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, 1999 TO JUNE 30, 2000

                         Commission file number 0-18094

                             UNIVERSAL EXPRESS, INC.

                      A Nevada Corporation ID.# 11-2781803

              1350 Broadway, Suite 1203, New York , New York 10018

        Registrant's telephone number including area code (212) 239-2570

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

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

                 Class A Common Stock par value $0.005 per share

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements for the past
90 days.                 Yes  X          No
                            -----          -----

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

State issuer's revenues for the period $5,850,198.



<PAGE>






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 September 8, 2000, $2,539,196 (based on 18,808,858)
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 18,779,438 shares of its $.005 par value Class A Common Stock
issued and outstanding as of June 30, 2000 and 1,280,000 shares of Class B
Common Stock.

Total number of sequentially numbered pages in this document:  (23).

Documents Incorporated by Reference: None.





<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 (USXP), is an integrated business to business service company
under the direction of its Chairman and Chief Executive Officer, Mr. Richard A.
Altomare.

The Company is engaged primarily in the development of its Private Postal
Network.com and a division of PPN called the Postal Business Center Network.com
("PBC Network") and expanding the Company's presence in the private postal and
international shipping industries. The PBC Network is an association with the
goal of unifying and organizing independent and franchised postal stores
nationwide. The Company is also active in acquiring businesses that complement
and improve the PBC Network. This multi-faceted association of packaging centers
nationwide is connected through the World Wide Web and its joint venture
partners.

In the international shipping arena, another division of PPN operates under the
name WorldPost Network.com.

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

                         THE BUSINESS OF THE CORPORATION
                         -------------------------------

The Company acquired SkyWorld International Courier (SkyNet) in May, 1999.

SkyNet is part of an international shipping network specializing in discount
shipping prices to its customers.

The Company believes that acquisition of SkyNet should benefit the PBC Network
by providing PBC store owners with reduced international shipping rates not
controlled by their present vendors.

The Company believes that Skynet will add growth to both the PBC Network and
Universal Express stockholder value.


                                       3
<PAGE>




The Company believes its strategy of developing PBCNetwork is unique to the
private postal industry. The Company believes that PBCNetwork has established
itself as a provider of quality products and services that benefit the owners of
private postal businesses. In order for PBCNetwork to continue to provide
high-quality products and services essential to today's market needs, the
Company believes that it is necessary to develop a strategy for the Internet.
While PBCNetwork members do not currently compete with traditional overnight
couriers, USXP can provide them with the opportunity to increase revenues
through the use of their own shipping network.

The Company purchased the Entertainment division of U.S. Transportation Systems,
Inc. (USTS) in 1997. The division consisted mainly of: Downtown Theatre Ticket
Agency, Inc., or Advance Entertainment (now known as "Manhattan Concierge"),
which provides theater, sports and special events tickets and concierge
services. The Company intends to incorporate this division into its expanding
list of services to the members of its PBC Network. These services are marketed
through toll-free phone numbers (1-888-NYSHOWS, 1-800-NYSHOWS AND
1-800-THE-SHOW) and Manhattan Conicerge's web site (www.manhattanconcierge.com).

USXP intends to incorporate this value-added service into the PBC Network
expanding menu of offerings to its member stores while attempting to increase
Manhattan Concierge's own business presence in the entertainment industry.

Management is now concentrating on raising new capital and focusing on new
ventures, including the PBC Network and SkyNet.

Management views this fiscal year as a period of transition and anticipates
growth based upon its decision to concentrate on core business development
through the PBC Network and SkyNet.

USXP's principal subsidiaries and divisions include:
--    Private Postal Network.com
--    The Postal Business Center Network.com
--    Manhattan Concierge
--    SkyNet
--    WorldPost Network.com
--    UniqueNet, Inc.
--    Packaging Plus Services, Inc.




                                       4
<PAGE>





                           Private Postal Network.com
                           --------------------------

On May 15, 1999, the name of the Association of Packagers and Carriers, APAC was
changed to the Private Postal Network.com (PPN), with two divisions, Postal
Business Center Network.com (PBC network.com) and an international shipping
division, WorldPost Network.com. In future reports, the names of these new
entities will be used to cover and describe the present functions and programs
of these networks as well as future programs and functions of this electronic
network of retail, mail, parcel, and business centers, which the Company
believes are positioned to provide goods and services needed to support
E-commerce, as well as the international shipping division, including support
from SkyNet Worldwide.

Private postal and business service centers form a highly fragmented cottage
industry. The Company believes that this industry generates over $5 billion in
sales and consists of more than 15,000 independent operators. The Company
believes there is a market opportunity for the development of an association
with the goal of unifying and organizing independent and franchised postal
stores nationwide. PBC Network members are connected to other members and the
PBC Network Headquarters via the PBC Web Site (PBCNetwork.com). The PBC Web Site
is utilized not only by members but also will be used by the general public.
Only one PBC Network store per Zip Code will be accepted, thus creating internal
quality control standards.

The Company believes that other industries will turn to the Internet to improve
their existing business models or introduce an innovative one, thus utilizing
PBC member stores.

As e-commerce grows, someone must deliver the purchased goods to the consumer.
The Company believes that many companies will eventually need a distribution
system to deliver nearly anything that customers purchase on-line.

A particular trend that the Company feels will further revolutionize the
e-commerce space surrounds strategic alliances between virtual companies and
traditional brick and mortar companies.

The PBC Network is an association formed to create a long overdue and needed
profitable partnership between packaging store owners and carriers, similar in
theory to FTD. The PBC Network provides store owners with a variety of
cost-effective services and products to increase their profitability, while they
still maintain their local identities or franchise loyalties. The PBC Network's
goal it to provide consumers nationwide with a feeling of quality assurance when
they frequent a PBC Network location.



                                       5
<PAGE>





            Services Offered To PBC Network Members & Strategic Goals
            ---------------------------------------------------------

The PBC Network has been formed to create a value-added association among
packaging and shipping centers as well as the actual carriers of freight
worldwide.

