If this card was Special Summoned by the effect of "Ultimate Insect LV3", while it remains on the field all of your opponent's monsters lose 500 ATK. During your Standby Phase, by sending this face-up card to the Graveyard, Special Summon 1 "Ultimate Insect LV7" from your hand or Deck. (You cannot activate this effect the turn this card is Normal Summoned, Special Summoned, or flipped face-up.)
If this monster is Special Summoned by the effect of “Ultimate Insect LV 3”, but is then flipped face-down, or removed from play with “Interdimensional Matter Transporter” or “Dimensionhole”, its effect is reset, so even if flipped face-up again, it will no longer decrease the ATK of the opponent’s monsters.
You can Special Summon “Ultimate Insect LV5” with the effect of “Ultimate Insect LV3” even if that “Ultimate Insect LV3” was not Special Summoned by the effect of “Ultimate Insect LV1”.
Sends itself from field to Graveyard for cost
Special Summons from your hand / Special Summons from your Deck
Your opponent's monsters lose ATK
Can use Insect Imitation to bring it out, then during your next Standby Phase, summon LV7. Seems OK to me.