SEC Info - Allstates Worldcargo Inc - ‘10KSB’ for 9/30/99

SEC Info℠

Home

Help

Please Sign In

Allstates Worldcargo Inc – ‘10KSB’ for 9/30/99

On: Wednesday, 1/12/00 · For: 9/30/99 · Accession #: 1009191-0-3 · File #: 0-24991

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 1/12/00  Allstates Worldcargo Inc          10KSB       9/30/99    2:103K                                   Robinson Stephen M/PA

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       42    192K 
 2: EX-27       Financial Data Schedule (Pre-XBRL)                     1      6K

10KSB — Annual Report — Small Business
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Certain Relationships and Related Transactions Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Description of Business Description of Property DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Earnings per Share EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed pursuant to Item 601 of Regulation S-B Financial Statements Legal Proceedings Management Remuneration and Transactions Management's Discussion and Analysis of Financial Condition and Results of Operations Market for the Common Equity and Related Stockholder Matters Security Ownership of Certain Beneficial Owners and Management Submission of Matters to A Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Description of Business
7	Item 2. Description of Property
"	Item 3. Legal Proceedings
8	Item 4. Submission of Matters to A Vote of Security Holders
"	Item 5. Market for the Common Equity and Related Stockholder Matters
"	Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations
14	Item 7. Financial Statements
24	Earnings per Share
34	Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
"	Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
36	Item 10. Management Remuneration and Transactions
38	Item 11. Security Ownership of Certain Beneficial Owners and Management
39	Item 12. Certain Relationships and Related Transactions
40	Item 13. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed pursuant to Item 601 of Regulation S-B

10KSB 1st Page of 42 TOC ↑Top Previous Next ↓Bottom Just 1st
 
UNITED STATES         
SECURITIES AND EXCHANGE COMMISSION          
Washington, DC   20549          

FORM 10-KSB         

(Mark One)                                                                      

[x] ANNUAL REPORT UNDER SECTION 13 0R 13(d) OF THE SECURITIES EXCHANGE ACT      
OF 1934 For the fiscal year ended September 30, 1999                    

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      
ACT 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      
------------------------------------------------------------  
(State or other jurisdiction of incorporation)  

22-3487471    
-------------------------------     
(IRS Employer Identification No.)     

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

7 Doig Road, Suite 3, Wayne, New Jersey   07470   
----------------------------------------------------------  
(Former address of principal executive offices)     

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

None          
----------------------------------------------------------      
(Securities registered pursuant to Section 12(b) of the Act)      

Common Stock Par Value $0.0001 Per Share      
--------------------------------------      
Title of Class      

----------------------------------------------------------      
(Securities registered pursuant to Section 12(g) of the Act)      

Check whether the issuer (1) filed all reports required to be filed by          
Section 13 or 15(d) of the Securities Exchange Act during the past 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 [x]     No [ ]                                                     

Check if there is no disclosure of delinquent filers in response to item 405    
of Regulation S-B contained in this form, and that no disclosure will be        
contained, to the best of the registrant's knowledge, in definitive proxy or    
information statements incorporated by reference in part III of this Form       
10-KSB or any amendment to this Form 10-KSB [X]                                 

State issuer's revenues for its most recent fiscal year: $31,229,694            

The number of shares of Common Stock outstanding as of December 15, 1999 was    
32,509,872 shares.                                                              

At December 15, 1999, the voting stock of the registrant had not been           
publicly quoted.                                                                

Transitional small business format   Yes __ No X                                

1     

10KSB 2nd Page of 42 TOC 1st Previous Next ↓Bottom Just 2nd
PART I                                                                          

ITEM 1.  DESCRIPTION OF BUSINESS                                                

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. ("Genesis").  On August 24, 1999, Audiogenesis acquired 100       
percent of the common stock of Allstates Air Cargo, Inc. in a reverse           
acquisition, and on November 30, 1999, changed its name to Allstates            
WorldCargo, Inc.  The Company's business is now comprised of freight            
forwarding, distribution and sales of safety equipment, and development and     
sales of audio-visual products.  Allstates is headquartered in Forked River,    
New Jersey.                                                                     

 The freight forwarding business of Allstates was founded by Joseph M.
Guido, the Company's Chairman of the Board, with its first terminal opening     
in Newark, New Jersey in 1961. Allstates provides domestic and international    
freight forwarding services to over 1,300 customers utilizing ground            
transportation, commercial air carriers, and ocean vessels. Allstates           
operates 21 offices throughout the United States, including Hawaii, and         
employs 101 people.  In addition, Allstates has a European branch office        
located in London, England that does business as Allstates Allcargo (UK),       
Ltd.                                                                            

Allstates has agreements with domestic and international strategic    
partners and a network of agents throughout the world.  Recently, Allstates     
formed strategic alliances with two established freight forwarding companies.   
The first alliance partner (wholly owned by third parties), trading under the   
name Allstates Allcargo Belgium N.V., has its principle office at the           
Brussels, Belgium airport.  The second recent alliance partner is located in    
Germany and has its principle office in Frankfurt.  Allstates plans to          
increase its global market share by forming additional strategic alliances      
and effecting selective acquisitions.                                           

     Allstates neither owns or nor operates any aircraft or ships.  By not
owning or operating its own equipment, Allstates believes it is able to         
provide more flexible delivery schedules and shipment size.  In addition, by    
eliminating  the substantial fixed expenses associated with the  ownership of   
such equipment, Allstates has been able to effect certain cost savings.         

