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

                                    FORM 10-Q

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

                  For the Quarterly period ended June 30, 2005

                                       OR
            [ ] 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.)

7-A Gwynns Mill Court
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
                                                 -----          -----

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act.  Yes            No     X
                                                 -----          -----

At August 11, 2005, the number of shares outstanding of the registrant's  common
stock was 1,673,498.

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<PAGE>

                                TABLE OF CONTENTS

Part I - Financial Information                                              Page

      Item 1.     Consolidated Financial Statements (unaudited):

                  Consolidated Balance Sheets at June 30, 2005
                  and March 31, 2005                                          3

                  Consolidated Statements of Earnings for the Three
                  Months Ended June 30, 2005 and 2004                         4

                  Consolidated Statements of Cash Flows for the Three
                  Months Ended June 30, 2005 and 2004                         5

                  Notes to Consolidated Financial Statements                  6

      Item 2.     Management's  Discussion  and  Analysis  of  Financial
                  Condition and Results of Operations                         9

      Item 3.     Quantitative and Qualitative Disclosure
                  About Market Risk                                           12

      Item 4.     Controls and Procedures                                     12


Part II - Other Information

      Item 1.     Legal Proceedings                                           13

      Item 6.     Exhibits                                                    13

                  Signatures                                                  14

<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

              UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (unaudited)

                       ASSETS                  June 30, 2005      March 31, 2005
                                               -------------      --------------

CURRENT ASSETS
Cash                                             $   117,496         $    59,287
Accounts receivable:
  Trade less allowance for doubtful
   accounts of $15,000 at June 30 and              1,229,256           1,014,757
  March 31, 2005
  Employees                                           23,889              21,503
                                                 -----------         -----------
                                                   1,253,145           1,036,260

Amount due from factor                             4,115,055           3,394,084
Inventories, net                                   4,032,290           4,834,486
Prepaid expenses                                     280,209             145,394
                                                 -----------         -----------

TOTAL CURRENT ASSETS                               9,798,195           9,469,511

DEFERRED TAX ASSET                                   451,780             351,780

INVESTMENT IN JOINT VENTURE                        6,833,379           6,131,481

PROPERTY AND EQUIPMENT - NET                          77,181              81,690

OTHER ASSETS
                                                      15,486              15,486
                                                 -----------         -----------
TOTAL ASSETS                                     $17,176,021         $16,049,948
                                                 ===========         ===========

        LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable                                 $ 1,767,543         $ 1,725,402
Accrued liabilities:
    Patent litigation and settlement reserve         649,893             555,893
    Professional fees                                415,413             355,652
    Payroll, commissions and other
                                                     555,295             515,333
                                                 -----------         -----------
TOTAL CURRENT LIABILITIES                          3,388,144           3,152,280

COMMITMENTS AND CONTINGENCIES                           --                  --

SHAREHOLDERS' EQUITY
Common stock, $.01 par value per share;
  authorized 20,000,000 shares; issued
  and outstanding 1,653,164 and 1,652,998
  shares at June 30, 2005 and
  March 31, 2005, respectively                        16,532              16,530
Additional paid-in capital                        11,469,881          11,469,444
Retained earnings                                  2,301,464           1,411,694
                                                 -----------         -----------

TOTAL SHAREHOLDERS' EQUITY                        13,787,877          12,897,668
                                                 -----------         -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $17,176,021         $16,049,948
                                                 ===========         ===========

          See accompanying notes to consolidated financial statements.


                                      -3-
<PAGE>

              UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (unaudited)

                                                   Three Months Ended June 30,
                                                     2005               2004
                                                 -----------        -----------

Net sales                                        $ 6,923,810        $ 4,874,782
Cost of goods sold                                 4,874,856          3,390,069
                                                 -----------        -----------

GROSS PROFIT                                       2,048,954          1,484,713

Research and development expense                      52,178             66,226
Selling, general and administrative expense        1,888,060          1,181,358
                                                 -----------        -----------

Operating income                                     108,716            237,129

Other income (expense):
   Interest income and other                           9,667               --
   Interest expense                                  (17,941)           (12,771)
                                                 -----------        -----------

INCOME BEFORE EARNINGS FROM JOINT VENTURE            100,442            224,358

Earnings from Joint Venture:
   Equity in earnings of Joint Venture               701,900            541,939
                                                 -----------        -----------

NET INCOME BEFORE TAXES                              802,342            766,297

Provision for income tax (benefit) expense           (87,428)              --
                                                 -----------        -----------

NET INCOME                                       $   889,770        $   766,297
                                                 ===========        ===========

Net income per common share amounts
   Basic                                               $0.54              $0.49
   Diluted                                             $0.50              $0.44

Weighted average number of
  common shares outstanding
   Basic                                           1,653,025          1,564,702
   Diluted                                         1,788,428          1,757,283


          See accompanying notes to consolidated financial statements.


