UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED March 31, 2001
Commission File Number 0-18094
UNIVERSAL EXPRESS, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 11-2781803
- ---------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
1350 Broadway, New York, NY 10018
- -------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 239-2575.
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock
(Title of Class)
Indicate by check mark whether the registrant (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
----- -----
State the aggregate market value of the voting stock held by non-affiliates of
the registrant on March 31, 2001:
$ 4,090,633
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
- --------------------------------------------------------------------------------
Common Stock Outstanding at March 31, 2001
- --------------------------------------------------------------------------------
Class "A" 56,970,206
Class "B" 1,280,000
UNIVERSAL EXPRESS, INC.
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - March 31, 2001 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7-11
Condition and Plan of Operations
PART II - OTHER INFORMATION 11
SIGNATURE 11
2
UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
March 31, 2001
ASSETS
CURRENT ASSETS:
Cash $ 16,167
Accounts receivable, net of allowance for doubtful
accounts of $107,600 242,349
Related party receivables 532,824
Loan to officer 924,402
----------
Total current assets 1,715,742
----------
PROPERTY AND EQUIPMENT, net 11,228
OTHER ASSETS:
Goodwill, net 501,662
Other 137,541
----------
Total other assets 639,203
----------
TOTAL ASSETS $ 2,366,173
==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable $ 638,817
Accrued expenses 1,440,817
Payroll taxes payable 133,465
Other 89,861
Convertible debentures 189,000
----------
Total current liabilities 2,491,960
----------
LONG-TERM LIABILITIES 975,540
----------
STOCKHOLDERS' DEFICIENCY:
Common stock, $0.005 par value; authorized 147,000,000
shares, 56,970,206 shares issued, and outstanding 284,851
Class B common stock, $.005 part value; authorized 3,000,000
shares 1,280,000 shares issued and outstanding 6,400
Additional paid-in capital 26,391,768
Stock rights 353,002
Common stock in treasury, at cost, 40,000 shares (12,000)
Accumulated deficit (26,743,932)
Deferred compensation related to stock issued for services (1,381,416)
------------
Total stockholders' deficiency (1,101,327)
------------
$ 2,366,173
============
See notes to consolidated financial statements
3
UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
CONSOLITED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MARCH 31 MARCH 31
-------- --------
2001 2000 2001 2000
---- ---- ---- ----
INCOME:
Ticket sales $ 244,902 $ 241,664 $ 1,172,827 $ 1,096,770
Merchandise and service sales
- 212 1,305 102,803
----------- ----------- ------------ -----------
TOTAL 244,902 241,876 1,174,132 1,199,573
COST AND EXPENSES:
Cost of goods sold (198,700) (248,512) (851,801) (895,276)
Selling, general and administration (463,169) (772,128) (1,217,352) (2,344,231)
Depreciation and amortization (13,555) (49,298) (40,059) (176,419)
----------- ----------- ------------ -----------
TOTAL (675,424) (1,069,938) (2,109,212) (3,415,926)
INCOME (LOSS) FROM OPERATIONS (430,522) (828,062) (935,080) (2,216,353)
Interest Expense (1,844) (3,423) (10,194) (7,713)
----------- ----------- ------------ -----------
Net income (loss) from continuing operations (432,366) (831,485) (945,274) (2,224,066)
Loss from discontinued operations - (349,699) (398,994) (906,891)
Gain from disposal of discontinued operations 1,517,555 - 1,517,555 -
----------- ----------- ------------ -----------
NET INCOME (LOSS) $ 1,085,189 $ (1,181,184) $ 173,287 $ (3,130,957)
=========== ============ ============ =============
BASIC INCOME (LOSS) EARNING PER SHARE:
Continuing operations $ (0.01) $ (0.10) $ (0.02) $ (0.19)
Loss from discontinued operations - (0.04) (0.01) (0.08)
Gain from discontinued operations 0.03 - 0.04 -
----------- ----------- ------------ -----------
BASIC INCOME (LOSS) PER COMMON SHARE $ 0.02 $ (0.14) $ 0.00 $ (0.27)
============ =========== =========== ===========
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 55,749,877 8,284,736 40,720,412 11,742,676
============ =========== =========== ===========
See notes to consolidated financial statements
4
UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31, 2001 AND 2000
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ( loss) $ 173,287 $ (2,224,066)
Adjustment to reconcile net loss to net cash used by operating
activities:
Depreciation and Amortization 27,638 176,419
Common stock issued for compensation - 431,852
Common stock cancelled from compensation (122,004) -
Common stock issued in lieu of cash - 18,000
Gain on disposal of discontined operations (1,517,555) -
Change in assets and liabilities:
(Increase)/Decrease in accounts receivable 27,473 (71,337)
(Increase)/Decrease in inventory - 23,916
(Increase)Deacrease in loan to officers (54,502) (37,350)
(Increase)/Decrease in other assets - (53,105)
(Increase)/Decrease in notes receivable (182,565) (15,032)
Increase/(Decrease) in accounts payable and
accrued expenses 451,069 260,275
Change in net assets & liabilities of discontinued operations (270,080) (840,963)
Increase/Decrease in taxes payable 7,987 4,429
Increase/(Decrease) in other liabilities 165,498 59,099
----------- -----------
Total Adjustments (1,467,041) (43,797)
----------- -----------