MARKETING AND LICENSING                                                         

Allstates markets its services through a network of 21 domestic   
offices, its UK operation, its European and South American strategic            
alliances, and selected agents throughout the world.                            

Allstates utilizes a combination of professionally prepared       
advertising materials, highly trained sales and operations/customer services    
professionals, direct mail, assorted promotional items, and audio/visual        
presentations. Allstates maintains 23 full time sales personnel operating       
from 21 domestic offices.  Of the 21 domestic locations, 11 are                 
company-owned, and the remaining 10 are licensees and agents.                   

  Allstates has formed strategic alliances in approximately 10 foreign
countries with which it shares information, customers and  profits.             

Allstates  has completed several site licensing agreements and has
created two new divisions, one of which is GTD Logistics, which is involved     
in ground transportation (trucking).  The other division is called              

2     

10KSB 3rd Page of 42 TOC 1st Previous Next ↓Bottom Just 3rd
Allstates Logistics.  This division holds Ocean Transportation Intermediary     
License No. 15364NF, and is responsible for the ocean freight segment of        
Allstates.                                                                      

INFORMATION SYSTEMS                                                             

   A primary component of Allstates's business strategy is the continued
development of its advanced information systems. Allstates has invested         
substantial management and financial resources in the development of its        
information systems in an effort to provide accurate and timely information     
to its management and customers. Allstates continues to upgrade its             
information systems.  Highlights of the information system are:                 

 o     Real-time information which is available to employees and
          customers, including customer service, operations, sales and
accounting                                        

o     Centralized system located in Forked River, New         
      Jersey, with terminals throughout all offices capable of
            dial-up by customers (through direct dial-up or via Internet),
including internal and external e-mail            

      o    System tracks shipments from pickup order to delivery; confirms
"on-board" and "out for delivery" status          

   o     System can produce the following daily, monthly, and yearly
reports:                                          
(1)     Operations reports (inbound, outbound   
and on-hand reports)            
(2)     Sales reports (revenue, customer        
client list)                    
(3)     Customer reports (POD report, shipping  
history report)                 
(4)     Accounting reports (P&L reports)        

o     System auto rates revenues and costs                    

o     System is capable of EDI (Electronic Data Interchange)  

  o     System is flexible in customizing reports to meet customer
needs                                           

o     System is "bar-code" capable                            

o     System allows customers to dial up and retrieve rate    
quotes and POD information                      

o     System produces shipping labels and computerized        
airbills and airline bills                        

LICENSING AND GOVERNMENT REGULATION                                             

  Allstates is the holder of Ocean Transportation Intermediary License
No. 15364NF, and must be in compliance with the regulations governing such      
certification.  Also, Allstates must be in compliance with the regulations of   
the Federal Aviation Administration that apply to the business of Allstates.    
Allstates believes that it has the resources, expertise and experience to       
continue its compliance with all Federal agencies and regulations.              

    Allstates relies primarily on a combination of copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to   
protect its proprietary technology. For example, Allstates licenses its         
software pursuant to signed license agreements, which impose certain            
restrictions on the licensees' ability to utilize the software. In addition,    
Allstates seeks to avoid disclosure of its trade secrets, including requiring   
those persons with access to Allstates's proprietary information to execute     
confidentiality agreements with Allstates and restricting access to             
Allstates's source code. Allstates seeks to protect its software,               
documentation and other written materials under trade secret and copyright      
laws, which afford only limited protection.                                     

Despite Allstates's efforts to protect its proprietary rights,        
unauthorized parties may attempt to copy aspects of Allstates's products or     
to obtain and use information that Allstates regards as proprietary. Policing   
unauthorized                                                                    

3     

10KSB 4th Page of 42 TOC 1st Previous Next ↓Bottom Just 4th
use of Allstates's products is difficult, and, while Allstates is unable to     
determine the extent to which piracy of its software products exists,           
software piracy can be expected to be a persistent problem. In addition, the    
laws of many countries do not protect Allstates's proprietary rights to as      
great an extent as do the laws of the United States. There can be no            
assurance that Allstates's means of protecting its proprietary rights will be   
adequate or that Allstates's competitors will not independently develop         
similar technology.                                                             

