Universal Express Inc – ‘10KSB’ for 6/30/06

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       42    167K 
 2: EX-31.1     Certification per Sarbanes-Oxley Act (Section 302)     2±     9K 
 3: EX-32.1     Certification per Sarbanes-Oxley Act (Section 906)     1      7K 

10KSB   —   Annual Report — Small Business
Document Table of Contents

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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, 2005 TO JUNE 30, 2006

Commission file number 0-18094

 UNIVERSAL EXPRESS, INC.

A Nevada Corporation ID.# 11-2781803

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

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

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

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

 CLASS A COMMON STOCK PAR VALUE $0.005 PER SHARE

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

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

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State issuer's revenues for the period: $1,073,486. State the aggregate market  
value of the voting and non-voting stock held by non-affiliates computed by     
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within the past 60 days: As of     
August 23, 2006, $89,794,717 (based on 12,647,143,170) 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 12,670,133,343 shares of its $.005 par value Class A Common  
Stock issued and outstanding as of June 30, 2006 and 1,280,000 shares of Class B
Common Stock.                                                                   

Total number of sequentially numbered pages in this document:  (26).            

Documents Incorporated by Reference: None.                                      

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PART I

ITEM 1

 DESCRIPTION OF BUSINESS

 HISTORY

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

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

Its principal businesses include the UniversalPost Private Postal Network/Postal
Nation, UniversalPost(TM) International Courier Service, Virtual Bellhop(R),    
Luggage Express(R), MadPackers, Universal Express Capital Corp., Universal Cash 
Express and Universal Express Properties.                                       

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

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

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

Virtual Bellhop(R) is a premier door-to-door luggage transportation service.    

MadPackers is a logistics subsidiary for the futuristic form of shipping        
personal items for college and university students.                             

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

Universal Express Properties concentrates on commercial property acquisitions.  

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

The web site for the company and its businesses is HTTP://WWW.USXP.COM.         

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 THE BUSINESS OF THE CORPORATION

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

The Company's principal subsidiaries and divisions are: UniversalPost Private   
Postal Network/Postal Nation UniversalPost International Courier Service        
Universal Express Logistics, Inc.                                               
Virtual Bellhop(R)                                            
Luggage Express(R)                                            
LEAP (Luggage Express Associate Program(TM))                  
MadPackers(TM), Inc.                                                            
Universal Express Capital Corp.                                                 
Universal Cash Express                                                          
Universal Express Properties                                                    

 MARKETPLACE

A challenging global economy has grown over the past decade. Internet, catalog  
and retail sales continue to mandate an inexpensive and responsive outsourced   
final mile Domestic and International delivery network. That innovative and     
outsourced final mile network continues to be addressed by Universal Express and
it has undergone visionary expansion in the last decade. Strong strategic       
relationships are currently being established with companies and manufacturers, 
thus strengthening its long term private postal network, its luggage business   
and its logistical courier network. Members of the UniversalPost's private      
postal network provide the public with a complement to the U.S. Post Office for 
many retail and business postal services. In addition, these Postal Service     
Centers offer individuals and business customers an additional variety of       
personal business services and merchandise.                                     

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

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

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

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

In just the past few years, USXP has identified more than 9,000 private postal  
centers in a network called UniversalPost that produces growing revenue streams 
for both its members and USXP. USXP offers its UniversalPost Network members    
discounted services from some of the country's largest vendors, as well as      
innovative new luggage services that resonate in the world's present            
security-conscious travel climate.                                              

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

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

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

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

MadPackers(TM) is a service oriented company that is assisting the college world
by moving students and their belongings into their rooms ahead of time; creating
a fluid move in process on the first days of school for students, parents and   
administrations across the country through a "door to dorm(TM)" shipping        
service. MadPackers takes students' belongings from their home and sends them   
directly to their college residences. They also take students' belongings back  
home after the semester has ended. They store students' belongings during       
winter, summer, and study abroad breaks, as well as ship to study abroad and    
spring break destinations. MadPackers provides students, parents, and           
administrations an innovative solution to the move in process on and off        
campuses across the country.                                                    

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

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

The Company is also affiliated with The Coalition for luggage Security. The     
Coalition is made of companies and individuals with the mission of creating     
safer air travel by separating luggage from passengers. The Founder and         
President of the Coalition is Richard Altomare, who is also the CEO and Chairman
of the Company. Currently, his white paper entitled, "More Safety, Less Hassle  
for American Travelers: A Private Sector Solution" has been circulated in       
Congress. You can read more about the Coalition and this white paper at         
WWW.LUGGAGESECURITYCOALITION.COM.                                               

 UNIVERSALPOST(TM) NETWORK- THE PRIVATE POSTAL NETWORK/POSTAL NATION

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

INDIVIDUAL SERVICES AND PRODUCTS

o Flowers/Gift Baskets                                                          
o Corrugated & Packaging                                                        
o Moving Supplies                                                               
o Customized Corrugated                                                         
o Parcel Insurance                                                              
o E-Bay Power Selling Franchises                                                
o Certified/Registered E-mail's                                                 
o Personalized Postage                                                          
o Discounted Supplies                                                           

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o Joint Promotions                                                              
o Fingerprinting                                                                
o Credit Union                                                                  
o Consolidated Shipping rates                                                   
o Supplemental Health Insurance                                                 
o Print Certified Mail                                                          
o On-line Purchasing                                                            
o Van Sales                                                                     
o Visa Debit Card                                                               

PostalNation, a Web Site and primary search engine for all postal store members,
vendors and consumers for product and service needs offered through             
UniversalPost.                                                                  

On April 25, 2006, the Company announced that its divisions Universal Post and  
PostalNation had agreed with QuikDrop International to offer its technology and 
hardware for eBay marketing for customers of postal store members throughout the
United States.                                                                  

On May 12, 2006, the Company announced a pilot program for a number of          
UniversalPost Network/Postal Nation members for the use of R-Post's registered  
e-mail secured program.                                                         

On August 23, 2006, the Company announced a UniversalPost Network/Postal Nation 
program with Enterprise Rent-A-Car.                                             

UNIVERSALPOST(TM) NETWORK- INTERNATIONAL COURIER SERVICE

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

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

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

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

LUGGAGE EXPRESS(TM) AND VIRTUAL BELLHOP(R)

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

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

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

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

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

The Company' Luggage Express is developing an innovative revenue program for the
selling of Luggage Express Associate Program (LEAP) territories to investors and
business entrepreneurs. The development of this program is in its final stages. 
The Company has been working with Francorp, Inc. the premier franchising        
organization to guide and assist the Company in the franchising program for its 
L.E.A.P. (Luggage Express Associate Program) division.                          

