UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, DC   20549

                                FORM 10-Q

(Mark One)

XX  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---  ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004

    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
---  ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ______.


    Commission file number        000-24991
                             ____________________


                         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  XX      No
    ----         ----

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

Yes          No   XX
    ----         ----

The Company had 32,509,872 shares of common stock, par value $.0001 per
share, outstanding as of February 14, 2005.

                                     1
<PAGE>





            ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES


                              INDEX

                                                                       PAGE
PART 1.   FINANCIAL INFORMATION                                        ----

  ITEM 1.   FINANCIAL STATEMENTS

   Financial Statements with Supplemental Information
   For the Period Ending December 31, 2004 and 2003

  Financial Statements:

    Condensed Consolidated Balance Sheet                                 3

    Condensed Consolidated Statement of Operations                       4

    Condensed Consolidated Statements of
        Stockholders' Equity (Deficit)                                   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....................................12

PART II.  OTHER INFORMATION.............................................12



   ITEM 1    LEGAL PROCEEDINGS..........................................12

   ITEM 2    CHANGES IN SECURITIES AND USE OF PROCEEDS..................13

   ITEM 3    DEFAULTS ON SENIOR SECURITIES..............................13

   ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........13

   ITEM 5    OTHER INFORMATION..........................................13

   ITEM 6    EXHIBITS AND REPORTS ON FORM 8-K...........................13

      SIGNATURES........................................................14


                                     2

<PAGE>




               PART 1 - FINANCIAL INFORMATION

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED BALANCE SHEET

                           ASSETS

                                December       September
                                   31,            30,
                                  2004           2004
                               (Unaudited)         *
  Current Assets
    Cash                       $116,502      $ 114,363
    Accounts Receivable, net
     of allowance for bad
     debt of $299,054 and
     $250,394                 8,820,110      8,073,391
    Prepaid expenses and
     other current assets       170,097        119,108
    Deferred tax asset -
     current                    351,000        351,000
                             ----------      ---------
  Total current assets        9,457,709      8,657,862

  Property, plant and
  equipment                   1,374,002      1,368,095
  Less:  Accumulated
  depreciation                  892,878        860,222
                             ----------      ---------
  Net property, plant and
  equipment                     481,124        507,873

  Goodwill, including
   acquisition cost, net        535,108        535,108
  Other assets                   82,640         86,224
                             ----------      ---------
  Total assets              $10,556,581    $ 9,787,067
                             ==========     ==========

            LIABILITIES AND STOCKHOLDERS' DEFICIT

  Current Liabilities
    Accounts payable         $5,715,588     $5,274,000
    Accrued expenses          1,441,752      1,178,377
    Short-term bank
     borrowings               1,099,500      1,099,500
    Notes payable                25,000         25,000
                             ----------      ---------
  Total current liabilities   8,281,840      7,576,877

  Deferred tax liability -
   non-current                   78,000         78,000
  Long term portion of notes
  payable                     2,361,730      2,361,730

    Stockholders' deficit
    Common stock                  3,251          3,251
    Retained earnings         ( 168,240)      (232,791)
                             ----------      ---------
  Total stockholders' deficit ( 164,989)      (229,540)

  Total liabilities and
  stockholders' deficit      $10,556,581     $9,787,067
                              ==========     ==========

 *  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 December
                                          31,
                                  2004           2003
  Revenues                  $16,452,754      $13,457,620
  Cost of transportation     11,721,572        9,026,301
                             ----------      -----------
  Gross profit                4,731,182        4,431,319

  Selling, general and
  administrative expenses     4,575,609        4,046,888
                             ----------      -----------
  Income from operations        155,573          384,431

  Other income (expense):
     Interest, net              (56,022)         (54,402)
     Other income                  -0-             4,973
                             ----------      -----------
  Income before income tax
  provision                      99,551          335,002

  Provision for income taxes     35,000          180,500

  Net income                   $ 64,551       $  154,502
                             ==========      ===========

  Weighted average common
  shares - basic              32,509,872     32,509,872
  Net income per common
  share - basic                    $ .00          $ .00

