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, 2003

    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
    ----         ----




The Company had 32,509,872 shares of common stock, par value $.0001 per
share, outstanding as of February 12, 2004.

                                     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, 2003 and 2002

  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.............................................13



   ITEM 1    LEGAL PROCEEDINGS..........................................13

   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...........................14

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


                                     2

<PAGE>




               PART 1 - FINANCIAL INFORMATION

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED BALANCE SHEET

                           ASSETS

                                December       September
                                   31,            30,
                                  2003           2003
                               (Unaudited)         *
  Current Assets
    Cash and cash
    cash equivalents           $342,854      $ 516,639
    Accounts Receivable       6,288,227      6,226,209
    Prepaid taxes and
     other current assets       152,218        155,191
    Deferred income taxes       353,000        490,000
                             ----------      ---------
  Total current assets        7,136,299      7,388,039

  Property, plant and
  equipment                   1,285,035      1,268,632
  Less:  Accumulated
  depreciation                  980,641        943,070
                             ----------      ---------
  Net property, plant and
  equipment                     304,394        325,562

  Goodwill, including
   acquisition cost, net        535,108        535,108
  Other assets                  110,371         38,571
                             ----------      ---------
  Total assets               $8,086,172     $8,287,380
                             ==========     ==========

            LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts payable         $3,757,994     $4,336,623
    Accrued expenses          1,042,947        823,029
    Short-term bank
    borrowings                1,149,500      1,149,500
    Notes payable                26,937         28,836
                             ----------      ---------
  Total current liabilities   5,977,378      6,337,988

  Deferred tax liability -
   non-current                   30,000         25,000


  Long term portion of notes
  payable                     2,386,730      2,386,730

    Stockholders' equity
    Common stock                  3,251          3,251
    Retained earnings         ( 311,187)      (465,689)
                             ----------      ---------
  Total stockholders' equity  ( 307,936)      (462,438)

  Total liabilities and
  stockholders' equity        $8,086,172     $8,287,280
                              ==========     ==========

 *  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,
                                  2003           2002
  Revenues (net of
  discounts)                $13,457,620      $13,089,484
  Cost of transportation      9,026,301        8,548,925
                             ----------      -----------
  Gross profit                4,431,319        4,540,559

  Selling, general and
  administrative expenses     4,046,888        4,597,220
                             ----------      -----------
  Income from operations        384,431         ( 56,661)

  Other income (expense):
     Interest, net              (54,402)         (58,343)
     Other income                 4,973            2,173
                             ----------      -----------
  Income before income tax
  provision                     335,002         (112,831)

  Provision for income taxes    180,500         ( 43,012)

  Net income                   $154,502)       $( 69,819)
                             ==========      ===========

  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' EQUITY
                          (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  $(465,689) $(462,438)
 September 30, 2003


Consolidated net
 income for the
 three months ended
 December 31, 2003                          154,502    154,502
                    ___________  ______   _________   _________
Balance at December
 31, 2003            32,509,872   3,251  $(311,187)  $(307,936)
                    ===========  ======   =========   =========

</TABLE>



                                 5
<PAGE>




         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                         (Unaudited)
                                       Three Months Ended
                                          December 31,
                                         2003       2002
  Cash flows from operating
  activities:
  Net income                        $154,502     $(69,819)
  Adjustments to reconcile net
  income to net cash provided
    by operating activities:
      Depreciation                    37,571       46,256
      Amortization                         0        1,166
      Provision for doubtful
        accounts                      39,176       50,301
      (Gain)/loss on sale of assets   (5,300)      (2,123)
      Deferred income taxes          142,000      (32,200)
      (Increase) decrease in assets:
          Accounts receivable       (101,194)     326,403
          Prepaid expenses and other
            assets                     2,972     (310,373)
       Increase (decrease) in
          liabilities:
          Accounts payable and
           accrued expenses         (358,710)     145,000
                                    ---------    ---------
  Net cash (used for) provided by
  operating activities               (88,983)     154,611