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On April 13, 2006, the Company announced that MadPackers, its college shipping  
and logistics division, had launched its promotional tour of universities.      

On April 25, 2006, the Company announced that Madpackers signed an agreement    
with Florida Atlantic University.                                               

On May 16, 2006, the Company announced that Luggage Express had strategically   
aligned itself with Preferred Boutique, the newest brand within the Preferred   
Hotel Group.                                                                    

On May 17, 2006, the Company announced that Luggage Express had entered into a  
partnership with The Association of Corporate Travel Executives, an association 
that provides global and regional leadership of the business travel industry.   

On June 21, 2006, the Company announced the signing of a contract to purchase   
Global Trucking Services, a provider of luggage delivery services and trucking  
services for major airlines serving the Miami, Florida market.                  

On July 18, 2006, the Company announced the implementation of the new website   
for Madpackers (WWW.MADPACKERS.COM).                                            

 UNIVERSAL EXPRESS CAPITAL CORP.

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

UNIVERSAL CASH EXPRESS

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

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UNIVERSAL EXPRESS PROPERTIES

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

On February 27, 2006, the Company announced the signing of a letter of intent to
purchase a South Florida based fuel and wholesale jobber, which servicing 144   
gas stations and directly owns 46 of them.                                      

On July 18, 2006, the Company announced the signing of an agreement to purchase 
Jacksonville Oil Company, a North Florida oil and gas retailer.                 

 COMPETITION

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

 INDUSTRY BACKGROUND

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

The opportunities to expand our corporate scope are limitless due to shipping,  
logistical distribution needs and growth of services through the world.         

The transportation industry has already developed the necessary infrastructure  
and continues to grow. The Company believes that the missing ingredients needed 
to make this industry improve are packaging, logistics and inexpensive          
residential locations.                                                          

The Company believes that a nationwide organized domestic fulfillment network   
with an affordable International Delivery System can become a key player in the 
Global                                                                          

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Economy. The Company has positioned itself to be that public player in this     
lucrative market. Members of UniversalPost provide the public with a complement 
to U.S. Post Offices for many retail postal services. In addition, our Service  
Centers offer individuals and business customers a variety of personal, business
and communications services and merchandise.                                    

MANAGEMENT

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

 TRADE MARKS AND SERVICE MARKS

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

 EMPLOYEES

As of June 30, 2006, the Company employed 37 individuals. The Company has not   
experienced any work stoppages and considers its relations with its employees to
be excellent. To facilitate its UniversalPost Network, USXP Capital, Luggage    
Express, MadPackers and UniversalPost International Delivery expansion plans,   
management expects to engage in significant hiring of management, sales,        
operational and support personnel during 2006 and beyond.                       

ITEM 2

 DESCRIPTION OF PROPERTIES

USXP's present corporate headquarters is located at 1230 Avenue of the Americas,
New York, New York, with operating and administrative offices at 5295 Town      
Center Road, Boca Raton, Florida.                                               

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ITEM 3

 LEGAL PROCEEDINGS

The Company filed a lawsuit for $168 Million in 2003 against North American     
Airlines and its President Mr. McKinnon in New York Supreme Court, Queens       
County, New York, for breach of contract and fraud, plus punitive damages. This 
suit was predicated upon Mr. McKinnon's actions following the signing of a      
contract for Universal to purchase this charter airline, the breach of that     
contract in various ways by Mr. McKinnon and Mr. McKinnon's attempts to         
frustrate the accomplishment of the proposed acquisition. This case is pending. 

In 2005, the Company filed a lawsuit for $269 Million against Capitalliance     
Financial Services and individuals and firms associated with Capitalliance in   
New York Supreme Court, New York County. This suit was predicated upon a series 
of failed transactions proposed to our Company, which were grounded on fraud,   
misrepresentation and a series of forged instruments and documents. This case is
pending.                                                                        

In 2006, the Company brought an action in New York Supreme Court, County of     
Albany, for $160 Million against Coach Industries Group and related companies.  
This suit is predicated on fraud and breach of contract, with respect to the    
violation of a "right of first refusal" our Company had to purchase a courier   
management company, Corporate Development Services (formerly, SubContracting    
Concepts, Inc.). This case is pending.                                          

On March 2, 2004, the Company brought suit against the SEC in Federal Court in  
Florida seeking damages from "naked shorting" of its shares and other matters.  
Thereafter, on March 23, 2004, the SEC brought an action in federal court in New
York against certain officers of the Company. These matters are pending. The    
Company and its President have been leading opponents of the growing "naked     
shorting" scandal for ten years and has joined with many other public companies 
in focusing on this national problem in press releases and public forums. It is 
significant that the Company has received very substantial jury verdicts and    
judgments concerning this problem, as indicated below.                          

On July 26, 2001, a jury in the Circuit Court of the Eleventh Circuit, Dade     
County, Florida awarded the Company a damage verdict after trial, of $87,622,000
compensatory damages, $275,000,000 punitive damages and $26,286,000 pre-judgment
interest, or a total judgment entered of $389 Million, against Select Capital   
and various stock manipulators and "naked shorters." This judgment continues to 
grow with post-judgment interest. On August 23, 2003, another jury in the       
Circuit Court, Dade County, Florida, after trial, awarded another verdict to the
Company in the total amount of $137 Million, against South Beach Financial and  
related stock manipulators and "naked shorters". Judgment was entered in favor  
of the Company upon this verdict. This judgment continues to grow with          
post-judgment interest. These judgments were non-appealable. Collection efforts 
on behalf of the Company with respect to these judgments are ongoing and the    
Company believes that the judgments are substantially collectable.              

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

ITEM 4

 SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

No meeting of shareholders was held during the year.                            

 PART II

ITEM 5

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

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

                             BID
QUARTER ENDED               LOW                    HIGH   
-------------               ---                    ----   
9/30/05                  $0.0006                 $0.003 
12/31/05                 $0.0003                 $0.001 
3/31/06                  $0.0004                 $0.037 
6/30/06                  $0.004                  $0.014 

As of June 30, 2006, there were over 15,000 holders of record of the Company's  
Common Stock.                                                                   

The Transfer Agent and Registrar of the Company's Common Stock is Continental   
Stock Transfer & Trust Company.                                                 

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ITEM 6

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION

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

 OVERVIEW:

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

Management views this year as a period of growth based upon its decision to     
concentrate on core business development through the UniversalPost              
Network/Postal Nation, Virtual Bellhop(R), Luggage Express(TM), MadPackers(TM), 
UniversalPost International Delivery and USXP Capital(TM).                      