  Weighted average common
  shares - diluted            32,509,872     32,509,872
  Net income per common
  share - diluted                  $ .00          $ .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' DEFICIT
                         (Unaudited)


<TABLE>
<S>                 <c>           <c>     <c>         <c>
                            Common Stock
                                          Retained     Total
                        Number            Earnings  Stockholders'
                          of        Par   (Deficit)    Equity
                        Shares     Value             (Deficit)
                    ___________  ______  _________   _________
Balance at           32,509,872  $ 3,251  $(232,791) $(229,540)
 September 30, 2004


Consolidated net
 profit for the
 three months ended
 December 31, 2004                           64,551     64,551
                    ___________  ______   _________   _________
Balance at December
 31, 2004            32,509,872   3,251  $(168,240)  $(164,989)
                    ===========  ======   =========   =========

</TABLE>



                                 5
<PAGE>




         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                         (Unaudited)
                                       Three Months Ended
                                          December 31,
                                         2004       2003
  Cash flows from operating
  activities:
  Net income                        $ 64,551     $154,502
  Adjustments to reconcile net
  income to net cash provided
    by operating activities:
      Depreciation                    32,655       37,571
      Provision for doubtful
        accounts                      47,643       39,176
      (Gain)/loss on sale of assets        0       (5,300)
      Deferred income taxes                0      142,000
      (Increase) decrease in assets:
          Accounts receivable       (794,361)    (101,194)
          Prepaid expenses and other
            assets                  ( 47,406)       2,972
       Increase (decrease) in
          liabilities:
          Accounts payable and
           accrued expenses          704,964     (358,710)
                                    ---------    ---------
  Net cash (used for) provided by
  operating activities                 8,046      (88,983)

  Cash flows from investing
  activities:
     Purchase of equipment           ( 5,907)    ( 16,403)
     Proceeds from sale of property
      and equipment                        0        5,300
     Deposits                              0      (71,800)
                                   ---------    ---------
  Net cash used for
  investing activities               ( 5,907)     (82,903)

  Cash flows from financing
  activities:
     Repayments under notes payable        0      ( 1,899)
                                    ---------    ---------
  Net cash used for financing
   activities                              0     (  1,899)

  Net increase (decrease) in cash
  and cash equivalents                2,139      (173,785)
  Cash, beginning of year           114,363       516,639
                                   ---------     ---------
  Cash, end of period             $ 116,502     $ 342,854
                                   =========     =========


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


                                6
<PAGE>





         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      December 31, 2004

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 2004 Form 10-K
  filing dated December 29, 2004 (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 December 31, 2004 and
  September 30, 2004 and the results of operations for the
  three months ended December 31, 2004 and 2003, respectively.

2.   Net income per common share appearing in the statements
  of operations for the three months ended December 31, 2004
  and 2003, 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 94 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 20 domestic
locations, 12 are licensee operations, while 8 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 December 31,
                                         2004          2003
                                         ----          ----
Revenues                                100.0%        100.0%
Cost  of transportation                  71.2          67.1
                                         ----          ----
Gross profit                             28.8          32.9

Operating Expenses:
 Personnel Costs                         10.1          11.9
 License commissions and
  royalties                              11.3          10.9
 Other selling, general and
  administrative expenses                 6.5           7.2
                                         ----          ----
Total operating expenses                 27.9          30.0

Operating income                          0.9           2.9
Interest expense                         (0.3)         (0.4)
Net income before tax provision           0.6           2.5

Tax provision                             0.2           1.4
                                         ====          ====
Net    income                             0.4%          1.1%


                             8
<PAGE>

Revenues

     Revenues  of  the Company represents gross consolidated
sales  less  customer  discounts.  Total  revenues  for  the
quarter  ended December 31, 2004 increased by $3.0  million,
or  22.3%,  to $16,453,000, over the quarter ended  December
31,  2003, reflecting a higher volume of shipments and total
weight  of cargo shipped. The increase in revenues primarily
reflects  volume growth at some of our existing stations  as
well  as  new volume generated by the addition of a licensee
operation  in  the  second quarter of fiscal  2004.   Higher
sales  volume within the Allstates truck brokerage operation
also accounted for some of the overall increase in revenues.

