UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter ended December 31, 1995June 30, 1996
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission file number 0-7885
UNIVERSAL SECURITY INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
Maryland 52-0898545
State of Incorporation I.R.S. Employer Identification Number
10324 S. Dolfield Road, Owings Mills, MD 21117
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 410-363-3000
Indicate by check mark whether the registrant (l)(1) has filed all
reports required to be filed by Section 13 and 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to the filing requirements for at least the
past 90 days.
YES X NO _____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Date Class Shares Outstanding
February 9,August 1, 1996 Common Stock, $.01 par value 3,245,587
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
INDEX
Part I - FINANCIAL INFORMATION
Item 1.l. Financial Statements
Consolidated balance sheets at December 31, 1995June 30, 1996 and March
31, 19951996
Consolidated statements of operations for the nine months ended
December 31, 1995 and 1994 and three
months ended December 31,June 30, 1996 and 1995
and 1994
Consolidated statements of cash flows for the ninethree
months ended December 31,June 30, 1996 and 1995 and 1994
Notes to consolidated financial statements
Item 2. Management's discussion and analysis of results
of operations and financial condition
Part II - OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports
- 2 -
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
Dec 31, 1995June 30, 1996 March 31, 19951996
CURRENT ASSETS
Cash and cash equivalents $ 273,905178,327 $ 173,80997,793
Time deposits 8,677 8,3228,820 8,748
Accounts receivable:
Trade (less allowance for doubtful
accounts of $30,360$25,771 at December 31, 1995June 30, 1996
and $50,000$25,771 at March 31, 1995) 2,392,745 3,129,8691996) 1,531,877 2,033,092
Officers and employees 38,668 33,192
2,431,413 3,163,0616,631 40,678
1,538,508 2,073,770
Inventories:
Finished goods 4,610,859 4,252,8254,244,421 4,099,907
Raw materials-foreign locations 154,243 163,756
4,765,102 4,416,581306,925 152,303
4,551,346 4,252,210
Prepaid expenses 508,662 427,716467,095 484,669
TOTAL CURRENT ASSETS 7,987,759 8,189,4896,744,096 6,917,190
INVESTMENT IN JOINT VENTURE 3,587,131 3,366,9512,668,137 3,660,350
PROPERTY, PLANT AND EQUIPMENT 2,027,805 2,074,0731,944,114 1,985,790
OTHER ASSETS 113,064 102,333
$13,715,759 $13,732,846113,061 113,061
$11,469,408 $12,676,391
- 3 -
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Dec 31, 1995June 30, 1996 March 31, 19951996
CURRENT LIABILITIES
Short-term borrowings $ 3,611,0572,589,831 $ 3,869,7112,993,685
Current maturity of long-term debt 12,833 106,666188,488 13,488
Accounts payable 518,098 560,0641,235,648 858,557
Accounts payable - joint venture 750,000 750,000
Accrued liabilities:
Payroll, commissions and payroll taxes 134,712 128,600184,873 71,372
Other 40,750 46,043
175,462 174,64343,056 35,980
TOTAL CURRENT LIABILITIES 5,067,450 5,461,0844,241,896 4,723,082
LONG-TERM DEBT, less current portion 1,281,165 497,2221,399,200 1,277,394
SHAREHOLDERS' EQUITY
Common stock, $.01 par value per share;
authorized 20,000,000 shares; issued
3,245,587 shares at December 31, 1995June 30, 1996
and 3,245,3823,245,587 shares at March 31, 19951996 32,456 32,45432,456
Additional paid-in capital 10,429,587 10,429,39810,429,588 10,429,588
Retained earnings (deficit) (3,094,899) (2,687,312)
7,367,144 7,774,540
$13,715,759 $13,732,846(4,633,732) (3,786,129)
5,828,312 6,675,915
$11,469,408 $12,676,391
See notes to consolidated financial statements
- 4 -
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Nine Months Ended
Dec 31, 1995 Dec 31, 1994
Net sales $15,275,355 $19,285,135
Cost of goods sold 12,634,997 16,436,532
2,640,358 2,848,603
Research and development expense 164,778 367,274
Selling, general and administrative expense 2,707,113 3,186,674
Operating (loss) (231,533) (705,345)
Other income (expense):
Interest income 3,926 3,567
Interest expense (399,713) (419,070)
Other (447) 3,050
(396,234) (412,453)
