UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20459





FORM
      10-KSB/A


(Amendment
      No. 1)





REPORT
      PURSUANT TO SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934 FOR THE


PERIOD
      FROM JULY 1, 2004 TO JUNE 30, 2005





Commission
      file number 0-18094





UNIVERSAL
      EXPRESS, INC.





A
      Nevada
      Corporation ID.# 11-2781803





1230
      Avenue of the Americas, Suite 771, Rockefeller Center, New York, NY
      10020





Registrant’s
      telephone number including area code (212) 239-2575





Securities
      registered under Section 12(b) of the Act: None





Securities
      registered under Section 12(g) of the Act:





Class
      A Common Stock par value $0.005 per share





Check
      whether the issuer (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__





Check
      if
      disclosure of delinquent filers in response to Item 405 of Regulation S-B is
      not
      contained in this form, and no disclosure will be contained, to the best of
      registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB .





State
      issuer’s revenues for the period: $931,009. State the aggregate market value of
      the voting and non-voting stock held by non-affiliates computed by reference
      to
      the price at which the stock was sold, or the average bid and asked prices
      of
      such stock, as of a specified date within the past 60 days: As of August 9,
      2005, $4,693,239 (based on 2,040,538,550) shares held by non-affiliates and
      computed by reference to the average closing bid and asked prices of the Common
      Stock.





Check
      whether the issuer has filed all documents and reports required to be filed
      by
      Section 12, 13, or 15(d) of the Exchange Act after the distribution of
      securities under a plan confirmed by a court. Yes  XNo__





The
      registrant had 2,063,428,723 shares of its $.005 par value Class A Common Stock
      issued and outstanding as of June 30, 2005 and 1,280,000 shares of Class B
      Common Stock.





Documents
      Incorporated by Reference: None.
















**EXPLANATORY
      NOTE**





This
      Amendment No. 1 to the Annual Report on Form 10-KSB for the year ended
      June 30, 2005 for Universal Express, Inc. (“USXP”) is being filed solely to
      correct an inadvertent, administrative error in the originally filed audit
      report by replacing that audit report with a new, corrected audit report of
      USXP’s auditor, Durland & Company CPAs, P.A., New York, NY, for the year
      ended June 30, 2005. Except for the inclusion of the corrected audit report
      and
      the currently dated certifications, USXP has made no further changes to the
      originally filed Annual Report on Form 10-KSB. USXP’s consolidated financial
      statements for the periods presented have not been restated or changed in any
      manner from those included in the original filing.





2





PART
      I





ITEM
      1





DESCRIPTION
      OF BUSINESS





History





The
      Company was originally incorporated in the State of Nevada on April 6,
      1983.





Universal
      Express, Inc. (USXP) has evolved into a conglomerate of supportive companies
      centered on its private postal network, UniversalPostTM Private Postal
      Network.





Its
      principal businesses include the UniversalPost Private Postal Network,
      UniversalPostTM International Courier Service, Virtual Bellhop®, Luggage
      Express®, Universal Express Capital Corp., Universal Cash Express and Universal
      Express Properties.





Its
      association of independent and franchise nationwide postal stores
      (UniversalPost) continues to evolve into a sophisticated buying service trade
      association, and market penetration vehicle.





UniversalPost
      International Courier Service earns revenues f rom
      selling discounted rates and services to the postal stores.





Luggage
      ExpressTM will enable consumers to have their baggage picked up at their home by
      one of its carriers or a local UniversalPost member store and delivered to
      the
      traveler’s destination.





Virtual
      Bellhop® is a premier door-to-door luggage transportation service.





Universal
      Express Capital Corp. is a full service asset based transportation/equipment
      leasing company. Its Universal Cash Express division provides stored value
      cards
      of all types to consumers.





Universal
      Express Properties concentrate s
      on
      commercial property acquisitions.





USXP
      continues to mature as an accepted participant within the shipping and postal
      store industry.





The
      web
      site for the company and its businesses is *http://www.usxp.com.*




3




The
      Business of the Corporation





Universal
      Express, Inc. (USXP) evolved into a conglomerate of supportive companies and
      divisions centered around its private postal system.





The
      Company’s principal subsidiaries and divisions are:


UniversalPost
      Private Postal Network


UniversalPost
      International Courier Service


Universal
      Express Logistics, Inc.


Virtual
      Bellhop®


Luggage
      Express®


Universal
      Express Capital Corp.


Universal
      Cash Express


Universal
      Express Properties





Marketplace





A
      challenging global economy has grown over the past decade. Internet, catalog
      and
      retail sales continue to mandate an inexpensive and responsive outsourced final
      mile Domestic and International delivery network. That innovative and outsourced
      final mile network continues to be addressed by Universal Express and it has
      undergone visionary expansion in the last decade. Strong strategic relationships
      are currently being established with companies and manufacturers, thus
      strengthening its long term private postal network, its luggage business and
      its
      logistical courier network.





Members
      of the UniversalPost’s private postal network provide the public with a
      complement to the U.S. Post Office for many retail and business postal services.
      In addition, these Postal Service Centers offer individuals and business
      customers an additional variety of personal business services and merchandise.





Luggage
      Express has begun to separate passengers from suitcases and offer a safer and
      more pleasurable travel experience.





These
      courier companies and private postal centers form a highly fragmented cottage
      industry. Universal Express believes that since this industry generates over
      $14
      billion in sales and presently consists of more than 30,000 independent
      operators, there is a market opportunity for the development of an association
      with the goal of unifying and organizing the independent and franchised postal
      stores and couriers nationwide. These members are electronically connected
      to
      other members via our new website, new sales and products.





Our
      company believes that an affordable outsourced distribution system is needed
      to
      suit consumers’ future needs. Universal Express believes it has positioned
      itself to be a contender in the global economy for the next decade with the
      development of its outsourced and innovative subsidiaries.





USXP
      is
      now positioned as a significant player in the international shipping and
      transportation industries. By building its divisions through classic outsourcing
      techniques, USXP’s future revenue growth will not be offset by increased
      overhead.





4


In
      just
      the past few years, USXP has identified more than 8,000 private postal centers
      in a network called UniversalPost that produces growing revenue streams for
      both
      its members and USXP. USXP offers its UniversalPost Network members discounted
      services from some of the country’s largest vendors, as well as innovative new
      luggage services that resonate in the world’s present security-conscious travel
      climate.





USXP’s
      business strategy is far more than the sum of today’s parts. The company’s three
      highly synergistic divisions position the company to create an entirely new
      industry paradigm by offering the private postal industry and consumers
      value-added services and products, logistical services, equipment leasing and
      cost-effective delivery of goods and services worldwide.





UniversalPostTM
      Network, the name for USXP’s private postal network, taps the purchasing power
      of over 20,000 privately owned and operated postal stores to create the nation’s
      first truly organized and funded private postal system.





USXP’s
      Web-based CRM software system empowers swift delivery of business products
      and
      services to the network: commercial mail receiving; office products and
      supplies; packaging and shipping; copying, imaging, photo finishing and digital
      services; home office boutique items; and even concierge services.





Universal
      Express Logistics, Inc. joins the company’s visionary Luggage ExpressTMservice
      offered through the UniversalPost Network and its Internet-based Virtual
      Bellhop® luggage pickup and delivery service to free travelers from the stress
      of dealing with their luggage as they travel across the country and around
      the
      world. Today’s target customer is the upscale traveler planning extended stays
      at destination resorts, but the service is equally appealing to any traveler
      who
      prefers not to pay extra airline fees or struggle with heavy and awkward baggage
      at either end of their trip. When you consider that domestic airline luggage
      is
      expected to exceed 3 billion pieces annually, USXP’s revenue potential is
      substantial as acceptance of luggage transportation services reaches critical
      mass with further branding and advertising.





Universal
      Express Capital Corp. is a full-service, asset-based transportation and leasing
      service that provides capital acquisition funding for the business sector.
      USXP
      has established strategic alliances with a number of major manufacturing firms
      in the limousine, livery, small fleet, vehicle rental, delivery truck and van,
      bus and aircraft industries.





Universal
      Cash Express, a division of Universal Express Capital, is a leader in the
      pre-paid PIN based products industry. Cash Express develops products and
      services for companies wishing to expand their current market penetration into
      this exciting and growing market segment. Cash Express employs industry experts
      that are able to advise these companies on which products are desired by this
      market niche. Cash Express is further able to assist our corporate clients
      by
      designing the perfect product for them to accelerate their profit
      potential.





5




UniversalPostTM
      - The Private Postal Networ k®





UniversalPost,
      a private postal network, is an association formed to create a very much needed
      partnership between previously unconnected shipping and packaging store owners.
      This concept has been accomplished many times before in American industries,
      most notably by FTD’s maturation of the independent florists across America and
      Interflora’s unification and development of florists in Europe. UniversalPost
      provides independent store-owners with a variety of cost effective services
      and
      products to help increase their profitability, while they are still able to
      maintain their local or franchised identities.





Individual
      Services and Products





•
      Flowers/Gift Baskets


•
      Corrugated & Packaging


•
      Customized Rubber Stamps


•
      Equipment Leasing


•
Moving
      Supplies


•
Car
      Rental


•
      Customized Corrugated


•
      Business and Office Supplies


•
Parcel
      Insurance


•
Credit
      Card Processing


•
Check
      Processing


•
Prepaid
      Debit Card Load Stations


•
Visa
      -
      MasterCard


•
      Discounted Supplies


•
Joint
      Promotions


•
Video
      Tape to DVD Conversion


•
      Fingerprinting


•
      International Cell Phone Rental


•
Credit
      Union


•
Message
      On Hold


• Consolidated
      Shipping rates


• 1-800-Tow
      Truck


• Bill
      Payments


•
      Discounted Prescriptions Program


•
Gift
      Cards


•
      Passport & Visa Expediting


•
Retail
      Products


•
Sign
      Making








On
      May 9,
      2005, the Company announced a partnership with MyMailEmail allowing postal
      stores to quickly e-mail customers when they have mail.





