<PAGE>

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

                                   FORM 10-Q/A
                                 AMENDMENT NO. 1

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

                  For the quarterly period ended March 31, 2004

                                       OR

[ ]   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 0-25198

                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
                      -------------------------------------
             (Exact name of registrant as specified in its charter)

             Delaware                                   36-3973627
             --------                                   ----------
 (State or other jurisdiction of                     (I.R.S. Employer
  incorporation or organization)                     Identification No.)

                           11859 South Central Avenue
                              Alsip, Illinois 60803
                              ---------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (708) 293-4050
                                 --------------
              (Registrant's telephone number, including area code)

                                       N/A
                                       ---
(Former name, former address and former fiscal year, if changed since
                                  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. Yes
[ ]No [X]

The number of shares of issuer's Common Stock, par value $.01 per share,
outstanding as of May 12, 2004 was 11,092,790 shares.

<PAGE>

                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.

                                   FORM 10-Q/A
                                (AMENDMENT NO. 1)

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                      PAGES(S)
<S>                                                                                   <C>
PART I.    FINANCIAL INFORMATION

   Explanatory Item                                                                      3

   Item 1. Financial Statements

           Consolidated Balance Sheets
                     March 31, 2004 (Unaudited) and December 31, 2003                    4

           Consolidated Statements of Operations
                     (Unaudited) - for the three months ended
                     March 31, 2004 and 2003                                             5

           Consolidated Statements of Cash Flows
                     (Unaudited) - for the three months ended
                     March 31, 2004 and 2003                                             6

           Notes to Condensed Financial Statements (Unaudited)                           7 - 10

   Item 2. Management's Discussion and Analysis of Financial Condition
                and Results of Operations                                                11 - 14

   Item 3. Quantitative and Qualitative Disclosure About Market Risk                     15

   Item 4. Controls and Procedures                                                       16

PART II. OTHER INFORMATION

   Items 1 through 5 are not applicable to the Company in this report                    17

   Item 6 - Exhibits and Reports on Form 8-K                                             17

   Signatures                                                                            17

EXHIBITS

   10.1 Revolving line of credit from Congress Financial Corporation

   31.1 Certificate of Chief Executive Officer

   31.2 Certificate of Chief Financial Officer

     32 Certification of Chief Executive Officer and Chief Financial Officer

     99 Computation of Earnings Per Share
</TABLE>

<PAGE>

AMENDMENT NO. 1

                                EXPLANATORY NOTE

      We are filing this Form 10-Q/A (Amendment No. 1) to reclassify the gain on
valuation of assets purchased in the quarter ended March 31, 2004 (an amount
equal to $9,886,328) from "other expense:/(income)" to an "extraordinary item."
This reclassification of the gain does not change our overall income or our net
worth for the three months ended March 31, 2004, but does impact the
classification of the income for the three months ended March 31, 2004. The
reclassification also will affect our earnings per share as reflected herein.

      Our Audit Committee has determined to reclassify the gain in response to a
letter ("Letter") we received on December 18, 2004 from our independent
registered public accountants, Blackman Kallick Bartelstein LLP ("Blackman").
The Letter advises us that our presentation of "gain on valuation of assets
purchased" as "other expense:/(income)" in our Consolidated Statements of
Operations for the nine months ended September 30, 2004 is not in conformity
with U.S. generally accepted accounting principles. Blackman advises us that the
proper presentation of the "gain on valuation of assets purchased" is as an
"extraordinary item." Blackman further advises us that we presented the gain as
"other expense:/(income)" in our Consolidated Statements of Operations for the
quarters ended March 31, 2004 and June 30, 2004. Blackman did not serve as our
independent registered public accountant for these quarters.

      As a result of the reclassification, we would have been in violation of
our earnings before interest, taxes, depreciation and amortization (EBITDA)
covenant contained in the revolving line of credit agreement (the "Credit
Agreement") with our principal lender, Congress Financial Corporation (the
"Lender"); however, we have, obtained a waiver of this covenant violation from
the Lender and entered into an amendment to the Credit Agreement which among
other things, revises this EBITDA covenant.