                                      -4-
<PAGE>
              UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
                                                         Three Months Ended June 30,
                                                             2005            2004
                                                          ---------       ---------
<CAPTION>
<S>                                                      <C>                 <C>
OPERATING ACTIVITIES
Net income                                               $ 889,770           $ 766,297
Adjustments  to reconcile net income
  to net cash (used in) provided
  by operating activities:
   Depreciation and amortization                             6,911               8,095
   Earnings of the Joint Venture                          (701,900)           (541,939)
   Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable and      (937,856)            765,696
amounts due from factor
      Decrease (increase) in inventories and prepaid       667,381            (895,312)
expenses
      Increase (decrease) in accounts payable and          235,864            (281,696)
      (Increase) in deferred tax asset
                                                          (100,000)                 --
                                                         ---------           ---------


NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES         60,170            (178,859)

INVESTING ACTIVITIES:
    Purchase of property, plant and equipment               (2,400)             (4,190)
                                                         ---------           ---------

NET CASH USED IN INVESTING ACTIVITIES                       (2,400)             (4,190)

FINANCING ACTIVITIES:
    Proceeds from issuance of common stock from                439              43,257
exercise of employee stock options
    Principal payments on capital lease                         --              (2,788)
                                                         ---------           ---------

NET CASH PROVIDED BY FINANCING ACTIVITIES                      439              40,469
                                                         ---------           ---------

INCREASE (DECREASE) IN CASH                                 58,209            (142,580)

Cash at beginning of period                                 59,287             188,190
                                                         ---------           ---------

CASH AT END OF PERIOD                                    $ 117,496           $  45,610
                                                         ---------           ---------

Supplemental information:
  Interest paid                                          $  17,941           $  12,771
</TABLE>


            See accompanying notes to consolidated financial statements.


                                      -5-
<PAGE>
              UNIVERSAL SECURITY INSTRUMENTS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Statement of Management

The consolidated  financial  statements  include the accounts of the Company and
its  wholly  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  consolidated  financial
statements  should be read in  conjunction  with the  Company's  March 31,  2005
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.

Income Taxes

No income tax expense has been  provided  for the three month  period ended June
30, 2005,  principally as a result of the carryforward of prior years' operating
losses. The valuation  allowance  previously  established to offset tax benefits
associated  with our net operating  loss  carryforwards  and other  deferred tax
assets was reduced during the quarter by $100,000, resulting in a net income tax
benefit of $87,428.  The valuation allowance is heavily influenced by historical
results of operations and management  believes recent operating  results support
the  recognition  of a  portion  of the  income  tax  benefits  associated  with
realization of net operation loss  carryforwards  and other deferred tax assets.
We will continue to monitor the remaining  valuation allowance of $676,523 which
offsets future tax benefits associated with net operating loss carryforwards and
other  deferred tax assets  until  circumstances  indicate  the  allowance is no
longer required.

Joint Venture

The  Company  maintains  a 50%  interest  in a joint  venture  with a Hong  Kong
corporation ("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 Hong
Kong Joint Venture for the three months ended June 30, 2005 and 2004:

                                             2005                 2004
                                         -----------          -----------
      Net sales                          $ 6,013,212          $ 6,843,904
      Gross profit                         2,120,533            2,214,058
      Net income                           1,200,195            1,238,336
      Total current assets                 7,320,006            6,789,802
      Total assets                        16,673,743           13,841,081
      Total current liabilities            4,717,636            4,547,686

During the three months ended June 30, 2005 and 2004, respectively,  the Company
purchased  $2,835,861  and  $2,693,179  of  products  from the Hong  Kong  Joint
Venture.  At June 30, 2005 and 2004, the Company had amounts payable to the Hong
Kong Joint Venture of $500,000 and $341,451, respectively. For the quarter ended
June 30,  2005,  the  Company has  adjusted  its equity in earnings of the Joint
Venture to reflect a reduction of $101,802 in inter-company  profit in inventory
as required by US GAAP.

