UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED March 31, 2000
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 Ident
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, 2000:
- --------------------------------------------------------------------------------
$ 6,025,346
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
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Common Stock Outstanding at March 31, 2000
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Class "A" 14,393,775
Class "B" 1,280,000
<PAGE>
UNIVERSAL EXPRESS, INC.
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INDEX
PAGE
NUMBER
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - March 31, 2000 1
Consolidated Statement of Operations - Three
and Nine months ended March 31, 2000 2
Consolidated Statement of Cash Flows - Three
and nine months ended March 31, 2000 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis 4-13
of Financial Condition and Plan of
Operations
PART II - OTHER INFORMATION 14
SIGNATURE 15
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<TABLE>
<CAPTION>
UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
UNAUDITED
---------
MARCH 31, 2000
--------------
ASSETS
------
CURRENT ASSETS:
<S> <C>
Cash $ 205,051
Accounts receivable, net of allowance for doubtful 786,644
accounts of $182,400
Inventory 76,246
Loan to officer 820,795
------------
Total current assets 1,888,736
------------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation 216,703
------------
OTHER ASSETS:
Reorganization value net or amortization 110,000
Goodwill, net 1,934,170
Loans and Notes receivable 565,832
Other assets 399,852
------------
3,009,854
------------
TOTAL ASSETS 5,115,293
============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILTIES:
Accounts payable and accrued expenses 2,948,742
Payroll taxes payable 425,181
Other 68,003
Notes payable 1,099,389
------------
Total current liabilities 4,549,315
LONG-TERM LIABILITIES
Notes payable 579,000
Convertible debentures 814,000
------------
Total long-term liabilities 1,393,000
MINORITY INTEREST 200,313
STOCKHOLDERS' DEFICIENCY:
Common stock, $.005 par value; authorized 147,000,000
shares, 14,393,775 shares issued and outstanding 71,969
Class B common stock, $.005 par value;
authorized 3,000,000 shares, 1,280,000
shares issued and outstanding 6,400
Additional paid-in capital 23,242,032
Cash received for stock rights 1,113,752
Accumulated deficit (24.286,164)
Deferred compensation related to stock issued for services (1,175,324)
------------
TOTAL STOCKHOLDERS' DEFICIENCY (1,027,335)
------------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIENCY 5,115,293
============
</TABLE>
See notes to consolidated financial statements
1
<PAGE>
<TABLE>
<CAPTION>
UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MARCH 31 MARCH 31
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
INCOME:
<S> <C> <C> <C> <C>
Merchandise and service income $ 212 $ 115,367 $ 102,803 $ 379,917
Ticket Sales 241,664 342,904 1,096,770 1,378,837
Delivery Service 847,549 0 2,619,853 0
Other Income 0 6,906 0 6,906
------------ ------------ ------------ ------------
TOTAL INCOME 1,089,425 465,177 3,819,426 1,765,660
------------ ------------ ------------ ------------
COST AND EXPENSES:
Cost of goods and services 902,621 241,816 2,857,875 998,386
Selling, General and administrative 1,315,267 838,452 3,829,745 2,392,878
Depreciation and amortization 49,298 79,681 255,050 239,308
------------ ------------ ------------ ------------
TOTAL EXPENSES 2,267,186 1,159,949 6,942,670 3,630,572
------------ ------------ ------------ ------------
LOSS BEFORE INTEREST EXPENSE (1,177,761) (694,772) (3,123,244) (1,864,912)
------------ ------------ ------------ ------------
INTEREST EXPENSE 3,423 3,344 7,713 10,246
NET LOSS $ (1,181,184) $ (698,116) $ (3,130,957) $ (1,875,158)
============ ============ ============ ============
LOSS PER COMMON SHARE - Basic
and Diluted ($ 0.14) ($ 0.18) ($ 0.27) ($ 0.39)
------------ ------------ ------------ ------------
Weighted average number of
shares used in calculation 8,284,736 3,966,773 11,742,676 4,808,031
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
2
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<TABLE>
<CAPTION>
UNIVERSAL EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS
-----------
ENDED MARCH 31
--------------
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Loss $(3,130,957) $(1,875,158)
Adjustment to reconcile net loss to net
Cash used in operating activities:
Common stock issued as compensation 431,852 459,345
Common stock issued in lieu of cash 18,000 0
Depreciation and Amortization 263,060 239,308
----------- -----------
(2,418,045) (1,176,505)
Change in assets and liabilities:
Increase in accounts receivable (249,510) (77,487)
Decrease in inventory 23,916 0
(Increase) in other assets (243,866)
Increase(Decrease) in accounts payable
and accrued expenses 352,593 189,050
Increase in taxes payable 253,087 4,189
Increase(Decrease) in other liabilities 66,344 (19,713)
----------- -----------
Net Cash Used in Operating Activities (2,215,481) (1,089,996)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (8,000) 0
Increase in loan to officers (37,350) (55,563)
Increase in notes receivable (15,032) 0
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (60,382) (55,563)
----------- -----------
NET CASH FLOW FROM FINANCING ACTIVITIES
Sale of common stock 1,240,000 350,000
Proceeds from notes and loans payable 60,000 66,000
Proceeds from issuance of convertible debt 625,000 100,000
Repayment of notes and other liabilities 0 (199,500)
Proceeds from Stock Rights 518,750 477,602
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,443,750 794,102
NET INCREASE (DECREASE) IN CASH 167,887 (351,457)
CASH-Beginning of year 37,164 227,892
----------- -----------
CASH-End of period 205,051 (123,565)
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
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 and Article 10 of
Regulation S-X. 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, 1999.