 LIQUIDITY AND CAPITAL RESOURCES

During the twelve-month period ended June 30, 2006, the Company's financing     
activities provided $8,686,856 while $6,532,973 was used in its operating and   
investing activities.                                                           

The Company's working capital equity for fiscal 2006 was $1,312,543 compared    
with a deficiency of $2,200,428 in fiscal 2005.                                 

The Company's net loss for fiscal 2006 was $18,899,026 compared with            
$9,985,868 in fiscal 2005. The net loss for fiscal 2006 was greatly increased   
due mainly to $12,434,041 of amortized deferred compensation, and the net loss  
for fiscal 2005 was largely increased due to mainly to $5,732,540 of amortized  
deferred compensation.                                                          

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

14

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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.                                                  
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.                        

15

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 INDEX TO FINANCIAL STATEMENTS

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

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

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

Consolidated Statements of Cash Flows........................................F-5

Consolidated Statements of Stockholders' Equity (Deficiency).................F-6

Notes to Consolidated Financial Statements...................................F-7

                                                                             F-1

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POLLARD-KELLEY AUDITING SERVICES, INC...........................................
Auditing Services             3250 West Market St, Suite 307, Fairlawn, OH 44333
                                                                    330-864-2265

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors & Stockholders                                               
Universal Express, Inc. and Subsidiaries                                        

We have audited the accompanying consolidated balance sheet of Universal        
Express, Inc. and Subsidiaries as of June 30, 2006, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for   
the one year in the period ended June 30, 2006. 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 conduct our audits in accordance with the standards of the Public Company    
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the 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.                                               

The Company has generated losses to date. This factor among others raises       
considerable doubt the Company will be able to continue as a going concern. The 
Company's continuation as a going concern depends upon its ability to generate  
sufficient cash flow to conduct its operations and its ability to obtain        
additional sources of capital and financing. The accompanying consolidated      
financial statements do not include any adjustments that might result from the  
outcome of this uncertainty.                                                    

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of the Company at June 30, 2006,  
and the results of its operations and it cash flows for the one year in the     
period ended June 30, 2006, in conformity with U.S. generally accepted          
accounting standards.                                                           

Pollard-Kelley Auditing Services, Inc.                                          

/S/ Pollard-Kelley Auditing Services, Inc.                                      
------------------------------------------                                      
Fairlawn, Ohio                                                                  
September 22, 2006                                                              

                                                                             F-2

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                     UNIVERSAL EXPRESS INC. AND SUBSIDIARIES                     
                           CONSOLIDATED BALANCE SHEET                            
                                    June 30,                                     

                                   ASSETS                                2006    
                                                                    ------------ 
CURRENT ASSETS:                                                                  
                                                                                 
  Cash and Equivalents                                              $  2,102,459 
  Accounts Receivable                                                     78,266 
  Other Receivables                                                         --   
  Other Current Assets                                                   730,856 
                                                                    ------------ 
      Total Current Assets                                             2,911,581 
                                                                    ------------ 

PROPERTY AND EQUIPMENT                                                           
Computers and Equipment                                                  373,968 
   Less Accumulated Depreciation                                        (167,136)
                                                                    ------------ 
     Net Property and Equipment                                          206,832 
                                                                    ------------ 

OTHER ASSETS:                                                                    
  Loan to Officer                                                        722,709 
  Related Party Receivables                                              906,000 
  Notes Receivable                                                       848,053 
  Goodwill                                                               397,107 
  Other Assets                                                            29,868 
                                                                    ------------ 
      Total Other Assets                                               2,903,737 
                                                                    ------------ 

                                                                    ------------ 
                                     Total Assets                   $  6,022,150 
                                                                    ============ 

                         LIABILITIES AND STOCKHOLDERS' EQUITY                    

CURRENT LIABILITIES:                                                             
  Accounts Payable                                                  $    862,708 
  Accrued Expenses                                                               
       Trade                                                             197,633 
       Officers' Salary                                                    2,047 
       Interest                                                          285,303 
  Current Portion of Long-Term Debt                                       90,829 
  Bank Line of Credit                                                     13,018 
  Notes Payable                                                           47,500 
  Convertible Debentures                                                 100,000 
                                                                    ------------ 
      Total Current Liabilities                                        1,599,038 
                                                                    ------------ 

Long-Term Debt, Net of Current Portion                                      --   
                                                                    ------------ 

                                                                    ------------ 
                                  Total Liabilities                    1,599,038 
                                                                    ------------ 

STOCKHOLDERS' EQUITY:                                                            
  Common Stock, $.005 par value; Authorized 12,950,000,000 Shares                
    12,670,133,343 Shares Issued,12,670,093,343 Shares Outstanding    63,350,667 
   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                                         24,460,847 
   Accumulated  Comprehensive Income (loss)                             (146,459)
   Stock Rights                                                       17,351,424 
   Treasury stock, at cost, 40,000 shares                                (14,350)
   Deferred Compenstation                                            (18,847,082)
   Collateral stock                                                   (3,920,000)
   Accumulated Deficit                                               (77,818,335)

                                                                    ------------ 
      Total Stockholders' Equity                                       4,423,112 
                                                                    ------------ 

                                                                    ------------ 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                            $  6,022,150 
                                                                    ============ 

See accompanying notes and accountants' report.                                  

                                                                             F-3

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

                                                            2005                2005      
                                                       ---------------    --------------- 

                                                                                          
   Revenues                                            $     1,073,486    $       931,009 
   Cost of Goods Sold                                          830,883            914,404 
                                                       ---------------    --------------- 
                            Gross Profit                       242,603             16,605 
                                                       ---------------    --------------- 

OPERATING EXPENSES                                                                        
   Selling, General and Administrative                       5,445,311          3,973,999 
   Amortization of Deferred Compensation                    12,434,041          5,732,540 
   Stock Based Compensation                                  1,245,876            348,431 
   Depreciation                                                 39,583             35,281 
                                                       ---------------    --------------- 
                          Total Operating Expenses          19,164,811         10,090,251 
                                                       ---------------    --------------- 

OPERATING LOSS                                             (18,922,208)       (10,073,646)
                                                       ===============    =============== 

   Other Income (Expense)                                                                 

    Loss Recoupment from Discontinued Operations                27,500              9,545 
    Income from Sale of Subsisdary                                --               54,133 
   Other Income                                                 25,000               --   
   Interest Income                                              43,462             45,266 
   Interest Expense                                            (46,021)           (21,166)
                                                       ---------------    --------------- 
            Total other income (expense)                        49,941             87,778 
                                                       ---------------    --------------- 