On
      August
      18, 2005, the Company announced an exclusive agreement with Yard Sale





6


Drop-Off
      to market its online auction solution to postal stores in order that they can
      become drop off and shipping centers for YSDO online auctions.





On
      August
      25, 2005, the Company announced an agreement with Q-Check allowing customers
      of
      postal stores to accept checks as a secured method of payment over the phone,
      fax or even by e-mail.








UniversalPostTM
      - International Courier Service








UniversalPost,
      the International Courier Service, is an alliance of independently owned and
      operated express courier services operating in 268 cities in 120 countries.
      UniversalPost provides global delivery and services to international firms.
      This
      network currently delivers over 650,000 packages per month and is part of the
      world’s largest independently owned courier network. It is the 5th largest
      express courier network in the world behind the integrated United States express
      carriers such as FedEx, UPS and DHL.





Unlike
      the major integrators who operate their own aircraft and thus offer rigid pick
      up and delivery schedule, UniversalPost members offer flexible, customized
      International services to meet a client’s specific distribution needs. Instead
      of operating our own costly fleet, UniversalPost offers express International
      air courier service and expedited air cargo through regularly scheduled
      commercial airlines to transport time-sensitive documents, parcels, freight
      and
      mail.





According
      to industry estimates, private postal stores alone ship $600,000,000 annually
      in
      International packages and without UniversalPost are totally dependent upon
      their suppliers’ shipping. The obvious synergy between UniversalPost, the
      International Courier Service and UniversalPost, the private postal network,
      enhances our unusual position in the shipping service industry.





Now
      UniversalPost Network members can offer an in-house solution for international
      deliveries at a higher profit margin for themselves and increase the value
      of
      international delivery service to their customers rather than the more expensive
      traditional carriers. The UniversalPost Networks’ use of the UniversalPost
      envelope for their international shipping method instead of outsourced options
      strengthens the local postal stores’ position as an international delivery
      solution.








Luggage
      Expres s®
and
      Virtual Bellhop®





Luggage
      Express and its premier service, the Virtual Bellhop, facilitate and manage
      the
      movement of baggage door-to-door for leisure and business
      travelers.





With
      many
      years of logistical corporate and entrepreneurial experience in relevant core
      businesses, Universal Express has created a powerful logistical business model
      driven by multi-channel distribution and multi-market demand. We have
      established relationships with travel service providers and distribution
      partners.




7




There
      are
      significant market opportunities not limited to the abundance of checked bags
      presently being moved each year. Making travel easier and more enjoyable through
      luggage free travel is the goal of our two companies.





Whether
      it be through partners like hotels, airlines, cruise lines, credit card
      companies, airline or travel agencies, or simply our neighborhood postal store,
      we continue to introduce Americans to luggage-free travel.





With
      over
      1.5 billion suitcases presently being checked by domestic passengers, our
      companies offer significant benefits to the airlines. Customer satisfaction,
      easier check-in, a secure alternative to curb-side check-in, less congestion
      in
      the departure hall and minimizing departure delays, defines our service. The
      FAA
      expects the number of airline passengers to double, making domestic luggage
      to
      exceed 3 billion suitcases. Luggage Express and Virtual Bellhop are indeed
      poised for luggage-free travel.





On
      August
      10, 2005, announced agreement with MARC USA, a national advertising and
      marketing firm, to impact sales and brand awareness of the Luggage
      Express.








Universal
      Express Capital Corp.





The
      Universal Express family of companies has broadened the nature of its core
      business by entering the financial services industry via its subsidiary
      Universal Express Capital Corp. A full service, asset based transportation
      and
      equipment lessor, Universal Express Capital Corp. provides capital acquisition
      funding, in the form of lease financing, to the national business community
      as
      well as within the framework of Universal Express’ other affiliates and
      subsidiaries.








Universal
      Cash Express





Universal
      Cash Express, a division of Universal Express Capital, is a leader in the
      pre-paid PIN based products industry. Cash Express develops products and
      services for companies wishing to expand their current market penetration into
      this exciting and growing market segment. Cash Express employs industry experts
      that are able to advise these companies on which products are desired by this
      market niche. Cash Express is further able to assist our corporate clients
      by
      designing the perfect product for them to accelerate their profit
      potential.








Universal
      Express Properties





The
      Company announced its real estate division on November 12, 2004. The division
      will concentrate on commercial property acquisitions, commercial loans and
      other
      lending activities, and will seek to be the lead investor in private placements,
      limited partnerships and other activities with a goal to develop a portfolio
      sufficient to operate the company as a real estate investment trust
      (REIT).




8





Competition





The
      company believes that the maturation of the Private Postal Network
      (UniversalPost) will strengthen the profitable atmosphere of this cottage
      private postal industry. Lack of financial strength and market penetration
      have
      prevented some excellent franchisors and independent stores from properly
      promoting their services. The ability of UniversalPost to create a nationally
      accepted private postal industry that the American public will embrace and
      trust
      should recreate a viable industry. The Company feels it can convince through
      financial discounts the independent and nationwide franchisors that they must
      self-regulate for consumer acceptance and seize this opportunity to become
      part
      of this new cooperative partnership and private postal network.





Industry
      Background





The
      future of the industry lies predominately in the international business
      community and domestic acceptance of private postal stores as a natural cohesive
      industry. As the world moves towards a Global Economy and trade tariffs begin
      to
      break down, the Company believes that new shipping markets and small business
      opportunities will be developed and the key ingredients underlying these
      developments will be transportation and outlets for carriers as well as final
      mile fulfillment for direct marketing products.





The
      opportunities to expand our corporate scope are limitless due to shipping,
      logistical distribution needs and growth of services through the world. The
      transportation industry has already developed the necessary infrastructure
      and
      continues to grow. The Company believes that the missing ingredients needed
      to
      make this industry improve are packaging, logistics and inexpensive residential
      locations.





The
      Company believes that a nationwide organized domestic fulfillment network with
      an affordable International Delivery System can become a key player in the
      Global Economy. The Company has positioned itself to be that public player
      in
      this lucrative market. Members
      of UniversalPost provide the public with a complement to U.S. Post Offices
      for
      many retail postal services. In addition, our Service Centers offer individuals
      and business customers a variety of personal, business and communications
      services and merchandise.





Management





Mr.
      Richard A. Altomare has been President and CEO of Universal Express since May
      1992, upon appointment by the reorganization court for Packaging Plus Services
      (predecessor of Universal Express) during Packaging’s reorganization, completed
      in May, 1994. Mr. Altomare directs the Company, and is continuing to build
      a
      multi-faceted Company foundation for future growth in the global marketplace.
      He
      envisions a synergistic company capable of creating a profitable partnership
      between packaging store owners and their carriers, as well as building
      innovative businesses in the logistics, commercial vehicles capital funding
      and
      leasing and transportation fields.




9




Trade
      Marks and Service Marks





The
      Company is the owner of tradenames, trademarks and service marks for the names
      and marks Universal Express®, USXP®, Private Postal Network®, USXP Capital®,
      USXP Cash ExpressTM, USXP LogisticsTM, UniversalPostTM, Luggage Express®, Virtual
      Bellhop®, USXP LogisticsTM, USXP PlatinumTM and USXP TransportationTM.





Employees





As
      of
      June 30, 2005, the Company employed 36 individuals. The Company has not
      experienced any work stoppages and considers its relations with its employees
      to
      be excellent. To facilitate its UniversalPost Network, USXP Capital, Luggage
      Express and UniversalPost International Delivery expansion plans, management
      expects to engage in significant hiring of management, sales, operational and
      support personnel during 2005 and beyond.








ITEM
      2





DESCRIPTION
      OF PROPERTIES





USXP’s
      present corporate headquarters is located at 1230 Avenue of the Americas, New
      York, New York, with administrative offices at 5295 Town Center Road, Boca
      Raton, Florida. UniversalPost Network has a branch office in Centereach, New
      York.








ITEM
      3





LEGAL
      PROCEEDINGS





The
      Company filed a lawsuit in New York against North American Airlines and its
      principal for $168,000,000 plus punitive damages.





The
      Company was awarded a $389 million dollar damage verdict by a jury in Dade
      County, Florida, upon which judgment was entered, against Select Capital, Ronald
      G. Williams and Walter Kolker. On April 21, 2003, the Company was awarded an
      additional $137,000,000 judgment upon a verdict after trial by a different
      jury
      in Dade County, Florida, against two other parties to this matter, Sheldon
      Taiger and South Beach Financial. We believe that the judgments, which are
      non-appealable, are substantially collectable.





On
      March
      2, 2004, the Company brought an action against the SEC in federal court in
      Florida on damages from the “naked shorting” of its shares and other matters.
      Thereafter, on March 23, 2004 the SEC brought an action in federal court in
      New
      York against certain officers of the Company. Both proceedings are
      pending.





The
      Company is involved in several lawsuits with vendors, suppliers, and
      professionals. These claims are all disputed by the Company. The Company
      believes that disposition of these matters will not have a material adverse
      effect on the Company’s financial position.




10




ITEM
      4





SUBMISSION
      OF MATTERS TO A VOTE OF SHAREHOLDERS





No
      meeting of shareholders was held during the year.





PART
      II





ITEM
      5





MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





The
      Company’s Class A Common Stock has been trading under the symbol “USXP” on the
      automated quotation system maintained by the National Quotation Bureau, Inc.,
      (the “Bulletin Board”).





The
      following table sets forth the range of high and low bid quotations on the
      Bulletin Board for the Common Stock during the quarterly periods of the Current
      Period. The source of these quotations is the National Quotations Bureau. These
      quotations reflect inter-dealer prices, without retail mark-up, mark-down,
      or
      commission and may not represent actual transactions.




BidQuarter
                Ended
            Low
            High9/30/04
            $0.006
            $0.01612/31/04
            $0.007
            $0.0253/31/05
            $0.005
            $0.0186/30/05
            $0.003
            $0.006





As
      of
      June 30, 2005, there were over 10,000  holders
      of record of the Company’s Common Stock.





The
      Transfer Agent and Registrar of the Company’s Common Stock is North American
      Transfer Co.





