10-Q/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q/A

(Amendment No. 1)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended June 30, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-31747

UNIVERSAL SECURITY INSTRUMENTS, INC.

(Exact name of registrant as specified in its charter)

Maryland	52-0898545
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
11407 Cronhill Drive, Suite A
Owings Mills, Maryland	21117
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (410) 363-3000

Inapplicable

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No o

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

Large accelerated filer oAccelerated filer  o Non-Accelerated Filer  o Smaller Reporting Company x

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

At August 12, 2011, the number of shares outstanding of the registrant’s common stock was 2,387,887.

UNIVERSAL SECURITY INSTRUMENTS, INC.

The Registrant hereby amends Item 6 of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, which was filed with the Commission on August 15, 2011.  The purpose of the amendment is to include interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T.

PART II - OTHER INFORMATION

ITEM 6.                      EXHIBITS

Exhibit No.

3.1 Articles of Incorporation (incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 1988, File No. 1-31747)

3.2 Articles Supplementary, filed October 14, 2003 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 31, 2002, file No. 1-31747)

3.3 Bylaws, as amended (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed July 13, 2011, File No. 1-31747)

10.1 Hong Kong Joint Venture Agreement, as amended (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2003, File No. 1-31747)

10.2 Amended and Restated Factoring Agreement between the Registrant and The CIT Group/Commercial Services, Inc. (“CIT”), dated June 22, 2007 (substantially identical agreement entered into by the Registrant’s wholly-owned subsidiary, USI Electric, Inc.) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 26, 2007, file No. 1-31747)

10.3 Amended and Restated Inventory Security Agreement between the Registrant and CIT, dated June 22, 2007 (substantially identical agreement entered into by the Registrant’s wholly-owned subsidiary, USI Electric, Inc.) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 26, 2007, file No. 1-31747)

10.4 Amendment, dated December 22, 2009, to Amended and Restated Factoring Agreement between the Registrant and CIT dated June 22, 2007 (substantially identical agreement entered into by the Registrant’s wholly-owned subsidiary, USI Electric, Inc.) (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed February 16, 2010, file No. 1-31747)

10.5 Lease between Universal Security Instruments, Inc. and St. John Properties, Inc. dated November 4, 2008 for its office and warehouse located at 11407 Cronhill Drive, Suites A-D, Owings Mills, Maryland 21117 (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2008, File No. 1-31747)

10.6 Amendment to Lease between Universal Security Instruments, Inc. and St. John Properties, Inc. dated June 23, 2009 (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2009, File No. 1-31747)

10.7 Amended and Restated Employment Agreement dated July 18, 2007 between the Company and Harvey B. Grossblatt (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2007, File No. 1-31747), as amended by Addendum dated November 13, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 15, 2007, File No. 1-31747), by Addendum dated September 8, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 8, 2008, File No. 1-31747), and by Addendum dated March 11, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 12, 2010, File No. 1-31747)

31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer*

31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer*

32.1 Section 1350 Certifications*

99.1 Press Release dated August 12, 2011*

101 Interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets, June 30, 2011 and March 31, 2011, (ii) Condensed Consolidated Statements of Earnings for the three months ended June 30, 2011 and 2010, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2011 and 2010, and (v) Notes to Consolidated Financial Statements

*Previously Filed

SIGNATURES

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

	UNIVERSAL SECURITY INSTRUMENTS, INC. (Registrant)
Date: August 26, 2011	By:	/s/ Harvey B. Grossblatt
		Harvey B. Grossblatt
		President, Chief Executive Officer (principal executive officer)
	By:	/s/ James B. Huff
		James B. Huff Vice President, Chief Financial Officer (principal financial officer)

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CONSOLIDATED BALANCE SHEETS [Parenethetical] (USD $)	Jun. 30, 2011	Mar. 31, 2011
Allowance for doubtful accounts	$ 75,000	$ 75,000
Net of Allowance for Obsolete Inventory	$ 70,000	$ 100,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	2,387,887	2,387,887
Common stock, shares outstanding	2,387,887	2,387,887

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CONSOLIDATED STATEMENTS OF EARNINGS (USD $)	3 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Net sales	$ 3,201,302	$ 3,681,421
Cost of goods sold - acquired from Joint Venture	1,902,892	2,365,287
Cost of goods sold - other	425,472	204,892
GROSS PROFIT	872,938	1,111,242
Research and development expense	142,753	167,103
Selling, general and administrative expense	1,101,395	1,207,882
Operating loss	(371,210)	(263,743)
Other income (expense):
Investment and interest income	9,654	34,868
Interest expense	(4,480)	(7,064)
LOSS BEFORE EQUITY IN EARNINGS OF JOINT VENTURE	(366,036)	(235,939)
Equity in earnings of Joint Venture	239,189	435,381
(Loss) income from operations before income taxes	(126,847)	199,442
Income tax benefit	127,428	82,425
NET INCOME	$ 581	$ 281,867
Income per share:
Basic (in dollars per share)	$ 0	$ 0.12
Diluted (in dollars per share)	$ 0	$ 0.12
Shares used in computing net income per share:
Basic (in shares)	2,387,887	2,387,887
Diluted (in shares)	2,396,428	2,395,328

