee has become so physically and/or mentally impaired or incapacitated as to preclude or impair Employee's ability to act in capacities and discharge the duties and obligations set forth herein.

          5.4      Severance Compensation. In the event a third party purchases the Company’s stock or substantially all of its assets or business, the Company may terminate this Agreement without cause by giving the Employee thirty day’s (30) prior written notice. In this event the Company shall pay the Employee a lump sum severance pay equal to twelve (12) months of Employee’s then monthly salary, plus twelve (12) months of Cobra insurance premiums for Employee’s then existing, health and major medical insurance coverage for Employee and her family, plus bonus for that calendar year as so

EMPLOYMENT AGREEMENT
Mimi Tan Edmonds
Page 2 of 6

provided for in Exhibit A hereto. In addition, Employee shall be entitled to such severance compensation in the event her employment is terminated hereunder because of illness or incapacity as set forth in section 5.4 hereof during the term of this Agreement. Also, Employee’s estate shall be entitled to such severance compensation in the event of her death during the term of this Agreement

          5.5      Effect of Delay. Any failure or delay by the Company to exercise the Company’s right to terminate Employee's employment under this Agreement with respect to any one (1) or more of the matters referred to in Section 5.3 hereof, shall not be deemed to be a waiver by the Company of the Company’s right of termination of this Agreement in respect of that Act of Breach or incapacity (provided it shall be continuing) or of any subsequent Act of Breach or incapacity.

          5.6      Employees Right to Terminate. Employee may, upon substantial breach of this Agreement by the Company, terminate this Agreement by giving thirty (30) days' prior written notice to the Company, in which event the Company is under no duty to pay any sums to Employee other than accrued but unpaid salary owing Employee as of the date of termination established by Employee's notice, plus the severance compensation provided for in section 5.4 hereof and provided that Employee fully performs Employee's obligations hereunder to the date of such termination.

          5.7      Employee's obligations concerning inventions and work product

                     (a) Employee shall promptly disclose to the Company all Inventions and keep accurate records relating to the conception and reduction to practice of all Inventions. Such records shall be the sole and exclusive property of the Company, and the Employee shall surrender possession of such records to the Company upon any suspension or termination of the Employee's employment with the Company.

                     (b) Employee hereby assigns to the Company, without additional consideration to the Employee, the entire right, title and interest in and to the Inventions and Work Product, in and to all proprietary rights therein or based thereon. The Employee agrees that the Work Product shall be deemed to be a "work made for hire.” The Employee shall execute all such assignments, oaths, declarations and other documents as may be prepared by the Company to effect the foregoing.

                     (c) Employee shall provide the Company with all information, documentation, and assistance the Company may request to perfect, enforce, or defend the proprietary rights in or based on the Inventions, Work Product or Trade Secrets. The Company, in its sole discretion, shall determine the extent of the proprietary rights, if any, to be protected in or based on the Inventions and Work Product. All such information, documentation, and assistance shall be provided at no additional expense to the Company, except for out-of-pocket expenses, which the Employee incurred at the Company's request.

          6.      Employee obligations concerning trade secrets.

                    (a) During the term of his employment with the Company and thereafter for 10 years employee shall treat Trade Secrets on a confidential basis and not disclose them to others without the prior written permission of the Company, or use Trade Secrets for any purpose, other than for the performance of services for the Company.

                    (b) Employee acknowledges that Trade Secrets are the sole and exclusive property of the Company. The Employee shall surrender possession of all Trade Secrets to the Company upon any suspension or termination of Employee's employment with the Company. If after the suspension or termination of Employee's employment, Employee becomes aware of any Trade Secrets in his possession, Employee shall immediately surrender possession thereof to the Company.

EMPLOYMENT AGREEMENT
Mimi Tan Edmonds
Page 3 of 6

           7.      Competitive activities.

                    (a) During the term of Employee's employment with the Company, Employee shall not:

                    (1) Perform any services, directly or indirectly, for any person or entity competing, directly or indirectly, with the Company;

                    (2) Own, directly or indirectly, an interest in any entity competing, directly or indirectly, with the Company except Employee may own less that 5% of a publicly traded company;

                    (3) Compete, directly or indirectly, with any products or services marketed or offered by the Company; and

                    (4) Engage in any activities which could be deemed to be a conflict of interest.

                    (b) During the period of eighteen months after any suspension or termination of Employee's employment by the Company, Employee shall not contact, directly or indirectly, any customer of the Company with whom Employee had contact during the last 12 months of Employee's employment hereunder.

           8.      Employee's performance of agreement. Except for such restrictions as may be expressly set forth in any exhibit annexed hereto and made a part hereof, Employee warrants and represents that she has the ability to enter into this Agreement and perform all obligations hereunder, and that there are no restrictions or obligations to third parties which would in any way detract from or affect the Employee's performance hereunder.

           9.      Governing law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas.

           10.      Unenforceability. Ifany provision of this Agreement is determined to be invalid and/or unenforceable by a final decision of a court of competent jurisdiction, it shall not effect the remainder of the Agreement, which shall survive and remain in full force and effect.

           11.      Survival of certain provisions. Any termination or expiration of this Agreement or suspension or termination of Employee's employment by the Company notwithstanding, the provisions of this Agreement which are intended to continue and survive shall so continue and survive, including, but not limited to, the provisions of Paragraphs 5, 6, 7, 8, 11, 12 and 17. This Agreement and all rights hereunder shall inure to the benefit of the Company, its successors and assigns.

           12.      Cumulative remedies. All rights and remedies of the Company and Employee shall be cumulative and the Company and Employee shall have the right to obtain specific performance for the enforcement of this Agreement.

           13.      Arbitration. Any controversy, dispute or claim between the Employee and the Company arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement after 30 days written notice of same, shall be settled by submission by either party to the controversy, claim or dispute to binding arbitration in Dallas County, Texas (unless the parties agree in writing to a different location) before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. In any such arbitration preceding the parties agree to provide all discovery deemed necessary by the arbitrator.

EMPLOYMENT AGREEMENT
Mimi Tan Edmonds
Page 4 of 6

The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.

           14.      Death Benefit. In the event Employee dies during the term of employment, the Company shall pay to the Employee’s estate the salary that would otherwise be payable to the end of the month in which the Employee died, plus the severance compensation provided for in section 5.4 hereof.

           15.      Notice. Any notice required to be given shall be either (1) personally delivered or (2) sent by U.S. Postal Service, postage pre-paid Certified Mail, Return Receipt Requested to the Company at the place of employment and to the Employee at the last residence address given to and on file with Company.

           16.      Integrated Agreement. This Agreement, into which all prior discussions, understandings and agreements merge, constitutes the entire agreement between the parties hereto with respect to the employment of Employee by the Company, and may be amended only by a written instrument duly executed by all the parties hereto.

           17.      Ownership Interest in the Company. If for any reason the Employee’s employment is terminated during the Initial Term of this Agreement, Employee must sell back to the Company any ownership interest she has in the Company for the fair market value thereof. Fair market value should be determined by the parties at least 10 days prior to termination and paid within 30 days of termination. If the parties cannot agree on the fair market value of Employee’s ownership interest, it shall be submitted to arbitration in accordance with the provisions of Paragraph 13 of this Agreement. This provision does not apply if the Company’s stock is publicly traded.

Employee has read and understood the foregoing and agrees to be bound thereby. Further, Employee has retained her own counsel to advise her concerning the terms and conditions of this Agreement.

Mee Mee Tan 

Date: _________________, 2006 

     The foregoing was executed by the Employee in the presence of and accepted on behalf of the Company.

Universal Power Group, Inc., a Texas corporation 

By: 

Randy Hardin, President and CEO 

Date: August 1, 2006 

By: 

Julie Sansom-Reese, 

Chief Financial Officer 

Date: __________________ , 2006

EMPLOYMENT AGREEMENT
Mimi Tan Edmonds
Page 5 of 6

Exhibit A to Mimi Tan Edmonds Employment Agreement with Universal Power Group, Inc., a Texascorporation

Salary
$161,200 annually.

Vacation
4 weeks per year.

Other
Medical and other employee benefits comparable to that provided to all full time executive management of the Company.

Duties
Mimi Tan Edmonds shall be the Secretary, Vice President of Business Development and Marketing of the Company. She shall perform and be responsible for those duties and obligations of the VP of Business Development and Marketing of the Company as set forth in the Bylaws of the Company. In addition, Mimi Tan Edmonds shall perform those duties as may reasonably be assigned to her by the Board of Directors of the Company.

Incentive Bonus
In addition to her salary as set forth above and subject to the conditions set forth below, Mimi Tan Edmonds may be paid an annual incentive bonus to be determined solely by the Board at the end of the year.

EMPLOYMENT AGREEMENT
Mimi Tan Edmonds
Page 6 of 6

EX-10.5C

Exhibit 10.5(c)

SECOND RENEWAL AND MODIFICATION AGREEMENT

           THIS SECOND RENEWAL AND MODIFICATION AGREEMENT (this “Modification”) is made by and between UNIVERSAL POWER GROUP, INC., a Texas corporation (“Borrower”), and COMPASS BANK (“Lender”), to be effective as of the 18^th day of April, 2006.

RECITALS:

           WHEREAS, Borrower executed and delivered to Lender that certain Revolving Credit and Security Agreement, dated December 14, 2004 (the “Security Agreement”), covering among other items of collateral certain Accounts, Accounts Receivable, Inventory, and other Collateral (each as defined in such Security Agreement), both tangible and intangible, together with all other collateral and property described in the Security Agreement (all of such property being hereinafter collectively referred to as the “Property”); and

           WHEREAS, the Security Agreement secures in part the indebtedness evidenced by that certain Revolving Note, dated of even date with the Security Agreement, in the original stated principal amount of Twelve Million and No/100 Dollars ($12,000,000.00), executed by Borrower and payable to Lender (as may have been heretofore renewed, extended, and/or modified, the “Note”); and

           WHEREAS, the Borrower has obligations (collectively, the “Obligations”) under the Note, Security Agreement, and other Loan Documents (as defined below), which Obligations, Note, Security Agreement and other Loan Documents were modified, renewed and/or extended, as the case may be, pursuant to that certain Renewal and Modification Agreement, dated March 23, 2006 (the “First Modification”) (the indebtedness evidenced by the Note is referred to herein as the “Loan”, and the Note, Security Agreement, First Modification, and all documents evidencing the Loan are herein collectively, the “Loan Documents”); and

           WHEREAS, the parties desire to increase the principal amount under the Loan from Twelve Million and No/100 Dollars ($12,000,000.00) to Sixteen Million and No/100 Dollars ($16,000,000.00), all in accordance with the terms and conditions herein contained; and

           WHEREAS, the parties desire to further modify the terms of the Loan as the same relate to certain of Borrower’s covenants, agreements, duties and obligations under the Security Agreement and other terms and conditions of the Loan.