(LOSS) BEFORE EQUITY IN
EARNINGS OF JOINT VENTURE (627,767) (1,117,798)
Equity in earnings of joint venture 220,180 707,564
NET (LOSS) $ (407,587) $ (410,234)
Per common share amounts:
Primary $ (.13) $ (.13)
Fully diluted (.13) (.13)
Weighted average number of common
shares outstanding
Primary 3,245,568 3,242,064
Fully diluted 3,245,568 3,242,064
See notes to consolidated financial statements
- 5 -
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended
Dec 31,June 30, 1996 June 30, 1995 Dec 31, 1994
Net sales $ 5,317,826 $ 5,956,198$4,346,913 $5,037,361
Cost of goods sold 4,087,389 5,049,954
1,230,437 906,2443,500,311 4,408,179
846,602 629,182
Research and development expense 56,716 117,32648,455 57,316
Selling, general and administrative expense 976,345 1,150,8671,102,821 900,047
Operating income (loss) 197,376 (361,949)loss (304,674) (328,181)
Other income (expense):
Interest income 1,033 1,2591,665 1,636
Interest expense (141,316) (161,279)(113,040) (127,699)
Other 2,003 (1,014)
(138,280) (161,034)
EARNINGS (LOSS)(449,968) (1,505)
(561,343) (127,568)
LOSS BEFORE EQUITY
IN EARNINGS OF JOINT VENTURE 59,096 (522,983)(866,017) (455,749)
Equity in (loss) earnings of joint venture (8,503) 59,08218,414 133,903
NET INCOME (LOSS)LOSS $ 50,593(847,603) $ (463,901)(321,846)
Per common share amounts:
Primary $ .02(.26) $ (.14)(.10)
Fully diluted .02 (.14)(.26) (.10)
Weighted average number of common
shares outstanding
Primary 3,245,587 3,245,1753,245,470
Fully diluted 3,245,587 3,245,1753,245,470
See notes to consolidated financial statements
- 65 -
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the NineThree Months Ended
Dec 31,June 30, 1996 June 30, 1995 Dec 31, 1994
OPERATING ACTIVITIES
Net (loss)loss $ (407,587)(847,603) $ (410,234)(321,846)
Adjustments to reconcile net (loss)loss to
net cash used inprovided by operating activities:
Depreciation and amortization 135,788 144,350
Provision for losses on accounts receivable 10,987
Undistributed41,677 43,782
Distributed (undistributed) earnings of
joint venture (220,180) (707,564)
(Gain) on sale of property, plant & equipment (7,200)992,213 (133,903)
Legal settlement 300,000
Changes in operating assets and liabilities:
Decrease in accounts receivable 731,648 904,691535,263 1,527,514
(Increase) decrease in inventories and
prepaid expenses (429,467) (52,338)
(Decrease)(281,564) 404,256
Decrease in accounts payable
and accrued expenses (41,147) (52,685)
(Increase) in other assets (10,731) (5,179)(252,332) (118,763)
NET CASH (USED IN)PROVIDED BY OPERATING ACTIVITIES (241,676) (175,172)487,654 1,401,040
INVESTING ACTIVITIES
Purchases of property,Property, plant and equipment (89,520) (91,467)
(Increase)(43,673)
Increase in commercial paper and time deposits (355) (199)
Proceeds from sale of property, plant and
equipment 7,200(72) (77)
NET CASH (USED IN)USED IN INVESTING ACTIVITIES (89,875) (84,466)(72) (43,750)
FINANCING ACTIVITIES
Net (repayment) issuancerepayment of short-term debt (258,654) 165,276(403,854) (1,988,736)
Proceeds from issuance of long-term debt 1,300,000
110,000
Principal payments on long-term debt (609,890) (76,944)(3,194) (603,888)
Proceeds from issuance of common stock
under stock option plan and employee
stock purchase plan 191 595184
NET CASH PROVIDED BYUSED IN FINANCING ACTIVITIES 431,647 198,927(407,048) (1,292,440)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 100,096 (60,711)80,534 64,850
Cash and cash equivalents at beginning of period 97,793 173,809 275,138
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 273,905178,327 $ 214,427238,659
Supplemental information:
Interest paid $ 399,713111,844 $ 283,406127,699
Income taxes paid - -
See notes to consolidated financial statements
- 76 -
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Statement of Management - The financial information included herein is
unaudited and does not include all disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles. The interim financial information should be read
in connection with the financial statements and related notes in the
Company's annual report on Form 10-K for the year ended March 31, 1995.1996.