Net Income Per Common Share

Basic earnings per common share is 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.


                                      -6-
<PAGE>

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 period
ended June 30, 2005 and 2004 is as follows:

                                                   Three Months Ended June 30,
                                                     2005               2004
                                                 -----------         -----------
Weighted average number of common shares           1,653,025           1,564,702
outstanding for basic EPS

Shares issued upon the assumed exercise of
outstanding stock options                            135,403             192,581
                                                 -----------         -----------

Weighted average number of common and common
equivalent shares                                  1,788,428           1,757,283
                                                 ===========         ===========
outstanding for diluted EPS

At June 30, 2005 and 2004 there were no securities  outstanding  whose  issuance
would have an anti-dilutive  effect on the earnings per share  calculation.  All
share and per share amounts  included in the consolidated  financial  statements
have been  retroactively  adjusted to reflect the 4-for-3 stock dividend paid on
April 5, 2004 to shareholders of record on March 15, 2004.

Stock Based Compensation

During  the three  months  ended June 30,  2005 and 2004,  the  Company  granted
options for the purchase of 0 and 1,000 shares, respectively,  to employees. The
options issued during the three months ended June 30, 2004 are exercisable at an
average price of $13.00 per share, respectively, expiring in 2009, and vest over
a four year period from the date of grant.

Subsequent  to June 30, 2005,  on July 12, 2005,  as described in Part II, Other
Information, Item 1 - Legal Proceedings, the Company settled the litigation with
a former director.  As a part of this settlement,  the Company accepted the June
6, 2002 exercise by the former  director of the option to purchase 20,000 shares
at an exercise price of $2.25 per share. The exercise price for these shares was
paid simultaneously with the closing of the settlement agreement.

The Company uses the intrinsic value method as defined by Accounting  Principles
Board  Opinion  No. 25 to account for  stock-based  employee  compensation.  The
Company  has  adopted  the  disclosure   requirements  of  Financial  Accounting
Standards   Board  (FASB)   Statement  No.  123,   Accounting  for   Stock-Based
Compensation,  as amended by FASB No. 148. The following  table  illustrates the
effect on net income and  earnings  per share as if the fair value based  method
had been applied to all outstanding and unvested awards in the period.


                                                   Three Months Ended June 30,
                                                     2005              2004
                                                 -----------        -----------

Net income, as reported                          $   889,770        $   766,297

Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects                                  (25,962)           (14,531)
                                                 -----------        -----------

Pro forma net income                             $   863,808        $   751,766
                                                 ===========        ===========

Earnings per share:
Basic - as reported                              $      0.54        $      0.49
                                                 ===========        ===========
Basic - pro forma                                $      0.52        $      0.48
                                                 ===========        ===========
Diluted - as reported                            $      0.50        $      0.44
                                                 ===========        ===========
Diluted - pro forma                              $      0.48        $      0.43
                                                 ===========        ===========

All  share  and  per  share  amounts  included  in  the  consolidated  financial
statements  have been  retroactively  adjusted  to  reflect  the  4-for-3  stock
dividend paid on April 5, 2004 to shareholders of record on March 15, 2004.


                                      -7-
<PAGE>

Recent Accounting Pronouncements

In May 2005, the Financial  Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting Standards ("SFAS") No. 154, "Accounting for Changes and
Error  Corrections - a replacement of Accounting  Opinions Board ("APB") Opinion
No.  20  and  FASB  Statement  No.  3."  SFAS  No.  154  requires  retrospective
application to changes in accounting  principles  for prior  periods'  financial
statements,  unless it is impracticable to determine either the  period-specific
effects or the  cumulative  effect of the change.  SFAS No. 154 is effective for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after  December  15, 2005,  and earlier  adoption is  permitted  for  accounting
changes and  corrections  of errors made in fiscal  years  beginning  after this
statement  was issued.  The Company has adopted  SFAS No. 154 as of its issuance
and will apply its provisions to any changes in accounting  principle that occur
in  future  periods.  The  Company's  adoption  of SFAS  No.  154 did not have a
material  impact on the Company's  financial  condition or results of operations
during the three months ended June 30, 2005.