<PAGE>

                       CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                           March 31, 2004   December 31, 2003
                                                                           --------------   -----------------
                                                                            (Unaudited)
<S>                                                                        <C>              <C>
                                  Assets
Current assets:
Cash                                                                          $  1,147,172      $    605,211
Accounts receivable - trade, net                                                16,935,210         9,724,502
Inventories                                                                     37,843,568        14,875,045
Deferred income taxes                                                              240,000           240,000
Prepaid expenses and other current assets                                          511,299           133,218
                                                                              ------------      ------------
                                                                                56,677,249        25,577,976
                                                                              ------------      ------------
Property and equipment , net                                                     4,118,496         3,913,867
                                                                              ------------      ------------
Other assets:
Goodwill                                                                           480,498           480,498
Due from employees                                                                  40,250            40,250
Deferred financing costs, net                                                    2,247,398         1,932,179
Other assets                                                                       252,676           605,586
                                                                              ------------      ------------
                                                                                 3,020,822         3,058,513
                                                                              ------------      ------------
                                                                              $ 63,816,567      $ 32,550,356
                                                                              ============      ============
                   Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable - trade                                                      $ 14,191,810      $  9,814,785
Accrued expenses and other current liabilities                                   7,318,668         2,417,821
Long-term indebtedness , current portion                                            50,899            81,430
Convertible note, current portion                                                1,636,364           909,091
Subordinated debenture, current portion                                            132,229            60,000
                                                                              ------------      ------------
                                                                                23,329,970        13,283,127
                                                                              ------------      ------------
Long-term liabilities:
Revolving line of credit                                                        22,864,963        11,997,526
Long-term indebtedness, non-current portion                                         33,766            37,234
Convertible note, non-current portion                                            4,995,518         3,868,265
Subordinated debenture, non-current portion                                        684,120           773,120
                                                                              ------------      ------------
                                                                                28,578,367        16,676,145
                                                                              ------------      ------------
Stockholders' equity:
Preferred stock (authorized 2,000,000 shares,  $.01 par  value,
201,438 shares of Series A and 100,000 shares of Series B issued and
 outstanding)                                                                        3,014             3,014

Common stock (authorized 50,000,000 shares, $.01 par  value, 10,930,726
and 8,948,097 shares issued and outstanding as of  March 31, 2004 and
December 31, 2003)                                                                 109,349            89,481

Additional paid-in-capital                                                      18,488,922        16,912,641
Accumulated deficit                                                             (6,157,141)      (13,885,621)
Accumulated other comprehensive loss                                              (491,764)         (479,781)
Stock subscription receivable                                                      (44,150)          (48,650)
                                                                              ------------      ------------
                                                                                11,908,230         2,591,084
                                                                              ------------      ------------
                                                                              $ 63,816,567      $ 32,550,356
                                                                              ============      ============
</TABLE>

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

<PAGE>

                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Three Months Ended March 31,
                                                          ----------------------------
                                                             2004             2003
                                                             ----             ----
<S>                                                      <C>               <C>
Net Sales                                                $ 23,347,747      $ 15,016,910
Cost of sales                                              20,774,200        13,268,771
                                                         ------------      ------------

GROSS PROFIT
                                                            2,573,547         1,748,139
Selling , general and administrative expenses               4,224,572         2,491,562
                                                         ------------      ------------

LOSS FROM OPERATIONS                                       (1,651,025)         (743,423)
Other income/(expense)
     Interest expense                                        (513,909)         (238,841)
     Other                                                      7,089             7,794
                                                         ------------      ------------
                                                             (506,820)         (231,047)
                                                         ------------      ------------

(LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY GAIN          (2,157,845)         (974,470)

Income tax provision                                                0                 0
                                                         ------------      ------------
NET (LOSS) BEFORE EXTRAORDINARY GAIN                       (2,157,845)         (974,470)

Extraordinary gain (net of income taxes of $0)              9,886,328                 0

                                                         ------------      ------------
NET INCOME/(LOSS)                                        $  7,728,483      $   (974,470)
                                                         ============      ============

Comprehensive income (loss):
Net (loss) income                                        $  7,728,483      $   (974,470)
Other comprehensive income (loss)
    Foreign currency translation adjustment                   (11,983)           67,788
Comprehensive income (loss)                              ============      ============
                                                         $  7,716,500      $   (906,682)
Earnings (Loss) per common share:
Basic
   (Loss) before extraordinary gain                      $      (0.21)     $      (0.12)
    Extraordinary gain                                           0.97                 -
                                                         ------------      ------------
                                                         $       0.76      $      (0.12)
                                                         ============      ============
Diluted
   (Loss) before extraordinary gain                      $      (0.16)     $      (0.12)
    Extraordinary gain                                           0.73                 -
                                                         ------------      ------------
                                                         $       0.57      $      (0.12)
                                                         ============      ============
Weighted average number of common shares outstanding
BASIC                                                      10,159,384         8,224,949
Common stock equivalents resulting from:
   Conversion of preferred stock                            3,014,380                 0
    Warrants and options                                      403,244                 0
                                                         ------------      ------------
DILUTED                                                    13,577,008         8,224,949
                                                         ------------      ------------
</TABLE>