The PBC Network offers a unique combination of value-added services on the
e-commerce horizon. A list of immediate and future benefits for association
members includes:

Immediate Benefits:

               Discounts for Web Utilization
               Savings on shipping prices through quantity discounts
               Centralized billing to lower certain costs
               PBC Network Web Site linking all members with outside customers
               E-mail customer leads
               PBC Network shipping insurance
               Shipping and tracking for customers
               Continual development of new profit centers
               National customer service satisfaction department
               Discounted air cargo/ next day worldwide rates
               Discounted postal meter leasing programs
               Discounted long distance rates
               Discounted printing programs
               Discounted equipment leasing program
               Prepaid phone card
               Centralized purchasing
               Brand recognition of PBC Network Logo
               Discounted packaging supplies
               Discounted stock and customer boxes
               Check authorization program
               Video conferencing program
               Secure document delivery program
               Discounted business supplies
               Credit card processing program
               Payroll and tax processing program
               Travel and entertainment discounts
               Free AAdvantage Airline incentive miles
               Rental car discounts & upgrade
               Customized website design
               Discounted promotional items


                                       6
<PAGE>


This value-added Network is expected to revitalize and re-define the private
postal industry and position itself for additional acquisitions within the
transportation industry that may benefit its members' collective strength.

                            Skynet Worldwide Express
                            ------------------------

SkyWorld International Couriers, Inc. is the U.S. member of the SkyNet Worldwide
Express Network, an alliance of independently owned and operated express courier
services operating in 268 cities in 120 countries. SkyWorld developed and owns
the Skynet Trademark in the US and in most countries in Latin America. The
SkyNet Network provides global delivery and logistics service to multinational
firms. The Network currently delivers over 300,000 packages per month. It is the
largest independently owned courier network and the 5th largest express network
behind the integrated US express carriers such as FedEx, UPS and DHL.

Unlike the major integrators who operate their own aircraft and thus offer rigid
standardized pick up and delivery schedules, SkyNet Network members offer
flexible, customized international services to meet the clients' specific
distribution needs. Instead of operating its own fleet, SkyNet offers express
international air courier service and expedited air cargo through regularly
scheduled commercial airlines to transport time sensitive documents, parcels,
freight and mail. SkyNet provides on demand and scheduled pick up and delivery
courier and freight service in the US and in foreign countries. SkyNet uses
available cargo and baggage space on scheduled passenger and cargo airlines
throughout the world. SkyNet operates its own facilities in Miami, New York, Los
Angeles, San Francisco, Venezuela and Costa Rica. Using licensees in most
countries in Latin America and the Caribbean, it provides 24 to 48 hour delivery
throughout the region. Hubs operated by SkyNet Network Members in London, Dubai,
Johannesburg, Brussels, Singapore and Sydney allow the swift delivery of
documents and parcels to almost any destination in the world within 72 hours.

UNIQUENET: In 1996, the Company launched its venture called UniqueNet. UniqueNet
is an interactive, specialty gifts Web Site on the Internet's WorldWide Web
(UniqueNet.Com). In the future, the Web Site will showcase the Company's line of
distinctive and "trendy" gifts. On-line visitors to the Web Site will be able to
view, select and purchase products through their personal computer using an
on-line order form or regular mail. A retail partner is presently being examined
and auction E-Commerce fulfillment may be originated from this site.

PBC Network Stores use basic corrugated and because of their non-centralized
purchasing and small storage space they are forced to pay above market prices.
Through the PBC Network, the stores will be able to purchase through a
centralized purchasing, thus lowering their costs and making their overall
operations more competitive. This would enable the Member to create a new market
for customized boxes the Company believes will help to expand their customer
base and increase their market share. Packaging Plus Services is the division of
PBC that addresses these trends.



                                       7
<PAGE>


                                   COMPETITION
                                   -----------

The Company further believes that the maturation of the PBC Network will
strengthen the profitable atmosphere in the cottage private postal industry.
Lack of financial strength and market penetration have prevented some excellent
franchisors and independents from properly promoting their services. Individual
store failures are far too great in this industry without a cohesive trade
association. The ability of the PBC Network to create a nationally accepted
private postal industry that the American public will embrace and trust should
make this a viable industry. The Company feels it can convince 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.

                               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 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 PBC Network 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. Mr. Altomare, a reorganization specialist and investor, was appointed
CEO and Chairman of Universal Express in December 1991. He 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 its
carriers.



                                       8
<PAGE>



                          TRADE MARKS AND SERVICE MARKS
                          -----------------------------

The Company is the owner of trademarks and service marks for the names Universal
Express(R), Skynet(R), Manhattan Concierge(R), Uniquenet(TM), PBC(TM),
WorldPost(TM) and Buyer WeCare(TM).

                                    EMPLOYEES
                                    ---------

As of June 30, 2000, the Company employed 100 individuals. The Company has not
experienced any work stoppages and considers its relations with its employees to
be excellent. To facilitate its Skynet and PBC Network expansion plans,
management expects to engage in significant hiring of management, sales,
operational and support personnel during 2000 and beyond. The Company's Stock
Option Plan provides for the issuance of up to 1.25 million shares of the
Company's common stock.

                                     ITEM 2
                                     ------

                            DESCRIPTION OF PROPERTIES

USXP's present corporate headquarters is located at 1350 Broadway, New York
City. Manhattan Concierge has offices in the same building. Skynet has offices
in Florida and New York. The PBC Network has an office in Centereach, NY.

                                     ITEM 3
                                     ------

                                LEGAL PROCEEDINGS

USXP's subsidiary, Skynet Worldwide Express ("Skynet"), obtained a preliminary
injunction in Federal District Court in Florida against a competitor, SKYN
Holdings, Inc. ("Holdings"), for servicemark infringement on courier shipments
throughout the United States. The defendant filed an appeal to the Court of
Appeals for the Eleventh Circuit and that Court held in Skynet's favor. Skynet
has moved for summary judgment on liability and expects to receive a judgment
for substantial damages after a trial. The collectability of these damages,
however, is not assured because of the financial condition of Holdings.

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



                                       9
<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
               -------------                ---                   ----

                  9/30/99                   $0.25                $0.58
                 12/31/99                   $0.24                $0.74
                  3/31/00                   $0.30                $0.69
                  6/30/00                   $0.175               $0.52

As of June 30, 2000, there were over 4,000 holders of record of the Company's
Common Stock.

                                       10
<PAGE>


The Transfer Agent and Registrar of the Company's Common Stock is OTC Corporate
Transfer Service Co.

A second 4% stock dividend was declared in this fiscal year.




                                     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-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 PBC Network, 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 PBC Network and further
acquisitions in the shipping business to compliment its acquisition of SkyNet.