AGREEMENTS:

           NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree as follows:

          1.           The parties desire to increase the original principal amount of the Note from Twelve Million and No/100 Dollars ($12,000,000.00) to Sixteen Million and No/100 Dollars ($16,000,000.00) (hereinafter, the “Principal Amount”), Borrower’s duties and obligations under the Note (as hereby modified, extended, and renewed) to repay the Principal Amount (as herein defined) shall be included within the definition of the Obligations as herein specified, all in accordance with the terms and conditions herein contained.

          2.          From the date hereof, Borrower promises to pay to Lender the Principal Amount (as herein modified), together with interest thereon, and to perform all of the Obligations under the Loan Documents (as hereby modified) including, without limitation the payment of all outstanding principal together with all accrued but unpaid interest on the Maturity Date (as defined in both the Note and Security Agreement). The Principal Amount shall accrue interest and be due and payable in accordance with and as specified within the Promissory Note; provided, however, that, contemporaneously upon the execution of this Modification, Borrower and Lender shall execute that certain First Amendment to Master Revolving Promissory Note (the “First Amendment”), reflecting, among other revised terms, the increase of the Principal Amount as specified in Section 1 above, as well as the increase in the sub-limit upon letters of credit (defined as L/C’s under the Security Agreement) from Seven Hundred Fifty Thousand and No/100 Dollars ($750,000.00) in the aggregate to Eight Hundred Seventy Five Thousand and No/100 Dollars ($875,000.00) . By this reference, the First Amendment is hereby incorporated into this Modification for all purposes.

          3.          In addition to the foregoing, the parties hereby further agree that certain sections of the Security Agreement shall be modified and/or amended, all in accordance with the following:

(a)

Any and all references to (i) “Twelve Million and No/100 Dollars ($12,000,000.00)” or “$12,000,000.00” in the Security Agreement with respect to the amount of the Revolving Line shall be deleted and replaced in their entirety by “Sixteen Million and No/100 Dollars ($16,000,000.00)” or “$16,000,000.00,” respectively, as appropriate; and (ii) “Seven Hundred Fifty Thousand and No/100 Dollars ($750,000.00)” or “$750,000.00” in the Security Agreement with respect to the sub-limit on the aggregate amount of L/C’s (as defined in the Security Agreement in respect of letters of credit) shall be deleted and replaced in their entirety by “Eight Hundred Seventy Five Thousand and No/100 Dollars ($875,000.00)” or “$875,000.00,” respectively, as appropriate, all in accordance with the terms and conditions of the Security Agreement (as modified hereby) and as further set forth in the First Amendment.

(b)

The advance formula referenced in the Security Agreement, Section 1.1, and defined as the “Borrowing Base” therein shall be and hereby is modified as follows: “eighty-five percent (85.0%) of the outstanding value of Borrower’s Eligible Accounts Receivable (as defined in the Security Agreement and modified hereby), plus fifty percent (50.0%) of the value of Borrower’s Eligible Inventory (as hereinafter defined). Advances against Borrower’s Eligible Inventory shall not to exceed the lesser of (a) $8,500,000.00, or (b) an amount equal to the

2

	product of (i) one and one-half (1.5), multiplied by (ii) eight-five percent (85%) of the outstanding value of Borrower’s Eligible Accounts Receivable at any one time outstanding; provided, however, that in no event shall the aggregate sum of all principal advances made by Bank to Borrower at any one time outstanding hereunder exceed the sum of $16,000,000.00.” From and after the date of this Modification, all references to the term “Borrowing Base” in the Security Agreement and other Loan Documents shall refer to the advance formula defined above.
(c)	Section 2.9 of the Security Agreement shall be and hereby is amended to read in its entirety as follows:
	“Section 2.9 Location of Collateral. Except for Inventory sold in the ordinary course of business, all Inventory and other tangible Collateral have always been, are and shall continue to be kept at Borrower’s locations as reflected in Schedule 2.9 of this Agreement.”
(d)	Section 6.1 (ii) of the Security Agreement shall be and hereby is amended to read in its entirety as follows: “(ii) Borrower’s audited fiscal year-end financial statements (in form, preparation and substance acceptable to Bank) within one hundred fifty (150) days after the close of each of its year-end, including a balance sheet as of the close of such period, an income statement, a reconciliation of stockholders’ equity, and a statement of cash flows, all certified by an independent certified public accountant acceptable to Bank and analyzed in accordance with generally accepted accounting principles;”
(e)	Section 7.2 of the Security Agreement shall be and hereby is amended to read in its entirety as follows:
	“7.2 Borrowings; Permitted Indebtedness. Except for borrowings under the Revolving Line, Borrower shall not borrow any money other than (i) Subordinated Debt (but only to the extent such borrowings and loans shall be fully subordinated hereto), without Bank’s prior written consent, or (ii) for trade credit and to finance the purchase of equipment in the ordinary course of business, not to exceed $50,000.00 in the aggregate at any given time, without Bank’s prior written consent. Except in favor of Bank, Borrower shall not guarantee, endorse or assume, either directly or indirectly, any indebtedness of any other corporation, person, or entity.”
(f)	Section 7.3 of the Security Agreement shall be and hereby is amended to read in its entirety as follows:
	“Section 7.3 Dividends. Borrower shall not pay, make or declare any dividends, distributions, or other similar payments, or make any other advances of any nature whatoseover, to Borrower’s directors, managers, officers, employees, owners, parent, members, affiliates, subsidiaries or other related persons or

3

	entities, without Bank’s prior written consent. Notwithstanding anything herein to the contrary, Bank agrees that Borrower may pay a monthly management fee to Zunicom of up to $40,000.00 per month and quarterly dividends equal to 50% of Borrower’s net income for any fiscal quarter for cash, taxes, or other Zunicom expenses, provided that (a) no Default of Event of Default exists as of the date any such payment is to be made or such payment would cause or result in a Default or Event of Default, (b) there is at least $500,000.00 of borrowing availability under the Revolving Line after the making of any such payment, (c) no more than one dividend is paid per fiscal quarter of Borrower, and (d) any such dividend is paid no sooner than thirty (30) days from Bank’s receipt of the financial statements delivered by Borrower for the end of the month that coincides with the end of such fiscal quarter of Borrower. Borrower shall not redeem, purchase or in any manner acquire any of its outstanding shares without Bank’s prior written consent.”
(g)	Section 7 (g) in Addendum A attached to the Security Agreement shall be and hereby is amended to read in its entirety as follows: “(g) it is located at one of Borrower’s places of business in (i) Carrollton, Texas, (ii) Oklahoma City, Oklahoma, (iii) Overland Park, Kansas, or (iv) Las Vegas, Nevada;”
(h)	Schedule 2.9 of the Security Agreement is hereby deleted in its entirety and replaced by the attached Schedule 2.9 (attached hereto as Exhibit A) which shall be incorporated into the Security Agreement (as hereby modified) for all purposes.
(i)	Except as specifically set forth in the Security Agreement (as hereby modified), the parties acknowledge and agree that all financial covenants of Borrower and/or any guarantor set forth in the Security Agreement (including, without limitation, Sections 6.5, 6.6, 7.9. and 7.11 of the Security Agreement) shall be measured based upon information contained in Borrower’s internally-prepared financial statements, including, without limitation, such statements as are required to be delivered to Lender pursuant to clauses (i), (iii), (iv), and (viii) of Section 6.1 of the Security Agreement or as otherwise may be reasonably requested from Lender from time to time.

          4.           Borrower hereby conveys and/or re-conveys, grants and/or re-grants, and makes and/or re-makes, each as applicable, to Lender the security interests and liens upon the Property remaining subject to the Loan Documents and securing the Obligations. Further, Borrower hereby covenants and agrees that Borrower shall not sell, transfer, convey or otherwise dispose of any of the Property without Lender’s prior written consent (except as otherwise permitted under the Security Agreement), and, in the event such consent by Lender is given, Borrower shall provide Lender with such additional security with respect to the Obligations as Lender shall require in its sole and absolute discretion.

          5.           Borrower hereby renews, but does not extinguish, the Note, Loan, and the liens and security interests created and evidenced by the Security Agreement and all other liens and

4

security interests securing the Note (including, without limitation, any vendor’s lien), and Borrower promises to pay to the order of Lender, the principal sum of the Loan evidenced by the Note, or so much thereof as may be advanced and outstanding, together with interest at the rate and in the manner specified in the Note, as modified herein, and to observe, comply with and perform each and every of the terms and provisions of the Loan Documents as herein modified.

          6.           Borrower hereby reaffirms the liens on the Property and any other liens securing the Note and/or Loan until the indebtedness and the Note and Loan as modified and renewed hereby has been fully paid, and agrees that the modification set forth herein shall in no manner affect or impair the Note, Loan, or the liens securing the same, and that said liens shall not in any manner be waived, the purpose of this instrument being simply to modify the Security Agreement (and other Loan Documents, as appropriate) and to carry forward all liens securing the same, which are acknowledged by Borrower to be valid and subsisting. Borrower further agrees that all terms and provisions of the Note and of the instrument or instruments creating or fixing the liens securing the same shall be and remain in full force and effect as therein written, except as otherwise expressly provided herein. All liens are hereby carried forward from the original inception thereof, and Borrower hereby ratifies, reaffirms and confirms all of said liens from the original inception thereof. Except as otherwise specified herein, the terms and provisions hereof shall in no manner impair, limit, restrict, or otherwise affect the obligations of Borrower or any guarantor under the Loan Documents. As a material inducement to Lender to execute and deliver this Modification, Borrower hereby acknowledges and agrees that Borrower is well and truly indebted to Lender in the amount set forth hereinabove, and that the liens, security interests and assignments created by the Security Agreement and any other Loan Documents are, respectively, valid and subsisting liens, security interests, and assignments, and, to the best of Borrower’s knowledge, are of the validity and priority recited in the Security Agreement and the other Loan Documents. As a further material inducement to Lender to execute and deliver this Modification, Borrower hereby acknowledges that there are no claims or offsets against, or defenses or counterclaims to, the terms or provisions or other obligations created or evidenced by the Loan Documents, and represent that, after modification of the Security Agreement and other Loan Documents hereunder, no event has occurred, and no condition exists which would constitute a default, either with or without notice or lapse of time, or both, under the Loan Documents.