TAX PROVISIONS                                                    --                 --   
                                                       ---------------    --------------- 
Net Loss                                                   (18,872,267)        (9,985,868)

COMPREHENSIVE LOSS - Net of tax                                (26,759)              --   
                                                       ---------------    --------------- 
NET COMPREHENSIVE LOSS                                 $   (18,899,026)   $    (9,985,868)
                                                       ===============    =============== 
LOSS PER SHARE                                                                            
  Net Loss                                             $         (0.00)   $         (0.01)
  Comprehensive Loss                                   $         (0.00)   $          --   
  Net Comprehensive Loss                               $         (0.00)   $         (0.01)

Weighted average number of common shares outstanding     5,670,235,320      1,185,567,376 
                                                       ===============    =============== 

See accompanying notes and accountants' report.                                           

                                                                             F-4

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                     Universal Express Inc, and Subsidiaries                                                                      
                      Consolidated Statements of Cash Flows                                                                       
                               Year Ended June 30                                                                                 

                                                                                                      2006                    2005
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                             
                                                                                                                                  
             Net Loss                                                                            $(18,899,026)   $ (9,985,868)    
             Adjustments to reconcile net loss to net cash used by operating activities:                                          
                                   Depreciation and amortization                                       39,583          35,281     
                                   Amortization Of Deferred Compensation                           12,434,041       5,732,540     
                                   Common shares issued for services                                1,245,876         348,431     
                                   Forgiveness of officer loan                                         74,185          77,345     
                                   Issuance of stock for Bonus                                         98,500            --       
          Changes in operating assets and liabilities:                                                                            
                                   (Increase) decrease in accounts receivable                          (9,502)        (24,144)    
                                   (Increase) decrease in other current assets                       (523,756)        (63,300)    
                                   (Increase) decrease in other receivables                              --             7,700     
                                   (Increase) decrease in notes receivables                             6,460        (344,523)    
                                   (Increase) decrease in loan to officers                            (43,398)        (45,247)    
                                   (Increase) decrease in other assets                                (15,063)         (3,250)    
                                   Increase (decrease) in accounts payable and accrued expenses        72,757          17,280     
                                   Increase (decrease) in accrued officers salary                    (933,010)        (43,258)    
                                   Increase (decrease) in accrued interest                             27,428          19,241     

                                                                                                 ----------------------------     
          Net cash provided (used) by operating activities:                                        (6,424,925)     (4,271,772)    
                                                                                                 ----------------------------     

CASH FLOWS FROM INVESTING ACTIVITIES                                                                                              
          Credit Card Line of Credit                                                                     --            20,315     
          Purchase of property and equipment                                                         (108,048)        (71,435)    
                                                                                                 ----------------------------     
Net cash provided (used) by investing activities                                                     (108,048)        (51,120)    

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                             
           Bank line of credit payments                                                                (5,034)         (7,075)    
          Credit Card Line of Credit payments                                                         (20,316)           --       
          Notes payable payments                                                                       (9,400)         (7,500)    
          Long Term Debt payments                                                                     (35,814)        (30,431)    
          Issuance of common stock for cash                                                         2,311,394         630,000     
          Issuance of stock rights for cash                                                         6,375,462       3,657,000     
                                                                                                 ----------------------------     

Net cash provided by financing activities                                                        $  8,616,292    $  4,241,994     
                                                                                                 ----------------------------     

Net increase (decrease) in cash and equivalents                                                     2,083,319         (80,898)    
CASH - BEGandIequivalents, beginning of period                                                         19,140         100,038     

                                                                                                 ----------------------------     
CASH - ENDand equivalents, end of period                                                         $  2,102,459    $     19,140     
                                                                                                 ============================     

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                                                 
          Interest paid in cash                                                                  $     18,594    $      1,925     
                                                                                                 ============================     

Non-Cash Financing Activities:                                                                                                    
          Issuance of common stock for deferred compensation                                       16,954,635      10,539,059     
          Issuance of common stock for loan Repayment                                                    --           400,000     
          Issuance of common stock for Conversion of Stock Rights                                      59,000          50,000     

See accompanying notes and accountants' report.                                                                                   

                                                                             F-5

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                                                       UNIVERSAL EXPRESS INC. AND SUBSIDIARIES                                    
                                                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                               

                                 COMMON STOCK                           CLASS B STOCK               PAID IN              STOCK    
                       # of Shares          $ Amount           # of Shares       $ Amount           CAPITAL              RIGHTS   
                       -----------          --------           -----------       --------           -------              ------   

                                                                                                                                  
BALANCE                                                                                                                           
  JUNE 30, 2004         718,265,970    $     3,591,330          1,280,000    $         6,400    $    51,583,289         7,427,962 

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

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

Amortization of                                                                                                                   
  Deferred                                                                                                                        
  Services                                                                                                                        

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

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

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Warrants                     --                 --                                                                              

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Accrued                                                                                                                         
  Officers Salary                                 --                                                                              

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Collateral                                                                                                                      

Common Shares                                                                                                                     
  Issue for                                                                                                                       
  Stock Rights            1,666,666              8,333                                                   41,667           (50,000)

Cash Received                                                                                                                     
  for Stock                                                                                                                       
  Rights                                                                                                                3,657,000 

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Notes Payable                --                 --                                                                              

Unrealized Loss                                                                                                                   
  on Marketable                                                                                                                   
  Securities                                                                                                                      

Net Loss                                                                                                                          

                     ------------------------------------------------------------------------------------------------------------ 
BALANCE                                                                                                                           
  JUNE 30, 2005       2,063,428,724         10,317,144          1,280,000              6,400         56,824,965        11,034,962 
                     ------------------------------------------------------------------------------------------------------------ 

Sale of Common                                                                                                                    
  Stock               3,466,847,620         17,334,238                                              (15,022,844)                  

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Deferred Serv       6,564,701,500         32,823,508                                              (15,868,872)                  

Amortization of                                                                                                                   
  Deferred                                                                                                                        
  Services                                                                                                                        

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Services              569,743,000          2,848,715                                               (1,602,839)                  

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Bonuses                 2,462,500             12,313                                                   86,187                   

Common Shares                                                                                                                     
  Issue for                                                                                                                       
  Stock Rights            2,950,000             14,750                                                   44,250           (59,000)

Cash Received                                                                                                                     
  for Stock                                                                                                                       
  Rights                                                                                                                6,375,462 