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, 2000 and the results of operations and cash flows for
the three-month and nine-month periods ended March 31, 2000 and March 31, 1999
have been included.
The results of operations for the three-months and nine-months periods ended
March 31, 2000, are not necessarily indicative of the results to be expected for
the full year ended June 30, 2000.
2. CONVERTIBLE DEBENTURES
----------------------
The additional convertible debt for the nine-months ended March 31, 2000 arises
from conversion of stock rights into convertible debentures in the amount of
$265,000 and convertible debentures covering additional investments for the
quarter of $360,000.
3. ISSUANCES OF COMMON STOCK
-------------------------
During the nine months ended March 31, 2000, the Company issued 7,185,918 shares
of common stock. Of such shares issued, 3,518,415 shares were sold for
$1,240,000 and 1,108,715 shares were issued for payment of $425,893 in services.
The remaining 2,558,788 shares were issued in conversions of previously sold
stock rights and loans.
4
<PAGE>
4. 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.
During the nine months ended March 31, 2000, the Company received $518,750 for
the sale of such stock rights.
5. TAXES PAYABLE
-------------
A substantial portion of taxes payable consists of payroll taxes of Skyworld
Worldwide Express. Skyworld Worldwide is seeking to negotiate a settlement
agreement with the Internal Revenue Service to provide for periodic payments.
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND 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 undergone major
transitions in recent years.
5
<PAGE>
On May 7, 1999, the Company acquired 51% of the capital stock of SkyWorld
International Courier, Inc.(d/b/a "SkyNet Worldwide Express").
SkyNet Worldwide Express is part of an international shipping network
specializing in corporate discount pricing to its customers.
The Company believes that that acquisition of SkyNet Worlwide Express will
benefit the PBC Network by providing PBC store owners with reduced international
shipping rates over their present vendors.
The Company believes that SkyNet Worlwide Express has an excellent reputation in
international shipping, and will add growth to both the PBC Network and
Universal Express.
Management has developed other new ancillary businesses to support its core
packaging and shipping businesses.
In November, 1999 the Company announced the signing of an agreement with Imaging
Technology Solutions, L.L.C. ("NetEx") pursuant to which NetEx will provide
services for the PBC Network. NetEx is a full-featured software and service
combination designed to securely transmit any document, including paper,
graphical images, hand written documents and electronic media via the Internet.
The Company believes that NetEx is the first Internet-based document delivery
service to seamlessly integrate a patented imaging platform, real-time document
linking, telephone notification and tiered digital security in an easy-to-use
Internet-ware graphical user interface. Accordingly, the Company believes that
NetEx provides a secure, expedient, and economical alternative to faxes,
overnight couriers and traditional email. The Company is offering to raise for
the "NetEx Program" and the PBC Network members 1.7 million dollars, in
increments based on a roll out schedule for the program and equipment, for the
members of the PBC Network throughout the United States. The Company will
provide each member store owner with a scanner valued at $300.00 for the members
to begin offering their customers the program for a fee based on usage. The PBC
Network will earn revenues based on the usage of the program by the members and
their customers.
