UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20459

                                   FORM 10-KSB

                     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 |_|.
<PAGE>

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 |X| No |_|

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.

Total number of sequentially numbered pages in this document: (24).

Documents Incorporated by Reference: None.


                                        2
<PAGE>

                                     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, UniversalPost(TM) Private
Postal Network.

Its principal businesses include the UniversalPost Private Postal Network,
UniversalPost(TM) International Courier Service, Virtual Bellhop(R), Luggage
Express(R), 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 from selling
discounted rates and services to the postal stores.

Luggage Express(TM) 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(R) 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 concentrates 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
<PAGE>

                         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(R)
      Luggage Express(R)
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
<PAGE>

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.

UniversalPost(TM) 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
Express(TM)service offered through the UniversalPost Network and its
Internet-based Virtual Bellhop(R) 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
<PAGE>

                UNIVERSALPOST(TM) - THE PRIVATE POSTAL NETWORK(R)

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


o Flowers/Gift Baskets
o Corrugated & Packaging
o Customized Rubber Stamps
o Equipment Leasing
o Moving Supplies
o Car Rental
o Customized Corrugated
o Business and Office Supplies
o Parcel Insurance
o Credit Card Processing
o Check Processing
o Prepaid Debit Card Load Stations
o Visa - MasterCard
o Discounted Supplies
o Joint Promotions
o Vide
o Tape to DVD Conversion
o Fingerprinting
o International Cell Phone Rental
o Credit Union
o Message On Hold
.. Consolidated Shipping rates
.. 1-800-Tow Truck
.. Bill Payments
o Discounted Prescriptions Program
o Gift Cards
o Passport & Visa Expediting
o Retail Products
o 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
<PAGE>

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.

                UNIVERSALPOST(TM) - 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 EXPRESS(R) AND VIRTUAL BELLHOP(R)

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
<PAGE>

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
<PAGE>

                                   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
<PAGE>

                          TRADE MARKS AND SERVICE MARKS

The Company is the owner of tradenames, trademarks and service marks for the
names and marks Universal Express(R), USXP(R), Private Postal Network(R), USXP
Capital(R), USXP Cash Express(TM), USXP Logistics(TM), UniversalPost(TM),
Luggage Express(R), Virtual Bellhop(R), USXP Logistics(TM), USXP Platinum(TM)
and USXP Transportation(TM).

                                    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
<PAGE>

                                     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.

                                                 Bid
                                                 ---
      Quarter Ended                 Low                     High
      -------------                 ---                     ----
         9/30/04                  $0.006                   $0.016
        12/31/04                  $0.007                   $0.025
         3/31/05                  $0.005                   $0.018
         6/30/05                  $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
<PAGE>

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(R), Luggage Express(TM), UniversalPost International Delivery
and USXP Capital(TM).

                         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
<PAGE>

                                     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
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

Independent Auditor's Reports................................................F-2

Consolidated Balance Sheets..................................................F-3

Consolidated Statements of Operations and Comprehensive Income (Loss)........F-4

Consolidated Statements of Stockholders' Equity (Deficiency).................F-5

Consolidated Statements of Cash Flows........................................F-7

Notes to Consolidated Financial Statements...................................F-8


                                                                             F-1
<PAGE>

             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.

Palm Beach, Florida
September 23, 2005


                                                                             F-2
<PAGE>

<TABLE>
<CAPTION>
                     UNIVERSAL EXPRESS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                    June 30,


                                  ASSETS                                2005
                                                                    ------------
CURRENT ASSETS:
<S>                                                                 <C>
  Cash and Equivalents                                              $     19,140
  Accounts Receivable                                                     68,764
  Other Receivables                                                         --
  Other Current Assets                                                   207,100
                                                                    ------------
      Total Current Assets                                               295,004
                                                                    ------------

