UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_________________________
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported): January
29, 2008
UNIVERSAL
SECURITY INSTRUMENTS, INC.
(Exact
name of registrant as specified in its charter)
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Maryland
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0-7885
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52-0898545
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(State
or Other Jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
Incorporation)
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Identification
No.)
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7-A
Gwynns Mill Court, Owings Mills, Maryland 21117
(Address
of Principal Executive Offices)
Registrant’s
telephone number, including area code: (410)
363-3000
Inapplicable
(Former
Name or Former Address if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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INFORMATION
TO BE INCLUDED IN THE REPORT
Item
2.03. Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
As
previously disclosed, in
October 2006, the Registrant acquired a majority interest in International
Conduits Ltd., an Ontario corporation (“Icon”),
which
manufactures and distributes electrical
mechanical tubing (EMT) steel
conduit. For the quarter ended September 30, 2007, Icon reported an operating
loss of $389,677 and a net loss of $483,977, and for the six month period ended
September 30, 2007, Icon reported an operating loss of $774,844 and a net loss
of $900,775.
On
January 29, 2008, Icon received
notice dated January 29, 2008 (the “CIT
Notice”)
from
CIT Financial Ltd., Icon’s principal and secured lender (“CIT
Canada”),
that
Icon is in default under the terms of the Credit Agreement dated June 22, 2007
between Icon and CIT Canada (the “CIT
Canada Credit Agreement”)
and
demanding immediate payment of all of Icon’s obligations to CIT Canada under the
CIT Credit Agreement. Icon’s obligations under the CIT Canada Credit Agreement
are guaranteed by the Registrant and the Registrant’s wholly-owned subsidiary,
USI Electric, Inc. pursuant to the terms of a Guaranty
made by the Registrant and
USI
Electric, Inc., in favor of CIT
Canada, dated
June 22, 2007 (the “CIT
Guaranty”).
Pursuant
to the CIT Notice, the indebtedness owed by Icon to CIT Canada under the CIT
Credit Agreement is CN$4,998,094, and payment must be made within 10 days from
the date of the CIT Notice. If Icon fails to pay the demanded amount in a timely
manner, CIT Canada may commence legal proceedings against Icon and may take
other steps to protect its rights, including the appointment of a receiver
under
the terms of the General Security Agreement dated June 22, 2007 between
Icon and CIT Canada entered into in connection with the CIT Canada Credit
Agreement.
Icon
is
in discussions with CIT Canada with respect to the payment of Icon’s obligations
to CIT Canada and is taking steps to reduce its operating expenses and maximize
the return on its assets to enhance its ability to pay its obligations to CIT
Canada. The Registrant cannot determine at this time what steps CIT Canada
will
take to protect its rights.
At
this
time, the Registrant is not able to determine how much, if any, of Icon’s
obligations under the CIT Canada Credit Agreement will be required to be paid
by
the Registrant under the terms of the CIT Guaranty or the terms of any such
payment. In connection with the preparation of the Registrant’s financial
statements required to be included in the Registrant’s Quarterly Report on Form
10-Q for the fiscal quarter ended December 31, 2007, the Registrant undertook
an
evaluation of the goodwill from its acquisition of Icon to determine whether
the
value of the goodwill has been impaired in accordance with FAS No. 142,
“Goodwill and Other Intangible Assets”. Based on such evaluation, the Registrant
determined that the value of the goodwill from its acquisition of Icon was
impaired, and will take a charge of US$1,926,696 for such goodwill as of
December 31, 2007. The Registrant is not able to determine at this time any
additional amounts which the Registrant will be required to take as a charge
for
impairment of its interest in Icon under generally accepted accounting
principles applicable to the Registrant.
Item
2.06. Material
Impairments.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
UNIVERSAL
SECURITY
INSTRUMENTS, INC.
(Registrant)
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Date:
February 4, 2008
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By:
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/s/
Harvey B.
Grossblatt
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Harvey
B. Grossblatt
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President
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