UNIVERSAL SECURITY INSTRUMENTS, INC.
10324 South Dolfield Road
Owings Mills, Maryland 21117
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on October 29, 1998
To the Shareholders of Universal Security Instruments, Inc.:
The Annual Meeting of Shareholders of UNIVERSAL SECURITY INSTRUMENTS,
INC. will be held at Universal Security Instruments, Inc., 10324 South Dolfield
Road, Owings Mills, Maryland 21117, on Thursday, October 29, 1998, at 10:30
a.m. for the following purposes:
1. To elect a Board of five directors to serve until the next annual
meeting and until their successors have been elected and qualify.
2. To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on August 3, 1998
will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
HARVEY B. GROSSBLATT
Secretary
DATED: September 25, 1998
IMPORTANT - YOUR PROXY IS ENCLOSED. Shareholders who do not plan to attend
the meeting are requested to complete, date, sign and return promptly the
enclosed proxy in the enclosed envelope. No postage is required for mailing in
the United States.
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Universal
Security Instruments, Inc. the "Company") in connection with the Annual Meeting
of the Shareholders of the Company to be held on October 29, 1998 or any
adjournments thereof. The proxy is revocable at any time before exercise by
written notice to the Chief Financial Officer of the Company, 10324 South
Dolfield Road, Owings Mills, Maryland 21117.
Only shareholders of record at the close of business on August 3, 1998
(Record Date) will be entitled to notice of and to vote at the meeting. The
number of shares of Common Stock, $.01 par value, of the Company (the "Common
Stock") outstanding on August 3, 1998 and entitled to vote at the meeting is
811,397 shares, each having one vote.
BENEFICIAL OWNERSHIP
The following table reflects the names and addresses of the only persons
known to the Company to be the beneficial owners of 5% or more of the Common
Stock outstanding as of the Record Date:
<TABLE>
<S> <C> <C>
Name and Address Shares beneficially Percent
of beneficial owner owned of class<F1>
Michael Kovens 214,6592<F2> 24.4%
10324 South Dolfield Road
Owings Mills, Maryland 21117
Stephen C. Knepper 105,3602<F2> 12.0%
10324 South Dolfield Road
Owings Mills, Maryland 21117
Bruce Paul 46,000 5.7%
One Hampton Road
Purchase, New York
Norman H. Pessin 42,250 5.0%
c/o Neuberger & Berman, LLC
605 Third Avenue
New York, NY 10158
_________________________________
<FN>
<FN1> For the purpose of determining the percentages of stock beneficially
owned, shares of stock subject to options or rights exercisable within
60 days of August 3, 1998 are deemed to be outstanding.
<FN2> For information regarding the nature of beneficial ownership of stock
owned by Messrs. Kovens and Knepper, please see footnotes 2 and 3, under
INFORMATION REGARDING STOCK OWNERSHIP OF MANAGEMENT.
</FN>
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
At the 1998 Annual Meeting, five directors will be elected to hold office
for the ensuing year and until their successors are elected and qualify.
Unless otherwise specified in the proxy, it is the present intention of
the persons named in the accompanying form of proxy to vote such proxy for the
election as directors of the five nominees listed below. Pursuant to the
Company's By-laws, the five nominees were nominated by the Board of
Directors. If, due to unforeseen contingencies, any of the nominees designated
below shall not be available for election, the persons named in the accompanying
form of proxy reserve the right to vote such proxy for such other person or
persons as may be nominated for director by the management of the Company so as
to provide a full Board. Management has no reason to believe that any
nominee will be unable to serve if elected.
<TABLE>
Principal occupation Director
Name Age for past five years since
<S> <C> <C> <C>
Stephen C. Knepper. .54 Director; Chairman of the Board of the 1970
Company 1970 through July 1996; Vice
Chairman of the Board since August 1996.
Michael Kovens. . . .55 Director; President of the Company 1970 1970
through July 1996; Chairman of the
Board since August 1996.
