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, 1998 TO JUNE 30, 1999

                         Commission file number 0-18094

                             UNIVERSAL EXPRESS, INC.

                      A Nevada Corporation ID.# 11-2781803

               20 South Terminal Drive, Plainview, New York 11803

        Registrant's telephone number including area code (516) 349-1300

           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 $2,626,215.



<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 October 1, 1999, $2,560,000 (based on 10,050,000 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 7,207,857 shares of its $.005 par value Class A Common Stock
issued and outstanding as of June 30, 1999 and 1,280,000 shares of Class B
Common Stock.

Total number of sequentially numbered pages in this document:  (25).

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 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 ("PPN", formerly called "APAC") 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.

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

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

The business of Universal Express has undergone major transitions in recent
years.

The Company recently announced the acquisition of SkyWorld International Courier
(SkyNet Miami).

SkyNet Miami is part of an international shipping network specializing in
corporate discount pricing to its customers. Its revenues for its most recent
fiscal year were in excess of $5,000,000.

The Company believes that that acquisition of SkyNet Miami will benefit the PBC
Network by providing PBC store owners with reduced international shipping rates
over their present vendors.

The Company believes that SkyNet Miami has an excellent reputation in
international shipping, and will add growth to both the PBC Network and
Universal Express.

Management has developed other new ancillary businesses to support its core
packaging and shipping businesses.




                                       1
<PAGE>





In March the Company announced an Internet based strategic alliances with
HouseHold Direct.com and Internet Advisory Corp. ("PUNK") and plans other such
alliances, to expand the PBC Network and Manhattan Concierge.

In July, the Company signed a letter of intent for Imaging Technology Solutions,
L.L.C. ("NetEx") to provide services for the PBC Network. There can be no
assurance that a definitive agreement will be reached. NetEx is a full-featured
software and service combination designed to securely transmit any document,
including paper, graphical images, hand written documents and electronic media
via the Internet. The Company believes that NetEx is the first Internet-based
document delivery service to seamlessly integrate a patented imaging platform,
real-time document linking, telephone notification and tiered digital security
in an easy-to-use Internet-ware graphical user interface. Accordingly, the
Company believes that NetEx provides a secure, expedient, and economical
alternative to faxes, overnight couriers and traditional email. The Company
believes that NetEx provides comparable document delivery services with much
lower fixed costs.

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 "third wave"
of the industrial revolution - the Internet. While PBCNetwork members do not
currently compete with traditional overnight couriers, NetEx will provide them
with the opportunity to increase revenues through the use of NetEx's technology
for a minimal investment.

Our Web Site is www.usxp.com.

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).



                                       2
<PAGE>



This concierge business is a nationally promoted source for high visibility
venues such as the Olympics, U.S. Open, Super Bowl and the World Series. It has
been serving corporate and individual clients throughout the United States for
over fifty-three years. 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. The Company's two (2) year contract with MBNA credit
card holders supports that direction.

In 1994, the Company acquired an advertising agency, Images Design & Marketing
(Images). This agency is the in-house marketing and promotional department of
the Company. The service of Images is primarily utilized to maximize the
Universal Express and the PBC Network's names and trademarks. Images is also
expected to reduce advertising costs for the PBC Network members by eliminating
the "agency commissions" paid to advertising agencies by printers and other
sources of media.

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

On September 15, 1999, the the Company's Office Quick store in California was
sold.

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 Miami.

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

                           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 Miami.



                                       3
<PAGE>


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) or by telephone
at "1-888-873-2722". 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 PBC Network, with the help of other media outlets, found that the emergence
of E-Commerce is being overlooked by the big retail outlets. The Company
believes these firms have not at this point moved well to address the online
focus that is gaining momentum. As the online population becomes more frequent
and E-Commerce gains speed, the Company believes that the PBC Network will have
laid the foundation that will be needed to provide the necessary adaptations for
future commerce.

The Company believes that business-to-consumer e-commerce will benefit from
consumers seeking the lowest possible price, convenience and public acceptance
over fears of insecure transactions and the difficult task of converting these
"eyeballs" into transactions.

The Company believes that E-commerce success factors such as quality domain
name, first mover advantage, capital to build a brand name, convergence with an
established brick and mortar player and the emergence of a leader in most
categories will determine the survival of the fittest.

Universal Express is bullish on the Internet's future as a vehicle for
consumers' spending, as it projects that the average U.S. household will spend
$900 online this year, and $3,000 in 2003 and break the 10% barrier in certain
categories. At the same time, e-merchants must distinguish themselves from their
competitors in ways other than price in orders to flourish in an online
environment.

The Company believes that industries will turn to the Internet to improve their
existing business models or introduce an innovative one.