In December 2004, the Financial Accounting Standards Board, or FASB, issued FASB
Statement No. 123R,  "Share-Based  Payment," which requires companies to expense
the value of employee  stock options and similar  awards.  The effective date of
FASB 123R is for interim and annual periods beginning after June 15, 2005.

In March 2005, the SEC issued Staff Accounting Bulletin No. 107 ("SAB No. 107"),
which  provides  guidance  on the  implementation  of SFAS No.  123R,  including
guidance  related  to  share-based   payment   transactions  with  nonemployees,
valuation methods, the accounting for certain redeemable  financial  instruments
issued  under   share-based   payment   arrangements,   the   classification  of
compensation  expense,  and the accounting for income tax effects of share-based
payment arrangements under SFAS No. 123R.

In April 2005, the SEC delayed the  implementation  date for SFAS No. 123R until
an issuer's first annual period that begins after June 15, 2005. Therefore,  the
Company is required to adopt SFAS No. 123R effective April 1, 2006, using one of
three implementation alternatives.  The Company anticipates that the adoption of
SFAS  No.  123R  may  have  a  significant  impact  on the  Company's  financial
statements.  The  Company  is  currently  in the  process of  determining  which
implementation  alternative  to use and what the  overall  accounting  impact of
adopting SFAS No. 123R may be.

Reclassifications

Certain  prior year  amounts  have been  reclassified  in order to conform  with
current year presentation.

                                      -8-
<PAGE>

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

      As used  throughout  this Report,  "we," "our," "the  Company" and similar
words refers to Universal Security Instruments, Inc.

FORWARD-LOOKING STATEMENTS

      This  Quarterly  Report  on Form  10-Q  contains  certain  forward-looking
statements  reflecting our current  expectations with respect to our operations,
performance,  financial condition, and other developments. These forward-looking
statements  may generally be  identified by the use of the words "may",  "will",
"believes",  "should",  "expects",   "anticipates",   "estimates",  and  similar
expressions.  These statements are necessarily estimates reflecting management's
best judgment based upon current  information  and involve a number of risks and
uncertainties.  We  caution  readers  not to place  undue  reliance  on any such
forward-looking  statements,  which speak only as of the date made,  and readers
are advised that various  factors  could affect our  financial  performance  and
could cause our actual  results  for future  periods to differ  materially  from
those  anticipated  or  projected.  While it is  impossible to identify all such
factors,  such factors could include:  (i) our and our Hong Kong Joint Venture's
respective  ability  to  maintain  operating  profitability,   (ii)  competitive
practices in the industries in which we compete, (iii) our dependence on current
management,  (iv) the  impact  of  current  and  future  laws  and  governmental
regulations  affecting us and our Hong Kong Joint Venture,  (v) general economic
conditions,  (vi) other factors which may be identified from time to time in our
Securities and Exchange Commission filings and other public  announcements,  and
(vii) currency  fluctuations.  We do not undertake and specifically disclaim any
obligation to update any  forward-looking  statements  to reflect  occurrence of
anticipated  or  unanticipated  events or  circumstances  after the date of such
statements.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2005 and 2004

      Sales.  Net sales for the three months ended June 30, 2005 were $6,923,810
compared to $4,874,782 for the comparable three months in the prior fiscal year,
an increase of $2,049,028  (42.03%).  Net sales of safety products  increased by
$2,545,631  compared to the quarter ended June 30, 2004.  The primary reason for
the  increase  in safety  sales was that sales  were up across our core  product
lines,  including  ground fault circuit  interrupters  (GFCI),  smoke and carbon
monoxide alarms and chimes.

      Gross Profit  Margin.  The gross profit  margin is calculated as net sales
less cost of goods sold expressed as a percentage of net sales. Our gross profit
margin decreased .9%, to 29.6% of sales for the quarter ended June 30, 2005 from
30.5% for the  corresponding  quarter  last year.  The  decrease in gross profit
margin  resulted from increased  costs of purchases  from the Company's  foreign
suppliers and changes in the mix of products sold.