In December, 1999, the Company announced the signing of a non-binding letter of
intent with Talk Visual Corp. to enable the PBC Network to offer its members
videocalling systems for the use of their customers. There can be no assurance
that the Company will reach a definitive agreement with Talk Visual Corp.
6
<PAGE>
On February 17, 2000, the Company announced that its subsidiary, Skynet
Worldwide Express had signed an agreement to purchase new Video Calling Phones
from Talk Visual Corp., which will be offered to Skynet's 200 individually owned
locations. A ten-site trial installation for ten Motion Media ISDN Telephones
will cost Skynet a total of $5,000. Each additional Skynet location will be
serviced by a low-cost lease program for the equipment of approximately $100
down and between $50 and $100 monthly.
The Company believes its strategy of developing PBC Network is unique to the
private postal industry. The Company believes that PBC Network has established
itself as a provider of quality products and services that benefit the owners of
private postal businesses. In order for PBCNetwork to continue to provide
high-quality products and services essential to today's market needs, the
Company believes that it is necessary to develop a strategy for the "third wave"
of the industrial revolution - the Internet. While PBCNetwork members do not
currently compete with traditional overnight couriers, the Company believes that
NetEx will provide them with the opportunity to increase revenues through the
use of NetEx's technology for a minimal investment.
The Company's Web Site is www.usxp.com.
The Company purchased the Entertainment division of U.S. Transportation Systems,
Inc. (USTS) in 1997. The division consisted mainly of: Downtown Theater Ticket
Agency, Inc., or Advance Entertainment (now known as "Manhattan Concierge")
which provides theater, sports and special events tickets and concierge
services. The Company intends to incorporate this division in to its expanding
list of services to the members of its PBC network. These services are marketed
through toll-free phone numberS (1-888-NYSHOWS, 1-800- NYSHOWS AND 1-800-
THE-SHOW)and Manhattan Concierge's web site (www.manhattanconcierge.com)
This concierge business is a nationally promoted source for high visibility
venues such as the Olympics, U.S. Open, Super Bowl and the World Series. It has
been serving corporate and individual clients throughout the United States for
over fifty three years. The Company intends to incorporate this value-added
service into the PBC Network expanding menu of offerings to its member stores
while attempting to increase Manhattan Concierge's own business presence in the
entertainment industry.
7
<PAGE>
Management is now concentrating on raising new capital and focusing on new
ventures, including the PBC Network and SkyNet Woldwide Express.
Management views this fiscal year as a period of transition and anticipates
growth based upon its decision to concentrate on core business development
through the PBC Network and SkyNet Worlwide Express.
USXP's principal subsidiaries and divisions include: Private Postal Network.com
The Postal Business Center Network.com Manhattan Concierge Skynet Worldwide
Express Worldpost Network.com UniqueNet, Inc.
Packaging Plus Services, Inc.
PRIVATE POSTAL NETWORK.COM
- --------------------------
On May 15, 1999, the name of the Association of Packagers and Carriers, APAC was
changed to the Private Postal Network.com (PPN), with two divisions, Postal
Business Center Network.com (PBC Network.com) and a international shipping
division, Worlpost Network.com.
Private postal and business service centers form a highly fragmented cottage
industry. The Company believes that this industry generates over $5 billion in
sales annually and consists of more than 15,000 independent operators. The
Company believes there is a market opportunity for the development of an
association with the goal of unifying and organizing independent and franchised
postal stores nationwide. PBC Network members are connected to other members and
the PBC Network Headquarters via the PBC Web Site (pbcnetwork.com) or by
telephone at 1-888-873-2722. The PBC Web Site is utilized not only by members
but also will be used by the general public. Only one PBC Network store per Zip
Code will be accepted, thus creating internal quality control standards.
The PBC Network, with the help of other media outlets, found that the emergence
of E-Commerce is being overlooked by the big retail outlets. The Company
believes these firms have not at this point moved well to address the online
focus that is gaining momentum. As the online population becomes more frequent
and E-Commerce gains speed, the Company believes that the PBC Network will have
laid the foundation that will be needed to provide the necessary adaptations for
future commerce.
8
<PAGE>
The Company believes that business-to-consumer e-commerce will benefit from
consumers seeking the lowest possible price, convenience and public acceptance
over fears of insecure transactions and the difficult task of converting these
"eyeballs" into transactions.
The Company believes that E-Commerce success factors such as quality domain
name, first mover advantage, capital to build a brand name, convergence of a
leader in most categories will determine the survival of the fittest.