Skynet
------

Upon purchasing Skynet Miami in May of 1999, its revenues were approximately
$6.0 million dollars per annum. Immediately upon announcing USXP's acquisition
of Skynet, Skynet was attacked and damaged by SKYN Holdings, the owner of Skynet
London and Pony Express. SKYN opened "Skynet" locations within the North
American territory using Skynet's trademark. USXP's Skynet revenues decreased to
approximately $2.0 million dollars and USXP was forced to litigate and
financially support Skynet with additional loans of approximately $1.7 million.

Upon winning this lawsuit in July 2000, USXP and Skynet have now returned Skynet
revenues to $700,000 monthly (est. $8.4 million annually). SKYN Holdings has
been delisted and both SKYN London and Pony Express have filed for bankruptcy
protection in their respective countries. Obviously, Skynet, which experienced
lower than expected revenues this past year, is very optimistic about its future
growth and our re-enforced trademark strength in North America.





                                       11
<PAGE>


Development PBC - new vendors
-----------------------------

The Postal Business Center Network also has been re-defined this year as well. A
new Director with e-commerce skills and new strategic partnerships seem to have
poised this futuristic concept of a private postal system to profitability.
Also, many new vendor programs have been put in place during this period to
benefit the postal stores.

Our recent Skynet legal victory now moves along our plans to utilize the
discounted Skynet (or WorldPost) envelopes in the 8000+ postal centers in North
America. Presently the postal stores already ship Internationally in excess of
$300,000,000 with other established carriers. By being able to offer Skynet
envelopes to these same stores, a market share of 5% to 15% is possible ($15
million to $45 million).

In additional, Skynet and PBC prior to last year's unexpected lawsuit had begun
plans to franchise Skynet territories utilizing the existing revenues of postal
stores within that territory. Since protecting its Skynet trademark and the
Skynet business, USXP and the PBC Network appear ready, with proper funding, to
advance the USXP mission statement, which is "to create a private postal system
with its own International delivery company capable of affordable e-commerce
national and international fulfillment contracts".

Manhattan Concierge
-------------------

The Company continues to utilize Manhattan Concierge as a service to the Postal
Stores and develop its base. Last year Manhattan Concierge was the only
concierge service approved by the Better Business Bureau of New York. It
continues to grow and financially create effective daily cash flow for the
entire USXP family of companies.





                                       12
<PAGE>




Results of Operations for the year ended June 30, 2000:
-------------------------------------------------------

                                                         Year Ended
                                              June 30, 2000       June 30, 1999
                                              -------------       -------------
Revenues:
---------
Ticket Sales                                   $  1,751,216        $  1,721,129
Merchandise & Service Sales                         100,696             479,077
Delivery Services                                 4,027,949             402,835
Other income                                          2,106              23,174
                                               ------------        ------------
                                               $  5,881,967        $  2,626,215
                                               ------------        ------------

Costs & Expenses:
-----------------

Cost of Goods Sold                                4,906,925        $  1,729,182
Selling, General & Admin                          6,172,074           5,152,192
Depreciation & Amortization                         234,297             160,836
                                               ------------        ------------
                                               $ 11,313,296        $  7,042,210
                                               ------------        ------------


Loss From Operations                             (5,431,329)       $ (4,415,995)


Interest Expense                                   (330,684)           (172,744)
                                               ------------        ------------

Net Loss                                       $ (5,762,013)       $ (4,588,739)
                                               ============        ============




Twelve Month Analysis
---------------------

During the year, the Company's operating revenues increased to $5,881,967 from
$2,626,215 for 1999, an increase of 123%, as a result of its acquisition of
Skynet in May, 1999. Skynet's contribution to operating income, which is fully
consolidated with the Company's results for this fiscal year was over
$4,000,000.

Cost of revenues, were $4,906,925 and $1,729,182 respectively, an increase of
184%, as a result of the acquisition of Skynet. Skynet's cost of revenue was
approximately $3,600,000.




                                       13
<PAGE>




Selling, general and administrative expenses were $6,172,074 for 2000 compared
with $5,152,192 for 1999, an increase of 20%. More than $2,500,000 of SG&A, was
incurred by Skynet. The Skynet costs arose mainly from maintaining its
operations and businesses at reasonable levels while it was under unfair
competitive attack by SKYN Holdings during fiscal 2000, as discussed above. With
the success of the trademark lawsuit against Holdings and the return of Skynet
to favorable operations and increased revenues, already evident in fiscal 2001,
it is anticipated that overall costs will decrease substantially this year. The
SG&A costs for the other business of the Company other than Skynet, was
decreased by approximately $1,500,000.


Liquidity and Capital Resources
-------------------------------

During the twelve month period ended June 30, 2000, the Company's cash position
increased from $37,000 to 54,000. The Company's financing activities provided
$2,955,879 while $3,122,053 was used in its operating and investing activities.

The Company's working capital deficiency in fiscal 2000 arose primarily from the
support provided by the Company to Skynet while it was under unfair competitive
attack by Holdings and during the lawsuit. With the return of Skynet to
favorable operations and increased revenues, it is anticipated that the
Company's working capital needs will decrease in fiscal 2001 and in the future.

Until the PBC Network is fully operational, 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.

                                     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.






                                       14
<PAGE>



                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS





                                                                           PAGE

INDEPENDENT AUDITORS' REPORT............................................    F-1

CONSOLIDATED BALANCE SHEET..............................................    F-2

CONSOLIDATED STATEMENTS OF OPERATIONS...................................    F-3


CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY......................    F-4

CONSOLIDATED STATEMENTS OF CASH FLOWS...................................    F-5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..............................    F-6











<PAGE>




                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



To the Stockholders and
Board of Directors
Universal Express, Inc. and Subsidiaries


We have audited the accompanying consolidated balance sheet of Universal
Express, Inc. and Subsidiaries as of June 30, 2000 and the related consolidated
statements of operations, stockholders' deficiency and cash flows for the years
ended June 30, 2000 and 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Universal Express, Inc. and Subsidiaries as of June 30, 2000 and the
consolidated results of their operations and their cash flows for the years
ended June 30, 2000 and 1999 in conformity with generally accepted accounting
principles.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 2(a) to the
consolidated financial statements, the Company incurred losses of approximately
$5,762,000 and $4,589,000 for the years ended June 30, 2000 and 1999
respectively and had a working capital and stockholders' deficiency of
approximately $5,745,000 and $3,072,000, respectively, at June 30, 2000. 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's plans in regard to these matters are described in
Note 2(a). The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


