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, 2007

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



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


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


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


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


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

Yes  X  No _

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

Yes _ No X

The Company had 32,509,872 shares of common stock, par value
$.0001 per share, outstanding as of February 14, 2008.

<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, 2007 and 2006

      Financial Statements:

         Condensed Consolidated Balance Sheet                        3

         Condensed Consolidated Statement of Operations              4

         Condensed Consolidated Statements of Stockholders'
           Equity                                                    5

         Condensed Consolidated Statement of Cash Flows              6

      Notes to the Financial Statements                              7


      ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS             8

      ITEM 3.       CONTROLS AND PROCEDURES                         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,
                                   2007           2007
                               (Unaudited)         *
                              ----------     ----------
  Current Assets
    Cash                     $   147,362    $    42,328
    Accounts receivable       11,654,054     10,706,418
    Prepaid expenses and
    other current assets         371,195        436,778
    Deferred tax asset -
    current                      157,959        157,959
                              ----------     ----------
  Total current assets        12,330,570     11,343,483

  Property, plant and
  equipment                    2,027,899      1,951,205
  Less:  Accumulated
  depreciation                 1,179,584      1,110,518
                              ----------     ----------
  Net property, plant and
  equipment                      848,315        840,687

  Goodwill, including
  acquisition cost, net          535,108        535,108
  Other assets                    44,748         48,336
                              ----------     ----------
  Total assets               $13,758,741    $12,767,614
                              ==========     ==========

            LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts payable         $ 5,326,749    $ 5,538,842
    Accrued expenses           2,602,451      1,926,083
    Short-term bank            2,300,000      1,900,000
    borrowings
    Income taxes payable         113,149        154,005
    Notes/leases payable -
    current portion               73,929         92,676
                              ----------     ----------
  Total current liabilities   10,416,278      9,611,606

  Deferred tax liability -
  non current                     94,768         94,768
  Long term portion of
  notes/leases payable         2,286,730      2,286,730

    Stockholders' equity
    Common stock                   3,251          3,251
    Retained earnings            957,714        771,259
                              ----------     ----------
  Total stockholders' equity     960,965        774,510

  Total liabilities and
  stockholders' equity       $13,758,741    $12,767,614
                              ==========     ==========

 *  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,
                                  2007           2006
                              ----------     ----------
  Revenues                   $20,772,619    $22,731,064
  Cost of transportation      14,979,619     15,785,047
                              ----------     ----------
  Net revenue                  5,793,000      6,946,017

  Selling, general and
  administrative expenses      5,368,652      6,211,516
                              ----------     ----------
  Income from operations         424,348        734,501

  Other income (expense):
     Interest, net               (88,926)       (86,050)
     Other income (expense)       16,378         (5,040)
                              ----------     ----------
  Income before income tax
  provision                      351,800        643,411

  Provision for income taxes     165,345        302,400

  Net income                   $ 186,455      $ 341,011
                                 =======        =======
  Weighted average common
  shares - basic              32,509,872     32,509,872
  Net income per common
  share - basic                $     .01      $     .01

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

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, 2007    32,509,872  $3,251   $  771,259   $  774,510

 Consolidated net
 profit for the
 three months ended                            186,455      186,455
 December 31, 2007     ----------  -------   ----------  ----------

 Balance at December
 31, 2007              32,509,872  $3,251   $  957,914   $  960,965
                       ==========  =======   ==========  ==========










                             -5-
<PAGE>


         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                         (Unaudited)


                                       Three Months Ended
                                          December 31,
                                         2007       2006
                                     ---------   ----------
  Cash flows from operating
  activities:
  Net income                         $ 186,455    $ 341,011
  Adjustments to reconcile net
  income to net cash provided
    by operating activities:
      Depreciation                      69,065       57,854
      Provision for doubtful
       accounts                         51,653       57,245
      Deferred income taxes
      (Increase) decrease in assets:
          Accounts receivable         (999,290)  (4,156,521)