As e-commerce grows, someone must deliver the purchased goods to the consumer.
The Company believes that companies such as FedEx, UPS and the U. S Postal
Service are well positioned. The opportunity in this market has drawn lots of
attention, as "Others" are quickly developing to snatch-away business from these
companies. Although traditional shipping companies have been handling most
online purchases, the Company believes that residential delivery is not their
forte. The Company believes that UPS delivers about 2.4 million packages to
homes each day, while Fedex delivers around 320,000. The Company believes that
startups will eventually need a distribution system to deliver nearly anything
that customers purchase on-line.



                                       4
<PAGE>


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 Company believes leverage can be
created being both online and off-line. The Company believes that distribution
issue present a problem for many e-commerce companies. And that traditional
companies, with their existing infrastructure, can be invaluable in fulfilling,
packaging and shipping orders. There are also benefits of offering customers
multiple sales and service channels.

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.

            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.

In return for a low monthly membership fee, 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:

         E-Commerce representation and a highly structured plan for these
         outlets
         Discounts for Web Utilization
         Savings on shipping prices through quantity discounts
         Centralized billing to lower certain costs
         Pre-paid discounts on shipping
         Professional theme coordinated advertising programs
         PBC Network Web Site linking all members with outside customers
         E-mail customer leads
         Scholarship Programs for members' children
         Packaging education programs
         Organized conventions
         PBC Network health/ dental insurance
         PBC Network shipping insurance
         Computer software/ hardware, Sales and consulting
         Shipping hot line and tracking for customers
         Continual development of new profit centers
         Quality control for member and customer benefits



                                       5
<PAGE>

         Affordable legal representation
         National customer service satisfaction department
         Political lobbying
         Vacation of the month program
         Discounted air cargo/ next day worldwide rates
         Discounted copier and/or fax, postal meter leasing programs
         Discounted long distance rates Discounted printing programs
         Discounted van and equipment leasing program
         Prepaid phone card
         Centralized purchasing
         Monthly Newsletter
         Brand recognition of
         PBC Network Logo PBC Network advisory council
         Store (design/modernization) program


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.

The Company announced in 1998 that the PBC Network had formed an Advisory
Council. This council consists of PBC members from 7 regions of the United
States as well as PBC President, Nick DeLeone. The goal of the Council is to
obtain a more specific regional view of the CMRA industry through the
cooperative efforts of the PBC members.

In 1998 the Company announced that the PBC Network had formed a strategic
alliance with Kodak to make available the Kodak Image Magic Picture Maker to the
PBC Network member stores nationwide.

During the year, the PBC Network also announced relationships with other leading
vendors, for use of its members, including the following:

         -- 3M - Heat free, non-electric laminating system and various office
            supplies.
         -- American Airlines Advantages Frequent Flyer Miles
         -- Reslinx Incentive Travel Program
         -- Century Marking/Stamper 2000 - Discounted rates on custom rubber
            stamps for resale.
         -- Discounts on planning and scheduling products available through
            Wescosa-Florida.
         -- GBC - Discounts on laminating/binding/finishing equipment and
            supplies.
         -- Keena - Discounts on tape and sealing products.
         -- Kittrich - Discounts on licensed mailing supplies.
         -- MBNA Bank - Co-Marketing/Corporate Credit Card program.



                                       6
<PAGE>

         -- Nova Information Services - Discounts on credit card processing with
            most monthly fees waived.
         -- Paychex - Discounts on payroll services.
         -- Rediform - Discounts on business forms and other office products and
            services.
         -- Risk Management - Business Insurance Services.
         -- Hertz - Co-Marketing/Car Rental Referral program.
         -- Ti-Mail - Discounts on decorated Tyvek mailing products.
         -- Wescosa-Florida - End-column discounts on office supplies.
         -- X-Stamper - Discounts on stock rubber stamps.


Future PBC Network benefits should include but not be limited to e-commerce,
mail order contract for individual stores, Internet document delivery systems,
national moving preparation program, direct access to packing supplies, audio
visual training, electronic car/truck rental, national television advertising,
auto club, video conferencing, bar-coded luggage national pick-up program,
advertising revenues directly from carriers.

This value-added Network with the goal of revitalizing the private postal
industry and positioning itself for additional acquisitions within the
transportation industry that benefit its members' collective strength.

Images Design and Marketing: In 1994, management acquired an advertising agency,
Images Design & Marketing. This agency is the in-house marketing and promotional
department of the Company. Images occupies space in the same building that the
Company leases. By utilizing this arrangement, management expects to achieve
substantial cost savings on its promotional programs and marketing support of
its other subsidiaries. Management expects to reduce the cost of development of
marketing and promotional programs for the Business Centers, thereby
inexpensively maximizing promotion of the Universal Express and the PBC names
and trademarks.

Management expects to reduce advertising expenditures for PBC Network Members
through group buying discounts and eliminating the "agency commissions" paid to
an ad agency by printers and sources of media. Typically, printers of
promotional material and media outlets such as newspapers, magazines and radio
escalate costs more for infrequent users.

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). 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.


