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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, 2003
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ______.
Commission file number 000-24991
____________________
ALLSTATES WORLDCARGO, INC.
-------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New Jersey 22-3487471
-------------- -------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
4 Lakeside Drive South, Forked River, New Jersey, 08731
----------------------------------------------------------
(Address of principal executive offices)
609-693-5950
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days)
Yes XX No
---- ----
The Company had 32,509,872 shares of common stock, par value $.0001 per
share, outstanding as of February 12, 2004.
1
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
INDEX
PAGE
PART 1. FINANCIAL INFORMATION ----
ITEM 1. FINANCIAL STATEMENTS
Financial Statements with Supplemental Information
For the Period Ending December 31, 2003 and 2002
Financial Statements:
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statement of Operations 4
Condensed Consolidated Statements of
Stockholders' Equity (Deficit) 5
Condensed Consolidated Statement of Cash Flows 6
Notes to the Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS....................... 8
ITEM 3. CONTROLS AND PROCEDURES....................................12
PART II. OTHER INFORMATION.............................................13
ITEM 1 LEGAL PROCEEDINGS..........................................13
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS..................13
ITEM 3 DEFAULTS ON SENIOR SECURITIES..............................13
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........13
ITEM 5 OTHER INFORMATION..........................................13
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K...........................14
SIGNATURES........................................................14
2
PART 1 - FINANCIAL INFORMATION
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
December September
31, 30,
2003 2003
(Unaudited) *
Current Assets
Cash and cash
cash equivalents $342,854 $ 516,639
Accounts Receivable 6,288,227 6,226,209
Prepaid taxes and
other current assets 152,218 155,191
Deferred income taxes 353,000 490,000
---------- ---------
Total current assets 7,136,299 7,388,039
Property, plant and
equipment 1,285,035 1,268,632
Less: Accumulated
depreciation 980,641 943,070
---------- ---------
Net property, plant and
equipment 304,394 325,562
Goodwill, including
acquisition cost, net 535,108 535,108
Other assets 110,371 38,571
---------- ---------
Total assets $8,086,172 $8,287,380
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $3,757,994 $4,336,623
Accrued expenses 1,042,947 823,029
Short-term bank
borrowings 1,149,500 1,149,500
Notes payable 26,937 28,836
---------- ---------
Total current liabilities 5,977,378 6,337,988
Deferred tax liability -
non-current 30,000 25,000
Long term portion of notes
payable 2,386,730 2,386,730
Stockholders' equity
Common stock 3,251 3,251
Retained earnings ( 311,187) (465,689)
---------- ---------
Total stockholders' equity ( 307,936) (462,438)
Total liabilities and
stockholders' equity $8,086,172 $8,287,280
========== ==========
* Condensed from audited financial statements.
The accompanying notes are an integral part of these
consolidated financial statements.
3
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended December
31,
2003 2002
Revenues (net of
discounts) $13,457,620 $13,089,484
Cost of transportation 9,026,301 8,548,925
---------- -----------
Gross profit 4,431,319 4,540,559
Selling, general and
administrative expenses 4,046,888 4,597,220
---------- -----------
Income from operations 384,431 ( 56,661)
Other income (expense):
Interest, net (54,402) (58,343)
Other income 4,973 2,173
---------- -----------
Income before income tax
provision 335,002 (112,831)
Provision for income taxes 180,500 ( 43,012)
Net income $154,502) $( 69,819)
========== ===========
Weighted average common
shares - basic 32,509,872 32,509,872
Net income per common
share - basic $ .00 $ .00
Weighted average common
shares - diluted 32,509,872 32,509,872
Net income per common
share - diluted $ .00 $ .00
The accompanying notes are an integral part of these
consolidated financial statements.