          Prepaid expenses and other
           assets                       44,712       63,408
       Increase (decrease) in
        liabilities:
          Accounts payable and
           accrued expenses            464,275    3,372,639
          Income taxes payable         (40,854)     230,976
                                     ---------   ----------
  Net cash used for
  operating activities               (223,984)      (33,388)

  Cash flows from investing
  activities:
     Purchase of equipment            (76,695)      (46,506)
     Collection of principal on loan
      to licensee                      24,460        20,550
                                     ---------   ----------
  Net cash used for investing
   activities                         (52,235)      (25,956)

  Cash flows from financing
  activities:
     Borrowings under capital leases
     Repayments under capital leases  (18,747)      (14,387)
     Borrowings under short term
      bank borrowing                  400,000       700,000
     Repayments under short term
      bank borrowing                               (600,000)
                                     ---------   ----------
  Net cash provided by financing
   activities                         381,253        85,613

  Net increase in cash and cash
   equivalents                        105,034        26,269
  Cash and cash equivalents,
  beginning of year                    42,328       111,630
                                     ---------   ----------
  Cash and cash equivalents, end of
   period                            $147,362      $137,899
                                     =========   ==========





         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, 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 2007 Form
10-K filing dated December 27, 2007 (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, 2007 and September 30, 2007 and the results
of operations for the three months ended December 31, 2007
and 2006, respectively.

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































                       -7-
<PAGE>

ITEM 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations.

General Overview

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

     The freight forwarding business of Allstates opened its
first terminal in Newark, New Jersey in 1961.  Allstates provides
domestic and international freight forwarding services to over
1,700 customers utilizing ground transportation, commercial air
carriers, and ocean vessels.  Allstates supplements its freight
forwarding services to include truck brokerage, warehousing and
distribution, and other logistics services.  Allstates operates 22
offices throughout the United States, including the corporate
headquarters, and employs 93 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 21 branch
locations, 14 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 December 31,
                                   2007           2006
                                 --------       ---------
Revenues                            100.0%        100.0%
Cost of transportation               72.1          69.4
                                 --------       ---------
Net revenue                          27.9          30.6

Operating expenses:
  Personnel costs                     8.3           8.1
  License commissions and royalties  12.7          14.1
  Other selling, general and
    administrative expenses           4.9           5.2
                                 --------       ---------
Total operating expenses             25.9          27.4

Operating income                      2.0           3.2
Net interest expense                 (0.4)         (0.4)
Other income/(expense)                0.1           0.0
                                 --------       ---------
Net income before tax provision       1.7           2.8

Tax provision                         0.8           1.3
Net income                            0.9%          1.5%
                                 ========       ==========
              1.5%


                   -8-
<PAGE>


Revenue

Revenue of the Company represents gross consolidated
sales less customer discounts. Total revenue for the quarter
ended December 31, 2007 decreased by approximately $2.0
million, or 8.6%, to $20,773,000, over the quarter ended
December 31, 2006, reflecting lower total volume of shipments
and total weight of cargo shipped.  Domestic revenue was
consistent with the prior year comparative period, increasing by
approximately $42,000 or 0.2%, to $17,045,000, while
international revenue decreased by approximately $2.0 million
or 34.9%, to $3,727,000, versus the previous year.  The
reduction in international volume primarily reflects the
elimination of specific business that was active during the
previous fiscal year period, but since terminated due to the
effects of a customer bankruptcy, the termination of an Allstates
licensee, and a change in a customer's shipping preference.

Net Revenue

Net revenue 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 increased by 2.7%, to
72.1% of sales, for the three months ended December 31, 2007,
in comparison to the same period in the previous year.  The cost
of sales percentage increase primarily reflects more competitive
pricing resulting in an increase in lower margin business as well
as reduced margins on existing business during the quarter.  In
absolute terms, the cost of sales decreased by approximately
$805,000 or 5.1%, to $14,980,000 during the three months
ended December 31, 2007 versus the comparative period in the
prior year, reflecting the decreased sales volume.  Gross margins
decreased to 27.9% during the quarter ended December 31, 2007
from 30.6% in the same quarter of the previous fiscal year.  Net
revenue decreased by approximately $1,153,000, to $5,793,000
for the three months ended December 31, 2007 versus the same
three months of the prior year.