                                               /S/ FELDMAN SHERB & CO., P.C.
                                               -----------------------------
                                               Feldman Sherb & Co., P.C.
                                               Certified Public Accountants
New York, New York
October 23, 2000
(except note 18, as to
which the date is November 1, 2000)


<PAGE>








<TABLE>
<CAPTION>




                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                  JUNE 30, 2000

                                     ASSETS

CURRENT ASSETS:
<S>                                                                <C>
     Cash                                                          $     53,873
     Accounts receivable, net of allowance
        for doubtful accounts of $107,600                               781,056
     Related party receivables                                           95,781
                                                                   ------------
        Total current assets                                            930,710
                                                                   ------------

PROPERTY AND EQUIPMENT, net                                             187,677
                                                                   ------------

OTHER ASSETS:
     Loan to officer                                                    869,900
     Related party receivables                                          350,259
     Non-compete agreement, net                                         100,000
     Goodwill, net                                                    1,927,860
     Other                                                              164,318
                                                                   ------------
        Total other assets                                            3,412,337
                                                                   ------------
                                                                   $  4,530,724
                                                                   ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
     Accounts payable                                              $  2,622,494
     Accrued expenses                                                 1,754,335
     Payroll taxes payable                                              197,058
     Other                                                              124,363
     Notes payable                                                    1,788,571
     Convertible debentures                                             189,000
                                                                   ------------
        Total current liabilities                                     6,675,821
                                                                   ------------

CONVERTIBLE DEBENTURES                                                  810,000
                                                                   ------------

MINORITY INTEREST                                                       116,567
                                                                   ------------

STOCKHOLDERS' DEFICIENCY:
     Common stock, $.005 par value; authorized
        147,000,000 shares, 18,819,439 shares issued,
        18,779,439 outstanding                                           94,097
     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                                      23,866,861
     Accumulated deficit                                            (26,917,220)
     Cumulative translation adjustment                                  182,883
     Stock rights                                                       795,002
     Common stock in treasury, at cost, 40,000 shares                   (12,000)
     Deferred compensation related to stock issued for services      (1,087,687)
                                                                   ------------
        Total stockholders' deficiency                               (3,071,664)
                                                                   ------------
                                                                   $  4,530,724
                                                                   ============
</TABLE>


                 See notes to consolidated financial statements
                                       F-2


<PAGE>

<TABLE>
<CAPTION>


                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                 Years Ended June 30,
                                           -----------------------------
                                                2000           1999
                                           -----------------------------

INCOME:
<S>                                        <C>             <C>
     Ticket sales                          $  1,751,216    $  1,721,129
     Merchandise and service sales              100,696         479,077
     Delivery services                        4,027,949         402,835
     Other                                        2,106          23,174
                                           ------------    ------------
                                              5,881,967       2,626,215
                                           ------------    ------------

COSTS AND EXPENSES:
     Cost of goods sold                       4,906,925       1,729,182
     Selling, general and administrative      6,172,074       5,152,192
     Depreciation and amortization              234,297         160,836
                                           ------------    ------------
                                             11,313,296       7,042,210
                                           ------------    ------------

LOSS FROM OPERATIONS                         (5,431,329)     (4,415,995)


INTEREST EXPENSE                               (330,684)       (172,744)
                                           ------------    ------------

NET LOSS                                   $ (5,762,013)   $ (4,588,739)
                                            ============   ============

     Basic loss per common share           $    (0.47) $          (1.29)
                                            ============   ============


WEIGHTED AVERAGE NUMBER OF COMMON SHARES     12,189,111       3,561,529
                                           ============    ============


</TABLE>






                 See notes to consolidated financial statements.

                                       F-3


<PAGE>
<TABLE>
<CAPTION>

                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY



                                                        Common Stock                      Class B Stock
                                             ------------------------------------  --------------------------      Paid-in
                                                 # of Shares          Amount        # of Shares      Amount        Capital
                                             -----------------    ---------------  ------------- ------------   ------------

<S>                                                <C>          <C>                <C>         <C>            <C>
BALANCE - JULY 1, 1998                               1,835,080    $      9,175       1,280,000   $      6,400   $ 17,998,520

Sale of common stock                                 2,738,833          13,694            --             --        1,038,306

Common shares canceled                                  (1,718)             (9)           --             --                9

Common shares issued for compensation                1,280,000           6,400            --             --          791,300

Amortization of deferred compensation                     --              --              --             --             --

Common shares issued for services                      233,500           1,168            --             --          205,581

Common shares issued for interest and penalties        118,200             591            --             --           30,209

Common shares issued for conversion of notes           315,000           1,575            --             --          167,425

Common shares issued for conversion of
        convertible debentures                         400,000           2,000            --             --           98,000

Common shares issued as good faith deposit              50,000             250            --             --           49,750

Dividends paid                                         239,028           1,195            --             --           (1,195)

Cash received for stock rights                            --              --              --             --             --

Net loss                                                  --              --              --             --             --

                                                  ------------    ------------    ------------   ------------   ------------
BALANCE - JUNE 30, 1999                              7,207,923          36,039       1,280,000          6,400     20,377,905

Sale of common stock                                 9,977,152          49,887            --             --        2,935,782

Common shares issued for compensation                  625,000           3,125            --             --          234,625

Amortization of deferred compensation                     --              --              --             --             --

Common shares issued for services                      608,001           3,040            --             --          223,261

Common shares issued for interest and penalties        295,480           1,477            --             --           77,817

Common shares issued for conversion of notes           105,883             529            --             --           17,471

Common shares purchased from investor                     --              --              --             --             --

Cumulative translation adjustment                         --              --              --             --             --

Net loss                                                  --              --              --             --             --

                                                  ------------    ------------    ------------   ------------   ------------
BALANCE - JUNE 30, 2000                             18,819,439    $     94,097       1,280,000   $      6,400   $ 23,866,861
                                                  ============    ============    ============   ============   ============



                                                                           Treasury Stock                         Cummulative
                                                     Stock          --------------------------    Accumulated     translation
                                                     Rights          # of Shares    Amount          Deficit        adjustment
                                                 --------------     ------------  ------------   -------------    -----------


BALANCE - JULY 1, 1998                            $    640,000            --      $       --      $(16,566,468)   $       --

Sale of common stock                                      --              --              --              --              --

Common shares canceled                                    --              --              --              --              --

