SECURITIES AND EXCHANGE COMMISSION
                    Washington, DC 20549


                          FORM 10-Q

 (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE  ACT OF 1934 FOR THE QUARTERLY
    PERIOD ENDED MARCH 31, 2007

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
    SECURITIES   EXCHANGE  ACT OF 1934 FOR THE TRANSITION
    PERIOD FROM _____ TO _____.



                         ALLSTATES WORLDCARGO, INC.
     -------------------------------------------------------------------
     (Exact name of small business issuer as specified in its charter)


          New Jersey                            22-3487471
        --------------                 -------------------------------
  (State or other jurisdiction        (IRS Employer Identification No.)
     of incorporation)


           4 Lakeside Drive South, Forked River, New Jersey, 08731
          ----------------------------------------------------------
                 (Address of principal executive offices)


                             609-693-5950
            --------------------------------------------------
            (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Exchange Act 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 _

Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).

Yes _ No X

The Company had 32,509,872 shares of common stock, par value
$.0001 per share, outstanding as of May 14, 2007.

<PAGE>

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

                            INDEX

PART 1.           FINANCIAL INFORMATION

      ITEM 1.    FINANCIAL STATEMENTS

        Financial Statements with Supplemental Information
        For the Period Ending March 31, 2007 and 2006


      Financial Statements:

         Condensed Consolidated Balance Sheet                   3

         Condensed Consolidated Statement of Operations         4

         Condensed Consolidated Statements of Stockholders'
           Equity                                               5

         Condensed Consolidated Statement of Cash Flows         6

      Notes to the Financial Statements                         7


      ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS        8

      ITEM 3.       CONTROLS AND PROCEDURES                    13

PART II.            OTHER INFORMATION                          13

       ITEM 1.  LEGAL PROCEEDINGS                              13

       ITEM 2   CHANGES IN SECURITIES AND USE OF PROCEEDS      15

       ITEM 3   DEFAULTS ON SENIOR SECURITIES                  15

       ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF
                SECURITY HOLDERS                               15

       ITEM 5   OTHER INFORMATION                              15

       ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K               15

                SIGNATURES                                     16




                               -2-
<PAGE>










         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED BALANCE SHEET

                           ASSETS

                                March 31,      September
                                                  30,
                                  2007           2006
                               (Unaudited)         *
  Current Assets
    Cash                      $  162,995    $   111,630
    Accounts receivable
                              11,237,740     10,707,363
    Prepaid expenses and
    other current assets         378,148        286,243
    Deferred tax asset -
    current                      159,859        159,859
                              ----------     ----------
  Total current assets        11,938,742     11,265,095

  Property, plant and
  equipment                    2,045,048      1,958,820
  Less:  Accumulated
  depreciation                 1,175,825      1,066,546
                              ----------     ----------
  Net property, plant and
  equipment                      869,223        892,274

  Goodwill, including
  acquisition cost, net          535,108         535,108
  Other assets                    59,737         114,098
                               ----------     ----------
  Total assets                $13,402,810    $12,806,575

            LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts payable         $ 5,025,440     $ 5,810,199
    Accrued expenses           2,487,610       1,690,800
    Short-term bank
    borrowings                 2,400,000       2,300,000
    Income taxes payable         195,231
    Notes/leases payable -
    current portion               98,917         94,624
                              ----------     ----------
  Total current liabilities   10,207,198      9,895,623

  Deferred tax liability -
  non current                     77,869         77,869
  Long term portion of
  notes/leases payable         2,343,588      2,379,407

    Stockholders' equity
    Common stock                   3,251          3,251
    Retained earnings            770,904        450,425
                              ----------     ----------
  Total stockholders' equity     774,155        453,676

  Total liabilities and
  stockholders' equity       $13,402,810    $12,806,575
                              ==========     ==========

 *  Condensed from audited financial statements.

     The accompanying notes are an integral part of these
consolidated financial statements.





