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 June 30, 2007

[ ] 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 August 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 June 30, 2007 and 2006

      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.................          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

                                June 30,     September 30,
                                  2007           2006
                               (Unaudited)         *
  Current Assets
    Cash                     $   152,078    $   111,630
    Accounts receivable       10,550,079     10,707,363
    Prepaid expenses and
    other current assets         474,469        286,243
    Deferred tax asset -
    current                      159,859        159,859
                              ----------     ----------
  Total current assets        11,336,485     11,265,095

  Property, plant and
  equipment                    2,097,070      1,958,820
  Less:  Accumulated
  depreciation                 1,240,904      1,066,546
                              ----------     ----------
  Net property, plant and
  equipment                      856,166        892,274

  Goodwill, including
  acquisition cost, net          535,108        535,108
  Other assets                    56,148        114,098
                              ----------     ----------
  Total assets               $12,783,907    $12,806,575
                             ===========    ===========

            LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts payable         $ 5,217,339    $ 5,810,199
    Accrued expenses           2,115,951      1,690,800
    Short-term bank
    borrowings                 2,000,000      2,300,000
    Income taxes payable         190,652
    Notes/leases payable -
    current portion               98,500         94,624
                              ----------     ----------
  Total current liabilities    9,622,442      9,895,623

  Deferred tax liability -
  non current                     77,869         77,869
  Long term portion of
  notes/leases payable         2,299,101      2,379,407

    Stockholders' equity
    Common stock                   3,251          3,251
    Retained earnings            781,244        450,425
                              ----------     ----------
  Total stockholders' equity     784,495        453,676

  Total liabilities and
  stockholders' equity       $12,783,907    $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      Nine Months Ended
                                June 30,               June 30,
                            2007       2006          2007       2006
Revenue
                        $17,119,086 $16,970,407   $57,185,241  $53,364,830

Cost of transportation   12,029,717  11,864,752    40,124,163   38,265,512
                         ----------  ----------    ----------   ----------

Net revenue               5,089,369   5,105,655    17,061,078   15,099,318

Selling, general and
administrative expenses   5,013,653   5,049,832    16,216,738   14,888,368
                         ----------  ----------    ----------   ----------
Income/(loss) from
operations                   75,716      55,823       844,340      210,950

Other income (expense):
   Interest, net            (85,977)    (87,460)     (262,133)    (231,882)
   Other income              27,301                    40,312       98,223
                         ----------  ----------    ----------   ----------
Income/(loss) before
income tax provision         17,040     (31,637)      622,519       77,291

Provision for income
taxes                         6,700      45,420       291,700       96,616

Net income/(loss)        $   10,340   $ (77,057)   $  330,819    $ (19,325)
                         ==========  ==========    ==========    =========
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

                          Number            Retained     Total
                            of        Par   Earnings  Stockholders'
                          Shares     Value  (Deficit)    Equity
Balance at            ___________  ______  _________   _________
 September 30, 2006    32,509,872   3,251    450,425     453,676


 Consolidated net
 profit for the nine
 months ended June                           330,819     330,819
 30, 2007

Balance at            ___________  ______  _________   _________
 June 30, 2007         32,509,872   3,251    781,244     784,495




                              -5-
<PAGE>


         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                         (Unaudited)

                                         Nine Months Ended
                                            June 30,
                                         2007       2006
  Cash flows from operating
  activities:
  Net income (loss)                 $ 330,819   $ (19,325)
  Adjustments to reconcile net
  income (loss) to net cash used
  for/provided by
  operating activities:
      Depreciation
                                      184,466     136,744
      Provision for doubtful
         accounts                     143,759     232,429
      Loss on sale of assets            1,375
      Deferred income taxes                        34,580
      (Increase) decrease in assets:
          Accounts receivable          13,526     994,970
          Prepaid expenses and other
           assets                    (198,000)    (24,883)
       Increase (decrease) in
        liabilities:
          Accounts payable and
           accrued expenses          (167,709) (1,230,987)
          Income taxes payable        190,652      25,709
                                     --------   ---------
  Net cash provided by
  operating activities                498,888     149,237

  Cash flows from investing
  activities:
     Purchase of equipment           (149,733)   (487,189)
     Loan to licensee
     Collection of loan principal      63,972      59,535
     Deposits                           3,750     (10,385)
                                     --------   ---------
  Net cash used for investing
  activities                          (82,011)   (438,039)

  Cash flows from financing
  activities:
     Repayments under capital leases  (51,429)    (39,797)
     Borrowing under capital leases               120,067
     Repayments under notes payable   (25,000)    (25,000)
     Repayments under short-term
      bank borrowings              (2,000,000)   (411,360)

     Borrowing under short-term
      bank borrowings               1,700,000   1,111,860
                                     --------   ---------
  Net cash (used for)/provided by
  financing activities               (376,429)    755,770

  Net increase in cash                 40,447     466,968
  Cash at beginning of period         111,630     180,317
                                     --------   ---------
  Cash, end of period               $ 152,078    $647,285
                                     ========   =========


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



                              -6-
<PAGE>

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        June 30, 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 June 30, 2007 and
  September 30, 2006 and the results of operations for the
  three and nine months ended June 30, 2007 and 2006,
  respectively.

