Investor Relations

Letter from the CEO

Dear Partners/Shareholders,

The fiscal year ended March 31, 2008 was a challenging year for your Company.

For the 12 months ended March 31, 2008, your Company reported sales of $33,871,362 and a net loss of $5,568,914 or $2.24 per basic share ($2.23 per diluted share) compared to sales of $32,934,388 and net income of $5,533,258 or $2.31 per share ($2.23 per diluted share) for the same period last year. The primary reasons for the decrease was the charge of $8,393,663 for closing our Canadian operation, lower sales due to the declining residential housing market and lower Joint Venture earnings.

Sales at our Canadian subsidiary were not strong enough to maximize production and the weak U.S. dollar did not allow us to be competitive in the United States. As a result of these factors, our Canadian EMT subsidiary was not profitable, and was placed into receivership by its secured creditor. Due to the requirements of accounting standard FAS 5, Universal did not record any gain in the year ended March 31, 2008 from its Canadian operations related to the anticipated abatement of debt (which is estimated to range between $3,750,000 and $4,250,000) and will not be recognized until the liquidation is completed which should occur during the fiscal year ending March 31, 2009.

Due to the continued softening of the housing market, sales through our USI ELECTRIC division continued to decline. Similarly, as a result of the softening of the European economy, our Joint Venture experienced lower sales and profits as well.

In an effort to reduce the impact of the declining housing market, we introduced a new exhaust and bath fan product line for the USI ELECTRIC division. These new exhaust and bath fans have features and benefits which should appeal to the electrical contractor and which are sold through our existing distributors and sales representatives.

We have also concentrated, and have succeeded, in increasing our retail sales with the addition of a major Canadian retailer, along with increasing sales to our existing retail customers. In addition, we have made a significant commitment to new product development and are currently working on several projects that should promote future growth. 

During July 2008, Universal’s board of directors authorized a 100,000 share repurchase of the Company’s stock as we consider USI’s common stock to be undervalued at its current level. 

We are fortunate to have an outstanding and dedicated group of associates on our team and we express our sincerest appreciation to each of them. We also want to express our appreciation to our Board of Directors for their guidance during this challenging year. At this time, we would once again like to extend our deepest sympathies to the family and many friends of Dr. Howard “Chip” Silverman, who died in March 2008. Dr. Silverman was a dear friend and valued Board Member.

We also want to thank our many customers who continue to support us, as well as the many new customers who have all been the key to our success. 

Once again, we thank our partners/shareholders for their continued support. We invite you to contact us any time and look forward to sharing more positive news in the coming year.

Respectfully,

Harvey B. Grossblatt
President and CEO

Ron Lazarus
President, USI ELECTRIC

August 1, 2008

Statements contained in this document that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Although UNIVERSAL SECURITY INSTRUMENTS, INC. believes that the expectations reflected in such forward-looking statements are reasonable, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projections.

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