                                       7
<PAGE>


                             Packaging Plus Services
                             -----------------------

Packaging Plus Services, Inc. is the corrugated box subsidiary of USXP. A
manufacturing facility is being sought relatively close to the main office. The
Company intends to be a full service corrugated box manufacturer. Additionally,
other equipment has been identified and readied for purchase. The Company
believes that this core business will lend itself to expanding the customer base
and "trim-out" a new and enhanced market. The Company believes that the
additional equipment and marketing effort will enable Packaging Plus Services,
Inc. to become a significant player in the corrugated market.

PBC Network Stores use basic corrugated and because of their non-centralized
purchasing, 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.

                                   Competition
                                   -----------

The Company, when it only franchised, previously viewed its competition to be
chains of neighborhood packaging and business service centers, the U. S. Postal
Service and even at times, carriers such as United Parcel Service and Federal
Express; however, with the establishment of the PBC Network, the Company
believes that it now works to assist its previous "competitors". Although these
"competitors" do not provide the full breadth of services that the PBC Network
Membership provides, they all offer services that PBC Network stores sell to the
public.

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 opportunities
will be developed and the key ingredients underlying these developments will be
transportation and outlets for carriers as well as fulfillment for direct
marketing products.


                                       8
<PAGE>


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. United Parcel Service, Federal Express, American Airlines
Cargo and all other carriers, are primarily in the shipping business, not
concentrating on packaging, business support services, and affordable consumer
outlets.

The Company believes that a nationwide organized packaging network can become a
key player in the Global Economy. The Company has positioned itself to be that
public player in this lucrative market. Control of the outlets' shipping choices
and residential pick-up capability increases company presence and future
importance.

From 1980 to 1996, U.S. Postal Service mail volume increased over 40%. During
the same period, the U.S. Postmaster General reports that the number of U.S.
Post Offices, branches and stations registered a decline from 30,326 to 26,210.
Due to high labor costs of staffing additional facilities and the continuing
pressure on the U.S. Congress to reduce government subsidies, such as those
provided to the U.S. Postal Service, the Company believes it is unlikely that
the number of U.S. Post Offices, branches and stations will increase
substantially in the foreseeable future. PBC Network stores could contract their
services to the Post Office or any International carrier. The Company believes
that long waiting lines and limited shipping options are commonplace in most
U.S. Post Offices, and that in many areas there is a shortage of post office
boxes. 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, took control
of Universal Express in December 1991. He directs the Company, and has built
(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 carriers.
He believes that the Company's advancement beyond the simple franchise
organization concept to involve all packaging and postal centers into one
worldwide organization whose time has come.

                          Trade Marks and Service Marks
                          -----------------------------

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


                                       9
<PAGE>


                                    Employees
                                    ---------

As of June 30, 1999, the Company employed 140 individuals. The Company has not
experienced any work stoppages and considers its relations with its employees to
be excellent. To facilitate its PBC Network and expansion plans, management
expects to engage in significant hiring of management, sales, operational and
support personnel during 1999 and beyond. The Company's Stock Option Plan
provides for the issuance of up to 1.25 million shares of the Company's class A
common stock.

                                     ITEM 2
                                     ------

                            DESCRIPTION OF PROPERTIES

USXP's present corporate headquarters is approximately 15,000 square feet in
Plainview, NY. Also, additional space will be needed for its customized
corrugated business. The Company maintains 6,000 square feet of office space in
Manhattan for its Entertainment businesses. The Company also has offices in
California and Florida. The Company has recently announced its intention to move
its corporate headquarters to Manhattan.

                                     ITEM 3
                                     ------

                                LEGAL PROCEEDINGS

The Company is involved in several old lawsuits with vendors and suppliers.
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.

The Company filed a suit in Florida in April against Select Capital, Ronald G.
Williams and others connected with Select Capital for compensatory and punitive
damages and a return of fees and a commissions for failing to honor previous
funding commitments and promises, for an amount in excess of $68 million
dollars.




                                       10
<PAGE>



                                     ITEM 4
                                     ------

                 SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

No meeting of shareholders was held during the year.


                                     PART II
                                     -------

                                     ITEM 5
                                     ------

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Class A Common Stock has been trading under the symbol "USXP" on
the automated quotation system maintained by the National Quotation Bureau,
Inc., (the "Bulletin Board") since June 30, 1998. Prior to this date, the
Company's common stock traded under the symbol "PKGP" on 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

              9/30/98                    $0.39              $2.125
             12/31/98                    $0.13              $0.375
              3/31/99                    $0.175             $0.90
              6/30/99                    $0.40              $1.313

As of June 30, 1998, there were over 3,500 holders of record of the Company's
Common Stock.

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

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





                                       11
<PAGE>





                                     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:
                                    ---------

The business of Universal Express has undergone major transitions since 1994
with the further development and growth of the PBC Network and the acquisition
of Manhattan Concierge and SkyNet Miami.

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, requires capital to be developed properly.