Common shares issued for compensation                     --              --              --              --              --

Amortization of deferred compensation                     --              --              --              --              --

Common shares issued for services                         --              --              --              --              --

Common shares issued for interest and penalties           --              --              --              --              --

Common shares issued for conversion of notes              --              --              --              --              --

Common shares issued for conversion of
        convertible debentures                            --              --              --              --              --

Common shares issued as good faith deposit                --              --              --              --              --

Dividends paid                                            --              --              --              --              --

Cash received for stock rights                       1,130,002            --              --              --              --

Net loss                                                  --              --              --        (4,588,739)           --

                                                  ------------    ------------    ------------    ------------    ------------
BALANCE - JUNE 30, 1999                              1,770,002            --              --       (21,155,207)           --

Sale of common stock                                  (975,000)           --              --              --              --

Common shares issued for compensation                     --              --              --              --              --

Amortization of deferred compensation                     --              --              --              --              --

Common shares issued for services                         --              --              --              --              --

Common shares issued for interest and penalties           --              --              --              --              --

Common shares issued for conversion of notes              --              --              --              --              --

Common shares purchased from investor                     --            40,000         (12,000)           --              --

Cumulative translation adjustment                         --              --              --              --           182,883

Net loss                                                  --              --              --        (5,762,013)           --

                                                  ------------    ------------    ------------    ------------    ------------
BALANCE - JUNE 30, 2000                           $    795,002          40,000    $    (12,000)   $(26,917,220)   $    182,883
                                                  ============    ============    ============    ============    ============



                                                    Deferred
                                                  Compensation        Total
                                                  ------------        -----

BALANCE - JULY 1, 1998                            $ (1,175,166)   $    912,461

Sale of Common Stock                                      --         1,052,000

Common shares canceled                                    --              --

Common shares issued for compensation                 (797,700)           --

Amortization of deferred compensation                  653,350         653,350

Common shares issued for services                         --           206,749

Common shares issued for interest and penalties           --            30,800

Common shares issued for conversion of notes              --           169,000

Common shares issued for conversion of
        convertible debentures                            --           100,000

Common shares issued as good faith deposit                --            50,000

Dividends paid                                            --              --

Cash received for stock rights                            --         1,130,002

Net loss                                                  --        (4,588,739)

                                                  ------------    ------------
BALANCE - JUNE 30, 1999                             (1,319,516)       (284,377)

Sale of common stock                                      --         2,010,669

Common shares issued for compensation                 (237,750)           --

Amortization of deferred compensation                  469,579         469,579

Common shares issued for services                         --           226,301

Common shares issued for interest and penalties           --            79,294

Common shares issued for conversion of notes              --            18,000

Common shares purchased from investor                     --           (12,000)

Cumulative translation adjustment                         --           182,883

Net loss                                                  --        (5,762,013)

                                                  ------------    ------------
 BALANCE - JUNE 30, 2000                          $ (1,087,687)   $ (3,071,664)
                                                  ============    ============


</TABLE>






                See notes to consolidated financial statements.


                                      F-4



<PAGE>



<TABLE>
<CAPTION>


                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                    June 30,
                                                           --------------------------
                                                              2000            1999
                                                           -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                        <C>            <C>
    Net loss                                               $(5,762,013)   $(4,588,739)
                                                           -----------    -----------
    Adjustments to reconcile net loss to net
       cash used in operating activities:
        Depreciation and amortization                          234,297        160,836
        Common shares issued for services                      775,174        890,901
        Write down of net fixed assets                          75,054        196,523
        Write off of reorganization cost                          --          290,941
        Write down of net goodwill                                --          342,664
        Minority interest in loss of subsidiary                (83,746)          --

    Increase (decrease) in cash attributable to
       changes in assets and liabilities as follows:
        (Increase) decrease in accounts receivable            (243,922)       134,649
        Decrease (increase)  in inventory                      100,162        (28,730)
        Increase in loan to officer                            (86,455)       (37,661)
        (Increase) decrease in notes receivable                210,241       (319,654)
        Increase in other assets                                (9,332)       (16,486)
        Increase in accounts payable and accrued expenses    1,772,679        480,838
        Increase in payroll taxes payable                       24,963         84,232
        (Decrease) increase in other liabilities                (6,388)       101,635
                                                           -----------    -----------
        Total adjustments                                    2,762,727      2,280,688
                                                           -----------    -----------

NET CASH USED IN OPERATING ACTIVITIES                       (2,999,286)    (2,308,051)
                                                           -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of property and equipment                     (122,767)        (7,933)
                                                           -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of convertible debt                 810,000           --
    Proceeds (Repayments) of notes and loans payable           147,210        (56,745)
    Proceeds from stock rights                                    --        1,130,002
    Purchase of treasury stock                                 (12,000)          --
    Sale of common stock                                     2,010,669      1,052,000
                                                           -----------    -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                    2,955,879      2,125,257
                                                           -----------    -----------

Effect of foreign currency translation on cash                 182,883           --

NET INCREASE (DECREASE) IN CASH                                 16,709       (190,728)

CASH - BEGINNING OF YEAR                                        37,164        227,892
                                                           -----------    -----------

CASH - END OF YEAR                                         $    53,873    $    37,164
                                                           ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
        Cash paid for interest                             $    26,163    $    19,301
                                                           ===========    ===========
        Non Cash Activity - See note 13 with
        respect to issuance of the company
        shares of common shares as
        compensation for services rendered
</TABLE>

                 See notes to consolidated financial statements
                                       F-5



<PAGE>




                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       YEARS ENDED JUNE 30, 2000 AND 1999

1.       DESCRIPTION OF THE BUSINESS

         Universal Express, Inc. ("USXP") was incorporated in the state of
         Nevada on April 6, 1983 and is an integrated business service company.
         Its principal subsidiaries include USXP's entertainment division which
         consists of Downtown Theater Ticket Agency, Inc. (DTTA) and Skyworld
         International Courier ("SkyNet") acquired on June 8, 1999, Private
         Postal Network.com and its division Postal Business Center Network.com,
         an association of independent and franchised nationwide postal stores.
         In addition, USXP owns several other subsidiaries with little or no
         activity. USXP's primary focus is on the development of its postal
         business center networks and new acquisitions which will strengthen its
         market position.

