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 DECEMBER 31, 2006

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



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


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


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


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


Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing
requirements for the past 90 days)

Yes  X  No _

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

Yes _ No X

The Company had 32,509,872 shares of common stock, par value
$.0001 per share, outstanding as of February 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 December 31, 2006 and 2005

      Financial Statements:

         Condensed Consolidated Balance Sheet                   3

         Condensed Consolidated Statement of Operations         4

         Condensed Consolidated Statements of Stockholders'
           Equity                                               5

         Condensed Consolidated Statement of Cash Flows         6

      Notes to the Financial Statements                         7


      ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS        8

      ITEM 3.       CONTROLS AND PROCEDURES                    12

PART II.            OTHER INFORMATION                          12

       ITEM 1.  LEGAL PROCEEDINGS                              12

       ITEM 2   CHANGES IN SECURITIES AND USE OF PROCEEDS      14

       ITEM 3   DEFAULTS ON SENIOR SECURITIES                  14

       ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF
                SECURITY HOLDERS                               14

       ITEM 5   OTHER INFORMATION                              14

       ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K               14

                SIGNATURES                                     15




                               -2-
<PAGE>
         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED BALANCE SHEET

                           ASSETS

                               December 31,   September 30,
                                   2006           2005
                               (Unaudited)         *
                              ----------     ----------
  Current Assets
    Cash                     $   137,899    $   111,630
    Accounts receivable
                              14,806,640     10,707,363
    Prepaid expenses and
    other current assets         231,512        286,243
    Deferred tax asset -
    current                      159,859        159,859
                              ----------     ----------
  Total current assets        15,335,910     11,265,095

  Property, plant and
  equipment                    2,005,325      1,958,820
  Less:  Accumulated
  depreciation                 1,124,400      1,066,546
                              ----------     ----------
  Net property, plant and
  equipment                      880,925        892,274

  Goodwill, including
  acquisition cost, net          535,108        535,108
  Other assets                    84,870        114,098
                              ----------     ----------
  Total assets                16,836,813     12,806,575

            LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts payable         $ 7,335,355    $ 5,810,199
    Accrued expenses           3,538,283      1,690,800
    Short-term bank            2,400,000      2,300,000
    borrowings
    Income taxes payable         230,976
    Notes/leases payable -
    current portion               96,738         94,624
                              ----------     ----------
  Total current liabilities   13,601,352      9,895,623

  Deferred tax liability -
  non current                     77,869         77,869
  Long term portion of
  notes/leases payable         2,362,905      2,379,407

    Stockholders' equity
    Common stock                   3,251          3,251
    Retained earnings            791,436        450,425
                              ----------     ----------
  Total stockholders' equity     794,687        453,676

  Total liabilities and
  stockholders' equity       $16,836,813    $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 December 31,
                                  2006           2005
                              ----------     ----------
  Revenues                   $22,731,064    $19,491,819
  Cost of transportation      15,785,047     14,308,707
                              ----------     ----------
  Net revenue                  6,946,017      5,183,112

  Selling, general and
  administrative expenses      6,211,516      4,978,493
                              ----------     ----------
  Income from operations         734,501        204,619

  Other income (expense):
     Interest, net               (86,050)       (70,042)
     Other income (expense)       (5,040)        98,223
                              ----------     ----------
  Income before income tax
  provision                      643,411        232,800

  Provision for income taxes     302,400        109,416

  Net income                   $ 341,011      $ 123,384
                                 =======        =======
  Weighted average common
  shares - basic              32,509,872     32,509,872
  Net income per common
  share - basic                $     .01      $     .00

  Weighted average common
  shares - diluted            32,509,872     32,509,872
  Net income per common
  share - diluted              $     .01      $     .00

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




                             -4-

<PAGE>

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

  CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         (Unaudited)

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

 Consolidated net
 profit for the
 three months ended                            341,011      341,011
 December 31, 2006     ----------  -------   ----------  ----------
 Balance at December
 31, 2006              32,509,872  $3,251   $  791,436   $  794,687
                       ==========  =======   ==========  ==========










                             -5-
<PAGE>

         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                         (Unaudited)


                                       Three Months Ended
                                          December 31,
                                         2006       2005
                                     ---------   ----------
  Cash flows from operating
  activities:
  Net income                         $ 341,011    $ 123,384
  Adjustments to reconcile net
  income to net cash provided
    by operating activities:
      Depreciation                      57,854       35,695
      Provision for doubtful
       accounts                         57,245       75,149
      Deferred income taxes
      (Increase) decrease in assets:
          Accounts receivable       (4,156,521)     543,492