          7.           Borrower reaffirms and remakes, as of the date hereof, all representations and warranties contained in the Note, Security Agreement, and other Loan Documents. Borrower further represents and warrants that, except as disclosed in writing to Lender, it has done nothing, nor has allowed anything, to adversely affect title to or encumber the Property or any other property of Borrower in which Lender has a security interest. Borrower further represents and warrants to Lender that it is aware of no condition or fact, which has not been disclosed in writing to Lender, which would materially adversely affect the repayment to Lender of all sums due under the Note, Security Agreement, and other Loan Documents.

          8.           Borrower, for it and its successors, assigns, and representatives does hereby waive, release, and discharge Lender and its agents, employees, officers, directors, and attorneys (collectively, the “Released Parties”) from any and all of Lender’s duties, obligations, and liabilities arising under, based upon or associated with, directly or

5

indirectly, the Loan, the Note, Security Agreement, First Modification, and any Loan Documents, existing as of the date of this Modification, and further does hereby waive any and all claims and causes of action of any kind or character, arising under, based upon, or associated with, directly or indirectly, the Loan Documents or the acts, actions, or omissions of the Released Parties in connection therewith, existing as of the date hereof, whether known or unknown, asserted or unasserted, equitable or at law, arising under or pursuant to common or statutory law, rules, or regulations.

          9.           Borrower hereby ratifies, reaffirms and confirms any and all covenants, agreements, or promises heretofore made by Borrower to Lender in connection with the Loan, Note, Security Agreement, or other Loan Documents, and all renewals thereof, including as hereby modified.

          10.         Borrower agrees, simultaneously with and as a condition precedent to the execution hereof, to pay to Lender a non-refundable credit facility fee in the amount of $5,000.00 (representing 0.125% of the $4,000,000.00 amount of the increased availability under the Revolving Line [as defined in the Security Agreement]), as well as all costs and expenses of Lender incurred in connection with the preparation and administration of this Modification, including, the cost of any recording fees and charges associated with the Security Agreement and/or other Loan Documents, and Lender’s attorneys’ fees and expenses.

          11.         It is hereby agreed and acknowledged that other parties, if any, who are liable in any part for the Obligations, including, without limitation, Zunicom, Inc., a Texas corporation, in its capacity as guarantor of the Loan and Obligations, are in no way released or discharged from such Obligations, nor are Lender’s rights against such persons or entities waived or negatively impacted by the execution of this Modification.

          12.         The parties agree that all clauses contained in the Loan Documents which relate to the payment, application, and spreading of interest received by Lender which may be greater than the maximum amount allowed by applicable law, shall remain in full force and effect and by this reference be fully incorporated herein.

          13.         If any provision of this Modification or application to any party or circumstance shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Modification or the application of such provision to such person or circumstances, other than those as to which it is so determined invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

          14.         Except as amended hereby, the Note, Security Agreement, First Modification, and other Loan Documents remain unmodified and in full force and effect.

          15.         THE LOAN, NOTE, SECURITY AGREEMENT, FIRST MODIFICAITON, AND OTHER WRITTEN LOAN DOCUMENTS, AS MODIFIED BY THIS MODIFICATION, REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER AND LENDER, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,

6

CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

          THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN BORROWER AND LENDER.

[remainder of page intentionally left blank]

7

          EXECUTED to be effective as of the date first above written.

	BORROWER:
	UNIVERSAL POWER GROUP, INC.,
	a Texas corporation
	By:	/s/ IAN EDMONDS
/s/ JULIE SANSOM-REESE	Name:	Ian Edmonds
Julie Sansom-Reese	Title:	Chief Operating Officer
Chief Financial Officer
	LENDER:
	COMPASS BANK
	By:	/s/ KEY COKER
	Name:	Key Coker
	Title:	Executive Vice President

[remainder of page intentionally left blank]

8

ACCEPTED, AGREED, AND ACKNOWLEDGED:

ZUNICOM, INC., a Texas corporation (“Guarantor”), as guarantor of the Obligations herein specified pursuant to its execution of that certain Guaranty Agreement dated of even date with the Security Agreement (the “Guaranty”), is executing below to evidence (a) its consent to this Modification and (b) its agreement that (i) this Modification does not void, invalidate, create a defense to the enforcement of, or otherwise negatively impact the Guaranty and (ii) the Guaranty shall continue in full force and effect and cover all of the Obligations (as herein modified); provided, however, that, upon Lender’s request, Guarantor shall execute a new Guaranty Agreement, to be dated of even date herewith to further evidence its duties and obligations as a principal obligor with respect to the Obligations (as herein modified).

 GUARANTOR:

ZUNICOM, INC.,
a Texas corporation

By:	/s/ IAN EDMONDS
Name:	Ian Edmonds
Title:	Executive Vice President

[acknowledgments on following page]

9

STATE OF TEXAS	§
	§
COUNTY OF DALLAS	§

           The foregoing instrument was acknowledged before me this      18      day of April, 2006, by   Julie Sansom-Reese  , as      CFO                          of Universal Power Group, Inc., a Texas corporation, on behalf of such entity.

/s/ TRACIE HUNTER

Notary Public in and for the State of Texas 

STATE OF TEXAS	§
	§
COUNTY OF DALLAS	§

           This instrument was acknowledged before me on the      18      day of April, 2006, by      Ian Edmonds      , as   Executive President    of Zunicom, Inc., a Texas corporation, on behalf of said corporation in its capacity as guarantor.

/s/ TRACIE HUNTER

Notary Public in and for the State of Texas 

STATE OF TEXAS	§
	§
COUNTY OF DALLAS	§

           This instrument was acknowledged before me on the 18 day of April, 2006, by Key Coker of COMPASS BANK.

/s/ G. Browning

Notary Public in and for the State of Texas 

10

EXHIBIT A

Schedule 2.9

Places of Business

Business Locations
Universal Power Group

1)	Main Warehouse and Corporate Offices 1720 Hayden Road Carrollton, Texas 75006
2)	Oklahoma City Retail Store and Wholesale Warehouse 11605 N. Santa Fe Oklahoma City, Oklahoma 73114
3)	Kansas City Customer Service Center 10580 Barkley, Ste. #410 Overland Park, Kansas 66212
4)	South Tech-Diablo Business Center, LLC 5770 South Valley View Boulevard Las Vegas, Nevada 89118

11

EX-10.5D

Exhibit 10.5(d)

FIRST AMENDMENT TO MASTER REVOLVING PROMISSORY NOTE

          THIS FlRST AMENDMENT TO MASTER REVOLVING PROMISSORY NOTE (this “Amendment”) is executed on April 18, 2006 (the “Effective Date”), by and between UNIVERSAL POWER GROUP, INC., a Texas corporation (“Borrower”), and COMPASS BANK (together with its successors and assigns, “Lender”).

RECITALS

          A.           Borrower executed to the order of Lender that certain Master Revolving Promissory Note, dated December 14, 2004, in the maximum principal amount of $12,000,000.00 (as amended hereby, the “Note”). The Note, as well as certain other documents and instruments evidencing and/or securing the indebtedness evidenced by such Note, have been modified pursuant to (i) that certain Renewal and Modification Agreement, dated March 23, 2006, by and between Borrower and Lender (the “First Modification”), and (ii) that certain Second Renewal and Modification Agreement, dated of even date herewith, by and between Borrower and Lender (the “Second Modification”). Unless otherwise defined herein, capitalized terms shall have the meaning assigned to them in the Note.

          B.           Borrower and Lender desire to increase the maximum principal amount and amend certain other terms of the Note and, pursuant to the terms and conditions of the Second Modification, have agreed to execute this Amendment to reflect such changes.

AGREEMENT

          NOW, THEREFORE, in consideration of the above Recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Borrower and Lender hereby amend the Note as follows:

          1.           Beginning as of the Effective Date, any and all references to the principal sum or principal amount of the Note (as modified by the First and Second Modification) shall be amended from “$12,000,000.00” to “$16,000,000.00” and from “Twelve Million and No/100 Dollars ($12,000,000.00)” to “Sixteen Million and No/100 Dollars ($16,000,000.00),” respectively, as appropriate; provided, however, that Lender's obligation to advance such sum shall remain subject to limitations upon Advances (as defined in the Note) as provided pursuant to the terms and conditions of the Note (as hereby amended, and as heretofore modified pursuant the First Modification and the Second Modification) and Security Agreement (as defined in the Note, and as modified pursuant to the First Modification and Second Modification), all of such limitations to remain in full force and effect.

          2. The fifth paragraph of the Note shall be deleted and amended to read in its entirety as follows:

          “Maker shall have the right, and in certain instances may be required, to prepay, at any time and from time to time prior to maturity, all or any part of the unpaid principal balance of this Note and all or any part of the unpaid interest accrued to the date of such prepayment, provided that any such principal thus paid is accompanied by accrued interest on such principal as well as the applicable Prepayment Fee (defined below), if applicable. Any partial prepayments of principal shall be applied to installments thereof in the inverse order of maturity. Maker may borrow, repay, and reborrow up to the principal face amount of this Note, except as otherwise limited by the Security Agreement. It is contemplated that, by

reason of prepayments hereon, there may be times when no indebtedness is owing hereunder; but notwithstanding such occurrences, this Note shall remain valid and shall be in full force and effect subsequent to each occurrence until the Maturity Date. Notwithstanding the foregoing, in the event Maker elects to prepay all or any portion of the unpaid principal balance of this Note and all or any part of the unpaid interest accrued to the date of such prepayment, Maker shall be required to pay to Payee a “Prepayment Fee” (so called herein) equal to a percentage amount of any such prepayment as follows: (a) three quarters percent (0.75%), if such prepayment is made on or after December 14, 2004 but prior to December 14, 2005, (b) one half percent (0.5%), if such prepayment is made on or after December 14, 2005 but prior to December 14, 2006, (c) one quarter percent (0.25%), if such prepayment is made on or after December 14, 2006 but prior to the Maturity Date. Notwithstanding anything herein contained to the contrary, Maker acknowledges and agrees that, with respect to letters of credit issued by Payee for the benefit of Maker, at no time hereunder shall Payee be obligated to issue letters of credit or make advances thereunder in excess of Eight Hundred Seventy Five Thousand and No/100 Dollars ($875,000.00) in the aggregate at any given time hereunder.”