         On June 8, 1999, USXP acquired 5,202 shares (51%) of SkyNet and its 60%
         owned subsidiary SkyNet Venezuela ("Venezuela") for a note payable of
         $450,000 payable in eighteen installments of $25,000 commencing June
         15, 2000. The note was not paid when due and the terms are being
         renegotiated. In addition, USXP had provided $50,000 to payoff SkyNet's
         loan from a bank with an additional $450,000 to be provided in the
         future. USXP also provided SkyNet with $600,000 of additional working
         capital. USXP recognized goodwill of approximately $1,500,000 from its
         acquisition of SkyNet.

         The following unaudited pro-forma information reflects the results of
         operations of the Company as though the purchase had been consummated
         as of July 1, 1998;

                                                     June 30, 1999
                                                ----------------------
                Revenue                             $  7,411,055
                Net loss                            $(4,493,331)
                Net loss per share                  $     (1.26)

         On September 15, 1999, USXP sold all of the assets of Leone, Inc. a
         subsidiary in consideration for the buyer assuming $85,896 of lease
         obligations and trade payables of $24,493.

         Hereinafter, all of the aforementioned companies are collectively
         referred to as the "Company".


                                      F-6




<PAGE>





2.       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

         a.    BASIS OF PRESENTATION - The accompanying consolidated financial
               statements have been prepared assuming the Company will continue
               as a going concern. The Company incurred losses of approximately
               $5,762,000 and $4,589,000 for the years ended June 30, 2000 and
               1999, respectively, and had a working capital and stockholders'
               deficiency of approximately $5,745,000 and $3,072,000,
               respectively, at June 30, 2000. 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 profitability, 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.

         b.    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.

         c.    REVENUE RECOGNITION - Entertainment division sales are recognized
               when the ticket is delivered to the customer. Delivery income is
               recognized upon the completion of the delivery to its
               destination.

         d.    CASH AND CASH EQUIVALENTS - The Company considers cash
               equivalents to be those instruments which have initial maturities
               of three months or less.

         e.    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.

         f.    NON-COMPETITION AGREEMENT - Amortization is provided over five
               years on a straight-line basis.

         g.    GOODWILL - Goodwill resulting from the acquisition of certain
               subsidiaries represents the remaining unamortized value of the
               excess of the purchase price over the fair market value of the
               net assets acquired. Goodwill is amortized on a straight line
               basis over a period of 15 years.

         h.    DEFERRED COMPENSATION - Deferred compensation recorded in
               connection with Class B common stock issued to the Company's
               Chief Executive Officer is amortized over the five years of the
               related employment agreement.


                                      F-7

<PAGE>


         i.    BASIC NET LOSS PER COMMON SHARE - Net loss per common share is
               calculated utilizing the weighted average number of common shares
               outstanding during the period. Contingently issuable shares are
               included in the computation where the effect is dilutive.

         j.    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.

         k.    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.

         l.    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.

         m.    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, 2000, the Company believes that
               there has been no impairment of its long-lived assets.

         n.    FOREIGN CURRENCY TRANSLATION - The financial statements of the
               Company's Venezuelan operations are measured in its local
               currency and then translated into U.S. dollars. All balance sheet
               accounts have been translated using the current rate of exchange
               at the balance sheet date. Results of operations have been
               translated using the average rates prevailing throughout the
               year. Translation gains or losses resulting from the changes in
               the exchange rates from year-to-year are accumulated in a
               separate component of stockholders' equity.

         o.    CONCENTRATION OF CREDIT RISK - The Company places its cash in
               what it believes to be credit-worthy financial institutions.
               However, cash balances exceeded FDIC insured levels at various
               times during the year.



                                      F-8

<PAGE>




3.       BUSINESS SEGMENTS

         The Company operates in three business segments; merchandise and
         services sales, shipping and entertainment services.

         Summarized financial information of the business segments in 2000 is as
         follows:
<TABLE>
<CAPTION>

                              Merchandise                   Entertain-
                                  and                          ment
                             services sales   Shipping      services       Total
                             -------------   ----------   -------------  ---------

<S>                            <C>          <C>           <C>           <C>
         Revenue               $  102,802   $4,027,949    $1,751,216    $5,881,967
                               ==========   ==========    ==========    ==========

         Operating loss        $2,888,818   $2,390,101    $  152,410    $5,431,329
                               ==========   ==========    ==========    ==========

         Net loss              $3,117,290   $2,492,313    $  152,410    $5,762,013
                               ==========   ==========    ==========    ==========

         Identifiable assets   $  946,677   $1,323,825    $  223,363    $2,493,865
                               ==========   ==========    ==========    ==========

         Depreciation and
         amortization          $  156,415   $   74,526    $    3,356    $  234,297
                               ==========   ==========    ==========    ==========

         Capital expenditures  $    -       $  107,842    $   14,925    $  122,767
                               ==========   ==========    ==========    ==========

</TABLE>


4.       LOAN TO OFFICER

         In accordance with the employment contract of the Company's Chief
         Executive Officer, such officer is entitled to secure loans from the
         Company in an amount not to exceed $950,000. These loans bear interest
         at the applicable federal rate, which approximated 6.5% during the
         years ended June 30, 2000. As of June 30, 2000 the amount owed under
         such loan is $869,900. As discussed in Note 18 such loan will be
         forgiven 10% per year of the outstanding balance. In addition, the
         Company has accrued unpaid salary to such officer aggregating
         $1,230,000 at June 30, 2000. For these matters also see note 18.

5.       RELATED PARTY RECEIVABLES

         During the year ended June 30, 2000 , the Company advanced $350,259 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. The remaining $95,781 receivable is from Skybox, a company
         partially owned by the minority shareholder of SkyNet.

6.       NOTE RECEIVABLE

         In December 1998, an individual purchased 100% of the stock of one of
         the Company's subsidiaries for $545,000 and issued a note as payment.
         Collection of the note is over a period of 16 years bearing interest at
         6% per annum payable in weekly installments of $629 over the first 53
         weeks and $1,060 weekly thereafter. The buyer did not make any payment
         and is in default. Accordingly, Company has recorded a 100% reserve
         against such note.


                                      F-9

<PAGE>



7.       PROPERTY AND EQUIPMENT

         Property and equipment consists of the following:

                Leasehold improvements                             $     18,552
                Office equipment                                        246,266
                Furniture and fixtures                                   82,483
                Software                                                 70,000
                                                                   -------------
                                                                        417,301
               Less accumulated depreciation and amortization          (229,624)
                                                                   -------------
                                                                   $    187,677
                                                                   =============


8.       NON-COMPETITION AGREEMENT

         The Company entered into a non-competition agreement for a period of 5
         years with a former subsidiary and paid $200,000 as consideration for
         such agreement. At June 30, 2000 the unamortized amount of the
         agreement is $100,000.

