<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 June 30, 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 (as
defined in Rule 12b-2 of the Exchange Act): Yes [ ] No [X]

The number of shares of issuer's Common Stock, par value $.01 per share,
outstanding as of June 30, 2004 was 11,783,693 shares.

<PAGE>

                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.

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

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                              <C>
PART I.  FINANCIAL INFORMATION

   Explanatory Note                                                                              3

   Item 1. Financial Statements

         Consolidated Balance Sheets
                  June 30, 2004 (Unaudited) and December 31, 2003                                4

         Consolidated Statements of Operations
                  (Unaudited) - for the six months ended
                  June 30, 2004 and 2003                                                         5

         Consolidated Statements of Cash Flows
                  (Unaudited) - for the six months ended
                  June 30, 2004 and 2003                                                         6

         Notes to Condensed Financial Statements (Unaudited)                                     7 - 9

   Item 2. Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                                          10 - 14

   Item 3. Quantitative and Qualitative Disclosure About Market Risk                             15

  Item 4.  Controls and Procedures                                                               15

PART II.  OTHER INFORMATION

   Items 1, 3 and 5 are not applicable to the Company in this report                             16

   Item 4 - Submission of Matters to a Vote of Security Holders                                  16

   Item 6 - Exhibits and Reports on Form 8-K                                                     16

   Signatures                                                                                    17

EXHIBIT 31 Certification of Chief Executive Officer                                              18

EXHIBIT 31 Certification of Chief Financial Officer                                              19

EXHIBIT 32 Certification of Chief Executive Officer and Chief Financial Officer                  20

EXHIBIT 99 Computation of Earnings Per Share                                                     21
</TABLE>

                                       2
<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."
Although the original classification occurred in the quarter ended March 31,
2004, this gain is also reflected in our Consolidated Statements of Operations
for the six months ended June 30, 2004. This reclassification of the gain does
not change our overall income or our net worth for the six months ended June 30,
2004, but does impact the classification of the income for the six months ended
June 30, 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.

                                       3
<PAGE>

                      UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   June 30, 2004    December 31, 2003
                                                                                   -------------    -----------------
                                                                                    (Unaudited)
<S>                                                                                <C>              <C>
                                      Assets
Current assets:
Cash                                                                               $    793,875       $    605,211
Accounts receivable - trade, net                                                     20,415,284          9,724,502
Inventories                                                                          33,926,000         14,875,045
Deferred income taxes                                                                   240,000            240,000
Prepaid expenses and other current assets                                               465,640            133,218
                                                                                   ------------       ------------
                                                                                     55,840,799         25,577,976
                                                                                   ------------       ------------
Property and equipment , net                                                          4,177,341          3,913,867
                                                                                   ------------       ------------
Other assets:
Goodwill                                                                                480,498            480,498
Due from employees                                                                       40,250             40,250
Deferred financing costs, net                                                         2,101,171          1,932,179
Other assets                                                                            289,617            605,586
                                                                                   ------------       ------------
                                                                                      2,911,536          3,058,513
                                                                                   ------------       ------------
                                                                                   $ 62,929,676       $ 32,550,356
                                                                                   ============       ============
                       Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable - trade                                                           $ 16,022,357       $  9,814,785
Accrued expenses and other current liabilities                                        9,099,559          2,417,821
Long-term indebtedness , current portion                                                 27,077             81,430
Convertible note, current portion                                                     1,636,388            909,091
Subordinated debenture, current portion                                                 201,182             60,000
                                                                                   ------------       ------------
                                                                                     26,986,563         13,283,127
                                                                                   ------------       ------------
Long-term liabilities:
Revolving line of credit                                                             21,569,016         11,997,526
Long-term indebtedness, non-current portion                                              30,825             37,234
Convertible note, non-current portion                                                 4,081,328          3,868,265
Subordinated debenture, non-current portion                                             600,000            773,120
                                                                                   ------------       ------------
                                                                                     26,281,169         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, 11,783,693 and
  8,948,097 shares issued and outstanding as of June 30, 2004 and December 31,
  2003)                                                                                 117,879             89,481
Additional paid-in-capital                                                           19,554,400         16,912,641
Accumulated deficit                                                                  (9,469,795)       (13,885,621)
Accumulated other comprehensive loss                                                   (503,904)          (479,781)
Stock subscription receivable                                                           (39,650)           (48,650)
                                                                                   ------------       ------------
                                                                                      9,661,944          2,591,084
                                                                                   ------------       ------------
                                                                                   $ 62,929,676       $ 32,550,356
                                                                                   ============       ============
</TABLE>