To date, Allstates has not been notified that Allstates's products infringe     
the proprietary rights of third parties, but there can be no assurance that     
third parties will not claim infringement by Allstates with respect to          
current or future products. Allstates expects that software product             
developers will increasingly be subject to infringement claims as the number    
of products and competitors in Allstates's industry segment grows and the       
functionality of products in different industry segments overlaps. Any such     
claims, with or without merit, could be time-consuming, result in costly        
litigation, cause product shipment delays or require Allstates to enter into    
royalty or licensing agreements. Such royalty or licensing agreements, if       
required, may not be available on terms acceptable to Allstates or at all,      
which could have a material adverse effect upon Allstates's business,           
operating results and financial condition.                                      

COMPETITION                                                                     
-----------                                                                     

Allstates competes with other companies in the same business, some of which     
are much larger and have substantially greater resources.  There are            
approximately 1,500 direct competitors of various sizes throughout the          
country.  The methods by which Allstates chooses to compete include highly      
skilled and experienced upper and middle management, a proprietary              
site-licensing program, cost control, professional sales representation,        
highly trained operations and customer service personnel, employee and          
customer premium awards program,  and a wide range of enhanced services. In     
addition, the integration of Audiogenesis' experience and expertise with        
respect to its audio-visual sales and training division and its applications    
for inventory control provides the Company with added benefits for its          
customers.  Allstates also owns its proprietary and customized computer         
software and advanced hardware. Allstates's website is currently under          
construction, and should be completed in the near future.                       

Allstates's major competitors nationwide are Federal Express, BAX, Eagle USA,   
and United Parcel Service.  At each of Allstates's locations, there are         
regional carriers who have strength in the local marketplace.  They, for the    
most part, all provide air, sea and ground services.  Service levels and        
pricing vary substantially based upon geographic and customer volume            
criteria.                                                                       

In order to remain competitive, Allstates negotiates with  its vendors to       
meet the appropriate service and pricing levels in its markets. In addition     
to competitive pricing, Allstates strives to provide its customers, with        
excellent service, highly trained inside operations personnel, and state of     
the art computer services.                                                      

CUSTOMERS                                                                       
---------                                                                       

Allstates has a diverse customer base, with approximately 1,300     
accounts.  Over the 38 years of its operations, Allstates has done business     
with over 25,000 customers.  Some of Allstates's major customers over the       
years have been J.B. Williams, Raytheon, Giorgio Perfume, Cosmair, Ashton       
Tate, Merisel Corporation, Budd Corporation, Home Box Office (a division of     
Time-Warner), Sensormatic, and AT&T.                                            

EMPLOYEES                                                                       
---------                                                                       

As of December 30, 1999, the Company employed a total of 101 individuals.       
Allstates Air Cargo, Inc. and subsidiaries accounted for 99 employees (of       
which 6 are part time), including 54 in operations and                          

4     

10KSB 5th Page of 42 TOC 1st Previous Next ↓Bottom Just 5th
customer service, 23 in sales, marketing and related activities, and 22 in      
administration and finance.  The Audiogenesis Systems division had 2 full-      
time employees.  Allstates's success is highly dependent on its ability to      
attract and retain qualified employees.  The loss of any of the Company's       
senior management or other key sales and marketing personnel could have a       
material adverse effect on Allstates's business, operating results and          
financial condition.                                                            

Pension Plan                                                                    
------------                                                                    

Effective May 1994, the Company adopted a discretionary non-standardized        
401(k) profit sharing plan.  The terms of the plan provide for eligible         
employees ("participants") who have met certain age and service requirements    
to participate by electing to contribute up to the maximum percentage           
allowable not to exceed the limits of Internal Revenue Code Section 401(k),     
404 and 415 (the "Code").  For 1999, the maximum percentage allowed by the      
Code was the lesser of 25% of an employees' compensation of which 15% is tax    
deductible, or $10,000.  The Company may make matching contributions equal to   
a discretionary percentage, as determined by the Company, up to 6% of  a        
participants' salary.  Company contributions vest at the rate of 20% of the     
balance at each employees' third, fourth, fifth, sixth, and seventh             
anniversary of employment.  The employees' contributions are 100% at the time   
of deferral.  The plan also allows employer discretionary contributions         
allocated in accordance with participants' compensation.  The Company did not   
make any discretionary contributions to the plan for the year ended September   
30, 1999.                                                                       

Audiogenesis Systems Division                                                   
-----------------------------                                                   

Sales of Safety Equipment.                                                      

Allstates, trading as Audiogenesis Systems, operates a store which    
distributes safety equipment under the service mark SafeTvend(sm) at a major    
pharmaceutical corporation in the New York area.  Audiogenesis's safety store   
is located on the customer's premises, and sells respirators, hard hats,        
safety glasses, protective clothing, and other similar products which are       
used or worn by the customer's employees to help protect them from industrial   
accidents and injuries.                                                         

Audio-Visual Products                                                           

    During the 1980's, Audiogenesis developed and had marketed the Genesis
System 1000 Employee Safety Training Program.  The system included color        
slides, tape cassette, workbook, poster and associated equipment.  The System   
1000 was copyrighted, and was sold to more than 50 companies, including a       
number of "Fortune 500" corporations.  The System 1000 products, which          
include training presentations for routinely used equipment such as             
respirators, continue to be sold by Audiogenesis from time to time.  However,   
Audiogenesis has no present plans to produce any additional employee safety     
training presentations, emphasizing instead audio-visual presentations for      
sales and marketing programs.                                                   