                              3
<PAGE>

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                         (Unaudited)

                           Three Months Ended         Six Months Ended
                               March 31,                 March 31,
                            2007       2006           2007       2006

Revenue                   $17,335,091 $16,902,604  $40,066,155  $36,394,423
Cost of transportation     12,309,399  12,092,054   28,094,446   26,400,760
                           ----------  ----------   ----------   ----------
Net revenue                 5,025,692   4,810,550   11,971,709    9,993,663

Selling, general and
administrative expenses     4,991,569   4,860,043   11,203,085    9,838,536
                           ----------  ----------   ----------   ----------
Income/(loss) from
operations                     34,123    (49,493)      768,624      155,127

Other income (expense):
   Interest, net              (90,106)   (74,379)     (176,156)    (144,422)
   Other income                18,051                   13,011       98,223
                           ----------  ----------   ----------   ----------
Income/(loss) before
income tax provision          (37,932)  (123,872)      605,479      108,928

Provision for income
taxes                         (17,400)   (58,220)      285,000       51,196

Net income/(loss)            $(20,532)  $(65,652)     $320,479      $57,732
                           ==========   =========    ==========   ==========
Weighted average common
shares - basic             32,509,872  32,509,872   32,509,872   32,509,872

Net income per common
share - basic               $    .00   $    .00     $    .01       $    .00

Weighted average common
shares - diluted           32,509,872  32,509,872   32,509,872   32,509,872

Net income per common
share - diluted             $    .00   $    .00     $    .01       $    .00

The accompanying notes are an integral part of these
consolidated financial statements.



                              4
<PAGE>
         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

  CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         (Unaudited)

                           Common Stock
                                                           Total
                        Number      Par     Retained    Stockholder's
                          of       Value    Earning        Equity
                        Shares
 Balance at            ----------  -------   ----------  ----------
 September 30, 2006    32,509,872  $3,251   $  450,425   $  453,676

 Consolidated net
 profit for the
 six months ended                              320,479      320,479
 March 31, 2007
                       ----------  -------   ----------  ----------
 Balance at March      32,509,872  $3,251   $  770,904   $  774,155
 31, 2007              ==========  =======   ==========  ==========






                              5
<PAGE>

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                         (Unaudited)

                                        Six Months Ended
                                            March 31,
                                         2007       2006
  Cash flows from operating
  activities:
  Net income                          $320,479     $57,732
  Adjustments to reconcile net
  income to net cash provided
    by operating activities:
      Depreciation                     119,387      78,452
      Provision for doubtful
       accounts                        100,512     145,203
      Loss on disposal of assets         1,375
      Deferred income taxes
      (Increase) decrease in assets:
          Accounts receivable         (630,888)   (456,477)
          Prepaid expenses and other
           assets                      (83,504)     14,558
       Increase (decrease) in
        liabilities:
          Income taxes payable         195,231
          Accounts payable and
           accrued expenses             12,051    (101,448)
                                      --------    --------
  Net cash provided by/(used for)
  operating activities                  34,643    (261,980)

  Cash flows from investing
  activities:
     Purchase of equipment             (97,711)   (319,077)
     Deposits                            3,750     (10,385)
     Collection of principal on loan
      to licensee                       42,208      37,881
                                      --------    --------
  Net cash used for investing
  activities                           (51,753)   (291,581)

  Cash flows from financing
  activities:
     Borrowings under capital leases               120,067
     Repayments under capital leases   (31,525)    (24,130)
     Borrowings under short term
      bank borrowing                 1,700,000     611,860
     Repayments under short term
      bank borrowing                (1,600,000)   (200,000)
                                      --------    --------
  Net cash provided by financing
  activities                            68,475     507,797

  Net increase/(decrease) in cash
  and cash equivalents                  51,365    (45,764)
  Cash and cash equivalents,
  beginning of year                    111,630    180,317
  Cash and cash equivalents, end of
  period                              $162,995   $134,553
                                      ========   ========



         The accompanying notes are an integral part of
these consolidated financial statements.



                              6
<PAGE>

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       March 31, 2007

1.   The accompanying unaudited condensed consolidated
  financial statements have been prepared by Allstates
  WorldCargo, Inc. (the "Company") in accordance with the
  rules and regulations of the Securities and Exchange
  Commission (the "SEC") for interim financial statements and
  accordingly do not include all information and footnotes
  required under generally accepted accounting principles for
  complete financial statements.  The financial statements
  have been prepared in conformity with the accounting
  principles and practices disclosed in, and should be read in
  conjunction with, the annual financial statements of the
  Company included in the Company's Fiscal year 2006 Form 10-K
  filing dated December 29, 2006 (File No. 000-24991).  In the
  opinion of management, these interim financial statements
  contain all adjustments necessary for a fair presentation of
  the Company's financial position at March 31, 2007 and
  September 30, 2006 and the results of operations for the
  three and six months ended March 31, 2007 and 2006,
  respectively.