      Expenses.  Selling,  general  and  administrative  expenses  increased  by
$706,702 from the comparable  three months in the prior year. As a percentage of
net sales,  these  expenses  increased to 27.3% for the three month period ended
June 30,  2005,  from 24.2% for the  comparable  2004  period.  The  increase in
selling  and  general  administrative  expense  as a percent of sales was due to
higher sales volume and variable costs that increase with sales. Various expense
categories  contributed to the increased  dollar amount of the expense,  but the
following major account  classifications were significant factors in this dollar
increase:  (i)  Commissions  and  freight  charges,  as a  percentage  of sales,
remained  consistent  with  commissions  and freight  charges of the prior year;
however,  these expenses vary directly with sales volume and, therefore,  of the
$706,702  increase in expenses,  $241,181 is  attributable  to  commissions  and
freight  charges  from  higher  sales  volume  during  the  2005  period.   (ii)
Professional fees (principally associated with the previously reported suit by a
former director and chief executive  officer) increased by $432,366 for the 2005
period as compared  to the same  quarter in the  previous  year.  As  previously
reported  (see Part II,  Other  Information,  Item 1 - Legal  Proceedings),  the
litigation with the former director and chief executive  officer settled on July
12, 2005.


                                      -9-
<PAGE>

      Interest Expense and Income. Our interest expense, net of interest income,
decreased  to $8,274 for the quarter  ended June 30,  2005 from  $12,771 for the
quarter ended June 20, 2004. The lower net interest expenses resulted  primarily
from an increase in interest income on investments.

      Net Income.  We reported net income of $889,770 for the quarter ended June
30, 2005 compared to net income of $766,297 for the corresponding quarter of the
prior  fiscal  year.  The  primary  reason  for the  increase  in net  income is
increased  earnings from our Hong Kong Joint  Venture,  the tax benefit  arising
from the  reduction  of the deferred tax asset  valuation  allowance,  partially
offset by increased selling, general and administrative expense.

FINANCIAL CONDITION AND LIQUIDITY

      Our cash needs are  currently  met by funds from our  Factoring  Agreement
which  supplies  both  short-term  borrowings  and  letters of credit to finance
foreign  inventory  purchases.  The maximum amount available under the Factoring
Agreement is currently  $7,500,000.  However,  based on specified percentages of
our accounts receivable and inventory and letter of credit  commitments,  we had
$5,254,000 available under the Factoring  Agreement,  all of which was available
as of June 30, 2005.  The  interest  rate under the  Factoring  Agreement on the
uncollected  factored  accounts  as of June 30, 2005 was 6.25%.  Borrowings  are
collateralized by all of our accounts receivable and inventory.

      On December 17, 2004, the Company  obtained an unsecured  $250,000 line of
credit  from a  commercial  bank.  Amounts  borrowed on this line of credit bear
interest  at the prime rate of interest  as  published  from time to time by The
Wall Street Journal.  The agreement requires,  among other provisions,  that the
Company maintain a zero balance on the facility for thirty consecutive days each
year. No amounts have been borrowed or are outstanding on this line of credit.

      Our  accounts  receivable  as of the end of our last  fiscal  year (net of
allowances for doubtful  accounts) were  $1,014,757,  and were  $1,229,256 as of
June 30, 2005. The increase in trade accounts  receivable during the first three
months of the current fiscal year is due to increased  sales,  primarily  direct
shipments  from our foreign  manufacturers,  directly to customers  for which we
bear the credit risk. Our prepaid expenses as of the end of our last fiscal year
were  $145,394,  and were $280,209 as of June 30, 2005.  The increase in prepaid
expenses  during the first three months of the current  fiscal year is primarily
due to the timing of premium payments to various insurance carriers.

      Operating  activities  provided  cash of $60,170 for the period ended June
30, 2005. This was primarily due to a decrease in inventory and prepaid expenses
of  $667,381,  and an  increase in  accounts  payable  and  accrued  expenses of
$235,864,  which were  partially  offset by equity in the earnings from our Hong
Kong Joint  Venture of  $701,900  and an increase  in  accounts  receivable  and
amounts due to factor of $937,856.

      Investing  activities  used  cash of  $2,400 in the  current  period  from
purchases  of  office  equipment.  For the  same  period  last  year,  investing
activities used cash of $4,190.

      Financing  activities  provided cash of $439 from the exercise of employee
stock options. For the same period last year, financing activities provided cash
of $40,469.

      We  believe  that  funds   available   under  the   Factoring   Agreement,
distributions  from the Hong Kong Joint Venture,  working  capital,  and our new
line of credit provide us with sufficient resources to meet our requirements for
liquidity  and working  capital in the ordinary  course of our business over the
next twelve months and over the long term.

