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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2002
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ______.
Commission file number 000-24991
____________________
ALLSTATES WORLDCARGO, INC.
-------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New Jersey 22-3487471
-------------- -------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
4 Lakeside Drive South, Forked River, New Jersey, 08731
----------------------------------------------------------
(Address of principal executive offices)
609-693-5950
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days)
Yes XX No
---- ----
The Company had 32,509,872 shares of common stock, par value $.0001 per
share, outstanding as of February 12, 2002.
1
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
INDEX
PAGE
PART 1. FINANCIAL INFORMATION ----
ITEM 1. FINANCIAL STATEMENTS
Financial Statements with Supplemental Information
For the Period Ending December 31, 2002 and 2001
Financial Statements:
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statement of Operations 4
Condensed Consolidated Statements of
Stockholders' Equity (Deficit) 5
Condensed Consolidated Statement of Cash Flows 6
Notes to the Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS....................... 8
ITEM 3. CONTROLS AND PROCEDURES....................................12
PART II. OTHER INFORMATION.............................................13
ITEM 1 LEGAL PROCEEDINGS..........................................13
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS..................13
ITEM 3 DEFAULTS ON SENIOR SECURITIES..............................13
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........13
ITEM 5 OTHER INFORMATION..........................................13
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K...........................14
SIGNATURES........................................................14
2
PART 1 - FINANCIAL INFORMATION
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
December September
31, 30,
2002 2002
(Unaudited) *
Current Assets
Cash and cash
cash equivalents $ 95,849 $ 173,277
Accounts Receivable 5,376,027 5,752,732
Prepaid taxes 218,581 199,977
Prepaid expenses and
other current assets 1,094,918 803,149
Deferred income taxes 93,799 81,999
---------- ---------
Total current assets 6,879,174 7,011,134
Property, plant and
equipment 1,372,117 1,403,658
Less: Accumulated
depreciation 940,136 935,447
---------- ---------
Net property, plant and
equipment 431,981 468,211
Goodwill 504,016 504,016
Other assets 67,010 67,134
---------- ---------
Total assets $7,882,181 $8,050,495
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $3,173,498 $3,150,565
Accrued expenses 968,241 846,174
Short-term bank
borrowings 1,200,000 1,400,000
Notes payable 60,141 80,720
---------- ---------
Total current liabilities 5,401,880 5,477,459
Deferred tax liability -
non-current 16,600 37,000
Long term portion of notes
payable 2,413,667 2,416,184
Stockholders' equity
Common stock 3,251 3,251
Retained earnings 46,783 116,601
---------- ---------
Total stockholders' equity 50,034 119,852
Total liabilities and
stockholders' equity $7,882,181 $8,050,495
========== ==========
* Condensed from audited financial statements.
The accompanying notes are an integral part of these
consolidated financial statements.
3
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended December
31,
2002 2001
Revenues (net of
discounts) $13,089,484 $ 8,351,228
Cost of transportation 8,548,925 5,102,242
---------- -----------
Gross profit 4,540,559 3,248,986
Selling, general and
administrative expenses 4,597,220 3,160,149
---------- -----------
Income from operations (56,661) 88,837
Other income (expense):
Interest, net (58,343) (53,539)
Other income 2,173 ( 1,095)
---------- -----------
Income before income tax
provision (112,831) 34,203
Provision for income taxes (43,012) 14,500
Net income ($ 69,819) $ 19,703
========== ===========
Weighted average common
shares - basic 32,509,872 32,509,872
Net income per common
share - basic $ .00 $ .00
Weighted average common
shares - diluted 32,509,872 32,509,872
Net income per common
share - diluted $ .00 $ .00
The accompanying notes are an integral part of these
consolidated financial statements.