2.   Net income per common share appearing in the statements
  of operations for the three and six months ended March 31,
  2007 and 2006, respectively have been prepared in accordance
  with Statement of Financial Accounting Standards No. 128
  ("SFAS No. 128").  SFAS No. 128 establishes standards for
  computing and presenting earnings per share ("EPS") and
  requires the presentation of both basic and diluted EPS.  As
  a result primary and fully diluted EPS have been replaced by
  basic and diluted EPS.  Such amounts have been computed
  based on the profit or (loss) for the respective periods
  divided by the weighted average number of common shares
  outstanding during the related periods.




                              7
<PAGE>
ITEM 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations.

General Overview

     Allstates WorldCargo, Inc. (the "Company" or
Allstates") is a New Jersey Corporation formed on January
14, 1997 as Audiogenesis Systems, Inc. (Audiogenesis"),
pursuant to a corporate reorganization of Genesis Safety
Systems, Inc.  On August 24, 1999, Audiogenesis acquired 100
percent of the common stock of Allstates Air Cargo, Inc. in
a reverse acquisition, and on November 30, 1999, changed its
name to Allstates WorldCargo, Inc.  Allstates is principally
engaged in the business of providing global freight
forwarding and other transportation and logistics services
for its customers.  Allstates is headquartered in Forked
River, New Jersey.

     The freight forwarding business of Allstates opened its
first terminal in Newark, New Jersey in 1961.  Allstates
provides domestic and international freight forwarding
services to over 1,700 customers utilizing ground
transportation, commercial air carriers, and ocean vessels.
Allstates supplements its freight forwarding services to
include truck brokerage, warehousing and distribution, and
other logistics services.  Allstates operates 20 offices
throughout the United States, including the corporate
headquarters, and employs 92 people.

     Allstates has agreements with domestic and
international strategic partners and a network of agents
throughout the world, and continues to pursue opportunities
to forge additional strategic alliances in order to increase
its global market share.  The Company is a party to several
site licensing agreements in which those licensees have
contracted with Allstates to provide exclusive freight
forwarding services, including sales and operating
functions, under the Allstates name.  Of the 19 branch
locations, 12 are licensees operations, while 7 are company
owned and staffed operations.


Results of Operations

     The   following  table  sets  forth  for  the   periods
indicated  certain financial information  derived  from  the
Company's consolidated statement of operations expressed  as
a percentage of net sales:

                                 Three months ended       Six months ended
                                    March 31,                March 31,
                                 2007      2006         2007       2006
Revenue                        100.0%        100.0%     100.0%     100.0%
Cost of transportation          71.0          71.5       70.1       72.5
                               -----         -----      -----      -----
Gross profit                    29.0          28.5       29.9       27.5

Operating expenses:
  Personnel costs                9.7          11.4        8.8       10.3
  License commissions
    and royalties               13.5          10.6       13.8       10.5
  Other selling, general
    and administrative
     expenses                    5.6           6.8        5.4        6.3
                               -----         -----      -----      -----
Total operating  expenses       28.8          28.8       28.0       27.1

Operating income/(loss)          0.2          (0.3)       1.9        0.4
Interest expense, net           (0.5)         (0.4)      (0.4)      (0.4)
Other expense                    0.1          (0.0)       0.0        0.3
                               -----         -----      -----      -----
Net income/(loss) before
  tax provision                 (0.2)         (0.7)       1.5        0.3

Tax provision                    0.1           0.3       (0.7)      (0.1)%
                               -----         -----      -----      -----
Net income/(loss)               (0.1)%        (0.4)%      0.8%       0.2%


                              8
<PAGE>
Revenue

     Revenue  of  the Company  represents gross consolidated
sales  less customer discounts. Total revenue  for the three
months  ended  March  31,  2007 increased  by  approximately
$432,000,  or  2.6%, to $17,335,000, over the quarter  ended
March 31, 2006, reflecting a higher volume of shipments  and
total  weight  of cargo shipped.  Total sales  for  the  six
month period ended March 31, 2007 increased by approximately
$3.7  million, or 10.1%, to $40,066,000 compared to the  six
month  period  ended March 31, 2006, for the  same  reasons.
Total  revenue   increases during those comparative  periods
were  achieved  despite  the  adverse  affect  of  Allstates
WorldCargo's  termination  of the  contractual  relationship
with  our Chicago branch licensee during the second  quarter
of  fiscal  2006,  as  well as with our  Minneapolis  branch
licensee  during  the second quarter of  fiscal  2007.   The
terminations  of  those  contracts account  for  approximate
decreases of $1,185,000 and $2,230,000 for the three and six
month   comparative  periods.   The  Company  was  able   to
compensate  for  that  loss of revenue  through  incremental
growth  at  our existing branch locations.  During  the  six
months  ended  March  31, 2007, one customer  accounted  for
approximately 9.7% of total revenue.