ITEM
      6





MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL


CONDITION
      AND RESULTS OF OPERATION





Included
      in this report are forward-looking statements within the meaning of Section
      27A
      of the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended. Although the Company believes that the
      expectations reflected in such forward-looking statements are reasonable, it
      can
      give no assurance that such expectations reflected in such forward-looking
      statements will prove to be correct. The Company’s actual results could differ
      materially from those anticipated in the forward-




11




looking
      statements as a result of certain factors, including sales levels, distribution
      and competition trends and other market factors.








OVERVIEW:





Management
      is continually concentrating on raising new capital to further develop the
      UniversalPostNetwork, its multi-faceted national private postal business centers
      nationwide connected through the World Wide Web, and for future
      acquisitions.




Management
      views this year as a period of growth based upon its decision to concentrate
      on
      core business development through the UniversalPost Network, Virtual Bellhop®,
      Luggage ExpressTM, UniversalPost International Delivery and USXP
      CapitalTM.








Liquidity
      and Capital Resources





During
      the twelve-month period ended June 30, 2005, the Company’s financing activities
      provided $4,287,000 while $4,322,892 was used in its operating and investing
      activities.





The
      Company’s working capital deficiency for fiscal 2005 was $2,200,428 compared
      with $3,601,215 in fiscal 2004.





The
      Company’s net loss for fiscal 2005 was $9,985,869 compared with $9,061,293 in
      fiscal 2004.





Until
      the
      UniversalPost Network, Virtual Bellhop, Luggage Express, USXP Capital and
      UniversalPost International Delivery are fully developed, the Company will
      continue to rely on equity and debt raises to fund its operations. Management
      is
      continuing efforts to raise cash by arranging lines of credit, and obtaining
      additional equity capital. The Company’s future business operations will require
      additional capital.





Management
      is presently exploring methods to increase available credit lines as well as
      methods to increase working capital through both traditional and non-traditional
      debt services.




12





ITEM
      7





FINANCIAL
      STATEMENTS





The
      Company’s audited financial statements for the Current Period are found on the
      next succeeding pages of this Report on Form 10-KSB.







13




**INDEX
      TO FINANCIAL STATEMENTS**


Independent
                  Auditor’s Reports
              F-2Consolidated
                  Balance Sheets
              F-3Consolidated
                  Statements of Operations and Comprehensive Income
                  (Loss)
              F-4Consolidated
                  Statements of Stockholders’ Equity
                  (Deficiency)
              F-5Consolidated
                  Statements of Cash Flows
              F-6Notes
                  to Consolidated Financial Statements
              F-7




F-1





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








The
      Board
      of Directors and Stockholders


Universal
      Express, Inc.








We
      have
      audited the accompanying consolidated balance sheet of Universal Express, Inc.,
      (the “Company”) as of June 30, 2005 and the related consolidated statements of
      operations and comprehensive income (loss), stockholders’ equity (deficiency)
      and cash flows for the two years in the period ended June 30, 2005. These
      consolidated financial statements are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these consolidated
      financial statements based on our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. An audit
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the consolidated financial statements. An audit also includes
      assessing the accounting principles used and significant estimates made by
      management, as well as evaluating the overall financial statement presentation.
      We believe that our audit provides a reasonable basis for our
      opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of the Company as of June
      30,
      2005 and the results of its operations and its cash flows for the two years
      in
      the period ended June 30, 2005, in conformity with U.S. generally accepted
      accounting principles.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 4 to the
      consolidated financial statements, the Company has experienced net losses since
      inception. The Company’s financial position and operating results raise
      substantial doubt about its ability to continue as a going concern. Management’s
      plans with regard to these matters are also described in Note 4. The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.





Durland
      & Company, CPAs, P.A.





New
      York,
      New York


September
      23, 2005




F-2





**UNIVERSAL
                  EXPRESS INC. AND
                  SUBSIDIARIES****CONSOLIDATED
                  BALANCE SHEET****June
                  30,****ASSETS**
              
              **2005****CURRENT
                  ASSETS:**Cash
                  and Equivalents
              
              $
              19,140Accounts
                  Receivable
              
              
              68,764Other
                  Receivables
              
              
              -Other
                  Current Assets
              
              
              207,100Total
                  Current Assets
              
              
              295,004**PROPERTY
                  AND EQUIPMENT**Computers
                  and Equipment
              
              
              265,920Less
                  Accumulated Depreciation
              
              
              (127,553
              )Net
                  Property and Equipment
              
              
              138,367**OTHER
                  ASSETS:**Loan
                  to Officer
              
              
              753,496Related
                  Party Receivables
              
              
              906,000Notes
                  Receivable
              
              
              854,513Goodwill
              
              
              397,107Other
                  Assets
              
              
              14,805Total
                  Other Assets
              
              
              2,925,921**Total
                  Assets**
              
              $
              3,359,292**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES:**Accounts
                  Payable
              
              $
              753,921Accrued
                  ExpensesTrade
              
              
              233,663Officers'
                  Salary
              
              
              935,057Interest
              
              
              257,875Current
                  Portion of Long-Term Debt
              
              
              119,648Bank
                  Line of Credit
              
              
              38,368Notes
                  Payable
              
              
              56,900Convertible
                  Debentures
              
              
              100,000Total
                  Current Liabilities
              
              
              2,495,432Long-Term
                  Debt, Net of Current Portion
              
              
              6,995**Total
                  Liabilities**
              
              
              2,502,427**STOCKHOLDERS'
                  EQUITY:**Common
                  Stock, $.005 par value; Authorized 2,200,000,000 Shares2,063,428,723
                  Shares Issued,2,063,388,723 Shares Outstanding
              
              
              10,317,144Class
                  B Common Stock, $.005 par value; Authorized 3,000,000shares
                  1,280,000 shares issued and outstanding
              
              
              6,400Additional
                  Paid-in Capital
              
              
              56,824,965Accumulated
                  Comprehensive Income (loss)
              
              
              (119,700
              )Stock
                  Rights
              
              
              11,034,962Treasury
                  stock, at cost, 40,000 shares
              
              
              (14,350
              )Deferred
                  Compenstation
              
              
              (14,326,488
              )Collateral
                  stock
              
              
              (3,920,000
              )Accumulated
                  Deficit
              
              
              (58,946,068
              )Total
                  Stockholders' Equity
              
              
              856,865**TOTAL
                  LIABILITIES & STOCKHOLDERS' EQUITY**
              
              $
              3,359,292




F-3




**UNIVERSAL
                  EXPRESS INC. AND
                  SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                  (LOSS)****Year
                  Ended June 30,****2005**
              
              **2004**Revenues
              
              $
              931,009
              
              $
              2,775,336Cost
                  of Goods Sold
              
              
              914,404
              
              
              2,507,528**Gross
                  Profit**
              
              
              16,605
              
              
              267,808**OPERATING
                  EXPENSES**Selling,
                  General and Administrative
              
              
              3,973,999
              
              
              4,844,773Amortization
                  of Deferred Compensation
              
              
              5,732,540
              
              
              3,465,453Stock
                  Based Compensation
              
              
              348,431
              
              
              96,660Depreciation
              
              
              35,281
              
              
              197,270**Total
                  Operating Expenses**
              
              
              10,090,251
              
              
              8,604,156**OPERATING
                  LOSS**
              
              
              (10,073,646
              )
              
              (8,336,348
              )**Other
                  Income (Expense)**Net
                  Loss from Discontinued Operations
              
              
              -
              
              
              (272,673
              )Loss
                  Recoupment
              
              
              9,545Income
                  from Sale of Subsisdary
              
              
              54,133Write
                  off failed acquisition deposit
              
              
              **-**
              
              
              (500,078
              )Interest
                  Income
              
              
              45,266
              
              
              89,523Interest
                  Expense
              
              
              (21,166
              )
              
              (41,717
              )Total
                  other income (expense)
              
              
              87,778
              
              
              (724,945
              )**Net
                  Loss**
              
              $
              (9,985,868
              )
              $
              (9,061,293
              )**Basic
                  net loss per common share**
              
              $
              (0.01
              )
              $
              (0.01
              )Weighted
                  average number of common shares outstanding
              
              
              1,185,567,376
              
              
              624,964,652





F-4


**UNIVERSAL
                    EXPRESS INC. AND
                    SUBSIDIARIES****CONSOLIDATED
                    STATEMENTS OF STOCKHOLDERS' DEFICIENCY**COMMON
                    STOCK
                
                CLASS
                    B STOCK
                
                PAID
                    IN
                
                STOCK
                
                TREASURY
                    STOCK
                
                ACCUM'TED
                
                OTHER#
                    of Shares
                
                $
                    Amount
                
                #
                    of Shares
                
                $
                    Amount
                
                CAPITAL
                
                RIGHTS
                
                #
                    OF SHARES
                
                AMNT
                
                DEFICIT
                
                COMPREHENSIVE
                  INCOME
                
                DEFERRED
                    SERVICES
                
                TOTALS**BALANCE
                    JUNE 30, 2003**
                
                
                491,248,233
                
                $
                2,456,241
                
                
                1,280,000
                
                $
                6,400
                
                $
                39,496,481
                
                $
                3,184,962
                
                
                40,000
                
                $
                (14,350
                )
                $
                (39,898,907
                )
                $
                (119,700
                )
                $
                (4,979,699
                )
                $
                131,429Sale
                    of Common Stock
                
                
                20,400,000
                
                
                102,000
                
                
                
                
                
                
                
                
                897,600
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                999,600Common
                    Shares Issued for Deferred Serv.
                