With the increasing utilization of computers for audio-visual     
presentations, Audiogenesis has broadened its safety training business to       
include developing, producing and presenting customized audio-visual products   
for business presentation.  Prior to its acquisition, Audiogenesis produced     
for Allstates Air Cargo, a customized audio-visual production with respect to   
a sales and marketing presentation.  This production included sales and         
marketing techniques, explanations, advances, and exposure to such subjects     
as a new supplier of telecommunication services, financial services, target     
territories and customers, customer evaluation, promotions and incentives,      
strategic alliances and their import, how to increase the volume of             
international air and ocean freight forwarding, the formation of a trucking     
division, enhanced employee benefits, and detailed information involving        
domestic site licensing agreements and international partners.                  

5     

10KSB 6th Page of 42 TOC 1st Previous Next ↓Bottom Just 6th
  The format used for the presentation involved digital computerized color
projection with sound which was interactive in nature in that several           
individuals (management personnel of the customer) presented various segments   
of the program and were able to interact with the audience throughout the       
presentation.                                                                   

  Audiogenesis plans to begin marketing of its customized presentations by
using direct mail to contact the same customer base that purchased              
Audiogenesis's Genesis System 1000 Employee Training Program.                   

AudioSelectron(sm)                                                              

Audiogenesis has developed a prototype belt-worn device which is      
designed to treat tinnitus by combining treatment by sound generation which     
masks the tinnitus, with stimulation of the affected area with very low         
voltage electrical current.  The Company has determined to defer any further    
development of the AudioSelectron(sm), but will continue to pursue              
opportunities for the device that may be beneficial to the Company.             

Competition                                                                     
-----------                                                                     

Audiogenesis's SafeTvend(sm) store is subject to competition not only   
from companies which would offer similar services on-site at the customer's     
premises, but also from direct distributors and manufacturers of the products   
which would sell directly to such company.  Virtually all of the competitors    
have greater financial, technological, marketing and sales resources than       
Audiogenesis.  There are numerous organizations of varying sizes that engage    
in the business of customized audio-visual presentations, most of these being   
advertising agencies and organizations of similar nature.  There is intense     
competition for such business from a variety of organizations who have          
greater financial, technical, marketing and sales resources than                
Audiogenesis.                                                                   

6     

10KSB 7th Page of 42 TOC 1st Previous Next ↓Bottom Just 7th
ITEM 2.    DESCRIPTION OF PROPERTY                                              

As of September 30, 1999, Allstates occupied approximately 7,000 square feet    
of space in Forked River, New Jersey for its principal administrative, sales    
and marketing support and product development facility.    The Company's        
branch locations, which are located in the vicinity of major metropolitan       
airports, occupy approximately 1,000 to 15,000 square feet.  All such branch    
locations are company leased properties or properties leased by licensee        
owners.  Terms for company leased properties in North America generally run     
from one to five years and are scheduled to expire between fiscal 2000 and      
fiscal 2004.  The Company's facility in the UK is leased for a ten year term    
and is due to expire in fiscal 2009.  Total rent expense for company leased     
facilities is approximately $398,000.00.  Allstates believes that its           
existing facilities are adequate to support its activities for the              
foreseeable future.                                                             

The Company's branch locations as of September 30, 1999 were:         

NORTH AMERICA                                                                   

                                                                [Download Table]
                                                        
Los Angeles, California       Honolulu, Hawaii          
Newark, New Jersey            Houston, Texas            
St. Louis, Missouri           Indianapolis, Indiana     
Kansas City, Missouri         Minneapolis, Minnesota    
Pittsburgh, Pennsylvania      New York, New York        
Atlanta, Georgia              Philadelphia, Pennsylvania
Baltimore, Maryland           Raleigh, North Carolina   
Boston, Massachusetts         San Francisco, California 
Chicago, Illinois             Shreveport, Louisiana     
Dallas, Texas                 Wayne, New Jersey         
San Diego, California                                   

UNITED KINGDOM                                                                  

London, England                                                                 

ITEM 3.  LEGAL PROCEEDINGS                                                      

The Company is involved in an ongoing environmental proceeding.  In December    
1996, five underground storage tanks ("UST's") and two above ground storage     
tanks were removed from a facility in which the Company leases office space.    
Post-excavation sampling results confirmed that certain soil contamination      
remained present after the removals at the location of two of the UST's.        
Also, at the time of the removals, free-floating groundwater contamination      
was observed in the area of these two former UST's.  During 1999, the Company   
engaged Carpenter Environmental Associates to prepare a Preliminary             
Assessment/Site Investigation Report ("PA/SI Report").  Carpenter's PA/SI       
Report stated that the chlorinated groundwater contamination is emanating       
from an off-site source.  The New Jersey Department of Environmental            
Protection approved Carpenter's PA/SI Report and agreed that no further         
investigation of the site was needed.  A Remedial Action Workplan was           
submitted in November 1999.  The Company is awaiting approval from the NJDEP.   
The Company has made claims against their liability insurance carriers for      
coverage.  Due to the uncertain nature and extent of any additional remedial    
activities that may be required regarding the existing site conditions,         
potential future costs cannot be estimated by management or its counsel at      
this time.  If an adverse judgment is entered, the potential effect on the      
consolidated financial position and consolidated results of operations, in      
the period in which resolved, cannot be ascertained at this time, but may be    
material.                                                                       