The Company believes that industries will turn to the Internet to improve their
existing business models or introduce as innovative one.
As e-commerce grows, someone must deliver the purchased goods to the consumer.
The company believes that companies such as FedEx, UPS and the U.S postal
Service are well positioned. The opportunity in this market has drawn lots of
attention, as "others" are quickly developing to snatch-away business from these
companies. Although traditional shipping companies have been handling most
online purchases, the Company believes that residential delivery is not their
forte. The Company believes that UPS delivers about 2.4 million packages to
homes each day, while FedEx delivers around 320,000. The Company believes that
startups will eventually need a distribution system to deliver nearly anything
that customers purchase on-line.
A particular trend that the Company feels will further revolutionize the
e-commerce space surrounds strategic alliances between virtual companies and
traditional brick and mortar companies. The Company believes leverage can be
created being both on-line and off-line. The Company believes that distribution
presents a problem for many e-commerce companies and that traditional companies,
with their existing infrastructure, can be invaluable in fulfilling, packaging
and shipping orders. There are also benefits of offering customers multiple
sales and service channels.
The PBC Network is an association formed to create a long overdue and needed
profitable partnership between packaging store owners and carriers, similar in
theory to FTD. The PBC Network provides store owners with a variety of cost
effective services and products to increase their profitability, while they
still maintain their local identities or franchise loyalties. The PBC Network's
goal is to provide consumers nationwide with a feeling of quality assurance when
they frequent a PBC Network location.
9
<PAGE>
SERVICES OFFERED TO PBC NETWORK MEMBERS & STRATEGIC GOALS
The PBC Network has been formed to create a value-added association among
packaging and shipping centers as well as the actual carriers of freight
worldwide.
In return for a low monthly membership fee, the PBC Network offers a unique
combination of value-added services on the e-commerce horizon.
A list of immediate and future benefits for association members includes:
Immediate Benefits:
E-Commerce representation and a highly structured plan for these outlets
Discounts for web utilization
Savings on shipping prices through quantity discounts
Centralized billing to lower certain costs
Pre-paid discounts on shipping
Professional theme coordinated advertising programs
PBC Network Web Site linking all members with outside customers
E-mail customer leads
Scholarship programs for member's children
Packaging education programs
Organized conventions
PBC Network health/ dental insurance
PBC Network shipping insurance
Computer software/ hardware, sales and consulting
Shipping hot line and tracking for customers
Continual development of new profit centers
Quality control for member and customer benefits
Affordable legal representation
National customer service satisfaction department
Political lobbying
Vacation of the month program
Discounted air cargo/next day worldwide rates
Discounted copier and/or fax, postal meter leasing programs
Discounted long distance rates
Discounted printing programs
Discounted van and equipment leasing program
Prepaid phone card
Centralized purchasing
Monthly Newsletter
Brand recognition of PBC Network Logo
PBC Network advisory council store (design/modernization) program
10
<PAGE>
This value-added Network is expected to revitalize and re-define the private
postal industry and position itself for additional acquisitions within the
transportation industry that may benefit its members' collective strength.
The Company announced in 1998 that the PBC Network had formed a Advisory
Council. This Council consists of PBC members from 7 regions of the United
States. The goal of the Council is to obtain a more specific regional view of
the CMRA industry through the cooperative efforts of the PBC members.
In 1998 the Company announced that the PBC Network had formed a strategic
alliance with Kodak to make available the Kodak Image Magic Picture Maker to the
PBC Network member stores nationwide.
During the year, the PBC Network also announced relationships with other leading
vendors, for use of its members, including the following:
3M - Heat free, non-electric laminating system and various office
supplies.
American Airlines Advantages Frequent Flyer Miles
Reslinx Incentive Travel Program
Century Marking/stamper 2000 - Discounted rates on custom rubber stamps for
resale.
Discounts on planning and scheduling products available through
Wescosa-Florida.
GBC - Discounts on laminating/binding/finishing equipment and supplies.
Keena - Discounts on tape and sealing products.
Kittrich - Discounts on licensed mailing supplies.
MBNA Bank - Co-Marketing/corporate Credit Card program.
Nova information services - Discounts on credit card processing with most
monthly fees waved.
Paychex - Discounts on payroll services.
Rediform - Discounts on business forms and other office products and
services.