2.   Net income per common share appearing in the statements
  of operations for the three and nine months ended June 30,
  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 91 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       Nine Months Ended
                             June 30,                  June 30,
                          2007        2006         2007      2006
                          ----        ----         ----      ----
Revenues                 100.0%      100.0%       100.0%    100.0%
Cost of transportation    70.3        69.9         70.2      71.7
Gross  profit             29.7        30.1         29.8      28.3

Operating expenses:
  Personnel    costs       9.9         9.2          9.1      10.0
  License commissions
   and royalties          13.7        13.7         13.7      11.5
  Other selling, general
   and administrative
    expenses               5.7         6.9          5.5       6.4
Total operating expenses  29.3        29.8         28.3      27.9

Operating income           0.4         0.3          1.5       0.4
Interest expense, net     (0.5)       (0.5)        (0.5)     (0.4)
Other income               0.2        (0.0)         0.1       0.2
Net income before
  tax  provision           0.1        (0.2)         1.1       0.2
Tax  provision            (0.0)       (0.3)        (0.5)     (0.2)
Net income                 0.1%       (0.5)%        0.6%      0.0%


                              -8-
<PAGE>

Revenue

     Revenue  of  the Company represents gross  consolidated
sales  less customer discounts. Total revenue for the  three
month  period ended June 30, 2007 increased by approximately
$149,000,  or  0.9%, to $17,119,000, over the quarter  ended
June  30, 2006, reflecting a higher volume of shipments  and
total  weight  of cargo shipped.  Total sales for  the  nine
months  ended June 30, 2007 increased by approximately  $3.8
million, or 7.2%, to $57,185,000 compared to the nine  month
period  ended  June 30, 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  $1,195,000 and $3,425,000 for the  three  and
nine  month  comparative periods.  The Company was  able  to
compensate  for  that  loss of revenue  through  incremental
growth  at our existing branch locations as well as business
derived  from  a  new branch location that began  operations
during  the first quarter of fiscal 2007.  During  the  nine
months ended March 31, 2007, no customer accounted for  more
than 10 % of total revenue, while one customer accounted for
approximately 8.6% of total revenue.

     Domestic revenue decreased by approximately $648,000 or
(4.8)%,  to $12,901,000 during the three-month period  ended
June  30,  2007  in  comparison to the same  period  in  the
previous year, reflecting lower net shipping volume that was
impacted   substantially  from  the   termination   of   the
Minneapolis  licensee contract as mentioned above.    During
the  nine  months  ended  June 30,  2007,  domestic  revenue
increased  by approximately $870,000 or 2.0%, to $43,473,000
compared   to   the   same  period  in   the   prior   year.
International revenue increased by approximately $796,000 or
23.3%, to $4,218,000, during the three months ended June 30,
2007  in  comparison to the prior year period.   During  the
nine   months  ended  June  30,  2007,  international  sales
increased  comparatively by approximately  $2.9  million  or
27.4%, to $13,713,000.


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
revenues  increased by 0.4%, to 70.3%, for the three  months
ended June 30, 2007, in comparison to the same period in the
previous year, primarily reflecting an additional charge  of
approximately $43,000 related to prior year activity as well
as  the  higher mix of international versus domestic freight
between  the  comparative periods.   International  freight,
which   generally   requires   a   higher   percentage    of
transportation  costs  to  revenue  than  domestic  freight,
accounted  for 24.7% of total revenues in 2007 versus  20.2%
in  2006.  For the nine months ended June 30, 2007, the cost
of  transportation percentage decreased by 1.5%, to 70.2% in
comparison  to the same period in the prior year,  primarily
due  to  a combination of increased volume of higher  margin
business,  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  $165,000  or
1.4%, to $12,030,000 during the three months ended June  30,
2007  over the previous year period.  This increase includes
an  additional charge of approximately $43,000  the  Company
incurred  related to prior year activity, the  result  of  a
settlement  agreement with one of our vendors.   During  the
nine  months  ended  June 30, 2007, cost  of  transportation
increased  by approximately $1.9 million or 4.9% versus  the
comparative  period  in  the  prior  year,  reflecting   the
increased  sales volume.  Gross margins decreased  to  29.7%
during  the  quarter ended June 30, 2007 from 30.1%  in  the
same quarter of the previous fiscal year, and increased  for
the  nine month comparative period then ended to 29.8%  from
28.3%  in  the prior year period.  Net revenue decreased  by
approximately  $16,000 to $5,089,000 for  the  three  months
ended  June  30, 2007 versus the same three  months  of  the
prior year, and increased by approximately $2.0 million  for
the nine month comparative period then ended.