7     

10KSB 8th Page of 42 TOC 1st Previous Next ↓Bottom Just 8th
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

No matter was submitted, during the Fourth Quarter of the Fiscal Year covered   
by this report, to a vote of security holders through solicitation of proxies   
or otherwise.                                                                   

PART II                                                                         

ITEM 5.    MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS         

The Company's common stock has not yet been publicly traded.  The Company       
anticipates that its common stock will be listed for quotation on the NASD      
OTC Bulletin Board in the near future.                                          

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND      
RESULTS OF 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:                              

                                         Fiscal Year Ended September 30,
                               1999         1998
                                            -----      -----
Revenues                                       100.0%  100.0%                   
Cost of transportation                              60.2          62.7          
                                             -----       -----
Gross profit                                   39.8          37.3               

Selling, general and administrative expenses           36.3       36.2          
                                             -----       -----
Operating income                                      3.5          1.1          
                                             =====       =====
Net income                                            1.5%        0.5%          

Fiscal Year Ended September 30, 1999                                            

Revenues of the Company increased by $5.2 million, or 20.1%, to       
$31,230,000 for the fiscal year ended September 30, 1999 as compared to the     
fiscal year ended September 30, 1998.  The increase in revenues in fiscal       
1999 is primarily due to an increase in the number of shipments and the total   
weight of cargo shipped.  The higher number of shipments and increased weight   
resulted primarily from additional volume generated through increased           
penetration of existing markets and the incremental effect of the addition of   
a key licensee operation in the later part of fiscal 1998.    Revenues          
generated from U.S. freight forwarding operations accounted for approximately   
97% of total sales of the Company.  One customer accounted for approximately    
9.0% of total revenues during fiscal 1999.  Due to circumstances beyond the     
Company's control, sales to that customer ceased during the first quarter of    
fiscal 2000.  No other customer accounted for greater than 4% of total          
revenues.  The Company believes that it can replace the loss of any             
significant account from its customer base but there is no guarantee of that    
occurring.                                                                      

8     

10KSB 9th Page of 42 TOC 1st Previous Next ↓Bottom Just 9th
 The cost of transportation is composed primarily of amounts paid by the
Company to carriers and cartage agents for the transport of cargo.  As a        
percentage of revenues, the cost of transportation decreased by 2.5% in         
fiscal 1999 to 60.2% from 62.7% in the prior fiscal year.  This decrease can    
be significantly attributed to the favorable impact of the introduction of a    
key licensee operation during the later part of fiscal 1998 that had a          
generally lower cost of transportation as a percent of revenues.  In            
addition, a combination of improvements in the Company's methods of providing   
customer freight quotes and more favorable rates negotiated with its carriers   
provided improved gross margins.  Margins may be affected in the future by      
increased fuel costs that are passed on to the Company by its carriers.  The    
Company has been notified recently by some of its international carriers of     
their intent to impose surcharges to cover the higher cost of fuel.  In         
absolute terms, the cost of transportation increased in fiscal 1999 by 15.2%    
to $18,783,000 as a result of the increases in the freight shipped.  Gross      
margins increased to 39.8% in fiscal 1999 from 37.3% in fiscal 1998.  Gross     
profit increased by 28.4% to $12,446,000 in fiscal 1999 from $9,693,000 in      
fiscal 1998.                                                                    

Selling, general and administrative expenses include all personnel    
costs, facilities costs, and licensee commissions.  In fiscal 1999, operating   
expenses increased slightly as a percentage of revenues by 0.1% from fiscal     
1998, to 36.3%, primarily reflecting one time charges incurred by the Company   
to bolster its marketing effort.  In absolute terms, operating expenses         
increased by approximately $1.9 million over the previous fiscal year.          
Licensee commissions increased by approximately $1.5 million in fiscal 1999     
primarily due to the addition of two licensee operations that replaced          
existing company locations in those local markets.  Personnel costs, which      
include all compensation, employee benefits and payroll taxes, decreased in     
total by approximately $0.3 million as compared to the previous year, most      
significantly as a result of the cost savings realized from the replacement     
of those company locations in favor of the licensee operations.  Included in    
this net reduction were higher administrative personnel expenses, which         
increased in fiscal 1999 versus the previous year as the Company added          
personnel to build its corporate infrastructure and support its future growth   
plans. Selling expenses increased by $330,000, reflecting costs incurred for    
marketing presentation and consulting services that were obtained during the    
fiscal year.  Accounting fees were higher in fiscal 1999 as compared to the     
previous year by approximately $102,000, primarily due to a write off of        
$60,000 of capitalized accounting fees that were recorded in prior years.       
General insurance expense increased by approximately $95,000, primarily         
related to higher cargo insurance costs which resulted from the increased       
volume of freight in fiscal 1999.  Bad debt expense increased by                
approximately $99,000 due to the effect of an extraordinary credit to the       
expense that was recorded in fiscal 1998 related to the successful collection   
of a significant outstanding receivable.                                        

