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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, 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 February 14, 2005.
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, 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....................................12
PART II. OTHER INFORMATION.............................................12
ITEM 1 LEGAL PROCEEDINGS..........................................12
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...........................13
SIGNATURES........................................................14
2
PART 1 - FINANCIAL INFORMATION
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
December September
31, 30,
2004 2004
(Unaudited) *
Current Assets
Cash $116,502 $ 114,363
Accounts Receivable, net
of allowance for bad
debt of $299,054 and
$250,394 8,820,110 8,073,391
Prepaid expenses and
other current assets 170,097 119,108
Deferred tax asset -
current 351,000 351,000
---------- ---------
Total current assets 9,457,709 8,657,862
Property, plant and
equipment 1,374,002 1,368,095
Less: Accumulated
depreciation 892,878 860,222
---------- ---------
Net property, plant and
equipment 481,124 507,873
Goodwill, including
acquisition cost, net 535,108 535,108
Other assets 82,640 86,224
---------- ---------
Total assets $10,556,581 $ 9,787,067
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $5,715,588 $5,274,000
Accrued expenses 1,441,752 1,178,377
Short-term bank
borrowings 1,099,500 1,099,500
Notes payable 25,000 25,000
---------- ---------
Total current liabilities 8,281,840 7,576,877
Deferred tax liability -
non-current 78,000 78,000
Long term portion of notes
payable 2,361,730 2,361,730
Stockholders' deficit
Common stock 3,251 3,251
Retained earnings ( 168,240) (232,791)
---------- ---------
Total stockholders' deficit ( 164,989) (229,540)
Total liabilities and
stockholders' deficit $10,556,581 $9,787,067
========== ==========
* 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,
2004 2003
Revenues $16,452,754 $13,457,620
Cost of transportation 11,721,572 9,026,301
---------- -----------
Gross profit 4,731,182 4,431,319
Selling, general and
administrative expenses 4,575,609 4,046,888
---------- -----------
Income from operations 155,573 384,431
Other income (expense):
Interest, net (56,022) (54,402)
Other income -0- 4,973
---------- -----------
Income before income tax
provision 99,551 335,002
Provision for income taxes 35,000 180,500
Net income $ 64,551 $ 154,502
========== ===========
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' DEFICIT
(Unaudited)
Common Stock
Retained Total
Number Earnings Stockholders'
of Par (Deficit) Equity
Shares Value (Deficit)
___________ ______ _________ _________
Balance at 32,509,872 $ 3,251 $(232,791) $(229,540)
September 30, 2004
Consolidated net
profit for the
three months ended
December 31, 2004 64,551 64,551
___________ ______ _________ _________
Balance at December
31, 2004 32,509,872 3,251 $(168,240) $(164,989)
=========== ====== ========= =========
5
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
December 31,
2004 2003
Cash flows from operating
activities:
Net income $ 64,551 $154,502
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 32,655 37,571
Provision for doubtful
accounts 47,643 39,176
(Gain)/loss on sale of assets 0 (5,300)
Deferred income taxes 0 142,000
(Increase) decrease in assets:
Accounts receivable (794,361) (101,194)
Prepaid expenses and other
assets ( 47,406) 2,972
Increase (decrease) in
liabilities:
Accounts payable and
accrued expenses 704,964 (358,710)
--------- ---------
Net cash (used for) provided by
operating activities 8,046 (88,983)
Cash flows from investing
activities:
Purchase of equipment ( 5,907) ( 16,403)
Proceeds from sale of property
and equipment 0 5,300
Deposits 0 (71,800)
--------- ---------
Net cash used for
investing activities ( 5,907) (82,903)
Cash flows from financing
activities:
Repayments under notes payable 0 ( 1,899)
--------- ---------
Net cash used for financing
activities 0 ( 1,899)
Net increase (decrease) in cash
and cash equivalents 2,139 (173,785)
Cash, beginning of year 114,363 516,639
--------- ---------
Cash, end of period $ 116,502 $ 342,854
========= =========
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, 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 2004 Form 10-K
filing dated December 29, 2004 (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, 2004 and
September 30, 2004 and the results of operations for the
three months ended December 31, 2004 and 2003, respectively.