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Document and Entity Information	3 Months Ended
	Jun. 30, 2011	Aug. 12, 2011
Entity Registrant Name	UNIVERSAL SECURITY INSTRUMENTS INC
Entity Central Index Key	0000102109
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	uuu
Entity Common Stock, Shares Outstanding		2,387,887
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2012

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Contingencies

3 Months Ended

Jun. 30, 2011

Contingencies [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Contingencies

From time to time, the Company is involved in various lawsuits and legal matters.  It is the opinion of management, based on the advice of legal counsel, that the ultimate outcome of these matters will not have a material adverse effect on the Company’s financial statements.

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Joint Venture

3 Months Ended

Jun. 30, 2011

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments Disclosure [Text Block]

Joint Venture

The Company and its co-venturer, a Hong Kong corporation, each owns a 50% interest in a Hong Kong joint venture, Eyston Company Limited (the “Joint Venture”), that has manufacturing facilities in the People’s Republic of China, for the manufacturing of security products.  The following represents summarized balance sheet and income statement information of the Joint Venture as of and for the three months ended June 30, 2011 and 2010:

	2011		2010
Net sales	$	6,196,059	$	6,795,331
Gross profit		1,590,785		1,943,791
Net income		666,827		830,380
Total current assets		15,647,398		17,456,253
Total assets		33,092,428		31,119,018
Total current liabilities		4,453,568		4,812,591

During the three months ended June 30, 2011 and 2010, respectively, the Company purchased $2,550,055 and $2,229,545 of products from the Joint Venture.  For the three month period ended June 30, 2011 and 2010, respectively, the Company has adjusted its earnings of the Joint Venture to reflect an increase of $106,035 and a decrease of $20,191, respectively, for changes to inter-Company profit in inventory

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Recent Accounting Pronouncements Not Yet Adopted

3 Months Ended

Jun. 30, 2011

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Recent Accounting Pronouncements Not Yet Adopted

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updated (ASU’s) to the FASB’s Accounting Standards Codification.

The Company considers the applicability and impact of all ASU’s.  Recently issued ASU’s were evaluated and determined to be either not applicable or are not expected to have a material impact on our consolidated financial statements.

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Statement of Management

3 Months Ended

Jun. 30, 2011

Statement Of Management [Abstract]

Statement Of Management [Text Block]

Statement of Management

The condensed consolidated financial statements include the accounts of Universal Security Instruments, Inc. (USI or the Company) and its majority owned subsidiaries.  Significant inter-company accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the interim consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted.  The interim condensed consolidated financial statements should be read in conjunction with the Company’s March 31, 2011 audited financial statements filed with the Securities and Exchange Commission on Form 10-K.  The interim operating results are not necessarily indicative of the operating results for the full fiscal year.

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Income Taxes

3 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

We calculate our interim tax provision in accordance with the guidance for accounting for income taxes in interim periods.  At the end of each interim period, we estimate the annual effective tax rate and apply that tax rate to our ordinary quarterly pre-tax income.  The tax expense or benefit related to significant, unusual or extraordinary discrete events during the interim period is recognized in the interim period in which those events occurred.  In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs.

The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. The deferred tax assets are reviewed periodically for recoverability and valuation allowances are provided, whenever it is more likely than not that a deferred tax asset will not be realized.  The Company follows the financial pronouncement that gives guidance related to the recognition and measurement of a tax position taken or expected to be taken in a tax return and requires that we recognize in our financial statements the impact of a tax position, if that position is more likely than not to be sustained upon an examination, based on the technical merits of the position.  Interest and penalties related to income tax matters are recorded as income tax expenses.

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Financing Receivables

3 Months Ended

Jun. 30, 2011

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Text Block]

Financing Receivables

In September 2010, the Financial Accounting Standards Board issued an Accounting Standards Update requiring enhanced disclosure of the credit quality of financing receivables, as defined therein, and the adequacy of allowances for credit losses.

Management considers amounts due from the Company’s factor to be “financing receivables”. Trade accounts receivable, other receivables, and receivables from our Hong Kong Joint Venture are not considered by management to be financing receivables.

The Company sells the majority of its short-term receivables arising in the ordinary course of business to our factor. At the time a receivable is sold to our factor the credit risk associated with the credit worthiness of the debtor is assumed by the factor. The Company continues to bear any credit risk associated with delivery or warranty issues related to the products sold.