Operating income increased by approximately $0.8 million to $1,107,000
in fiscal 1999 as compared to fiscal 1998 for the reasons indicated above.      
Operating margins increased by 2.4% to 3.5% of revenues due to the lower cost   
of transportation as a percentage of revenues as described above.               

Income before income taxes increased to $1,170,000 in fiscal 1999 from
$252,000 in 1998.  The provision for income taxes for fiscal 1999 was           
$689,000 as compared to the provision for income taxes of $131,000 for fiscal   
1998.  Net income amounted to $480,000 in fiscal 1999 versus $121,000 in        
fiscal 1998.                                                                    

Fiscal Year Ended September 30, 1998                                            

 Revenues of the Company increased by $864,000, or 30.4%, to $25,997,000
for the fiscal year ended September 30, 1998 as compared to the fiscal year     
ended September 30, 1997.  The increase in revenues is primarily attributable   
to the full year effect of sales generated from the UK subsidiary, Allstates    
Allcargo (UK) Ltd., which began operations in January 1997.  Total revenues     
generated from U.S. freight forwarding operations                               
9     

10KSB 10th Page of 42 TOC 1st Previous Next ↓Bottom Just 10th
accounted for approximately 97% of total sales of the Company in fiscal 1998.   
Sales to international customers increased to $1.1 million or 18.6% of total    
U.S. revenues from 14.3% of total U.S. revenues during fiscal 1997,             
reflecting the Company's commitment to expand its international markets.        

  The cost of transportation increased by $576,000 in fiscal 1998 over the
previous fiscal year to $16,305,000 as a result of the increase in sales.  As   
a percentage of revenues, the cost of transportation was static from the        
previous year, increasing slightly by 0.1% in fiscal 1998 to 62.7%,             
reflecting the increased sales to international customers, which generally      
have lower gross margins than domestic shipments.  Gross profit increased by    
3.1% to $9,693,000 in fiscal 1998 from $9,405,000 in the previous fiscal        
year.  Gross margins decreased as a percentage of sales in fiscal 1998 by       
0.1% from 37.4% to 37.3%.                                                       

Operating expenses include all personnel costs, facilities costs, and 
licensee commissions.  In fiscal 1998, operating expenses decreased as a        
percentage of revenues by 0.9% to 36.2%, as sales grew at a higher rate than    
operating expenses.  In absolute terms, operating expenses increased by         
$98,000 over the previous fiscal year.  This net increase in operating          
expense is due to a combination of key factors, including the full year         
impact of activity at the Company's branch in the UK, which accounted for       
approximately $140,000 in additional overhead expenses.  Legal expenses         
increased by approximately $211,000 during fiscal 1998 as compared to the       
prior year, as a result of the Company's involvement in certain legal           
matters.    Personnel expenses decreased in fiscal 1998 by approximately        
$338,000 versus the previous fiscal year primarily due to a restructuring of    
sales management responsibilities and the cost savings realized from the        
replacement of a company location in favor of a licensee operation that was     
introduced in June 1998.  The provision for bad debt expense in fiscal 1999     
was lower than the prior comparative period due to a favorable reserve          
adjustment of approximately $131,000 that was recorded on the fiscal 1998       
books subsequent to the legal settlement and collection of outstanding          
receivables.                                                                    

Operating income increased by $190,000 to $276,000 in fiscal 1998 as  
compared to fiscal 1997 for the reasons indicated above.  Operating margins     
increased by 0.8% to 1.1% of revenues primarily due to the lower operating      
expenses as a percentage of revenue as described above.                         

Income before income taxes increased to $252,000 in fiscal 1998 from  
$76,000 in fiscal 1997.  The provision for income taxes for fiscal 1998 was     
$131,000 as compared to a provision for income taxes of $94,000 for fiscal      
1997.  Net income amounted to $121,000 in fiscal 1998 .                         