                
                148,942,918
                
                
                744,715
                
                
                
                
                
                
                
                
                7,261,008
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (8,005,723
                )
                
                (0
                )Amortization
                    of Deferred Services
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,465,453
                
                
                3,465,453Common
                    Shares Issued for Services
                
                
                1,579,000
                
                
                7,895
                
                
                
                
                
                
                
                
                88,765
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                96,660Common
                    Shares Issued for Conversion of Loans and Interest
                
                
                -
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Common
                    Shares Issued for Warrants
                
                
                95,819
                
                
                479
                
                
                
                
                
                
                
                
                9,435
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                9,914Common
                    Shares Issued for Accrued Officers Salary
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Common
                    Shares Issued for Collateral
                
                
                40,000,000
                
                
                200,000
                
                
                
                
                
                
                
                
                3,720,000Common
                    Shares Issue for Stock Rights
                
                
                16,000,000
                
                
                80,000
                
                
                
                
                
                
                
                
                110,000
                
                
                (190,000
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Cash
                    Received for Stock Rights
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                4,433,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                4,433,000Common
                    Shares Issued for Notes Payable
                
                
                -
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Unrealized
                    Loss on Marketable Securities
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Net
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (9,061,293
                )
                
                
                
                
                
                
                
                (9,061,293
                )**BALANCE
                    JUNE 30, 2004**
                
                
                718,265,970
                
                
                3,591,330
                
                
                1,280,000
                
                
                6,400
                
                
                51,583,289
                
                
                7,427,962
                
                
                40,000
                
                
                (14,350
                )
                
                (48,960,200
                )
                
                (119,700
                )
                
                (9,519,969
                )
                
                74,763Sale
                    of Common Stock
                
                
                44,666,667
                
                
                223,333
                
                
                
                
                
                
                
                
                406,667
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                630,000Common
                    Shares Issued for Deferred Serv.
                
                
                1,234,241,921
                
                
                6,171,210
                
                
                
                
                
                
                
                
                4,367,849
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (10,539,059
                )
                
                (0
                )Amortization
                    of Deferred Services
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,732,540
                
                
                5,732,540Common
                    Shares Issued for Services
                
                
                31,587,500
                
                
                157,938
                
                
                
                
                
                
                
                
                190,493
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                348,431Common
                    Shares Issued for Repayment of Loans
                
                
                33,000,000
                
                
                165,000
                
                
                
                
                
                
                
                
                235,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                400,000Common
                    Shares Issued for Warrants
                
                
                
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Common
                    Shares Issued for Accrued Officers Salary
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Common
                    Shares Issue for Stock Rights
                
                
                1,666,666
                
                
                8,333
                
                
                
                
                
                
                
                
                41,667
                
                
                (50,000
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                0Cash
                    Received for Stock Rights
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,657,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,657,000Common
                    Shares Issued for Notes Payable
                
                
                
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Unrealized
                    Loss on Marketable Securities
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Net
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (9,985,868
                )
                
                
                
                
                
                
                
                (9,985,868
                )**Balance
                    Qtr ending 06/30/05**
                
                
                1,345,162,754
                
                
                6,725,814
                
                
                -
                
                
                -
                
                
                5,241,676
                
                
                3,607,000
                
                
                -
                
                
                -
                
                
                (9,985,868
                )
                
                -
                
                
                (4,806,519
                )
                
                782,103**Balance
                    06/30/05**
                
                
                2,063,428,724
                
                
                10,317,143
                
                
                1,280,000
                
                
                6,400
                
                
                56,824,965
                
                
                11,034,962
                
                
                40,000
                
                
                (14,350
                )
                
                (58,946,068
                )
                
                (119,700
                )
                
                (14,326,488
                )
                
                856,865


F-5




**Universal
                    Express Inc, and
                    Subsidiaries****Consolidated
                    Statements of Cash Flows****Year
                    Ended June 30****2005**
                
                **2004****CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    Loss
                
                
                
                
                
                (9,985,868
                )
                $
                (9,061,293
                )Adjustments
                    to reconcile net loss to net cash used by operating
                    activities:Depreciation
                    and amortization
                
                
                
                
                
                35,281
                
                
                197,270Amortization
                    Of Deferred Compensation
                
                
                
                
                
                5,732,540
                
                
                3,465,453Common
                    shares issued for services
                
                
                
                
                
                348,431
                
                
                96,660Forgiveness
                    of officer loan
                
                
                
                
                
                77,345
                
                
                80,640Officer
                    salary accrued
                
                
                
                
                
                -
                
                
                250,000Net
                    loss from discontinued operations
                
                
                
                
                
                -
                
                
                272,673Write
                    off acquisition deposit
                
                
                
                
                
                -
                
                
                500,078Bad
                    debt expense
                
                
                
                
                
                -
                
                
                19,340Changes
                    in operating assets and liabilities:(Increase)
                    decrease in accounts receivable
                
                
                
                
                
                (24,144
                )
                
                (28,929
                )(Increase)
                    decrease in other current assets
                
                
                
                
                
                (63,300
                )
                
                (100,968
                )(Increase)
                    decrease in other receivables
                
                
                
                
                
                7,700
                
                
                -(Increase)
                    decrease in notes receivables
                
                
                
                
                
                (344,523
                )
                
                (509,990
                )(Increase)
                    decrease in loan to officers
                
                
                
                
                
                (45,247
                )
                
                (47,175
                )(Increase)
                    decrease in other assets
                
                
                
                
                
                (3,250
                )
                
                3,601Increase
                    (decrease) in accounts payable and accrued expenses
                
                
                
                
                
                17,280
                
                
                209,115Increase
                    (decrease) in accrued officers salary
                
                
                
                
                
                (43,258
                )
                
                (98,241
                )Increase
                    (decrease) in accrued interest
                
                
                
                
                
                19,241
                
                
                39,259Net
                    cash provided (used) by operating activities:
                
                
                
                
                
                (4,271,772
                )
                
                (4,712,507
                )**CASH
                    FLOWS FROM INVESTING ACTIVITIES**Acquisition
                    payments and deposits
                
                
                
                
                
                -
                
                
                (780,000
                )Credit
                    Card Line of Ctedit
                
                
                
                
                
                20,315Loan
                    to employee
                
                
                
                
                
                -
                
                
                (2,500
                )Purchase
                    of property and equipment
                
                
                
                
                
                (71,435
                )
                
                (29,515
                )Net
                    cash provided (used) by investing activities
                
                
                
                
                
                (51,120
                )
                
                (812,015
                )**CASH
                    FLOWS FROM FINANCING ACTIVITIES:**Bank
                    line of credit payments
                
                
                
                
                
                (7,075
                )
                
                (9,913
                )Notes
                    payable payments
                
                
                
                
                
                (7,500
                )
                
                (6,000
                )Long
                    Term Debt payments
                
                
                
                
                
                (30,431
                )
                
                (34,164
                )Issuance
                    of common stock for cash
                
                
                
                
                
                630,000
                
                
                999,600Issuance
                    of stock rights for cash
                
                
                
                
                
                3,657,000
                
                
                4,433,000Net
                    cash provided by financing activities
                
                
                
                
                $
                4,241,994
                
                $
                5,382,523Net
                    increase (decrease) in cash and equivalents
                
                
                
                
                
                (80,898
                )
                
                (141,999
                )**CASH**and
                    equivalents, beginning of period
                
                
                
                
                
                100,038
                
                
                242,037**CASH**and
                    equivalents, end of period
                
                
                
                
                $
                19,140
                
                $
                100,038**SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION:**Interest
                    paid in cash
                
                
                
                
                $
                1,925
                
                $
                2,458**Non-Cash
                    Financing Activities:**Issuance
                    of common stock for deferred compensation
                
                
                
                
                
                10,539,059
                
                
                8,005,123Issuance
                    of common stock for loan Repayment
                
                
                
                
                
                400,000
                
                
                -Issuance
                    of common stock for Conversion of Stock Rights
                
                
                
                
                
                50,000
                
                
                190,000




F-6




**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      1 -
      SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES




Nature
      of
      Organization


Universal
      Express, Inc. ("USXP" or "the Company") was incorporated in the state of Nevada
      on April 6, 1983 and is an integrated business to business services company
      centered around the private postal and international shipping industries. Its
      principal subsidiaries include Universal Express Capital Corp. and Universal
      Express Logistics, Inc. (which includes Virtual Bellhop, LLC, Luggage Express
      and Worldpost, its international shipping divisions), and Private Postal Center
      Network.com (PPN Network) and its division Postal Business Center Network.com
      ("PBC Network").





The
      PPN
      Network is an association with the goal of unifying and organizing independent
      and franchised postal stores nationwide.





Universal
      Express Capital Corp. was a full service asset based transportation/equipment
      leasing brokerage company.





Virtual
      Bellhop, Inc. and Luggage Express are door to door luggage transportation
      services with established unique strategic relationships with well known travel
      service providers and distribution partners.





On
      January 2, 2001, USXP sold its 51% interest in SkyWorld International Couriers,
      Inc. ("SkyNet") in exchange for $400,000, a non-exclusive license to sublicense
      the SkyNet name in connection with an international courier service in the
      United States, and delivery service credits of $700,000 provided that USXP
      shall
      not use more than $50,000 in credits in any one month, unless authorized by
      SkyNet. Through June 30, 2005, the Company has used $20,177 of the
      aforementioned credits.





On
      May
      11, 2001 USXP sold all of the assets of its subsidiary Downtown Theater Ticket
      Agency, Inc. ("DTTA") for $50,000 and a promissory note of approximately
      $392,000 payable over approximately 33 years. The present value of this note
      using a 9% discount rate is $119,402. Due to the uncertainty of collectability
      and the non-recourse nature of this long-term note the Company has recorded
      a
      reserve of $111,702, resulting in an unreserved other receivable of $7,700,
      representing approximately 1 year of payments. The Company did not receive
      any
      payments on this note after July 2001, and filed a lawsuit to collect. This
      suit
      was settled after June 30, 2004, and the Company received an initial payment
      under the settlement of $60,000, and another $55,000 to be paid $1,833 per
      month
      for 30 months. As of June 30, 2005, the Company has received $ 61,833 of this
      amount.





In
      addition, USXP owns several other subsidiaries with little or no activity and
      seeks new acquisitions which will complement the PBC Network. Hereinafter,
      all
      of the aforementioned companies are collectively referred to as the
      "Company".