4
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIT)
(Unaudited)
Common Stock
Other Retained Total
Number Comprehen Earnings Stockholders'
of Par sive (Deficit) Equity
Shares Value Income (Deficit)
(Loss)
___________ ______ _________ _________ _________
Balance at 32,509,872 $ 3,251 $116,602 $119,853
September 30, 2002
Consolidated net
income for the
three months ended
December 31, 2002 (69,819) (69,819)
___________ ______ _________ _________ _________
Balance at December
31, 2002 32,509,872 3,251 $ 0 $ 46,783 $ 50,034
=========== ====== ========= ========= =========
5
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
December 31,
2002 2001
Cash flows from operating
activities:
Net income $(69,819) $ 19,703
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 46,256 56,134
Amortization 1,166 1,166
Provision for doubtful
accounts 50,301 32,620
(Gain)/loss on sale of assets (2,123) 2,511
Deferred income taxes (32,200)
(Increase) decrease in assets:
Accounts receivable 326,403 405,760
Prepaid expenses and other
assets (310,373) (105,418)
Increase (decrease) in
liabilities:
Accounts payable and
accrued expenses 145,000 (541,452)
--------- ---------
Net cash provided by (used for)
operating activities 154,611 (128,976)
Cash flows from investing
activities:
Purchase of equipment (24,241) ( 853)
Proceeds from sale of property
and equipment 16,338 3,300
Security deposits (1,040) 3,080
--------- ---------
Net cash (used for)/provided by
investing activities (8,943) 5,527
Cash flows from financing
activities:
Repayments under notes payable (23,096) (28,775)
Repayments under short-term
bank borrowings (1,000,000) 0
Borrowing under short-term
Bank borrowings 800,000 0
--------- ---------
Net cash used for financing
activities ( 223,096) (28,775)
Net (decrease) in cash
and cash equivalents ( 77,428) (152,224)
Cash and cash equivalents,
beginning of year 173,277 623,925
--------- ---------
Cash and cash equivalents, end of
period 95,849 471,701
========= =========
The accompanying notes are an integral part of
these consolidated financial statements.
6
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002
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 2002 Form 10-K
filing dated December 27, 2002 (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, 2002 and
September 30, 2002 and the results of operations for the
three months ended December 31, 2002 and 2001, respectively.
2. Net income per common share appearing in the statements
of operations for the three months ended December 31, 2002
and 2001, 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 balance sheets of Allstates WorldCargo at December
31, 2002 and September 30, 2002 include a non-trade
receivable of $702,000, pursuant to an agreement the Company
entered in to with a third party company. In September
2000, Allstates had extended an operating loan to an
unrelated freight and warehouse services company, Q
Logistics Solutions, Inc. ("QLS"), as part of an agreement
that the Company entered into to provide customer invoicing
and vendor disbursement services. The loan was secured by a
$750,000 promissory note signed by the borrower, and for
which a Form UCC-1 financing statement was filed. In
February 2001, QLS filed for Chapter 11 protection under the
U.S. bankruptcy laws. Pursuant to the bankruptcy
proceedings, another company, unrelated to Allstates
WorldCargo, Inc., purchased the assets of QLS in May 2001.
At that time, Allstates had outstanding loan advances of
approximately $702,000 to QLS. As a contingency of that
purchase, Allstates entered in to an agreement with the
other company whereby Allstates assigned the Form UCC-1
filing to them in exchange for their promissory note,
secured by a personal guarantee made by an officer of that
company, to pay the full loan amount of approximately
$702,000, plus 9% interest over six months, beginning in
April 2001. The other company subsequently defaulted on the
loan after having made no payments to Allstates. The
Company filed suit against the other company and against the
guarantor for breach of contract, and subsequently the
parties signed a Stipulation of Settlement whereby Allstates
received a judgment against the other company for the full
amount plus interest and attorney's fees.
Subsequent to the quarter ended December 31, 2002, the
parties came to an agreement whereby the other company would
pay Allstates a total of $330,000 in full settlement.
Payments are to be made over four equal monthly installments
at $82,500 per month. The first installment was received by
the Company in February 2003. If the other company defaults
on any of the scheduled payments, the full amount of the
receivable will become due. Allstates will record a charge
in the amount of $372,000 during the second quarter of
fiscal 2003, representing the difference between the
receivable and the settlement amount.