Liquidity and Capital Resources                                                 

 Cash flows from operations were approximately $1,029,000 for the fiscal
year ended September 30, 1999 compared to $100,000 for fiscal year 1998.  In    
fiscal 1999, cash was provided primarily by the net income of the Company,      
and by an increase in income taxes payable, reflecting the higher earnings      
during the year.  For fiscal 1998, cash flow was primarily provided by the      
net income of the Company and by a decrease in accounts receivable,             
reflecting an improved collections effort, offset by a decrease in accounts     
payable.  Cash flows from operations for both fiscal 1999 and 1998 were         
negatively impacted by the losses generated by the Company's UK subsidiary,     
Allstates Allcargo (UK) Ltd.                                                    

At September 30, 1999, the Company had cash and cash equivalents of   
$407,000 and net working capital of $783,000, compared with cash and cash       
equivalents of $176,000 and net working capital of $416,000 respectively, at    
September 30, 1998.  The increase in working capital at September 30, 1999      
over the respective period in 1998 is primarily attributable to the earnings    
for the year then ended.                                                        

10    

10KSB 11th Page of 42 TOC 1st Previous Next ↓Bottom Just 11th
The Company's investing activities were primarily comprised of        
expenditures for capital equipment, primarily representing purchases of         
computer hardware and software, as well as company owned automobiles used by    
its sales representatives.  For the fiscal year ended September 30, 1999,       
capital expenditures amounted to approximately $258,000, of which               
approximately $174,000 were acquired through notes payable. For the fiscal      
year ended September 30, 1998, capital expenditures totaled approximately       
$225,000, of which approximately $114,000 were acquired through notes           
payable.  In addition, during the fiscal year ended September 30, 1999, the     
Company paid approximately $203,000 for the purchase of one share of            
Allstates Air Cargo, Inc. stock.                                                

Domestically, the Company has a commercial line of credit with a bank,
pursuant to which the Company may borrow up to $1,350,000, based on a maximum   
of 70% of eligible accounts receivable.  Per the agreement, interest on         
outstanding borrowings accrues at the Wall Street Journal's prime rate of       
interest less .25% per annum (8.0% at September 30, 1999).  The interest rate   
is predicated on the Company maintaining a compensating account balance in a    
non-interest bearing account equal to at least 15% of the outstanding           
principal balance.  If such average compensating balances are not maintained,   
the interest rate will increase by 1% over the rate currently accruing.  At     
September 30, 1999, $350,000 of the line of credit was restricted as            
collateral for a letter of credit opened in support of a duty deferment         
guarantee and overdraft facility for the Company's UK branch.  There were no    
outstanding borrowings on the line of credit at September 30, 1999.             

 The Company's branch location in the United Kingdom relies primarily on
its ultimate parent company, Allstates Air Cargo, Inc., for its financial       
support.  In the past, the parent company has provided cash advances in the     
form of loans to the UK branch to support its working capital needs and         
purchase computer equipment.  As of September 30, 1999, the UK branch had       
L269,000 in loans payable to the parent (the equivalent of approximately        
$441,000).  In April 1997, the parent company deposited $165,000 (the US$       
equivalent of L100,000) in a restricted account in a UK bank, bearing           
interest at approximately 5%, as a condition of obtaining a HM Customs and      
Excise bond.  The bond is a requirement to guarantee the payment of VAT and     
excise taxes to UK Customs on cargo imports, which the Company collects from    
its customers.  As of September 30, 1999, those funds, including interest,      
totaled L111,000 (the equivalent of approximately $184,000).  On September      
27, 1999, the UK branch entered in to an agreement with a new bank to provide   
a separate overdraft facility and an HM Customs and Excise bond to replace      
the guarantee provided by the original bank.  The agreement is effective        
through March 31, 2000, and allows the UK branch to draw to a maximum of        
L100,000 (the equivalent of approximately $164,000 @ September 30, 1999).       
Interest is calculated on the cleared daily balance of the account, and is      
payable on the amount owing up to the limit at 3% per annum over the bank's     
base rate (8.25% at September 30, 1999).  The overdraft facility and HM         
Customs guarantee is collateralized by a $350,000 letter of credit opened at    
the Company's US bank.  As of September 30, 1999, the bank overdraft totaled    
L154,494 (the equivalent of approximately $253,000).  Subsequent to the         
fiscal year end, the guarantee funds on deposit at the original bank were       
released by HM Customs and Excise and applied against the overdraft facility    
at the new bank.                                                                

Year 2000 Compliance                                                            

Allstates has addressed the issue of the potential effect that the transition   
from the year 1999 to 2000 may have on its critical information systems.        
This issue relates to the inability of certain software programs, as well as    
the hardware they run on, to properly process date sensitive data for the       
year 2000 and thereafter.  Computer systems that are not corrected may          
experience system failure or a disruption of normal business activities.        

11    

10KSB 12th Page of 42 TOC 1st Previous Next ↓Bottom Just 12th
The Company has taken several measures to improve its overall data processing   
capabilities in the last two years, while preparing for a successful            
transition to the Year 2000.  In 1998, the Company purchased, as part of its    
capital additions budget, an NCR WorldMark 4300 Enterprise Server, which was    
confirmed by the manufacturer as Year 2000 compliant.  The Company's SCO UNIX   
operating system was upgraded to the most up-to-date release during 1999 and    
was reported by the product manufacturer to be Year 2000 ready.  In September   
1999, the most recent version of the underlying database manager, filepro       
RDBMS 4.8 was installed and has been confirmed by its manufacturer that it      
will not produce errors in processing date data in connection with the year     
change. The Company contracted with a third party computer services provider    
to perform an analysis of its filepro software and underlying filepro           
applications to determine where any risk of failure existed and to make         
corrective adjustments.  Those modifications were tested in a simulated Year    
2000 environment in September 1999 and revealed no notable issues.              