Management views this year as a period of continued transition and anticipates
additional 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 Miami.





                                       12
<PAGE>



Results of Operations for the year ended June 30, 1999:

                                                Twelve Months Ended
                                                June 30, 1999      June 30, 1998
                                                -------------      -------------
Revenues:
---------
Ticket Sales                                     $ 1,721,129        $ 1,706,939
Merchandise & Service Sales                          479,077            506,835
Delivery Services                                    402,835            293,739
Other income                                          23,174              1,929
                                                 -----------        -----------
                                                 $ 2,626,215        $ 2,509,442
                                                 -----------        -----------

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

Cost of Goods Sold                               $ 1,729,182        $ 1,663,051
Selling, General & Admin                           4,304,644          5,152,192
Depreciation & Amortization                          160,836            446,675

                                                 $ 7,042,210        $ 6,414,370
                                                 -----------        -----------

Loss From Cont. Operations                       $(4,415,995)       $(3,904,928)


Interest Expense                                    (172,744)        (2,999,062)
                                                 -----------        -----------


Net Loss                                         $(4,588,742)       $(6,903,990)
                                                 -----------        -----------

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



During the year, the Company's operating revenues increased to $2,626,000 from
$2,509,000 for 1998.

Cost of revenues, was $1,729,000 and $1,663,000 respectively.

Selling, general and administrative expenses were $5,034,000 for 1999 compared
with $4,304,000 for 1998.

Generally, increases in revenue and expenses for 1999 over 1998 are the result
of new business development.



                                       13
<PAGE>



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

During the twelve month period ended June 30, 1999, the Company's cash position
decreased by approximately $191,000 to $37,000. The Company's financing
activities provided $2,125,257 while $2,315,984 was used in its operating and
investing activities.

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>





                                     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            51                           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 $7 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 four (4)
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 serves on numerous 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. References in the foregoing tables to the 1994 fiscal year or the latest
or last fiscal year refer to the Current Period. 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
   POSITION             YEAR       SALARY       BONUS     COMPENSATION   OPTIONS

Richard A. Altomare     1995     $130,000(2)     $0           $0           0
Chmn. & CEO             1996      100,000(2)     $0           $0           0
                        1997      100,000(2)     $0           $0           0
                        1998      300,000(2)     $0           $0           0
                        1999      300,000(2)     $0           $0           0


(1) Mr. Altomare received no salary during the Company's Reorganization Case and
continues to draw no salary from the Company. Mr. Altomare's "Other Annual
Compensation" represents a 1.5 million share bonus, issued in the form of Class
B Common Stock, authorized by the Bankruptcy Court as a result of Mr. Altomare's
three year commitment to the Company and his achievement in effecting the
Company's successful reorganization. One million of such shares represented
compensation for services rendered during the Company's Reorganization Case; the
remaining 500,000 represented compensation for services to be rendered, subject
to forfeiture as follows: In the event Mr. Altomare's employment is terminated
for cause or by Mr. Altomare other than for good reason or by reason of a
termination event, as defined in the employment agreement, Mr. Altomare shall
forfeit 8,333 shares of Class B Common Stock for each month remaining under the
employment agreement through its expiration. See financial statements for
additional details.

(2) Accrued but not paid. These amounts remain unpaid.





                                       17
<PAGE>




<TABLE>
<CAPTION>

                         OPTION GRANTS IN CURRENT PERIOD


                                Individual Grants

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

                                           % of Total Options Granted
                          Options Granted    to Employees in Current
        Name                                         Period                Exercise Price        Expiration Date
------------------------- ---------------- ---------------------------- ---------------------- --------------------

<S>                             <C>                <C>                          <C>                   <C>
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                                     Exercisable/          Exercisable/
        Name               Exercise (#)        Value Realized ($)           Unexercisable         Unexercisable
------------------------- ---------------- ---------------------------- ---------------------- --------------------

Richard A. Altomare
  Chairman. & CEO                0                      0                        0/0                   0/0
</TABLE>


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. To date, Mr. Altomare
has deferred receipt of said base salary. To date, $930,000 has been accrued but
not paid. 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.



                                       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, 1999 more than five percent of the Class A Common Stock of
the Company. This information is based on 7,207,857 shares of Class A Common
Stock issued and outstanding as of June 30, 1999. For purposes of this section,
it is assumed that all l.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 R           AMOUNT AND NATURE                   % OF
 OF BENEFICIAL OWNER          OF BENEFICIAL OWNERSHIP           COMMON STOCK
---------------------------------------- ---------------------------------------

Richard A. Altomare
20 S. Terminal Drive
Plainview, NY 11803           1,290,173 shares                      15.2%



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, 1999. This information is based on 7,207,857
shares of Class A Common Stock issued and outstanding as of June 30, 1999. 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 R           AMOUNT AND NATURE                   % OF
 OF BENEFICIAL OWNER          OF BENEFICIAL OWNERSHIP           COMMON STOCK
---------------------------------------- ---------------------------------------

