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 MARCH 31, 2004

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


    Commission file number        000-24991
                             ____________________


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


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


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


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


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

Yes  XX      No
    ----         ----

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

Yes          No   XX
    ----         ----

The Company had 32,509,872 shares of common stock, par value $.0001 per
share, outstanding as of May 13, 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 March 31, 2004 and 2003

  Financial Statements:

    Condensed Consolidated Balance Sheet                                 3

    Condensed Consolidated Statement of Operations                       4

    Condensed Consolidated Statements of
        Stockholders' Equity (Deficit)                                   5

    Condensed Consolidated Statement of Cash Flows                       6

  Notes to the Financial Statements                                      7


   ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS....................... 8

   ITEM 3.   CONTROLS AND PROCEDURES....................................13

PART II.  OTHER INFORMATION.............................................14

   ITEM 1    LEGAL PROCEEDINGS..........................................14

   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..........................................15

   ITEM 6    EXHIBITS AND REPORTS ON FORM 8-K...........................14

      SIGNATURES........................................................15


                                     2

<PAGE>
         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED BALANCE SHEET

                           ASSETS

                                March 31,   September 30,
                                  2004           2003
                              (Unaudited)         *
                              ---------      ---------
  Current Assets
    Cash and cash
     equivalents             $  104,574     $  516,639
    Accounts receivable, net
    of allowance for          6,538,766      6,226,209
          bad debt of
    $231,000 and $229,000
    Prepaid expenses and
    other current assets        163,525        155,191
    Deferred income taxes       408,000        490,000
                              ---------      ---------
  Total current assets        7,214,865      7,388,039

  Property, plant and
  equipment                   1,459,047      1,268,632
  Less:  Accumulated
   depreciation                 971,281        943,070
  Net property, plant and
    equipment                   487,766        325,562

  Goodwill, including
    acquisition cost, net       535,108        535,108
  Other assets                   35,371         38,571
                              ---------      ---------
  Total assets               $8,273,110     $8,287,280
                              =========      =========

            LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts payable         $4,141,099     $4,336,623
    Accrued expenses            919,303        823,029
    Short-term bank
     borrowings               1,149,500      1,149,500
    Notes payable                25,000         28,836
                              ---------      ---------
  Total current liabilities   6,234,902      6,337,988

  Deferred tax liability -
   non current                   35,000         25,000
  Long term portion of notes
   payable                    2,386,730      2,386,730

    Stockholders' equity
    Common stock                  3,251          3,251
    Retained deficit           (386,773)      (465,689)
                              ---------      ---------
  Total stockholders' deficit  (383,522)      (462,438)
                              ---------      ---------
  Total liabilities and
  stockholders' deficit      $8,273,110     $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        Six Months Ended
                               March 31,                 March 31,
                            2004       2003         2004          2003
                         ----------  ----------   -----------  -----------
Revenues (net of
discounts)              $12,095,930  $9,693,480   $25,553,550  $22,782,964
Cost of transportation    8,126,150   6,089,074    17,152,451   14,637,999
                         ----------  ----------   -----------  -----------
Gross profit              3,969,780   3,604,406     8,401,099    8,144,965

Selling, general and
administrative expenses   4,043,023   3,975,349     8,089,911    8,572,569
                         ----------  ----------   -----------  -----------
Income (loss) from
   operations             (  73,243)  ( 370,943)      311,188    ( 427,604)

Other income (expense):
   Interest, net            (53,283)  ( 56,530)     ( 107,685)   ( 114,873)
   Gain/(loss) on sale
    of assets               ( 8,887)    (9,046)      (  3,587)   (   6,923)
   Other income/(expense)       327   (372,527)           -0-    ( 372,477)
                         ----------  ----------   -----------  -----------
Income (loss) before
income tax provision       (135,086)  (809,046)       199,916    ( 921,877)

Provision for income
taxes                      ( 59,500)  (355,801)       121,000    ( 398,813)

Net income (loss)         $( 75,586) $(453,245)    $   78,916   $( 523,064)
                         ==========  ==========   ===========  ===========
Weighted average common
shares - basic           32,509,872 32,509,872     32,509,872   32,509,872

Net income per common
 share - basic             $   (.00)$     (.02)    $     (.00)  $     (.02)

Weighted average common
shares - diluted         32,509,872 32,509,872     32,509,872   32,509,872