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

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                          Three Months Ended June 30,        Six Months Ended June 30,
                                                         -----------------------------     -----------------------------
                                                             2004             2003            2004              2003
                                                         ------------     ------------     ------------     ------------
<S>                                                      <C>              <C>              <C>              <C>
Net sales                                                $ 25,888,576     $ 17,838,657     $ 49,236,323     $ 32,855,567
Cost of sales                                              23,614,774       15,203,203       44,388,974       28,471,974
                                                         ------------     ------------     ------------     ------------
Gross profit                                                2,273,802        2,635,454        4,847,349        4,383,593
Selling, general, and administrative expenses               4,994,806        2,374,812        9,219,378        4,866,374
                                                         ------------     ------------     ------------     ------------
Income (loss) from operations                              (2,721,004)         260,642       (4,372,029)        (482,781)
Other expense:
   Interest expense                                           597,163          249,247        1,111,072          488,088
   Other (income)                                              (3,688)          (3,688)         (12,603)         (11,482)
                                                         ------------     ------------     ------------     ------------
                                                              593,475          245,559        1,098,469          476,606
                                                         ------------     ------------     ------------     ------------

Income (loss) before provision for income taxes
  and extraordinary item                                   (3,314,479)          15,083       (5,470,498)        (959,387)

Income tax provision                                                0                0                0                0
                                                         ------------     ------------     ------------     ------------
Income (loss) before extraordinary item                    (3,314,479)          15,083       (5,470,498)        (959,387)

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

                                                         ------------     ------------     ------------     ------------
Net income (loss)                                        $ (3,314,479)    $     15,083     $  4,415,830     $   (959,387)
                                                         ============     ============     ============     ============

Comprehensive income (loss):
Net income (loss)                                        $ (3,314,479)    $     15,083     $  4,415,830     $   (959,387)
   Other comprehensive income (loss),
   Foreign currency translation adjustment                    (12,140)         290,571          (24,123)         358,389
                                                         ------------     ------------     ------------     ------------
Comprehensive income (loss)                              $ (3,326,619)    $    305,654     $  4,391,707     $   (600,998)
                                                         ============     ============     ============     ============

Earnings (Loss) per share:
Basic
  (Loss) income before extraordinary gain                $      (0.31)    $       0.00     $      (0.51)    $      (0.12)
  Extraordinary gain                                                -                -             0.92                -
                                                         ------------     ------------     ------------     ------------
                                                         $      (0.31)    $       0.00     $       0.41     $      (0.12)
                                                         ============     ============     ============     ============

Diluted
  (Loss) income before extraordinary gain                $      (0.31)    $       0.00     $      (0.40)    $      (0.12)
  Extraordinary gain                                                -                -             0.72                -
                                                         ------------     ------------     ------------     ------------
                                                         $      (0.31)    $       0.00     $       0.32     $      (0.12)
                                                         ============     ============     ============     ============

Weighted average number of common shares outstanding:
Basic                                                      10,705,778        8,224,949       10,705,778        8,224,949
Common stock equivalents resulting from
  Conversion of preferred stock                                     -        3,014,380        3,014,380                -
  Conversion of warrants and options                                -          964,962           86,741                -
                                                         ------------     ------------     ------------     ------------
Diluted                                                    10,705,778       12,204,291       13,806,899        8,224,949
                                                           ==========       ==========       ==========        =========
</TABLE>

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

                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                               Six Months Ended June 30,
                                                              ----------------------------
                                                                 2004              2003
                                                              ------------     -----------
<S>                                                           <C>              <C>
Cash flows from operating activities:
Net income (loss)                                             $  4,415,830     $  (959,387)
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
   Depreciation and amortization                                 1,144,755         572,464
   Provision for bad debts                                         818,070         169,097
   Extraordinary gain                                           (9,886,328)              -
   Other, net                                                        9,000           7,500
   Changes in operating assets and liabilities:
    Accounts receivable, trade                                  (5,689,925)     (2,627,028)
    Inventories                                                  6,263,231       3,558,169
    Prepaid expenses and other current assets                     (299,745)       (246,625)
    Other assets                                                   (38,386)              -
    Accounts payable, trade                                      2,840,445         (12,361)
    Accrued expenses and other current liabilities                 733,788         106,415
                                                              ------------     -----------
Net cash provided by operating activities                          310,735         568,244

