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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 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
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
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
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
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
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)
=========== ====== ========= =========
5
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
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
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
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
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
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
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
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
PART II
OTHER INFORMATION
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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
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-