4
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIT)
(Unaudited)
Common Stock
Retained Total
Number Earnings Stockholders'
of Par (Deficit) Equity
Shares Value (Deficit)
___________ ______ _________ _________
Balance at 32,509,872 $ 3,251 $(465,689) $(462,438)
September 30, 2003
Consolidated net
income for the
three months ended
December 31, 2003 154,502 154,502
___________ ______ _________ _________
Balance at December
31, 2003 32,509,872 3,251 $(311,187) $(307,936)
=========== ====== ========= =========
5
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
December 31,
2003 2002
Cash flows from operating
activities:
Net income $154,502 $(69,819)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 37,571 46,256
Amortization 0 1,166
Provision for doubtful
accounts 39,176 50,301
(Gain)/loss on sale of assets (5,300) (2,123)
Deferred income taxes 142,000 (32,200)
(Increase) decrease in assets:
Accounts receivable (101,194) 326,403
Prepaid expenses and other
assets 2,972 (310,373)
Increase (decrease) in
liabilities:
Accounts payable and
accrued expenses (358,710) 145,000
--------- ---------
Net cash (used for) provided by
operating activities (88,983) 154,611
Cash flows from investing
activities:
Purchase of equipment (16,403) ( 24,241)
Proceeds from sale of property
and equipment 5,300 16,338
Deposits (71,800) ( 1,040)
--------- ---------
Net cash used for
investing activities (82,903) ( 8,943)
Cash flows from financing
activities:
Repayments under notes payable ( 1,899) (23,096)
Repayments under short-term
bank borrowings (1,000,000)
Borrowing under short-term
Bank borrowings 800,000
--------- ---------
Net cash used for financing
activities ( 1,899) ( 223,096)
Net (decrease) in cash
and cash equivalents (173,785) ( 77,428)
Cash and cash equivalents,
beginning of year 516,639 173,277
--------- ---------
Cash and cash equivalents, end of
period $ 342,854 $ 95,849
========= =========
The accompanying notes are an integral part of
these consolidated financial statements.
6
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
1. The accompanying unaudited condensed consolidated
financial statements have been prepared by Allstates
WorldCargo, Inc. (the "Company") in accordance with the
rules and regulations of the Securities and Exchange
Commission (the "SEC") for interim financial statements and
accordingly do not include all information and footnotes
required under generally accepted accounting principles for
complete financial statements. The financial statements
have been prepared in conformity with the accounting
principles and practices disclosed in, and should be read in
conjunction with, the annual financial statements of the
Company included in the Company's Fiscal year 2003 Form 10-K
filing dated December 29, 2003 (File No. 000-24991). In the
opinion of management, these interim financial statements
contain all adjustments necessary for a fair presentation of
the Company's financial position at December 31, 2003 and
September 30, 2003 and the results of operations for the
three months ended December 31, 2003 and 2002, respectively.
2. Net income per common share appearing in the statements
of operations for the three months ended December 31, 2003
and 2002, respectively have been prepared in accordance with
Statement of Financial Accounting Standards No. 128 ("SFAS
No. 128"). SFAS No. 128 establishes standards for computing
and presenting earnings per share ("EPS") and requires the
presentation of both basic and diluted EPS. As a result
primary and fully diluted EPS have been replaced by basic
and diluted EPS. Such amounts have been computed based on
the profit or (loss) for the respective periods divided by
the weighted average number of common shares outstanding
during the related periods.
3. The line of credit with the Sun National Bank contains
a covenant pertaining to maintenance of a Debt Service
Coverage Ratio. At December 31, 2003, the Company was in
breach of the Debt Service Coverage Ratio. Under the terms
of the agreement, the bank may call the loan if the Company
is in violation of any restrictive covenant. Per the banks
requirement, Allstates underwent an independent accounts
receivable audit. Based on the results of the audit, the
bank has agreed to waive the covenant default for the period
covering February 28, 2003 to February 28, 2004 when the
covenant will once again go into effect.
4. During the fiscal quarter ended December 31, 2003,
Allstates entered into a ten-year licensee agreement with
another party. This agreement would result in the creation
of a new station in Nashville, Tennessee, the conversion of
the Company-owned Raleigh, North Carolina station to a
licensee operation, and the rights to Atlanta, Georgia
licensee operation. Operations related to this agreement
started January 31, 2004. As part of the agreement,
Allstates WorldCargo agreed to pay a sum of $300,000 to the
licensees as a start-up fee. As of December 31, 2003, the
Company paid one deposit installment of $75,000. The
Company intends to amortize the $300,000 payment over the
ten-year life of the contract.