          Prepaid expenses and other
           assets                       63,408      107,669
       Increase (decrease) in
        liabilities:
          Accounts payable and
           accrued expenses          3,372,639      117,667
          Income taxes payable         230,976
                                     ---------   ----------
  Net cash provided/(used for) by
  operating activities                (33,388)    1,003,056

  Cash flows from investing
  activities:
     Purchase of equipment            (46,506)    (259,786)
     Collection of principal on loan
      to licensee                      20,550       19,586
                                     ---------   ----------
  Net cash used for investing
   activities                         (25,956)    (240,200)

  Cash flows from financing
  activities:
     Borrowings under capital leases                120,067
     Repayments under capital leases  (14,387)       (8,923)
     Borrowings under short term
      bank borrowing                  700,000
     Repayments under short term
      bank borrowing                 (600,000)     (200,000)
                                     ---------   ----------
  Net cash used for financing
   activities                          85,613       (88,856)

  Net increase in cash and cash
   equivalents                         26,269       674,000
  Cash and cash equivalents,
  beginning of year                   111,630       180,317
                                     ---------   ----------
  Cash and cash equivalents, end of
   period                            $137,899      $854,317
                                     =========   ==========





         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, 2006

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 December 31, 2006 and
  September 30, 2006 and the results of operations for the
  three months ended December 31, 2006 and 2005, respectively.

2.   Net income per common share appearing in the statements
  of operations for the three months ended December 31, 2006
  and 2005, 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 85 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, 13 are licensees operations, while 6 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,
                                   2006           2005
                                 --------       ---------
Revenues                            100.0%        100.0%
Cost of transportation               69.4          73.4
                                 --------       ---------
Net revenue                          30.6          26.6

Operating expenses:
  Personnel costs                     8.1           9.3
  License commissions and royalties  14.1          10.4
  Other selling, general and
    administrative expenses           5.2           5.9
                                 --------       ---------
Total operating expenses             27.4          25.6

Operating income                      3.2           1.0
Net interest expense                 (0.4)         (0.3)
Other income/(expense)                0.0           0.5
Net income before tax provision       2.8           1.2

Tax provision                         1.3           0.6
Net income                            1.5%          0.6%
                                 ========       ==========

                              -8-
<PAGE>

Revenues

     Revenues  of  the Company represents gross consolidated
sales  less  customer  discounts.  Total  revenues  for  the
quarter  ended  December 31, 2006 increased by approximately
$3.2  million,  or 16.6%, to $22,731,000, over  the  quarter
ended  December  31,  2005, reflecting a  higher  volume  of
shipments  and  total  weight of  cargo  shipped.   Domestic
revenues increased by approximately $1.2 million or 7.8%, to
$17,003,000 during the three-month period ended December 31,
2006  in comparison to the same period in the previous year.
International  revenues  increased  by  approximately   $2.0
million or 53.9%, to $5,728,000, during the same comparative
periods.   Higher  business  volume  in  markets  served  by
certain  existing  stations accounted for the  increases  in
both  domestic and international revenues.  The increase  in
domestic  sales was achieved despite the adverse  affect  of
Allstates' termination of the contractual relationship  with
our  Chicago  branch licensee during the second  quarter  of
fiscal  2006, accounting for a $990,000 decrease in  revenue
at that station.


Net Revenue

     Net  revenues  represents the difference between  gross
sales   and  the  cost  of  transportation.   The  cost   of
transportation is comprised primarily of amounts paid by the
Company to carriers and cartage agents for the transport  of
cargo.   Cost of transportation as a percentage of  revenues
decreased  by  4.0%,  to 69.4%, for the three  months  ended
December 31, 2006, in comparison to the same period  in  the
previous  year.   The cost of sales percentage  decrease  is
primarily  due  to  the increased volume  of  higher  margin
business   during  the  quarter,  as  well  as   significant
improvements   in  margins  realized  on  certain   existing
business. In absolute terms, the cost of sales increased  by
approximately  $1.5 million or 10.3%, to $15,785,000  during
the   three  months  ended  December  31,  2006  versus  the
comparative  period  in  the  prior  year,  reflecting   the
increased  sales volume.  Gross margins increased  to  30.6%
during the quarter ended December 31, 2006 from 26.6% in the
same  quarter  of  the  previous fiscal year.   Net  revenue
increased by approximately $1,763,000, to $6,946,000 for the
three  months ended December 31, 2006 versus the same  three
months of the prior year.