Net income per common
share - diluted            $   (.00)$     (.02)    $     (.00)  $     (.02)

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
 profit for the
 six months ended
 March 31, 2004                               78,916      78,916
                    ___________  ______  ___________   _________

Balance at March
 31, 2004            32,509,872   3,251    $(386,773)  $(383,522)
                    ===========  ======    =========   =========

</TABLE>


                                 5
<PAGE>




         ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                         (Unaudited)
                                         Six Months Ended
                                            March 31,
                                         2004       2003
  Cash flows from operating
  activities:
  Net income (loss)                $  78,916    $(523,064)
  Adjustments to reconcile net
  income to net cash provided
    by operating activities:
      Depreciation                    77,977       93,239
      Amortization                       -0-        1,166
      Provision for doubtful
        accounts                      73,855      108,809
      (Gain)/loss on sale of assets    3,587        6,923
      Deferred income taxes           92,000     (403,001)
      (Increase) decrease in assets:
          Accounts receivable       (386,412)      82,120
          Prepaid expenses and other
            assets                   ( 8,335)     626,041
       Increase (decrease) in
          liabilities:
          Accounts payable and
           accrued expenses          (99,248)     163,383
                                   ---------    ---------
  Net cash provided by (used for)
  operating activities              (167,660)     155,616

  Cash flows from investing
  activities:
     Purchase of equipment          (257,819)    ( 50,945)
     Proceeds from sale of property
      and equipment                   14,050       21,338
     Deposits                          3,200          775
                                   ---------    ---------
  Net cash (used for)/provided by
  investing activities              (240,569)    ( 28,832)

  Cash flows from financing
  activities:
     Repayments under notes payable  ( 3,836)     (65,953)
     Repayments under short-term
      bank borrowings                    -0-   (1,100,000)
     Borrowing under short-term
      Bank borrowings                    -0-    1,000,000
                                   ---------    ---------
  Net cash used for financing
   activities                     (    3,836)   ( 165,953)

  Net (decrease) in cash
  and cash equivalents             (412,065)     ( 39,169)
  Cash and cash equivalents,
  beginning of year                 516,639       173,277
                                   ---------     ---------
  Cash and cash equivalents, end
    of period                      $104,574      $134,108
                                   =========     =========

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

                                6
<PAGE>
          ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       March 31, 2004

1.   The accompanying unaudited condensed consolidated
  financial statements have been prepared by Allstates
  WorldCargo, Inc. (the "Company") in accordance with the
  rules and regulations of the Securities and Exchange
  Commission (the "SEC") for interim financial statements and
  accordingly do not include all information and footnotes
  required under generally accepted accounting principles for
  complete financial statements.  The financial statements
  have been prepared in conformity with the accounting
  principles and practices disclosed in, and should be read in
  conjunction with, the annual financial statements of the
  Company included in the Company's Fiscal year 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 March 31, 2004 and
  September 30, 2003 and the results of operations for the
  three and six months ended March 31, 2004 and 2003,
  respectively.

2.   Net income per common share appearing in the statements
  of operations for the three and six months ended March 31,
  2004 and 2003, respectively have been prepared in accordance
  with Statement of Financial Accounting Standards No. 128
  ("SFAS No. 128").  SFAS No. 128 establishes standards for
  computing and presenting earnings per share ("EPS") and
  requires the presentation of both basic and diluted EPS.  As
  a result primary and fully diluted EPS have been replaced by
  basic and diluted EPS.  Such amounts have been computed
  based on the profit or (loss) for the respective periods
  divided by the weighted average number of common shares
  outstanding during the related periods.

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  waived the covenant default for the period  covering
  February 28,  2003 to February 28, 2004, and Allstates was
  no longer in breach of the Debt Service Coverage Ratio.
  The  bank  has extended the maturity date of the loan through
  January 31, 2005 and a new covenant is in place.