9.       NOTES PAYABLE

         Notes payable consist of the following:

         Note payable - bearing interest at rate of 10% per annum,
         due August 31, 2000                                          $  250,000

         Bank line of credit, renewable monthly,
         bearing interest at 2% above the prime rate                     130,000

         Note payable,  due upon demand, bearing
         interest at 10%                                                  28,500

         Note payable - due upon demand, at a
         fixed interest amount of $15,200                                 45,000

         Loan payable - bearing interest at the
         rate of 10% per annum, due upon demand                           25,941

         Notes payable - individuals, due upon demand,
         bearing interest at rates ranging from
         8% to 24% per annum                                             129,000




                                      F-10


<PAGE>


         Bank loan due on December 31, 2000,
         interest payable at the bank prime
         rate plus 1.5 points. Secured by $300,000
         letter of credit from the former owner of SkyNet                300,000

         Bank loan due on November 24, 2000,
         interest payable at bank's certificate of deposit
         rate plus 1.5 points. Secured by $150,000
         certificate of deposit from the minority
         shareholder of SkyNet                                           150,000

         Loan from an investor at a fixed interest
         amount of $17,500, due December 15, 2000                         82,500

         Two notes payable to an individual payable
         in weekly payments of aggregate $610 including
         interest.  These notes provide that if the
         controlling interest of SkyNet were to change
         then the notes would be due on demand. Additionally,
         the note would bear interest at 30% per
         annum until paid. The note holder not exercised
         his right to demand payment                                      41,439

         Notes payable - to an individual bearing
         interest at 14%, payable in monthly payments
         of $10,000 including interest, until the total amount
         of principal and interest is repaid                             116,193

         Non-interest bearing loan from investor due
         December 15, 2000                                                39,998

         Note payable for purchase of 51% of shares
         of stock of SkyNet, was payable in eighteen
         installments of $25,000 commencing June 15, 2000
         The terms of such note is being renegotiated                    450,000
                                                                      ----------
                                                                      $1,788,571
                                                                      ==========

10.      CONVERTIBLE DEBENTURES

         The Company issued a series of convertible debentures in the year ended
         June 30, 2000 in the amount off $810,000 are due in 2002. In addition,
         $189,000 of debentures issued from 1997 are still outstanding. Such
         debentures bear interest ranging from 10% to 12% per annum.



                                      F-11



<PAGE>


11.      COMMITMENTS AND CONTINGENCIES


         a. The Company operates its facilities under operating lease agreements
         with unrelated parties. The base rent aggregates approximately $13,000
         per month. The related leases expire on February 28, 2001, June 30,
         2002 and February 29, 2005.

         Lease payment, by year, and in aggregate at June 30, 2000 are as
         follows:

         Year ended June 30,
           2001                                 $149,628
           2002                                  146,791
           2003                                   81,033
           2004                                   83,796
           2005                                   57,092
                                                --------
                                                $518,340
                                                ========


b.       The employment agreement with the Company's Chief Executive Officer
         provided for an annual base salary of $84,000 in 1994, subject to
         annual cost of living adjustments each succeeding January 1st over a
         five year period. In connection therewith, the officer was issued
         1,000,000 new common shares as compensation for services previously
         rendered and expenses previously incurred during the pendency of the
         Company's 1994 bankruptcy proceedings. The shares had been valued at
         $0.50 per share and compensation of $ 500,000 was included as a charge
         to reorganization expense. Additionally, the officer will be issued
         500,000 additional shares as additional compensation pursuant to the
         employment agreement. If, prior to the termination of the entire
         employment period, the officer's employment is terminated for cause (as
         defined), the officer will forfeit 8,333 shares for each of the months
         of employment that has not been completed over the remaining term of
         the agreement. Deferred compensation of $500,000 had been recorded in
         connection with the 500,000 shares issuance which was fully amortized
         at June 30, 1999. In February, 1999 the employment contract of the
         officer was renewed for an additional five year period at an annual
         compensation of $300,000 per annum. As of June 30, 2000 Company has
         accrued $1,230,000 of salary due to such officer.

c.       The Company is obligated under a consulting agreement expiring April,
         2004 under which the Company is to receive financial and accounting
         services for a fee of approximately $72,000 per annum.


                                      F-12


<PAGE>


d.       USXP's subsidiary, Skynet obtained a preliminary injunction in Federal
         District Court in Florida against a competitor, Skynet Holdings, Inc.
         ("Holding"), for servicemark infringement on courier shipments
         throughout the United States. The defendant filed an appeal with the
         Court of Appeals for the Eleventh Circuit and the Court held in
         Skynet's favor. Skynet has moved for summary judgment on liability and
         expects to receive a judgment for substantial damages after trial. The
         collectibility of these damages, however, is not assured because of the
         financial condition of Holding.

e.       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.



12.      INCOME TAXES

         At June 30, 2000 the Company had approximately $25,000,000 of net
         operating loss carry forwards expiring beginning in 2008. 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
         limitation.

         Deferred tax debits in the amount of approximately $10,188,000
         (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, 2000
         and 1999 are as follows:
                                                       Years ended June 30,
                                                --------------------------------
                                                  2000                  1999
                                                ------------       -------------
        Net operating loss carryforward         $ 25,000,000       $ 21,000,000
                                                ------------       ------------
        Total gross deferred asset                10,188,000          8,419,000
        Less: valuation allowance                (10,188,000)        (8,419,000)
                                                ------------       ------------
        Net deferred tax assets                 $       --         $       --
                                                ============       ============

         The increase in the valuation allowance of $1,769,000 during the year
         ended 2000 was due to the additional allowance provided for the 2000
         net operating loss.


                                      F-13

<PAGE>


         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:



                                                          Years ended June 30,
                                                    ----------------------------

                                                         2000           1999
                                                    -----------    -------------

         Benefit computed at the statutory rate     $ 1,959,000    $ 1,560,000

         Losses for which no benefit recognized      (1,959,000)    (1,560,000)
                                                    -----------    -----------
         Benefit recorded                           $      --      $      --
                                                    ===========    ===========

13.      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, 2000, the
         Company issued 11,611,516 shares of common stock. Of such shares
         issued, 608,001 were issued in exchange for services rendered; 401,363
         shares were issued in payment of principal, interest and penalties on
         notes payable. In addition, 8,205,724 shares were issued to investors
         for cash and 1,771,428 shares were issued to investors for cash rights.