     The accompanying notes are an integral part of the financial statements

<PAGE>

                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31,
                                                                    ----------------------------
                                                                      2004             2003
                                                                      ----             ----
<S>                                                                <C>               <C>
OPERATING ACTIVITIES
Net income (loss)                                                  $  7,728,483      $  (974,470)
Adjustments to reconcile net (loss) income  to net cash
 provided by (used in) operating activities:
    Depreciation and amortization                                       567,967          236,770
    Provision for bad debts                                            (276,045)          47,612
    Extraordinary gain                                               (9,886,328)               -
    Other, net                                                            4,502            7,500
    Changes in operating assets and liabilities:
      Accounts receivable, trade                                     (1,115,736)      (1,085,762)
      Inventories                                                     2,345,663        1,914,111
      Prepaid expenses and other current assets                        (378,081)        (221,040)
      Other assets                                                        6,514                -
      Accounts payable, trade                                         1,009,899        1,199,508
      Accrued expenses and other current liabilities                   (887,722)        (482,434)
                                                                   ------------      -----------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
                                                                       (880,884)         641,795
INVESTING ACTIVITIES
     Advances to stockholders, net                                            -           (1,458)
     Purchase of certain assets of Kelsey-Hayes Company             (11,571,008)               -
     Purchase of property and equipment                                (424,468)        (102,820)
                                                                   ------------      -----------
Net cash used in investing activities                               (11,995,476)        (104,278)
FINANCING ACTIVITIES
     Net increase/(decrease) in revolving loan  indebtedness         10,867,437          (89,252)
     Principal payments on notes payable and subordinated debt          (50,770)        (111,335)
     Proceeds from issuance of convertible notes, net                 1,743,700                -
     Proceeds from conversion of warrants and options                   869,940                -
                                                                   ------------      -----------
Net cash provided by (used in) financing activities                  13,430,307         (200,587)

Effect of exchange rate changes on cash                                 (11,983)             612
                                                                   ------------      -----------
Net  increase in cash                                                   541,964          337,542
Cash, beginning of period                                               605,211          237,600
                                                                   ------------      -----------
Cash, end of period                                                $  1,147,175      $   575,142
                                                                   ============      ===========
Supplemental disclosures of cash flow information:
   Cash paid for interest                                          $    334,636      $   235,723
   Cash paid for income taxes                                      $          -      $     1,900

Supplemental disclosure of non-cash financing activities:
    Issuance of warrants in connection with convertible notes      $    167,047      $         -

   Conversion of convertible notes into common stock               $    559,162      $         -
</TABLE>

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

<PAGE>

                     UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. UNAUDITED INTERIM FINANCIAL STATEMENTS

Interim condensed financial statements are prepared pursuant to the requirements
for reporting on Form 10-Q. Accordingly, certain disclosures accompanying annual
financial statements prepared in accordance with generally accepted accounting
principles (USA) are omitted. For additional disclosures, see the Notes to
Consolidated Financial Statements contained in Universal Automotive Industries,
Inc. (the "Company") Annual Report on Form 10-K for the year ended December 31,
2003.

Our significant accounting policies are described in Note 2 to the Consolidated
Financial Statements contained in Universal Automotive Industries, Inc. (the
"Company") Annual Report on Form 10-K for the year ended December 31, 2003. The
application of these policies may require management to make judgments and
estimates about the amounts reflected in the financial statements. Management
uses historical experience and all available information to make these estimates
and judgments, and different amounts could be reported using different
assumptions and estimates.

In the opinion of management of the Company, all adjustments, consisting solely
of normal recurring adjustments, necessary for the fair presentation of the
financial statements for these interim periods have been included. The current
period's results of operations are not necessarily indicative of results, which
ultimately may be achieved for the year.

2. BASIS OF PRESENTATION

Net Loss Per Share

Common stock equivalents resulting from the conversion of preferred stock,
warrants and options issued by the Company are only included in the computation
of weighted average number of shares outstanding, where their inclusion is not
anti-dilutive. For the three months ended March 31, 2003, common stock
equivalents are not included in the weighted average number of shares
outstanding in determining net loss per share.

Income Taxes

For the quarter ended March 31, 2004 the provision for income taxes was offset
by the benefit associated with the utilization of the tax loss carryforward. For
the quarter ended March 31, 2003, no tax benefit associated with the loss
incurred has been provided as the Company believed that, consistent with
accounting principles generally accepted in the United States, it was not more
likely than not that the tax benefits associated with the balance of loss
carryforwards and other deferred tax assets will be realized through future
taxable earnings or alternative tax strategies.