7
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. The Company's business
is comprised of freight forwarding and the distribution and
sales of safety equipment. 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 operates 20 offices throughout the United States,
and employs 109 people.
Allstates has agreements with domestic and
international strategic partners and a network of agents
throughout the world. 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 20 domestic
locations, 9 are licensee operations, while 11 are company
owned and staffed operations.
In September, 2000, Allstates entered in to an
agreement with an unrelated freight and warehousing company
to provide them services which primarily include customer
invoicing and transportation vendor disbursements on
business that they provide to the Company. Per the
agreement, Allstates paid a commission to this company based
on the invoiced amount, less deductions for transportation
cost and a fee for providing the service. In May, 2001, the
assets of that company were purchased by another company
unrelated to Allstates WorldCargo, Inc., and consequently
the service agreement was terminated.
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,
2002 2001
---- ----
Revenues 100.0% 100.0%
Cost of transportation 65.3 61.1
---- ----
Gross profit 34.7 38.9
Selling, general and
administrative expenses 35.1 37.8
---- ----
Operating income (0.4) 1.1
==== ====
Net income (0.5%) 0.2%
Revenues
Revenues of the Company represents gross consolidated
sales less customer discounts. Total revenues for the
quarter ended December 31, 2002 increased by $4,738,000, or
56.7%, to $13,089,000, from the quarter ended December 31,
2001, reflecting a higher volume of shipments and total
weight of cargo shipped. The increase in shipping volume
can be partially attributed to a combination of the addition
of two new stations during the third quarter of fiscal 2002,
as well as the effect of additional sales personnel that
were hired in the third and fourth quarters of fiscal 2002.
Further accentuating the increase in revenues, during the
comparative three month period ended December 31, 2001 sales
volume had decreased in part due to the adverse effects of
the events of September 11, 2001.
8
Included in total revenues of the three month period
ended December 31, 2002 is approximately $1,787,000 of
billing to one customer for the arrangement of international
chartered aircraft. The Company was asked to make these
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. Although Allstates offers
charter airline services to its customers as part of the
normal course of business, it cannot guarantee a recurrence
of that service at that level of billing. International
revenues increased in total by approximately $2.1 million
or 98.2%, to $4,215,000.
Domestic revenues increased by approximately $2.6
million or 42.6%, to $8,874,000 during the three-month
period ended December 31, 2002 in comparison to the same
period in the previous year. Domestic revenues included
sales that were generated from one customer that accounted
for 11.7% of total revenues for the current fiscal year
quarter. Allstates has provided freight services to this
customer for more than two years. Although Allstates is
confident in its ability to continue to provide freight
services to this customer, there is no contractual agreement
in place, and therefore the Company can not guarantee that
this business will continue indefinitely.
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 4.2%,
to 65.3%, for the three months ended December 31, 2002, in
comparison to the same period in the previous year. This
increase is primarily due to the effect of the charter
airline services that Allstates provided to one customer
during the period, which commands a higher cost of sales
percentage than typical freight forwarding services. After
discounting the effect of the charter airline service, the
cost of sales percentage would have increased by 1.4%, to
62.5%. In absolute terms, the cost of sales increased by
approximately $3.4 million or 67.6%, to $8,549,000 during
the three months ended December 31, 2002 versus the
comparative period in the prior year, reflecting the
increased sales volume. Gross margins decreased to 34.7%
during the quarter ended December 31, 2002 from 38.9% in the
same quarter of the previous fiscal year. Gross profit
increased by approximately $1,292,000 to $4,541,000 for the
three months ended December 31, 2002 versus the same three
months of the prior year.
Selling, General and Administrative Expenses
As a percentage of sales, operating expenses decreased
by 2.7% for the three months ended December 31, 2002 in
comparison to the three months ended December 31, 2001,
reflecting higher sales volume in relation to fixed
operating costs. In absolute terms, operating expenses
increased by approximately $1,437,000 or 45.5% during the
three-month period ended December 31, 2002 as compared to
the same period in the prior fiscal year. The increase in
SG&A expenses reflects a combination of the increased volume
of revenues and gross profit during the quarter, represented
primarily by higher commissions expense, the addition of two
company stations, and the overall increase in sales and
operations headcount.