PROPERTY AND EQUIPMENT
Computers and Equipment                                                  265,920
   Less Accumulated Depreciation                                        (127,553)
                                                                    ------------
     Net Property and Equipment                                          138,367
                                                                    ------------

OTHER ASSETS:
  Loan to Officer                                                        753,496
  Related Party Receivables                                              906,000
  Notes Receivable                                                       854,513
  Goodwill                                                               397,107
  Other Assets                                                            14,805
                                                                    ------------
      Total Other Assets                                               2,925,921
                                                                    ------------

                                                                    ------------
                               Total Assets                         $  3,359,292
                                                                    ============

                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts Payable                                                  $    753,921
  Accrued Expenses
       Trade                                                             233,663
       Officers' Salary                                                  935,057
       Interest                                                          257,875
  Current Portion of Long-Term Debt                                      119,648
  Bank Line of Credit                                                     38,368
  Notes Payable                                                           56,900
  Convertible Debentures                                                 100,000
                                                                    ------------
      Total Current Liabilities                                        2,495,432
                                                                    ------------

Long-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 Shares
     2,063,428,723 Shares Issued,2,063,388,723 Shares Outstanding     10,317,144
   Class B Common Stock, $.005 par value; Authorized 3,000,000
     shares 1,280,000 shares issued and outstanding                        6,400
   Additional Paid-in Capital                                         56,824,965
   Accumulated  Comprehensive Income (loss)                             (119,700)
   Stock Rights                                                       11,034,962
   Treasury 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
                                                                    ============

</TABLE>




                                                                             F-3
<PAGE>

<TABLE>
<CAPTION>
                     UNIVERSAL EXPRESS INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                               Year Ended June 30,

                                                             2005               2004
                                                       ---------------    ---------------

<S>                                                    <C>                <C>
   Revenues                                            $       931,009    $     2,775,336
   Cost of Goods Sold                                          914,404          2,507,528
                                                       ---------------    ---------------
                            Gross Profit                        16,605            267,808
                                                       ---------------    ---------------

OPERATING EXPENSES
   Selling, General and Administrative                       3,973,999          4,844,773
   Amortization of Deferred Compensation                     5,732,540          3,465,453
   Stock Based Compensation                                    348,431             96,660
   Depreciation                                                 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                                              9,545
    Income from Sale of Subsisdary                              54,133
   Write off failed acquisition deposit                           --             (500,078)
   Interest Income                                              45,266             89,523
   Interest 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
                                                       ===============    ===============
</TABLE>


                                                                             F-4
<PAGE>

<TABLE>
<CAPTION>
                     Universal Express Inc, and Subsidiaries
                      Consolidated Statements of Cash Flows
                               Year Ended June 30


                                                                                  2005            2004
                                                                             ----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                            <C>           <C>
           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         197,270
                            Amortization Of Deferred Compensation               5,732,540       3,465,453
                            Common shares issued for services                     348,431          96,660
                            Forgiveness of officer loan                            77,345          80,640
                            Officer salary accrued                                   --           250,000
                            Net loss from discontinued operations                    --           272,673
                            Write off acquisition deposit                            --           500,078
                            Bad debt expense                                         --            19,340
        Changes 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)          3,601
                            Increase (decrease) in accounts payable
                                and accrued expenses                               17,280         209,115
                            Increase (decrease) in accrued officers salary        (43,258)        (98,241)
                            Increase (decrease) in accrued interest                19,241          39,259

                                                                             ----------------------------
        Net 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                                                 20,315
        Loan 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         999,600
        Issuance of stock rights for cash                                       3,657,000       4,433,000
                                                                             ----------------------------

Net cash provided by financing activities                                    $  4,241,994    $  5,382,523
                                                                             ----------------------------

Net increase (decrease) in cash and equivalents                                   (80,898)       (141,999)
CASH - BandNequivalents, beginning of period                                      100,038         242,037