Net Loss                                                                                                                          

                     ------------------------------------------------------------------------------------------------------------ 
                     10,606,704,620         53,033,523               --                 --          (32,364,118)        6,316,462 
                     ------------------------------------------------------------------------------------------------------------ 
BALANCE                                                                                                                           
  JUNE 30, 2006      12,670,133,344    $    63,350,667          1,280,000    $         6,400    $    24,460,847    $   17,351,424 
                     ============================================================================================================ 

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

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

Sale of                                                                                                                           
  Common Stock                                                                                                            630,000 

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

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

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Services                                                                                                                348,431 

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Repayment of                                                                                                                    
  Loans                                                                                                                   400,000 

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Warrants                                                                                                                  --    

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Accrued                                                                                                                         
  Officers Salary                                                                                                           --    

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Collateral                                                                                                                    0 

Common Shares                                                                                                                     
  Issue for                                                                                                                       
  Stock Rights                                                                                                          3,657,000 

Cash Received                                                                                                                     
  for Stock                                                                                                                       
  Rights                                                                                                                    --    

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Notes Payable                                                                                                             --    

Unrealized Loss                                                                                                                   
  on Marketable                                                                                                                   
  Securities                                                                                                                      

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

                     ------------------------------------------------------------------------------------------------------------ 
BALANCE                                                                                                                           
  JUNE 30, 2005               40,000           (14,350)       (58,946,068)          (119,700)       (14,326,488)          856,866 

                     ------------------------------------------------------------------------------------------------------------ 

Sale of Common                                                                                                                    
  Stock                                                                                                                 2,311,394 

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Deferred Serv                                                                                     (16,954,635)            --    

Amortization of                                                                                                                   
  Deferred                                                                                                                        
  Services                                                                                           12,434,041        12,434,041 

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Services                                                                                                              1,245,876 

Common Shares                                                                                                                     
  Issued for                                                                                                                      
  Bonuses                                                                                                                  98,500 

Common Shares                                                                                                                     
  Issue for                                                                                                                       
  Stock Rights                                                                                                              --    

Cash Received                                                                                                                     
  for Stock                                                                                                                       
  Rights                                                                                                                6,375,462 

Net Loss                                                                         (18,872,267)           (26,759)      (18,899,026)

                     ------------------------------------------------------------------------------------------------------------ 
                                --                --          (18,872,267)           (26,759)        (4,520,594)        3,566,247 

                     ------------------------------------------------------------------------------------------------------------ 

BALANCE                                                                                                                           
  JUNE 30, 2006               40,000   $       (14,350)   $   (77,818,335)   $      (146,459)   $   (18,847,082)   $    4,423,112 

                     ============================================================================================================ 

See accompanying notes and accountants' report.                                                                                   

                                                                             F-6

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES                           
Nature of Organization                                                          
   Universal Express, Inc. ("USXP" or "the Company") was incorporated in the
    state of Nevada on April 6, 1983 and is an integrated business to business
services company centered around the private postal and international 
   shipping industries. Its principal subsidiaries include Universal Express
     Capital Corp. and Universal Express Logistics, Inc. (which includes Virtual
 Bellhop, LLC, Luggage Express and Worldpost, its international shipping
 divisions), and Private Postal Center Network.com (PPN Network) and its
division Postal Business Center Network.com ("PBC Network").          

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

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

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

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

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

In addition, USXP owns several other subsidiaries with little or no   
    activity and seeks new acquisitions which will complement the PBC Network.

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

                                                                             F-7

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, continued                
Going concern                                                                   
The accompanying consolidated financial statements have been prepared 
     assuming the Company will continue as a going concern. The Company incurred
  losses from operations of $18,872,267 and $9,985,868 for the years ended
 June 30, 2006 and 2005, respectively. This condition raises substantial
  doubt about the Company's ability to continue as a going concern without
    the raising of additional debt and/or equity financing to fund operations.
 Management is actively pursuing new debt and/or equity financing and is
  continually evaluating the Company's operations, however, any results of
their plans and actions cannot be assured. The consolidated financial 
statements do not include any adjustments that might result from the  
outcome of this uncertainty.                                          

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

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

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

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

Advertising Costs                                                               
Advertising costs are charged to operations when incurred. Advertising
   expense was $1,279,662 and $394,658 for the years ended June 30, 2006 and
2005, respectively.                                                   

Goodwill                                                                        
    Goodwill represents the excess of the purchase price of companies acquired
    over the fair market value of their net assets at the date of acquisition.
    The Company tests goodwill for impairment on an annual basis, relying on a
  number of factors including operating results, business plans and future
cash flows. If the carrying value of the goodwill of a reporting unit 
   exceeds the fair value of that goodwill, an impairment loss is recognized
  in an amount equal to the excess. At June 30, 2006, the Company believes
that there has been no impairment of goodwill.                        

                                                                             F-8

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, continued                
Property and Equipment                                                          
  Property and equipment are stated at cost. Depreciation and amortization
     are provided on a straight-line basis over the estimated useful life of the
respective assets, ranging from five to ten years.                    

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

Stock Based Compensation                                                        
Financial Accounting Statement No. 123 ("SFAS No. 123), Accounting for
 Stock Based Compensation, encourages, but does not require companies to
 record compensation cost for stock-based employee compensation plans at
   fair value. The Company has chosen to continue to account for stock-based
     compensation using the intrinsic method prescribed in Accounting Principles
     Board Opinion No. 25, Accounting for Stock Issued to Employees, and related
   interpretations through June 30, 2006. Accordingly, compensation cost for
     stock options is measured as the excess, if any, of the quoted market price
     of the Company's stock at the date of the grant over the amount an employee
must pay to acquire the stock. The Company has adopted the "disclosure
only" alternative described in SFAS 123 and SFAS 148, which require   
   pro-forma disclosures of net income and earnings per share as if the fair
value method of accounting had been applied.                          
Stock Based Compensation, continued                                             
    As required by Statement No. 123 the Company accounts for stock issued for
services to non-employees by reference to the fair market value of the
Company's stock on the date of issuance.                              

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

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

                                                                             F-9

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, continued                
Income Taxes                                                                    
 The Company recognizes deferred tax assets and liabilities based on the
 difference between the financial statements carrying amount and the tax
    basis of assets and liabilities using the effective tax rates in the years
 in which the differences are expected to reverse. A valuation allowance
  related to deferred tax assets is also recorded when it is probable that
some or all of the deferred tax assets will not be realized.          

Impairment of Long-Lived Assets                                                 
     The Company reviews long-lived assets for impairment whenever circumstances
  and situations change such that there is an indication that the carrying
   amounts may not be recovered. At June 30, 2006, the Company believes that
there has been no impairment of its long-lived assets.                