Cash flows for investing activities:
   Advances on notes receivable, net                                     -           9,423
   Purchase of certain assets of Kelsey-Hays Company           (11,571,008)
   Purchase of property and equipment                             (661,603)       (166,937)
                                                              ------------     -----------
Net cash used in investing activities                          (12,232,611)       (157,514)

Cash flows from financing activities:
   Net increase (decrease) in revolving loan indebtedness        9,571,490        (410,198)
   Net Principal payments on notes payable and
    subordinated debt                                              (92,699)       (219,317)
   Proceeds from issuance of convertible notes, net                270,715               -
   Proceeds from conversion of warrants and options              2,385,157               -
                                                              ------------     -----------
Net cash (used in) provided by financing activities             12,134,663        (629,515)

Effect of exchange rate changes on cash                            (24,123)        (12,562)
                                                              ------------     -----------
Net decrease in cash                                               188,664        (231,347)
Cash, beginning of period                                          605,211         237,600
                                                              ------------     -----------
Cash, end of period                                           $    793,875     $     6,253
                                                              ============     ===========

Supplemental disclosures of cash flow information:
   Cash paid for interest                                     $    513,162     $   531,929
                                                              ============     ===========
   Cash paid for income taxes                                 $          -     $     7,403
                                                              ============     ===========

Supplemental disclosure of non-cash  financing activities:
   Issuance of warrants in connection with convertible
    notes                                                     $    167,047               -
                                                              ============     ===========
   Conversion of convertible notes into common stock          $  1,181,359               -
                                                              ============     ===========
   Issuance of common stock for interest due on
    convertible notes                                         $    126,068               -
                                                              ============     ===========
</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 (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, when their inclusion is not
anti-dilutive. For the three months ended June 30, 2004 and the six months ended
June 30, 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 six months ended June 30, 2004 the provision for income taxes was offset
by the benefit associated with the utilization of the tax loss carryforward. For
the six months ended June 30, 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 is more likely
that the tax benefits associated with the balance of loss carryforwards and
other deferred tax assets will not be realized through future taxable earnings
or alternative tax strategies. Accordingly, net deferred tax assets were offset
with a valuation allowance.

3. INVENTORIES

<TABLE>
<CAPTION>
                  June 30, 2004   December 31, 2003
                  -------------   -----------------
<S>               <C>             <C>
Finished goods     $28,633,282       $12,231,089
Work in process        396,958           574,730
Raw materials        4,895,750         2,069,226
                   -----------       -----------
                   $33,926,000       $14,785,045
                   -----------       -----------
</TABLE>

                                       7
<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 June
30, 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 obtained a waiver of this covenant violation
from Congress.

5. STOCK-BASED COMPENSATION

The Company has elected to follow APB Opinion 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for the stock options
granted to employees and directors. Accordingly, 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 a option-pricing
model prescribed by SFAS No. 13. The assumptions used for grants during the
periods ended June 30, 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 $60,632 to $4,355,198 for the period ended June
30, 2004 and the net loss for the period ended June 30, 2003 would have been
increased by $67,458 to $1,026,845.

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 June 30, 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, and the
moving of its inventories to its Alsip, Illinois and Carson, California
distribution facilities respectively. In addition the Carson, California rotor
manufacturing operation 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 June 30, 2004 approximately $500,000
has been charged against this reserve.

                                       8
<PAGE>

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 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.

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 extraordinary gain not be taxable
for income tax purposes until the underlying assets acquired are sold. The
extraordinary gain contributed to a realized net income for the period ended
June 30, 2004. There was no recorded income tax provision for the period ended
June 30, 2004, nor was a deferred tax liability recorded, because the Company
has net operating loss carryforwards that are expected to reduce any taxable
income.

