<PAGE>

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

                                    FORM 10-Q

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

                For the quarterly period ended September 30, 2001

         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

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of issuer's Common Stock, par value $.01 per share,
outstanding as of November 13, 2001 was 7,844,059 shares.



<PAGE>
                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.

                                      INDEX
<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION                                                    Page (s)
                                                                                  -------
<S>     <C>                                                                     <C>

   Item 1. Financial Statements

         Consolidated Balance Sheets
                  September 30, 2001 (Unaudited) and December 31, 2000                  3

         Consolidated Statements of Operations
                  (Unaudited) - for the three months and nine months ended
                  September 30, 2001 and 2000                                           4

         Consolidated Statements of Cash Flows
                  (Unaudited) - for the nine months ended
                  September 30, 2001 and 2000                                           5 - 6

         Notes to Condensed Financial Statements (Unaudited)                            7 - 10

   Item 2. Management's Discussion and Analysis of Results of
           Operations and Financial Condition                                           10 - 12

   Item 3.  Quantitative and Qualitative Disclosure About Market Risk                   12 - 13

PART II.  OTHER INFORMATION

   Item 1 - Not applicable to the Company in this Report.

   Item 2 - Changes in Securities and Use of Proceeds                                   13

   Item 3 - Not applicable to the Company in this Report

   Item 4 - Not applicable to the Company in this Report


   Item 5 - Not applicable to the Company in this Report

   Item 6 - Exhibits and Reports on Form 8-K                                            13 - 14

   Signatures                                                                           14

    EXHIBIT 11 - Computation of Earnings Per Share                                      15

</TABLE>


                                       2
<PAGE>

                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                      September 30,2001  December 31, 2000
                                                                      -----------------  -----------------
                                                                          (Unaudited)
<S>                                                                        <C>             <C>
        Assets
Current Assets:
   Cash                                                                    $  2,896,671    $     56,127
   Accounts receivable, trade                                                17,151,661      14,592,188
   Inventories                                                               17,049,510      19,744,571
   Deferred income taxes                                                        578,000         578,000
   Prepaid expenses and other current assets                                    804,274         762,843
   Net current assets of discontinued operations                                      0         213,087
                                                                           ------------    ------------
                                                                             38,480,116      35,946,816
                                                                           ------------    ------------
Property and Equipment - continuing operations, net                           4,757,615       4,996,811
                                                                           ------------    ------------
Property and Equipment - discontinued operation, net                            800,000         800,000
                                                                           ------------    ------------
Other Assets:
   Goodwill, net                                                                489,751         521,690
   Deferred income taxes                                                        307,000         307,000
   Due from stockholders                                                        262,921         237,262
   Other assets                                                                 564,712         836,737
                                                                           ------------    ------------
                                                                              1,624,384       1,902,689
                                                                           ------------    ------------
                                                                           $ 45,662,115    $ 43,646,316
                                                                           ============    ============
   Liabilities and Stockholders' Equity
Current Liabilities:
   Accounts payable, trade                                                 $ 12,932,446    $ 14,524,409
   Revolving loan indebtedness                                               19,287,620               0
   Subordinated debenture, current portion                                    1,500,000               0
   Long-term indebtedness, current portion                                      669,439         473,405
   Accrued expenses and other current liabilities                             3,335,932       3,850,668
   Net current liabilities of discontinued operation                            172,497               0
   Estimated loss on disposal of discontinued operation                         860,161         860,161
                                                                           ------------    ------------
                                                                             38,758,095      19,708,643
                                                                           ------------    ------------
Long-term Liabilities:
   Revolving loan indebtedness                                                        0      17,264,111
   Subordinated debenture                                                     2,964,375       4,430,625
   Long-term indebtedness, non-current portion                                  366,513         856,151
   Deferred income taxes                                                        206,339         217,174
                                                                           ------------    ------------
                                                                              3,537,227      22,768,061
                                                                           ------------    ------------
Minority Interest in Subsidiary                                                       0         450,000
                                                                           ------------    ------------