3. INVENTORIES

<TABLE>
<CAPTION>
                  March 31, 2004     December 31, 2003
                  --------------     -----------------
<S>               <C>                <C>
Finished goods      $    31,025,756     $    12,231,089
Work in process             391,846             574,730
Raw materials             6,425,966           2,069,226
                    ---------------     ---------------
                    $    37,843,568     $    14,785,045
                    ---------------     ---------------
</TABLE>

<PAGE>

4. CONGRESS INDEBTEDNESS

On January 12, 2004, the Company entered into a revolving line-of-credit
agreement with Congress Financial Corporation ("Congress"), replacing the
LaSalle indebtedness. The maximum available amount of the revolving
line-of-credit is $35,000,000 based on eligible accounts receivable and
inventory and is fully secured by a first lien on the inventory and the accounts
receivable of the Company. The revolving line-of-credit has a term ending
January 12, 2007 and an interest rate of prime plus .50% per annum. The line is
subject to an ongoing option to convert to LIBOR plus 2.75% per annum.

The Congress agreement contains certain limitations on dividends and capital
expenditures and requires the Company to satisfy a financial test concerning
earnings before interest, taxes, depreciation and amortization (EBITDA). At
March 31, 2004, the Company would not have been in compliance with the financial
test concerning earnings before interest, taxes, depreciation and amortization
(EBITDA); however, the Company has received a waiver of the covenant violation
from Congress.

5. CONVERTIBLE NOTES

On January 9, 2004 the Company issued a secured convertible note to Laurus
Master Funds Ltd. ("Laurus") in the amount of $2,000,000 which is payable in 33
equal monthly installments beginning April 1, 2004 and is secured by a first
lien on the fixed assets of the Company, including the fixed assets acquired in
connection with the acquisition of Autospecialty (See note 7). Interest is
payable at the prime rate plus two percent (6.0% as of March 31, 2004). The note
provides that payments of principal and interest may, at the sole option of the
Company, be made in cash or in shares of common stock of the Company. The
payment of principal and interest may be made in common stock of the Company if
the closing price for the five trading days preceding the payment date is at
least $1.30 per share. If the Company's common stock is not $1.30 per share for
the five days preceding the payment date, the conversion price will be 90% of
the five lowest closing prices for the last twenty two trading days prior to the
payment date, with a floor conversion price of $0.50 per share. If the payment
of principal and interest is made in cash, the amount due will be 103% of the
amount which would otherwise be due. The Company also issued 280,000 warrants to
Laurus and 250,000 warrants to a financial advisor. The Laurus warrants are
exercisable over five years at a price of $1.60 to $2.01 per share. The warrants
issued to the financial advisor are exercisable over five years at $1.76 per
share. The warrants were valued at $167,047 and were recorded as deferred
financing fees. Total fees and expenses paid in cash were $226,000 and have been
recorded as deferred financing fees. These costs will be amortized over the term
of the note.

On January 15, 2004 the Company issued an unsecured convertible note in the
original amount of $300,000 to GCA Strategic Investment Fund Ltd, an affiliate
of Global Capital Funding Group, L.P., for proceeds of $240,000. The note
provides for a lump sum payment of $300,000 on January 15, 2006. In addition,
the note contains a voluntary conversion at the option of the note holder at the
lesser of $3.00 per share or 95% of the volume weighted average market value of
the Company's common stock for the ten business days immediately prior to the
date of conversion notice, except that in no event will the conversion price be
less than $0.35 per share. Total fees and expenses paid in cash were $4,000 and
have been recorded as deferred financing fees. These costs will be amortized
over the term of the note.

6. STOCK-BASED COMPENSATION

The Company has elected to follow APB Opinion NO. 25, Accounting for Stock
Issued to Employee, and related interpretations in accounting for the stock
options granted to employees and directors. Accordingly,

<PAGE>

employee and director compensation expense is recognized only for those options
whose price is less than fair market value at the measurement date. The Company
has adopted the disclosure-only provisions of SFAS No. 125, Accounting for
Stock-Based Compensation, as amended.

      The Company has computed the pro forma disclosures required under SFAS No.
123, as amended by SFAS No. 148, for options granted using the minimal value
option-pricing model prescribed by SFAS No. 13. The assumptions used for grants
during the periods ended March 31, 2004 and 2003 include a dividend yield of
0.0%, risk-free interest rates of 2.50%, an option term of immediate to 10 years
and a volatility factor of 78%. Had the compensation costs for these plans been
determined consistent with SFAS No. 123, the Company's net income would have
been reduced by approximately $30,316 to $7,698,167 for the period ended March
31, 2004 and the net loss for the period ended March 31, 2003 would have been
increased by $33,729 to $1,008,199.