         During the year ended June 30, 2000, the Company issued 11,611,516
         shares of common stock. Of such shares issued, 608,001 were issued in
         exchange for services rendered; 401,363 shares were issued in payment
         of principal, interest and penalties on notes payable. In addition,
         8,205,724 shares were issued to investors for cash and 1,771,428 shares
         were issued to investors for cash rights.

         During the year ended June 30, 2000, advisory fees were prepaid to
         consultants retained by the Company to provide certain advisory
         services via the issuance of 625,000 common shares. The common shares
         were valued at their approximate fair market value on the dates of
         issuance. The terms of the consulting agreements are from eighteen to
         twenty-four months, and the amounts recorded for the issuance of the
         shares are being amortized over the respective periods.

14.      TREASURY STOCK

         The Company bought 40,000 shares from one investor for $12,000.
         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.



                                      F-14


<PAGE>



15.      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.

16.      STOCK OPTION PLAN


         The Company's "1994 Stock Option Plan" provides for the issuance of up
         to 104,167 shares of common stock. The purchase price per share of
         common stock under each option shall not be less than the fair market
         value of the common stock on the date such option is granted. No
         options have been granted under the plan as of June 30, 2000.


17.      MINORITY INTEREST

         At June 30, 2000 minority interest represents 750 shares of non-voting
         preferred stock of SkyNet issued prior to its acquisition by USXP. The
         stock is convertible into 10 shares of common stock of SkyNet at the
         option of SkyNet on or before December 31, 2003.

18.      SUBSEQUENT EVENTS

         In July 2000, the Company's subsidiary, Skynet acquired the operating
         assets of Skynet Worldwide Express, Costa Rica.

         The Company has announced a 4% stock dividend to stockholders of record
         on the close of business July 20, 2000, payable on August 15, 2000.

         On November 1, 2000 the Company's board of directors authorized the
         issuance of 15,000,000 shares of the Company's common stock to its
         Chief Executive Officer, the value of which is to be applied against
         accrued salary payable to such officer.

         In addition, 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 $869,900 as of June 30, 2000.



                                      F-15


<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). Directors are scheduled for election at
each annual meeting. Directors shall be elected by the holders of record of a
plurality of the votes cast at each annual meeting and shall hold office until
the next succeeding annual meeting. 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                    52                   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 PBC
Network is a leader of the $5 billion private postal industry. Its other
subsidiaries are engaged in international shipping, advertising and
entertainment concierge services. 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 as a Commander 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.


                                       15
<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 three fiscal
years. No other information is included regarding compensation paid to other
Executive Officers during such three 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.






                                       16
<PAGE>


                           SUMMARY COMPENSATION TABLE
                           --------------------------


                                                  Long-Term
                                             Annual Compensation
                                             Compensation Awards

      (a)              (b)        (c)        (d)         (e)            (f)
NAME & PRINCIPAL      FISCAL     ANNUAL     ANNUAL   OTHER ANNUAL   # of OPTIONS
   POSITION            YEAR      SALARY      BONUS   COMPENSATION
--------------------------------------------------------------------------------
Richard A. Altomare    1996     100,000      $0         $0              0
Chairman & CEO         1997     100,000      $0         $0              0
                       1998     300,000      $0         $0              0
                       1999     300,000      $0         $0              0
                       2000     300,000      $0         $0              0



Mr. Altomare received no cash compensation from the Company during the Company's
Reorganization and since then, though his employment agreement currently
entitles him to an annual base salary of at least $300,000.






                                       17
<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
                                                     FY-end(#)       FY-end($)


                        Shares
                      acquired on     Value        Exercisable/    Exercisable/
       Name           Exercise (#)  Realized ($)   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.






                                       18
<PAGE>


C.  EMPLOYMENT CONTRACTS AND RELATED MATTERS

The Company has an employment contract with Mr. Altomare, which currently
provides an annual base salary of $300,000. 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. Mr. Altomare's employment agreement further grants to
Mr. Altomare the right under the Court-approved 1994 Stock Option Plan to
purchase not less than 500,000 shares of the Company's Class A Common Stock at
the fair market price of the stock as of the Plan Effective Date. The employment
agreement further provides certain restrictive covenants and nondisclosure
obligations upon Mr. Altomare during the term of the agreement.

On November 1, 2000 the Company's board of directors authorized the issuance of
15,000,000 shares of the Company's common stock to Mr. Altomare the value of
which is to be applied against accrued salary payable to Mr. Altomare.

In addition, 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
$869,900 as of June 30, 2000.








                                       19
<PAGE>

                                     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, 2000 more than five percent of the Class A Common Stock of
the Company. This information is based on 18,779,438 shares of Class A Common
Stock issued and outstanding as of June 30, 2000. 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
------------------------------------------ -------------------------------------

Richard A. Altomare
1 Central Park West,
Suite 30C                      1,290,173 shares                 6.4%
New York, NY 10023

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, 2000. This information is based on 18,779,438
shares of Class A Common Stock issued and outstanding as of June 30, 2000. 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
    BENEFICIAL OWNER           OF BENEFICIAL OWNERSHIP        COMMON STOCK
-------------------------------------------- -----------------------------------

Richard A. Altomare
1 Central Park West,
Suite 30C,                       1,290,173 shares                 6.4%
New York, NY 10023



                                       20
<PAGE>





                                     ITEM 12
                                     -------

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Richard A. Altomare, the Company's Chairman and Chief Executive Officer, served
until July, 1993 as advisor and reorganization consultant to the Company during
the Company's Reorganization case. Thereafter, the Company appointed Mr.
Altomare as Chairman and President, a position he has continually occupied
thereafter.

Mr. Altomare received no cash compensation from the Company during its
Reorganization and since then, though his employment agreement currently
entitles him to an annual base salary of at least $300,000.








                                       21
<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



                                       22
<PAGE>


SIGNATURES:
-----------

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


                                         UNIVERSAL EXPRESS, INC.


Date:  November 6, 2000                  /s/ Richard A. Altomare
                                         -----------------------
                                         Richard A. Altomare, President
                                         and Chairman of the Board








                                       23
<PAGE>