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

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

 As such, the Company has two major segments for the year ended June 30,
2006: Logistics and International Shipping, Transportation/Equipment  
    Leasing Brokerage and Parent (other). Logistics and International Shipping
includes Virtual Bellhop, LLC, Luggage Express, Worldpost, and Private
Postal Center Network.com.                                            

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

NOTE 2 - CONCENTRATION OF CREDIT RISK                                           

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

                                                                            F-10

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LOAN TO OFFICER                                                        

Prior to the enactment of the Sarbanes-Oxley act, the Company's Chief 
     Executive Officer, in accordance with the such officer' employment contract
  was entitled to secure loans from the Company in an amount not to exceed
    $950,000. The board agreed to forgive 10% per year (2.5% quarterly) of the
outstanding balance of the Company loans to such officer, commencing  
    January 2, 2001. These loans bear interest at the applicable federal rate,
    which approximated 6%. As of June 30, 2006 the amount owed under such loan
is $722,709.                                                          

NOTE 4 - RELATED PARTY RECEIVABLES                                              

     As of June 30, 2006, the Company has advanced $906,000 to the spouse of the
Chief Executive Officer, who is also an employee of the Company. The  
repayment terms of such advances have not yet been determined.        

NOTE 5 - MARKETABLE INVESTMENT SECURITIES                                       

Cost and fair value of the Company's investment in available for sale 
equity securities as of June 30, 2006 are as follows:                 

     AMORTIZED COSTS    GROSS UNRELATED LOSS      FAIR VALUE
     ---------------    --------------------      ----------
      $  120,000          $  (119,700)           $     300
      $  200,000          $   (26,759)           $ 173,241

NOTE 6 -PROPERTY AND EQUIPMENT                                                  

Property and equipment at June 30, 2006 consists of the following:    

Leasehold improvements                                     $  47,028
Office equipment                                             153,389
Furniture and fixtures                                        98,490
Vehicles                                                      75,061
                                                           ---------
                                                             373,968
Less accumulated depreciation and amortization               167,136
                                                           ---------
                                                           $ 206,832
                                                           =========

                                                                            F-11

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - OTHER CURRENT ASSETS                                                   

Other current assets as of June 30, 2006 consist of the following:    

  Prepaid legal fees                                            $170,000
  Employee advance                                                20,553
  Deposit                                                         92,000
  Escrow deposits                                                275,000
  Investment                                                     173,303
                                                                --------
                                                                $730,856
                                                                ========

    Escrow deposits are earnest monies deposited on three separate real estate
     transactions. All three deposits were returned to the Company subsequent to
year-end as each transaction failed to go forward.                    

NOTE 8 - NOTES PAYABLE                                                          

Notes payable at June 30, 2006 consist of the following:              

Note payable, due upon demand, bearing interest                     
   at rate of 18% per annum                                 $ 25,000
Notes payable, due upon demand, bearing interest                    
   at a rate of 18% per annum                                 22,500
                                                            --------
                                                            $ 47,500
                                                            ========

NOTE 9 - BANK LINE OF CREDIT                                                    

  The Company has a line of credit under which the bank has agreed to make
 loans up to $70,000 at 1.75% above the prime interest rate. At June 30,
2006, the outstanding balance on the line of credit was $13,018.      

                                                                            F-12

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - LONG-TERM DEBT                                                        

Long-term debt at June 30, 2006, is comprised of the following:       

 Promissory note to bank payable in equal monthly installments of $2,167
    plus interest through October 2006. The note bears interest at the rate of
2% over the then prevailing prime rate.                               
The note is secured by substantially all the                          
     Company's assets.                                                  $  8,831

Loans payable to former owners of Virtual Bellhop,                    
LLC, payable in monthly installments of $3,333 plus                   
     interest at 4% through May 2005 (in default)                         81,998
                                                                       ---------
         Total                                                            90,829
     Less current maturities                                              90,829
                                                                       ---------
     Long-Term Debt, Net of Current Maturities                         $       0
                                                                       =========
Total maturities of long-term debt are as follows:                    

Year ended June 30,                                                   
                 2007                                                 $ 90,829
                 2008                                                        0
                 2009                                                        0
                 2010                                                        0
                 2011                                                        0
                                                                      --------
                                                                      $ 90,829
                                                                      ========

NOTE 11 - CONVERTIBLE DEBENTURE                                                 

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

                                                                            F-13

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - COMMITMENTS AND CONTINGENCIES                                         

     The Company leases certain office space and equipment under operating lease
 agreements with unrelated parties. The base rent under these agreements
aggregates approximately $21,934 per month. The related leases expire 
between July 2006 and 2008.                                           

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

Year ended June 30,                                                   
                    2007                                                 506,594
                    2008                                                 353,066
                                                                        --------
                                                                        $859,660
                                                                        ========

    Rent expense charged to operations was $410,660 and $306,438 for the years
ended June 30, 2006 and 2005, respectively.                           

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

The employment agreement with the Company's Chief Executive Officer   
provides for an annual base salary of $650,000 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.                                                             

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

                                                                            F-14

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - INCOME TAXES                                                          

     At June 30, 2006 the Company had approximately $77,000,000 of net operating
    loss carry forwards expiring beginning in 2009 through 2026. A substantial
    amount of the carry forwards are subject to annual limitations pursuant to
  provisions contained in the Internal Revenue Code which become effective
    when an "ownership change", such as the ownership change effected pursuant
     to the Plan of Reorganization occurs. To the extent that such net operating
     losses are not utilized in a particular year, such amounts become available
to increase the following year's limitations.                         

   Deferred tax assets in the amount of approximately $26,000,000 (resulting
from the benefit of the aforementioned net operating losses) have been
   fully offset by a valuation allowance since realization of the benefit of
the net operating losses is not assured.                              