     Domestic  revenue  increased by approximately  $285,000
or  2.1%, to $13,569,000 during the three-month period ended
March  31,  2007  in comparison to the same  period  in  the
previous  year,  reflecting higher shipping volume  for  the
reasons  mentioned above. During the six months ended  March
31,  2007, domestic revenue  increased by approximately $1.5
million or 5.2%, to $30,572,000 compared to the same  period
in  the  prior  year.  International revenue   increased  by
approximately  $147,000 or 4.1%, to $3,766,000,  during  the
three months ended March 31, 2007 in comparison to the prior
year  period.  During the six months ended March  31,  2007,
international sales increased comparatively by approximately
$2.2 million or 29.3%, to $9,494,000.


Net Revenue

     Net  revenue   represents the difference between  gross
sales   and  the  cost  of  transportation.   The  cost   of
transportation is composed primarily of amounts paid by  the
Company to carriers and cartage agents for the transport  of
cargo.   The  cost  of  transportation as  a  percentage  of
revenue   decreased by 0.5%, to 71.0%, for the three  months
ended  March 31, 2007, and decreased by 2.4%, to  70.1%  for
the  six months then ended, in comparison to the same period
in   the  previous  year.   The  cost  of  sales  percentage
decreases  are primarily due to a combination  of  increased
volume  of  higher  margin  business  during  each  of   the
comparative  periods,  significant improvements  in  margins
realized  on  certain existing business, and the elimination
of  lower  margin  business resulting  from  the  terminated
relationships of two of our branch licensees.   In  absolute
terms, the cost of transportation increased by approximately
$217,000  or  1.8%, to $12,309,000 during the  three  months
ended  March 31, 2007 over the previous year period.  During
the  six months ended March 31, 2007, cost of transportation
increased  by approximately $1.7 million or 6.4% versus  the
comparative  period  in  the  prior  year,  reflecting   the
increased  sales volume.  Gross margins increased  to  29.0%
during  the quarter ended March 31, 2007 from 28.5%  in  the
same quarter of the previous fiscal year, and increased  for
the  six  month comparative period then ended to 29.9%  from
27.5%  in  the prior year period.  Net revenue increased  by
approximately  215,000 to $5,026,000 for  the  three  months
ended  March  31, 2007 versus the same three months  of  the
prior year, and increased by approximately $2.0 million  for
the six month comparative period then ended.



                              9
<PAGE>
Selling, General and Administrative Expenses

     As a percentage of revenue, operating expenses remained
constant at 28.8% for the three months ended March 31,  2007
in  comparison to the three months ended March 31, 2006, and
increased by 1.0% to 28.0% of sales for the six month period
then ended.  In absolute terms, operating expenses increased
by  approximately  $132,000 or 2.7% during  the  three-month
period  ended March 31, 2007 as compared to the same  period
in the prior fiscal year, and increased by $1,365,000 during
the  six  months then ended.  The comparative  increases  in
SG&A expenses during those periods reflects the increase  in
sales   volume,  manifested  primarily  in  higher   license
commission, royalty and cargo insurance expense, and  offset
by reductions in personnel and facilities expenses.

     Allstates pays commissions to licensees as compensation
for generating profits to the Company.  Licensee commissions
and royalties paid pursuant to licensee agreements increased
by  approximately $546,000 for the three-month period  ended
March  31,  2007, in comparison to the same  period  in  the
previous  year,  and  increased by approximately  $1,716,000
during  the  six months then ended.   The higher expense  is
primarily  due  to the change in status of  our  Newark,  NJ
branch  from a company-owned branch location to  a  licensee
operated   station  effective  April  1,   2006.    Licensee
commissions  and royalties expensed to that station  totaled
approximately  $530,000 during the quarter ended  March  31,
2007 and totaled approximately $1,291,000 for the six months
ended on that date.  A net increase in gross profits at  our
other  licensee  locations accounts for the balance  of  the
increase  in  licensee  commissions.   As  a  percentage  of
revenue,  licensee  commissions and royalties  increased  by
2.9%,  to 13.5% of sales during the quarter ended March  31,
2007,  and  increased by 3.3%, to 13.8% of sales during  the
six months then ended.