Stockholders' Equity:
   Preferred stock (authorized 2,000,000 shares,
$.01 par value, liquidation value of $2,800,000,
201,438 issued and outstanding)                                                   2,014               0
   Common stock (authorized 30,000,000 shares,
$.01 par value, 7,844,059 shares and 7,243,570
issued and outstanding at September 30, 2001
and December 31, 2000, respectively)                                             78,440          72,435
   Additional paid-in-capital                                                12,524,429       8,670,736
   Accumulated deficit                                                       (8,086,228)     (6,774,614)
   Accumulated other comprehensive losses                                    (1,151,862)     (1,248,945)
                                                                           ------------    ------------
                                                                              3,366,793         719,612
                                                                           ------------    ------------
                                                                           $ 45,662,115    $ 43,646,316
                                                                           ============    ============
</TABLE>

The accompanying notes are an integral part of the financial statements



                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                Three Months Ended September 30,  Nine Months Ended September 30,
                                                --------------------------------  -------------------------------

                                                        2001            2000             2001             2000
                                                        ----            ----             ----             ----
<S>                                                <C>             <C>             <C>             <C>
Net Sales                                          $ 18,160,436    $ 18,940,835    $ 54,188,292    $ 56,439,032
Cost of Sales                                        14,375,084      15,363,728      43,408,947      44,793,437
                                                   ------------    ------------    ------------    ------------
Gross Profit                                          3,785,352       3,577,107      10,779,345      11,645,595
Selling, General, and Administrative Expenses         3,385,346       3,397,384       9,763,932       9,985,385
Loss from Discontinued Operation                        337,475               0         679,662               0
                                                   ------------    ------------    ------------    ------------
Income from Operations                                   62,531         179,723         335,751       1,660,210
                                                   ------------    ------------    ------------    ------------
Other (Income) Expense:
   Interest expense                                     589,085         678,184       1,804,273       1,929,814
     Other                                              (97,119)         (2,006)       (156,910)        (56,464)
                                                   ------------    ------------    ------------    ------------
                                                        491,966         676,178       1,647,363       1,873,350
                                                   ------------    ------------    ------------    ------------

Loss before Provision (Benefit) for Income Taxes       (429,435)       (496,455)     (1,311,612)       (213,140)
Income Tax Provision (Benefit)                                0        (164,900)              0         (29,000)
                                                   ------------    ------------    ------------    ------------
Net Loss                                           $   (429,435)   $   (331,555)   $ (1,311,612)   $   (184,140)
                                                   ============    ============    ============    ============

Comprehensive Income (Loss):
     Net Loss                                      $   (429,435)   $   (331,555)   $ (1,311,612)   $   (184,140)
     Other Comprehensive Gain (Loss),
Foreign Currency Translation Adjustment                (203,948)         21,126          97,083          (5,313)
                                                   ------------    ------------    ------------    ------------
Comprehensive Income (Loss)                        $   (633,383)   $   (310,429)   $ (1,214,529)       (189,453)
                                                   ============    ============    ============    ============

Loss Per Share:

Basic                                              $      (0.06)   $      (0.05)   $      (0.18)   $      (0.03)
                                                   ============    ============    ============    ============
Diluted:
                                                   $      (0.06)   $      (0.05)   $      (0.18)   $      (0.03)
                                                   ============    ============    ============    ============

Weighted Average Number of Common Shares
Outstanding:
   Basic                                              7,697,944       7,036,563       7,489,009       6,914,194
   Common stock equivalents resulting
     from warrants and options                                0               0               0               0
                                                   ------------    ------------    ------------    ------------
   Diluted                                            7,697,944       7,036,563       7,489,009       6,914,194
                                                   ============    ============    ============    ============
</TABLE>