Selling, General and Administrative Expenses

As a percentage of revenue, operating expenses
decreased by 1.4% for the three months ended December 31,
2007 in comparison to the three months ended December 31,
2006, primarily due to a decrease in licensee commissions
expense manifested by the decrease in gross margin percent.  In
absolute terms, operating expenses decreased by approximately
$843,000 or 13.6% during the three-month period ended
December 31, 2007 as compared to the same period in the prior
fiscal year.  The comparative decrease in SG&A expenses
reflects the decrease in sales volume for the quarter, manifested
primarily in lower costs for license commissions, cargo
insurance and bonus expense.

Allstates pays commissions to licensees as compensation
for generating profits to the Company.  Licensee commissions
decreased by approximately $590,000 for the three-month period
ended December 31, 2007 in comparison to the same period in
the previous year.   The lower expense is primarily due to the net
decrease in gross profit at our licensee owned stations, as well as
the termination of one of our licensee agreements during the
second quarter of fiscal 2007.  As a percentage of revenue,
licensee commissions and royalties decreased by 1.4%, to 12.7%
of sales during the quarter ended December 31, 2007.

Cargo insurance decreased by approximately $60,000
during the three months ended December 31, 2007 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 lower due to
decreases in those variables.



                   -9-
<PAGE>



Personnel expense decreased by approximately
$115,000 during the quarter ended December 31, 2007 as
compared to the same quarter of the previous fiscal year,
primarily reflecting a $172,000 bonus accrual made during the
quarter ended December 31, 2006 that was not accrued during
the quarter ended December 31, 2007.  Allstates management
will record a similar expense in the second quarter of fiscal 2008
when those bonuses are paid.  Conversely, operations personnel
salaries increased by approximately $68,000 during the quarter
as headcount was increased at certain company owned stations to
support their business.

Freight claims expense decreased by approximately
$58,000 during the quarter ended December 31, 2007 as
compared to the quarter ended December 31, 2006, primarily
reflecting claims paid to one customer during the prior year
quarter related to stolen freight from fiscal 2005.

SG&A expenses presented for the three months ended
December 31, 2007 and 2006 are inclusive of expenditures to
related parties totaling $471,789 and $626,625, respectively.

Income From Operations

Operating income decreased during the three months
ended December 31, 2007 by approximately $310,000, to
$424,000, 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, 2006, the operating
margin for the three month period ended December 31, 2007
decreased by 1.2%, to 2.0% of sales.

Net Interest Expense

            Net interest expense increased by approximately $3,000
during the three months ended December 31, 2007, to $89,000 in
comparison to the prior year, reflecting the combination of higher
average borrowings applied to lower average borrowing rates.

Other income

            Other income totaled approximately $16,000 during the
three months ended December 31, 2007, representing
weekly payments totalling $22,000 received from a terminated licensee
as part of the separation agreement, offset by approximately $6,000
foreign exchange losses.

Net Income

Income before income taxes decreased to $352,000
during the quarter ended December 31, 2007, versus $643,000
during the same period in the prior year.  The Company recorded
a tax provision of approximately $165,000 for the quarter ended
December 31, 2007 as compared to a tax provision of $302,000
for quarter ended December 31, 2006.  Net income after tax
amounted to approximately $187,000 or 0.9% of revenues
during the first quarter of Fiscal 2008 versus net income of
approximately $341,000 or 1.5% of revenues in the first quarter
of Fiscal 2007.