          3.           Except as expressly amended herein, the Note (as modified by the First and Second Modification) shall remain in full force and effect in accordance with its terms and conditions.

          4.           Notwithstanding the execution of this Amendment, the indebtedness evidenced by the Note shall remain in full force and effect, and nothing contained herein shall be interpreted or construed as resulting in a novation of such indebtedness. Borrower acknowledges and agrees that there are no offsets or defenses to payment of the obligations evidenced by the Note (as modified by the First and Second Modification), as hereby amended, and hereby waives any defense, claim or counterclaim of Borrower regarding the obligations of Borrower under the Note (as modified by the First and Second Modification), as hereby amended. Borrower represents that to its best knowledge there are no conditions of default or facts or consequences which will or could lead to a default under the obligations due from Borrower under the Note (as modified by the First and Second Modification), as amended herein.

[SIGNATURES ON FOLLOWING PAGE]

          IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to be executed by their respective duly authorized representatives, as of the date first set forth above.

BORROWER:
UNIVERSAL POWER GROUP, INC.,
a Texas corporation
By:	/s/ Julie Sansom-Reese
Name:	Julie Sansom-Reese
Title:	Chief Financial Officer
By:	/s/ Ian Edmonds
Name:	Ian Edmonds
Title:	Chief Operating Officer
LENDER:
COMPASS BANK
By:	/s/ KEY COKER
Name:	Key Coker
Title:	Executive Vice President

EX-10.10

EX-10.10

DATE: May 6, 1998

TO: Universal Battery Corporation

FROM: Stan Battat

ATT: Randy T. Hardin

PAGES: 1

CUSTOMER NON DISCLOSURE AND SUPPLY AGREEMENT

THIS AGREEMENT IS MADE THIS 6^TH DAY OF MAY, 1998 BY AND BETWEEN STAN BATTAT D/B/A IMPORT CONSULTANTS OF TRUMBULL CONNECTICUT (“IMPORT”) AND UNIVERSAL BATTERY CORPORATION OF DALLAS, TEXAS.

WHEREAS IMPORT HAS VAST EXPERIENCE LOCATING FACTORIES AND OTHER BUSINESSES THAT SELL PRODUCTS/SERVICES THE TYPE OF WHICH UNIVERSAL IS IN THE MARKET TO PURCHASE; AND WHEREAS UNIVERSAL IS PREPARED TO PAY IMPORT A COMMISSION FEE ON ALL PURCHASES IT MAY HEREAFTER MAKE FROM ANY SUPPLIER TO WHOM IT IS INTRODUCED BY IMPORT;

NOW THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS AND OTHER VALUABLE CONSIDERATIONS, THE SUFFICIENCY AND RECEIPT OF WHICH IS HEREBY MUTUALLY ACKNOWLEDGED, THE PARTIES HEREBY AGREE THAT:

(1) UNIVERSAL SHALL PAY A COMMISSION FEE TO IMPORT OF 6.00% (SIX PERCENT) OF FACTORY NET INVOICE AMOUNTS ON ANY AND ALL PURCHASES IT MAY HEREAFTER MAKE AND WHICH GOODS ARE RECEIVED BY IT FROM ANY AND ALL SUPPLIER(S) TO WHOM IT IS INTRODUCED BY IMPORT (FEE TO BE PAID)

(2) UNIVERSAL AGREES THAT ONCE IT IS INTRODUCED TO A SUPPLIER(S) BY IMPORT IT MAY NOT MAKE ANY PURCHASES FROM [SIC] SUCH SUPPLIER WITHOUT PAYING IMPORT ITS FEE NOR APPROACH SUCH SUPPLIER FOR PURPOSES OF PLACING ANY ORDERS AND AGREES TO CONTEMPORANEOUSLY PROVIDE IMPORT WITH A COPY OF SUCH ORDER.

(3) IMPORT HEREBY ACKNOWLEDGES THAT NOTHING CONTAINED HEREIN SHALL PREVENT UNIVERSAL FROM MAKING ANY PURCHASES FROM OTHER SUPPLIERS NOT INTRODUCED TO THEM BY IMPORT AND ON SUCH PURCHASES NO COMMISSION SHALL BE DUE IMPORT.

Page 1

(4) ALL FEES AND COMMISSIONS DUE TO IMPORT HEREUNDER SHALL BE BASED ON ALL MERCHANDISE ACTUALLY RECEIVED BY UNIVERSAL AND SHALL BE PAID TO IMPORT WITHIN FIFTEEN (15) DAYS OF THE RECEIPT OF MERCHANDISE; ALL OF WHICH SHALL BE IN CONFORMITY WITH UNIVERSAL PURCHASE ORDERS.

/s/ RANDY T. HARDIN	/s/ STAN BATTAT
RANDY T. HARDIN,	STAN BATTAT D/B/A
UNIVERSAL BATTERY CORPORATION	IMPORT CONSULTANTS

FACTORIES TO BE INTRODUCED (OTHERS MAY BE ADDED LATER BY MUTUAL WRITTEN AGREEMENT:

CGB, HENDA POWER (BATTERIES)
YUSHENG (SIRENS)
E-HWA (TRANSFORMERS)

Page 2

EX-10.11(A)

Exhibit 10.11(a)

UNSECURED PROMISSORY NOTE

$2,850,000.00  Dallas, Texas  _____________ , 2006 

FOR VALUE RECEIVED, the undersigned, UNIVERSAL POWER GROUP, INC., a Texas corporation (“Maker”), promises to pay to the order of ZUNICOM, INC., a Texas corporation (“Payee”), on or before _________ , 2012 (the “Maturity Date”), the principal sum of TWO MILLION EIGHT HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($2,850,000.00), with interest thereon from this date on the unpaid principal amount hereof from time to time outstanding at the rate of interest provided below, both principal and interest payable as provided below in lawful money of the United States of America at the address of Payee set forth below or at such other place within Dallas County, Texas, as from time to time may be designated by the holder of this Unsecured Promissory Note (the “Note”).

The unpaid principal of this Note from time to time outstanding shall bear interest prior to maturity at the rate of interest equal to 6.00% per annum. Interest shall be payable quarterly in arrears on the unpaid principal balance of this Note outstanding from time to time beginning ___________ __, 2007.

Maker shall be entitled to prepay the principal of the Note from time to time.

The original principal amount of this Note shall be payable in sixteen (16) equal quarterly installments of ONE HUNDRED SEVENTY EIGHT THOUSAND, ONE HUNDRED TWENTY FIVE and 00/100 DOLLARS ($178,125.00) beginning _______ __, 2008 [21 months from the date of this Note] (each such date on which a payment is due, a “Payment Date”).

Notwithstanding the foregoing, the entire unpaid principal balance of this Note and all accrued and unpaid interest thereon shall become immediately due and payable upon the earliest to occur of the following events:

(i)	if Maker shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed; or
(ii)	bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of

	debtors shall be instituted by or against Maker and if instituted is not dismissed within sixty (60) days; or
(iii)	Maker shall fail to make any payment, whether interest, principal or a combination of the two, when due and such failure continues for ten (10) days without being cured.

All principal and interest under this Note that remains in arrears five (5) or more consecutive days after their respective due dates shall thereafter bear interest at the rate of interest per annum equal to ten percent (10%) (the “Default Rate”).

Maker waives presentment for payment, demand, notice of demand and of dishonor and nonpayment of this Note, notice of intention to accelerate the maturity of this Note, notice of acceleration, protest and notice of protest.

Should the indebtedness represented by this Note or any part thereof be collected at law or in equity or through any bankruptcy, receivership, probate or other court proceedings or if this Note is placed in the hands of attorneys for collection after default, Maker and all endorsers, guarantors and sureties of this Note jointly and severally agree to pay to the holder of this Note in addition to the principal and interest due and payable hereon all the costs and expenses of the holder in enforcing this Note including, without limitation, reasonable attorneys’ fees and legal expenses.

This Note and the rights, duties and liabilities of the parties hereunder or arising from or relating in any way to the indebtedness evidenced by this Note or the transaction of which such indebtedness is a part shall be governed by and construed in accordance with the law of the State of Texas and the law of the United States applicable to transactions within such State.

No amendment of this Note shall be binding unless expressed in a writing executed by Maker and the holder of this Note.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

2

MAKER IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS COUNTY, TEXAS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, AND MAKER HEREBY AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS COUNTY, TEXAS MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO MAKER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE FIVE DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

Dated effective as of this the ____ day of __________ , 2006.

Maker’s Address:	MAKER:
1720 Hayden Drive	UNIVERSAL POWER GROUP, INC., a
Carrollton, Texas 75006	Texas corporation
	By:
	Name:
	Title:
Maker’s Address:	MAKER:
1720 Hayden Drive	UNIVERSAL POWER GROUP, INC., a
Carrollton, Texas 75006	Texas corporation
	By:
	Name:
	Title:
Payee’s Address:
ZUNICOM, INC.
1720 Hayden Drive
Carrollton, Texas 75006
Attn: William Tan

3

EX-10.11(B)

Exhibit 10.11(b)

UNSECURED PROMISSORY NOTE

$____________ Dallas, Texas  _____________ , 2006 

FOR VALUE RECEIVED, the undersigned, UNIVERSAL POWER GROUP, INC., a Texas corporation (“Maker”), promises to pay to the order of ZUNICOM, INC., a Texas corporation (“Payee”), on or before _________ , 2012 (the “Maturity Date”), the principal sum of ____ MILLION AND NO/100 DOLLARS ($__,000,000.00) , with interest thereon from this date on the unpaid principal amount hereof from time to time outstanding at the rate of interest provided below, both principal and interest payable as provided below in lawful money of the United States of America at the address of Payee set forth below or at such other place within Dallas County, Texas, as from time to time may be designated by the holder of this Unsecured Promissory Note (the “Note”).

The unpaid principal of this Note from time to time outstanding shall bear interest prior to maturity at the rate of interest equal to 6.00% per annum. Interest shall be payable quarterly in arrears on the unpaid principal balance of this Note outstanding from time to time beginning ___________ __, 2007.

Maker shall be entitled, and in certain instances may be required, to prepay the principal of the Note from time to time. Except as otherwise set forth herein, the original principal amount of this Note shall be payable in sixteen (16) equal quarterly installments of ____________ 00/100 DOLLARS ($__________) beginning _______ __, 2008 [21 months from the date of this Note] (each such date on which a payment is due, a “Payment Date”). Notwithstanding the prior sentence, in the event the underwriters of Maker’s initial public offering exercise their over-allotment option, in whole or in part, the net proceeds to Maker from the sale of the shares of its common stock covered by such option (after taking into account any discounts or commissions payable to the underwriters) shall be payable to Payee and applied against the original principal amount of this Note. Any remaining balance shall be payable in sixteen equal quarterly installments as set forth above.