                                                                             ----------------------------
CASH - EandOequivalents, 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       8,005,123
        Issuance of common stock for loan Repayment                               400,000            --
        Issuance of common stock for Conversion of Stock Rights                    50,000         190,000
</TABLE>


                                                                             F-5
<PAGE>

<TABLE>
<CAPTION>
                     UNIVERSAL EXPRESS INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                                                        COMMON STOCK                      CLASS B STOCK               PAID IN
                                              # OF SHARES       $ AMOUNT          # OF SHARES      $ AMOUNT           CAPITAL
                                              ------------------------------------------------------------------------------------
<S>                                            <C>            <C>                    <C>         <C>               <C>
BALANCE JUNE 30, 2003                         491,248,233    $    2,456,241         1,280,000   $        6,400    $   39,496,481

Sale of Common Stock                           20,400,000           102,000                                              897,600

Common Shares Issued for Deferred Serv        148,942,918           744,715                                            7,261,008

Amortization of Deferred  Services

Common Shares Issued for Services               1,579,000             7,895                                               88,765

Common Shares Issued for
  Conversion of Loans and Interest                   --                --

Common Shares Issued for Warrants                  95,819               479                                                9,435

Common Shares Issued for Accrued
  Officers Salary                                    --

Common Shares Issued for  Collateral           40,000,000           200,000                                            3,720,000

Common Shares Issue for Stock Rights           16,000,000            80,000                                              110,000

Cash Received for Stock Rights

Common Shares Issued for Notes Payable               --                --

Unrealized Loss on Marketable Securities             --


Net Loss


                                            ------------------------------------------------------------------------------------
BALANCE JUNE 30, 2004                         718,265,970         3,591,330         1,280,000            6,400        51,583,289
                                            ------------------------------------------------------------------------------------


Sale of Common Stock                           44,666,667           223,333                                              406,667

Common Shares Issued for Deferred Serv      1,234,241,921         6,171,210                                            4,367,849

Amortization of Deferred  Services

Common Shares Issued for Services              31,587,500           157,938                                              190,493

Common Shares Issued for
  Repayment of Loans                           33,000,000           165,000                                              235,000

Common Shares Issued for Warrants                                      --

Common Shares Issued for Accrued
  Officers Salary

Common Shares Issue for Stock Rights            1,666,666             8,333                                               41,667

Cash Received for Stock Rights

Common Shares Issued for Notes Payable                                 --

Unrealized Loss on Marketable Securities


Net Loss

                                            ------------------------------------------------------------------------------------
Balance  Qtr ending 06/30/05                1,345,162,754         6,725,814              --               --           5,241,676
                                            ====================================================================================

          Balance 06/30/05                  2,063,428,724        10,317,143         1,280,000            6,400        56,824,965




















                                                  TREASURY STOCK                             OTHER
                                             STOCK     # OF                  ACCUM'TED   COMPREHENSIVE    DEFERRED
                                             RIGHTS    SHARES     AMNT         DEFICIT      INCOME       SERVICES       TOTALS
                                         ------------------------------------------------------------------------------------------

BALANCE JUNE 30, 2003                    $ 3,184,962   40,000   $(14,350)  $(39,898,907)   $(119,700)   $ (4,979,699)   $   131,429

Sale of Common Stock                                                                                                        999,600

Common Shares Issued for Deferred Serv                                                                    (8,005,723)            (0)

Amortization of Deferred  Services                                                                         3,465,453      3,465,453

Common Shares Issued for Services                                                                                            96,660

Common Shares Issued for
  Conversion of Loans and Interest                                                                                              --

Common Shares Issued for Warrants                                                                                             9,914

Common Shares Issued for Accrued
  Officers Salary                                                                                                               --

Common Shares Issued for  Collateral

Common Shares Issue for Stock Rights                                                                        (190,000)           --

Cash Received for Stock Rights             4,433,000                                                                      4,433,000

Common Shares Issued for Notes Payable                                                                                          --

Unrealized Loss on Marketable Securities                                                                                        --