Richard A. Altomare
20 S. Terminal Drive
Plainview, NY 11803           1,290,173 shares                      15.2%


                                       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. On account of services rendered to the Company during the
Reorganization, the Bankruptcy Court awarded Mr. Altomare a $1 million bonus for
his achievement in successfully reorganizing the Company, payable in the form of
1 million shares of the Company's Class B Common Stock. In addition, the
Bankruptcy Court approved the issuance of 500,000 shares of Class B Common Stock
pursuant to a Court-approved employment agreement that became enforceable on the
Plan Effective Date. The terms of this employment are described above. (See
"Compensation of Officers and Directors-Employment Agreements and Related
Matters").

Mr. Altomare received no cash compensation from the Company during the Chapter
11 case or during the current period, though his employment agreement entitles
him to an annual base salary of at least $300,000. To date, $930,000 of salary
has been accrued and not paid.



                                       21
<PAGE>





                                     ITEM 13
                                     -------

                        EXHIBITS AND 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 24, 1999                /s/ Richard A. Altomare
                                        ------------------------------
                                        Richard A. Altomare, President
                                        and Chairman of the Board




                                       23
<PAGE>
                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS





                                                                            Page
                                                                            ----
REPORT ON AUDITS OF CONSOLIDATED FINANCIAL STATEMENTS....................... F-1

CONSOLIDATED BALANCE SHEETS................................................. F-2

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY............................. 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, 1999 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended June 30, 1999 and 1998. 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, 1999 and the results of
their operations and their cash flows for the years ended June 30, 1999 and 1998
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 3 to the
consolidated financial statements the Company has a working capital and
stockholders= deficiency of approximately $2,613,000 and $284,000, respectively
at June 30, 1999, and has incurred significant recurring operating losses which
raise substantial doubt about its 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 3. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.




                                        /s/ Feldman Sherb Horowitz & Co., P.C.
                                        --------------------------------------
New York, New York                      Feldman Sherb Horowitz & Co., P.C.
November 1, 1999                        Certified Public Accountants


<PAGE>


                             UNIVERSAL EXPRESS, INC.
                                AND SUBSIDIARIES

                                REPORT ON AUDITS
                                       OF
                              FINANCIAL STATEMENTS

                       YEARS ENDED JUNE 30, 1999 AND 1998




<PAGE>


                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
                    ----------------------------------------

                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
<TABLE>
<CAPTION>
                                     ASSETS
                                     ------

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

CURRENT ASSETS:
<S>                                                                <C>
    Cash                                                           $     37,164
    Accounts receivable, net of allowance for doubtful
          accounts of $182,400                                          537,134
    Inventory                                                           100,162
    Loan to officer                                                     783,445
    Related party receivables                                           105,481
                                                                   ------------
          Total current assets                                        1,563,386
                                                                   ------------

PROPERTY AND EQUIPMENT, net of accumulated depreciation                 228,222
                                                                   ------------

OTHER ASSETS:
    Non-compete agreement, net                                          140,000
    Goodwill, net                                                     2,032,898
    Note receivable                                                     550,800
    Other assets                                                        155,986
                                                                   ------------
                                                                      2,879,684
                                                                   ------------
                                                                   $  4,671,292
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
    Accounts payable and accrued expenses                          $  2,604,149
    Payroll taxes payable                                               172,095
    Other                                                               130,751
    Notes payable                                                     1,080,310
    Convertible debentures                                              189,000
                                                                   ------------
          Total current liabilities                                   4,176,305
                                                                   ------------

LONG-TERM LIABILITIES                                                   579,051
                                                                   ------------

MINORITY INTEREST                                                       200,313
                                                                   ------------

STOCKHOLDERS' EQUITY:
    Common stock, $.005 par value; authorized 147,000,000
          shares, 7,207,857  shares issued and outstanding               36,039
    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                                       20,377,905
    Cash received for stock rights                                    1,770,002
    Accumulated deficit                                             (21,155,207)
    Deferred compensation related to stock issued for services       (1,319,516)
                                                                   ------------
          Total stockholders' equity                                   (284,377)
                                                                   ------------
                                                                   $  4,671,292
                                                                   ============
</TABLE>

                 See notes to consolidated financial statements
                                       F-2



<PAGE>


                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
                    ----------------------------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------

<TABLE>
<CAPTION>

                                                         Years Ended June 30,
                                                         --------------------

                                                          1999         1998
                                                          ----         ----


INCOME:
<S>                                                  <C>           <C>
    Ticket sales                                     $ 1,721,129   $ 1,706,939
    Merchandise and service sales income                 479,077       506,835
    Delivery services                                    402,835       293,739
    Other  income                                         23,174         1,929
                                                     -----------   -----------
                                                       2,626,215     2,509,442
                                                     -----------   -----------