     Cargo insurance increased by approximately $18,000  and
$87,000 during the three and six months ended March 31, 2007
respectively,  as  compared  to  the  same  periods  of  the
previous  year.  Cargo insurance expense, which is based  on
the  amount  of revenue, shipment weight and declared  value
for  the  period,  was  higher due  to  increases  in  those
variables.

     Personnel-related expenses decreased  on  a  net  basis
during the three and six month periods ended March 31,  2007
by   approximately   $243,000  and   220,000   respectively,
primarily related to the conversion of the Newark, NJ branch
from  a company-owned branch location to a licensee operated
station  at  the start of the third quarter of fiscal  2006.
Facilities-related   expenses,   specifically    rent    and
utilities, decreased by approximately $60,000 for  the  same
reason.

     SG&A  expenses  presented for the  three  months  ended
March  31,  2007  and 2006 are inclusive of expenditures  to
related parties totaling $469,216 and $520,809, respectively.
SG&A  expenses presented for the six months ended March  31,
2007  and  2006  are  inclusive of expenditures  to  related
parties totaling $961,225 and 1,026,204, respectively.

Income From Operations

     Operating  income  increased during  the  three  months
ended  March 31, 2007 by approximately $84,000, to  $34,000,
compared  to  the  same three month period in  the  previous
year, for the reasons indicated above.  In comparison to the
respective period ended March 31, 2006, the operating margin
for the three month period ended March 31, 2007 increased by
0.5%, to 0.2% of sales.

     Operating income increased during the six months  ended
March  31,  2007  by  approximately $613,000,  to  $769,000,
compared to the same six month period in the prior year, for
the   reasons  indicated  above.   In  comparison   to   the
respective period ended March 31, 2006, the operating margin
for  the six month period ended March 31, 2007 increased  by
0.6%, to 0.8% of sales.





                             10
<PAGE>
Net Interest Expense

     Net interest expense increased by approximately $16,000
and $32,000 for the three and six months ended March 31,
2007  as compared to the same period in the previous year,
reflecting higher interest rates on higher average
outstanding borrowings.

Other income

     Other income reported during the six months ended March
31, 2006 represents funds received during the period from
the final distribution settlement of the Q Logistics Chapter
11 filing from February 2001.

Net Income/(loss)

     During  the quarter ended March 31, 2007, income before
income  taxes increased to a loss of approximately ($38,000)
versus  a  loss of approximately ($124,000) during the  same
period  in  the  prior  year.  The Company  recorded  a  tax
benefit of approximately $17,000 for the quarter ended March
31,  2007  as  compared  to a tax benefit  of  approximately
$58,000  for  quarter ended March 31, 2006.   The  net  loss
after  tax amounted to approximately ($21,000) or (0.1%)  of
revenue   during the second quarter of Fiscal 2007 versus  a
net loss of approximately ($66,000) or (0.4%) of revenue  in
the second quarter of Fiscal 2006.

     During  the  six  month period ended  March  31,  2007,
income   before  income  taxes  increased  to  approximately
$605,000 versus $109,000 during the same period in the prior
year.  The Company recorded a tax provision of approximately
$285,000 for the six months ended March 31, 2007 as compared
to  a  tax  provision of approximately $51,000  for  quarter
ended  March  31,  2006.  Net income after tax  amounted  to
approximately  $320,000 or 0.8% of revenue  during  the  six
months   ended  March  31,  2007  versus   net   income   of
approximately  $58,000 or 0.2% of revenue   during  the  six
months then ended.


Liquidity and Capital Resources

       Net   cash  provided  by  operating  activities   was
approximately  $35,000 for the six months  ended  March  31,
2007   compared   to  net  cash  used  for   operations   of
approximately  $262,000 for the six months ended  March  31,
2006.   For  the six months ended March 31, 2007,  cash  was
provided primarily by the net income of the Company,  before
non-cash charges, of approximately $542,000, and an increase
in  income taxes payable of $195,000, offset by an  increase
in  accounts  receivable of $631,000.  For  the  six  months
ended  March 31, 2006, cash was used to finance the $456,000
increase  in  accounts  receivable, and  also  reflects  the
decrease  in  accounts  payable  and  accrued  expenses   of
$101,000.    Net  income,  net of non-cash  charges  totaled
$281,000.