Going
      concern


The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. The Company incurred losses from
      operations of $9,985,900 and $9,061,300 for the years ended June 30, 2005 and
      2004, respectively, and had a working capital deficiency of $2,200,400 at June
      30, 2005. These conditions raise substantial doubt about the Company's ability
      to continue as a going concern without the raising of additional debt and/or
      equity financing to fund operations. Management is actively pursuing new debt
      and/or equity financing and is continually evaluating the Company's operations,
      however, any results of their plans and actions cannot be assured. The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.




F-7




**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      1 -
      SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, Continued





Principles
      of Consolidation


The
      accompanying financial statements consolidate the accounts of USXP and its
      wholly-owned subsidiaries. All significant intercompany transactions and
      balances have been eliminated in consolidation.





Revenue
      Recognition


For
      the
      luggage transportation operations, revenue is recognized upon delivery of the
      luggage.





For
      the
      transportation/equipment leasing brokerage company, revenue is recognized upon
      delivery of the transportation/equipment to the end user.





Shipping
      and Handling Costs


Shipping
      and handling costs for the luggage transportation operations are charged to
      costs of goods sold as incurred.





Advertising
      Costs


Advertising
      costs are charged to operations when incurred. Advertising expense was $394,658
      and $131,802 for the years ended June 30, 2005 and 2004,
      respectively.





Goodwill


Goodwill
      represents the excess of the purchase price of companies acquired over the
      fair
      market value of their net assets at the date of acquisition. The Company tests
      goodwill for impairment on an annual basis, relying on a number of factors
      including operating results, business plans and future cash flows. If the
      carrying value of the goodwill of a reporting unit exceeds the fair value of
      that goodwill, an impairment loss is recognized in an amount equal to the
      excess. At June 30, 2005, the Company believes that there has been no impairment
      of goodwill.





Property
      and Equipment


Property
      and equipment are stated at cost. Depreciation and amortization are provided
      on
      a straight-line basis over the estimated useful life of the respective assets,
      ranging from five to ten years.





Deferred
      Service Costs


Deferred
      service costs are recorded in connection with common stock issued to advisors
      for future services and are amortized over the period of the agreement, ranging
      from six months to ten years.





Stock
      Based Compensation


Financial
      Accounting Statement No. 123 ("SFAS No. 123), Accounting for Stock Based
      Compensation, encourages, but does not require companies to record compensation
      cost for stock-based employee compensation plans at fair value. The Company
      has
      chosen to continue to account for stock-based compensation using the intrinsic
      method prescribed in Accounting Principles Board Opinion No. 25, Accounting
      for
      Stock Issued to Employees, and related interpretations. Accordingly,
      compensation cost for stock options is measured as the excess, if any, of the
      quoted market price of the Company's stock at the date of the grant over the
      amount an employee must pay to acquire the stock. The Company has adopted the
      "disclosure only" alternative described in SFAS 123 and SFAS 148, which require
      pro forma disclosures of net income and earnings per share as if the fair value
      method of accounting had been applied.




F-8




**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      1 -
      SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, Continued





Stock
      Based Compensation, continued


As
      required by Statement No. 123 the Company accounts for stock issued for services
      to non-employees by reference to the fair market value of the Company's stock
      on
      the date of issuance.





Basic
      Loss Per Common Share


Net
      loss
      per common share is calculated utilizing the weighted average number of common
      shares outstanding during the period. Common stock equivalents and contingently
      issuable shares have not been included in the computation since the effect
      would
      be anti-dilutive.





Estimates


The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenue and expenses during the reporting period. Actual
      results could differ from those estimates.





Income
      Taxes


The
      Company recognizes deferred tax assets and liabilities based on the difference
      between the financial statements carrying amount and the tax basis of assets
      and
      liabilities using the effective tax rates in the years in which the differences
      are expected to reverse. A valuation allowance related to deferred tax assets
      is
      also recorded when it is probable that some or all of the deferred tax assets
      will not be realized.





Impairment
      of Long-Lived Assets


The
      Company reviews long-lived assets for impairment whenever circumstances and
      situations change such that there is an indication that the carrying amounts
      may
      not be recovered. At June 30, 2005, the Company believes that there has been
      no
      impairment of its long-lived assets.





Marketable
      Securities


Investments
      in marketable securities are classified as available-for-sale and are recorded
      at fair value with any unrealized holding gains or losses included in unrealized
      loss on marketable securities, which is a component of accumulated other
      comprehensive income (loss) in stockholders' equity.





Segment
      Disclosure


The
      Company uses the "management approach" model for segment reporting. The
      management approach model is based on the way a company's management organizes
      segments within the company for making operating decisions and assessing
      performance.





As
      such,
      the Company has two major segments for the year ended June 30, 2005: Logistics
      and International Shipping, Transportation/Equipment Leasing Brokerage and
      Parent (other). Logistics and International Shipping includes Virtual Bellhop,
      LLC, Luggage Express, Worldpost, and Private Postal Center Network.com.




F-9




**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      1 -
      SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, Continued





Comprehensive
      Income


The
      Company has adopted Statement of Financial Accounting Standards No. 130 ("SFAS
      130") "Reporting Comprehensive Income". Comprehensive income is comprised of
      net
      income (loss) and all changes to the statements of stockholders' equity, except
      those due to investments by stockholders, changes in paid-in capital and
      distributions.





NOTE
      2 -
      CONCENTRATION OF CREDIT RISK





The
      Company places its cash in what it believes to be credit-worthy financial
      institutions. However, cash balances may exceed FDIC insured levels at various
      times during the year.





NOTE
      3 -
      LOAN TO OFFICER





Prior
      to
      the enactment of the Sarbanes-Oxley act, the Company's Chief Executive Officer,
      in accordance with the such officer' employment contract was entitled to secure
      loans from the Company in an amount not to exceed $950,000. The board agreed
      to
      forgive 10% per year (2.5% quarterly) of the outstanding balance of the Company
      loans to such officer, commencing January 2, 2001. These loans bear interest
      at
      the applicable federal rate, which approximated 6% during the year ended June
      30, 2004. As of June 30, 2005 the amount owed under such loan is
      $753,496.





NOTE
      4 -
      RELATED PARTY RECEIVABLES





As
      of
      June 30, 2005, the Company has advanced $906,000 to the spouse of the Chief
      Executive Officer, who is also an employee of the Company. The repayment terms
      of such advances have not yet been determined.





NOTE
      5 -
      MARKETABLE INVESTMENT SECURITIES





Cost
      and
      fair value of the Company's investment in available for sale equity securities
      as of June 30, 2005 are as follows:





Amortized
                Costs
            
            Gross
                Unrelated Loss
            
            Fair
                Value$120,000
            
            $(119,700)
            
            $300








NOTE
      6
      -PROPERTY AND EQUIPMENT




Property
                and equipment at June 30, 2005 consists of the following:Leasehold
                improvements
            
            $
            47,028Office
                equipment
            
            
            103,620Furniture
                and fixtures
            
            
            115,272265,920Less
                accumulated depreciation and amortization
            
            
            127,553$
            138,367





F-10




**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      7 -
      OTHER CURRENT ASSETS





Other
      current assets as of June 30, 2005 consist of the following:





Prepaid
                legal fees
            
            $
            171,000Employee
                advance
            
            
            24,100Deposit
            
            
            12,000$
            207,100





NOTE
      8 -
      NOTES PAYABLE





Notes
      payable at June 30, 2005 consist of the following:





Note
                payable, due upon demand, bearing interest at rate of 18% per
                annum
            
            $
            25,000Notes
                payable, due upon demand, bearing interest at a rate of 18% per
                annum
            
            
            31,900$
            56,900





NOTE
      9 -
      BANK LINE OF CREDIT





The
      Company has a line of credit under which the bank has agreed to make loans
      up to
      $70,000 at 1.75% above the prime interest rate. At June 30, 2005, the
      outstanding balance on the line of credit was $36,368.





NOTE
      10 -
      LONG-TERM DEBT





Long-term
      debt at June 30, 2005, is comprised of the following:





Installment
                note arising from settlement agreement due in monthlyinstallments
                of $1,185 including interest through December 2004. Thisnote
                bears interest at 12.5% (in default)
            
            $
            11,646Promissory
                note to bank payable in equal monthly installmentsof
                $2,167 plus interest through October 2006. The note bearsinterest
                at the rate of 2% over the then prevailing prime rate.The
                note is secured by substantially all the Company's assets.
            
            
            32,999Loans
                payable to former owners of Virtual Bellhop, LLC, payable
                inmonthly
                installments of $3,333 plus interest at 4% through May 2005 (in
                default)
            
            
            81,998Total
            
            
            126,643Less
                current maturities
            
            
            119,648Long-Term
                Debt, Net of Current Maturities
            
            $
            6,995




F-11




**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      10 -
      LONG-TERM DEBT, Continued





Total
      maturities of long-term debt are as follows:





Year
                ended June 30,2006
            
            $
            119,6482007
            
            
            6,9952008
            
            
            02009
            
            
            0$
            126,643




NOTE
      11 -
      CONVERTIBLE DEBENTURE





The
      Company issued a $100,000 convertible debenture in 1997. Such debenture is
      still
      outstanding and bears interest at 18% per annum. Any payment or conversion
      of
      this debenture is disputed by the Company.





NOTE
      12 -
      COMMITMENTS AND CONTINGENCIES





The
      Company leases certain office space and equipment under operating lease
      agreements with unrelated parties. The base rent under these agreements
      aggregates approximately $21,934 per month. The related leases expire between
      July 2004 and 2007.





The
      following is a schedule of future minimum rental payments (exclusive of common
      area charges) required under operating operating leases that have remaining
      non-cancelable lease terms in excess of one year as of June 30,
      2005.





Year
                ended June 30,2006
            
            
            314,3202007
            
            
            263,208$
            577,528








Rent
      expense charged to operations was $306,438 and $227,882 for the years ended
      June
      30, 2005 and 2004, respectively.





The
      leases also contain provisions for contingent rental payments based upon
      increases in taxes, insurance and common area maintenance expenses as well
      as
      renewal options.