COSTS AND EXPENSES:
    Cost of goods sold                                 1,729,182     1,663,051
    Selling, general and administrative                5,152,192     4,304,644
    Depreciation and amortization                        160,836       446,675
                                                     -----------   -----------
                                                       7,042,210     6,414,370
                                                     -----------   -----------

LOSS FROM OPERATIONS                                  (4,415,995)   (3,904,928)


INTEREST EXPENSE                                        (172,744)   (2,999,062)
                                                     -----------   -----------

NET LOSS                                             $(4,588,739)  $(6,903,990)
                                                     ===========   ===========


    Net loss per common share                        $     (1.29)  $    (16.74)*
                                                     ===========   ===========


WEIGHTED AVERAGE NUMBER OF COMMON SHARES               3,561,529       412,453 *
                                                     ===========   ===========




* adjusted retroactively for 1:70 reverse stock split in 1998

</TABLE>


                 See notes to consolidated financial statements.

                                       F-3



<PAGE>


                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
                    ----------------------------------------

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 -----------------------------------------------

<TABLE>
<CAPTION>

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

<S>                                                        <C>       <C>           <C>         <C>       <C>
BALANCE - JUNE 30, 1997                                      60,735    $     304     1,280,000   $ 6,400   $ 10,833,279

     Common shares issued for compensation                   36,000          180          --        --          988,815

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

     Common shares issued for interest and penalties        372,710        1,864          --        --        1,113,032

     Common shares issued for upon conversion of notes    1,353,847        6,769          --        --        4,605,938

     Common shares issued as security                         7,075           35          --        --          137,679

     Common shares issued for acquisition
          of Office Quick                                     4,714           23          --        --          319,777

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

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

                                                         -----------    --------     ---------   -------   ------------
BALANCE - JUNE 30, 1998                                   1,835,081        9,175     1,280,000     6,400     17,998,520

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

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

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

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

     Common shared 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 upon conversion of notes      315,000        1,575          --        --          167,425

     Common shares issued for upon 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
                                                         ===========   =========     =========   =======   ============



                                                            Stock        Accumulated     Deferred

                                                           Rights         Deficit      Compensation       Totals
                                                         ------------    -----------   ------------     -----------



BALANCE - JUNE 30, 1997                                  $       --     $ (9,662,478)   $ (1,054,000)   $    123,505

     Common shares issued for compensation                       --             --          (913,057)         75,938

     Amortization of deferred compensation                       --             --           791,891         791,891

     Common shares issued for interest and penalties             --             --              --         1,114,896

     Common shares issued for upon conversion of notes           --             --              --         4,612,707

     Common shares issued as security                            --             --              --           137,714

     Common shares issued for acquisition
          of Office Quick                                        --             --              --           319,800

     Cash received for stock rights                           640,000           --              --           640,000

     Net loss                                                    --       (6,903,990)           --        (6,903,990)

                                                         ------------   ------------    ------------    ------------
BALANCE - JUNE 30, 1998                                       640,000    (16,566,468)     (1,175,166)        912,461

     Sales of common stock                                       --             --              --         1,052,000

     Common shares cancelled                                     --             --              --              --

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

     Amortization of deferred compensation                       --             --           653,350         653,350

     Common shared issued for services                           --             --              --           206,749

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

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

     Common shares issued for upon 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           --              --         1,130,002

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

                                                         ------------   ------------    ------------    ------------
BALANCE - JUNE 30, 1999                                  $  1,770,002   $(21,155,207)   $ (1,319,516)   $   (284,377)
                                                         ============   ============    ============    ============


</TABLE>

                 See notes to consolidated financial statements

                                       F-4





<PAGE>
                    UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                                                   June 30,
                                                                        -----------------------------
                                                                           1999              1998
                                                                        ------------     ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                      <C>             <C>
    Net Loss                                                             $ (4,588,739)   $(6,903,990)
                                                                         ------------    -----------
    Adjustments to reconcile net loss to net cash
     provided by operating activities:
       Depreciation and amortization                                          160,836        446,675
       Common shares issued for non-cash expense transactions                 890,901       (121,166)
       Write down of net fixed assets                                         196,523         16,684
       Write off of net reorganization cost                                   290,941
       Write down of net goodwill                                             342,664
       Amortization of deferred financing costs                                  --        1,834,467

    Increase (decrease) in cash attributable to changes in assets and
    liabilities as follows:
       Decrease in accounts receivable                                        134,649        163,362
       (Increase)  in inventory                                               (28,730)       (40,692)
       (Increase) in loan to officer                                          (37,661)      (417,054)
       (Increase) decrease in notes receivable                               (319,654)        67,743
       Decrease  in other, primarily prepaid expenses                            --          143,957
       (Increase) decrease in other assets                                    (16,486)      (334,505)
       Increase (decrease) in accounts payable and accrued expenses           480,838        (69,359)
       Increase in payroll taxes payable                                       84,232         75,973
       Increase in other liabilities                                          101,635           --
                                                                         ------------    -----------
             Total adjustments                                              2,280,688      1,766,085
                                                                         ------------    -----------