The results for the interim period are not necessarily indicative of the
results expected for the year. The accompanying interim information
reflects all adjustments (consisting of normal recurring accruals)adjustments),
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods.
Per Share Data - Primary and fully diluted net income per share is
computed by dividing net income (loss) by the weighted average number of
common and common equivalent shares outstanding. Common equivalent shares
include the dilutive effect of outstanding stock options calculated
under the treasury stock method.
Cash Equivalents - The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash
equivalents.
Long-Term Debt - In conjunction with the settlement of litigation with Black
& Decker, the Company agreed to pay the sum of $300,000. The repayment terms
are $100,000 payable 10 days from the date of the settlement and
$200,000 payable in 32 equal installments.
Joint Venture - The Company maintains a 50% interest in a joint venture
with a Hong Kong corporation (Hong Kong joint venture) which has
manufacturing facilities in the People's Republic of China, for the
manufacturing of consumer electronic products. Additionally, the Hong
Kong joint venture has a 30% interest in a separate joint venture with a
People's Republic of China company to manufacturedesign and selldevelop a portable
cellular telephone primarilyphone for manufacture and sale in China.
Included in the results of the Hong Kong joint venture for the nine
months ended December 31, 1994 is $500,000 of profit related to a
$3.5 million contract for the design and development of the
cellular telephone. The contract is being accounted for under the
percentage of completion method. The following
represents summarized income statement information of the Hong Kong
joint venture for the nine monthsquarters ended December 31, 1995June 30, 1996 and 1994:
1995 1994
Sales $8,136,727 $10,585,397
Gross Profit 1,451,206 2,644,649
Net Income 440,361 1,415,1281995:
1996 1995
Net sales $1,859,574 $3,217,892
Gross profit 396,569 581,363
Net income 36,828 267,805
Commitments - The Company has employment agreements with two of its
officers, both expiring on March 31, 1998. The combined fixed aggregate
annual remuneration under these agreements is $500,000 per year. In
addition, the agreements provide incentive compensation to these
officers based on the Company's achievement of certain levels of
earnings.
Outstanding letter- 7 -
Subsequent Events - Since June 30, 1996, the following events have
occurred: (i) the Company settled the suit filed by Black &
Decker against the Company for patent infringement in
connection with the marketing by the Company of credit
commitments approximated $362,000 at December 31, 1995.a flexible
flashlight under the name "PRETZL LITE." Under the terms of
the settlement agreement entered into on July 19, 1996, the Company
agreed to pay Black & Decker $300,000 as follows: $100,000 within
10 days and $200,000 in 32 consecutive monthly payments of $6,250
beginning September 1, 1996. Under the terms of a Consent Decree
entered in the U.S. District Court for the Eastern District of
Virginia, the Company was enjoined from future sales of the product,
except for approximately 31,300 units to specified customers and the
Company was ordered to turn over to Black & Decker for destruction
its molds and marketing and packaging materials for the product. The
total expenses related to the settlement amounted to approximately
$450,000 and have been recorded in the three month period ended
June 30, 1996; (ii) the Company sold undeveloped real estate adjacent
to its plant which resulted in a gain of approximately $314,000,
which will be recorded in the quarter ending September 30, 1996; and (iii)
commencing in August, the Company began implementation of an additional
phase of its cost reduction program.