The
      employment agreement with the Company's Chief Executive Officer provides for
      an
      annual base salary of $600,000 per annum. As of June 30, 2005 the Company has
      accrued $935,057 of salary due to such officer.





The
      Company is involved in various lawsuits and claims in the normal course of
      business. The Company believes that the disposition of these matters will not
      have a material adverse effect on the Company's financial position.





F-12


**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      12 -
      COMMITMENTS AND CONTINGENCIES, Continued





On
      July
      5, 2001, the Company was awarded a $389 million judgment by a jury in Dade
      County, Florida against the Company's former investment banker. On April 23,
      2003, the Company was awarded an additional $137 million judgment against two
      other parties related to this matter. The Company is currently pursuing
      collection of the judgments. At this time, however, no estimate can be made
      as
      to the time or amount of collection.





NOTE
      13 -
      INCOME TAXES





At
      June
      30, 2005 the Company had approximately $59,000,000 of net operating loss carry
      forwards expiring beginning in 2009 through 2025. A substantial amount of the
      carry forwards are subject to annual limitations pursuant to provisions
      contained in the Internal Revenue Code which become effective when an "ownership
      change", such as the ownership change effected pursuant to the Plan of
      Reorganization, occurs. To the extent that such net operating losses are not
      utilized in a particular year, such amounts become available to increase the
      following year's limitations.





Deferred
      tax assets in the amount of approximately $23,600,000 (resulting from the
      benefit of the aforementioned net operating losses), have been fully offset
      by a
      valuation allowance since realization of the benefit of the net operating losses
      is not assured.





Significant
      components of the deferred tax assets as of June 30, 2005 were from net
      operating losses. The deferred tax assets have been presented in the Company's
      financial statements as follows:





Total
                deferred tax assets
            
            $
            23,600,000Less:
                valuation allowance
            
            
            (23,600,000
            )Net
                deferred tax assets
            
            $
            0








The
      increase in the valuation allowance of $4,000,000 during the year ended 2005
      was
      due to the additional allowance provided for the 2005 net operating
      loss.





The
      provision for income taxes differ from the amount computed by applying the
      statutory federal income tax rate to income before provision for income taxes
      as
      follows:





June
                30,2005
            
            2004Benefit
                computed at the statutory rate
            
            $
            4,000,000
            
            $
            4,873,000Losses
                for which no benefit recognized
            
            
            (4,000,000
            )
            
            (4,873,000
            )Benefit
                recorded
            
            $
            0
            
            $
            0




F-13




**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      14 -
      STOCKHOLDERS' EQUITY





The
      Company's Class B common shares (of which 3,000,000 shares have been authorized)
      provide for one and one-third votes per share. If the Company's current Chief
      Executive Officer exercises any stock options pursuant to the Company's stock
      option plan, or if the officer receives other shares of common stock pursuant
      to
      his employment agreement with the Company in lieu of stock options, the
      aggregate number of votes to which the initial 1,500,000 Class B shares issuable
      to such officer is entitled shall be reduced by one vote for each additional
      share which is received by the officer.





During
      the year ended June 30, 2005, the Company issued 110,920,833 shares of common
      stock. Of such shares issued, 31,587,500 shares were issued in exchange for
      advisory services rendered, 1,666,666 shares were issued to investors for stock
      rights, 44,666,667 shares were issued in exchange for cash and 33,000,000 shares
      were issued in payment of loans outstanding.





During
      the year ended June 30, 2005, advisory fees were prepaid to consultants retained
      by the Company to provide certain advisory services via the issuance of
      1,234,241,921 common shares. The common shares were valued at their approximate
      fair market value on the dates of issuance and are being amortized over their
      respective contract periods.





During
      the year ended June 30, 2004, the Company issued 232,017,737 shares of common
      stock and cancelled 5,000,000 shares of common stock. Of such shares issued,
      1,579,000 shares were issued in exchange for advisory services rendered,
      16,000,000 shares were issued to investors for stock rights, 20,400,000 shares
      were issued in exchange for cash and 95,819 shares were issued in exchange
      for
      warrants. 5,000,000 shares were issued in conjunction with the acquisition
      of
      Subcontracting Concepts, Inc., (SCI). Upon the resale of SCI to its original
      owners, these shares were returned to the Company and cancelled.





During
      the year ended June 30, 2004, advisory fees were prepaid to consultants retained
      by the Company to provide certain advisory services via the issuance of
      148,942,918 common shares. The common shares were valued at their approximate
      fair market value on the dates of issuance and are being amortized over their
      respective contract periods.





NOTE
      15 -
      TREASURY STOCK





The
      Company has bought an aggregate 50,000 shares from one investor for $18,000.
      Treasury stock is recorded at cost. The Company has a verbal agreement with
      such
      investor to repurchase an additional 200,000 shares at $.60 per share under
      certain circumstances. During the years ended June 30, 2004 and 2003 the Company
      retired 0 and 10,000 shares of treasury stock, respectively.





NOTE
      16 -
      STOCK RIGHTS





Stock
      rights represent amounts received from investors for their future rights to
      purchase shares of stock of the Company at a discount of 20% to 30% of the
      market value of the stock at the date of exercise subject to the Company's
      right
      of redemption at a premium not to exceed 20% of the face amount of the
      right.




F-14




**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      17 -
      SEGMENT INFORMATION




Year
      ended June 30, 2005:





Transportation/Logistics
                &
            
            EquipmentInternational
            
            Leasing
            
            ParentShipping
            
            Brokerage
            
            (Other)
            
            ConsolidatedRevenue
            
            $
            575,652
            
            $
            355,357
            
            $
            -
            
            $
            931,009Operating
                Loss
            
            $
            (796,434
            )
            $
            (531,501
            )
            $
            (8,745,711
            )
            $
            (10,073,646
            )





Year
      ended June 30, 2004:





Transportation/Logistics
                &
            
            EquipmentInternational
            
            Leasing
            
            ParentShipping
            
            Brokerage
            
            (Other)
            
            ConsolidatedRevenue
            
            $
            287,706
            
            $
            2,487,630
            
            $
            0
            
            $
            2,775,336Operating
                Loss
            
            $
            (782,208
            )
            $
            (498,519
            )
            $
            (7,054,930
            )
            $
            (8,335,657
            )





Assets
      of
      the segment groups are not relevant for management of the businesses, nor for
      disclosure.





NOTE
      18 -
      FAIR VALUE OF FINANCIAL INSTRUMENTS





The
      carrying amounts reported in the balance sheet for cash, receivables, accounts
      payable, notes payable, convertible debt and accrued expenses approximate fair
      value based on the short-term maturity of these instruments.





NOTE
      19 -
      NEW ACCOUNTING PRONOUNCEMENTS





In
      August
      2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 144,
      Accounting for the Impairment or Disposal of Long-Lived Assets. This statement
      addresses financial accounting and reporting for the impairment or disposal
      of
      long-lived assets. SFAS No. 144 supersedes SFAS No. 121, Accounting for the
      Impairment of Long-Lived Assets to be Disposed of, and provides guidance on
      classification and accounting for such assets when held for sale or abandonment.
      SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
      The adoption of SFAS No. 144 did not have a significant impact on the Company's
      results of operations or financial position.





In
      April
      2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44
      and
      64, Amendment of FASB Statement No. 13, and Technical Corrections. This
      statement rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment
      of
      Debt, and an amendment of that statement, SFAS No. 44, Accounting for Intangible
      Assets of Motor Carriers, and SFAS No. 64, Extinguishments of Debt Made to
      Satisfy Sinking-Fund Requirements. This statement amends SFAS No. 13, Accounting
      for Leases, to eliminate inconsistencies between the required accounting for
      sales-leaseback transactions and the required accounting for certain lease
      modifications that have economic effects that are similar to sales-leaseback
      transactions. Also, this statement amends other existing authoritative
      pronouncements to make various technical corrections, clarify meanings,


or
      describe their applicability under changed conditions. Provisions of SFAS No.
      145 related to the rescissions of SFAS No. 4 were effective for the Company
      on
      November 1, 2002 and provisions affecting SFAS No. 13 were




F-15


**Universal
      Express, Inc.**


**Notes
      to the Consolidated Financial Statements**





NOTE
      19 -
      NEW ACCOUNTING PRONOUNCEMENTS, continued





effective
      for transactions occurring after May 15, 2002. The adoption of SFAS No. 145
      did
      not have a significant impact on the Company's results of operations or
      financial position.





In
      November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), Guarantor's
      Accounting and Disclosure Requirements for Guarantees, Including Indirect
      Guarantees of Indebtedness of Others. FIN 45 requires a company, at the time
      it
      issues a guarantee, to recognize an initial liability for the fair value of
      obligations assumed under the guarantees and elaborates on existing disclosure
      requirements related to guarantees and warranties. The initial recognition
      requirements are effective for the Company during the third quarter ending
      March
      31, 2003. The adoption of FIN 45 did not have a significant impact on the
      Company's results of operations or financial position.





In
      December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
      Compensation-Transition and Disclosure, which provides alternative methods
      of
      transition for a voluntary change to fair value based method of accounting
      for
      stock-based employee compensation as prescribed in SFAS 123, Accounting for
      Stock-Based Compensation. Additionally, SFAS No. 148 required more prominent
      and
      more frequent disclosures in financial statements about the effects of
      stock-based compensation. The provisions of this Statement are effective for
      fiscal years ending after December 15, 2002. The adoption of this statement
      is
      not expected to have a significant impact on the Company's results of operations
      of financial position.





In
      January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
      Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
      FIN 46 requires certain variable interest entities to be consolidated by the
      primary beneficiary of the entity if the equity investors in the entity do
      not
      have the characteristics of a controlling financial interest or do not have
      sufficient equity at risk for the entity do not have the characteristics of
      a
      controlling financial interest or do not have sufficient equity at risk for
      the
      entity to finance its activities without additional subordinated financial
      support from other parties. FIN 46 is effective for all new variable interest
      entities created or acquired after January 31, 2003. For variable interest
      entities created or acquired prior to February 1, 2003, the provisions of FIN
      46
      must be applied for the first interim or annual period beginning after June
      15,
      2003. The adoption of FIN 46 did not have a significant impact on the Company'
      results of operations or financial position.