Notwithstanding the foregoing, the entire unpaid principal balance of this Note and all accrued and unpaid interest thereon shall be immediately due an payable upon the earliest to occur of the following events:

(i)	if Maker shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed; or
(ii)	bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of

	debtors shall be instituted by or against Maker and if instituted is not dismissed within sixty (60) days; or
(iii)	Maker shall fail to make any payment, whether interest, principal or a combination of the two, when due and such failure continues for ten (10) days without being cured.

All principal and interest under this Note that remains in arrears five (5) or more consecutive days after their respective due dates shall thereafter bear interest at the rate of interest per annum equal to ten percent (10%) (the “Default Rate”).

Maker waives presentment for payment, demand, notice of demand and of dishonor and nonpayment of this Note, notice of intention to accelerate the maturity of this Note, notice of acceleration, protest and notice of protest.

Should the indebtedness represented by this Note or any part thereof be collected at law or in equity or through any bankruptcy, receivership, probate or other court proceedings or if this Note is placed in the hands of attorneys for collection after default, Maker and all endorsers, guarantors and sureties of this Note jointly and severally agree to pay to the holder of this Note in addition to the principal and interest due and payable hereon all the costs and expenses of the holder in enforcing this Note including, without limitation, reasonable attorneys’ fees and legal expenses.

This Note and the rights, duties and liabilities of the parties hereunder or arising from or relating in any way to the indebtedness evidenced by this Note or the transaction of which such indebtedness is a part shall be governed by and construed in accordance with the law of the State of Texas and the law of the United States applicable to transactions within such State.

No amendment of this Note shall be binding unless expressed in a writing executed by Maker and the holder of this Note.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

2

MAKER IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS COUNTY, TEXAS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, AND MAKER HEREBY AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS COUNTY, TEXAS MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO MAKER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE FIVE DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

Dated effective as of this the ____ day of __________ , 2006.

Maker’s Address:	MAKER:
1720 Hayden Drive	UNIVERSAL POWER GROUP, INC., a
Carrollton, Texas 75006	Texas corporation
	By:
	Name:
	Title:
Maker’s Address:	MAKER:
1720 Hayden Drive	UNIVERSAL POWER GROUP, INC., a
Carrollton, Texas 75006	Texas corporation
	By:
	Name:
	Title:
Payee’s Address:
ZUNICOM, INC.
1720 Hayden Drive
Carrollton, Texas 75006
Attn: William Tan

3

EX-10.13

NOTE: CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS AGREMENT HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION

THIRD PARTY LOGISTICS & PURCHASE AGREEMENT

THIS THIRD PARTY LOGISTICS AND PURCHASE AGREEMENT (“Agreement”) entered into as of November 22, 2006 by and between BRINK’S HOME SECURITY, INC. (“Brink’s”) and UNIVERSAL POWER GROUP, INC. (“UPG”) by which UPG will provide third party logistics services to Brink’s including, but not limited to, assembling, shipping, storing, procuring and other related services. UPG will also coordinate battery recycling services to Brink’s. The following terms and conditions apply:

1.	Services, Battery and Transformer Purchases and Warranties: (a) As requested by Brink’s, UPG shall procure components for residential and/or commercial alarm systems including tools and supplies necessary for installation (“Alarm System Components”) from manufacturers specified by Brink’s, who have existing contracts with Brink’s. UPG shall also procure packing, and other related materials, and shall store such Alarm System Components and materials in UPG’s distribution centers. UPG shall assemble kits of the following components: control panel; battery; transformer; RJ block; speaker; motion sensor (in certain cases); and instruction materials (“Kits”). Specific brands and models of components that should be included in the Kits will be specified by Brink’s. UPG shall ship Kits to destinations specified by Brink’s. If Brink’s changes the equipment, or the configuration of the equipment, in the Kits and thus causes UPG’s supply of existing packaging (box and partitions) to be unusable, Brink’s shall reimburse UPG for the cost of the unusable packaging that cannot be returned or reimbursed. UPG shall also store, ship and procure other additional Alarm System Components, that are not products included in Kits, from manufacturers specified by Brink’s, who have existing contracts and pricing arrangements with Brink’s.
	(b)    Brink’s may also purchase from UPG batteries, transformers, and other Kit components from manufacturers of UPG’s choice that are produced to Brink’s specifications.
	(c)    For batteries and transformers not included in a Kit, UPG warrants that those products will be in conformance with the specifications provided to and by Brink’s, and that its products will be free from material and workmanship defects and other product warranties including, without limitation, the warranties described in Exhibit A, attached hereto. Other terms of purchase are also specified in Exhibit A.
	(d)    In consideration of Brink’s obligations under this Agreement, UPG will coordinate battery recycling services to Brink’s for the duration of this Agreement, in accordance with Exhibit B, attached hereto, at no additional charge.
2.	Authority. Except as expressly set forth in this Agreement, UPG shall have no authority to enter into contracts, or other commitments, with other persons, companies, corporations or entities on Brink’s behalf, and shall not be permitted to represent or bind Brink’s in any way.
3.	Fees. (a) For Kits shipped to Brink’s locations, Brink’s agrees to pay UPG as specified in Exhibit C (a). Applicable sales tax, if any, shall be added to invoices, unless Brink’s provides UPG a valid sales tax exemption certificate applicable to purchases.
	(b)    Brink’s may periodically, at Brink’s option, request that UPG procure additional Alarm System Components that Brink’s has sourced from the same or additional manufacturers. In that event, UPG’ shall be compensated as set forth in Exhibit C(b).
	(c)    Brink’s has established an authorized dealer program that requires authorized dealers to purchase approved Kits and Alarm System Components from UPG. Brink’s authorized dealers are solely responsible for setting up an account and credit terms with UPG. UPG agrees that

NOTE: CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS AGREMENT HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION

	warehousing and other charges to Brink’s authorized dealers will not exceed the amounts as specified in Exhibit C(c). Brink’s may purchase equipment directly from UPG for Brink’s authorized dealers. If Brink’s exercises this option, Brink’s will pay UPG the amounts described in Exhibit C(c).
	(d)    In the event that Brink’s purchases products directly from a manufacturer, and such products are shipped to UPG for handling and distribution, UPG may charge Brink’s the shipping and handling fees described in Exhibit C(b). Brink’s shall provide UPG with product cost information for this purpose.
	(e)    For items ordered by UPG and drop-shipped directly to a destination specified by Brink’s (other than UPG’s distribution centers), Brink’s shall pay UPG the amounts for these items, as specified in Exhibit C(d).
	(f)    Immediately after UPG receives notification from a manufacturer of its effective date of any price changes for Alarm System Components, UPG will notify Brink’s of the manufacturer’s price changes and the effective date. Brink’s agrees to provide UPG with price change approvals prior to the effective date of manufacturer’s price change so that UPG may procure products timely. UPG will charge Brink’s the new price thirty (30) days after the manufacturer's effective date. UPG shall not procure products at new prices without Brink’s approval and instructions.
	(g)    Brink’s may also purchase from UPG products that are manufactured by manufacturers of UPG’s choice and who have existing contracts with UPG. Products will be packaged by UPG as a normal distribution product. Brink’s shall pay UPG the amounts as specified in Exhibit C(e).
4.	Freight & Fuel Surcharges. Brink’s agrees to pay UPG an index-based fuel surcharge that is adjusted quarterly. Changes to the fuel surcharge will be effective immediately on the first Monday of each calendar quarter. UPG will provide written notice to Brink’s two weeks prior to the effective date of the fuel surcharge adjustment for approval. The surcharge will be calculated as specified in Exhibit C(f).
5.	Payment. UPG shall provide weekly invoices to Brink’s. Brink’s shall pay UPG within thirty (30) days from the receipt of UPG’s invoice. Each UPG invoice will separately list in detail the: actual cost to Brink’s for products obtained; shipping charges; warehousing and other handling charges; and fuel surcharges.
6.	Purchase Orders. (a) Brink’s shall submit to UPG, at intervals of Brink’s choice, requests for UPG to procure Alarm System Components and related materials from manufacturers specified by Brink’s. UPG, as promptly as practical after receipt of such requests, shall submit purchase orders to manufacturers for materials specified by Brink’s and shall diligently expedite such purchase orders (subject always to availability of product from the specified manufacturer) with a view towards maintaining adequate inventory.
	(b)    For critical custom products not available from other sources (e.g., Honeywell Series 4000 control panels and motherboards, compatible Honeywell keypads, receivers, fob kits, radios, telephone control modules, zone expanders, and System Sensor model 2112ATL/2112ATLA smoke detectors), UPG agrees to exercise additional diligence in maintaining adequate inventory.
7.	Shipments. Within 24 hours after Brink’s places an order with UPG, UPG shall ship Kits, Alarm System Components and related materials to Brink’s branch office, dealer office or final user specified in Brink’s instructions within the continental United States. If for any reason material orders do not ship within 48 hours, backorders will be immediately reported to Brink’s. All surface shipping and handling costs to any branch office, dealer or final user in the continental United

NOTE: CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS AGREMENT HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION

	States shall be at UPG’s sole expense; however, if Brink’s requests shipment by air freight or to a destination outside the 48 states, UPG shall prepay such air freight or other shipping charge and Brink’s shall reimburse UPG for the actual charges incurred. UPG shall endeavor to assure that all Alarm System Components and related materials shipped by UPG are delivered as promptly as possible in a reasonable amount of time so as not to disrupt Brink’s operations. Any time UPG is scheduled to not ship product for an entire day or more, such as when UPG performs periodic physical inventory counts, a ten (10) day notice must be provided to Brink’s.
8.	Manufacturers’ Warranties. Brink’s shall be the beneficiary of all manufacturers’ warranties. UPG shall take such reasonable steps (excluding institution of litigation) to enforce the terms of all manufacturers’ warranties with respect to the Alarm System Components and related materials, including but not limited to, returning defective items for repair or replacement. UPG, AS A PROVIDER OF WAREHOUSING AND SHIPPING SERVICES AND AS A WHOLESALE DISTRIBUTOR, MAKES NO WARRANTIES OF ITS OWN, EITHER EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OF THESE PRODUCTS NOT MANUFACTURED BY UPG, AND SHALL NOT BE LIABLE FOR SPECIAL OR CONSEQUENTIAL DAMAGES. UPG WILL EXTEND WARRANTIES ON ITEMS MANUFACTURED BY UPG AND UPG VENDORS PER RESPECTIVE PRODUCT WARRANTIES.
9.	Risk of Loss. Risk of loss on all Alarm System Components, Kits and other products and related materials purchased, stored, assembled, and shipped by UPG under this Agreement shall remain with UPG until such Alarm System Components, Kits and other products and related materials are delivered to Brink’s branch office, dealer office or the end user as instructed by Brink’s.
10.	Returns. In the event of a return authorized by Brink’s and subject to an equipment or material return authorization issued by UPG, Brink’s shall pay UPG for any restock charge imposed by the manufacturer of the product. UPG shall provide Brink’s branches with credits upon receipt of credits from the manufacturer. At UPG’s discretion, UPG may provide authorized dealers with immediate credit for returns of equipment or material to the manufacturer. If reconciliation is required upon receipt by the manufacturer, UPG will invoice Brink’s or the authorized dealer in full or for the difference, as the case may be.
11.	Effective Date, Term and Termination.
	(a)    This Agreement shall become effective as of November 22, 2006, and shall continue for an initial term of 24 months. At the end of the initial term, this Agreement will renew for successive one year renewal terms, unless cancelled in writing by either party without cause at least 120 days before the end of the initial term or any renewal term. This Agreement may be terminated by Brink’s as specified in Exhibit C(g). This Agreement supersedes any and all prior agreements between the parties.
	(b)    In the event that either party commits a Default under this Agreement, the non-defaulting party shall give written notice of the Default to the defaulting party. If the defaulting party does not cure such default within seven business days, or if there is a subsequent Default of the same nature within a 6-month period of each other, then the non-defaulting party shall have the right to terminate this Agreement by giving ten days written notice. With respect to UPG, the term “Default” means a failure to meet a material shipping or warehousing obligation under this Agreement. With respect to Brink’s, the term “Default” means a failure to meet a material payment obligation under this Agreement. With respect to both parties, an occurrence shall not be considered a Default if it is caused by an event or condition beyond the party’s reasonable control, including Acts of God, war and terrorist attacks or threats. Provided, however, upon early termination, Brink’s will purchase from UPG any and all remaining inventory procured by UPG pursuant to this Agreement (including inventory in transit) and pay any applicable cancellation fees of the manufacturer.

NOTE: CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS AGREMENT HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION

BRINK’S HOME SECURITY, INC.

By:
	Stephen Yevich
	SVP and CFO
Date:

UNIVERSAL POWER GROUP, INC.
By:		By:
	Randy Hardin		Mimi Tan
	President & CEO		VP Business Development & Marketing
Date:		Date:

NOTE: CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS AGREMENT HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION

EXHIBIT A

Terms and Conditions for UPG Battery and Transformer Purchases

As stated in Section 1 of this Agreement, Brink’s may purchase from UPG the UPG 1245 (12v-4.5AH) battery and the 3-Prong 16.5V -40Va transformer (“UPG Products”) at the prices listed in Exhibit C in the quantities determined by Brink’s. The purchase of such batteries and transformers is subject to the following additional terms and conditions.

1.	U.L. Listing. UPG shall maintain an Underwriters Laboratories (“U.L.”) listing on the UPG transformers purchased under this Agreement.
2.	Compliance. UPG shall comply with all environmental and other laws in connection with the manufacture and delivery of the UPG Products.
3.	Indemnity. UPG agrees to defend, indemnify and hold harmless Brink’s from and against all damages and costs arising out of any action for infringement of any United States patent, copyright or trade secret by the UPG Products. Brink’s shall give UPG prompt written notice of any action, claim or threat of infringement suit either oral or written. Brink’s shall give UPG opportunity to elect to take over, settle or defend any such claim, action or suit through counsel of UPG’s own choice and under its sole direction. Brink’s will make available to UPG all defenses against any such claim, action, suit or proceeding known to Brink’s. Brink’s may, at its own option, continue to use the product, request that UPG replace the product with a non-infringing product of equal quality, modify the product to be non-infringing or demand a full refund of the purchase price of the product from UPG.
	UPG shall defend, indemnify and hold harmless Brink’s from any and all damages caused directly by any defect in a UPG Product, including without limitation failure of the product to comply with environmental or other laws. UPG shall have the option to take over, settle or defend such action, claim or suit through counsel of its own choice.
4.	Warranty. UPG warrants that the UPG Products will conform to the most recent documented specifications, drawings, samples or other descriptions provided to Brink’s and will be free from defects in materials and workmanship for a period of two years on batteries and one year on transformers. UPG agrees that this warranty will survive acceptance of the UPG Products and shall run to Brink’s, its successors, assigns, subsidiaries, divisions, affiliates and purchasers. In no event shall UPG be liable for consequential damages, such as loss of profits under this Warranty.
5.	Insurance. With respect to liability resulting from any alleged failure of the UPG Products, UPG agrees to furnish Brink’s with a Broad Form Vendors endorsement to its product liability insurance policy extending coverage to Brink’s subject to the terms of the endorsement within thirty (30) days of the date UPG signs this Agreement. UPG further agrees to furnish Brink’s, within thirty days of signing this Agreement, a Comprehensive General Liability (including product liability, contractual liability and completed operations) Certificate of Insurance showing limits of $2,000,000, naming Brink’s as an additional insured and providing thirty (30) days written notice of cancellation or material change in the policy.

NOTE: CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS AGREMENT HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION

EXHIBIT B

Universal Power Group (“UPG”)
Battery Recycling Program
(Lead Acid Batteries)

1.	Brink’s shall fax the “Pick-Up Request” to UPG at (469) 892-1123.
2.	Within 24-hours, UPG will contact an authorized person or entity to remove and drop-off (“hauler”) hazardous material as close as possible to the pick-up location.
3.	The authorized hauler must contact Brink’s, within 24-hours, to schedule the pick-up. Typically the pick-up will occur within one week.
4.	The minimum pick-up is 200 lbs.
5.	The authorized hauler will be responsible for taking used batteries to an EPA authorized smelter and will send the proper documentation (as required by law) to UPG.
6.	If UPG cannot locate a hazardous material hauler in a particular area, UPG will immediately notify Brinks of such failure to locate a hauler.

NOTE: CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS AGREMENT HAS BEEN OMITTED AND HAS BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION

EXHIBIT C

Fees and Volume Commitments

(a) Pricing for Kits: [*]

(b) Pricing for additional Alarm System Components or other items from the same or additional manufacturers: [*]

(c) Pricing for Brink’s authorized dealers: [*]

(d) Pricing for items ordered by UPG and drop-shipped directly to a destination specified by Brink’s (other than UPG’s distribution centers): [*]

(e) Pricing for products from manufacturers of UPG’s choice with whom UPG has negotiated contracts: [*]

(f) Calculation of index-based fuel surcharge: [*]

(g) This Agreement may be terminated by Brink’s for any reason by giving 120 days prior written notice. Provided, however, upon such early termination, Brink’s will purchase from UPG any and all remaining inventory procured by UPG pursuant to this Agreement (including inventory in transit and obsolete inventory) and pay any applicable cancellation fees imposed on UPG by the manufacturer.

* Confidential Information omitted and filed separately with the Securities and Exchange Commission.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated February 24, 2006, except for Note D, to which the date is April 18, 2006 and Note L, to which the date is October 25, 2006, accompanying the financial statements of Universal Power Group, Inc. contained in this Registration Statement and Prospectus. We consent to the use of the aforementioned report in this Registration Statement and Prospectus, and our report dated February 24, 2006 with respect to the related financial statement schedule, included herein, and to the references to our firm under the headings “Selected Financial Data” and “Experts.”

/s/ KBA GROUP LLP
Dallas, Texas
November 30, 2006

CORRESP

MO R S E ,ZE L N I C K ,RO S E &LA N D E R
A    L I M I T E D    L I A B I L I T Y    P A R T N E R S H I P
405 PARK AVENUE
NEW YORK, NEW YORK 10022-2605
212-838-1177
FAX – 212-838-9190

November 30, 2006

WRITER’S DIRECT LINE
(212) 838-8269

BY FEDERAL EXPRESS

Peggy Fisher, Esq.
Assistant Director
U.S. Securities and Exchange Commission
100 F Street, N.E.
Mail Stop 6010
Washington, D.C. 20549

Re:	Universal Power Group, Inc.
	Registration Statement on Form S-1
	Filed September 12, 2006
	File No. 333-137265

Dear Ms. Fisher,

          Reference is made to your comment letter, dated November 14, 2006, to Randy Hardin, Chief Executive Office of Universal Power Group, Inc. (“UPG” or the “Company”), with respect to the above-referenced registration statement (the “Registration Statement”) filed by UPG. We are filing this letter, together with Amendment No. 3 to the Registration Statement, in response to your comments. For ease of reference, your inquiries have been incorporated in this letter in bold type and precede our responses. If you have any questions regarding the responses to your comments, please feel free to call me at the number indicated above.

Competition, page 43

1. We note your revised disclosure in the third bullet point on page 44. Please clarify what you mean by “[u]p to 50% or more. ” Does your inventory consist of “up to 50%” of products you are required to carry under your agreement with Brinks, or “50% or more”? Also, please tell us where which provision of your agreement with Brinks requires you to maintain this inventory level.

The disclosure has been revised by deleting the words “or more” and the words “are required to carry”. Under the agreement with Brinks, there is no express obligation to carry inventory.¹ The obligation is to

¹ Our responses are based on the Purchase Agreement dated June 1, 2004 with Brinks filed as exhibit 10.6 to the Registration Statement and the prior purchase agreement that was signed in 2002, which were the operative agreements for the years reflected in the financial statements included in the Registration Statement. On November 27, 2006 the Company and Brinks signed a new agreement dated as of November 22, 2006. The new agreement is virtually identical in all material respects to the old agreements. Where the terms of the new agreement are different than the terms of the old agreements and such differences relate to a comment, the differences will be noted in a footnote.

U.S. Securities & Exchange Commission
November 30, 2006
Page 2

ship orders within 48 hours of receipt.² In order to comply with this requirement, the Company generally carries up to two months worth of inventory for Brinks. The exact amount of inventory the Company carries at any one time to fulfill its obligations under the Brinks agreement varies from quarter to quarter and ranges from 40%-50% of its total inventory.

Financial Statements – page F-1

2. Please refer to prior comment 31. Consideration should be given on an ongoing basis to the updating requirements of Rule 3-12 of Regulation S-X.