  Cash flows from investing
  activities:
     Purchase of equipment           (16,403)    ( 24,241)
     Proceeds from sale of property
      and equipment                    5,300       16,338
     Deposits                        (71,800)    (  1,040)
                                   ---------    ---------
  Net cash used for
  investing activities               (82,903)    (  8,943)

  Cash flows from financing
  activities:
     Repayments under notes payable  ( 1,899)     (23,096)
     Repayments under short-term
      bank borrowings                          (1,000,000)
     Borrowing under short-term
      Bank borrowings                             800,000
                                   ---------    ---------
  Net cash used for financing
   activities                       (  1,899)   ( 223,096)

  Net (decrease) in cash
  and cash equivalents             (173,785)     ( 77,428)
  Cash and cash equivalents,
  beginning of year                 516,639       173,277
                                   ---------     ---------
  Cash and cash equivalents, end of
    period                        $ 342,854     $  95,849
                                   =========     =========


         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, 2003


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 2003 Form 10-K
  filing dated December 29, 2003 (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, 2003 and
  September 30, 2003 and the results of operations for the
  three months ended December 31, 2003 and 2002, respectively.


2.   Net income per common share appearing in the statements
  of operations for the three months ended December 31, 2003
  and 2002, 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.


3.    The line of credit with the Sun National Bank contains
  a  covenant  pertaining to maintenance of a  Debt  Service
  Coverage Ratio.  At December 31, 2003, the Company was  in
  breach of the Debt Service Coverage Ratio.  Under the terms
  of the agreement, the bank may call the loan if the Company
  is in violation of any restrictive covenant.  Per the banks
  requirement,  Allstates underwent an independent  accounts
  receivable audit.  Based on the results of the audit,  the
  bank has agreed to waive the covenant default for the period
  covering  February 28, 2003 to February 28, 2004 when  the
  covenant will once again go into effect.

4.   During the fiscal quarter ended December 31, 2003,
  Allstates entered into a ten-year licensee agreement with
  another party.   This agreement would result in the creation
  of a new station in Nashville, Tennessee, the conversion of
  the Company-owned Raleigh, North Carolina station to a
  licensee operation, and the rights to Atlanta, Georgia
  licensee operation.  Operations related to this agreement
  started January 31, 2004.  As part of the agreement,
  Allstates WorldCargo agreed to pay a sum of $300,000 to the
  licensees as a start-up fee.  As of December 31, 2003, the
  Company paid one deposit installment of $75,000.  The
  Company intends to amortize the $300,000 payment over the
  ten-year life of the contract.


                               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 22 offices
throughout the United States, and employs 99 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 22 domestic
locations, 14 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,
                                         2003          2002
                                         ----          ----
Revenues                                100.0%        100.0%
Cost  of transportation                  67.1          65.3
                                         ----          ----
Gross profit                             32.9          34.7

Selling, general and
 administrative expenses                 30.1          35.1
                                         ----          ----
Operating income                          2.9          (0.4)
                                         ====          ====
Net    income                             1.1%         (0.5%)


Revenues

     Revenues  of  the Company represents gross consolidated
sales  less  customer  discounts.  Total  revenues  for  the
quarter  ended December 31, 2003 increased by  $368,000,  or
2.8%,  to  $13,458,000, from the quarter ended December  31,
2002,  reflecting  a  higher volume of shipments  and  total
weight of cargo shipped.  Included in total revenues of  the
comparative three month period ended December 31,  2002  was
approximately $1,787,000 of one-time billing to one customer
for  the  arrangement  of international chartered  aircraft.
                             8
<PAGE>

The Company was asked to make these special arrangements  by
its  customer  as an emergency response to  the  backlog  of
ocean freight deliveries that resulted from the lock out  of
West  Coast  ports.  After discounting the  effect  of  this
isolated  billing during the prior year fiscal quarter,  the
company's  real revenue growth from quarter to  quarter  was
approximately  $2,155,000 or 19.1%.  The  increase  in  this
shipping   volume  can  be  primarily  attributed   to   the
maturation  of  the two Florida stations that opened  during
the  third  quarter of fiscal 2002, the addition  of  a  new
licensee location during the second quarter of fiscal  2003,
and  the revenues generated by the Allstates truck brokerage
operation   which  began  providing  truckload  service   to
selected customers during the second quarter of fiscal 2003.