In
      April
      2003, the FASB issued SFAS Statement No. 149, "Amendment of Statement 133 on
      Derivative Instruments and Hedging Activities", which amends and clarifies
      financial accounting and reporting for derivative instruments, including certain
      derivative instruments embedded in other contracts (collectively referred to
      as
      derivatives) and for hedging activities under FASB Statement No. 133, Accounting
      for Derivative Instruments and Hedging Activities. This Statement is effective
      for contracts entered into or modified after June 30, 2003, except for certain
      hedging relationships designated after June 30, 2003. Most provisions of this
      Statement should be applied prospectively. The adoption of this statement is
      not
      expected to have a significant impact on the Company's results of operations
      or
      financial position.




F-16


**Universal
        Express, Inc.**
 **Notes
        to the Consolidated Financial Statements**
 
 NOTE
        19 -
        NEW ACCOUNTING PRONOUNCEMENTS, Continued


In
      May
      2003, the FASB issued SFAS Statement No. 150, "Accounting for Certain Financial
      Instruments with Characteristics of both Liabilities and Equity". This Statement
      establishes standards for how an issuer classifies and measures certain
      financial instruments with characteristics of both liabilities and equity.
      It
      requires that an issuer classify a financial instrument that is within its
      scope
      as a liability (or an asset in some circumstances). This statement is effective
      for financial instruments entered into or modified after May 31, 2003, and
      otherwise is effective at the beginning of the first interim period beginning
      after June 15, 2003, except for mandatorily redeemable financial instruments
      of
      nonpublic entities, if applicable. It is to be implemented by reporting the
      cumulative effect of a change in an accounting principle for financial
      instruments created before the issuance date of the Statement and still existing
      at the beginning of the interim period of adoption. The adoption of this statement
      is not expected to have a significant impact on the Company's results of
      operations or financial position.





In
      June
      2003, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit
      or
      Disposal Activities. This statement covers restructuring type activities
      beginning with plans initiated after December 31, 2002. Activities covered
      by
      this standard that are entered into after that date will be recorded in
      accordance with provisions of SFAS No. 146. The adoption of SFAS No. 146 did
      not
      have a significant impact on the Company's results of operations or financial
      position.





NOTE
      20 -
      DISCONTINUED OPERATIONS





On
      March
      30, 2004, the Company sold Bags to Go, Inc., (BTG), to its former owner. BTG
      was
      purchased by the Company on January 22, 2004. The Company decided to sell BTG
      as
      a result of its decision to lower its long-term debt. The purchase price
      consisted of (a) $179,500, with $25,000 paid at closing and 24 equal monthly
      payments of $6,437.50, (b) $129,275, with $25,000 paid at closing and 24 equal
      monthly payments of $4,344.83 and (c) the cancellation of the note due to the
      former owner of BTG, of which, the balance at closing was $424,666.





In
      the
      fourth fiscal quarter, the Company sold Subcontracting Concepts, Inc., (SCI),
      to
      its former owners. SCI was purchased by the Company on November 28, 2003. The
      decision to sell SCI was based on the concern and apprehension voiced by SCI’s
      insurance carriers, financial institutions and clients regarding the recent
      SEC
      public complaint filed against the Company. The purchase price consisted of
      (a)
      $91,667 paid at closing, (b) $458,333 payable in five equal monthly payments
      of
      $91,666.60, (c) the surrender of 5,000,000 shares of the Company’s common stock,
      (which have since been cancelled), and (d) the cancellation of the note due
      to
      the former owners of SCI, of which, the balance at closing was $6,850,000.
      The
      Company recorded a gain of $50,000 as a result of this transaction.





F-17





On
                October 12, 2003, the Company signed a contract to purchase North
                American
                Airlines, (NAA). This contract required the Company to place a $1,000,000
                deposit at the signing of the agreement, which it did. On November
                24,
                2003, the Company announced that this transaction would not close.
                The
                Company received $500,000 of the initial deposit back. During the
                third
                fiscal quarter the Company filed a lawsuit against NAA and its principal
                stockholder. In the fourth fiscal quarter, the Company wrote off
                the
                remaining $500,000 of the initial deposit, as it is now the subject
                of the
                lawsuit and the return of it is in question as to amount and
                timing.





On
                December 16, 2003, the Company acquired a portfolio of automotive
                leases
                from Go Automotive Leasing Corp. of Bohemia, NY. The purchase price
                was
                (a) $200,000 in cash at closing, which was paid, (b) a $50,000 deposit
                with Sovereign Bank as security deposit for future leases, which
                was paid
                and (c) the assumption of existing debt directly related to the lease
                portfolio, which at closing amounted to $2,237,405. Subsequent to
                year end
                the Company discovered that Go Leasing had repossessed the lease
                portfolio
                during the fourth fiscal quarter. Therefore the Company wrote off
                the
                portfolio resulting in the recording a loss of $284,409. Go Leasing
                has
                refused to return the Company’s $200,000 payment and Sovereign as so far
                refused to return the $50,000 security deposit. The Company is currently
                evaluating its options in this
                matter.




F-18





ITEM
      8





CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS


ON
      ACCOUNTING AND FINANCIAL DISCLOSURE





Nothing
      to report








PART
      III





ITEM
      9





MANAGEMENT
      OF THE COMPANY; COMPLIANCE WITH SECTION 16(a)





A.
      DIRECTORS





Pursuant
      the Company’s Bylaws, the authorized number of directors of the Board of
      Directors of the Company is five (5). The sole Director of the Company at
      present is Richard A. Altomare, whose biographical information is set forth
      below.





B.
      EXECUTIVE OFFICERS





The
      following table sets forth certain information concerning the persons who will
      serve as Executive Officers of the Company or certain of its subsidiaries.
      Each
      such person shall serve at the pleasure of the Board of Directors of the
      Company.








NAME
            AGE
            POSITIONRichard
                A. Altomare
            57
            Chairman
                and CEO





Richard
      A. Altomare .
      Mr.
      Altomare, is the Chairman and Chief Executive Officer of Universal Express
      (USXP). Universal, with its wholly owned subsidiary the UniversalPost Network
      is
      a leader of the $7 billion private postal industry. Its division, the
      UniversalPost International Courier System is engaged in international shipping.
      Prior to Universal Express, Mr. Altomare was an investment banker specializing
      in real estate, bankruptcy reorganizations and equipment transactions. Mr.
      Altomare also owned and operated professional sports teams. He served in the
      U.S. Marine Corps. and U.S. Army specializing in communications and
      intelligence. Mr. Altomare attended Adelphi and Hofstra University and has
      been
      a political candidate for U.S. Congress and served on numerous corporate
      Boards.




14




C.
      COMPLIANCE WITH SECTION 16(a)





Based
      on
      a review of forms submitted to the Company during and with respect to the
      current Period, the Company is not aware of any Director, Officer, or Beneficial
      Owner of more than 10% of any class of equity securities of the Company that
      failed to file on a timely basis the reports required by Section 16(a) of the
      Exchange Act of 1934 during the Current Period.








ITEM
      10





COMPENSATION
      OF EXECUTIVE OFFICERS AND DIRECTORS





A.
      COMPENSATION OF EXECUTIVE OFFICERS.





The
      following table sets forth information, as required by Section 228.402 of
      Regulation S-B, 17 C.F.R. Section 228.402, as currently in effect, concerning
      the annual and long-term compensation of the Company’s Chief Executive Officer
      and other individuals acting in a similar capacity for the past five fiscal
      years. No other information is included regarding compensation paid to other
      Executive Officers during such five year period because no such Executive
      Officer earned annual or long-term compensation in excess of $100,000. Except
      as
      set forth in the tables following, no bonus, other annual compensation,
      long-term compensation (in the form of restricted stock awards, options, stock
      appreciation rights, long-term incentive plans, or otherwise), or other forms
      of
      compensation were paid to the Company’s Chief Executive Officer, any other
      individuals acting in a similar capacity, or any other Executive Officer of
      the
      Company at any time during such periods as are reflected in the tables (and
      accompanying notes) set forth below. Accordingly, as permitted by Item 402
      (a)
      (5) of Regulation S-B, tables or columns otherwise required have been omitted
      from this Registration Statement where there has been no compensation awarded
      to, earned by, or paid to any of the named executives required to be reported
      in
      that table or column in any fiscal period covered by that table.




15




SUMMARY
      COMPENSATION TABLE







Annual
                Compensation
            Long-Term
              Compensation
                Awards(a)
            (b)
            (c)
            (d)
            (e)
            (f)NAME
                & PRINCIPAL
              POSITION
            FISCAL
              YEAR
            ANNUAL
              SALARY
            ANNUAL
              BONUS
            OTHER
                ANNUAL
              COMPENSATION
            #
                of
              OPTIONSRichard
                A. Altomare
            2001
            300,000
            $0
            $0
            0Chairman
                & CEO
            2002
            300,000
            $0
            $0
            02003
              2004
              2005
            300,000
              500,000
              600,000
            $0
              $0
              $0
            $0
              $0
              $0
            0
              0
              0







During
      the Company’s reorganization commencing in 1991 until June 30, 2002, Mr.
      Altomare received no cash compensation under his employment agreement approved
      by the Reorganization Court. Such agreement currently entitles him to an annual
      base salary of at least $600,000. For fiscal year ended June 30, 2005, Mr.
      Altomare received $560,962 in cash compensation under his employment agreement.
      Mr. Altomare’s accrued salary as of June 30, 2005 is $935,057.