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
  licensee as a start-up fee.  As of March 31, 2004, the
  Company paid a total of $225,000.  The final payment of
  $75,000 was paid in April 2004.  The Company has capitalized
  this expenditure as a leasehold improvement and is
  depreciating (straight-line) 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 Audio genesis Systems, Inc. ("Audio genesis"),
pursuant to a corporate reorganization of Genesis Safety
Systems, Inc.  On August 24, 1999, Audio genesis 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 95 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       Six Months Ended
                             March 31,                  March 31,
                          2004        2003         2004      2003
                          ----        ----         ----      ----
Revenues                 100.0%      100.0%       100.0%    100.0%
Cost of transportation    67.2        62.8         67.1      64.2
                          ----        ----         ----      ----
Gross profit              32.8        37.2         32.9      35.8

Selling, general and
 administrative expenses  33.4        41.0         31.7      37.7
                          ----        ----         ----      ----
Operating income          (0.6)       (3.8)         1.2      (1.9)
Net income                (0.6)%      (4.7%)        0.3%     (2.3)%

                                8
<PAGE>




Revenues

     Revenues  of  the Company represents gross consolidated
sales  less  customer  discounts.  Total  revenues  for  the
quarter ended March 31, 2004 increased by approximately $2.4
million,  or  24.8%, to $12,096,000, from the quarter  ended
March 31, 2003, reflecting a higher volume of shipments  and
total  weight  of cargo shipped.  Sales for  the  six  month
period ended March 31, 2004 increased by approximately  $2.8
million, or 12.2%, to $25,554,000 compared to the six  month
period  ended  March 31, 2003, for the  same  reasons.   The
increase in the shipping volume during both periods reflects
the  overall growth of the Company, primarily driven by  the
maturation  of  the two Florida stations that opened  during
the  third  quarter  of fiscal 2002,  the  addition  of  new
licensees over the past year, 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 $2,155,000
or 27.4%, to $10,037,000 during the three-month period ended
March  31, 2004 in comparison to the same period  in  the
previous year, and increased by approximately $3,408,000  or
20.3%, to $20,163,000 during the six months ended March  31,
2004  compared  to  the  same  period  in  the  prior  year.
International revenues increased in the three  month  period
ended March 31, 2004 by approximately $247,000 or 13.6%,  to
$2,059,000 in comparison to the same period of the  previous
year.   International sales generated during the six  months
ended March 31, 2004 decreased by approximately $637,000  or
(10.6%),  to  $5,390,000,  reflecting  the  effect  of   the
chartered aircraft service that the Company provided in  the
previous   fiscal  year.  International  revenues   of   the
comparative  six month period ended March 31, 2003  included
approximately  $1.8  million  of  one-time  billing  to  one
customer  for  the  arrangement of  international  chartered
aircraft.   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.


Gross Profit

     Gross  profit  represents the  difference  between  net
revenues  and  the  cost of sales.  The  cost  of  sales  is
composed  primarily  of  amounts  paid  by  the  Company  to
carriers  and  cartage agents for the  transport  of  cargo.
Cost of sales as a percentage of revenues increased by 4.4%,
to  67.2%,  for the three months ended March 31,  2004,  and
increased  by 2.9%, to 67.1% for the six months then  ended,
in  comparison  to the respective periods  in  the  previous
year.   This  higher  cost of sales percentage  during  both
periods can be attributed primarily to increased competition
for   freight   business   in  the   marketplace.    Further
contributing to the increase in the cost of sales percentage
is  the  growth  of  the Company's truck brokerage  business
since  the second quarter of fiscal 2003, as it operates  at
lower  margins  than typical freight forwarding  operations.
The  addition of certain new lower margin business that  the
Company attained during the six months ended March 31,  2004
also  led  to  the increase in the cost of sales percentage.
In   absolute   terms,  the  cost  of  sales  increased   by
approximately $2,037,000 or 33.5%, to $8,126,000 during  the
three   months   ended   March  31,  2004,   and   increased
approximately  $2,514,000 or 17.2%, to $17,152,000  for  the
six  months  then  ended,  versus each  of  the  comparative
periods  in  the prior year, reflecting the increased  sales
volume.  Gross margins decreased to 32.8% during the quarter
ended  March 31, 2004 from 37.2% in the same quarter of  the
previous fiscal year.  For the six month period ended  March
31, 2004, gross margins decreased to 32.9% from 35.8% in the
same   period  of  the  prior  fiscal  year.   Gross  profit
increased  by approximately $365,000 to $3,970,000  for  the
three  months  ended  March  31,  2004,  and  increased   by
approximately $256,000 to $8,401,000 during the  six  months
then  ended, versus the same respective periods of the prior
year.
                                9
<PAGE>