HONG KONG JOINT VENTURE

      Net Sales.  Net sales of the Hong Kong Joint  Venture for the three months
ended June 30, 2005 were $6,013,212,  compared to $6,843,904, for the comparable
period in the prior  fiscal  year.  Sales of the Hong Kong Joint  Venture to the
Company  amounted to $2,835,861  (47%) for the three month period ended June 30,
2005 and $2,693,179 (39%) for the same period of the prior year.

      Net  Income.  Net income  for the three  months  ended  June 30,  2005 was
$1,200,195, compared to $1,238,336, in the comparable period last year. The 0.3%
decrease in net income for the quarter was mainly due to lower sales.

                                      -10-
<PAGE>

      Gross Margins.  Gross margins of the Hong Kong Joint Venture for the three
month period ended June 30, 2005  increased to 35% from 32% for the 2004 period.
The increase in the percent of gross margin is due primarily to price  increases
initiated during the past fiscal year.

      Expenses.  Selling, general and administrative expenses were $886,270, for
the three month period ended June 30, 2005,  compared to $864,871,  in the prior
year's respective  period. As a percentage of sales,  expenses were 15%, for the
three month  period  ended June 30,  2005,  compared to 13%, for the three month
period ended June 30, 2004. The increase in selling,  general and administrative
expense was primarily due to increased  professional  fees  associated  with the
pursuit of legal action  against a company in Germany  which the Hong Kong Joint
Venture  believes is infringing on patents and copyrights of the Hong Kong Joint
Venture.

      Interest Income and Expense. Interest expense, net of interest income, was
$6,870,  for the three month period  ended June 30,  2005,  compared to interest
expense of $9,780 for the prior year's period.

      Liquidity.  Cash needs of the Hong Kong Joint Venture are currently met by
funds  generated from  operations.  During the three months ended June 30, 2005,
working  capital  increased by $1,008,603  from  $1,593,767 on March 31, 2005 to
$2,602,370 on June 30, 2005.

      As  we  previously  reported,  the  Hong  Kong  Joint  Venture  was  being
positioned for a possible  initial public  offering (IPO). On June 30, 2005, the
Joint  Venture  filed for  listing  of an IPO on the Main Board of the Hong Kong
Stock  Exchange.  No assurances  can be given that these steps will result in an
IPO for the Hong Kong Joint Venture. We will report further developments at such
time as permitted in accordance with Hong Kong and U.S. regulations.  Should the
Hong Kong Joint  Venture  complete its IPO, our  ownership of the Joint  Venture
will be reduced.

CRITICAL ACCOUNTING POLICIES

      Management's   discussion  and  analysis  of  our  consolidated  financial
statements  and results of operations  are based on our  Consolidated  Financial
Statement  included  as  part  of  this  document.   The  preparation  of  these
consolidated  financial  statements  requires  management to make  estimates and
judgments that affect the reported amounts of assets, liabilities,  revenues and
expenses and related  disclosures of contingent  assets and  liabilities.  On an
ongoing  basis,  we evaluate  these  estimates,  including  those related to bad
debts,  inventories,  income taxes, and  contingencies  and litigation.  We base
these estimates on historical  experiences and on various other assumptions that
are believed to be reasonable under the circumstances, the results of which form
the  basis  for  making  judgments  about the  carrying  values  of  assets  and
liabilities  that are not readily  available from other sources.  Actual results
may differ from these estimates under different assumptions or conditions.

      We believe the following critical  accounting policies affect management's
more  significant  judgments  and  estimates  used  in  the  preparation  of its
consolidated financial statements.  For a detailed discussion on the application
on these and other accounting policies, see Note A to the consolidated financial
statements  included  in Item 8 of the Form  10-K for the year  ended  March 31,
2005. Certain of our accounting  policies require the application of significant
judgment by management in selecting the appropriate  assumptions for calculating
financial estimates. By their nature, these judgments are subject to an inherent
degree of  uncertainty  and actual  results  could differ from these  estimates.
These  judgments  are  based on our  historical  experience,  terms of  existing
contracts, current economic trends in the industry,  information provided by our
customers,  and information available from outside sources, as appropriate.  Our
critical accounting policies include:

      Our revenue  recognition  policies are in compliance with Staff Accounting
Bulletin No. 101, "Revenue  Recognition in Financial  Statements"  issued by the
Securities and Exchange Commission. We recognize sales upon shipment of products
net of applicable  provisions for any discounts or  allowances.  We believe that
the  shipping  date  from our  warehouse  is the  appropriate  point of  revenue
recognition since upon shipment we have substantially  completed our obligations
which entitle us to receive the benefits  represented  by the revenues,  and the
shipping date provides a consistent point within our control to measure revenue.
Customers  may not return,  exchange or refuse  acceptance  of goods without our
approval. We have established  allowances to cover anticipated doubtful accounts
based upon historical experience.


                                      -11-
<PAGE>

      Inventories  are valued at the lower of market or cost. Cost is determined
on the first-in first-out method. We have recorded a reserve for obsolescence or
unmarketable inventory equal to the difference between the cost of inventory and
the estimated market value based upon assumptions about future demand and market
conditions. Management reviews the reserve quarterly.

      We  currently  have  significant  deferred tax assets  resulting  from tax
credit carryforwards,  net operating loss carryforwards and deductible temporary
differences,  which  will  reduce  taxable  income  in future  periods.  We have
provided a  valuation  allowance  on future  tax  benefits  such as foreign  tax
credits, foreign net operating losses, capital losses and net operating losses.

      A valuation allowance is required when it is more likely than not that all
or a  portion  of the  deferred  tax  assets  will not be  realized.  Forming  a
conclusion that a valuation allowance is not needed is difficult when there is a
negative  evidence  such as  cumulative  losses  and  losses  in  recent  years.
Cumulative losses weigh heavily in the overall assessment. Accordingly, based on
current  results of operations,  the balance of the valuation  allowance for our
remaining net deferred tax assets at June 30, 2005 has been reduced to $676,523.

      We are subject to lawsuits and other claims,  related to patents and other
matters.  Management  is  required  to  assess  the  likelihood  of any  adverse
judgments or outcomes to these matters,  as well as potential ranges of probable
losses.  A determination of the amount of reserves  required,  if any, for these
contingencies  is based on a careful  analysis of each individual issue with the
assistance of outside  legal  counsel.  The required  reserves may change in the
future due to new  developments  in each matter or changes in approach such as a
change in settlement strategy in dealing with these matters.

      We   generally   provide   warranties   from  one  to  ten  years  to  the
non-commercial  end user on all products sold. The manufacturers of our products
provide us with a one-year  warranty on all  products  we  purchase  for resale.
Claims for warranty  replacement of products beyond the one-year warranty period
covered by the  manufacturers  are  immaterial  and we do not  record  estimated
warranty expense or a contingent liability for warranty claims.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      No material  changes have  occurred in our  quantitative  and  qualitative
market risk disclosures as presented in our Annual Report Form 10-K for the year
ended March 31, 2005.

ITEM 4.     CONTROLS AND PROCEDURES

      We  maintain  a system  of  disclosure  controls  and  procedures  that is
designed to provide reasonable assurance that information,  which is required to
be disclosed  by us in the reports  that we file or submit under the  Securities
and Exchange Act of 1934, as amended,  is recorded,  processed,  summarized  and
reported  within  the time  periods  specified  in the  rules  and  forms of the
Securities and Exchange  Commission,  and is  accumulated  and  communicated  to
management in a timely manner.  Our Chief Executive  Officer and Chief Financial
Officer have evaluated  this system of disclosure  controls and procedures as of
the end of the period  covered by this  quarterly  report,  and believe that the
system is  effective.  There have been no changes in our  internal  control over
financial  reporting  during the most recent fiscal quarter that have materially
affected,  or are reasonably likely to materially  affect,  our internal control
over financial reporting.

      Management is aware that there is a lack of  segregation  of duties at the
Company due to the small number of employees dealing with general administrative
and  financial  matters.  However,  at this time  management  has  decided  that
considering  the employees  involved and the control  procedures  in place,  the
risks  associated  with  such  lack of  segregation  are  insignificant  and the
potential  benefits  of adding  employees  to  clearly  segregate  duties do not
justify  the  expenses   associated   with  such   increases.   Management  will
periodically review this situation.