16




OPTION
                GRANTS IN CURRENT PERIODIndividual
                Grants(a)
            (b)
            (c)
            (d)
            (e)Name
            Options
                Granted
            %
                of Total Options
              Granted
                to Employees
              in
                Current Period
            Exercise
                Price
            Expiration
                DateRichard
                A. AltomareChairman.
                & CEO
            0
            0
            0
            0AGGREGATED
                OPTION EXERCISES IN CURRENT PERIOD AND FY-END OPTION
                VALUES(a)
            (b)
            (c)
            (d)
            (e)#
                of unexercised
              options
                at
              FY-end(#)
            value
                of
              unexercised
              in-the-money
              options
                at
              FY-end($)Name
            Shares
              acquired
                on
              Exercise
                (#)
            Value
                Realized ($)
            Exercisable/
              Unexercisable
            Exercisable/
              UnexercisableRichard
                A. AltomareChairman.
                & CEO
            0
            0
            0/0
            0/0








B.
            COMPENSATION
                OF DIRECTORS





In
      the
      Company’s Current Period, there were no arrangements pursuant to which any
      director of the Company was compensated for any service provided as a
      Director.




17




C.
      EMPLOYMENT CONTRACTS AND RELATED MATTERS





The
      Company has an employment contract with Mr. Altomare that was approved by the
      Reorganization Court as part of the Company’s Reorganization Plan, which
      currently provides an annual base salary of $600,000. The employment agreement
      with Mr. Altomare provides that in the event Mr. Altomare’s employment is
      terminated at any time within nine months following a “change of control event”,
      as defined therein and generally described below, (i) his salary benefits for
      the remaining term of the agreement shall be accelerated and (ii) he shall
      receive shares of Class A Common Stock equal to 10% of all outstanding shares
      of
      Class A and Class B Common Stock of the Company, assuming all unexercised and
      outstanding warrants had been exercised. For purposes of the employment
      agreement with Mr. Altomare, a “change of control event” shall be deemed to have
      occurred in the event of (A) a merger or consolidation involving the Company
      in
      which the Company is not the surviving corporation, (B) the sale of all or
      substantially all of the assets of the Company, or (C) the acquisition by any
      individual, entity or group not affiliated with Mr. Altomare directly or
      indirectly becoming the beneficial owner of 20% or more of the combined voting
      power of the then outstanding voting securities of the Company. The employment
      agreement further provides certain restrictive covenants and nondisclosure
      obligations upon Mr. Altomare during the term of the agreement.





The
      board
      agreed to forgive 10% per year of the outstanding balance of the Company loans
      to such officer, commencing January 2, 2001 as long as the officer continues
      in
      the service of the Company. Such loan had a balance of $753,496 as of June
      30,
      2005.








ITEM
      11





SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL


OWNERS
      AND MANAGEMENT





A.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS





The
      table
      below lists each stockholder known to the Company that beneficially owns as
      of
      June 30, 2005 more than five percent of the Class A Common Stock of the Company.
      This information is based on 2,063,428,723 shares of Class A Common Stock issued
      and outstanding as of June 30, 2005. For purposes of this section, it is assumed
      that all 1.28 million shares of Class B Common Stock, each share of which is
      convertible into one share of Class A Common Stock under certain circumstances
      as set forth in the Company’s Articles of Incorporation, have been so
      converted.





NAME
                AND ADDRESS OF
              BENEFICIAL
                OWNER
            AMOUNT
                AND NATURE OF
              BENEFICIAL
                OWNERSHIP
            %
                OF
              COMMON
                STOCKNone





18




B.
      SECURITY OWNERSHIP OF MANAGEMENT





The
      table
      below sets forth information with respect to the number of shares of the
      Company’s Class A Common Stock that are beneficially owned by each director and
      executive officer of the Company and by all directors and offices of the Company
      as a group as of June 30, 2005. This information is based on 2,063,428,723
      shares of Class A Common Stock issued and outstanding as of June 30, 2005.
      For
      purposes of this section, it is assumed that all 1.28 million shares of Class
      B
      Common Stock (par value $.005), which are convertible into Class A Common Stock
      under certain circumstances as set forth in the Company’s Articles of
      Incorporation, have been so converted.





NAME
                AND ADDRESS OF
              BENEFICIAL
                OWNER
            AMOUNT
                AND NATURE OF
              BENEFICIAL
                OWNERSHIP
            %
                OF
              COMMON
                STOCKRichard
                A. Altomare5295
                Town Center Rd.
              Boca
                Raton, FL 33486
            22,990,173
                shares
            1.2%








ITEM
      12





CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS





Richard
      A. Altomare, the Company’s Chairman and Chief Executive Officer, served from
      1991 until May 11, 1994 as advisor and reorganization consultant to the Company
      and the Reorganization Court during the Company’s Reorganization case. The
      Reorganization Court and the Company appointed Mr. Altomare as Chairman and
      President through a long- term employment agreement, approved by the
      Reorganization Court as part of the Company’s Reorganization Plan, a position he
      has continually occupied thereafter.





During
      the Company’s reorganization commencing in 1991 until June 30, 2002, Mr.
      Altomare received no cash compensation under his employment agreement approved
      by the Reorganization Court. Such agreement currently entitles him to an annual
      base salary of at least $600,000. For fiscal year ended June 30, 2005, Mr.
      Altomare received $560,962 in cash compensation under his employment agreement.
      Mr. Altomare’s accrued salary as of June 30, 2005 is $935,057.





Mr.
      Altomare’s outstanding loan balance under his employment agreement as of June
      30, 2005 is $753,496.





As
      of
      June 30, 2005, The Company has advanced $906,000 to the spouse of the Chief
      Executive Officer, who is also an employee of the Company.




19




ITEM
      13





EXHIBITS
      AND REPORTS ON FORM 8-K


(A)
              Exhibits2.1*
              Order,
                  dated February 18, 1994. Confirming First Amended Plan ofReorganization
                       of Packaging Plus Services, Inc., including confirmedReorganization
                  Plan and other exhibits.3.1*
              Amended
                  and Restated Articles of Incorporation of Packaging Plus Services,
                  Inc.3.2**
              Certificate
                  of Amendment to Change the Number of Authorized Shares of Stockof
                  Packaging Plus Services, Inc.3.3**
              Certificate
                  of Amendment of the Certificate of Incorporation to Change the
                  Nameof
                  Packaging Plus Services, Inc. to Universal Express,
                  Inc.3.4*
              Amended
                  and Restated By-Laws of Packaging Plus Services, Inc.4.1*
              Specimen
                  Class A Common Stock Certificate.4.2*
              Specimen
                  Class B Common Stock Certificate.4.3**
              Specimen
                  Class A Warrant Certificate.4.4**
              Specimen
                  Class B Warrant Certificate.10.1*
              Employment
                  Agreement of Richard A. Altomare.10.2*
              1994
                  Stock Option Plan.21.1**
              List
                  of Subsidiaries of Registrant.31.1
              Rule
                  13a-14(a) Certifications32.1
              Section
                  1350 Certifications




*     
      Incorporated herein by reference to the Registrant’s Transition Report on Form
      10-KSB for the Transition Period from January 1, 1994 through June 30, 1994
      (as
      filed December 12, 1994)


**  
       Incorporated herein by reference to the Registrant’s Annual Report, as
      amended, on Form 10-KSB/A for the Annual Period ended June 30, 1999 (as filed
      January 20, 2000).





(B)
            Reports
                on Form 8-K-





None




20


Item
      14




Principal
      Accountant Fees and Services





The
      Company paid or accrued the following fees in each of the prior two fiscal
      years
      to it's principal accountant, 2005 - Durland & Company, CPA’s, P.A. of Palm
      Beach, Florida and 2004 - Durland & Company, CPA's, P. A. of Palm Beach,
      Florida/Rosenberg, Rich, Baker, Berman & Company of New Jersey:




Year
                  ended
              
              Year
                  endedJune
                  30,
              
              June
                  30,2005
              
              20041. 
                     Audit fees
              
              $
              71,000
              
              $
              104,1452.   
                   Audit-related fees
              
              
              -
              
              
              -3.  
                    Tax fees
              
              
              -
              
              
              -4.  
                    All other fees
              
              
              -
              
              
              -Totals
              
              $
              71,000
              
              $
              104,145


The
      Company has not designated a formal audit committee. However, as defined in
      Sarbanes-Oxley Act of 2002, the entire Board of Directors (Board), in the
      absence of a formally appointed committee, is, by definition, the Company's
      audit committee.





In
      discharging its oversight responsibility as to the audit process, commencing
      with the engagement, the Board obtained from it's independent auditors a formal
      written statement describing all relationships between the auditors and the
      Company that might bear on the auditors' independence as required by
      Independence Standards Board Standard No. 1, "Independence Discussions with
      Audit Committees." The Board discussed with the auditors any relationships
      that
      may impact their objectivity and independence, including fees for non-audit
      services, and satisfied itself as to the auditors' independence. The Board
      also
      discussed with management and the independent auditors the quality and adequacy
      of the Company's internal controls. The Board reviewed with the independent
      auditors their management letter on internal controls, if one was issued by
      the
      Company's auditors.





The
      Board
      discussed and reviewed with the independent auditors all matters required to
      be
      discussed by auditing standards generally accepted in the United States of
      America, including those described in Statement on Auditing Standards No. 61,
      as
      amended, "Communication with Audit Committees".





The
      Board
      reviewed the audited financial statements of the Company as of and for the
      years
      ended June 30, 2005 and 2004 with management and its independent auditors.
      Management has the sole ultimate responsibility for the preparation of the
      Company's financial statements and the respective independent auditors have
      the
      responsibility for their examination of those statements.




21




Based
      on
      the above-mentioned review and discussions with the respective independent
      auditors and management, the Board of Directors approved the Company's audited
      financial statements and recommended that they be included in its Annual Report
      on Form 10-KSB for the year ended June 30, 2005, for filing with the Securities
      and Exchange Commission.





The
      Company's principal accountant for the year ended June 30, 2005, and for the
      year ended June 30, 2004, Durland & Company, CPA's P.A., did not engage any
      other persons or firms other than the respective principal accountant's
      full-time, permanent employees.








SIGNATURES:





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Company’s report
      on Form 10-KSB has been signed below by the following person on behalf of the
      registrant and in the capacities and on the dates indicated.







UNIVERSAL
                EXPRESS,
                INC.Date:
              November 8, 2006
            
            /s/
              Richard A. AltomareRichard
                A. Altomare, President
              and
                Chairman of the Board




22