7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General Overview
Allstates WorldCargo, Inc. (the "Company" or
Allstates") is a New Jersey Corporation formed on January
14, 1997 as Audiogenesis Systems, Inc. (Audiogenesis"),
pursuant to a corporate reorganization of Genesis Safety
Systems, Inc. On August 24, 1999, Audiogenesis acquired 100
percent of the common stock of Allstates Air Cargo, Inc. in
a reverse acquisition, and on November 30, 1999, changed its
name to Allstates WorldCargo, Inc. Allstates is principally
engaged in the business of providing global freight
forwarding and other transportation and logistics services
for its customers. Allstates is headquartered in Forked
River, New Jersey.
The freight forwarding business of Allstates opened its
first terminal in Newark, New Jersey in 1961. Allstates
provides domestic and international freight forwarding
services to over 1,700 customers utilizing ground
transportation, commercial air carriers, and ocean vessels.
Allstates supplements its freight forwarding services to
include truck brokerage, warehousing and distribution, and
other logistics services. Allstates operates 22 offices
throughout the United States, and employs 99 people.
Allstates has agreements with domestic and
international strategic partners and a network of agents
throughout the world, and continues to pursue opportunities
to forge additional strategic alliances in order to increase
its global market share. The Company is a party to several
site licensing agreements in which those licensees have
contracted with Allstates to provide exclusive freight
forwarding services, including sales and operating
functions, under the Allstates name. Of the 22 domestic
locations, 14 are licensee operations, while 8 are company
owned and staffed operations.
Results of Operations
The following table sets forth for the periods
indicated certain financial information derived from the
Company's consolidated statement of operations expressed as
a percentage of net sales:
Three Months Ended December 31,
2003 2002
---- ----
Revenues 100.0% 100.0%
Cost of transportation 67.1 65.3
---- ----
Gross profit 32.9 34.7
Selling, general and
administrative expenses 30.1 35.1
---- ----
Operating income 2.9 (0.4)
==== ====
Net income 1.1% (0.5%)
Revenues
Revenues of the Company represents gross consolidated
sales less customer discounts. Total revenues for the
quarter ended December 31, 2003 increased by $368,000, or
2.8%, to $13,458,000, from the quarter ended December 31,
2002, reflecting a higher volume of shipments and total
weight of cargo shipped. Included in total revenues of the
comparative three month period ended December 31, 2002 was
approximately $1,787,000 of one-time billing to one customer
for the arrangement of international chartered aircraft.
8
The Company was asked to make these special arrangements by
its customer as an emergency response to the backlog of
ocean freight deliveries that resulted from the lock out of
West Coast ports. After discounting the effect of this
isolated billing during the prior year fiscal quarter, the
company's real revenue growth from quarter to quarter was
approximately $2,155,000 or 19.1%. The increase in this
shipping volume can be primarily attributed to the
maturation of the two Florida stations that opened during
the third quarter of fiscal 2002, the addition of a new
licensee location during the second quarter of fiscal 2003,
and the revenues generated by the Allstates truck brokerage
operation which began providing truckload service to
selected customers during the second quarter of fiscal 2003.
Domestic revenues increased by approximately $1.3
million or 14.1%, to $10,126,000 during the three-month
period ended December 31, 2003 in comparison to the same
period in the previous year, for the reasons mentioned
above. International revenues decreased in total by
approximately $884,000 or (21.0%), to $3,331,000, reflecting
the effect of the chartered aircraft service that the
Company provided in the previous fiscal year, offset by
import sales generated by one customer that accounted for
approximately 8.9% of total revenues for the three months
ended December 31, 2003.
Gross Profit
Gross profit represents the difference between net
revenues and the cost of sales. The cost of sales is
composed primarily of amounts paid by the Company to
carriers and cartage agents for the transport of cargo.