                                      -12-
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

      As  previously  reported,  Michael L. Kovens  filed an action in Baltimore
County Circuit Court (Case No. C-03-9639)  against the Company and the Estate of
Stephen  C.  Knepper,  Harvey  B.  Grossblatt,  Ronald  A.  Seff,  M.D.,  Howard
Silverman,  Ph.D., and Cary Luskin,  alleging various claims and seeking various
relief.  The Company  incorporates by reference into this Report the information
reported in the Company's  Current  Report on Form 8-K,  filed on July 14, 2005,
with respect to the July 12, 2005 settlement of this litigation.

      On June 10, 2003,  Leviton  Manufacturing  Co., Inc.  filed a second civil
suit against the Company and its USI Electric  subsidiary  in the United  States
District Court for the District of Maryland (Case No.  03cv1701),  alleging this
time that the  Company's  GFCI units  infringe one or more of its more  recently
issued  patents for reset lockout  technology  related to but not required by UL
Standard  943 for ground GFCI units,  effective  January  2003  ("Leviton  II").
Leviton also asserted  trade dress and unfair  competition  claims which largely
correspond  to the claim in the  "Leviton l" suit.  On July 23,  2003,  the GFCI
manufacturer,  Shanghai Meihao  Electric,  Inc., filed an action for Declaratory
Judgment of non-infringement,  invalidity,  and unenforceability of the asserted
patents.  The Court has  bifurcated the action into liability and damage phases,
linked the supplier's  Declaratory  Judgment  action with the action against the
Company,  and  consolidated  Leviton I with Leviton II. In March 2005, the court
dismissed one of the Leviton  patents from the suit and in April 2005,  issued a
claims construction Order that favors the position of the Company.  Discovery is
concluded and the Company has filed for summary  judgment on certain  aspects of
its  defenses  to  both  the  accused  trade  dress   infringement   and  patent
infringement.  In  the  event  of an  unfavorable  outcome,  the  amount  of any
potential loss to USI is not yet determinable.

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  Quarterly  Report on Form 10-Q for the  period  ended  June 30,
      2004, File No.
      1-31747)
10.1  Non-Qualified Stock Option Plan, as amended  (incorporated by reference to
      Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period
      ended September 30, 2003, File No. 1-31747)
10.2  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)
10.3  Amended Factoring Agreement with CIT Group (successor to Congress Talcott,
      Inc.) dated November 14, 1999  (incorporated  by reference to Exhibit 10.3
      to the  Company's  Annual Report on Form 10-K for the year ended March 31,
      2003, File No. 1-31747)
10.4  Amendment to Factoring Agreement with CIT Group (incorporated by reference
      to Exhibit  10.4 to the  Company's  Quarterly  Report on Form 10-Q for the
      period ended September 30, 2002, File No. 1-31747)
10.5  Amendment to Factoring  Agreement with CIT Group dated  September 28, 2004
      (incorporated  by  reference to Exhibit  10.5 to the  Company's  Quarterly
      Report on Form 10-Q for the period  ended  September  30,  2004,  File No.
      1-31747)
10.6  Lease  between   Universal   Security   Instruments,   Inc.  and  National
      Instruments  Company  dated  October 21, 1999 for its office and warehouse
      located  at  7-A  Gwynns  Mill  Court,   Owings  Mills,   Maryland   21117
      (incorporated by reference to Exhibit 10.19 to the Company's Annual Report
      on Form 10-K for the Fiscal Year Ended March 31, 2000, File No. 1-31747)
10.7  Amended and Restated Employment  Agreement dated April 1, 2003 between the
      Company and Harvey B.  Grossblatt  (incorporated  by  reference to Exhibit
      10.8 to the Company's  Annual Report on Form 10-K for the year ended March
      31, 2003, File No. 1-31747)
10.8  Settlement Agreement with respect to Michael Kovens vs. Universal Security
      Instruments, Inc. et al.*

31.1  Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*
31.2  Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer*
32.1   Section 1350 Certifications*
99.1  Press Release dated August 12, 2005*
*Filed herewith


                                      -13-
<PAGE>

                                   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 12, 2005                   By:  /s/ Harvey B. Grossblatt
                                        ----------------------------------
                                        Harvey B. Grossblatt
                                        President, Chief Executive Officer


                                        By:  /s/  James B. Huff
                                        ----------------------------------
                                        James B. Huff
                                        Vice President, Chief Financial Officer


                                      -14-