Net Loss                                                                     (9,061,293)                                 (9,061,293)

                                          -----------------------------------------------------------------------------------------
BALANCE JUNE 30, 2004                      7,427,962   40,000    (14,350)   (48,960,200)    (119,700)     (9,519,969)        74,763
                                          -----------------------------------------------------------------------------------------

Sale of Common Stock                                                                                                        630,000

Common Shares Issued for Deferred Serv                                                                   (10,539,059)            (0)

Amortization of Deferred  Services                                                                         5,732,540      5,732,540

Common Shares Issued for Services                                                                                           348,431

Common Shares Issued for
  Repayment of Loans                                                                                                        400,000

Common Shares Issued for Warrants                                                                                               --

Common Shares Issued for Accrued
  Officers Salary                                                                                                               --

Common Shares Issue for Stock Rights         (50,000)                                                                             0

Cash Received for Stock Rights             3,657,000                                                                      3,657,000

Common Shares Issued for Notes Payable                                                                                          --

Unrealized Loss on Marketable Securities                                                                                        --


Net Loss                                                                     (9,985,868)                                 (9,985,868)

                                          -----------------------------------------------------------------------------------------
Balance  Qtr ending 06/30/05               3,607,000     --         --       (9,985,868)          --      (4,806,519)       782,103
                                          =========================================================================================
          Balance 06/30/05                11,034,962   40,000    (14,350)   (58,946,068)    (119,700)    (14,326,488)       856,865
</TABLE>


                                                                             F-7
<PAGE>

                             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-8
<PAGE>

                        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-9
<PAGE>

                             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-10
<PAGE>

                             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                                      $ 47,028
            Office equipment                                             103,620
            Furniture and fixtures                                       115,272
                                                                        --------
                                                                         265,920
            Less accumulated depreciation and amortization               127,553
                                                                        --------
                                                                        $138,367
                                                                        ========


                                                                            F-11
<PAGE>

                             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                                          $171,000
            Employee advance                                              24,100
            Deposit                                                       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                                          $ 25,000
      Notes 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 monthly installments of $1,185
            including interest through December 2004. This
            note bears interest at 12.5% (in default)                   $ 11,646

            Promissory note to bank payable in equal monthly
            installments of $2,167 plus interest through
            October 2006. The note bears interest at the
            rate of 2% over the then prevailing prime rate.
            The note is secured by substantially all the
            Company's assets.                                             32,999

            Loans payable to former owners of Virtual
            Bellhop, LLC, payable in monthly installments of
            $3,333 plus interest at 4% through May 2005 (in
            default)                                                      81,998
                                                                        --------

                  Total                                                  126,643
            Less current maturities                                      119,648
                                                                        --------
            Long-Term Debt, Net of Current Maturities                   $  6,995
                                                                        ========


                                                                            F-12
<PAGE>

                             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                                                  $119,648
                  2007                                                     6,995
                  2008                                                         0
                  2009                                                         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                                                 314,320
                    2007                                                 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-13
<PAGE>

                             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                                   $ 23,600,000
       Less: 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           2004
                                                     -----------    -----------
            Benefit computed at the statutory rate   $ 4,000,000    $ 4,873,000
            Losses for which no benefit recognized    (4,000,000)    (4,873,000)
                                                     -----------    -----------
                  Benefit recorded                   $         0    $         0
                                                     ===========    ===========


                                                                            F-14
<PAGE>

                             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-15
<PAGE>

                             UNIVERSAL EXPRESS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 - SEGMENT INFORMATION Year ended June 30, 2005:

                                  Transportation/
                    Logistics &      Equipment
                   International      Leasing        Parent
                     Shipping        Brokerage       (Other)       Consolidated
                   ------------    ------------    ------------    ------------
  REVENUE          $    575,652    $    355,357    $         --    $    931,009

  OPERATING LOSS   $   (796,434)   $   (531,501)   $ (8,745,711)   $(10,073,646)

YEAR ENDED JUNE 30, 2004:

                                TRANSPORTATION/
                   LOGISTICS &     EQUIPMENT
                  INTERNATIONAL     LEASING        PARENT
                    SHIPPING       BROKERAGE       (OTHER)     CONSOLIDATED
                   -----------    -----------    -----------   ------------
  REVENUE          $   287,706    $ 2,487,630    $         0    $ 2,775,336

  OPERATING 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 supercedes
      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-16
<PAGE>

                             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.