2. Net income per common share appearing in the statements
of operations for the three months ended December 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.
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 20 offices
throughout the United States, including the corporate
headquarters,and employs 94 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 20 domestic
locations, 12 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,
2004 2003
---- ----
Revenues 100.0% 100.0%
Cost of transportation 71.2 67.1
---- ----
Gross profit 28.8 32.9
Operating Expenses:
Personnel Costs 10.1 11.9
License commissions and
royalties 11.3 10.9
Other selling, general and
administrative expenses 6.5 7.2
---- ----
Total operating expenses 27.9 30.0
Operating income 0.9 2.9
Interest expense (0.3) (0.4)
Net income before tax provision 0.6 2.5
Tax provision 0.2 1.4
==== ====
Net income 0.4% 1.1%
8
Revenues
Revenues of the Company represents gross consolidated
sales less customer discounts. Total revenues for the
quarter ended December 31, 2004 increased by $3.0 million,
or 22.3%, to $16,453,000, over the quarter ended December
31, 2003, reflecting a higher volume of shipments and total
weight of cargo shipped. The increase in revenues primarily
reflects volume growth at some of our existing stations as
well as new volume generated by the addition of a licensee
operation in the second quarter of fiscal 2004. Higher
sales volume within the Allstates truck brokerage operation
also accounted for some of the overall increase in revenues.
Domestic revenues increased by approximately $3.6
million or 35.4%, to $13,712,000 during the three-month
period ended December 31, 2004 in comparison to the same
period in the previous year, reflecting higher shipping
volume for the reasons mentioned above. Included in this
category were sales to one customer that accounted for 9.9%
of total revenues. International revenues decreased by
approximately $590,000 or (17.70%), to $2,741,000, primarily
due to import sales generated by one customer during the
three months ended December 31, 2003 that accounted for
approximately $1.2 million, and which was not sustained in
to the quarter ended December 31, 2004.
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 71.2%, for the three months ended December 31, 2004, in
comparison to the same period in the previous year. This
higher cost of sales percentage can be attributed to a
combination of factors, including the effect of increases in
fuel costs as they affect carrier rates, an increase in
deferred shipments versus priority, and the growth of
significant lower margin business that the Company attained
during fiscal 2004. In absolute terms, the cost of sales
increased by approximately $2.7 million or 29.9%, to
$11,722,000 during the three months ended December 31, 2004
versus the comparative period in the prior year, reflecting
the increased sales volume. Gross margins decreased to
28.8% during the quarter ended December 31, 2004 from 32.9%
in the same quarter of the previous fiscal year. Gross
profit increased by approximately $300,000 to $4,731,000 for
the three months ended December 31, 2004 versus the same
three months of the prior year.
Selling, General and Administrative Expenses
As a percentage of sales, operating expenses decreased
by 2.3% for the three months ended December 31, 2004 in
comparison to the three months ended December 31, 2003,
reflecting the growth rate in sales in relation to fixed
operating expenses, primarily those related to personnel and
company facilities. In absolute terms, operating expenses
increased by approximately $529,000 or 13.1% during the
three-month period ended December 31, 2004 as compared to
the same period in the prior fiscal year. The comparative
increase in SG&A expenses is primarily due to higher license
commission and royalty expense as well as higher legal
expense.
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 $389,000 for the three-month period ended
December 31, 2004 in comparison to the same period in the
previous year, reflected by higher gross profits at some
existing licensee operations as well as the addition of one
licensee operation during the second quarter of fiscal 2004.
Legal fees increased during the three months ended
December 31, 2004 in comparison to the same period of the
prior year by approximately $133,000. The increased expense
primarily reflects Allstates defense and settlement effort
related to an action commenced by a majority shareholder
against the Company during the fourth quarter of fiscal
2004.
9
SG&A expenses presented for the three months ended
December 31, 2004 and 2003 are inclusive of expenditures to
related parties totaling $483,906 and $394,395,
respectively.