Risk Management - Business Insurance Services
Hertz - Co-Marketing/Car Rental Referral program.
Ti-Mail - Discounts on decorated TYVEK mailing products.
Wescosa - Florida - End-column discounts on office supplies.
X-Stamper - Discounts on stock rubber stamps.
11
<PAGE>
Future PBC Network benefits should include but not be limited to e-commerce,
mail order contract for individual stores, Internet document delivery systems,
national moving preparation program, direct access to packing supplies, audio
visual training, electronic car/ truck rental, national television advertising,
auto club, video conferencing, bar-coded luggage national pick-up program,
advertising revenues directly from carriers.
UNIQUENET: In 1996, the Company launched its venture called UniqueNet. UniqueNet
is an interactive, specialty gifts web site on the Internet's WorldWide Web
(UniqueNet.Com) . The Web Site will showcase the Company's line of distinctive
and "trendy" gifts. On-line visitors to the Web Site will be able to view,
select and purchase products through their personal computer using an on-line
order form or regular mail. A retail partner is presently being examined and
auction E-Commerce fulfillment may be originated from this site.
PACKAGING PLUS SERVICES
- -----------------------
Packaging Plus Services, Inc. is the Corrugated box subsidiary of USXP. A
manufacturing facility is being sought. The Company intends to be a full service
corrugated box manufacturer. The Company believes that this core business will
lend itself to expanding the customer base and "trim-out" a new and enhanced
market. The Company believes that additional equipment and marketing effort will
enable Packaging Plus Services, Inc. to become a significant player in the
corrugated market.
PBC NetWork stores use basic corrugated and because of their non-centralized
purchasing, they are forced to buy above market prices. Through the PBC NetWork,
the stores will be able to purchase through centralized purchasing, thus
lowering their costs and making their overall operations more competitive. This
would enable the member to create a new market for customized boxes which the
Company believes will help to expand their customer base and increase their
market share.
12
<PAGE>
RESULTS OF OPERATIONS - THREE AND NINE MONTHS
- ---------------------------------------------
Universal Express, Inc. (USXP), is an integrated business services conglomerate.
Its principal subsidiaries and divisions include SkyNet Worldwide Express and
the Private Postal Network.com (with two divisions, Postal Business Center
Network.com (PBC Network)and WorldPost. Network.com), Manhattan Concierge and
Packaging Plus Services, Inc. (corrugated business).
Net loss was $1,181,184 for the three months ended March 31, 2000 compared to
$698,116 for the three months ended March 31, 1999.
During the three months ending March 31, 2000, the Company's current business
operations generated revenues of $1,089,425 as compared with operating revenues
from such business of $ 465,177 for the same three month period in 1999, an
increase of 230%. Delivery Service Revenues for the third quarter of $847,549
arose from the operations of Skynet Worldwide Express.
Ticket sales for Manhattan Concierge for the third quarter were $241,664 as
compared with $342,904 for the same period of 1999.
Net loss was $3,130,957 for the nine months ended March 31, 2000 compared to
$1,875,158 for the nine months ended March 31, 1999.
Similarly, for the nine months period ended March 31, 2000, the Company's
current business operations generated revenues of $3,819,426 as compared with
operating revenues from such businesses of $1,765,660 for the same nine month
period in 1999, an increase of 116%. Delivery Service Revenues for the nine
months of $2,619,853 arose from the operations of Skynet Worldwide Express. Cost
of revenues was $2,857,875 for the nine months ended March 31, 2000 and $998,386
for the nine months ended March 31, 1999.
Selling, general and administrative expenses were approximately $3,829,745 for
the nine months ended March 31, 2000, compared to $2,392,898 for the
corresponding 1999 period. The increase was attributable to the acquisition of
Skynet Worldwide Express, Inc., Skynet's increased interest and borrowing
expenses, payroll taxes, depreciation and amortization, moving and telephone
expenses, and infringement actions toward Skynet as discussed below.
13
<PAGE>
The business of Skynet Worldwide Express was severely affected by the
infringement actions underlying the issuance of the preliminary injunction
against a competitor, Skynet Holdings, referred to in "Legal Proceedings".
Profits of Skynet Worldwide were substantially less than anticipated, and costs
were substantially increased as a result of the infringement. Amounts sought to
be recovered against the defendants are at least $3,000,000, which amount is
sought to be tripled as a recovery from the defendants' under the trademark law
and, also, the recovery by Skynet Worldwide of all of the defendants' profits
during the infringement period, punitive damages and attorneys fees and costs.