    The accompanying notes are an integral part of the financial statements


                                       4
<PAGE>


                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                              Nine Months Ended September 30,
                                                              -------------------------------
                                                                   2001            2000
                                                                   ----            ----
<S>                                                            <C>            <C>
Cash Flows from Operating Activities:
   Net Loss                                                    $(1,311,612)   $  (184,140)
Adjustments to reconcile net loss to net cash used
in operating activities:
    Depreciation and amortization                                1,094,222        916,570
    Provision for bad debts                                        318,483        360,103
Effect of exchange rate changes                                     97,083         (5,313)
    Compensation expense for stock options                          29,700         29,700
    Stock issued for services                                       80,560         72,675
    Deferred income taxes and other                                 47,683        171,216
    Changes in operating assets and liabilities:
      Accounts receivable, trade                                (2,877,956)    (3,517,742)
      Inventories                                                2,695,061        405,760
      Prepaid expenses and other current assets                     57,582       (120,290)
      Other assets                                                       0       (201,995)
      Accounts payable, trade                                     (991,963)     3,355,278
      Accrued expenses and other current liabilities              (614,736)      (484,694)
                                                               -----------    -----------
    Net cash provided by (used in) by operating
      activities from continuing operations                     (1,375,893)       797,128
    Net cash provided by (used in) operating activities from
      discontinued operations                                      309,674       (361,061)
                                                               -----------    -----------
    Net cash provided by (used in) operating activities         (1,066,219)       436,067
                                                               -----------    -----------

Cash Flows for Investing Activities -  purchase of
property and equipment                                            (674,843)    (1,198,412)
                                                               -----------    -----------

Cash Flows from Financing Activities:
Net increase in revolving loan indebtedness                      2,023,509        700,978
Proceeds from issuance of preferred stock                        2,800,000              0
Proceeds from issuance of preferred stock of subsidiary                  0        450,000
Principal payments on notes payable                               (319,265)      (422,390)
Proceeds from issuance of common stock from exercise of
options and warrants                                                 1,452        120,500
                                                               -----------    -----------
      Net cash provided by financing activities                  4,505,696        849,088
                                                               -----------    -----------
Net Increase in Cash                                             2,764,634         86,743
Cash, Beginning of Period                                          216,686         42,401
                                                               -----------    -----------
Cash, End of Period                                            $ 2,981,320    $   129,144
                                                               ===========    ===========

Cash of continuing operations                                  $ 2,896,691    $    86,907
Cash of discontinued operation (included with
  net current assets/liabilities of discontinued operation)         84,629         32,237
                                                               -----------    -----------
                                                               $ 2,981,320    $   129,144
                                                               ===========    ===========
</TABLE>


                                       5
<PAGE>

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



<TABLE>
<CAPTION>
                                                                Nine Months Ended September 30,
                                                                -------------------------------
                                                                       2001         2000
                                                                       ----         ----
Supplemental Disclosures of Cash Flow Information:

<S>                                                                 <C>          <C>
   Cash paid for interest                                           $1,805,890   $1,996,650
                                                                    ----------   ----------
    Cash paid for income taxes                                      $    8,230   $   41,000
                                                                    ----------   ----------



Supplemental Disclosure of Noncash Investing and
           Financing Activities:
Issuance of common stock for services                               $   80,560   $   72,675
                                                                    ----------   ----------
Debt incurred in connection with acquisition of
            fixed assets                                            $   74,014   $        0
                                                                    ----------   ----------


Conversion of accounts payable into equity                          $  600,000   $        0
                                                                    ----------   ----------
</TABLE>

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










                                       6
<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 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,
2000.

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.   INVENTORIES
                                     September 30, 2001
                                     ------------------
     Finished goods                      $ 13,906,159
     Work in process                          305,413
     Raw materials                          2,837,938
                                         ------------
                                         $ 17,049,510
                                         ============
3.   BASIS OF PRESENTATION

Net Income (Loss) Per Share
Warrants and options issued by the Company and convertible securities are only
included in the computation of weighted average number of shares, where their
inclusion is not anti-dilutive. For the nine months ended September 30, 2001,
common stock equivalents are not included in the weighted average number of
shares outstanding in determining net loss per share.

Income Taxes
The Company's provision for income taxes for the three and nine months ended
September 30, 2001 differed from the amount computed by applying the statutory
tax rate to income (loss) before income taxes primarily due to an increase in
the valuation allowance for deferred tax benefit.

Reclassification
Certain amounts reported in the 2000 condensed financial statements have been
reclassified to conform to the 2001 presentation without affecting previously
reported net income.