Income From Operations
Operating income decreased during the three months
ended December 31, 2004 by approximately $229,000, to
$156,000, from an operating profit of $384,000 in the same
three month period in the previous year, for the reasons
indicated above. In comparison to the respective period
ended December 31, 2003, the operating margin for the three
month period ended December 31, 2004 decreased by 2.0%, to
0.9% of sales.
Interest Expense and Income
Interest expense increased slightly for the three
months ended December 31, 2004 by approximately $2,000 as
compared to the same period in the previous year, reflecting
higher interest rates on borrowed funds.
Net Income/(Loss)
Income before income taxes decreased to $100,000 during
the quarter ended December 31, 2004, versus $335,000 during
the same period in the prior year. The Company recorded a
tax provision of $35,000 for the quarter ended December 31,
2004 as compared to a tax provision of $181,000 for quarter
ended December 31, 2003. Net income after tax amounted to
approximately $65,000 or 0.4% of revenues during the first
quarter of Fiscal 2005 versus net income of $155,000 or 1.1%
of revenues in the first quarter of Fiscal 2004.
Liquidity and Capital Resources
Net cash provided by operating activities was
approximately $8,000 for the three months ended December 31,
2004, compared to cash used for operations of approximately
$89,000 for the three months ended December 31, 2003. For
the three months ended December 31, 2004, cash was provided
by the net income of the company, offset by the net effect
of increases in accounts receivable and accounts payable
that reflect the growth in sales volume during the period as
compared to the same period of the previous year. 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.
At December 31, 2004, the Company had cash of $117,000
and net working capital of $1,176,000, compared with cash of
$343,000 and net working capital of $1,159,000 respectively,
at December 31, 2003. The change in working capital at
December 31, 2004 over December 31, 2003 is primarily
attributable to the Company's net income during the
preceding twelve months, offset by payments made in
connection with a licensee agreement that Allstates entered
in to in fiscal 2004.
During the quarter ended December 31, 2003, 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 paid in installments a
sum of $300,000 to the licensees as a start- up fee. As of
the quarter ended December 31, 2003, the Company paid an
installment deposit of $75,000, with the balance paid during
the second and third quarters of fiscal 2004. Allstates has
capitalized this expenditure as a leasehold improvement and
will depreciate it over the ten- year life of the contract.
10
In addition to the leasehold improvement payment, 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, 2004, capital expenditures
amounted to approximately $6,000, while capital expenditures
amounted to approximately $16,000 for the three months ended
December 31, 2003.
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 29,
2006, interest on outstanding borrowings accrues at the Wall
Street Journal's prime rate of interest (5.25% at December
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
$1,100,000 and $1,150,000 at December 31, 2004 and 2003,
respectively.
Forward Looking Statements
The Company is making this statement in order to satisfy the
"safe harbor" provisions contained in the Private Securities
Litigation Reform Act of 1995. The statements contained in
all parts of this document (including the portion, if any,
appended to the Form 10-K) including, but not limited to,
those relating to the availability of cargo space; the
Company's plans for, effects, results and expansion of
international operations and agreements for international
cargo; future international revenue and international market
growth; the future expansion and results of the Company's
terminal network; plans for local delivery services and
truck brokerage; future improvements in the Company's
information systems and logistic systems and services;
technological advancements; future marketing results;
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.
11
ITEM 3 CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. The
Company's principal executive officer and principal
financial officer, based on their evaluation of the
Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) as of a date within 90
days prior to the filing of this Quarterly Report on Form
10Q, concluded that the Company's disclosure controls and
procedures are adequate and effective for the purposes set
forth in the definition in the Exchange Act rules.
(b) Changes in Internal Controls. There were no significant
changes in the Company's internal controls or in other
factors that could significantly affect the Company's
internal controls subsequent to the date of the evaluation.
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Joseph M. Guido, v. Allstates WorldCargo, Inc., Sam
DiGiralomo, Barton C. Theile, and Craig D. Stratton
On October 14, 2004, the 56.91% majority shareholder of the
Company (the "Shareholder") (also employed by the Company as
its Chairman) commenced an action against the Company and
three of the Company's directors, entitled "Joseph M. Guido
v. Allstates WorldCargo, Inc., Sam DiGiralomo, Barton C.
Theile, and Craig D. Stratton," in the Superior Court of New
Jersey, Chancery Division, Ocean County, bearing Docket No.