7. ACQUISITION OF CERTAIN ASSETS OF KELSEY-HAYES COMPANY

On January 12, 2004 the Company purchased substantially all the assets of the
Autospecialty division of Kelsey-Hayes Company a subsidiary of TRW Automotive,
Inc ("Autospecialty"), for a total cost, including transaction fees and
expenses, of approximately $11,925,000 plus the assumption of certain
liabilities as set forth in the Purchase Agreement dated December 23, 2003
between the Company and TRW Automotive, Inc. The purchase price is subject to
certain adjustments based upon the future collection of trade accounts
receivable. Negative goodwill recorded in conjunction with the acquisition
transaction included an approximate $9.9 million non-operating, non-cash gain
reflected in Company's Statement of Operations for the quarter ended March 31,
2004.

During the period ending March 31, 2004 the Company incurred costs in connection
with the consolidation and integration of this acquisition including the closing
of two distribution centers, Itasca, Illinois and Compton, California, into its
Alsip, Illinois and Carson, California distribution facilities respectively. In
addition the Carson, California rotor manufacturing operations was relocated and
combined into the Company's Alsip, Illinois rotor manufacturing facility. A
reserve of $700,000 was established under the purchase method of accounting for
these and other integration and business consolidation expenditures. As of March
31, 2004 approximately $258,000 has been charged against this reserve.

Further details of the acquisition (in thousands of dollars) as are follows:

<TABLE>
<S>                                        <C>
Tangible assets acquired                   $ 31,141
Liabilities assumed                          (8,630)
Reserve recorded                               (700)
                                           --------
                                             21,811
Purchase price                               11,925
                                           --------
Excess of fair value of the net assets
received over the amount paid              $  9,886
                                           ========
</TABLE>

This acquisition has been accounted for using the purchase method of accounting.
Accordingly, the allocation of the cost of the acquired assets and liabilities
has been made on the basis of the estimated fair value. The consolidated
financial statements include the operating results of each business from the
date of acquisition. The financial statements reflect the preliminary allocation
of the purchase price and contained certain subjective reserves. Accordingly, it
is expected that the purchase price allocation will be finalized upon the
realization of the acquired accounts receivable and inventory.

<PAGE>

In conjunction with recording the acquisition using the purchase method of
accounting, the assets acquired and liabilities assumed have different bases for
income tax purposes. It is expected that the gain on the valuation of assets
purchased would not be taxable for income tax purposes until the underlying
assets acquired are sold. The gain on the valuation of assets acquired
substantially contributed to a realized net income for the quarter ended March
31, 2004. There was no recorded income tax provision for the quarter ended March
31, 2004, nor was a deferred tax liability recorded, because the Company has net
operating loss carryforwards that are expected to reduce any taxable income.

On a pro forma basis, had the acquisition of Autospecialty occurred as of the
beginning of the quarter ended March 31, 2004, the results of operations and
statement of changes in financial position would not have changed materially
from the amounts reflected herein. Had the acquisition occurred as of the
beginning of the quarter ended March 31, 2003, the combined business would have
had revenues of approximately $26.9 million and loss from operations of
approximately $2.9 million, as compared with the historical reported amounts of
$15.0 million and $(0.7) million, respectively.

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS(1)

      Certain statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this quarterly
report on Form 10-Q/A (Amendment No. 1) constitute "forward-looking statements"
within the meaning of the Federal Private Securities Litigation Reform Act of
1995. These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the Company's actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking
statements. Examples of factors which could affect the Company's performance are
set forth elsewhere in this Form 10-Q/A (Amendment No. 1) and in the Company's
annual report on Form 10-K, as filed with the Securities and Exchange Commission
on April 14, 2004 under the heading "Risk Factors."

GENERAL

      We are a manufacturer and distributor of brake rotors, drums, disc brake
pads, relined brake shoes, non-asbestos friction lining, and a complete line of
caliper, clutch, chassis and hydraulic parts. We believe that we are the leading
supplier of private label brake parts (brake parts sold at prices below those of
certain leading national brand name brake parts) to mass-market retailers,
traditional warehouse distributors and specialty undercar distributors in North
America.(1)

-----------------------
(1)  Some of the statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations, may be considered to be "forward
looking statements" since such statements relate to matters which have not yet
occurred. For example, phrases such as "the Company anticipates," believes" or
"expects" indicate that it is possible that the event anticipated, believed or
expected may not occur. Should such event not occur, then the result, which the
Company expected, also may not occur or may occur in a different manner, which
may be more or less favorable to the Company. The Company does not undertake any
obligation to publicly release the result of any revisions to these forward
looking statements that may be made to reflect any future event or
circumstances.