     Domestic  revenues  increased  by  approximately   $3.6
million  or  35.4%,  to $13,712,000 during  the  three-month
period  ended December 31, 2004 in comparison  to  the  same
period  in  the  previous year, reflecting  higher  shipping
volume  for the reasons mentioned above.  Included  in  this
category were sales to one customer that accounted for  9.9%
of  total  revenues.   International revenues  decreased  by
approximately $590,000 or (17.70%), to $2,741,000, primarily
due  to  import sales generated by one customer  during  the
three  months  ended  December 31, 2003 that  accounted  for
approximately $1.2 million, and which was not  sustained  in
to the quarter ended December 31, 2004.


Gross Profit

     Gross  profit  represents the  difference  between  net
revenues  and  the  cost of sales.  The  cost  of  sales  is
composed  primarily  of  amounts  paid  by  the  Company  to
carriers  and  cartage agents for the  transport  of  cargo.
Cost of sales as a percentage of revenues increased by 4.2%,
to  71.2%, for the three months ended December 31, 2004,  in
comparison  to the same period in the previous  year.   This
higher  cost  of  sales percentage can be  attributed  to  a
combination of factors, including the effect of increases in
fuel  costs  as  they affect carrier rates, an  increase  in
deferred  shipments  versus  priority,  and  the  growth  of
significant lower margin business that the Company  attained
during  fiscal 2004.  In absolute terms, the cost  of  sales
increased  by  approximately  $2.7  million  or  29.9%,   to
$11,722,000 during the three months ended December 31,  2004
versus  the comparative period in the prior year, reflecting
the  increased  sales  volume.  Gross margins  decreased  to
28.8%  during the quarter ended December 31, 2004 from 32.9%
in  the  same  quarter of the previous fiscal  year.   Gross
profit increased by approximately $300,000 to $4,731,000 for
the  three  months ended December 31, 2004 versus  the  same
three months of the prior year.


Selling, General and Administrative Expenses

     As  a percentage of sales, operating expenses decreased
by  2.3%  for  the three months ended December 31,  2004  in
comparison  to  the  three months ended December  31,  2003,
reflecting  the  growth rate in sales in relation  to  fixed
operating expenses, primarily those related to personnel and
company  facilities.  In absolute terms, operating  expenses
increased  by  approximately $529,000 or  13.1%  during  the
three-month  period ended December 31, 2004 as  compared  to
the  same  period in the prior fiscal year.  The comparative
increase in SG&A expenses is primarily due to higher license
commission  and  royalty expense as  well  as  higher  legal
expense.

     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 $389,000 for the three-month period  ended
December  31, 2004 in comparison to the same period  in  the
previous  year,  reflected by higher gross profits  at  some
existing licensee operations as well as the addition of  one
licensee operation during the second quarter of fiscal 2004.


     Legal  fees  increased during the  three  months  ended
December  31, 2004 in comparison to the same period  of  the
prior year by approximately $133,000.  The increased expense
primarily  reflects Allstates defense and settlement  effort
related  to  an  action commenced by a majority  shareholder
against  the  Company during the fourth  quarter  of  fiscal
2004.

                           9
<PAGE>

     SG&A  expenses  presented for the  three  months  ended
December 31, 2004 and 2003 are inclusive of expenditures  to
related    parties   totaling   $483,906    and    $394,395,
respectively.

Income From Operations

     Operating  income  decreased during  the  three  months
ended  December  31,  2004  by  approximately  $229,000,  to
$156,000, from an operating profit of $384,000 in  the  same
three  month  period in the previous year, for  the  reasons
indicated  above.   In comparison to the  respective  period
ended  December 31, 2003, the operating margin for the three
month  period ended December 31, 2004 decreased by 2.0%,  to
0.9% of sales.

Interest Expense and Income

     Interest expense increased slightly for the three
months ended December 31, 2004 by approximately $2,000 as
compared to the same period in the previous year, reflecting
higher interest rates on borrowed funds.