Net Cash Used In Operating Activities (1,293,754) (2,267,863)
----------- -----------
CASH USED IN INVESTING ACTIVITIES
Purchase of property and equipment - (8,000)
----------- -----------
- (8,000)
----------- -----------
NET CASH (USED IN) OPERATING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
Sale of common stock 475,000 1,240,000
Repayments of notes and loans and payables 367,099 60,000
Proceeds from issuance of convertible debt - 625,000
Proceeds from Stock Rights 8,000 518,750
Proceeds from loans 439,000 -
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,289,099 2,443,750
----------- -----------
NET INCREASE(DECREASE) IN CASH (4,655) 167,887
CASH-Beginning of period 20,823 37,164
----------- -----------
CASH-End of period $ 16,168 $ 205,051
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 10,914 $ 7,713
=========== ===========
See notes to consolidated financial statements
5
UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
Notes To Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-QSB. Accordingly, they
do not include all of the information and disclosures required for annual
financial statements. These financial statements should be read in conjunction
with the consolidated financial statements and related footnotes included in the
Company's annual report on Form 10-KSB for the year ended June 30, 2001.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of March 31, 2001 and the results of operations and cash flow for
the nine-months ended March 31, 2001 have been included.
The results of operations for the nine-months ended March 31, 2001, are not
necessarily indicative of the results to be expected for the full year ended
June 30, 2001.
2. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. The Company incurred a net loss of
approximately $945,000 for the nine months ended March 31, 2001. Additionally,
the Company had working capital and total capital deficiencies of approximately
$776,000 and $1,100,000 at March 31, 2001. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans with respect to these matters include restructuring its existing debt,
raising additional capital through future issuances of stock and or debentures.
The accompanying financial statements do not include any adjustments that might
be necessary should the Company be unable to continue as a going concern.
3. Sale of Skynet
In January 2001, the Company sold its 51% interest in Skyworld International
Couriers, Inc. ("Skynet") for the following consideration: $200,000 cash payable
by Skynet on February 27, 2001; $200,000 cash payable by Skynet in six monthly
installments of $30,000 each and one installment of $20,000, commencing on March
29, 2001; a service credit from Skynet in the sum of $700,000, use of which is
limited to $50,000 per month; Skynet's grant to the Company of a non-exclusive
license to grant sublicenses in the use of the trademark and tradename "Skynet"
in connection with international courier service for North America; agreement
between Skynet and the Company under which Skynet will provide the Company with
international courier service; and, the assumption of all of Skynet's
liabilities by the purchasers.
6
Item 2
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATIONS
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.
The business of Universal Express, Inc.(The "Company") has, the Company
believes, stabilized after having undergone major transitions in recent years.
The Company's web site is www.usxp.com.
Although the Company sold Skynet, the Company believes it retained most of the
benefits sought by the Company upon its acquisition of Skynet in 1999, in terms
of the granting of licenses to the Company of the Skynet trademark for North
America, franchise territory rights, shipping credits and low international
shipping rates for its PBC member stores.
The Company believes that the value to the Company of the sale of its interest
in Skynet is approximately $3,000,000 in cash, services and franchise
rights. In addition, the Company expects to market its Skynet/Worldpost
territory business opportunity throughout North America. USXP has received
$700,000 in shipping service credits to pass on to its postal store members of
its trade association (pbc network.com).
The agreement between Skynet and the Company provides for cash, services,
franchise revenues and an international discounted shipping service to PBC
Network's postal store and consumer customers.
Management continues to concentrate on the raising of new capital and focusing
on new ventures, including the PBC Network and WorldPost.
The Company's principal subsidiaries and divisions include:
o The Postal Business Center Network.com
o Manhattan Concierge
o WorldPost Network.com
7
Private Postal Network.com and WorldPost.com
---------------------------------------------
On May 15, 1999, the name of the Association of Packagers and Carriers, APAC was
changed to the Private Postal Network.com (PPN), with two divisions, Postal
Business Center Network.com (PBC network.com) and an international shipping
division, WorldPost Network.com. In future reports, the names of these new
entities will be used to cover and describe the present functions and programs
of these networks as well as future programs and functions of this electronic
network of retail, mail, parcel, and business centers, which the Company
believes are positioned to provide goods and services needed to support
E-commerce, as well as the international shipping division, including support
from WorldPost.