Selling, General and Administrative Expenses

     As   a   percentage  of  revenues,  operating  expenses
increased  by  1.8% for the three months ended December  31,
2006  in  comparison to the three months ended December  31,
2005,  reflecting the growth rate in sales  in  relation  to
fixed  operating  expenses.   In absolute  terms,  operating
expenses  increased  by approximately  $1,233,000  or  24.8%
during  the  three-month period ended December 31,  2006  as
compared  to the same period in the prior fiscal year.   The
comparative increase in SG&A expenses reflects the  increase
in  sales  volume for the quarter, manifested  primarily  in
higher  license  commission,  royalty  and  cargo  insurance
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 $1,170,000 for the three-month period ended
December 31, 2006. in comparison to the same period  in  the
previous year.   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  $762,000
during  the quarter ended December 31, 2006.  A net increase
in  gross  profits at our other licensee locations  accounts
for the balance of the increase in licensee commissions.  As
a percentage of revenues, licensee commissions and royalties
increased  by  3.7%,  to 14.1% of sales during  the  quarter
ended December 31, 2006.


                              -9-
<PAGE>



     Cargo  insurance  increased  by  approximately  $68,000
during  the three months ended December 31, 2006 as compared
to  the  same period 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.

     Freight   claims  expense  increased  by  approximately
$69,000  during  the  quarter ended  December  31,  2006  as
compared  to  the  same  period of the  prior  fiscal  year,
primarily reflecting claims made to one customer relating to
stolen freight from fiscal 2005.


     SG&A  expenses  presented for the  three  months  ended
December 31, 2006 and 2005 are inclusive of expenditures  to
related parties totaling $626,625 and $505,395, respectively.

Income From Operations

     Operating  income  increased during  the  three  months
ended  December  31,  2006  by  approximately  $530,000,  to
$735,000,  compared to the same three month  period  in  the
previous   year,  for  the  reasons  indicated  above.    In
comparison to the respective period ended December 31, 2005,
the  operating  margin  for  the three  month  period  ended
December 31, 2006 increased by 2.2%, to 3.2% of sales.

Net Interest Expense

     Net interest expense increased by approximately $16,000
for the three months ended December 31, 2006 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 three months ended
December 31, 2005 represents funds received during the
period from the final distribution settlement of the Q
Logistics Chapter 11 filing from February 2001.

Net Income

     Income before income taxes increased to $643,000 during
the quarter ended December 31, 2006,  versus $233,000 during
the  same period in the prior year.  The Company recorded  a
tax  provision  of approximately $302,000  for  the  quarter
ended  December 31, 2006 as compared to a tax  provision  of
$109,000  for quarter ended December 31, 2005.   Net  income
after  tax  amounted to approximately $341,000  or  1.5%  of
revenues during the first quarter of Fiscal 2007 versus  net
income of approximately $123,000 or 0.6% of revenues in  the
first quarter of Fiscal 2006.


Liquidity and Capital Resources

       Net   cash   used   for  operating   activities   was
approximately  $33,000 for the three months  ended  December
31,  2006  compared to net cash provided  by  operations  of
approximately $1,003,000 for the three months ended December
31,  2005.   For the three months ended December  31,  2006,
cash was used to finance the $4,157,000 increase in accounts
receivable,  offset by the $3,373,000 increase  in  accounts
payable, a $283,000 swing increase in income taxes due,  and
the  net income of the Company.  Net income, net of non-cash
charges  totaled  $456,000.   For  the  three  months  ended
December  31,  2005,  cash was provided  by  a  decrease  in
accounts  receivable  of $543,000, an increase  in  accounts
payable  of  $117,000,  as well as the  net  income  of  the
Company, net of non-cash charges, of $234,000.

                             -10-
<PAGE>

     At  December 31, 2006, the Company had cash of $138,000
and net working capital of $1,735,000, compared with cash of
$854,000 and net working capital of $1,523,000 respectively,
at  December 31, 2005.   The increase in working capital  at
December  31,  2006 versus December 31, 2005  was  primarily
affected  by  the Company's net income during the  preceding
twelve  months, offset by capital expenditures  made  during
that period.

     The  Company's  investing activities during  the  three
months  ended December 31, 2006 were primarily comprised  of
expenditures  made  for  the benefit  of  the  new  computer
system,  primarily representing long term  enhancements  and
improvements.  For the three months ended December 31, 2006,
capital  expenditures  amounted  to  approximately  $47,000.
Capital expenditures amounted to approximately $260,000  for
the   three  months  ended  December  31,  2005,  of   which
approximately $120,000 is financed by a three  year  leasing
arrangement.