Net Income/(Loss)

     Income before income taxes decreased to $100,000 during
the quarter ended December 31, 2004,  versus $335,000 during
the  same period in the prior year.  The Company recorded  a
tax  provision of $35,000 for the quarter ended December 31,
2004  as compared to a tax provision of $181,000 for quarter
ended  December 31, 2003.  Net income after tax amounted  to
approximately $65,000 or 0.4% of revenues during  the  first
quarter of Fiscal 2005 versus net income of $155,000 or 1.1%
of revenues in the first quarter of Fiscal 2004.



Liquidity and Capital Resources

     Net   cash   provided  by  operating   activities   was
approximately $8,000 for the three months ended December 31,
2004,  compared to cash used for operations of approximately
$89,000  for the three months ended December 31, 2003.   For
the  three months ended December 31, 2004, cash was provided
by  the  net income of the company, offset by the net effect
of  increases  in  accounts receivable and accounts  payable
that reflect the growth in sales volume during the period as
compared to the same period of the previous year.   For  the
three  months  ended December 31, 2003,  cash  was  used  to
finance an increase in accounts receivable and a decrease in
accounts payable, offset by the Company's profit during  the
quarter.

     At  December 31, 2004, the Company had cash of $117,000
and net working capital of $1,176,000, compared with cash of
$343,000 and net working capital of $1,159,000 respectively,
at  December  31,  2003.  The change in working  capital  at
December  31,  2004  over December  31,  2003  is  primarily
attributable  to  the  Company's  net  income   during   the
preceding  twelve  months,  offset  by  payments   made   in
connection with a licensee agreement that Allstates  entered
in to in fiscal 2004.

       During the quarter ended December 31, 2003, Allstates
entered  into a licensee agreement with another  party  that
would  result  in  that party owning  the  rights  to  three
licensee operations commencing January 31, 2004.  As part of
the  agreement, Allstates WorldCargo paid in installments  a
sum of $300,000 to the licensees as a start- up fee.  As  of
the  quarter  ended December 31, 2003, the Company  paid  an
installment deposit of $75,000, with the balance paid during
the second and third quarters of fiscal 2004.  Allstates has
capitalized this expenditure as a leasehold improvement  and
will depreciate it over the ten- year life of the contract.

                            10
<PAGE>

     In  addition to the leasehold improvement payment,  the
Company's    investing   activities   were   comprised    of
expenditures  for capital equipment, primarily  representing
purchases of computer hardware and software.  For the  three
months   ended   December  31,  2004,  capital  expenditures
amounted to approximately $6,000, while capital expenditures
amounted to approximately $16,000 for the three months ended
December 31, 2003.

     The  Company  has a commercial line of  credit  with  a
bank,  pursuant  to  which  the Company  may  borrow  up  to
$2,000,000,  based on a maximum of 70% of eligible  accounts
receivable.   Per the agreement, which expires  January  29,
2006, interest on outstanding borrowings accrues at the Wall
Street  Journal's prime rate of interest (5.25% at  December
31,  2004).  The interest rate is predicated on the  Company
maintaining a compensating account balance in a non-interest
bearing account equal to at least $230,000.  If such average
compensating balances are not maintained, the interest  rate
will  increase  by  1%  over  the rate  currently  accruing.
Outstanding  borrowings  on  the  line  of  credit   totaled
$1,100,000  and  $1,150,000 at December 31, 2004  and  2003,
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;
construction of the new facilities; the effect of
litigation; future costs of transportation; future operating
expenses; future margins; any seasonality of the Company's
business; future dividend plans; 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.

                                     11
<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

Joseph M. Guido, v. Allstates WorldCargo, Inc., Sam
DiGiralomo, Barton C. Theile, and Craig D. Stratton