OCN- C -305-04. (Messrs. DiGiralomo, Theile, and Stratton
are also employed by the Company as its President and Chief
Executive Officer, its Executive Vice President and Chief
Operating Officer, and its Chief Financial Officer.) The
Shareholder alleged that in accordance with state law, on
August 16, 2004, he had delivered to the Company's Secretary
(1) an executed Written Consent in Lieu of a Special Meeting
of the Stockholders of Allstates WorldCargo, Inc. dated
August 16, 2004 (the "Written Consent"), (2) Amended and
Restated Bylaws of the Company adopted pursuant to the
Written Consent (the "A&R Bylaws"), and (3) a draft
Information Statement pursuant to Section 14(c) of the 1934
Act (the "Draft Information Statement").
The Shareholder alleged that pursuant to the Written
Consent, he had amended the Company's bylaws to (among other
things) expand the Board of Directors from four members to
seven members, and appointed three persons (alleged to be
independent) to fill the newly created board seats. He
alleged that the Company was required by law to comply with
his demand to notify the shareholders of his action, and
that the Company's failure to do so was a violation of the
law. He also alleged that the three individual defendants,
both as directors and officers, owed the Company and it
shareholders certain fiduciary duties and duty of loyalty to
direct that "appropriate steps" be taken by the Company to
allegedly comply with New Jersey state law "and other
applicable law" in response to the Written Consent.
The Majority Shareholder demanded temporary, preliminary,
and injunctive relief enjoining a scheduled special Board of
Directors meeting (the "Special Board Meeting") pending
Company's performance of acts allegedly required by New
Jersey law and by the 1934 Act. The Majority Shareholder
also sought a permanent injunction requiring the Company and
its Secretary to prepare and distribute to the Company's
shareholders all notices allegedly required by state and
federal law in connection with the Written Consent.
Finally, he sought entry of an Order requiring the Company
to file and serve upon him, within seven days after entry of
a permanent injunction, a written report setting forth the
manner and form in which the Company complied with the
injunctions.
12
The Company (and the three individual defendants) opposed
the application for temporary relief upon the grounds that
subsequent to his execution of the Written Consent, the
Majority Shareholder advised one of the individual
defendants that he had decided not to proceed with his
amendment of the Bylaws or his expansion of the Board of
Directors. Defendants also alleged that the Majority
Shareholder's actions were not in the best interest of the
Company, and were motivated by self-interest, that because
of such concerns, the Company needed time to determine its
obligations under the law, and that the purpose of the
Special Board Meeting (among others) was to consider "issues
pertaining to the request by [the Majority Shareholder] to
file the Schedule 14C presented to the Secretary of the
Corporation."
On October 28, 2004, the parties reached an agreement with
regard to some essential terms of a settlement, pursuant to
which (1) the Company's Board of Directors would not be
expanded except by unanimous consent, (2) the Majority
Shareholder and the individual defendants would enter into a
voting agreement pursuant to which each would agree to vote
his respective shares in the Company for the others as
directors of the Company, (3) the Company would enter into
new employment agreements (the precise terms of which were
to be agreed upon) with the individual defendants (the
existing employment agreements being due to expire on
December 31, 2004), (4) the parties would exchange general
releases, and (5) the Company would, to the extent lawfully
required by the Majority Shareholder's existing employment
agreement, reimburse him for the attorneys fees he incurred
in connection with the action. It was anticipated that the
complete terms of a Settlement would be agreed upon, and
that formal settlement documents would be prepared and
executed. Such formal documentation was prepared and
delivered to the Shareholder's counsel on December 27,
2004. The proposed settlement failed, and the Majority
Shareholder reinstituted his claim against the defendants
on February 10, 2005. A hearing will be held on March 15,
2005 with regard to the Majority Shareholder's proposed
application for temporary restraints.
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, 2005
--------------------------------- -----------------
Sam DiGiralomo, President and CEO
BY: /s/ Craig D. Stratton DATED: February 14, 2005
--------------------------------- -----------------
Craig D. Stratton, CFO, Secretary,
Treasurer and Principal Financial Officer
-14-