- 8 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Nine Months Ended December 31, 1995 Compared to
Nine Months Ended December 31, 1994
Sales - Net sales for the nine months ended December 31, 1995 were
$15,275,355 compared to $19,285,135 for the comparable nine months
in the prior fiscal year, a decrease of $4,009,780. Net sales of
security products increased by $1,309,511, as compared to the nine
months ended December 31, 1994. Net sales of telecommunications
and video products decreased by $2,883,459 and $2,435,832,
respectively, from the comparable period of the previous year. The
decrease in video and telecommunications sales was due to a
decreased demand for certain of the Company's video and
telecommunications products by its private label customers. The
increase in security sales was due to the demand for certain of the
Company's new products.
Net Income - The Company reported a net loss of $407,587 for the
nine months ended December 31, 1995 compared to a net loss of
$410,234 for the corresponding nine months of the prior fiscal
year. The Company's gross margin declined by $208,000, which was
due to the decline in sales described above, partially offset by an
improvement of 2.5% in gross margin as a percentage of sales.
Additionally, expenses declined by $682,000 as described below,
partially offset by a decline in joint venture earnings of
$487,000. The primary reason for the increase in gross margin as
a percentage of sales was the Company's sales emphasis on products
with higher gross margins.
Expenses - Research, selling, general and administrative expenses
decreased by approximately $682,000 from the comparable nine months
in the prior year. As a percentage of sales, research, selling,
general and administrative expenses were 19% for the nine months
ended December 31, 1995 and 18% for the same period in the prior
fiscal year. The most significant reason for the decrease in
expenses was the savings resulting from the implementation of the
Company's cost reduction program.
Interest Expense and Income - The Company's interest expense, net
of interest income, decreased from $415,503 for the nine months
ended December 31, 1994 to $395,787 for the comparable period in
1995.
Three Months Ended December 31, 1995June 30, 1996 Compared to
Three Months Ended December 31, 1994June 30, 1995
Sales - Net sales for the three months ended December 31, 1995June 30, 1996 were
$5,317,826$4,346,913 compared to $5,956,198$5,037,361 for the comparable three months in the
prior fiscal year, a decrease of $638,372.$690,448. Net sales of security
products increased by $995,374,$932,148 as compared to the quarter ended December 31, 1994.June 30,
1995. Net sales of telecommunications and video products decreased by
$741,667$1,390,640 and $892,079,$231,956, respectively, fromas compared to the same quarter last year.ended
June 30, 1995. The increase in security sales was due primarily to a
significant sale of smoke detectors to an existing customer. The
decrease in videotelecommunications and telecommunicationsvideo sales was due to a decreased
demand for certain of the Company's videotelecommunications and telecommunicationsvideo
products by its private label customers.
The increase in security sales was due to
the demand for certain of the Company's new products.
- 9 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Net Income - The Company reported a net incomeloss of $50,093$847,603 for the quarter
ended December 31, 1995June 30, 1996 compared to a net loss of $463,901$321,846 for the
corresponding quarter of the prior fiscal year. The Company's gross margin improved by $324,000, whichdecrease in net income
was due to an
improvementa decrease in the Company's equity in the earnings of 8% in gross margin as a percentage of sales,
partially offset by the decline in sales described above.
Additionally, expenses declined by $235,000 as described below,
partially offset by a decline inits
joint venture, earningsand the costs of $68,000.
The primary reason forsettlement of Black & Decker's patent
infringement suit against the increaseCompany, including fees and expenses,
in gross margin as a percentagethe aggregate approximate amount of sales was the Company's sales emphasis on products with higher
gross margins.$450,000.
Expenses - Research, selling, general and administrative expenses
decreasedincreased by approximately $235,000$202,000 from the comparable three months in
the prior year. As a percentage of sales, research, selling, general
and administrative expenses were 19%25% for the three months ended December 31, 1995June 30,
1996 and 21%19% for the same period in the last fiscal year. The decrease in selling, general and
administrative expenses was primarily due to the savings resulting
from the implementation of the Company's cost reduction program.