<PAGE>

RESULTS OF OPERATIONS

Three Months Ended March 31, 2004 Compared To Three Months Ended March 31, 2003

<TABLE>
<CAPTION>
                                                             Three Months Ending
                                                             -------------------
                                                March 31,       %of       March 31,       % of    Change from 2003 to 2004
                                                                                                  ------------------------
                                                   2004       Revenues       2003       Revenues        $            %
                                                   ----       --------       ----       --------  -----------        -----
<S>                                             <C>           <C>       <C>             <C>       <C>                <C>
Revenues
     Brake Parts, Net                            $ 20,310         87.0%    $ 11,788         78.5%    $  8,522         72.3%
     Wholesale Products                             3,038         13.0%       3,229         21.5%        (191)        -5.9%
                                                 --------        -----     --------        -----     --------         ----
                                                 $ 23,348        100.0%    $ 15,017        100.0%    $  8,331         55.5%

Cost of sales
     Brake Parts, Net                              18,184         89.5%      10,394         88.2%       7,790         74.9%
     Wholesale Products                             2,590         85.3%       2,875         89.0%        (285)        -9.9%
                                                 --------        -----     --------        -----     --------         ----
                                                   20,774         89.0%      13,269         88.4%       7,505         56.6%

                                                 --------        -----     --------        -----     --------         ----
GROSS PROFIT                                        2,574         11.0%       1,748         11.6%         826         47.3%

Selling,general &
administrative expenses                             4,225         18.1%       2,491         16.6%       1,734         69.6%
                                                 --------        -----     --------        -----     --------         ----
LOSS FROM OPERATIONS                                0,651)        -7.1%        (743)        -4.9%        (908)       122.2%
Other income (expense)
      Interest expense                               (514)        -2.2%        (239)        -1.6%        (275)       115.1%
      Other                                             7          0.0%           8          0.1%          (1)       -12.5%
                                                 --------        -----     --------        -----     --------         ----
                                                     (507)        -2.2%        (231)        -1.5%        (276)        54.4%
(LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM                                 (2,158)        -9.2%        (974)        -6.5%      (1,184)       121.6%

Income Taxes                                            -          0.0%           -          0.0%           -           NM
                                                 --------        -----     --------        -----     --------         ----
NET (LOSS) BEFORE EXTRAORDINARY
ITEM                                               (2,158)        -9.2%        (974)        -6.5%      (1,184)       121.6%

Extraordinary gain (net of income taxes of $0)      9,886         42.3%           0          0.0%       9,886           NM
                                                 --------        -----     --------        -----     --------         ----
NET INCOME/(LOSS)                                $  7,728         33.1%    $   (974)        -6.5%       8,702        893.4%
                                                 --------        -----     --------        -----     --------         ----
</TABLE>

Net sales for the three months ended March 31, 2004 increased $8,331,000 or
55.5% over the same quarter in 2003 to $23,348,000. The increase sales were a
result of the new customers obtained in the acquisition of certain assets of The
Kelsey-Hayes Company ("Kelsey-Hayes") of $8,522,000 offset by a decrease in
sales of wholesale products of $191,000.

Gross profit for the three months ended March 31, 2004 is $2,574,000 or 11.0% of
net sales compared to $1,748,000 or 11.6% in the same period of 2003, an
increase of $826,000 or 47.3%. This increase in gross profit is a result of
increased margins on the higher sales of brake parts of $732,000 coupled with
increased margins of $94,000 from the sale of wholesale products.

Selling, general and administrative expenses of $4,225,000 (18.1% of net sales)
for the three months ended March 31, 2004 increased by $1,734,000 when compared
to $2,491,000 (16.6% of net sales) for the same period in 2003. This increase
was a result of costs associated with operations of the acquired Kelsey-Hayes
Company assets, increased freight costs and the amortization of certain expenses
related to the issuance of warrants in 2003.

Loss from operations for the three months ended March 31, 2004 increased
$908,000 to $1,651,000 as compared to a loss for operation of $743,000 for the
same period in 2003. This increased loss relates to increased selling, general
and administrative expenses partially offset by increased margins on higher
sales volume.
<PAGE>

Other expense for the three months ended March 31, 2004 increased $275,000 to
$714,000 from $231,000 for the same period of 2003. This increase is a result of
an increase in interest expense on higher indebtedness.