Liquidity and Capital Resources

            Net cash used for operating activities was approximately
$54,000 for the three months ended December 31, 2007
compared to net cash used for operations of approximately
$33,000 for the three months ended December 31, 2006.  For the
three months ended December 31, 2007, cash was used to
finance the $999,000 increase in accounts receivable, as well as a
$41,000 decrease in income tax payable, offset by
the $464,000 increase in accounts payable, and net income, net of non-cash
charges, which totaled $307,000.  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.

                  -10-
<PAGE>

At December 31, 2007, the Company had cash of
$147,000 and net working capital of $1,914,000, compared with
cash of $138,000 and net working capital of $1,735,000
respectively, at December 31, 2006.   The increase in working
capital at December 31, 2007 versus December 31, 2006 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, 2007 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, 2007,
capital expenditures amounted to approximately $77,000.
Capital expenditures amounted to approximately $47,000 for the
three months ended December 31, 2006.

            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 extends to May 28, 2008,
interest on outstanding borrowings accrues at the banks prime
rate of interest (7.25% at December 31, 2007).  During the
quarter ended December 31, 2007, Allstates borrowed $400,000
from the bank credit line.  Outstanding borrowings on the line of
credit at December 31, 2007 and 2006 were $2,300,000 and
$1,900,000, respectively.


Forward Looking Statements

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

                  -11-
<PAGE>



ITEM 3           CONTROLS AND PROCEDURES

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

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


 PART II

 OTHER INFORMATION


 ITEM 1           LEGAL PROCEEDINGS
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 indicated that the monitoring wells were
destroyed and that abandonment was not feasible.

            In order to resolve the matter administratively with DEP,
Allstates was required to proceed through NJDEP's Notice of
Non-Compliance process for lost or destroyed wells.  This
process required that the party demonstrate that it made an
appropriate effort to find and properly abandon the wells, but
that abandonment was 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.  We were successful in
proceeding through the NJDEP's Notice of Non-Compliance
process.  In lieu of the proper abandonment, DEP assessed a
penalty of $3,000 ($1,000 per well), which amount has been paid
by the site purchaser.  No further costs will be incurred to
address this issue, which is now fully resolved.

            On March 21, 2007, DEP issued a letter requiring the
submission of a Biennial Certification concerning the
groundwater Classification Exception Area ("CEA") established
for the site at the time of the 2002 No Further Action Letter.
The CEA projected when remaining groundwater contamination
would naturally degrade and groundwater would comply with
DEP's groundwater cleanup standards.  The request was
unexpected given DEP's prior indications that it would not
require Biennial Certifications on closed matters.  The Biennial
Certification was submitted to DEP on September 14, 2007, and
was approved by DEP, but required that Allstates conduct
groundwater sampling to demonstrate that groundwater now
complies with DEP's groundwater cleanup standards.

                  -12-
<PAGE>

            Carpenter Environmental Associated, Inc. ("Carpenter")
collected groundwater samples on November 30, 2007 and the
sample result came back well above the NJDEP standard for
acceptable benzene level.  Because the sample taken contained a
great deal of sediment, this could have resulted in elevated levels
in the analysis.  Allstates will arrange to install a well on the
property to try to obtain a cleaner sample for submission to the
state.  Allstates counsel has received proposals to install the
permanent monitoring well, perform two additional rounds of
sampling, and prepare a closure report for submission to the
NJDEP should the benzene levels come back below NJDEP
standards during both sample rounds.  The cost for this service
would be approximately $11,000 to $15,000.

            If the additional rounds of sampling continue to come
back above NJDEP standards, DEP will require submission of a
revised CEA projecting when contamination will naturally
degrade followed by sampling to confirm the accuracy of the
new projection and reporting of the data.  The estimated costs of
the revised CEA, should it be required, and the associated
sampling and reporting, is approximately $15,000 to $25,000, up
to $6,000 of which is to be reimbursed by the purchaser pursuant
to the Agreement of Sale.