     Domestic  revenues  increased  by  approximately   $1.3
million  or  14.1%,  to $10,126,000 during  the  three-month
period  ended December 31, 2003 in comparison  to  the  same
period  in  the  previous year, for  the  reasons  mentioned
above.    International  revenues  decreased  in  total   by
approximately $884,000 or (21.0%), to $3,331,000, reflecting
the  effect  of  the  chartered aircraft  service  that  the
Company  provided  in the previous fiscal  year,  offset  by
import  sales  generated by one customer that accounted  for
approximately  8.9% of total revenues for the  three  months
ended December 31, 2003.


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 1.8%,
to  67.1%, for the three months ended December 31, 2003,  in
comparison  to the same period in the previous  year.   This
higher  cost  of  sales percentage can be  attributed  to  a
combination  of factors.  The growth of the Company's  truck
brokerage  business since the second quarter of fiscal  2003
has impacted the overall cost percentage, as it operates  at
lower  margins  than  freight  forwarding  operations.   The
addition  of  certain lower margin customer accounts  during
the  quarter ended December 31, 2003, including one customer
that  accounted for 8.9% of revenues for that  period,  also
led to the increase in the cost of sales percentage, but  is
offset  in  comparison  by  the low  margin  effect  of  the
chartered  airline  service  the  Company  provided  in  the
previous  fiscal  year quarter.  The reduction  in  revenues
from  a  previously significant account also contributed  to
the  increase in the cost percentage. In absolute terms, the
cost  of sales increased by approximately $477,000 or  5.6%,
to  $9,026,000  during the three months ended  December  31,
2003  versus  the  comparative period  in  the  prior  year,
reflecting  the  increased  sales  volume.   Gross   margins
decreased  to  32.9% during the quarter ended  December  31,
2003  from 34.7% in the same quarter of the previous  fiscal
year.   Gross profit increased by approximately $109,000  to
$4,431,000  for  the three months ended  December  31,  2003
versus the same three months of the prior year.


Selling, General and Administrative Expenses

     As  a percentage of sales, operating expenses decreased
by  5.0%  for  the three months ended December 31,  2003  in
comparison  to  the  three months ended December  31,  2002,
reflecting  a  reduction  in fixed  operating  expenses  and

licensee  commissions  in relation to  sales.   In  absolute
terms,   operating   expenses  decreased  by   approximately
$550,000  or  12.0%  during  the  three-month  period  ended
December  31,  2003 as compared to the same  period  in  the
prior  fiscal  year.   The  comparative  decrease  in   SG&A
expenses  is  primarily  due  to lower  licensee  commission
expense  as well as a reduction in personnel costs  for  the
period.

     Allstates pays commissions to licensees as compensation

for generating profits to the Company.  Licensee commissions
and royalties paid pursuant to licensee agreements decreased
by  approximately $313,000 for the three-month period  ended
December  31, 2003 in comparison to the same period  in  the
previous  year,  as  gross  profits  generated  by  licensee
operations decreased, primarily reflecting the impact of the
chartered airline service that the Company provided  in  the
prior year quarter through one of its licensees.

                           9
<PAGE>

     Personnel expenses decreased by approximately  $182,000
during  the three months ended December 31, 2003 as compared
to the same period of the prior year, primarily reflecting a
reduction in sales and operations personnel during the third
quarter  of  fiscal 2003 to offset losses that  the  Company
sustained  during the first six months of that fiscal  year.
On  a net basis, the Company's headcount decreased by 10, to
99  employees at December 31, 2003, compared to December 31,
2002.