Amendment No. 3 includes the Company’s financial statements for the nine months ended September 30, 2006.

3. We note that a forward stock split of 6.07404258 to 1 was effective October 25, 2006. Please revise all shares and per share amounts to retroactively adjust to reflect the stock split.

All share and earnings per share amounts in the financial statements and all financial information in the prospectus have been revised to give retroactive effect to the October 25, 2006 stock split.

Note B. Summary of Significant Accounting Policies, page F-9

Revenue Recognition, page F-11

4. Please refer to prior comment 34. Explain in detail the buy-back agreement you have with customers discussed on page 39 and the impact this has on your revenue recognition.

The only customer with which the Company has a “buy-back” arrangement is Brinks. The disclosure on page 39 has been revised to clarify the limited nature of this buy-back arrangement. In terms of the Company’s revenue recognition policy, because the buy-back arrangement offers only limited protection to the Company, as discussed in our letter, dated October 26, 2006 in response to comment 36 and as will be discussed in more detail below in response to comment 5, while a relevant consideration, the limited buy-back arrangement does not outweigh the other indicators that support Gross Revenue Reporting.

Specifically, the buy-back arrangement only applies in a case where Brinks terminates the agreement prior to the expiration of its term. In that situation, the agreement provides that “Brink’s will purchase from UPG any and all remaining inventory procured by UPG pursuant to this Agreement,” which, in turn, means inventory procured by the Company to fulfill outstanding purchase orders issued by Brinks and the independent dealers who are authorized to sell and install Brinks’ security systems. That being the case, the Company has no buy-back protection upon early termination with respect to inventory not covered by unfilled purchase orders. The agreement further provides that the Company will ship goods against purchase orders issued under the Brinks agreement within two days. In order to make timely shipments, the Company must carry a significant amount of inventory – far in excess of what is required under purchase orders in hand at any particular moment in time. For example, at the present time the Company

² Under the new agreement, the Company’s obligation is to ship within 24 hours of receipt of a purchase order.

U.S. Securities & Exchange Commission
November 30, 2006
Page 3

is carrying approximately $7.5 million of inventory ordered to fulfill its obligations under the Brinks agreement and it only has orders in hand totaling $36,000.

The agreement supports the Company’s revenue recognition policy. As will be discussed in greater detail below in response to comment 5, the agreement explicitly provides that (i) the Company is the sole owner of the inventory; (ii) the Company alone bears the risk of loss of the inventory while the inventory is in its possession; (iii) the Company is the sole obligor for paying the manufacturers of these inventory items which the Company has purchased; and (iv) the Company alone bears the entire risk of collection from each and every purchaser to whom it ships the inventory items. The Company believes that the buy-back provision regarding unsold inventory, in the event of an early termination by Brinks of this multi-year supply agreement, is a reasonable commercial term which is not inconsistent with the conclusion that the Company owns this inventory and properly reports revenue on a gross basis.

5. We have considered your response to our prior comment 34. We are still uncertain how you have determined that it is appropriate to recognize revenue on a gross basis under EITF 99-19. Specifically, we note the purchase agreement with Brink’s included as Exhibit 10.6, states, (i) as requested by Brink’s, UPG, as Brink’s agent, shall procure components . . . from manufactures specified by Brink’s with whom Brink’s negotiated contracts, (ii) these prices remain firm throughout the term of the purchase agreement and (iii) in the event of a return, Brink’s shall pay a restock charge. Specifically address each of the factors of EITF 99-19 and tell us how you applied such factors in determining the appropriate accounting treatment for your arrangement with Brink’s. Additionally, revise your disclosure to expand on the discussion of your relationship with Brink’s and the specific criteria that you are relying upon in order to account for the revenues under this arrangement on a gross basis. Also, we note on page 28 that you provide Brink’s with battery recycling at no extra charge. Please explain how you account for this service.

The Company believes that, substantively, it is the owner and reseller of its inventories and therefore properly reports revenue on a gross basis. This is true as well with respect to those inventory items that the Company purchases and resells in fulfillment of its obligations under its multi-year supply agreement with Brinks. Accordingly, the Company believes that the indicia supporting Gross Revenue Reporting far outweigh, both in terms of absolute numbers and importance, the indicia supporting Net Revenue Reporting.

           Before we specifically address the points raised in the comment letter and the criteria in EITF 99-19, we think it is helpful to highlight the following key considerations:

• First, while this agreement does refer to the Company as “Brink’s agent” in one instance, this does not reflect the substance of the agreement or the working relationship between the parties. Rather, it is simply an inartful way of referring to the Company as the other “contracting party” with Brinks under the agreement.³ Clearly, the substance of the agreement supports the conclusion that the Company operates as a principal and not as a mere agent of Brinks as regards the inventories governed by the agreement. In terms of the agreement itself, the following provisions clearly indicate that the Company is not Brinks’ agent. (i) Pursuant to Section 1(b) ofthe Agreement and paragraphs 3, 4 and 5 of Exhibit A to the agreement, the Company provides Brinks with a warranty, an indemnity and coverage under its product liability insurance policy on

³ Most significantly, in the new agreement the Company is no longer described as “Brink’s agent”.
U.S. Securities & Exchange Commission
November 30, 2006
Page 4

many of the items it sells to Brinks.⁴ While in some cases, Brinks is only the beneficiary of the manufacturer’s warranty, which, alone, does not conclusively indicate a principal-agent relationship. Normally, a purchasing agent would not be providing any warranty to its principal. (ii) Under Section 2 of the agreement, “UPG shall have no authority to enter into contracts or other commitments on Brinks’ behalf or to represent or bind Brinks in any way.” Although the parties can agree otherwise, typically an agent does have authority within the scope of its agency to bind the principal. (iii) Section 8 of the agreement clearly provides that UPG bears the risk of loss until the items it sells to Brinks are delivered to Brinks. Typically, an agent would not bear any risk of loss and would only be liable for acts of gross negligence and willful misconduct.⁵


• Second, under its agreement with Brinks, the Company receives purchase orders from Brinks and from independent, third-party dealers who are authorized to sell and install Brinks’ security systems. The Company’s acceptance of these purchase orders creates a binding contract of sale between two contracting principals. None of the documentation regarding these transactions refers to the Company as Brinks’ agent. All of the documentation relating to the Company’s purchase of inventory items from its vendors indicates that the Company is the sole and exclusive owner of these goods. Brinks’ name does not appear anywhere on the documentation between the Company and its vendors. All invoices for purchased goods are delivered by the vendors to the Company and the Company pays its vendors directly and is solely responsible for such payment. All Bills of Lading list the Company as owner.
  
  
• Third, Section 8 of the Brinks agreement clearly provides that the Company has the risk of physical and financial loss of all inventory items which the Company purchases from its suppliers. Under the agreement, risk of loss does not pass until these items are shipped by the Company and are received by Brinks or the dealer who issued the purchase order. Accordingly, the Company insures its inventories against fire, water and other damage at its own expense. The only protection the Company has is in the event Brinks elects to terminate the agreement prior to its stated term. In that event, Brinks would be obligated to “purchase any and all remaining inventory procured by UPG under this Agreement.” This is a reasonable commercial provision given the fact that Brinks is electing to terminate the agreement prematurely. On the other hand, if the agreement were to expire by its own terms, Brinks would have no obligation to purchase any unsold inventory and the Company would have to find another buyer. As a practical matter, because of the volume of the Brinks account and because the Company is obligated to ship within two days of receipt of a purchase order, the Company carries a significant amount of inventory to fulfill the purchase orders it receives (both from Brinks and from Brinks’ independent third-party dealers) pursuant to the agreement – far in excess of its obligations under purchase orders in hand. So there is real financial risk to the Company. For example, at the present time the Company is carrying approximately $7.5 million of inventory for sale to Brinks and it only has orders in hand totaling $36,000.
  
  
• Fourth, the risk of collection for goods shipped and delivered by the Company is borne entirely by the Company; there is no indemnity or “hold harmless” from Brinks ensuring the Company

⁴ These provisions apply with respect to those items that the Company buys from its own suppliers, as opposed to Brinks-designated suppliers. With respect to items purchased from Brinks-designated suppliers, Brinks is the beneficiary of the manufacturer’s warranty. As will be discussed in greater detail below, most of the items the Company sells to Brinks are sourced from the Company’s own suppliers. See paragraph “Fifth”.
⁵ This point is discussed in greater detail below under paragraph “Third”.

U.S. Securities & Exchange Commission
November 30, 2006
Page 5

against non-payment, and this applies, as well, to goods delivered to Brinks authorized dealers pursuant to purchase orders issued by them directly to the Company.


• Fifth, most of the items that the Company sells to Brinks are not sourced from suppliers that have been designated by Brinks and with which Brinks has negotiated prices; and most of the suppliers from which the Company purchases items that it sells to Brinks have not been designated by Brinks. In total, Brinks purchases approximately 900 items from the Company, which the Company sources with 86 suppliers. Only seven, or 8% of these 86 suppliers, have been designated by Brinks (and with which Brinks has negotiated prices) and these seven suppliers furnish approximately 360 items, or 40% of the 900 items that the Company sells to Brinks. With respect to those items that the Company sources from its suppliers that have not been designated by Brinks, the Company is free to charge Brinks whatever it believes is reasonable.
  
  
• Sixth, a very limited number of the items that the Company purchases from Brinks-designated suppliers are proprietary or unique to Brinks. However, nothing in the Brinks agreement prohibits the Company from using any of the items it purchases from Brinks-designated suppliers in non-Brinks products or selling them directly to customers other than Brinks.
  
  
• Seventh, in order to fill the orders it receives from Brinks and the independent Brinks authorized dealers, the Company, in turn, purchases and inventories the necessary items from various manufacturer/vendors. As mentioned above, even with respect to those items that the Company purchases from Brinks-designated suppliers, the substance of the business relationship between the Company and Brinks goes significantly beyond that of a mere purchasing agent. Were the Company a mere purchasing agent, it would simply re-ship purchased inventory items to Brinks or their authorized dealers in the same condition or form in which the Company received them from its suppliers. That is simply not the case. The Company assembles items from various suppliers into “kits”. These kits include some of the major alarm system components and other items that are used to install Brinks security systems. Less than 30% of the items included in completed kits are purchased by the Company from Brinks’ designated suppliers.