Selling, General and Administrative Expenses

     As  a percentage of sales, operating expenses decreased
by  7.6%  for  the  three months ended  March  31,  2004  in
comparison  to  the  three  months  ended  March  31,  2003,
primarily reflecting a reduction in fixed personnel expenses
and  licensee commissions in relation to total  sales.   For
the  six  month  period  ended  March  31,  2004,  operating
expenses  decreased  as a percentage of  sales  by  6.0%  in
comparison to the six months ended March 31, 2003,  for  the
same   reason.    In  absolute  terms,  operating   expenses
increased by approximately $68,000 or 1.7% during the three-
month  period ended March 31, 2004 as compared to  the  same
period  in the prior fiscal year.  The comparative  increase
in SG&A expenses during this three month period is primarily
due to higher licensee commission expense, under accruals of
legal  and  accounting expenses in prior quarters that  were
adjusted  in  the current quarter, as well as higher  travel
and entertainment expense, offset by reduced personnel costs
for  the  period.  For the six months ended March 31,  2004,
operating  expenses decreased by approximately  $483,000  or
5.6%  compared  to  the same period of the  previous  fiscal
year.   This decrease in SG&A expenses during the six  month
comparative   period  primarily  reflects  a  reduction   in
licensee commissions as well as reduced personnel costs.

     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 $114,000 for the three-month period  ended
March  31,  2004  in comparison to the same  period  in  the
previous  year,  as  gross  profits  generated  by  licensee
operations  increased, primarily reflecting the transfer  of
the  Company's  Raleigh office from  company  station  to  a
licensee-owned station during the current quarter.  Licensee
commissions and royalties decreased for the six months ended
March 31, 2004 by approximately $199,000 in comparison to the
same   period   of  the  previous  fiscal  year,   primarily
reflecting the impact of the chartered airline service  that
the  Company  provided in the prior year  six  month  period
through one of its licensees.

     Personnel expenses decreased by approximately  $121,000
during the three months ended March 31, 2004 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,  as  well  as  the   effect   of
transferring   two  company  stations  to   licensee   owned
operations  during the past year.  For the six months  ended
March  31,  2004, personnel costs decreased by approximately
$268,000 in comparison to the same period of the prior year,
for  the  same  reasons.   On  a net  basis,  the  Company's
headcount  decreased  by 10, to 95 employees  at  March  31,
2004, compared to March 31, 2003.

     Travel and entertainment expense increased for both the
three  and  six  month comparative periods by  approximately
$28,000 and $25,000, respectively, primarily reflecting  the
overall  growth in sales as well as the specific demands  of
some   of  the  Company's  new  business.   Accounting  fees
increased  by approximately $24,000 for both the  three  and
six  month comparative periods, primarily based on an  under
accrual of fees as they related to the fiscal 2003 audit, as
well as an increase in audit rates.

     Legal  fees increased by approximately $35,000 for  the
three months ended March 31, 2004 in comparison to the  same
period  of  the  prior year, primarily reflecting  an  under
accrual  of  expenses in the first quarter of  fiscal  2004.
For  the six months ended March 31, 2004, legal expense  was
comparable to that of the previous fiscal year.

     MIS  fees,  which represent the expense of  maintaining
the computer system and programming modifications to improve
its  output  and  performance,  decreased  by  approximately
$51,000  during  the six month period ended March  31,  2004
versus  the  same  period ended March  31,  2003,  primarily
reflecting  enhancements to the Company's EDI capability and
streamlining  of  customer order entry during  the  previous
fiscal year.

     SG&A  expenses  presented for the  three  months  ended
March  31,  2004  and 2003 are inclusive of expenditures  to
related    parties   totaling   $342,598    and    $330,792,
respectively.   SG&A expenses presented for the  six  months
ended  March 31, 2004 and 2003 are inclusive of expenditures
to   related   parties  totaling  $749,345   and   $716,270,
respectively.

                                10
<PAGE>

Income/(Loss) From Operations

     Operating  income  increased during  the  three  months
ended March 31, 2004 by approximately $298,000, to a loss of
($73,000), as compared to an operating loss of ($371,000) in
the  same three month period in the previous year,  for  the
reasons  indicated above.  In comparison to  the  respective
period  in  fiscal 2003, the operating margin for the  three
month  period  ended March 31, 2004 increased  by  3.2%,  to
(.6%) of sales.

     Operating income increased during the six months  ended
March  31,  2004 by approximately $739,000, to $311,000,  as
compared to an operating loss of ($428,000) in the same  six
month period in the previous year, for the reasons indicated
above.   In  comparison to the respective period  in  fiscal
2003,  the  operating margin for the six month period  ended
March 31, 2004 increased by 3.1%, to 1.2% of sales.