Allstates paid commissions to salespeople, licensees
and an independent sales agent, as compensation for
generating profits to the Company. Licensee commissions and
royalties paid pursuant to licensee agreements increased by
approximately $548,000 for the three-month period ended
December 31, 2002 in comparison to the same period in the
previous year, reflecting the higher level of gross profits
at certain licensee operations. During the third quarter of
fiscal 2002, Allstates signed an agreement with an
independent sales agent whereby the Company pays a
percentage of gross profits earned from revenues generated
by the agent. Allstates paid approximately $77,000 in
commissions to this agent during the three months ended
December 31, 2002.
9
Personnel expenses were higher by approximately
$519,000 during the three months ended December 31, 2002 as
compared to the same period of the prior year. During the
third quarter of fiscal 2002, Allstates opened and staffed
two company-owned stations in Florida, where there had been
no presence in recent years, and also increased sales and
operations staff in other existing locations. On a net
basis, the Company's headcount increased by 22, to 109
employees at December 31, 2002, compared to December 31,
2001.
Facilities expenses increased by approximately $104,000
during the quarter ended December 31, 2002 in comparison to
the quarter ended December 31, 2001, driven by higher
telephone and data line expense as well as higher rent
expense. Allstate's stations are connected on a real-time
basis via data lines to a centralized computer system
located at the Company's corporate office. During the first
quarter of fiscal 2003, in order to realize a smoother
transmission of data during high volume periods, the Company
converted from T1 data line service to a frame relay. This
process required that both services run concurrently for a
limited period until the conversion was completed in full.
The charges for concurrent services totaled approximately
$30,000 during the quarter. The conversion was completed
prior to the end of the first quarter of fiscal 2003,
therefore the Company does not expect any further related
expense. Other telephone expense increased by approximately
$32,000 due to the increase in salespersonnel as well the
addition of the two new stations. Rent expense was
approximately $34,000 higher during the current fiscal year
quarter than in the same quarter of the previous year,
primarily reflecting rental of warehouse space at one of the
new Florida stations. That station provides warehousing
service to one of its customers. Per an agreement with that
customer, the station is guaranteed a minimum profit which
fully covers the rental expense.
MIS fees, which represent the expense of maintaining
the computer system and programming modifications to improve
its output and performance, increased by approximately
$39,000 during the quarter ended December 31, 2002 versus
the same period ended December 31, 2001. Enhancements to
the Company's EDI capability and streamlining of customer
order entry accounted for much of the increase. Other
expenses related to the increase in salesperson headcount
and the opening of the two company stations accounted for
the balance of the increase in SG&A. Auto allowances
increased by approximately $34,000 and travel &entertainment
expense increased by approximately $25,000.
SG&A expenses presented for the three months ended
December 31, 2002 and 2001 are inclusive of expenditures to
related parties totaling $385,478 and $348,790,
respectively.
Income/(Loss) From Operations
Operating income decreased during the three months
ended December 31, 2002 by approximately $145,000, to a loss
of ($57,000), as compared to operating income of $89,000 in
the same three month period in the previous year for the
reasons indicated above. In comparison to the respective
period in fiscal 2001, the operating margin for the three
month period ended December 31, 2002 decreased by 1.5%, to
(0.4%) of sales.
Interest Expense and Income
Net interest expense increased for the three months
ended December 31, 2002 by approximately $5,000 as compared
to the same period in the previous year, reflecting a higher
level of borrowing on the Company's bank line of credit,
offset by lower interest rates.
Net Income/(Loss)
Income before income taxes decreased to a loss of
approximately ($113,000) during the quarter ended December 31,
2002 from a profit of $34,000 during the same period in the
prior year. The Company recorded a tax benefit of $43,000
for the quarter ended December 31, 2002 as compared to a tax
provision of $15,000 for quarter ended December 31, 2001.
The net loss amounted to approximately ($70,000) or (0.5%)
10
of revenues during the first quarter of Fiscal 2003 versus a
net profit of $20,000 or 0.2% of revenues in the first
quarter of Fiscal 2002.