     At March 31, 2007, the Company had cash of $163,000 and
net  working  capital of $1,732,000, compared with  cash  of
$135,000 and net working capital of $1,438,000 respectively,
at March 31, 2006.  The increase in working capital at March
31, 2007 versus March 31, 2006 was primarily affected by the
Company's  net  income during the preceding  twelve  months,
before  depreciation  expense,  of  approximately  $595,000,
offset  by  capital expenditures made during that period  of
approximately $310,000.

     The  Company's  investing  activities  during  the  six
months  ended  March  31, 2007 were primarily  comprised  of
expenditures  made  for  the benefit  of  the  new  computer
system,  primarily representing long term  enhancements  and
improvements.   For the six  months ended  March  31,  2007,
capital  expenditures  amounted  to  approximately  $98,000.
During   the  six  months  ended  March  31,  2006,  capital
expenditures  amounted to approximately $319,000,  of  which
approximately $120,000 is financed by a three  year  leasing
arrangement.

                             11
<PAGE>
     The Company makes weekly collections on a $250,000 loan
extended  to  a  licensee in March  2005  to  finance  their
expansion  effort.  The loan is being paid back  over  three
years including interest, at the same rate the Company  pays
on its line of credit with the bank.  The loan is secured by
the personal guarantees of the licensee principals.  For the
six   months  ended  March  31,  2007,  Allstates  collected
approximately $42,000, and through that date, has  collected
approximately $164,000 since the loans inception.

      The  Company  has a commercial line of credit  with  a
bank,  pursuant  to  which  the Company  may  borrow  up  to
$3,000,000,  based on a maximum of 70% of eligible  accounts
receivable.  Per the agreement, which expires May 28,  2007,
interest  on  outstanding borrowings accrues  at  the  banks
prime   rate   of  interest  (8.25%  at  March  31,   2007).
Management  expects the loan agreement to be  extended  past
the  expiration date.  During the six months ended March 31,
2007,  Allstates  borrowed $1,700,000 from the  bank  credit
line  and repaid $1,600,000.  Outstanding borrowings on  the
line  of  credit at March 31, 2007 and 2006 were  $2,400,000
and $2,011,000, respectively.


Forward Looking Statements

      The  Company  is  making this statement  in  order  to
satisfy  the  "safe  harbor"  provisions  contained  in  the
Private  Securities  Litigation Reform  Act  of  1995.   The
statements   contained  in  all  parts  of   this   document
(including  the portion, if any, appended to the Form  10-K)
including,  but  not  limited  to,  those  relating  to  the
availability  of  cargo  space;  the  Company's  plans  for,
effects,  results and expansion of international  operations
and agreements for international cargo; future international
revenue   and  international  market  growth;   the   future
expansion  and  results of the Company's  terminal  network;
plans  for  local  delivery services  and  truck  brokerage;
future improvements in the Company's information systems and
logistic  systems and services; technological  advancements;
future  marketing results; the effect of litigation;  future
costs  of transportation; future operating expenses;  future
margins;  any seasonality of the Company's business;  future
acquisitions  and the effects, benefits, results,  terms  or
other  aspects  of  any  acquisition;  Ocean  Transportation
Intermediary  License;  ability  to  continue   growth   and
implement  growth  and  business strategy;  the  ability  of
expected sources of liquidity to support working capital and
capital  expenditure requirements; future expectations;  and
any  other  statements regarding future growth, future  cash
needs,  future terminals, future operations, business plans,
future  financial results, financial targets and goals;  and
any  other  statements  which are not historical  facts  are
forward-looking statements. When used in this document,  the
words  "anticipate," "estimate," "expect,"  "may,"  "plans,"
"project" and similar expressions are intended to  be  among
the  statements  that  identify forward-looking  statements.
Such  statements involve risks and uncertainties, including,
but   not  limited  to,  those  relating  to  the  Company's
dependence  on  its  ability to attract and  retain  skilled
managers and other personnel; the intense competition within
the  freight  industry;  the uncertainty  of  the  Company's
ability to manage and continue its growth and implement  its
business   strategy;  the  Company's   dependence   on   the
availability of cargo space to serve its
customers; the effects of regulation; results of litigation;
the Company's vulnerability to general economic
conditions;   the   control  by  the   Company's   principal
shareholder;   risks  of  international  operations;   risks
relating to acquisitions; the Company's future financial and
operating  results, cash needs and demand for its  services;
and  the  Company's  ability to  maintain  and  comply  with
permits  and licenses, as well as other factors detailed  in
this  document  and  the Company's other  filings  with  the
Securities  and Exchange Commission. Should one or  more  of
these   risks  or  uncertainties  materialize,   or   should
underlying assumptions prove incorrect, actual outcomes  may
vary materially from those indicated. The Company undertakes
no  responsibility to update for changes related to these or
any other factors that may occur subsequent to this filing.