4.   DISCONTINUED OPERATIONS



                                       7
<PAGE>

As previously disclosed in Note 10 of the 2000 audited financial statements, the
Company finalized its decision to discontinue its Hungarian operation in
December 1999. As of December 31, 1999, the Company provided for estimated costs
of disposition of $1,500,000 including estimated losses of the discontinued
operation during the disposal period. The disposition was initially expected to
occur by the end of 2000. For the three and nine months ended September 30,
2000, losses from the discontinued operation of $166,000 and $521,000,
respectively were applied against the aforementioned reserve. The Company is
actively engaged in attempting to sell the entire Hungarian operation and
believes that it will do so by the end of 2001. Because the Company had not
disposed of the Hungarian operation within one year of the decision to
discontinue such operation, commencing in 2001, accounting principles generally
accepted in the United States require that income or loss from such discontinued
operations be included in the Statement of Earnings as a component of income or
loss. Accordingly, a net loss of $337,000 ($0.04 per share) and $680,000 ($0.09
per share) was charged to expense for the three and nine months ended September
30, 2001, respectively.

5.   CONVERSION OF LIABILITIES TO EQUITY

The Company has completed a private offering of its common stock to certain of
its key suppliers pursuant to which the Company has converted, at a slight
discount to the public market price, approximately $500,000 of accounts payable
to common stock. In June 2001, the Company converted $100,000 of the Company's
remaining debt to the former owner of its Walkerton, Virginia friction plant
into 47,847 shares of the Company's common stock.

6.   MINORITY INTEREST IN SUBSIDIARY

At December 31, 2000, the Company owned seventy-four percent (74%) of the
outstanding capital stock of its eParts eXchange, Inc. ("EPX") subsidiary, which
is engaged in internet-based sales of automotive parts. The Company has entered
into exchange agreements with the minority holders of preferred stock in EPX,
exchanging its common stock for EPX preferred stock based upon a $2.00 per share
value of the Company's common stock in exchange for the preferred stock valued
at the original paid-in capital for the preferred stock. $350,000 in stock value
was issued in the first quarter of 2001 and the remaining $100,000 of stock
value was issued on September 30, 2001.

7.   CAPITAL INVESTMENT

On August 29, 2001, the Company closed a definitive agreement ("Agreement") with
an affiliate of Wanxiang America Corporation and has issued 201,438 shares of
Series A Preferred Stock ($0.01 par value), convertible into 2,014,380 shares of
common stock, subject to standard weighted average anti-dilution protection, and
representing approximately 21% of the Company's capital stock on a post-closing
basis, in exchange for $2,800,000 in cash. The stock carries no dividend, but
has an 8% per annum compounding liquidation preference.

The Agreement provides Wanxiang with one-year warrants to purchase up to 800,000
shares of common stock at $2.00 per share and 800,000 shares of common stock at
the greater of $2.00 per share or 90% of the rolling average public market price
for the Company's shares. It also provides Wanxiang with a "Default Warrant"
which would be triggered in the event of the Company's default of certain
covenants, representations or warranties to Wanxiang; the Default Warrant
provides Wanxiang the right to purchase



                                       8
<PAGE>

up to 2,500,000 shares of the Company's common stock at the greater of 150% of
book value or at a per share price based on a formula tied to six times EBITDA
of the Company. The common stock issuable on conversion of the preferred stock
or exercise of the warrants will be registrable pursuant to a registration
rights agreement. The Agreement further provided for a shareholders' agreement
whereby in the event the Default Warrant is exercised, Wanxiang would receive a
proxy to vote a corresponding percentage of the shares held by the Company's two
largest shareholders, Arvin Scott and Yehuda Tzur, as well as certain rights of
first refusal with respect to off market sales of their shares. In addition, the
Agreement calls for a long-term supply agreement whereby Wanxiang will be
provided a right of first refusal to source on competitive terms the products
purchased by the Company in China.

The Agreement contains a "put" right, that enabled Wanxiang to effectively put
back its shares for a return of its funds, and to terminate the various
agreements covered by the Agreement, in the event the Company was unable to
demonstrate within 90 days following closing that Nasdaq confirmed that the
Company has corrected its net tangible asset deficiency to Nasdaq's
satisfaction. On October 16, 2001, the Company was notified by Nasdaq's Listing
Qualification Panel that it was in compliance with Nasdaq's minimum net tangible
capital requirement; therefore, the "put" right lapsed (subject to Nasdaq's
right to review the Panel's decision within 45 days of the decision) and the
Company classified the proceeds as cash and the preferred stock as a component
of stockholders' equity.