      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


                                                                            F-17
<PAGE>

                             UNIVERSAL EXPRESS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 - NEW ACCOUNTING PRONOUNCEMENTS, Continued

      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-18
<PAGE>

      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-19
<PAGE>

                                     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                POSITION
----                               ---                --------
Richard 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
<PAGE>

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
<PAGE>

                           SUMMARY COMPENSATION TABLE

                                                                Long-Term
                              Annual Compensation          Compensation Awards
                              ------------------------------------------------

      (a)                   (b)       (c)       (d)         (e)           (f)

 NAME & PRINCIPAL         FISCAL    ANNUAL    ANNUAL    OTHER ANNUAL     # of
     POSITION              YEAR     SALARY     BONUS    COMPENSATION    OPTIONS
     --------              ----     ------     -----    ------------    -------

Richard A. Altomare        2001    300,000      $0          $0             0
Chairman & CEO             2002    300,000      $0          $0             0
                           2003    300,000      $0          $0             0
                           2004    500,000      $0          $0             0
                           2005    600,000      $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
<PAGE>

                         OPTION GRANTS IN CURRENT PERIOD

                                Individual Grants
--------------------------------------------------------------------------------
        (a)              (b)              (c)              (d)         (e)

                                  % of Total Options
                       Options   Granted to Employees   Exercise   Expiration
       Name            Granted     in Current Period      Price       Date
--------------------------------------------------------------------------------
Richard A. Altomare
 Chairman. & CEO          0                0                0           0

     AGGREGATED OPTION EXERCISES IN CURRENT PERIOD AND FY-END OPTION VALUES

--------------------------------------------------------------------------------
         (a)               (b)          (c)           (d)               (e)

                                                                     value of
                                                                   unexercised
                                               # of unexercised    in-the-money
                                                   options at       options at
                         Shares        Value        FY-end(#)        FY-end($)
                      acquired on    Realized     Exercisable/     Exercisable/
        Name          Exercise (#)      ($)      Unexercisable    Unexercisable
--------------------------------------------------------------------------------
Richard A. Altomare
  Chairman. & 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
<PAGE>

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          AMOUNT AND NATURE OF             % OF
  BENEFICIAL OWNER           BENEFICIAL OWNERSHIP          COMMON STOCK
-----------------------------------------------------------------------
       None


                                       18
<PAGE>

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          AMOUNT AND NATURE OF             % OF
  BENEFICIAL OWNER           BENEFICIAL OWNERSHIP          COMMON STOCK
-----------------------------------------------------------------------
Richard A. Altomare
5295 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
<PAGE>

                                     ITEM 13

                        EXHIBITS AND REPORTS ON FORM 8-K

(A)   EXHIBITS

2.1*  Order, dated February 18, 1994. Confirming First Amended Plan of
      Reorganization of Packaging Plus Services, Inc., including confirmed
      Reorganization 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
      Stock of Packaging Plus Services, Inc.

3.3** Certificate of Amendment of the Certificate of Incorporation to Change the
      Name of 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.

* 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
<PAGE>

                                     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 ended
                                    June 30,          June 30,
                                      2005              2004

1.   Audit fees                     $71,000           $104,145
2.   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
<PAGE>

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: September 28, 2005                         /s/ Richard A. Altomare
                                                 -----------------------
                                                 Richard A. Altomare, President
                                                 and Chairman of the Board


                                       22