                             12
<PAGE>

ITEM 3         CONTROLS AND PROCEDURES

(a)   Evaluation of Disclosure Controls and Procedures.  The
Company's   principal   executive  officer   and   principal
financial  officer,  based  on  their  evaluation   of   the
Company's disclosure controls and procedures (as defined  in
Exchange Act Rules 13a-14 and 15d-14) as of a date within 90
days  prior to the filing of this Quarterly Report  on  Form
10Q,  concluded that the Company's disclosure  controls  and
procedures  are adequate and effective for the purposes  set
forth in the definition in the Exchange Act rules.

(b)  Changes in Internal Controls. There were no significant
changes  in  the  Company's internal controls  or  in  other
factors   that  could  significantly  affect  the  Company's
internal controls subsequent to the date of the evaluation.



 PART II

 OTHER INFORMATION


 ITEM 1         LEGAL PROCEEDINGS


Environmental matter

     As previously reported, the Company has been involved
in an ongoing environmental proceeding pertaining to five
underground storage tanks and two above ground storage tanks
that were removed from a facility in which the Company
leased office space at the time prior to 1997. Also as
previously reported, the Company performed certain remedial
work and monitoring as required by the New Jersey Department
of Environmental Protection (the "NJDEP"), and at the
NJDEP's request, the Company submitted proposal that no
further action was required. The NJDEP subsequently issued a
No Further Action ("NFA") letter for the soil and
groundwater.  Pursuant to the NFA, Allstates was to seal the
monitoring wells at the site.

     As previously reported, the work was unable to be
completed due to site improvements installed by the current
property owner that rendered the monitoring wells
inaccessible.  While the property owner agreed to fund the
additional costs necessary to access the wells for
abandonment, information provided by the owner indicates
that the monitoring wells were likely destroyed and that
abandonment is not feasible.

     In order to resolve the matter administratively with
DEP, Allstates must proceed through NJDEP's Notice of Non-
Compliance process for lost or destroyed wells.  This
process requires that the party
demonstrate that it made an appropriate effort to find and
properly abandon the wells, but that abandonment
is not possible.  Documentation was submitted by counsel to
the NJDEP to demonstrate that when the site improvements
were installed, the contractors excavated to a depth such
that the wells would have been destroyed beyond the ability
to be properly abandoned.  Although the NJDEP has
acknowledged that a high penalty is unlikely, it cannot
estimate the amount of penalty until the time of settlement.
Allstates will proceed to resolve the issue administratively
pursuant to the Notice of Non-Compliance process. A
conservative estimate for the penalty, including some
premium assessed by the NJDEP, may be $3,000-$10,000. The
law provides for higher penalties, but the NJDEP has not
typically assessed significant penalties in this type of
matter.

     Allstates counsel has received written confirmation
from the property owner that it would assume the cost of the
penalty, conservatively estimated at $3000 to $10,000, as
well as the costs to perform the remaining work concerning
the well closure issue and the legal fees to resolve the
matter.

                             13
<PAGE>
     In March 1997, Allstates made claims against liability
insurance carriers for coverage.  The Company's counsel
submitted invoices to the carriers in September 2003, and
continues to respond to their requests for information.  The
Company's counsel is in the process of arranging to meet
with the carriers to discuss settlement.

Joseph M. Guido v. Allstates WorldCargo, Inc., Sam
DiGiralomo, Barton C. Theile, and Craig D. Stratton.
     As previously reported, pursuant to the Settlement
Agreement that resolved the litigation that commenced in
October 2004 by the Company's majority shareholder (the
"Shareholder Litigation"), the By-Laws of the Company were
amended to provide that the Board of Directors shall consist
of seven members.  The number of directors prior to the
amendment was four.  Also pursuant to the Settlement
Agreement, Charles F. Starkey, Alan E. Meyer, and Joseph
Buckelew were appointed to fill the vacancies on the Board
of Directors created by the expansion of its size.  The By-
Laws were also amended, pursuant to the Settlement
Agreement, to provide for the manner in which vacancies in
the Board of Directors were to be filled.  The Settlement
Agreement also required the parties to nominate and vote
for, as Directors, Messrs. Buckelew, Starkey, and Meyer (or
their duly appointed successors) at future meetings of the
Company's shareholders at which directors are to be chosen.