Harvey Grossblatt . .52 Director since September 1996; President 1996
since July 1996; Chief Financial Officer
since April 1997; Executive Vice President
of the Company from December 1986
through June 1996; Secretary and Treasurer
of the Company since September 1988;
Vice President and Chief Financial Officer
of the Company from October 1983 through
May 1995.
Ronald Frank<F1>. . .32 Vice President of Lexington National 1998
Insurance Company since 1993.
Gary Goldberg . . .49 1993 to 1996 President of Ultravision LLC; 1998
1996 to 1997 Independent Consultant;
1997 to present Procurement Agent
for Sierra Military Health Services, Inc.
<FN>
<F1> Mr. Frank is the son-in-law of Mr. Michael Kovens, Director and Chairman
of the Board of the Company.
</FN>
</TABLE>
Committees and Meetings of the Board of Directors
For the fiscal year ended March 31, 1998, the Company did not have a
standing Nominating Committee or Compensation Committee of the Board of
Directors, or committees performing similar functions. The Company appointed
an Audit Committee in February 1998 consisting of independent directors
Ronald Frank and Gary Goldberg. The Audit Committee is to recommend to the
Board the selection of the independent public accountants, review with such
accountants and management the financial statements of the Company, discuss with
the accountants the results of the audit and internal accounting procedures and
controls, and review any proposed related party transactions. The Audit
Committee did not hold any meetings in the year ending March 31, 1998.
2
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that the Company's directors and executive officers and each person who
owns more than 10% of the outstanding Common Stock file with the Securities and
Exchange Commission an initial report of beneficial ownership and subsequent
reports of changes in beneficial ownership and subsequent reports of changes
in beneficial ownership of Common Stock. To the Company's knowledge, all of
the required persons complied with the filing requirements applicable to them
with respect to transactions during the fiscal year ended March 31, 1998, except
that the initial statement of beneficial ownership of securities on Form 3 for
each of Ronald Frank and Gary Goldberg were filed late following their election
as directors.
INFORMATION REGARDING STOCK OWNERSHIP OF MANAGEMENT
As of August 3, 1998, the shares of the Company's Common Stock owned
beneficially by each director, by each executive officer and by all directors
and officers as a group were as follows:
<TABLE>
Amount and nature of Percent of
Name of beneficial owner beneficial ownership class<F1>
<S> <C> <C>
Michael Kovens. . . . . . . . . . . . . . 214,659<F2> 24.4%
Stephen C. Knepper. . . . . . . . . . . . 105,360<F3> 12.0%
Harvey Grossblatt . . . . . . . . . . . . 31,272<F4> 3.7%
Ronald Frank. . . . . . . . . . . . . . . 7,548<F5> .9%
Gary Goldberg . . . . . . . . . . . . . . 2,500<F6> .3%
All directors and officers as a
group (5 persons included). . . . . . . . 361,339 37.0%
_________________________________
<FN>
<F1> For the purpose of determining the percentages of stock beneficially owned,
shares of stock subject to options or rights exercisable within 60 days of
August 3, 1998 are deemed to be outstanding.
<F2> Includes 68,750 shares which Mr. Kovens presently has the right to acquire.
On September 2, 1998, Mr. Kovens purchased an additional 113,636 shares
from the Company at a purchase price of $.88 cents per share (the mean
between the closing bid and asked prices on the NASDAQ Small Cap Market
on that date), or an aggregate of $100,000.
<F3> Includes 68,750 shares which Mr. Knepper presently has the right to acquire
and 4,487 shares held by Mr. Knepper's adult children.
<F4> Includes 24,000 shares which Mr. Grossblatt presently has the right to
acquire.
<F5> Includes 5,048 shares held by his wife and 2,500 shares which Mr. Frank
presently has the right to acquire.
<F6> Includes 2,500 shares which Mr. Goldberg presently has the right to
acquire.
</FN>
</TABLE>
3
<PAGE>
EXECUTIVE COMPENSATION
Table I. Summary Compensation Table
The following table reflects the aggregate amount paid or accrued by the
Company in its three most recent fiscal years, for each executive officer whose
compensation exceeded $100,000 in that year.