Liquidity and Capital Resources
Net cash provided by operating activities was
approximately $155,000 for the three months ended December
31, 2002, compared to cash flow used for operations of
approximately $129,000 for the three months ended December
31, 2001. For the three months ended December 31, 2002,
cash was provided by a net decrease in accounts receivable
and an increase in accounts payable, offset by an increase
in other current assets. In December 2002, Allstates made a
temporary transfer of $300,000 to a bonding company as
security for a legal judgement in the Company's favor.
Those funds were returned in January 2003 in favor of a
letter of credit issued through the Company's bank. During
the three months ended December 31, 2001, cash was primarily
used to satisfy trade accounts payable and income tax
obligations, offset by a decrease in accounts receivable as
well as the net income of the Company.
At December 31, 2002, the Company had cash and cash
equivalents of $96,000 and net working capital of
$1,477,000, compared with cash and cash equivalents of
$472,000 and net working capital of $1,378,000 respectively,
at December 31, 2001. The increase in working capital at
December 31, 2002 over December 31, 2001 is primarily
attributable to the Company's net income during the prior
twelve month period.
The Company's investing activities were comprised of
expenditures for capital equipment, primarily representing
purchases of computer hardware and software. For the three
months ended December 31, 2002, capital expenditures
amounted to approximately $24,000, while capital
expenditures amounted to approximately $1,000 for the three
months ended December 31, 2001.
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, interest on outstanding
borrowings accrues at the Wall Street Journal's prime rate
of interest (4.25% at December 31, 2002). The interest rate
is predicated on the Company maintaining a compensating
account balance in a non-interest bearing account equal to
at least 10% of the outstanding principal balance. 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 $1,200,000 as of December 31, 2002.
In September, 2000, Allstates extended an operating
loan to an unrelated freight and warehouse services company,
Q Logistics Solutions, Inc. ("QLS"), as part of an agreement
that the Company entered into to provide customer invoicing
and vendor disbursement services. The loan was secured by a
$750,000 promissory note signed by the borrower, and for
which a Form UCC-1 financing statement was filed. In
February 2001, QLS filed for Chapter 11 protection under the
U.S. bankruptcy laws. Pursuant to the bankruptcy
proceedings, another company, unrelated to Allstates
WorldCargo, Inc., purchased the assets of QLS in May 2001.
Allstates had outstanding loan advances of approximately
$702,000 to QLS prior to the purchase. As a contingency of
that purchase, Allstates entered in to an agreement with the
other company whereby Allstates assigned the Form UCC-1
filing to them in exchange for their promissory note,
secured by a personal guarantee made by an officer of that
company, to pay the full loan amount of approximately
$702,000, plus 9% interest over six months, beginning in
April 2001. The other company subsequently defaulted on the
loan after having made no payments to Allstates. The
Company filed suit against the other company and against the
guarantor for breach of contract, and subsequently the
parties signed a Stipulation of Settlement whereby Allstates
received a judgement against the other company for the full
amount plus interest and attorney's fees. An
$80,000 payment in lieu of the personal guarantee was placed
in escrow pending legal review of documentation supplied to
the Company. In January, 2003, the parties came to an
agreement whereby the other company would pay Allstates a
total of $330,000 in full settlement. Payments are to be
made over four equal monthly installments at $82,500 per
month. The first installment, which primarily represents
the release of the escrow funds, was received by the Company
in February 2003.
11
Forward Looking Statements
The statements contained in all parts of this document
including, but not limited to, those relating to the
availability of cargo space; the Company's overseas presence
and the 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, effects of the Year 2000 issue; Ocean
Transportation Intermediary License; ability to continue
growth and implement growth and business strategy; the
ability of expected sources of liquidity to support working
capital and capital expenditure requirements; future
expectations; and any other statements regarding future
growth, future cash needs, future terminals, future
operations, business plans, future financial results,
financial targets and goals; and any other statements which
are not historical facts are forward-looking statements.