Extraordinary gain for the three months ended March 31, 2004 of $9,886,000
represents the excess of the fair value of the assets of the Autospecialty
division of the Kelsey-Hayes Company, a subsidiary of TRW Automotive, Inc. over
the cost paid for these assets.

Net income for the three months ended March 31, 2004 was $7,728,000 compared to
a net loss of $974,000 for the same period in 2003, an increase of $8,702,000.
The increase in net income is attributed to the extraordinary gain related to
the excess of the fair value of the assets of the Autospecialty division of the
Kelsey-Hayes Company, a subsidiary of TRW Automotive, Inc. over the cost paid
for these assets of $9,886,000 and increased gross margin on higher sales of
$826,000 offset by increased selling, general and administrative expenses of
$1,734,000 and increased interest expense on higher indebtedness of $275,000.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used for operating activities for the three months ended March 31, 2004
was $880,887 which was primarily due to (a) net income for the period of
$7,728,480, (b) reduction in inventories of $2,345,663, (c) net increase in
accounts payable and accrued expenses of $122,177, (d) non-cash items consisting
of depreciation and amortization of $567,967, and (e) a decrease in other assets
of $11,016, offset by (f) non-cash gain on the valuation of assets purchased
from Kelsey-Hayes of $9,886,328, (g) a increase in net trade accounts receivable
of $1,391,781, and (h) an increase in prepaid expenses of $378,081.

Net cash used in investing activities was $11,995,476, which is attributable
primarily to the purchase of certain assets of Kelsey-Hayes for $11,571,008 and
leasehold improvements incurred in connection with the relocation of the rotor
manufacturing from Carson, CA into the Alsip, IL facility.

Net cash provided by financing activities was $13,430,307, consisting primarily
of an increase to the revolving line of credit of $10,867,437, net proceeds from
the issuance of convertible notes of $1,743,700 and the exercise of warrants on
options of $869,940 offset by principal payments on notes payable and
subordinated debt of $50,770.

The Congress agreement contains certain limitations on dividends and capital
expenditures and requires the Company to satisfy a financial test concerning
earnings before interest, taxes, depreciation and amortization (EBITDA). At
March 31, 2004, the Company would not have been in compliance with the financial
test concerning earnings before interest, taxes, depreciation and amortization
(EBITDA); however, Congress has granted a waiver of the covenant violation.

The Company expects to continue to finance its operations through cash flow
generated from operations, borrowings under the Company's bank lines of credit
and credit from its suppliers.

<PAGE>

Future contractual obligations of the Company are as follows:

<TABLE>
<CAPTION>
                                                      PAYMENTS DUE BY PERIOD
                           --------------------------------------------------------------------------
CONTRACTUAL                                        NEXT 12                                   AFTER
OBLIGATIONS                   TOTAL                MONTHS              1-3 YEARS            4 YEARS
-----------
<S>                        <C>                   <C>                 <C>                    <C>
Revolving Loan             $22,864,963           $        -          $22,864,963
Convertible notes          $ 6,631,882            1,636,364            4,995,518                    -
Subordinated debt          $   816,349              132,229              684,120
Capital leases             $    84,665               50,889               33,776
Operating leases           $10,513,512            3,060,592            5,527,020            1,925,900
</TABLE>

SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are described in Note 2 to the Consolidated
Financial Statements contained in the Universal Automotive Industries, Inc. (the
"Company") Annual Report on Form 10-K for the year ended December 31, 2003. The
application of these policies may require management to make judgments and
estimates about the amounts reflected in the financial statements. Management
uses historical experience and all available information to make these estimates
and judgments, and different amounts could be reported using different
assumptions and estimates.

RISK FACTORS

CONVERTIBLE NOTE FINANCING. We have entered into a series of unsecured
convertible notes with Global Capital Funding Group, L.P. and affiliates
(Global) in the original principal amounts of $1,550,000 on July 3, 2003,
$1,200,000 on November 26, 2003 and $300,000 on January 15, 2004. In addition,
we entered into two secured convertible notes with Laurus Master Fund, Ltd
(Laurus) in the original principal amounts of $2,500,000 on October 31, 2003 and
$2,000,000 on January 9, 2004, the terms of which are all described in greater
detail the Company's Annual Report on Form 10-K filed with the SEC on April 14,
2004.