            Should a revised CEA be required, Biennial
Certifications will be required to be submitted every two years at
a cost of approximately $2,500 to $4,000.  Purchaser is obligated
to reimburse Allstates up to $3,000 per year of these costs unless
otherwise exhausted.  The number of Biennial Certifications that
may need to be submitted under those circumstances cannot be
predicted.

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 has
responded to their requests for information.  Any costs incurred
by Allstates in connection with the current year issues will be
pursued from its insurance carriers.  Company counsel will defer
further settlement discussions with the insurance carriers until
groundwater is confirmed to meet DEP cleanup standards.


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 alleged
breach of contract and tortious behavior in connection with a
shipment of equipment handled by the Company. The plaintiff
alleged that it was damaged in the amount of $139,379,
which it sought to recover.  The plaintiff has reserved the right to
seek punitive damages in the amount of $400,000.

On June 11, 2007, the parties entered into a written Settlement
Agreement pursuant to which the Company agreed to pay
plaintiff the sum of $10,600 in full settlement of its claim, while
at the same time the plaintiff agreed to pay the Company the sum
of $5,362 for outstanding freight charges, for a net recovery
by plaintiff of $5,238. The Company's insurance carrier paid
the full amount of the settlement payment ($10,600) to plaintiff
(less the applicable $1,000 deductible).

On June 19, 2007, the Court dismissed the action, with
prejudice, pursuant to a Joint Stipulation of Dismissal.










                  -13-
<PAGE>


Allstates Air Cargo, Inc. v. Dan Gustafson & C.A.S.S. Group,
Inc.

On or about January 15, 2007, the Company's subsidiary
Allstates Air Cargo, Inc. ("AAC") received a letter from
C.A.S.S. Group, Inc. ("C.A.S.S."), its licensee in Minnesota and
parts of Wisconsin, allegedly declaring AAC in default under the
parties' September 20, 1999 Licensing Agreement. The letter
alleged that AAC was wrongfully competing with C.A.S.S. in its
exclusive territory, that AAC had failed to pay C.A.S.S. certain
amounts said to be due under the Licensing Agreement, that
AAC had promised to pay for certain computer equipment and
had failed to, and that AAC had promised to make certain sales
materials and promotional items available to C.A.S.S. at AAC's
cost and had failed to. In the letter, C.A.S.S. stated that if AAC
failed to cure these alleged defaults by February 15, 2007,
C.A.S.S. would exercise its alleged right to terminate the
Licensing Agreement.

On or about January 31, 2007, AAC commenced an arbitration
proceeding against C.A.S.S. and its principal, Dan Gustafson
("Gustafson"), under the auspices of the American Arbitration
Association, in East Providence, RI, under Claim Number 14
125 00174 07 (the "Arbitration Proceeding"), in which AAC
sought a declaration that AAC was not in default, that AAC had
cured any existing default, and/or that any existing default was
immaterial and was not a basis for termination of the Licensing
Agreement.

By letter dated February 19, 2007, C.A.S.S. notified AAC that
C.A.S.S. considered AAC to have failed to cure the alleged
defaults, and that C.A.S.S. was exercising its purported right to
terminate the Licensing Agreement as of the close of business,
February 19, 2007.

On or about February 20, 2007, C.A.S.S. and Gustafson
interposed a Counterclaim in the Arbitration Proceeding against
AAC, and also setting forth a Third-Party Claim against AAC's
president, Sam DiGiralomo ("DiGiralomo"), setting forth, in
substance, the same allegations as in the their letter.

On or about March 30, 2007, the parties settled their dispute
pursuant to a written Settlement Agreement, pursuant to which
the Licensing Agreement was terminated in return for a series of
payments to the Company over a period.


 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, 2008
             Sam DiGiralomo, President and CEO


 BY:             /s/ Craig D. Stratton
             DATED:       February 14, 2008
             Craig D. Stratton,
             CFO, Secretary,
             Treasurer and Principal Financial Officer


                            -15-