                                       9
<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) 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 "we anticipate," believe" or "expect"
indicate that it is possible that the event anticipated, believed or expected
may not occur. Should such event not occur, then the result, which we expected,
also may not occur or may occur in a different manner, which may be more or less
favorable to us. We do 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>

RESULTS OF OPERATIONS

Three Months Ended June 30, 2004 Compared To Three Months Ended June 30, 2003

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDING                  CHANGE FROM 2003 TO 2004
                                       JUNE 30,     % OF      JUNE 30,     % OF      ------------------------
                                         2004     REVENUES      2003     REVENUES           $          %
                                       --------   --------    --------   --------        -------    -------
<S>                                    <C>        <C>         <C>        <C>             <C>        <C>
Revenues
  Brake Parts, net                     $ 21,893      84.6%    $ 13,576     76.1%         $ 8,317       61.3%
  Wholesale Products                      3,996      15.4%       4,263     23.9%            (267)      -6.3%
                                       --------   -------     --------   ------          -------    -------
                                         25,889     100.0%      17,839    100.0%           8,050       45.1%

Cost of sales
  Brake Parts, net                       20,004      91.4%      11,425     84.2%           8,579       75.1%
  Wholesale Products                      3,611      90.4%       3,778     88.6%            (167)      -4.4%
                                       --------   -------     --------   ------          -------    -------
                                         23,615      91.2%      15,203     85.2%           8,412       55.3%

                                       --------   -------     --------   ------          -------    -------
GROSS PROFIT                              2,274       8.8%       2,636     14.8%            (362)     -13.7%

Selling, general &
administrative expenses                   4,995      19.3%       2,375     13.3%           2,620      110.3%
                                       --------   -------     --------   ------          -------    -------
(Loss) income from operations            (2,721)    -10.5%         261      1.5%          (2,982)   -1142.5%
Other income (expense)
  Interest expense                        (597)      -2.3%       (250)     -1.4%            (347)     138.8%
  Other                                       4       0.0%           4      0.0%               -        0.0%
                                       --------   -------     --------   ------          -------    -------
                                           (593)     -2.3%        (246)    -1.4%            (347)     141.1%

(Loss) before provision for income
taxes and extraordinary item             (3,314)    -12.8%          15      0.1%          (3,329)     NM

Income tax provision                          0       0.0%           0      0.0%               -      NM
                                       --------   -------     --------   ------          -------    -------
Net (loss) before extraordinary
  item                                   (3,314)    -12.8%          15      0.1%          (3,329)     NM
Extraordinary gain                            0       0.0%           0      0.0%               -      NM
                                       --------   -------     --------   ------          -------    -------
NET (LOSS) INCOME                      $ (3,314)    -12.8%    $     15      0.1%         $(3,329)     NM
                                       ========   =======     ========   ======          =======    =======
</TABLE>

Net sales for the three months ended June 30, 2004 increased $8,050 or 45.1%
over the same quarter in 2003 to $25,889. 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 $8,317 offset by a decrease in sales of
wholesale products of $267.

Gross profit for the three months ended June 30, 2004 is $2,274 or 8.8% of net
sales compared to $2,636 or 14.8% in the same period of 2003, a decrease of $362
or 13.7%. This decrease in gross profit is a result of increased product margins
on the higher sales of brake parts of $1,783 offset by increased distribution
expenses of $1,899, increased unabsorbed manufacturing costs of $146 and a
decrease in wholesale commodity margins of $100 on the lower sales volume.

Selling, general and administrative expenses of $4,995 (19.3% of net sales) for
the three months ended June 30, 2004 increased by $2,620 when compared to $2,375
(13.3% 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 June 30, 2004 increased $2,982
to $2,721 as compared to income from operations of $267 for the same period in
2003. This increased loss relates to increased selling, general and
administrative expenses and reduced gross profit.

Other expense for the three months ended June 30, 2004 increased $347 to $593 as
compared to loss of $246 for the same period of 2003. This increase is a result
of the increased interest expense on higher indebtedness.

                                       11
<PAGE>

Net loss for the three months ended June 30, 2004 was $3,314 compared to a net
income of $15 for the same period in 2003, a decrease of $3,329. The decrease in
net income is attributed to the decrease in gross profit of $362, higher
selling, general and administrative expenses of $2,620 and increased other
expenses of $347.

SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO SIX MONTHS ENDED JUNE 30, 2003

<TABLE>
<CAPTION>
                                                                          Six months ending
                                                             -----------------------------------------    Change from 2003 to 2004
                                                              June 30     % of      June 30     % of      ------------------------
                                                               2004     Revenues     2003     Revenues           $           %
                                                               ----     --------     ----     --------       ---------    ------
<S>                                                          <C>        <C>        <C>        <C>            <C>          <C>
Revenues
    Brake Parts, Net                                         $  42,202    85.7%    $  25,364    77.2%        $  16,838     66.4%
    Wholesale Products                                           7,034    14.3%        7,492    22.8%             (458)    -6.1%
                                                             ---------   -----     ---------   -----         ---------    -----
                                                             $  49,236   100.0%    $  32,856   100.0%        $  16,380     49.9%

Cost of sales
    Brake Parts, Net                                            38,188    90.5%       21,819    86.0%           16,369     75.0%
    Wholesale Products                                           6,201    88.2%        6,653    88.8%             (452)    -6.8%
                                                             ---------   -----     ---------   -----         ---------    -----
                                                                44,389    90.2%       28,472    86.7%           15,917     55.9%
                                                             ---------   -----     ---------   -----         ---------    -----
GROSS PROFIT                                                     4,847     9.8%        4,384    13.3%              463     10.6%

Selling,general &
administrative expenses                                          9,219    18.7%        4,866    14.8%            4,353     89.5%
                                                             ---------   -----     ---------   -----         ---------    -----
LOSS FROM OPERATIONS                                            (4,372)   -8.9%         (482)   -1.5%           (3,890)   807.1%
Other income (expense)
    Interest expense                                            (1,111)   -2.3%         (488)   -1.5%             (623)   127.7%
    Other                                                           13     0.0%           11     0.0%                2     18.2%
                                                             ---------   -----     ---------   -----         ---------    -----
                                                                (1,098)   -2.2%         (477)   -1.5%             (621)    56.6%

Income (loss) before provision for income taxes and
  extraordinary item                                            (5,470)  -11.1%         (959)   -2.9%           (4,511)   470.4%
Income Taxes                                                         -     0.0%            -     0.0%                -
                                                             ---------   -----     ---------   -----         ---------    -----
Income (loss) before extraordinary gain                      $  (5,470)  -11.1%    $    (959)   -2.9%        $  (4,511)   470.4%
Extraordinary gain (net of income taxes of $0)                   9,886    20.1%            -     0.0%            9,886      NM
                                                             ---------   -----     ---------   -----         ---------    -----
Net income (loss)                                            $   4,416     9.0%    $    (959)   -2.9%        $   5,375    470.4%
                                                             ---------   -----     ---------   -----         ---------    -----
</TABLE>

Net sales for the six months ended June 30, 2004 increased $16,380 or 49.9% over
the same period in 2003 to $49,236. The increased sales were a result of the new
customers obtained in the acquisition of certain assets of The Kelsey-Hayes
Company ("Kelsey-Hayes") of $16,838, offset by a decrease in sales of wholesale
products of $458.

Gross profit for the six months ended June 30, 2004 is $4,847 or 9.8% of net
sales compared to $4,384 or 13.3% in the same period of 2003, an increase of
$463 or 10.6%. This increase in gross profit is a result of increased product
margins on the higher sales of brake parts of $3,658, offset by increased
distribution expenses of $3,260 and a decrease in wholesale commodity margins of
$7 on the lower sales volume, partially offset by a decrease in unabsorbed
manufacturing costs of $72.

Selling, general and administrative expenses of $9,219 (18.7% of net sales) for
the six months ended June 30, 2004 increased by $4,353 when compared to $4,866
(14.8% 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 on the higher sales levels and the amortization of
certain expenses related to the issuance of warrants in 2003.

Loss from operations for the six months ended June 30, 2004 increased $3,890 to
$4,372 as compared to a loss of $482 for the same period in 2003. This increased
loss relates to increased selling, general and administrative expenses of $4,353
offset by increased gross profit of $463.

Other expense for the six months ended June 30, 2004 increased $621 to $1,098 as
compared to $477 in the same period of 2003. This increase is primarily a result
of increased interest expense of $623 on higher debt levels.