Management assesses the credit risk of both its trade accounts receivable and its financing receivables based on the specific identification of accounts that have exceeded credit terms. An allowance for uncollectible receivables is provided based on that assessment. Changes in the allowance account from one accounting period to the next are charged to operations in the period the change is determined.  Amounts ultimately determined to be uncollectible are eliminated from the receivable accounts and from the allowance account in the period that the receivables’ status is determined to be uncollectible.

Based on the nature of the factoring agreement and prior experience, no allowance for uncollectible financing receivables has been provided.  At June 30, 2011, an allowance of $75,000 has been provided for uncollectible trade accounts receivable.

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Net Income per Common Share

3 Months Ended

Jun. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Net Income per Common Share

Basic earnings per common share are computed based on the weighted average number of common shares outstanding during the periods presented.  Diluted earnings per common share is computed based on the weighted average number of common shares outstanding plus the effect of stock options and other potentially dilutive common stock equivalents.  The dilutive effect of stock options and other potentially dilutive common stock equivalents is determined using the treasury stock method based on the Company’s average stock price.

A reconciliation of the weighted average shares of common stock utilized in the computation of basic and diluted earnings per share for the three month periods ended June 30, 2011 and 2010, is as follows:

	Three Months Ended June 30,
	2011		2010
Weighted average number of common shares outstanding for basic EPS		2,387,887		2,387,887
Shares issued upon the assumed exercise of outstanding stock options		8,541		7,441
Weighted average number of common and common equivalent shares outstanding for diluted EPS		2,396,428		2,395,328

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
OPERATING ACTIVITIES
NET INCOME	$ 581	$ 281,867
Adjustments to reconcile net income to net cash provided by operating activities:
Increase in deferred taxes	(128,468)	(82,425)
Depreciation and amortization	11,294	13,756
Earnings of the Joint Venture	(239,189)	(435,381)
Changes in operating assets and liabilities:
Decrease in accounts receivable and amounts due from factor	121,717	2,088,530
(Increase) decrease in inventories and prepaid expenses	(1,010,403)	316,528
Decrease in accounts payable and accrued expenses	(229,385)	(1,462,762)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(1,473,853)	720,113
INVESTING ACTIVITIES:
Purchase of assets held for investment	0	(29,345)
Purchase of property and equipment	(1,125)	(2,600)
(DECREASE) INCREASE IN CASH	(1,474,978)	688,168
Cash at beginning of period	6,728,593	2,253,631
CASH AT END OF PERIOD	5,253,615	2,941,799
Supplemental information:
Interest paid	4,480	7,064
Income taxes	$ 0	$ 0

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Use of Estimates

3 Months Ended

Jun. 30, 2011

Use Of Estimates [Abstract]

Use Of Estimates [Text Block]

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

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CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2011	Mar. 31, 2011
ASSETS
Cash and cash equivalents	$ 5,253,615	$ 6,728,593
Accounts receivable:
Trade less allowance for doubtful accounts of approximately $75,000 at June 30, 2011 and March 31, 2011	402,043	276,463
Notes receivable - employees	68,019	69,666
Receivable from Hong Kong Joint Venture	117,262	301,380
Accounts, Notes, Loans and Financing Receivable, Net, Current	587,324	647,509
Amount due from factor	1,507,594	1,569,126
Inventories, net of allowance for obsolete inventory of $70,000 at June 30, 2011 and $100,000 at March 31, 2011	4,509,819	3,534,011
Prepaid expenses	553,951	519,356
TOTAL CURRENT ASSETS	12,412,303	12,998,595
DEFERRED TAX ASSET	2,131,029	2,002,561
INVESTMENT IN HONG KONG JOINT VENTURE	13,388,803	13,149,614
PROPERTY AND EQUIPMENT - NET	194,389	203,440
INTANGIBLE ASSET - NET	88,316	89,434
OTHER ASSETS	40,134	40,134
TOTAL ASSETS	28,254,974	28,483,778
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	709,792	794,014
Hong Kong Joint Venture accounts payable	350,056	453,480
Accrued liabilities:
Payroll and employee benefits	138,209	177,298
Commissions and other	31,048	33,700
TOTAL CURRENT LIABILITIES	1,229,105	1,458,492
Long-term obligation - other	25,000	25,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.01 par value per share; authorized 20,000,000 shares; 2,387,887 shares issued and outstanding at June 30, 2011 and March 31, 2011	23,879	23,879
Additional paid-in capital	13,135,198	13,135,198
Retained earnings	13,841,792	13,841,209
TOTAL SHAREHOLDERS' EQUITY	27,000,869	27,000,286
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 28,254,974	$ 28,483,778