     Facilities expenses decreased by approximately  $23,000
during the quarter ended December 31, 2003 in comparison  to
the  quarter  ended December 31, 2002, primarily  driven  by
lower  telephone and data line expense.  Allstate's stations
are  connected  on a real-time basis via  data  lines  to  a
centralized   computer  system  located  at  the   Company's
corporate office.  During the first quarter of fiscal  2003,
in  order to realize a smoother transmission of data  during
high volume periods, the Company converted from T1 data line
service  to a frame relay.  This process required that  both
services  run  concurrently for a limited period  until  the
conversion   was  completed  in  full.   The   charges   for
concurrent services totaled approximately $30,000,  and  the
conversion  was  completed prior to the  end  of  the  first
quarter of fiscal 2003.

     MIS  fees,  which represent the expense of  maintaining
the computer system and programming modifications to improve
its  output  and  performance,  decreased  by  approximately
$44,000  during the quarter ended December 31,  2003  versus
the   same   period  ended  December  31,  2002,   primarily
reflecting  enhancements to the Company's EDI capability and
streamlining  of  customer order entry during  the  previous
fiscal  year quarter.  Legal fees decreased by approximately
$41,000, partially reflecting increased responsibilities  of
the Company's in-house General Counsel.

     SG&A  expenses  presented for the  three  months  ended
December 31, 2003 and 2002 are inclusive of expenditures  to
related    parties   totaling   $394,395    and    $385,478,
respectively.

Income/(Loss) From Operations

     Operating  income  increased during  the  three  months
ended  December  31,  2003  by  approximately  $441,000,  to
$384,000, as compared to an operating loss of $57,000 in the
same  three  month  period in the  previous  year,  for  the
reasons  indicated above.  In comparison to  the  respective
period  in  fiscal 2002, the operating margin for the  three
month  period ended December 31, 2003 increased by 3.3%,  to
2.9% of sales.

Interest Expense and Income

     Net interest expense decreased slightly for the three
months ended December 31, 2003 by approximately $4,000 as
compared to the same period in the previous year, reflecting
lower interest rates on borrowed funds.

Net Income/(Loss)

     Income before income taxes increased to $335,000 during
the  quarter  ended  December  31,  2003  from  a  loss   of
($113,000)  during the same period in the prior  year.   The
Company recorded a tax provision of $181,000 for the quarter
ended  December  31, 2003 as compared to a  tax  benefit  of
$43,000  for  quarter ended December 31, 2002.   Net  income
after  tax  amounted to approximately $155,000  or  1.1%  of
revenues  during the first quarter of Fiscal 2004  versus  a
net  loss  of ($70,000) or (0.5%) of revenues in  the  first
quarter of Fiscal 2003.



Liquidity and Capital Resources

     Net    cash   used   for   operating   activities   was
approximately  $89,000 for the three months  ended  December
31,  2003,  compared to cash flow provided by operations  of
approximately  $155,000 for the three months ended  December
31,  2002.   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.  During the three  months  ended

                            10
<PAGE>

December  31,  2002, cash was primarily provided  by  a  net
decrease  in  accounts  receivable as  collections  outpaced
sales, as well as an increase in accounts payable, offset by
an  increase  in  other current assets.  In  December  2002,
Allstates made a temporary transfer of $300,000 to a bonding
company  as security for a legal judgement in the  Company's
favor.   Those funds were returned in January 2003 in  favor
of a letter of credit issued through the Company's bank.