NET CASH USED IN OPERATING ACTIVITIES                                      (2,308,051)    (5,137,905)
                                                                         ------------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                                      (7,933)      (221,411)
                                                                         ------------    -----------

NET CASH USED IN INVESTING  ACTIVITIES                                         (7,933)      (221,411)
                                                                         ------------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from issuance of convertible debt                               --        4,938,645
    Repayments of notes and loans payable                                     (56,745)       (89,174)
    Proceeds from stock rights                                              1,130,002        640,000
    Issuance of common stock                                                1,052,000           --
                                                                         ------------    -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                   2,125,257      5,489,471
                                                                         ------------    -----------

NET INCREASE (DECREASE) IN CASH                                              (190,728)       130,155

CASH - BEGINNING OF YEAR                                                      227,892         97,738
                                                                         ------------    -----------

CASH - END OF YEAR                                                       $     37,164    $   227,892
                                                                         ============    ===========

        Supplemental disclosure of cash
             flow information:
        Cash paid for interest --                                        $     19,301    $    49,967
                                                                         ============    ===========
        Non Cash Activity - See note 14 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, 1999
                            -------------------------

1.       DESCRIPTION OF THE BUSINESS
         ---------------------------

         Universal Express, Inc. (AUSXP@) is an integrated business service
         company. Its principal subsidiaries and divisions include USXP=s
         entertainment division which consists of Downtown Theater Ticket
         Agency, Inc. (DTTA) and its subsidiaries, its recently acquired
         subsidiary, Skyworld International Courier (ASkyNet Miami@), and
         Private Postal Network.com and its division Postal Business Center
         Network.com, an association of independent and franchised nationwide
         postal stores. 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 30, 1998 USXP elected to effect a 1:70 reverse stock split of
         its common stock. The aforementioned financial statements and opening
         balances have been restated to reflect such reverse splits.

         On September 1, 1997, USXP acquired all of the outstanding shares of
         Leone, Inc. d/b/a Office Quick and Etc. Etc. Color and Copy Centers,
         Inc. for 330,000 shares of the Companies= stock at a price of $1.00 per
         share and $24,000 in cash. On September 15, 1999, USXP sold all of the
         assets of Leone, Inc. in consideration for the buyer assuming $127,729
         of lease obligations and trade payables of $21,300.

         On June 8, 1999 USXP acquired 5202 shares (51%) of SkyNet, MIA and its
         60% owned subsidiary SkyNet Venezuela (ASkyNet@) for a note payable of
         $450,000 payable in eighteen instalments of $25,000 commencing June 15,
         2000. In addition, USXP will provide $500,000 to payoff SkyNet=s loan
         from a bank. USXP will also provide SkyNet with $600,000 additional
         working capital. USXP recognized goodwill of approximately $1,500,000
         from its acquisition of SkyNet.

         Hereinafter, all of the aforementioned companies are collectively
         referred to as the ACompany@.

         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, 1997;

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

                                          1999                       1998
                                          ----                       ----

         Revenue                    $   7,411,055              $    7,953,359

         Net Loss                   $ (4,493,331)              $  (6,849,082)

         Net loss per share         $      (1.26)              $      (16.61)


                                      F-6

<PAGE>


2.       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

         a.    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.

         b.    REVENUE RECOGNITION - Income from sales of supplies and
               equipment is recognized when the orders are completed and
               shipped.

               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.

         c.    Cash and cash equivalents - The Company considers cash
               equivalents to be those instruments which have initial
               maturities of three months or less.

         d.    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.

         e.    Non-competition agreement - Amortization is provided over the
               five year contractual life of the agreement.

         f.    Goodwill - Goodwill resulting from the acquisition of the
               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.

         g.    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.

         h.    Inventory - Inventories, consisting of supplies, are stated at
               the lower of average cost or market.

         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.

                                      F-7



<PAGE>


         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.

12.            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.

13.            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, 1999, the
               Company believes that there has been no impairment of its
               long-lived assets.

3.       BASIS OF PRESENTATION
         ---------------------

         The Company has a working capital and stockholders= deficiency of
         approximately $2,613,000 and $284,000, respectively at June 30, 1999,
         and has incurred significant recurring operating losses which raise
         substantial doubt about its 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 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.