Cost of sales as a percentage of revenues increased by 1.8%,
to 67.1%, for the three months ended December 31, 2003, in
comparison to the same period in the previous year. This
higher cost of sales percentage can be attributed to a
combination of factors. The growth of the Company's truck
brokerage business since the second quarter of fiscal 2003
has impacted the overall cost percentage, as it operates at
lower margins than freight forwarding operations. The
addition of certain lower margin customer accounts during
the quarter ended December 31, 2003, including one customer
that accounted for 8.9% of revenues for that period, also
led to the increase in the cost of sales percentage, but is
offset in comparison by the low margin effect of the
chartered airline service the Company provided in the
previous fiscal year quarter. The reduction in revenues
from a previously significant account also contributed to
the increase in the cost percentage. In absolute terms, the
cost of sales increased by approximately $477,000 or 5.6%,
to $9,026,000 during the three months ended December 31,
2003 versus the comparative period in the prior year,
reflecting the increased sales volume. Gross margins
decreased to 32.9% during the quarter ended December 31,
2003 from 34.7% in the same quarter of the previous fiscal
year. Gross profit increased by approximately $109,000 to
$4,431,000 for the three months ended December 31, 2003
versus the same three months of the prior year.
Selling, General and Administrative Expenses
As a percentage of sales, operating expenses decreased
by 5.0% for the three months ended December 31, 2003 in
comparison to the three months ended December 31, 2002,
reflecting a reduction in fixed operating expenses and
licensee commissions in relation to sales. In absolute
terms, operating expenses decreased by approximately
$550,000 or 12.0% during the three-month period ended
December 31, 2003 as compared to the same period in the
prior fiscal year. The comparative decrease in SG&A
expenses is primarily due to lower licensee commission
expense as well as a reduction in personnel costs for the
period.
Allstates pays commissions to licensees as compensation
for generating profits to the Company. Licensee commissions
and royalties paid pursuant to licensee agreements decreased
by approximately $313,000 for the three-month period ended
December 31, 2003 in comparison to the same period in the
previous year, as gross profits generated by licensee
operations decreased, primarily reflecting the impact of the
chartered airline service that the Company provided in the
prior year quarter through one of its licensees.
9
Personnel expenses decreased by approximately $182,000
during the three months ended December 31, 2003 as compared
to the same period of the prior year, primarily reflecting a
reduction in sales and operations personnel during the third
quarter of fiscal 2003 to offset losses that the Company
sustained during the first six months of that fiscal year.
On a net basis, the Company's headcount decreased by 10, to
99 employees at December 31, 2003, compared to December 31,
2002.
Facilities expenses decreased by approximately $23,000
during the quarter ended December 31, 2003 in comparison to
the quarter ended December 31, 2002, primarily driven by
lower telephone and data line expense. Allstate's stations
are connected on a real-time basis via data lines to a
centralized computer system located at the Company's
corporate office. During the first quarter of fiscal 2003,
in order to realize a smoother transmission of data during
high volume periods, the Company converted from T1 data line
service to a frame relay. This process required that both
services run concurrently for a limited period until the
conversion was completed in full. The charges for
concurrent services totaled approximately $30,000, and the
conversion was completed prior to the end of the first
quarter of fiscal 2003.
MIS fees, which represent the expense of maintaining
the computer system and programming modifications to improve
its output and performance, decreased by approximately
$44,000 during the quarter ended December 31, 2003 versus
the same period ended December 31, 2002, primarily
reflecting enhancements to the Company's EDI capability and
streamlining of customer order entry during the previous
fiscal year quarter. Legal fees decreased by approximately
$41,000, partially reflecting increased responsibilities of
the Company's in-house General Counsel.
SG&A expenses presented for the three months ended
December 31, 2003 and 2002 are inclusive of expenditures to
related parties totaling $394,395 and $385,478,
respectively.
Income/(Loss) From Operations
Operating income increased during the three months
ended December 31, 2003 by approximately $441,000, to
$384,000, as compared to an operating loss of $57,000 in the
same three month period in the previous year, for the
reasons indicated above. In comparison to the respective
period in fiscal 2002, the operating margin for the three
month period ended December 31, 2003 increased by 3.3%, to
2.9% of sales.
Interest Expense and Income
Net interest expense decreased slightly for the three
months ended December 31, 2003 by approximately $4,000 as
compared to the same period in the previous year, reflecting
lower interest rates on borrowed funds.