                              -9-
<PAGE>

Selling, General and Administrative Expenses

     As   a   percentage  of  revenue,  operating   expenses
decreased  by 0.5% to 29.3% for the three months ended  June
30,  2007  in comparison to the three months ended June  30,
2006.   In  absolute terms, operating expenses decreased  by
approximately  $36,000  or 0.7%, to  $5,014,000  during  the
three-month  period ended June 30, 2007 as compared  to  the
same  period  in the prior fiscal year. Decreases  in  legal
fees and bad debt expense, offset by increases in personnel-
related  expenses,  were the primary drivers  of  the  lower
expense  during the quarter.  During the nine  months  ended
June  30, 2007, operating expenses as a percentage of  sales
increased by 0.5% to 28.4% in comparison to the same  period
of  the  prior  year,  and in absolute  terms  increased  by
$1,328,000 or 8.9%, to $16,217,000 over the same  period  of
the  previous year.  The change in SG&A expenses during  the
nine   month  comparative  period  primarily  reflects   the
increase  in  sales volume, manifested primarily  in  higher
license  commission,  royalty and cargo  insurance  expense,
offset  by  reductions in personnel and facilities expenses,
as well as legal fees and bad debt 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  $1,684,000 during the  nine-month  period
ended  June 30, 2007.   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  $1,696,000
during   the   nine  months  ended  June  30,  2007   versus
approximately  $371,000 expensed during the same  period  in
2006,  an  increase of $1,325,000.  A net increase in  gross
profits  at our other licensee locations during that  period
accounts  for  the  balance  of  the  increase  in  licensee
commissions.    As   a   percentage  of  revenue,   licensee
commissions  and royalties increased by 2.2%,  to  13.7%  of
sales during the nine months ended June 30, 2007.

     Cargo insurance increased by approximately $21,000  and
$107,000  during the three and nine months  ended  June  30,
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 increased  on  a  net  basis
during  the  three  month  period ended  June  30,  2007  by
approximately  $133,000 over the previous  year  comparative
period.    Sales   commissions  increased  by  approximately
$43,000,  reflecting  higher revenues generated  at  company
owned stations.  Operations salaries increased approximately
$45,000,  primarily  due to increased  staffing  to  support
growth  at  our  two Florida locations.  In addition,  bonus
expense  was  higher  by $66,000 over  the  previous  year's
comparative period, reflecting management's decision  during
the  quarter  ended June 30, 2006 to reverse  the  executive
bonus  that  had accrued over the first six months  of  that
fiscal  year.   The nine month period ended  June  30,  2007
resulted in a net decrease in personnel-related expenses  of
approximately  $96,000, impacted by 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 $55,000  for
the same reason.

     Bad  debt expense decreased for the three months  ended
June  30,  2007 by approximately $44,000, and  decreased  by
approximately $89,000 for the nine months then  ended.   The
decrease during the three month period reflects a negotiated
settlement payment the Company made during the prior  year's
quarter  ended June 30 2006 for the return of funds received
from  a  customer  who had filed for Chapter  11  bankruptcy
status  in  2005.   The  comparative decrease  in  bad  debt
expense during the nine month period ended June 30, 2007  is
primarily due to the additional expense incurred during  the
previous year for the aforementioned return of funds payment
as  well  as  bad debt charge-offs made during  that  period
within   the   Company's  GTD  Logistics   truck   brokerage
operation.



                             -10-
<PAGE>

     Legal  fees  decreased  for the three  and  nine  month
periods  ended June 30, 2007 by approximately  $137,000  and
$173,000 in comparison to the prior year periods ended  June
30,  2006,  reflecting higher expenses incurred  during  the
2006  period  for outside counsel in support of the  Company
for various issues.

     SG&A expenses presented for the three months ended June
30,  2007 and 2006 are inclusive of expenditures to  related
parties totaling $446,007 and $394,950, respectively.   SG&A
expenses  presented for the nine months ended June 30,  2007
and  2006  are inclusive of expenditures to related  parties
totaling $1,557,004 and 1,421,155, respectively.

Income From Operations

     Operating  income  increased during  the  three  months
ended  June  30, 2007 by approximately $20,000, to  $76,000,
compared  to  the  same three month period in  the  previous
year, for the reasons indicated above.  In comparison to the
respective period ended June 30, 2006, the operating  margin
for the three month period ended June 30, 2007 increased  by
0.1%, to 0.4% of sales.