     At  December 31, 2003, the Company had cash of $343,000
and net working capital of $1,159,000, compared with cash of
$96,000  and net working capital of $1,477,000 respectively,
at  December 31, 2002.  The decrease in working  capital  at
December  31,  2003  over December  31,  2002  is  primarily
attributable  to  the Company's net loss  during  the  final
three  quarters of fiscal 2003, which includes  the  partial
write-off  of a third party loan, offset by the  net  profit
during the first quarter of fiscal 2004

     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,  2003,  capital  expenditures
amounted    to   approximately   $16,000,   while    capital
expenditures amounted to approximately $24,000 for the three
months ended December 31, 2002.

     During the first quarter of fiscal 2004, 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 agreed to pay in
installments a sum of $300,000 to the licensees as a start-
up fee.  As of December 31, 2003, the Company paid a deposit
of $75,000.

     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 February  28,
2004, interest on outstanding borrowings accrues at the Wall
Street  Journal's prime rate of interest (4.00% at  December
31,  2003).  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
$1,150,000 as of December 31, 2003.  The line of credit with
the bank contains a covenant pertaining to maintenance of  a
Debt  Service  Coverage Ratio.  At December  31,  2003,  the
Company  was  in breach of the Debt Service Coverage  Ratio.
Per   the   banks   requirement,  Allstates   underwent   an
independent accounts receivable audit.  Based on the results
of  the  audit,  the bank has agreed to waive  the  covenant
default  for  the  period  covering  February  28,  2003  to
February 28, 2004 when the covenant will once again go  into
effect.

     In  September,  2000, Allstates extended  an  operating
loan to an unrelated freight and warehouse services company,
Q Logistics Solutions, Inc. ("QLS"), as part of an agreement
that  the Company entered into to provide customer invoicing
and vendor disbursement services.  The loan was secured by a
$750,000  promissory note signed by the  borrower,  and  for
which  a  Form  UCC-1  financing statement  was  filed.   In
February 2001, QLS filed for Chapter 11 protection under the
U.S.   bankruptcy   laws.   Pursuant   to   the   bankruptcy
proceedings,   another  company,  unrelated   to   Allstates
WorldCargo, Inc., purchased the assets of QLS in  May  2001.
Allstates  had  outstanding loan advances  of  approximately
$702,000 to QLS prior to the purchase.  As a contingency  of
that purchase, Allstates entered in to an agreement with the
other  company  whereby Allstates assigned  the  Form  UCC-1
filing  to  them  in  exchange for  their  promissory  note,
secured  by a personal guarantee made by an officer of  that
company,  to  pay  the  full loan  amount  of  approximately
$702,000,  plus  9% interest over six months,  beginning  in
April 2001.  The other company subsequently defaulted on the
loan  after  having  made  no payments  to  Allstates.   The
Company  filed  suit  against  the  other  company  and  the
guarantor  for  breach  of contract,  and  subsequently  the
parties signed a Stipulation of Settlement whereby Allstates
received a judgement against the other company for the  full
amount  plus  interest  and  attorney's  fees.   An  $80,000
payment  in  lieu of the personal guarantee  was  placed  in
escrow pending legal review of documentation supplied to the
Company.  In January, 2003, the parties came to an agreement
whereby  the other company would pay Allstates  a  total  of
$330,000 in full settlement.  Payments were scheduled to  be
made  over  four equal monthly installments at  $82,500  per
month,  including  the release of the  escrow  funds.    All
payments  were received by the Company as per the  schedule.
Allstates  recorded a charge of $372,000 during  the  second
quarter  of fiscal 2003, representing the difference between
the receivable and the settlement amount.

                                     11
<PAGE>

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.


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.

                                     12
<PAGE>




PART II

OTHER INFORMATION
------------------

ITEM 1    LEGAL PROCEEDINGS

There has been no material change in our legal proceedings since
the filing of our Form 10-K for the period ended September 30, 2003.


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 13, 2004
        ---------------------------------               -----------------
          Sam DiGiralomo, President and CEO




BY:       /s/ Craig D. Stratton               DATED:    February 13, 2004
        ---------------------------------               -----------------
          Craig D. Stratton, CFO, Secretary,
        Treasurer and Principal Financial Officer





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