Marketplace
A true global economy has surfaced and grown over the past decade. With
Internet, Catalog and Infomercial sales transcending all boundaries, an
inexpensive and responsive final mile Domestic and International delivery
network coupled with warehouse and shipping capabilities has been, the Company
believes, inexpensively created by the Company.
Business
Private postal and business service centers form a highly fragmented cottage
industry. The Company believes that this industry generates over $7 billion in
sales and presently consists of more than 20,000 independent operators. The
Company believes there is a market opportunity for the development of an
association with the goal of unifying and organizing independent and franchised
postal stores nationwide. PBC Network members are connected to other members and
to the PBC Network Headquarters via the PBC Web Site (PBCNetwork.com). The PBC
Web Site is utilized not only by members but also will be used in the future by
the general public. Only one PBC Network store per Zip Code has been
recommended, thus creating internal quality control standards.
8
Revenue Sources
Our initial revenues sources, the Company believes, will combine SkyNet
Worldwide delivery and territory sales, along with our other subsidiaries. Based
upon marketing and branding monies, PBC's strategic alliances today could
include the following revenue sources:
International Shipping Internet Postage
Worldpost.com (SkyNet) E-Stamps
Corrugated & Packaging Customized Corrugated
Packaging Technologies Cactus Corrugated
Lamination and Photo ID's Business and Office
Supplies
D&K Laminex PBCNBizSupplies.com
Customized Rubber Stamps Parcel Insurance
TheStampMaker.com Universal Parcel
Insurance Co.
Equipment Leasing Credit Card rocessing
Advantage Leasing Nova Information
Systems
Promotional Items Check Processing
International Promotion Group Echeck2000.com
Key Machines and Supplies Payroll and Tax
Processing
LV Sales PayChex
Discounted Phone Cards Video Conferencing
Saratoga Telecom Talk Visual
Secure Document Delivery Air Miles Incentive
Program
NetEx American Airlines
Moving Supplies Travel and
Entertainment
All Boxes Direct Reslinx
Car Rental Shredder Cushioning
Systems
Hertz Rent-A-Car Pac-Mate
Insurance
AFLAC Insurance
9
Competition
The company further believes that the maturation of the PBC Network 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 the PBC Network to create a nationally accepted private postal
industry that the American public will embrace and trust should re-create a
viable industry. The Company feels it can convince the independent and
nationwide franchisors that they must self-regulate for consumer acceptance and
seize this opportunity to become part of this new cooperative partnership within
the global economy.
Results of Operations - Three and Nine Months
Universal Express, Inc. (USXP), is an integrated business services conglomerate.
Its principal subsidiaries and divisions include the Private Postal Network.com
(with two divisions, Postal Business Center Network.com (PBC Network)and
WorldPost. Network.com)and Manhattan Concierge.
Net loss from operations was $432,366 for the three months ended March 31, 2001
compared to a net loss of $828,062 for the three months ended March 31, 2000.
Net loss from operations for the nine months ended March 31, 2001 was $945,274
compared to a net loss of $2,224,066 for the same period ended March 31,2000. A
gain of $1,517,555 is recognized in this quarter for sale of a discontinued
operation. Such operation carried a loss of $398,994 at March 31, 2001.
Ticket sales for Manhattan Concierge for the third quarter were $244,902 as
compared with $241,664 for the same period of 2000.
Liquidity and Capital Resources - for the Three Months Ended March 31, 2001
- ---------------------------------------------------------------------------
The net proceeds from new loans to the Company were $100,000, all of which was
used in its operating activities.
Until the PBC Network and WorldPost are fully operational, the Company faces a
situation whereby it needs to raise additional cash in the near future.
Management is continuing efforts to raise cash by arranging lines of credit and
obtaining additional equity. The Company's future business operation will
require additional capital.
10
Management continues to explore methods to increase working capital through debt
and additional equity infusions, as well as possible acquisitions.
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is involved in a small number of three lawsuits with vendors or
suppliers and claims for fees of certain professionals. The Company disputes of
all these claims. The Company believes that the disposition of these matters
will not have a material adverse effect on the Company's financial position.
Item 2. CHANGES IN SECURITIES -- NONE
---------------------
Item 3. DEFAULTS ON SENIOR SECURITIES -- NONE
-----------------------------
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
--------------------------------------------
HOLDERS - NONE
Item 5. OTHER INFORMATION - NONE
-------------------------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
None
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNIVERSAL EXPRESS, INC.
/s/Richard A. Altomare
Richard A. Altomare,
President and Chairman
of the Board.
Dated: May 18, 2001
11