                                      F-8




<PAGE>


4.       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 1999 is as
         follows:

<TABLE>
<CAPTION>

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


<S>                                          <C>            <C>           <C>            <C>
         Revenue                             $   494,040    $   411,046   $ 1,721,129    $ 2,626,215

         Operating (income) loss             $ 4,516,369    $   107,494   $   (35,121)   $ 4,588,742

         Net (income) loss                   $ 4,516,369    $   107,494   $   (35,121)   $ 4,588,742

         Identifiable assets                 $   747,311    $ 1,527,720   $   223,363    $ 2,498,394

         Depreciation and amortization       $   262,189    $    12,742   $     3,634    $   278,565

         Capital expenditures                $     7,933    $     --      $    --        $     7,933
                                             ===========     ==========   ===========    =============
</TABLE>

5.       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, 1999 and June 30, 1998. Repayment of such note is
         due June 15, 2000. As of June 30, 1999 the amount owed under such loan
         is $783,445. In addition, the Company has accrued unpaid salary to such
         officer aggregating $930,000 at June 30, 1999.

6.       PROPERTY AND EQUIPMENT
         ----------------------

         Property and equipment consists of the following:

               Leasehold improvements                           $   121,689

               Office equipment                                     726,765

               Furniture and fixtures                               125,765
                                                                -----------

                                                                    974,219

               Less accumulated depreciation and amortization      (745,997)


                                                                $   228,222
                                                                ===========

                                      F-9



<PAGE>


7.       RELATED PARTY RECEIVABLES
         -------------------------

         Related party receivables represent receivables from companies
         partially owned by the minority shareholder of SkyNet.

8.       NOTE RECEIVABLE
         ---------------

         Note receivable represents the principal and accrued interest balance
         due from an individual who in December, 1998 purchased 100% of the
         stock of one of the Company=s subsidiaries for $545,000. 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
         $1060 weekly thereafter.

9.       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, 1999 the unamortized amount of the
         agreement is $140,000.

10.      NOTES PAYABLE
         -------------

         Notes payable consist of the following:

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

         Notes  payable -  individuals, due upon demand,
         bearing  interest at rates ranging from 8% to
         24% per annum                                                 147,000

         Note payable,  due upon demand, bearing
         interest at 10%.                                               29,000

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

         Capital lease  obligations  assumed with varying
         monthly  payments and interest rates maturing in 2000;
         secured by interest in equipment.                              85,896

          Bank loan due on March 15,  2000,  interest  payable
          at the bank prime rate plus 1.5  points.
          Secured by  $300,000  letter of credit from the              300,000
          former owner of SkyNet.


                                      F-10

<PAGE>


          Bank  loan  due on  November  25,  1999,  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 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 for demand payment.                      72,294



          Bank  loan  payable  in  monthly  installments
          up to March  15,  2000, interest  payable  at the
          bank  prime  rate plus 2 points.  Secured  by                 33,291
          accounts receivable.

          Non-interest  bearing notes to shareholders
          and two investors  payable
          from July 1, 2000 to December 15, 2000.                      153,439

          Note payable for purchase of 51% of shares of stock
          of SkyNet,  payable in eighteen installments of
          $25,000 commencing June 15, 2000                             450,000
                                                                     ---------

                                                                     1,659,361

Less: current maturities                                            (1,080,310)


                                                                  $    579,051
                                                                  ============





         The above long-term loans are maturing on various dates during the year
         ending June 30, 2001.


11.      CONVERTIBLE DEBENTURES
         ----------------------

         The Company issued a series of convertible debentures in 1997 in the
         approximate amount of $5,000,000 which all but $189,000 were converted
         into common shares. The remaining portion bears interest ranging 10% to
         12% per annum maturing July 31, 1999. Subsequent to the maturity date
         the holder of $100,000 of such debentures issued notices of conversion.
         The remaining $89,000 is still outstanding.


                                      F-11

<PAGE>


12.      COMMITMENTS AND CONTINGENCIES
         -----------------------------

         The Company leases the space for its administrative offices and
         warehouse on a month to month basis and is currently paying
         approximately $7,600 per month and two other offices on yearly leases
         of approximately $8,100.

         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 share 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.

         The Company is obligated under a consulting agreement expiring February
         28, 2004 under which the Company is to receive financial and accounting
         services for a fee of approximately $116,000 per annum.

         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.

13.      INCOME TAXES
         ------------

         At June 30, 1999 the Company had approximately $21,000,000 of net
         operating loss carry forwards expiring beginning in 2007. 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 $8,419,000
         (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.

                                      F-12
<PAGE>





14.      STOCKHOLDERS' EQUITY
         --------------------

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

         During the year ended June 30, 1999 the Company issued 5,374,560 shares
         of common stock. Of such shares issued, 233,500 were issued in exchange
         for services rendered; 433,200 shares were issued in payment of
         interest and principal on notes payable, 400,000 shares were issued for
         conversion of convertible debentures; 50,000 common shares were issued
         as a good faith deposit for acquisition of SkyNet and 239,028 shares
         were issued as a dividend. In addition, 2,738,833 shares were issued to
         investors for cash.

         During the year ended June 30, 1999 advisory fees was prepaid to
         consultants retained by the Company to provide certain advisory
         services via the issuance of 1,280,000 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.

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, 1999.

17.      MINORITY INTEREST
         -----------------

         At June 30, 1999 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.

                                      F-13