LIQUIDITY AND CAPITAL RESOURCES - FOR THE NINE MONTHS ENDED MARCH 31, 2000
- --------------------------------------------------------------------------
The net proceeds from new loans and investments in the Company was approximately
$2,443,750. Approximately $2,275,863 was used in its operating activities.
Common stock in the amount of approximately $431,852 was issued for services
rendered.
The Company had a working capital deficiency of approximaely $2,700,000 at March
31, 2000.
Until the PBC Network is 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.
Management continues to explore methods to increase working capital through
convertible debt and additional equity infusions, as well as possible
acquisitions.
PART II -- OTHER INFORMATION
- ----------------------------
Item 1. LEGAL PROCEEDINGS
-----------------
USXP's subsidiary, Skynet Worldwide Express, obtained a preliminary injunction
in Federal District Court in Florida against a competitor, Skynet Holdings,
Inc., for servicemark infringement on courier shipments throughout the United
States. Skynet Worldwide is also seeking substantial damages against Skynet
Holdings.
14
<PAGE>
The Company is involved in several old lawsuits with vendors and suppliers and
claims for fees of certain professionals. These claims are all disputed by the
Company. The Company believes that the disposition of these matters will not
have a material adverse effect on the Company's financial position.
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
--------------------------------
(A) EXHIBITS
--------
10.0 Talk Visual-Skynet Contract
(B) 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 25, 2000
15
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LETTER OF AGREEMENT
TO: Richard Altomare
FR: Gene Rosov
RE: Agreement for SkyNet Videcalling Developing
Thank you for our discussions concerning the deployment of Talk Visual's
videocalling equipment package into the SkyNet network of worldwide locations.
Based on our discussions, the following represents our agreement for proceeding
to fit out two hundred SkyNet network locations with our most cost-effective
videocalling package to be used as a ten-site trial.
1. LOCATIONS: Your will choose the 200 appropriate locations. We understand
that you will choose key venues in Latin America, which you believe will
produce the greatest volume of videocall traffic.
2. PACKAGE; We will provide you with ISDN video-codecs from Motion Media (the
MM225) and, if and only if necessary, a compute for running our software if
the location does not have a compute available. The tracking software will
be provided as part of the package at no additional cost. The location
itself will provide the necessary television (a 25" or 27" TV is
preferred). In addition, if possible, the location will provide a VCR. It
must also provide a 128K ISDN dial-up line (generally delivered as two 64K
circuits). As discussed, ANY existing regular analog line can be
"converted" by the local telco to an ISDN facility, usually at very modest
incremental charge. We will provide all set-up guidance at no cost.
3. PAYMENT: You agree to pay five thousand dollars ($5,000) to purchase TEN
Motion Media ISDN Telephones. These ten will be installed immediately in
mutually chose venues. For each additional installation beyond the first
ten, the SkyNet location itself must commit to a low-cost lease program of
approximately $100 down ad between $50 and $100 monthly, depending upon the
equipment configuration chosen. Any profit on the lease arrangements will
be split equally between us.
4. TIMING: We agree to provide the TEN Motion Media Telephones within five (5)
days of receipt of your payment.
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5. DEPLOYMENT AND PROMOTION: We will jointly arrange for presentation of the
program to your locations, and for shipment direct to them. We will work
closely with you to promote business and consumer videocalling between the
target cities/countries and other worldwide locations, with an especial
focus on the U.S.A. and locations here in Miami. We will produce a
promotional mailing for use by your Latin American locations, and work
closely with SkyNet to create a successful mailing piece and ongoing
product promotion. We will obtain significant Spanish-language press
coverage here in the United States.
6. PRESS INFORMATION: We will produce a press release today (attached)
announcing our venture, and will provide it for your editing prior to any
issuance. As we are planning this release for today, prior to any issuance.
As we are planning this release for today, Thursday, February 17, 2000, we
will remain in close contact with you.
We truly appreciate your enthusiasm for this project. I am personally looking
forward to working closely with you on this. This comes with my very best
regards and appreciation for your valued perspective and partnership.
Signed for Talk Visual Corporation: Signed for USXP/SkyNet:
/S/ EUGENE A. ROSOV /S/ RICHARD A. ALTOMARE
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Eugene A. Rosov Richard A. Altomare
President & CEO Chairman
1.