                                       12
<PAGE>

Extraordinary gain for the six months ended June 30, 2004 of $9,886 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 of these
net assets.

Net income for the six months ended June 30, 2004 was $4,416 compared to a net
loss of $959 for the same period in 2003, an increase of $5,375. This increase
is attributed to the extraordinary gain of $9,886 offset by decrease in
operating income of $3,890 and an increase in interest expense and other income
of $621.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities for the six months ended June 30, 2004
was $310,735 which was primarily due to (a) net income for the period of
$4,415,830, (b) reduction in inventories of $6,263,231, (c) net increase in
accounts payable and accrued expenses of $3,574,233, (d) non-cash items
consisting of depreciation, amortization and provision for bad debts of
$1,962,825, and (e) a decrease in other assets of $9,000, 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 $5,689,925, and (h) an increase in
prepaid expenses and other assets of $338,131.

Net cash used in investing activities was $12,232,611, 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 $12,134,663, consisting primarily
of an increase to the revolving line of credit of $9,571,490, net proceeds from
the issuance of convertible notes of $270,715 and the exercise of warrants on
options of $2,385,157, offset by principal payments on notes payable and
subordinated debt of $92,699.

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 June
30, 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 obtained a waiver of this covenant violation from
Congress.

We expect to continue to finance our operations through cash flow generated
from operations, borrowings under our bank lines of credit and credit from our
suppliers.

                                       13
<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       $21,569,016    $        -    $21,569,016    $        -
Convertible notes    $ 5,717,716     1,636,388      4,081,328             -
Subordinated debt    $   816,349       216,349        600,000             -
Capital leases       $    57,902        27,077         30,825             -
Operating leases     $ 9,723,587     2,875,530      5,059,107     1,788,950
</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.

                                       14
<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 June 30, 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, we believe 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.

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 extraordinary gain, there may have been a material
weakness in our internal controls over financial reporting. The existence of
these items has been disclosed to our Audit Committee and independent registered
public accountants. We are implementing corrective measures to correct these
weaknesses to prevent errors from occurring in future periods.

                                       15
<PAGE>

PART II OTHER INFORMATION

Items 1, 3 and 5 are not applicable to the Company in this report.

ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      (a) The annual meeting of the Stockholders of the Company was held on June
22, 2004.

      (b) The following directors were elected at the annual meeting: Arvin
Scott, M. Catherine Jaros, Dennis Kessler, Zemin Xu and Alan Zeffer.

      (c) The Stockholders voted to approve the Company's 2004 Long-Term
Incentive Plan. The votes cast with respect to the 2004 Long-Term Incentive Plan
and the election of the directors are as follows:

                                  VOTES CAST(1)

<TABLE>
<CAPTION>
                                                                                                      BROKER
                                                   FOR            AGAINST          ABSTAIN          NON-VOTES
                                                   ---            -------          -------          ---------
<S>                                             <C>              <C>               <C>              <C>
2004 LONG-TERM INCENTIVE PLAN                   8,409,760        2,860,092            0               7,000
</TABLE>

------------------
(1)   Includes votes of Series A Preferred Stock and Series B Preferred Stock
      voting on an "as converted" basis, and allocated 2,014,380 and 1,000,000
      votes, respectively, in addition to the 8,889,771 shares of common stock
      represented at the meeting.

                              ELECTION OF DIRECTORS

<TABLE>
<CAPTION>
                                VOTES               VOTES
DIRECTOR                       RECEIVED           WITHHELD
--------                       --------           --------
<S>                            <C>                <C>
Arvin Scott                    11,878,750          25,400
M. Catherine Jaros             11,879,851           6,300
Dennis Kessler                 11,879,851           6,300
Zemin Xu                       11,866,251          19,900
Alan Zeffer                    11,879,851           6,300
</TABLE>

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit Number     Description of Document
--------------     -----------------------
<S>                <C>
    31.1           Certifications of CEO Pursuant to Section 302 of the
                   Sarbanes-Oxley Act of 2002

    31.2           Certifications of CFO Pursuant to Section 302 of the
                   Sarbanes-Oxley Act of 2002

     32            Certifications 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

      None.

                                       16
<PAGE>

                                   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 & Accounting Officer)

                                       17