8.   LASALLE INDEBTEDNESS

At September 30, 2001, the Company was not in compliance with some of its
financial covenants under its Credit Agreement with LaSalle Bank, NA. On August
8, 2001, LaSalle informed the Company that it would waive such non-compliance
and reset certain covenants subject to the Company increasing its stockholders
equity by $1 million. LaSalle also agreed to extend the expiration date of the
Credit Agreement one year to May 1, 2003 subject to the extension or refinance
of the $4,500,000 subordinated debenture to Finova Mezzanine Capital, Inc. The
Company has completed the equity raise with Wanxiang (Note 7) and has completed
the refinancing of the FINOVA subordinated debenture (Note 9). The Company has
classified the LaSalle indebtedness as a current liability until the waiver
documentation is competed.

9.   SUBORDINATED DEBENTURE

On October 31, 2001, the Company completed a restructuring of a $4.5 million
subordinated debenture held by FINOVA Mezzanine Capital Inc. The principal
amount of the debenture was reduced to $1.5 million and the interest rate was
reduced to 7% from 12.25%. Under the restructuring, Universal made a cash
payment of $1 million to FINOVA, representing a prepayment on the subordinated
debenture held by FINOVA, plus accrued interest. In addition, Universal issued
100,000 shares of Series B Preferred Stock ($0.01 par value), of approximately
$2,000,000 to FINOVA, which are convertible into 1 million shares of Universal's
common stock, subject to standard weighted-average anti-dilution protection. As
part of the restructuring, FINOVA surrendered to Universal 279,260 shares of
common stock, and warrants to purchase an additional 1.125 million shares of
common stock at exercise prices ranging from $1.12 to $1.58. In addition, the
debenture was amended to provide for Universal's making five additional
principal payments, each in the amount of $100,000, beginning 45 days from the
date of the closing, and the due date of the debenture was extended to July 11,
2005 from an original due date of July 11, 2002. Universal provided FINOVA with
registration rights with regard to the shares of common stock into



                                       9
<PAGE>

which the shares of Series B Preferred Stock are convertible. Due to the
completion of the restructuring, the Company classified $1,500,000 of the
debenture at September 30, 2001 as current that is equivalent to the $1,000,000
cash payment plus the five $100,000 principal payments due within one year.


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

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
hydraulic parts. We believe that we are the leading supplier of "value line"
brake parts (brake parts sold at prices significantly below those of certain
leading national brand name brake parts) to mass-market retailers, traditional
warehouse distributors and specialty undercar distributors in North America.


RESULTS OF OPERATIONS

Three Months Ended September 30, 2001 Compared To Three Months Ended September
30, 2000

     Net sales for the three months ended September 30, 2001 were $18,161,000, a
decrease of $780,000 or 4.1% from third quarter 2000 sales of $18,941,000. Sales
growth of the basic brake parts business has been hampered by caution on the
part of our customers as they react to continued weakness throughout the
economy. We also reacted to competitor's pricing moves as they sought to gain
market share. However, our non-brake commodity business was stronger in the
third quarter of 2001 as compared to the third quarter of 2000.

     Gross profits for the three months ended September 30, 2001 were $3,785,000
or 20.8% of net sales compared to $3,920,000 or 20.7% in the same period of 2000
(excluding $343,000 of one-time costs related to the start-up of the Virginia
friction manufacturing facility incurred in the third quarter of 2000). The
decrease in gross profit is attributable to lower sales volume.

     Selling, general and administrative ("SG&A") expenses for the three months
ended September 30, 2001 increased by $152,000 or 4.7% to $3,385,000 from
$3,233,000 for the same period in 2000 (excluding $164,000 of costs related to
the start-up of our e-commerce initiative incurred in the third quarter of
2000). The increase was due primarily to marketing allowances to customers.

     Included as an other operating expense for quarter ended September 30, 2001
is the loss of $337,000 from the discontinued Hungarian foundry (see Note 4 of
Notes to Condensed Financial Statements).