<TABLE>
Long Term Compensation
Name and Awards Payouts
Principal Annual Compensation Stock LTLIP All Other
Position Year Salary Bonus Other Awards Options Payouts Compensation<F1>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael
Kovens 1998 $175,000 - - - 15,000 - $ -0-
Chairman
of the
Board 1997 $300,000 - - - 17,500 - $3,200
1996 $200,000 - - - - - $3,200
Stephen C.
Knepper 1998 $ 50,000 - - - 15,000 - $ -0-
Vice
Chairman
of the 1997 $183,328 - - - 17,500 - $3,200
Board 1996 $200,000 - - - - - $2,700
Harvey
Grossblatt 1998 $122,500 - - - - - $ -0-
President,
Secretary 1997 $142,923 - - - 17,750 - $2,857
and
Treasurer 1996 $143,675 - - - - - $3,918
_________________________________
<FN>
<F1> Consists of Company contributions to the Company's 401(k) plan.
</FN>
</TABLE>
Table II. Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option
/SAR Values
The following table sets forth information concerning the number and value
of unexercised options held as of March 31, 1998 by each executive officer whose
compensation exceeded $100,000 in the year then ended:
<TABLE>
Value
Number of Unexercised
of Unexercised In-the-Money
Options Options
Shares at FY-End at FY-End
Acquired Value Exer- Unexer- Exer- Unexer-
Name on Exercise Realized cisable/cisable cisable/cisable
<S> <C> <C> <C> <C> <C> <C>
Stephen C. Knepper - - 68,750/-0- -0-/-0-
Michael Kovens - - 68,750/-0- -0-/-0-
Harvey Grossblatt - - 24,000/-0- -0-/-0-
</TABLE>
4
<PAGE>
MATTERS PERTAINING TO THE 1999 ANNUAL MEETING
Any shareholder desiring to present a proposal to be considered by the
shareholders at the Annual Meeting of Shareholders scheduled to be held in
October 1999, and desiring that information concerning such proposal be
included in the proxy statement and form of proxy furnished to shareholders by
the Board of Directors, should submit the proposal in writing, including all
supporting materials, to the Company at its principal executive offices no
later than July 1, 1999.
The Persons designated by the Company to vote proxies given by shareholders
in connection with the Company's 1999 Annual Meeting of Shareholders will not
exercise any discretionary voting authority granted in such proxies on any
matter not disclosed in the Company's 1999 proxy statement and with respect
to which the Company has received written notice no later than August 12, 1999
that a shareholder (i) intends to present such matter at the 1999 Annual
Meeting, and (ii) intends to and does distribute a proxy statement and proxy
card to holders of such percentage of the Company's shares required to approve
the matter. If the shareholder fails to provide evidence that the necessary
steps have been taken to complete a proxy solicitation on such matter, the
Company may exercise its discretionary voting authority if it discloses in its
1999 proxy statement the nature of the proposal and how it intends to
exercise its discretionary voting authority.
OTHER MATTERS
The solicitation of proxies will be made by mail, at the expense of the
Company, including the charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of stock. Subsequent
solicitations may be made by mail, telegraph, telephone or any other appropriate
means.
The Board of Directors of the Company is not aware of any other matter which
may be presented for action at the Annual Meeting, but should any such matter
requiring a vote of the shareholders arise, it is intended that the proxies
will be voted with respect thereto in accordance with the best judgment of
the person or persons voting the proxies, and discretionary authority to do
so is provided for in the proxy.
Deloitte & Touche LLP is the firm of certified public accountants selected
by the Board of Directors of the Company to audit the books and accounts of
the Company for the fiscal year ended March 31, 1998. It is anticipated
that representatives of Deloitte & Touche LLP will be present at the Annual
Meeting to respond to appropriate questions.
Shareholders who do not plan to attend the Annual Meeting are urged to
complete, date, sign and return the enclosed proxy in the enclosed envelope to
which no postage need be affixed if mailed in the United States. Prompt
response is helpful and your cooperation will be appreciated.
By Order of the Board of Directors,
HARVEY B. GROSSBLATT
Secretary
Dated: September 25, 1998
5
