Form 10KSB/A for UNIVERSAL EXPRESS INC/
26-Mar-2007
Annual Report
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ITEM 7
FINANCIAL STATEMENTS
Our audited financial statements for the current period are found on the next succeeding pages of this Report on Form 10-KSB.
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Reports F-2
Consolidated Balance Sheets F-4
Consolidated Statements of Operations and Comprehensive Income F-5
(Loss)
Consolidated Statements of Cash Flows F-6
Consolidated Statements of Stockholders' Equity (Deficiency) F-7
Notes to Consolidated Financial Statements F-8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Universal Express, Inc.
We have audited the accompanying consolidated statements of operations and comprehensive income (loss), stockholders equity (deficit) and cash flows of Universal Express, Inc. (the Company) for the year ended June 30, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with 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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of its operations and its cash flows for the period ended June 30, 2005 of Universal Express, Inc. in conformity with U.S. generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the consolidated financial statements, the Company has experienced net losses since inception. The Company's financial position and operating results raise substantial doubt about its ability to continue as a going concern. Management's plans with regard to these matters are also described in Note 4. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Durland & Company, CPAs, P.A.
/s / Durland & Company, CPAs, P.A.
New York, New York
September 23, 2005
F-2
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 substantial 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-3
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 Compensation (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-4
Universal Express Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
Year Ended June 30,
2006 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 6,691,187 4,322,430
Depreciation and Amortization 12,473,624 5,767,821
Total Operating Expenses 19,164,811 10,090,251
OPERATING LOSS (18,922,208 ) (10,073,646 )
Other Income (Expense)
Other Income 25,000 -
Interest Income 43,462 45,266
Interest Expense (46,021 ) (21,166 )
Total other income (expense) 22,441 24,100
TAX PROVISIONS - -
Net Loss from continuing operations (18,899,767 ) (10,049,546 )
Income (net of tax) from discontinued operations 27,500 63,678
Net Income before Comprehensive Items (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-5
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 and equivalents, beginning of period 19,140 100,038
CASH and 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-6
Universal Express Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
Other
Paid In Stock Accumulated Comprehensive Deferred
Common Stock Class B Stock Capital Rights Treasury Stock Deficit Income Services Totals
# of $ # of $ # of $
Shares Amount Shares Amount Shares Amount
BALANCE JUNE 30,
2004 718,265,970 $ 3,591,330 1,280,000 $ 6,400 $ 51,583,289 $ 7,427,962 40,000 $ (14,350 ) $ (48,960,200 ) $ (119,700 ) $ (9,519,969 ) $ 74,763
Sale of Common
Stock 44,666,667 223,333 406,667 630,000
Common Shares
Issued for
Deferred Serv. 1,234,241,921 6,171,210 4,367,849 (10,539,059 ) (0 )
Amortization of
Deferred Services 5,732,540 5,732,540
Common Shares
Issued for
Services 31,587,500 157,938 190,493 348,431
Common Shares
Issued for
Repayment of Loans 33,000,000 165,000 235,000 400,000
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 ) 0
Cash Received for
Stock Rights 3,657,000 3,657,000
Common Shares
Issued for Notes
Payable - - -
Unrealized Loss on
Marketable
Securities -
Net Loss (9,985,868 ) (9,985,868 )
BALANCE JUNE 30,
2005 2,063,428,724 10,317,144 1,280,000 6,400 56,824,965 11,034,962 40,000 (14,350 ) (58,946,068 ) (119,700 ) (14,326,488 ) 856,866
Sale of Common
Stock 3,466,847,620 17,334,238 (15,022,844 ) 2,311,394
Common Shares
Issued for
Deferred Serv. 6,564,701,500 32,823,508 (15,868,872 ) (16,954,635 ) -
Amortization of
Deferred Services 12,434,041 12,434,041
Common Shares
Issued for
Services 569,743,000 2,848,715 (1,602,839 ) 1,245,876
Common Shares
Issued for Bonuses 2,462,500 12,313 86,187 98,500
Common Shares
Issue for Stock
Rights 2,950,000 14,750 44,250 (59,000 ) -
Cash Received for
Stock Rights 6,375,462 6,375,462
Net Loss 10,606,704,620 53,033,523 - - (32,364,118 ) 6,316,462 - - (18,872,267 ) (26,759 ) (4,520,594 ) 3,566,247
BALANCE JUNE 30,
2006 12,670,133,344 $ 63,350,667 1,280,000 $ 6,400 $ 24,460,847 $ 17,351,424 40,000 $ (14,350 ) $ (77,818,335 ) $ (146,459 ) $ (18,847,082 ) $ 4,423,112
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