      The  Company  has a commercial line of credit  with  a
bank,  which  became effective March 30, 2006,  pursuant  to
which  the Company may borrow up to $3,000,000, based  on  a
maximum  of  70% of eligible accounts receivable.   Per  the
agreement,   which  expires  May  28,  2007,   interest   on
outstanding  borrowings accrues at the banks prime  rate  of
interest (8.25% at December 31, 2006).  Allstates previously
had a $2,000,000 line of credit with a different bank, which
was  originally  scheduled to expire on  January  31,  2007.
However,  that  line of credit was paid off  and  terminated
concurrent with the opening of the line of credit  with  the
new  bank.  Outstanding borrowings on the line of credit  at
December  31, 2006 and 2005 were $2,400,000 and  $1,400,000,
respectively.


Forward Looking Statements

      The  Company  is  making this statement  in  order  to
satisfy  the  "safe  harbor"  provisions  contained  in  the
Private  Securities  Litigation Reform  Act  of  1995.   The
statements   contained  in  all  parts  of   this   document
(including  the portion, if any, appended to the Form  10-K)
including,  but  not  limited  to,  those  relating  to  the
availability  of  cargo  space;  the  Company's  plans  for,
effects,  results and expansion of international  operations
and agreements for international cargo; future international
revenue   and  international  market  growth;   the   future
expansion  and  results of the Company's  terminal  network;
plans  for  local  delivery services  and  truck  brokerage;
future improvements in the Company's information systems and
logistic  systems and services; technological  advancements;
future  marketing results; the effect of litigation;  future
costs  of transportation; future operating expenses;  future
margins;  any seasonality of the Company's business;  future
acquisitions  and the effects, benefits, results,  terms  or
other  aspects  of  any  acquisition;  Ocean  Transportation
Intermediary  License;  ability  to  continue   growth   and
implement  growth  and  business strategy;  the  ability  of
expected sources of liquidity to support working capital and
capital  expenditure requirements; future expectations;  and
any  other  statements regarding future growth, future  cash
needs,  future terminals, future operations, business plans,
future  financial results, financial targets and goals;  and
any  other  statements  which are not historical  facts  are
forward-looking statements. When used in this document,  the
words  "anticipate," "estimate," "expect,"  "may,"  "plans,"
"project" and similar expressions are intended to  be  among
the  statements  that  identify forward-looking  statements.
Such  statements involve risks and uncertainties, including,
but   not  limited  to,  those  relating  to  the  Company's
dependence  on  its  ability to attract and  retain  skilled
managers and other personnel; the intense competition within
the  freight  industry;  the uncertainty  of  the  Company's
ability to manage and continue its growth and implement  its
business   strategy;  the  Company's   dependence   on   the
availability of cargo space to serve its







                             -11-
<PAGE>


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.

     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


                            -12-
<PAGE>

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 $3,000 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
"Shareholder Litigation"), the By-Laws of the Company were
amended to provide that the Board of Directors shall consist
of seven members.  The number of directors prior to the
amendment was four.  Also pursuant to the Settlement
Agreement, Charles F. Starkey, Alan E. Meyer, and Joseph
Buckelew were appointed to fill the vacancies on the Board
of Directors created by the expansion of its size.  The By-
Laws were also amended, pursuant to the Settlement
Agreement, to provide for the manner in which vacancies in
the Board of Directors were to be filled.  The Settlement
Agreement also required the parties to nominate and vote
for, as Directors, Messrs. Buckelew, Starkey, and Meyer (or
their duly appointed successors) at future meetings of the
Company's shareholders at which directors are to be chosen.

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

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


                            -13-
<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
"Brushes").

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

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

Autosplice, Inc. v. Allstates WorldCargo, Inc.

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

     The action is only recently commenced, and has not
progressed past the service of the Summons and Complaint.
The Company intends to contest the matter, and has turned
the matter over to its insurance carrier, which has
confirmed acceptance for defense and/or settlement.


 ITEM 2   CHANGES IN SECURITIES AND USE OF PROCEEDS

 NONE

 ITEM 3   DEFAULTS ON SENIOR SECURITIES

 NONE

 ITEM 4         SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

NONE

ITEM 5    OTHER INFORMATION

 NONE

 ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits
            None

          (b)  Reports on Form 8-K
            None


                             -14-
<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, 2007
 Sam DiGiralomo, President and CEO


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



                            -15-