    Significant components of the deferred tax assets as of June 30, 2006 were
   from net operating losses. The deferred tax assets have been presented in
the Company's financial statements as follows:                        

    Total deferred tax assets                                     $ 26,000,000
     Less: valuation allowance                                      (26,000,000)
                                                                  ------------
    Net deferred tax assets                                       $          0
                                                                  ============

     The increase in the valuation allowance of $2,400,000 during the year ended
2006 was due to the additional allowance provided for the 2006 net    
operating loss.                                                       

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

                                                        JUNE 30,
                                                      ----------------------
                                                       2006           2005
                                                        ----           -----
    Benefit computed at the statutory rate           $ 2,400,000    $4,000,000
     Losses for which no benefit recognized            (2,400,000)    4,000,000)
                                                     -----------    ----------
        Benefit recorded                             $         0    $        0
                                                     ===========    ==========

                                                                            F-15

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - STOCKHOLDERS' EQUITY                                                  

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

During the year ended June 30, 2006, the Company issued 4,042,003,120 
     shares of common stock for the following; 569,743,000 shares were issued in
  exchange for advisory services rendered, 2,950,000 shares were issued to
  investors for stock rights, 3,466,847,620 shares were issued in exchange
for cash and 2,462,500 shares were issued for bonuses. In addition,   
advisory fees were prepaid to consultants retained by the Company to  
    provide certain advisory services via the issuance of 6,564,701,500 common
shares. The common shares were valued at their approximate fair market
value on the dates of issuance and are being amortized over their     
respective contract periods.                                          

NOTE 15 - TREASURY STOCK                                                        

 The Company has bought an aggregate 50,000 shares from one investor for
$18,000. Treasury stock is recorded at cost. The Company has a verbal 
    agreement with such investor to repurchase an additional 200,000 shares at
     $.60 per share under certain circumstances. During the years ended June 30,
2006 the Company retired 0 shares of treasury stock.                  

NOTE 16 - STOCK RIGHTS                                                          

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

                                                                            F-16

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 - SEGMENT INFORMATION Year ended June 30, 2006:                         

                                                        [Enlarge/Download Table]


                                           TRANSPORTATION/                              
                            LOGISTICS &       EQUIPMENT                                 
                           INTERNATIONAL       LEASING         PARENT                   
                             SHIPPING         BROKERAGE       (OTHER)      CONSOLIDATED 
                             --------         ---------       -------      ------------ 

                                                                                        
REVENUE                     $  1,073,486    $          0    $          0   $  1,073,486 

OPERATING LOSS              $ (2,330,282)   $          0    $(16,591,926)  $(18,922,208)

YEAR ENDED JUNE 30, 2005:                                                               

                                             TRANSPORTATION/                            
                             LOGISTICS &        EQUIPMENT                               
                            INTERNATIONAL       LEASING         PARENT                  
                               SHIPPING        BROKERAGE       (OTHER)     CONSOLIDATED 
                               --------        ---------       -------     ------------ 

REVENUE                     $    575,652    $    355,357    $          0   $    931,009 

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

Assets of the segment groups are not relevant for management of the   
businesses, or for disclosure.                                        

NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS                                   

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

NOTE 19 - LEGAL PROCEEDINGS                                                     

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

     On July 26, 2001, the Company was awarded a $389 million judgment by a jury
    in Dade County, Florida against the Company's former investment banker. On
     April 23, 2003, the Company was awarded an additional $137 million judgment
    against two other parties related to this matter. The Company is currently
  pursuing collection of the judgments. At this time, however, no estimate
can be made as to the time or amount of collection.                   

                                                                            F-17

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 UNIVERSAL EXPRESS, INC.
 June 30, 2006
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 - LEGAL PROCEEDINGS, continued                                          

    On March 2, 2004, the Company brought an action against the SEC in Federal
 Court in Florida on damages from the "naked shorting" of its shares and
    other matters. Thereafter, on March 23, 2004, the SEC brought an action in
 Federal Court in New York against certain officers of the Company. Both
suits are pending.                                                    

On October 5, 2005, the Company brought suit against Capitalliance    
Financial Services, LLC, and individuals and firms associated with    
Capitalliance $269,000,000 for fraud, false documents and             
misrepresentation. The suit is pending.                               

On January 3, 2006, the Company brought suit against Coach Industries 
Group, and related companies for $160,000,000 for fraud and breach of 
contract. The suit is pending.                                        

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

                                                                            F-18

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ITEM 8

 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

Nothing to report                                                               

PART III

ITEM 9

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

A. DIRECTORS                                                                    

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

B. EXECUTIVE OFFICERS                                                           

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

NAME                                   AGE                     POSITION         
----                                   ---                     --------         

Richard A. Altomare                    58                 Chairman and CEO    

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

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C. COMPLIANCE WITH SECTION 16(a)                                                

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

 ITEM 10

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

A. COMPENSATION OF EXECUTIVE OFFICERS.                                          

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

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SUMMARY COMPENSATION TABLE
                                                 LONG-TERM
                    ANNUAL COMPENSATION            COMPENSATION AWARDS
                    -------------------            -------------------

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

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

Richard A. Altomare     2002     300,000       $0         $0             0      
Chairman & CEO          2003     300,000       $0         $0             0      
                  2004     500,000       $0         $0             0
                  2005     600,000       $0         $0             0
                  2006     650,000       $0         $0             0

     During the Company's reorganization commencing in 1991 until June 30, 2002,
   Mr. Altomare received no cash compensation under his employment agreement
     approved by the Reorganization Court. Such agreement currently entitles him
   to an annual base salary of at least $650,000. For fiscal year ended June
 30, 2006, Mr. Altomare received $650,000 in cash compensation under his
employment agreement.                                                 

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 OPTION GRANTS IN CURRENT PERIOD

 Individual Grants

--------------------------------------------------------------------------------
(a)                  (b)           (c)               (d)         (e)
      % of Total
         Options Granted
                        Options    to Employees in     Exercise   Expiration
Name                 Granted     Current Period      Price        Date
--------------------------------------------------------------------------------
Richard A. Altomare                                                             
Chairman. & CEO            0             0                0           0     

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

(a)                    (b)        (c)          (d)                 (e)
--------------------------------------------------------------------------------
                                                                      value of
                                                    # of             unexercised
                                                 unexercised        in-the-money
                                                 options at         options at
                                                  FY-end(#)          FY-end($)

Shares                      
                       acquired on     Value         Exercisable/   Exercisable/
    Name               Exercise (#)  Realized ($)   Unexercisable  Unexercisable
--------------------------------------------------------------------------------
Richard A. Altomare                                                             
Chairman. & CEO          0            0                0/0           0/0    

B. COMPENSATION OF DIRECTORS                                                    

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

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C. EMPLOYMENT CONTRACTS AND RELATED MATTERS                                     

The Company has an employment contract with Mr. Altomare that was approved by   
the Reorganization Court as part of the Company's Reorganization Plan, which    
currently provides an annual base salary of $650,000. The employment agreement  
with Mr. Altomare provides that in the event Mr. Altomare's employment is       
terminated at any time within nine months following a "change of control event",
as defined therein and generally described below, (i) his salary benefits for   
the remaining term of the agreement shall be accelerated and (ii) he shall      
receive shares of Class A Common Stock equal to 10% of all outstanding shares of
Class A and Class B Common Stock of the Company, assuming all unexercised and   
outstanding warrants had been exercised. For purposes of the employment         
agreement with Mr. Altomare, a "change of control event" shall be deemed to have
occurred in the event of (A) a merger or consolidation involving the Company in 
which the Company is not the surviving corporation, (B) the sale of all or      
substantially all of the assets of the Company, or (C) the acquisition by any   
individual, entity or group not affiliated with Mr. Altomare directly or        
indirectly becoming the beneficial owner of 20% or more of the combined voting  
power of the then outstanding voting securities of the Company. The employment  
agreement further provides certain restrictive covenants and nondisclosure      
obligations upon Mr. Altomare during the term of the agreement.                 