Net Income/(Loss)
Income before income taxes increased to $335,000 during
the quarter ended December 31, 2003 from a loss of
($113,000) during the same period in the prior year. The
Company recorded a tax provision of $181,000 for the quarter
ended December 31, 2003 as compared to a tax benefit of
$43,000 for quarter ended December 31, 2002. Net income
after tax amounted to approximately $155,000 or 1.1% of
revenues during the first quarter of Fiscal 2004 versus a
net loss of ($70,000) or (0.5%) of revenues in the first
quarter of Fiscal 2003.
Liquidity and Capital Resources
Net cash used for operating activities was
approximately $89,000 for the three months ended December
31, 2003, compared to cash flow provided by operations of
approximately $155,000 for the three months ended December
31, 2002. For the three months ended December 31, 2003,
cash was used to finance an increase in accounts receivable
and a decrease in accounts payable, offset by the Company's
profit during the quarter. During the three months ended
10
December 31, 2002, cash was primarily provided by a net
decrease in accounts receivable as collections outpaced
sales, as well as an increase in accounts payable, offset by
an increase in other current assets. In December 2002,
Allstates made a temporary transfer of $300,000 to a bonding
company as security for a legal judgement in the Company's
favor. Those funds were returned in January 2003 in favor
of a letter of credit issued through the Company's bank.
At December 31, 2003, the Company had cash of $343,000
and net working capital of $1,159,000, compared with cash of
$96,000 and net working capital of $1,477,000 respectively,
at December 31, 2002. The decrease in working capital at
December 31, 2003 over December 31, 2002 is primarily
attributable to the Company's net loss during the final
three quarters of fiscal 2003, which includes the partial
write-off of a third party loan, offset by the net profit
during the first quarter of fiscal 2004
The Company's investing activities were comprised of
expenditures for capital equipment, primarily representing
purchases of computer hardware and software. For the three
months ended December 31, 2003, capital expenditures
amounted to approximately $16,000, while capital
expenditures amounted to approximately $24,000 for the three
months ended December 31, 2002.
During the first quarter of fiscal 2004, Allstates
entered into a licensee agreement with another party that
would result in that party owning the rights to three
licensee operations commencing January 31, 2004. As part
of the agreement, Allstates WorldCargo agreed to pay in
installments a sum of $300,000 to the licensees as a start-
up fee. As of December 31, 2003, the Company paid a deposit
of $75,000.
The Company has a commercial line of credit with a
bank, pursuant to which the Company may borrow up to
$2,000,000, based on a maximum of 70% of eligible accounts
receivable. Per the agreement, which expires February 28,
2004, interest on outstanding borrowings accrues at the Wall
Street Journal's prime rate of interest (4.00% at December
31, 2003). The interest rate is predicated on the Company
maintaining a compensating account balance in a non-interest
bearing account equal to at least $230,000. If such average
compensating balances are not maintained, the interest rate
will increase by 1% over the rate currently accruing.
Outstanding borrowings on the line of credit totaled
$1,150,000 as of December 31, 2003. The line of credit with
the bank contains a covenant pertaining to maintenance of a
Debt Service Coverage Ratio. At December 31, 2003, the
Company was in breach of the Debt Service Coverage Ratio.
Per the banks requirement, Allstates underwent an
independent accounts receivable audit. Based on the results
of the audit, the bank has agreed to waive the covenant
default for the period covering February 28, 2003 to
February 28, 2004 when the covenant will once again go into
effect.
In September, 2000, Allstates extended an operating
loan to an unrelated freight and warehouse services company,
Q Logistics Solutions, Inc. ("QLS"), as part of an agreement
that the Company entered into to provide customer invoicing
and vendor disbursement services. The loan was secured by a
$750,000 promissory note signed by the borrower, and for
which a Form UCC-1 financing statement was filed. In
February 2001, QLS filed for Chapter 11 protection under the
U.S. bankruptcy laws. Pursuant to the bankruptcy
proceedings, another company, unrelated to Allstates
WorldCargo, Inc., purchased the assets of QLS in May 2001.