In addition, we note that you raised two other specific points with respect to the Brinks agreement. The first of these remaining points is the fact that the prices under the Brinks agreement remain firm throughout the term. (We note that the Brinks agreement was, in fact, amended in November 2005 to provide for price increases on some items.) However, supply contracts typically provide for fixed pricing throughout their term. Naturally, the Company has ample opportunity to review these prices and determine whether or not to be bound by them for a fixed period at the time it first negotiates and enters into its agreement with Brinks. In other words, the Company has “reasonable latitude within economic constraints” to negotiate pricing prior to the time it enters into this agreement. In addition, a majority of the items that the Company sells to Brinks are sourced from the Company’s suppliers that have not been designated by Brinks. As to those items, the Company has complete discretion over pricing. So this particular feature should not be a strong indicator of net revenue reporting in light of the other factors discussed above. Also, as noted above, most of the items that the Company sells to Brinks and Brinks dealers under the agreement – 60% -- are not purchased from Brinks designated suppliers with whom Brinks has negotiated prices. As to these items, the Company negotiates prices directly with its suppliers.

The last point specifically mentioned in your comment relates to the issue of “restocking” charges. The agreement provides that if Brinks cancels an order for any reason and the Company returns the goods to the manufacturer, Brinks must reimburse the Company for any restocking charges imposed by the

U.S. Securities & Exchange Commission
November 30, 2006
Page 6

manufacturer against the Company. There is a divergence between what the agreement says and what has been the practice between the parties. In fact, the Company imposes a restocking charge on Brinks regardless of whether it returns the goods to the manufacturer. Restocking charges are standard commercial practice in these types of relationships and should not be viewed as indicating that Brinks is the owner of the goods.

In terms of the specific criteria set forth in EITF 99-19, we think it is clear that after analyzing the Brinks agreement in light of the indicators of gross revenue reporting and the indicators of net revenue reporting, there are no strong indicators of net revenue reporting. To the contrary, there are strong indicators of gross revenue reporting. Moreover, none of the indicators of net revenue reporting are present.

INDICATORS OF GROSS REVENUE REPORTING:

-	The Company is the primary obligor in the arrangement:
	º	The Company receives purchase orders from Brinks and from independent dealers authorized to install Brinks security systems. The Company, in turn, submits its purchase orders, in its own name, to suppliers. This is the procedure whether or not the supplier has been designated by Brinks. The goods are shipped to the Company. Title to the goods passes to the Company. Suppliers bill the Company for the goods. The Company pays for the goods out of its own funds. The Company pays the shipper. The Company insures the goods. The Company assembles various inventory items into kits on the Company’s premises. When the kitting process is completed, the Company ships the kits and the other items designated in the purchase order to the purchaser and invoices the purchaser. When these goods are delivered to the purchaser, title passes from the Company to the purchaser, either Brinks or an independent Brinks dealer, whoever originally issued its purchase order to the Company.
-	The Company has general inventory risk:
	º	The Company owns the goods from the moment they are shipped from the manufacturer until they are delivered to the purchaser. As previously discussed, the Company generally maintains two months of inventory on hand to fulfill its obligations to Brinks and Brinks independent authorized dealers. Thus, quantities purchased are in excess of purchase orders on hand from Brinks and Brinks independent authorized dealers. The Company has general inventory risk as the items are maintained in inventory prior to customer order. If the goods were to be destroyed while in the Company’s possession, whether or not the Company was negligent, the Company would bear the entire risk of loss and would have to replace those goods at its own expense. The Company insures the goods at its own cost. In addition, the Company must pay for the goods out of its own funds and bears the entire risk of collection when it resells the goods.
-	The Company has latitude in establishing price:
	º	Although the agreement does provide that the prices for goods furnished by the seven Brinks-designated suppliers remain firm throughout the agreement term, the Company still has “reasonable latitude within economic constraints” to establish prices. First, the Company and Brinks negotiated extensively over pricing prior to entering into the agreement. Second, historically, the prices that Brinks pays the

U.S. Securities & Exchange Commission
November 30, 2006
Page 7

	Company, including the prices for those items that the Company purchases from Brinks-designated suppliers, have been revised during the term of the agreement. Third, the agreement fixes prices only with respect to approximately 40% of the items Brinks purchases from the Company. The balance of the items are sourced independently by the Company and the Company negotiates prices directly with the suppliers and sets the price it charges Brinks. Finally, the Company’s margin on its overall Brinks business is approximately 12%, which is certainly reasonable and an indication that it is acting as more than a mere purchasing agent.
-	The Company changes the product or performs part of the service:
	º	The major components that the Company purchases to fulfill its obligations under its agreement with Brinks are assembled and packed into kits. The kits include the major security system components and other materials used to install Brinks’ security systems. Some of the items in the kits are purchased from Brinks designated suppliers and some are not.
-	The Company has discretion in supplier selection:
	º	Under its agreement, the Company is required to purchase certain items from suppliers that have been designated by Brinks. The Company sells approximately 900 items to Brinks, which it buys from 86 suppliers. Only seven of these suppliers have been designated by Brinks and only 360 items are purchased from these seven suppliers. As to the remaining 540 items – 60% of the total – the Company has complete and absolute discretion to determine the suppliers as long as general quality parameters are met.
-	The Company is involved in the determination of product specifications:
	º	With respect to those items that the Company sources with its own suppliers – approximately 60% of the items it sells to Brinks – the Company determines the product specifications. Even with respect to those items which the Company purchases from Brinks-designated suppliers, Brinks affords the Company the opportunity to introduce alternate and improved specifications.
-	The Company has physical loss inventory risk:
	º	From the time the goods are shipped from a supplier to the Company until the Company, in turn, delivers those goods (packaged separately or in kits) to its customers, namely Brinks or an independent Brinks dealer, the Company bears the risk of physical loss should the product be damaged, destroyed or lost. The Company incurs the cost to insure against this risk.
-	The Company has credit risk:
	º	The Company contracts with suppliers for the production of goods. The Company, not Brinks, is obligated to its suppliers. The Company pays its suppliers out of its own funds and must pay its suppliers regardless of whether the sales price is fully collected from Brinks or the Brinks dealer. The Company borrows significant amounts under its line of credit and incurs significant interest expense because of the volume of purchases it makes to fulfill its obligations under the Brinks agreement. Further, the Company has no recourse against Brinks for non-payment of goods sold by the Company to Brinks’ independent dealers.

U.S. Securities & Exchange Commission
November 30, 2006
Page 8

INDICATORS OF NET REVENUE REPORTING:

-	The supplier (not the Company) is the primary obligor in the arrangement:
	º	There is no privity of contract between the Company’s suppliers and Brinks, whether or not the supplier is one that Brinks has designated. The Company is the sole and primary obligor under this arrangement. The Company is solely responsible for the purchase, fulfillment and delivery of the orders placed with the Company by Brinks and Brinks’ independent authorized dealers. Moreover, one of the Company’s primary obligations under the agreement and pursuant to the purchase orders it receives, is to assemble kits from some of the inventory items that the Company purchases. No supplier has that obligation. Accordingly, we do not believe this net indicator is met.
-	The amount the Company earns is fixed:
	º	Under the EITF, this indicator is present “if the company earns a fixed dollar amount per customer transaction regardless of the amount billed.” Clearly, that is not the case here. Under the agreement, the Company invoices a purchaser based on the quantity and type of items purchased. Every purchase order involves a different mix of items. Some purchase orders may involve items that are purchased from both Brinks-designated suppliers and other Company suppliers. Other purchase orders may involve items that are purchased from either category of supplier but not both. As to items purchased from suppliers that have not been designated by Brinks, the gross margins are different. In addition, the number of items purchased and the quantities of each item differ from purchase order to purchase order. Finally, the kits that the Company assembles include items purchased by the Company from Brinks-designated suppliers as well as other Company suppliers. Thus, the dollar value of each purchase order is different and the gross profit on each purchaser order will vary. Accordingly, this indicator of net revenue reporting is not present.
-	The supplier (and not the Company) has credit risk:
	º	The Company has the credit risk that Brinks and Brinks’ authorized dealers, will pay for the goods, which have been ordered by them from the Company and delivered to them by the Company. The Company does not collect the sales price until it has first delivered goods to its customer -- Brinks or a Brinks dealer. Under the agreement, the Company is obligated to give Brinks’ payment terms “net 30 days”. The Company has no obligation to give the Brinks dealers those terms. In fact, the Company has complete discretion over the payment terms it offers to Brinks’ independent authorized dealers.

Finally, with respect to your comment regarding the Company’s recycling services, the Company acts as a facilitator rather than as the provider of the service. All the Company does is contact a battery recycler and coordinates the pick-up between the recycler and the Company’s customer. The Company never physically touches the batteries. There is no accounting related to this service as the Company’s coordination costs are de minimis. In fact, the recyclers are paid by the smelters directly. Since the recycling service has no significant P&L impact on the Company, the reference to that service on page 27 of the prospectus has been deleted.

U.S. Securities & Exchange Commission
November 30, 2006
Page 9

As you requested in your comment, the discussion of the Company’s revenue recognition policy in the notes to its financial statements has been revised to include a more detailed analysis of the applicability of the criteria set forth in EITF 99-19. In addition, revisions have been made to various disclosures in the narrative portion of the prospectus to address some of the points raised in this response and to eliminate any confusion regarding the issue.

Note F. Related Party Transactions, page F-14

6. Revise to disclose the terms of the related party note, including maturity date and interest rate. Also, discuss the triggering events that would cause the note to be immediately due and payable, as disclosed on page 35.

See new Note L – Subsequent Events – which has been added to disclose the terms of the related party note. In this connection, we note that the definitive terms of this note will not be determined until the effective date of the Registration Statement.

7. We also note that immediately before the effective date of this offering, you will declare a dividend estimated to be $2 million to Zunicom. Revise here or in a subsequent event footnote to disclose.

See new Note L – Subsequent Events – which has been added to disclose the terms of the dividend note. In this connection, please note that the maturity date of the note and the payment dates cannot be definitively determined until the effective date of the Registration Statement is known.

Exhibits

8. We reissue prior comment 39 and note that, for example, exhibits 10.5(c), 10.5(d) and 10.10 were not executed by all the parties to those agreements.

The agreements in question were executed by all the parties thereto but conformed signatures were not always presented. The agreements have been refiled with properly conformed signatures.

9. We note that you have requested confidential treatment for portions of exhibit 10.6. We will review and provide any comments on your request separately. Please resolve all comments regarding your request before requesting acceleration of the effectiveness of this registration statement.

Your comment is noted.

Very truly yours,

Morse, Zelnick, Rose & Lander LLP

/s/ Joel J. Goldschmidt