When used in this document, the words "anticipate,"
"estimate," "expect," "may," "plans," "project" and similar
expressions are intended to be among the statements that
identify forward-looking statements. Such statements involve
risks and uncertainties, including, but not limited to,
those relating to the Company's dependence on its ability to
attract and retain skilled managers and other personnel; the
intense competition within the freight industry; the
uncertainty of the Company's ability to manage and continue
its growth and implement its business strategy; the
Company's dependence on the availability of cargo space to
serve its customers; the effects of regulation; results of
litigation; the Company's vulnerability to general economic
conditions; the control by the Company's principal
shareholder; risks of international operations; risks
relating to acquisitions; the Company's future financial and
operating results, cash needs and demand for its services;
and the Company's ability to maintain and comply with
permits and licenses, as well as other factors detailed in
this document and the Company's other filings with the
Securities and Exchange Commission. Should one or more of
these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual outcomes may
vary materially from those indicated. The Company undertakes
no responsibility to update for changes related to these or
any other factors that may occur subsequent to this filing.
ITEM 3 CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. The Company's
principal executive officer and principal financial officer, based on their
evaluation of the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days prior to the
filing of this Quarterly Report on Form 10Q, concluded that the Company's
disclosure controls and procedures are adequate and effective for the purposes
set forth in the definition in the Exchange Act rules.
(b) Changes in Internal Controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
the Company's internal controls subsequent to the date of the evaluation.
12
PART II
OTHER INFORMATION
- ------------------
ITEM 1 LEGAL PROCEEDINGS
In the matter of Allstate's WorldCargo, Inc. v. Logistics Management
Resources, Inc. and Daniel Pixler, Superior Court of New Jersey Law
Division, Ocean County (Docket No. OCN-L-1822-01) in which the Company
asserted a breach of contract, the parties, subsequent to the quarter
ended December 31, 2002, came to an agreement whereby the defendants
would pay Allstates a total of $330,000 in full settlement.
Payments are to be made over four equal monthly installments
at $82,500 per month. The first installment was received by
the Company in February 2003. If the other company defaults
on any of the scheduled payments, the full amount of the
receivable will become due. Allstates will record a charge
in the amount of $372,000 during the second quarter of
fiscal 2003, representing the difference between the
receivable and the settlement amount.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
NONE
ITEM 3 DEFAULTS ON SENIOR SECURITIES
NONE
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5 OTHER INFORMATION
NONE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
13
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, 2003
--------------------------------- -----------------
Sam DiGiralomo, President and CEO
BY: /s/ Craig D. Stratton DATED: February 14, 2003
--------------------------------- -----------------
Craig D. Stratton, CFO, Secretary,
Treasurer and Principal Financial Officer
-14-
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ALLSTATES WORLDCARGO, INC. (the
"Company") on Form 10Q for the period ending December 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Sam DiGiralomo, Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Sam DiGiralomo
Chief Executive Officer
February 14, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ALLSTATES WORLDCARGO, INC. (the
"Company") on Form 10Q for the period ending December 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Craig D. Stratton, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Craig D. Stratton
Chief Financial Officer
February 14, 2003
-15-
CERTIFICATION PURSUANT TO THE
SARBANES-OXLEY ACT
I, Sam DiGiralomo, the Chief Executive Officer of ALLSTATES WORLDCARGO, INC.,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of ALLSTATES WORLDCARGO,
INC.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of my most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: February 14, 2003 /s/ Sam DiGiralomo
-----------------------------
Sam DiGiralomo, Chief Executive Officer
-16-
CERTIFICATION PURSUANT TO THE
SARBANES-OXLEY ACT
I, Craig D. Stratton, the Chief Financial Officer of ALLSTATES WORLDCARGO,
INC., certify that:
1. I have reviewed this quarterly report on Form 10-Q of ALLSTATES WORLDCARGO,
INC.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about the effectiveness
of
the disclosure controls and procedures based on my evaluation as of the
Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of my most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: February 14, 2003 /s/ Craig D. Stratton
-----------------------------
Craig D. Stratton, Chief Financial Officer
-17-