Allstates had outstanding loan advances of approximately
$702,000 to QLS prior to the purchase. As a contingency of
that purchase, Allstates entered in to an agreement with the
other company whereby Allstates assigned the Form UCC-1
filing to them in exchange for their promissory note,
secured by a personal guarantee made by an officer of that
company, to pay the full loan amount of approximately
$702,000, plus 9% interest over six months, beginning in
April 2001. The other company subsequently defaulted on the
loan after having made no payments to Allstates. The
Company filed suit against the other company and the
guarantor for breach of contract, and subsequently the
parties signed a Stipulation of Settlement whereby Allstates
received a judgement against the other company for the full
amount plus interest and attorney's fees. An $80,000
payment in lieu of the personal guarantee was placed in
escrow pending legal review of documentation supplied to the
Company. In January, 2003, the parties came to an agreement
whereby the other company would pay Allstates a total of
$330,000 in full settlement. Payments were scheduled to be
made over four equal monthly installments at $82,500 per
month, including the release of the escrow funds. All
payments were received by the Company as per the schedule.
Allstates recorded a charge of $372,000 during the second
quarter of fiscal 2003, representing the difference between
the receivable and the settlement amount.
11
Forward Looking Statements
The Company is making this statement in order to satisfy the
"safe harbor" provisions contained in the Private Securities
Litigation Reform Act of 1995. The statements contained in
all parts of this document (including the portion, if any,
appended to the Form 10-K) including, but not limited to,
those relating to the availability of cargo space; the
Company's plans for, effects, results and expansion of
international operations and agreements for international
cargo; future international revenue and international market
growth; the future expansion and results of the Company's
terminal network; plans for local delivery services and
truck brokerage; future improvements in the Company's
information systems and logistic systems and services;
technological advancements; future marketing results;
construction of the new facilities; the effect of
litigation; future costs of transportation; future operating
expenses; future margins; any seasonality of the Company's
business; future dividend plans; future acquisitions and the
effects, benefits, results, terms or other aspects of any
acquisition; Ocean Transportation Intermediary License;
ability to continue growth and implement growth and business
strategy; the ability of expected sources of liquidity to
support working capital and capital expenditure
requirements; future expectations; and any other statements
regarding future growth, future cash needs, future
terminals, future operations, business plans, future
financial results, financial targets and goals; and any
other statements which are not historical facts are
forward-looking statements. When used in this document, the
words "anticipate," "estimate," "expect," "may," "plans,"
"project" and similar expressions are intended to be among
the statements that identify forward-looking statements.
Such statements involve risks and uncertainties, including,
but not limited to, those relating to the Company's
dependence on its ability to attract and retain skilled
managers and other personnel; the intense competition within
the freight industry; the uncertainty of the Company's
ability to manage and continue its growth and implement its
business strategy; the Company's dependence on the
availability of cargo space to serve its customers; the
effects of regulation; results of litigation; the Company's
vulnerability to general economic conditions; the control by
the Company's principal shareholder; risks of international
operations; risks relating to acquisitions; the Company's
future financial and operating results, cash needs and
demand for its services; and the Company's ability to
maintain and comply with permits and licenses, as well as
other factors detailed in this document and the Company's
other filings with the Securities and Exchange Commission.
Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those
indicated. The Company undertakes no responsibility to
update for changes related to these or any other factors
that may occur subsequent to this filing.
ITEM 3 CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. The Company's
principal executive officer and principal financial officer, based on their
evaluation of the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days prior to the
filing of this Quarterly Report on Form 10Q, concluded that the Company's
disclosure controls and procedures are adequate and effective for the purposes
set forth in the definition in the Exchange Act rules.
(b) Changes in Internal Controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
the Company's internal controls subsequent to the date of the evaluation.
12
PART II
OTHER INFORMATION
- ------------------
ITEM 1 LEGAL PROCEEDINGS
There has been no material change in our legal proceedings since
the filing of our Form 10-K for the period ended September 30, 2003.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
NONE
ITEM 3 DEFAULTS ON SENIOR SECURITIES
NONE
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5 OTHER INFORMATION
NONE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
13
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ALLSTATES WORLDCARGO, INC.
BY: /s/ SAM DIGIRALOMO DATED: February 13, 2004
--------------------------------- -----------------
Sam DiGiralomo, President and CEO
BY: /s/ Craig D. Stratton DATED: February 13, 2004
--------------------------------- -----------------
Craig D. Stratton, CFO, Secretary,
Treasurer and Principal Financial Officer
-14-