Interest Expense and Income - The Company's interest expense, net of
interest income, decreased from $160,020$126,063 for the three monthsquarter ended December 31, 1994June 30,
1995 to $140,283$111,375 for the comparable quarter in
1995.ended June 30, 1996.
Financial Condition and Liquidity - Cash needs of the Company are
currently met by funds generated from operations and itsthe Company's line
of credit with a financial institution, which supplies both short-term
borrowings and letters of credit to finance foreign inventory purchases.
The Company's maximum bank line of credit is currently the lower of
$7,500,000 or specified percentages of the Company's accounts receivable
and inventory. Approximately $3,973,000$2,589,000 has been utilized in letter of
credit commitments and short-term borrowings as of December 31, 1995.June 30, 1996. As of
December 31, 1995,June 30, 1996, the amount available for borrowings under the line was
approximately $100,000 based on the specified percentages.
The outstanding principal balance of the revolving credit line is
payable upon demand. The interest rate on the revolving credit line is
equal to 1% in excess of the prime rate of interest charged by the
Company's lender. The loan is securedcollateralized by the Company's accounts
receivable and inventory.
During the nine months ended
December 31, 1995, working capital increased by $191,904.
Operating activities usedprovided cash of $241,676$487,654 for the nine monthsquarter ended
December 31, 1995.June 30, 1996. This was primarily due to the loss from
operations and an increase in inventories of $348,521, partially
offset by a decrease in accounts
receivable of $731,648.$535,263 and a partnership distribution of approximately
$1,000,000, partially offset by the net loss of $847,603. For the same
period last year, operating activities usedprovided cash of $175,172.
This was$1,401,040,
primarily due to the loss from operations and the
undistributed earnings from the Company's joint venture, partially
offset by a decrease in accounts receivable of $904,691.$1,527,514 and a
decrease in inventories of $49,624 offset by a net loss of $321,846.
- 108 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Investing activities used cash of $89,875$72 in the current quarter and
$84,466$43,750 in the same quarter last year, consisting primarily of
purchases of equipment.year.
Financing activities providedused cash of $431,647,$407,048 primarily due to issuance of long-term debt of $1,300,000, partially offset bythe net
repayment of short-term debt of $258,654 and the retirement of
long-term debt of $609,890.$403,854. For the same period last
year, financing activities provided cash of $198,927,used $1,292,440 primarily due to the net
issuancerepayments of short-term debt.
DuringThe Company believes that its line of credit and its working
capital provide it with sufficient resources to meet its
requirements for liquidity and working capital in the nine months ended December 31, 1995,ordinary
course of its business over the Company
refinanced the mortgage on its headquarters building. The terms of
the new financing are a $1,300,000 loan repayable in 60 equal
monthly installments of principal and interest based on a 25 year
amortization schedule, with an interest rate of 10%. The full
outstanding balance is due at the end of the 60 month period. The
refinancing resulted in an increase in cash available to the
Company of approximately $700,000.next twelve months.
Hong Kong Joint Venture - Net sales of the joint venture for the
nine months and three months ended December 31, 1995June 30, 1996 were $8,136,727 and $2,078,668, respectively,$1,859,574 compared to
$10,585,397
and $2,669,389, respectively,$3,217,892 for the comparable nine months and three months in the prior fiscal
year. The decrease in sales was primarily due to decreased sales
of telecommunications and video products to the Company which was due to the decreased demand for
certain of these products by the Company's private label customers.Company.
Net income was $36,828 for the nine monthsquarter ended December 31, 1995 was $440,361
and net loss for the three months ended December 31, 1995 was
$17,005,June 30, 1996 compared
to net income of $1,415,128 and $118,164
respectively,$267,805 in the comparable nine months and three monthsquarter last year. Included in the results for the nine months ended December
31, 1994 is $500,000 of profit related to a $3.5 million contract
for the design and development of the cellular telephone under a
separate joint venture arrangement. Exclusive of this item, theThe decrease in
net income was primarilyis due to the decrease in sales.