The board agreed to forgive 10% per year of the outstanding balance of the      
Company loans to such officer, commencing January 2, 2001 as long as the officer
continues in the service of the Company. Such loan had a balance of $722,709 as 
of June 30, 2006.                                                               

 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, 2006 more than five percent of the Class A Common Stock of  
the Company. This information is based on 12,670,133,343 shares of Class A      
Common Stock issued and outstanding as of June 30, 2006. For purposes of this   
section, it is assumed that all 1.28 million shares of Class B Common Stock,    
each share of which is convertible into one share of Class A Common Stock under 
certain circumstances as set forth in the Company's Articles of Incorporation,  
have been so converted.                                                         

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

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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, 2006. This information is based on            
12,670,133,343 shares of Class A Common Stock issued and outstanding as of June 
30, 2006. For purposes of this section, it is assumed that all 1.28 million     
shares of Class B Common Stock (par value $.005), which are convertible into    
Class A Common Stock under certain circumstances as set forth in the Company's  
Articles of Incorporation, have been so converted.                              

NAME AND ADDRESS OF            AMOUNT AND NATURE OF                   % OF      
BENEFICIAL OWNER               BENEFICIAL OWNERSHIP                COMMON STOCK 
--------------------------------------------------------------------------------

Richard A. Altomare                                                             
5295 Town Center Rd.                                                            
Boca Raton, FL 33486             22,990,173 shares                  .0018%      

 ITEM 12

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

During the Company's reorganization commencing in 1991 until June 30, 2002, Mr. 
Altomare received no cash compensation under his employment agreement approved  
by the Reorganization Court. Such agreement currently entitles him to an annual 
base salary of at least $650,000. For fiscal year ended June 30, 2006, Mr.      
Altomare received $650,000 in cash compensation under his employment agreement. 

Mr. Altomare's outstanding loan balance under his employment agreement as of    
June 30, 2006 is $710,709.                                                      

As of June 30, 2006, The Company has advanced $906,000 to the spouse of the     
Chief Executive Officer, who is also an employee of the Company.                

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 ITEM 13

EXHIBITS AND REPORTS ON FORM 8-K

(A)       EXHIBITS                                                              

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

3.1*      Amended and Restated Articles of Incorporation of Packaging Plus      
Services, Inc.                                              

3.2**     Certificate of Amendment to Change the Number of Authorized Shares of 
Stock of Packaging Plus Services, Inc.                      

3.3**     Certificate of Amendment of the Certificate of Incorporation to Change
        the Name of Packaging Plus Services, Inc. to Universal Express, Inc.

3.4*      Amended and Restated By-Laws of Packaging Plus Services, Inc.         

4.1*      Specimen Class A Common Stock Certificate.                            

4.2*      Specimen Class B Common Stock Certificate.                            

4.3**     Specimen Class A Warrant Certificate.                                 

4.4**     Specimen Class B Warrant Certificate.                                 

10.1*     Employment Agreement of Richard A. Altomare.                          

10.2*     1994 Stock Option Plan.                                               

21.1**    List of Subsidiaries of Registrant.                                   

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

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

(B) REPORTS ON FORM 8-K -                                                       

None                                                                

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ITEM 14 
Principal Accountant Fees and Services

The Company paid or accrued the following fees in each of the prior two fiscal  
years to it's principal accountants, 2006 Pollard-Kelly Auditing Services, Inc.,
Durland & Company, CPA's, P.A. of Palm Beach, Florida and 2005 - Durland &      
Company, CPA's, P. A. of Palm Beach, Florida.:                                  

                          Year ended    Year ended
                           June 30,       June 30,
                         2006           2005
                          ------------------------
1  Audit fees                            $75,500        $71,000                 
2  Audit-related fees                       --             --                   
3  Tax fees                                 --             --                   
4  All other fees                           --             --                   
                        -------        -------
Totals                                $75,000        $71,000              
                        -------        -------

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

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

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

The Board reviewed the audited financial statements of the Company as of and for
the years ended June 30, 2006 and 2005 with management and its independent      
auditors. Management has the sole ultimate responsibility for the preparation of
the Company's financial statements and the respective independent auditors have 
the responsibility for their examination of those statements.                   

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Based on the above-mentioned review and discussions with the respective         
independent auditors and management, the Board of Directors approved the        
Company's audited financial statements and recommended that they be included in 
its Annual Report on Form 10-KSB for the year ended June 30, 2006, for filing   
with the Securities and Exchange Commission.                                    

The Company's principal accountants for the year ended June 30, 2006,           
Pollard-Kelley Auditing Services, Inc. & Durland & Company CPA's P.A. and for   
the year ended June 30, 2005, Durland & Company, CPA's P.A., did not engage any 
other persons or firms other than the respective principal accountant's         
full-time, permanent employees.                                                 

SIGNATURES:                                                                     

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

                             UNIVERSAL EXPRESS, INC.

Date:  September 28, 2006                  /S/ RICHARD A. ALTOMARE              
                             -----------------------
                                    Richard A. Altomare, President
                               and Chairman of the Board

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		6/30/07		28					NTN 10K
Filed on:		9/28/06		42
		9/22/06		17
		8/23/06		2		7
		7/18/06		9		10
For Period End:		6/30/06		1		42			10KSB/A
		6/21/06		9
		5/17/06		9
		5/16/06		9
		5/12/06		7
		4/25/06		7		9
		4/13/06		9
		2/27/06		10
		1/3/06		33
		10/5/05		33
		7/1/05		1
		6/30/05		22		42			10KSB,  10KSB/A
		11/12/04		10
		6/30/04		22					10-K,  NT 10-K
		3/23/04		12		33
		3/2/04		12		33
		8/23/03		12
		4/23/03		29		32
		6/30/02		36		39			10KSB
		7/26/01		12		32
		7/5/01		29
		5/11/01		22
		1/2/01		22		38
		1/20/00		40					10KSB/A
		6/30/99		40					10KSB,  10KSB/A,  NT 10-K
		12/12/94		40
		6/30/94		40
		5/11/94		39
		2/18/94		40
		1/1/94		40
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