     Operating income increased during the nine months ended
June  30,  2007  by  approximately  $633,000,  to  $844,000,
compared  to  the same nine month period in the prior  year,
for  the  reasons  indicated above.  In  comparison  to  the
respective period ended June 30, 2006, the operating  margin
for  the nine month period ended June 30, 2007 increased  by
1.1%, to 1.5% of sales.


Net Interest Expense

     Net interest expense increased by approximately $30,000
nine months ended June 30, 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 nine months ended June
30, 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 June 30, 2007, income  before
income  taxes  increased to approximately $17,000  versus  a
loss  of  approximately ($32,000) during the same period  in
the  prior  year.  The Company recorded a tax  provision  of
approximately $7,000 for the quarter ended June 30, 2007  as
compared  to  a tax provision of approximately  $45,000  for
quarter  ended June 30, 2006.  Net income after tax amounted
to approximately $10,000 or 0.1% of revenue during the third
quarter  of  Fiscal 2007 versus a net loss of  approximately
($77,000)  or  (0.5%)  of revenue in the  third  quarter  of
Fiscal 2006.

     During  the  nine  month period ended  June  30,  2007,
income   before  income  taxes  increased  to  approximately
$623,000 versus $77,000 during the same period in the  prior
year.  The Company recorded a tax provision of approximately
$292,000 for the nine months ended June 30, 2007 as compared
to  a  tax  provision of approximately $97,000  for  quarter
ended  June  30,  2006.  Net income after  tax  amounted  to
approximately  $331,000 or 0.6% of revenue during  the  nine
months   ended  June  30,  2007  versus   a  net   loss   of
approximately ($19,000) or 0.0% of revenue during  the  nine
months then ended.



                             -11-
<PAGE>

Liquidity and Capital Resources

       Net   cash  provided  by  operating  activities   was
approximately  $499,000 for the nine months ended  June  30,
2007 versus net cash provided by operations of approximately
$149,000 for the nine months ended June 30, 2006.   For  the
nine months ended June 30, 2007, cash was provided primarily
by  the  net income of the Company, before non-cash charges,
of  approximately $659,000, and an increase in income  taxes
payable  of  $191,000,  offset by  a  decrease  in  accounts
payable and accrued expenses of $168,000, and an increase in
prepaid expense of $160,000.  For the nine months ended June
30,  2006,  cash  was  provided by the  net  income  of  the
Company, net of non-cash charges, of $409,000 and a $995,000
decrease  in  accounts receivable, offset  by  a  $1,231,000
decrease in accounts payable.

     At  June 30, 2007, the Company had cash of $152,000 and
net  working  capital  of $1,714,000, compared  to  cash  of
$647,000 and net working capital of $1,245,000 respectively,
at  June 30, 2006.  The increase in working capital at  June
30,  2007 versus June 30, 2006 was primarily affected by the
Company's  net  income during the preceding  twelve  months,
before  depreciation  expense,  of  approximately  $689,000,
offset  by  capital expenditures made during that period  of
approximately $194,000.

     The  Company's  investing activities  during  the  nine
months  ended  June  30,  2007 were primarily  comprised  of
expenditures  made  for  the benefit  of  the  new  computer
system,  primarily representing long term  enhancements  and
improvements.   For  the nine months ended  June  30,  2007,
capital  expenditures  amounted to  approximately  $150,000.
During   the  nine  months  ended  June  30,  2006,  capital
expenditures  amounted to approximately $487,000,  of  which
approximately $120,000 is financed by a three  year  leasing
arrangement.

     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
nine   months  ended  June  30,  2007,  Allstates  collected
approximately $64,000, and through that date, has  collected
approximately $186,000 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 February  28,
2008,  interest  on outstanding borrowings  accrues  at  the
banks  prime  rate  of interest (8.25% at  June  30,  2007).
During  the  nine  months  ended June  30,  2007,  Allstates
borrowed  $1,700,000 from the bank credit  line  and  repaid
$2,000,000.  Outstanding borrowings on the line of credit at
June  30,  2007  and  2006 were $2,000,000  and  $2,300,000,
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


                             -12-
<PAGE>
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.




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.

                             -13-
<PAGE>

     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.

     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
SShareholder 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.

                             -14-
<PAGE>

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
SBrushes").

     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."


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.

     In June 2007, the action was settled pursuant to the
following terms: The plaintiff was paid the total sum of
$10,600 in full settlement of its claim (which sum was
paid by the Company's insurance carrier, less a $1,000
deductible). In addition, the plaintiff paid to the
Company the sum of $5,462.02 in outstanding freight
charges.


 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:    August 14, 2007
 Sam DiGiralomo,
 President and CEO


 BY: /s/ Craig D. Stratton    DATED:    August 14, 2007
 Craig D. Stratton, CFO,
 Secretary,
 Treasurer and Principal
 Financial Officer





                             -16-