Selling, general and administrative expenses were $1,172,463 (14%
of sales)$430,224 and
$348,381 (17% of sales), respectively,$384,669 for the nine
monthsquarter ended June 30, 1996 and three months ended December 31, 1995,
respectively. As a percentage of sales, expenses were 23% and were $1,392,442
(13%12%
for 1996 and 1995, respectively.
Interest income net of sales) and $462,798 (17% of sales)interest expense was $13,023 for the comparable
periodsquarter
ended June 30, 1996 compared to $38,154 for the same quarter last
year.
Cash needs of the Hong Kong joint venture are currently met by
funds generated from operations. During the nine monthsquarter ended December 31, 1995,June 30,
1996, working capital decreasedincreased by $71,133$651,541 from $2,656,378$712,439 on March
31, 19951996 to $2,585,245$1,363,980 on December 31, 1995.June 30, 1996.
Subsequent Events - 11Since June 30, 1996, the following events have
occurred: (i) the Company settled the suit filed by Black &
Decker against the Company for patent infringement in
connection with the marketing by the Company of a flexible
flashlight under the name "PRETZL LITE." Under the terms of
the settlement agreement entered into on July 19, 1996, the Company
agreed to pay Black & Decker $300,000 as follows: $100,000 within
10 days and $200,000 in 32 consecutive monthly payments of $6,250
beginning September 1, 1996. Under the terms of a Consent Decree
entered in the U.S. District Court for the Eastern District of
Virginia, the Company was enjoined from future sales of the product,
except for approximately 31,300 units to specified customers and the
Company was ordered to turn over to Black & Decker for destruction
its molds and marketing and packaging materials for the product. The
total expenses related to the settlement amounted to approximately
$450,000 and have been recorded in the three month period ended
June 30, 1996; (ii) the Company sold undeveloped real estate adjacent
to its plant which resulted in a gain of approximately $314,000,
which will be recorded in the quarter ending September 30, 1996; and (iii)
commencing in August, the Company began implementation of an additional
phase of its cost reduction program.
- 10 -
UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
PART II
Item 1. Legal Proceedings5. Other Information
On November 2, 1995,August 1, 1996, the Board of Directors of the Corporation
(i) adopted amendments to the Company's by-laws creating the office of
Vice Chairman of the Company, was served with a Complaint
filed by Black & Decker (U.S.) Inc.(ii) accepted the resignation of Michael
Kovens as President and related entities
againstelected him to the Companyoffice of Vice Chairman, (iii)
elevated Harvey Grossblatt from Executive Vice President to President,
and others in(iv) reduced the United States District
Court forannual salary of Stephen Knepper, Chairman of the
Eastern DistrictBoard of Virginia. The Complaint
alleges patent and copyright infringement by the Company in
connection with oneDirectors of its products. The Complaint seeks
triple damages for the infringement, costs and attorneys'
fees, and various injunctive relief prohibiting further
infringement. The Company engaged patent counsel to defend
the suit.
As a result of a series of hearings, the Court enjoined the Company, from further manufacture of its original design of the
products (which it had already sold out), ordered a full trial$250,000 to determine whether there was actual infringement by the
original design and determined that the Company could market
its redesigned version of the product.$50,000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits included herein:
Exhibit Number
11.1 Statement of computation of per share earnings.3(ii) By-Law Amendments
(b) ReportsNo reports on Form 8-K were filed during the quarter for
which this report is filed.
Form 8-K filed January 22, 1996 dated January 19, 1996.
Item 4. Changes in Registrant's Certifying
Accountant
- 1211 -
UNIVERSAL SECURITY INSTRUMENTS, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
UNIVERSAL SECURITY INSTRUMENTS, INC.
Dated: February 13,August 14, 1996 Harvey Grossblatt
HARVEY GROSSBLATT
Executive Vice President
Dated: February 13,August 14, 1996 Ira Bormel
IRA BORMELGrant Pierpont
GRANT PIERPONT
Principal Financial Officer
- 12 -