On October 14, 2004, the 56.91% majority shareholder of the
Company (the "Shareholder") (also employed by the Company as
its Chairman) commenced an action against the Company and
three of the Company's directors, entitled "Joseph M. Guido
v. Allstates WorldCargo, Inc., Sam DiGiralomo, Barton C.
Theile, and Craig D. Stratton," in the Superior Court of New
Jersey, Chancery Division, Ocean County, bearing Docket No.
OCN- C -305-04.  (Messrs. DiGiralomo, Theile, and Stratton
are also employed by the Company as its President and Chief
Executive Officer, its Executive Vice President and Chief
Operating Officer, and its Chief Financial Officer.)  The
Shareholder alleged that in accordance with state law, on
August 16, 2004, he had delivered to the Company's Secretary
(1) an executed Written Consent in Lieu of a Special Meeting
of the Stockholders of Allstates WorldCargo, Inc. dated
August 16, 2004 (the "Written Consent"), (2) Amended and
Restated Bylaws of the Company adopted pursuant to the
Written Consent (the "A&R Bylaws"), and (3) a draft
Information Statement pursuant to Section 14(c) of the 1934
Act (the "Draft Information Statement").

The Shareholder alleged that pursuant to the Written
Consent, he had amended the Company's bylaws to (among other
things) expand the Board of Directors from four members to
seven members, and appointed three persons (alleged to be
independent) to fill the newly created board seats.  He
alleged that the Company was required by law to comply with
his demand to notify the shareholders of his action, and
that the Company's failure to do so was a violation of the
law.  He also alleged that the three individual defendants,
both as directors and officers, owed the Company and it
shareholders certain fiduciary duties and duty of loyalty to
direct that "appropriate steps" be taken by the Company to
allegedly comply with New Jersey state law "and other
applicable law" in response to the Written Consent.

The Majority Shareholder demanded temporary, preliminary,
and injunctive relief enjoining a scheduled special Board of
Directors meeting (the "Special Board Meeting") pending
Company's performance of acts allegedly required by New
Jersey law and by the 1934 Act.  The Majority Shareholder
also sought a permanent injunction requiring the Company and
its Secretary to prepare and distribute to the Company's
shareholders all notices allegedly required by state and
federal law in connection with the Written Consent.
Finally, he sought entry of an Order requiring the Company
to file and serve upon him, within seven days after entry of
a permanent injunction, a written report setting forth the
manner and form in which the Company complied with the
injunctions.

                                     12
<PAGE>

The Company (and the three individual defendants) opposed
the application for temporary relief upon the grounds that
subsequent to his execution of the Written Consent, the
Majority Shareholder advised one of the individual
defendants that he had decided not to proceed with his
amendment of the Bylaws or his expansion of the Board of
Directors.  Defendants also alleged that the Majority
Shareholder's actions were not in the best interest of the
Company, and were motivated by self-interest, that because
of such concerns, the Company needed time to determine its
obligations under the law, and that the purpose of the
Special Board Meeting (among others) was to consider "issues
pertaining to the request by [the Majority Shareholder] to
file the Schedule 14C presented to the Secretary of the
Corporation."

On October 28, 2004, the parties reached an agreement with
regard to some essential terms of a settlement, pursuant to
which (1) the Company's Board of Directors would not be
expanded except by unanimous consent, (2) the Majority
Shareholder and the individual defendants would enter into a
voting agreement pursuant to which each would agree to vote
his respective shares in the Company for the others as
directors of the Company, (3) the Company would enter into
new employment agreements (the precise terms of which were
to be agreed upon) with the individual defendants (the
existing employment agreements being due to expire on
December 31, 2004), (4) the parties would exchange general
releases, and (5) the Company would, to the extent lawfully
required by the Majority Shareholder's existing employment
agreement, reimburse him for the attorneys fees he incurred
in connection with the action.  It was anticipated that the
complete terms of a Settlement would be agreed upon, and
that formal settlement documents would be prepared and
executed.  Such formal documentation was prepared and
delivered to the  Shareholder's counsel on December 27,
2004.  The proposed settlement failed, and the Majority
Shareholder reinstituted his claim against the defendants
on February 10, 2005.  A hearing will be held on March 15,
2005 with regard to the Majority Shareholder's proposed
application for temporary restraints.






 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


                                      13


<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:    February 14, 2005
        ---------------------------------               -----------------
          Sam DiGiralomo, President and CEO




BY:       /s/ Craig D. Stratton               DATED:    February 14, 2005
        ---------------------------------               -----------------
          Craig D. Stratton, CFO, Secretary,
        Treasurer and Principal Financial Officer





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