--------
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 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.

                                       10
<PAGE>

     Other expense for the three months ended September 30, 2001 decreased by
$184,000 to $492,000 from $676,000 for the same period of 2000. The decrease was
due primarily to lower interest expense as bank lending rates decreased steadily
during the third quarter.

        There was no benefit for income taxes for the three months ended
September 30, 2001 as a result of there being a net operating loss for the
period for which a valuation allowance was provided to reduce the tax benefit of
this loss.

     Net loss for the quarter ended September 30, 2001 was $429,000 compared to
net loss of $332,000 for the same period in 2000. This decrease in profitability
is due to factors set forth before, particularly reduced sales and gross profit
margin and inclusion of the loss from discontinued operations in 2001 earnings
of $337,000 ($0.04 per share) that was offset in part by reduced interest
expense.


Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

     Net sales for the nine months ended September 30, 2001 was $54,188,000, a
decrease of $2,251,000 or 4.0% from the same 2000 period. Most of this decrease
was experienced in the first quarter of 2001 (8.4% less that the first quarter
of 2000); the quarter where we and the automotive aftermarket experienced
decreased activity. In addition, we did not repeat a large new customer opening
inventory roll-out as was the case in the first quarter of 2000. Second quarter
2001 sales were essentially flat as compared with the second quarter of 2000 and
third quarter 2001 sales were 4.1% less that the same 2000 quarter. During the
nine-month period, we responded to competitors' pricing actions as they sought
to maintain sales volumes in the face of a soft aftermarket.

     Gross profits for the nine months ended September 30, 2001 decreased
$1,663,000 or 13.4% to $10,779,000 from $12,442,000 for the same nine-month
period in 2000 (excluding $796,000 of one-time costs related to the realignment
of our Canadian friction manufacturing facility and the start-up of the Virginia
friction facility incurred in the nine-month period ended September 30, 2000).
Before the effect of the one-time costs in 2000, the gross profit margin
percentage for the nine-month period was 19.9% compared to 22.0% for the same
2000 period. This decrease was due to more competitive pricing, and
underabsorption of manufacturing costs, particularly in the first quarter,
associated with the relocation of our rotor machining facility from Texas to
Missouri as the Texas facility was wound down and the Missouri facility was
ramped up.

     Selling, general and administrative expenses for the nine months ended
September 30, 2001 were $9,764,000, a decrease of $44,000 or 0.5% from
$9,720,000 for the same period in 2000 (excluding $265,000 of costs related to
the start-up of our e-commerce business incurred in the nine-month period ended
September 30, 2000). The decrease was due primarily to reduced personnel and
other internal costs offset by increased freight costs of shipments to customers
especially in the first quarter of 2001.

     Included as an other operating expense for nine-month period ended
September 30, 2001 is the loss of $680,000 ($0.09 per share) from our
discontinued Hungarian foundry (see Note 4 of Notes to Condensed Financial
Statements).



                                       11
<PAGE>

     Other Expense for the nine months ended September 30, 2001 decreased by
$226,000 to $1,647,000 from $1,873,000 for the same period of 2000 due primarily
to a net decrease in interest cost. Interest expense on higher average
borrowings were more than offset by reductions in interest rates.

     There was no benefit for income taxes for the nine months ended September
30, 2001 as a result of there being a net operating loss for the period for
which a valuation allowance was provided to reduce the tax benefit of this loss.

     For the nine-month period ended September 30, 2001, net loss was $1,312,000
compared to net loss of $184,000 for the nine months ended September 30, 2000.
The principal reasons for decreased profitability were the factors described
above.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash used in operating activities from continuing operations for the
nine months ended September 30, 2001 was $1,376,000 compared to net cash
provided by operating activities from continuing operations of $797,000 for the
same period of 2000. $2,878,000 of cash was required to finance growth in
accounts receivable and $992,000 of cash was used to reduce accounts payable.
The accounts receivable growth was due in part to an abnormally low accounts
receivable balance as of December 31, 2000 which was a result of poor sales in
the fourth quarter of 2000. This cash used was partially satisfied through cash
generated from earnings after non-cash items ($356,000) and a substantial
decrease in inventory ($2,695,000).