     On August 2, 2006, the Company received a Written
Consent in Lieu of a Special Meeting of the Stockholders of
Allstates WorldCargo, Inc. (the "Written Consent"), signed
by the Messrs. Guido, DiGiralomo, Theile, and Stratton, all
of whom constitute the holders of a majority of the issued
and outstanding shares of stock of the Company, and the
parties to the Settlement Agreement.  The effect of the
Written Consent was to modify the Settlement Agreement by
(1) relieving the parties of the obligation to nominate and
vote for Messrs. Buckelew, Starkey, and Meyer (or their duly
appointed successors) as Directors, (2) removing Messrs.
Buckelew, Starkey, and Meyer from the Board of Directors,
(3) amending Section 3.02 of the By- Laws to provide that
the Board of Directors shall consist of not less than one
and not more than ten directors, with the precise number of
directors within that range to be set by the Board each year
before the annual meeting of shareholders, and with the
number of directors immediately following the adoption of
the amended Section 3.02 being four, and (4) amending
Sections 3.12(b) and 3.12(c) to provide that vacancies in
the Board shall be filled by an affirmative vote of the
remaining Board.

     The Written Consent also provided that the By-Laws, as
amended, have been adopted by the Shareholders, and may not
be amended or repealed by the Board of Directors.

Masterbrush, LLC and B&G Plastics, Inc. v. Allstates
Logistics, Inc. and T.H. Weiss, Inc.
      As previously reported, on or about December 5, 2005,
Masterbrush, LLC ("Masterbrush") and B&G Plastics, Inc.
("B&G") commenced an action against the Company's wholly-
owned subsidiary Allstates Logistics, Inc. ("ALI") and T.H.
Weiss, Inc. ("Weiss"), alleging various causes of action
arising out of the importation by Masterbrush of a quantity
of natural bristle paintbrushes produced in China (the
"Brushes").

     The Complaint alleged that plaintiffs retained ALI to
expedite the importation of the Brushes into the United
States, that ALI wrongfully failed to advise plaintiffs that
the Brushes were subject to federal antidumping duties of
351.92 percent (the "Antidumping Duty") in addition to the 4
percent normal duty, and that by reason of ALI's (alleged)
failure to so advise plaintiffs, plaintiffs were required by
U.S. Customs to pay the Antidumping Duty, in the amount of
$422,282.  The plaintiffs seek to recover compensatory and
consequential damages.

     The case settled in November 2006. Pursuant to the
settlement, the case was dismissed against the Company,
without any admission of liability on the Company's part.
The Company was not, and will not be, required to pay any
money to the plaintiffs or any other party."



                             14
<PAGE>
Autosplice, Inc. v. Allstates WorldCargo, Inc.

     On or about November 30, 2006, a complaint was filed
against the Company in the Superior Court of California,
County of San Diego, Docket No. GIC876245. In that case, the
plaintiff alleges breach of contract and tortious behavior
in connection with a shipment of equipment handled by the
Company. The plaintiff alleges that it was damaged in the
amount of $139,379, which it seeks to recover.  The
plaintiff has reserved the right to seek punitive damages in
the amount of $400,000.

     The action is in the pre-trial stage.  The Company is
contesting the matter, and has turned the matter over to its
insurance carrier, which has confirmed acceptance for defense
and/or settlement.




 ITEM 2   CHANGES IN SECURITIES AND USE OF PROCEEDS

 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
               None

          (b)  Reports on Form 8-K
               None














                             15


<PAGE>


SIGNATURES

 Pursuant to the requirements of the Exchange Act of 1934,
the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

 ALLSTATES WORLDCARGO, INC.

 BY:    /s/ SAM DIGIRALOMO         DATED:    May 15, 2007
 Sam DiGiralomo, President and CEO


 BY:    /s/ Craig D. Stratton     DATED:     May 15, 2007
  Craig D. Stratton, CFO, Secretary,
  Treasurer and Principal Financial Officer





                             16


<PAGE>