All of the convertible notes provide the holder a voluntary right to convert
principal and interest that is due under certain circumstances into common
stock. The loan agreements for the various convertible notes obligate the
Company to file a registration statement registering the shares into which the
various notes could possibly be converted (which it has done) and to maintain
the effectiveness of such registration statement for the applicable periods
under which the notes have conversion rights. This includes the obligation to
remain current with respect to its required filings under the Securities
Exchange Act of 1934. Failure to meet these covenants would constitute an event
of default under the applicable loan agreements and provide the respective
lenders the right to seek to accelerate the loans and assess additional interest
and penalties. In addition, all of the notes have cross default provisions, and
the notes with Laurus are secured by a first lien on the Company's fixed assets.
Accordingly, the Company has an obligation to continue to maintain the
effectiveness of the registration statement it has filed for the shares
underlying such notes. While the Company believes it has met these requirements
to date and will continue to meet these requirements, should it be determined
that it has failed or in the future fails to meet the necessary requirements,
this could result in acceleration of the convertible loans and, due to the cross
default provisions, all other loans of the Company including the Company's
primary credit facility with Congress Financial Corporation. Additionally, to
the extent that the loans are secured, the lenders could exercise their rights
to foreclose on the collateral securing the loans. If it were determined that
the Company was in default on its loans and the lenders were successful in
foreclosing on the loans, then the Company would be required to find alternate
financing to repay the loans. If the Company could not obtain such alternate
financing, the Company would not have sufficient cash and assets to continue
operations.

<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We believe that our Company does not have significant exposure to market risk
associated with derivative financial instruments, other financial instruments,
or derivative commodity instruments. We previously utilized only limited
derivative financial instruments and did not use them for trading purposes and
have never used derivative commodity instruments. At March 31, 2004, there were
no such derivative instruments. The fair value of financial instruments, other
than debt instruments, closely approximates their carrying value. Because the
interest rate of the revolving loan with Congress Financial Corporation and term
loan with The Laurus Funds adjusts with the changes in the market rate of
interest, the Company believes that the fair value is equivalent to the carrying
value.

We believe the interest rate of eight percent (8.0%) on the subordinated
debenture held by FINOVA Mezzanine Capital, Inc. is approximately equal to the
current rate available for similar debt. Accordingly, the fair value of this
debenture approximates its carrying value.

<PAGE>

ITEM 4. CONTROLS AND PROCEDURES.

We maintain a system of controls and procedures designed to provide reasonable
assurance as to the material reliability of the financial statements and other
disclosures included in this report as well as to safeguard assets from
unauthorized use or disposition. However, no cost effective systems of internal
controls will preclude all errors and irregularities, and management is
necessarily required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

As of the date of this Report, our Chief Executive Officer and Chief Financial
Officer have evaluated the effectiveness of the design and operation of our
disclosure controls and procedures. Based on and as of the date of such
evaluation, these officers have concluded that as a result of the occurrence of
the events described herein under "Explanatory Note" regarding the
reclassification of the gain, there may have been a material weakness in our
internal controls over financial reporting. This matter has been disclosed to
our Audit Committee and independent registered public accountant. We are
implementing corrective measures to correct these weaknesses to prevent errors
from occurring in future periods.

<PAGE>

PART II OTHER INFORMATION

ITEMS 1 THROUGH 5 ARE NOT APPLICABLE TO THE COMPANY IN THIS REPORT.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit Number       Description of Document
--------------       -----------------------
<S>                  <C>
    10.1             Revolving Credit Agreement with Congress Financial Corporation
    31.1             Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    31.2             Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     32              Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted  Pursuant to Section 906 of the  Sarbanes-Oxley
                     Act of 2002
     99              Computation of Earnings Per Share
</TABLE>

(b) Reports on Form 8-K

A Form 8-K was filed on January 12, 2004, under Item 5, relating to our Press
Release on January 12, 2004, in which we announced that we had acquired certain
assets of TRW Automotive's Kelsey-Hayes Subsidiary.

A Form 8-K was filed on January 27, 2004, under Item 2, 5 and 7, announcing our
acquisition of business assets of Autospecialty, a division of Kelsey-Hayes
Company, whose indirect parent is TRW Automotive, Inc.

A Form 8-K/A was filed on March 29, 2004, under Item 7, in order to provide the
audited financial statement of Autospecialty, a division of Kelsey-Hayes
Company, whose indirect parent is TRW Automotive, Inc.

A Form 8-K was filed on March 31, 2004, under Item 12, relating to our Press
Release on March 30, 2004, in which we announced our financial results for the
fourth quarter and year ending December 31, 2003.

                                   SIGNATURES

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

                                 UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.

                                 /s/ ARVIN SCOTT
                                 ---------------
Date: December 23, 2004          Arvin Scott, Chief Executive Officer, President
                                 (Principal Executive Officer)

                                 /s/ ROBERT W. ZIMMER
                                 --------------------
Date: December 23, 2004          Robert W. Zimmer, Chief Financial Officer
                                 (Principal Financial Officer)