Interest Expense and Income

     Net interest expense decreased slightly for the three
and six months ended March 31, 2004 by approximately $3,000
and $7,000, respectively as compared to the same periods in
the previous year, reflecting lower interest rates on
borrowed funds.

Net Income/(Loss)

     The  loss  before income taxes decreased to  ($135,000)
during  the  quarter ended March 31, 2004  from  a  loss  of
($809,000)  during the same period in the prior  year.   The
Company  recorded a tax benefit of $59,500 for  the  quarter
ended  March  31,  2004 as compared  to  a  tax  benefit  of
$356,000  for quarter ended March 31, 2003.  Net loss  after
tax  amounted to approximately $76,000 or (0.6%) of revenues
during  the second quarter of Fiscal 2004 versus a net  loss
of ($453,000) or (4.7%) of revenues in the second quarter of
Fiscal 2003.

     Income  before income taxes increased to $79,000 during
the  six  months  ended  March  31,  2004  from  a  loss  of
($523,000)  during the same period in the prior  year.   The
Company  recorded a tax provision of $121,000  for  the  six
months ended March 31, 2004 as compared to a tax benefit  of
$399,000  for six months ended March 31, 2003.   Net  income
after  tax  amounted  to approximately $79,000  or  0.3%  of
revenues during the first six months of Fiscal 2004 versus a
net  loss  of ($523,000) or (2.3%) of revenues in the  first
six months of Fiscal 2003.


Liquidity and Capital Resources

     Net    cash   used   for   operating   activities   was
approximately  $168,000 for the six months ended  March  31,
2004,  compared  to  cash  flow provided  by  operations  of
approximately  $156,000 for the six months ended  March  31,
2003.   For  the six months ended March 31, 2004,  cash  was
used  to  finance an increase in accounts receivable  and  a
decrease in accounts payable, offset by the Company's profit
during the period.  For the six months ended March 31, 2003,
cash  was  primarily provided by a combination of a decrease
in  accounts receivable and an increase in accounts  payable
as well as the receipt of loan funds due from a third party,
offset by the net losses of the Company during the period.

     At March 31, 2004, the Company had cash of $105,000 and
net  working  capital  of $980,000, compared  with  cash  of
$134,000 and net working capital of $1,039,000 respectively,
at March 31, 2003.  The decrease in working capital at March
31,  2004  over March 31, 2003 is primarily attributable  to
the  payment  made  in connection with a licensee  agreement
that  Allstates entered in to in fiscal 2004, offset by  the
profits of the Company over the past twelve months.

     The  Company's investing activities were  comprised  of
expenditures  for capital equipment, primarily  representing
purchases  of computer hardware and software.  For  the  six
months  ended March 31, 2004, capital equipment expenditures
amounted    to   approximately   $33,000,   while    capital
expenditures amounted to approximately $51,000 for  the  six
months ended March 31, 2003.

     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 March 31, 2004, the Company paid a total of
$225,000.  Allstates has capitalized this expenditure as a
leasehold improvement and will depreciate it over the ten
year life of the contract.
                                11
<PAGE>

     The  Company  has a commercial line of  credit  with  a
bank,  pursuant  to  which  the Company  may  borrow  up  to
$2,000,000,  based on a maximum of 70% of eligible  accounts
receivable.   Per the agreement, which expires  January  31,
2005, interest on outstanding borrowings accrues at the Wall
Street Journal's prime rate of interest (4.00% at March  31,
2004).   The  interest  rate is predicated  on  the  Company
maintaining a compensating account balance in a non-interest
bearing account equal to at least $230,000.  If such average
compensating balances are not maintained, the interest  rate
will  increase  by  1%  over  the rate  currently  accruing.
Outstanding  borrowings  on  the  line  of  credit   totaled
$1,150,000 as of March 31, 2004.


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.

                                12
<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.

                                     13
<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


                                      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:    May 14, 2004
        ---------------------------------               -----------------
          Sam DiGiralomo, President and CEO




BY:       /s/ Craig D. Stratton               DATED:    May 14, 2004
        ---------------------------------               -----------------
          Craig D. Stratton, CFO, Secretary,
        Treasurer and Principal Financial Officer




                                     -15-