     Net cash used in investing activities was $675,000, which is attributable
to the acquisition of various tooling, manufacturing equipment, and computer
equipment, particularly in connection with the relocation of our rotor machining
facility from Laredo, Texas to Cuba, Missouri, and upgrade of our friction
manufacturing facilities.

     Net cash provided by financing activities was $4,506,000, consisting
primarily of borrowings under our revolving credit agreement and proceeds from
the issuance of 201,438 shares of Series A Preferred Stock (Note 7 of Notes to
Condensed Financial Statements) net of normal payments of $319,000 on our term
debt and capital leases.

     The increase in cash is due primarily to the proceeds of the issuance of
the Series A Preferred Stock (see Note 7 to Notes to Condensed Financial
Statements). Subsequent to September 30, 2001, we used $1,000,000 of the
proceeds to make the payment to FINOVA (as described in Note 9 to Notes to
Condensed Financial Statements) and used the balance of the proceeds to reduce
the amount outstanding on the revolving loan indebtedness. We expect to continue
to finance our operations through cash flow generated from operations,
borrowings under bank lines of credit, and credit from our suppliers. See also
Note 8 to Condensed Financial Statements related to the LaSalle Bank
indebtedness.

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 have previously utilized
only limited derivative financial instruments and did not use them for trading
purposes and have never used derivative commodity instruments. At September 30,
2001, there were no



                                       12
<PAGE>

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 and the term loan with LaSalle National Bank
adjusts with the changes in the market rate of interest, we believe that the
fair value is equivalent to the carrying value. We believe that the interest
rate of 12.25% on the subordinated debenture is approximately equal to the
current rate available for similar debt (which interest rate was reduced to 7%
effective October 31, 2001). Accordingly, the fair value of this debenture
approximates its carrying value.




PART II  OTHER INFORMATION

ITEM 1 IS NOT APPLICABLE TO THE COMPANY IN THIS REPORT.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

     During the quarter ended September 30, 2001, we sold shares of our Common
Stock (the "Shares") in transactions not registered under the Securities Act of
1933, as amended (the "Securities Act"). During the quarter, we issued 286,842
common shares pursuant to agreements with suppliers who agreed to receive common
stock in exchange for cancellation of $500,000 of accounts payable owed to the
suppliers by us (see Note 5 of the Notes to Condensed Financial Statements). As
described in Note 6 of the Notes to Condensed Financial Statements, we issued
50,000 common shares valued at $100,000 to a person pursuant to an exchange
agreement whereby preferred shares of our subsidiary eParts eXchange, Inc. are
exchangeable for our common shares based on a value of $2.00 per share.

     The Company issued 201,438 shares of Series A Preferred Stock for proceeds
of approximately $2,800,000 (see Note 7 of Notes to Condensed Financial
Statements).

     The Company increased the number of authorized shares of Common Stock to
30,000,000 shares from 15,000,000 shares and the number of authorized shares of
Preferred Stock to 2,000,000 shares from 1,000,000 shares.

     We did not use the services of any finders or securities broker-dealers in
connection with the issuance of these shares. We believe that all Shares issued
in these transactions are exempt from registration under the Securities Act by
virtue of Section 4(2) of the Securities Act and/or Regulation D promulgated
thereunder.

ITEM 3 IS NOT APPLICABLE TO THE COMPANY IN THIS REPORT.
ITEM 4 IS NOT APPLICABLE TO THE COMPANY IN THIS REPORT.
ITEM 5 IS NOT APPLICABLE TO THE COMPANY IN THIS REPORT.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

a)       Exhibit 11 - Computation of Earnings Per Share




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<PAGE>

b)       The Company filed a Report on Form 8-K on September 6, 2001 wherein it
         disclosed information under Item 5, Other Events.





                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                   UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.


                             /s/ ARVIN SCOTT
                             ---------------------------------------------------
                             Arvin Scott, Chief Executive Officer, President
                             (Principal Executive Officer)

                             /s/ JEROME J. HISS
                             ---------------------------------------------------
                             Jerome J. Hiss, Chief Financial Officer (Principal
                             Financial Officer and Principal Accounting Officer)

                   Date: November 14, 2001








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