Additionally, the Company's e-mail system and faxing software used in system    
applications have been upgraded to the most current versions, which have been   
confirmed as Year 2000 compliant by the respective manufacturers.  Allstates    
relies on these systems for the timely communication of information to its      
network of agents and business partners.                                        

12    

10KSB 13th Page of 42 TOC 1st Previous Next ↓Bottom Just 13th
Throughout 1999, the Company has contacted its significant vendors and          
service providers as well as its largest customers to access their state of     
readiness with the Year 2000 issue.  While the Company cannot verify the        
results of its inquiries of third parties, it has not received any              
information that would suggest any significant issues with its material         
vendors or customers.  However, there can be no guarantee that the systems of   
other companies on which the Company's business relies will be timely           
converted or that failure to convert by another company would not have a        
material adverse effect on the Company and its operations.                      

Allstates does not consider the cost of Year 2000 compliance to be material     
to its financial position, cash flow or results of operations.  The cost of     
software upgrades and testing for Year 2000 compliance have been less than      
$40,000, and the Company does not expect any future costs to be material.       

Forward Looking Statements                                                      

The statements contained in all parts of this document (including the           
portion, if any, appended to the Form 10-KSB) including, but not limited to,    
those relating to the availability of cargo space; the Company's overseas       
presence and the plans for, effects, results and expansion of international     
operations and agreements for international cargo; future international         
revenue and international market growth; the future expansion and results of    
the Company's terminal network; plans for local delivery services and truck     
brokerage; future improvements in the Company's information systems and         
logistic systems and services; technological advancements; future marketing     
results; construction of the new facilities; the effect of litigation; future   
costs of transportation; future operating expenses; future margins; any         
seasonality of the Company's business; future dividend plans; future            
acquisitions and the effects, benefits, results, terms or other aspects of      
any acquisition, effects of the Year 2000 issue; Ocean Transportation           
Intermediary License; ability to continue growth and implement growth and       
business strategy; the ability of expected sources of liquidity to support      
working capital and capital expenditure requirements; future expectations;      
and any other statements regarding future growth, future cash needs, future     
terminals, future operations, business plans, future financial results,         
financial targets and goals; and any other statements which are not             
historical facts are forward-looking statements. When used in this document,    
the words "anticipate," "estimate," "expect," "may," "plans," "project" and     
similar expressions are intended to be among the statements that identify       
forward-looking statements. Such statements involve risks and uncertainties,    
including, but not limited to, those relating to the Company's dependence on    
its ability to attract and retain skilled managers and other personnel; the     
intense competition within the freight industry; the uncertainty of the         
Company's ability to manage and continue its growth and implement its           
business strategy; the Company's dependence on the availability of cargo        
space to serve its customers; the effects of regulation; results of             
litigation; the Company's vulnerability to general economic conditions; the     
control by the Company's principal shareholder; risks of international          
operations; risks relating to acquisitions; the Company's future financial      
and operating results, cash needs and demand for its services; and the          
Company's ability to maintain and comply with permits and licenses, as well     
as other factors detailed in this document and the Company's other filings      
with the Securities and Exchange Commission. Should one or more of these        
risks or uncertainties materialize, or should underlying assumptions prove      
incorrect, actual outcomes may vary materially from those indicated. The        
Company undertakes no responsibility to update for changes related to these     
or any other factors that may occur subsequent to this filing.                  

13    

10KSB 14th Page of 42 TOC 1st Previous Next ↓Bottom Just 14th
ITEM 7.  FINANCIAL STATEMENTS                                                   

ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         

Financial Statements with Supplemental Information                    
For the Fiscal Years Ended September 30, 1999 and 1998                    

CONTENTS                                                     Page           

Independent Accountants' Report                                1            

Financial Statements:                                                       

Consolidated Balance Sheets                                2 - 3        

Consolidated Statements of Operations                        4          

Consolidated Statements of Stockholders' Equity (Deficit)    5          

Consolidated Statements of Cash Flows                        6          

Notes to the Financial Statements                           7 - 16          

Supplemental Information:                                      17           

Unaudited Pro Forma Combined Statements of Operations             
For the Fiscal Year Ended September 30, 1999          18    
For the Fiscal Year Ended September 30, 1998          19    

Notes to the Unaudited Pro Forma Combined Statements          
of Operations                                          20     

13          

10KSB 15th Page of 42 TOC 1st Previous Next ↓Bottom Just 15th
INDEPENDENT ACCOUNTANTS' REPORT               

To the Board of Directors                                                   
Allstates WorldCargo, Inc. and Subsidiaries                                 
(formerly known as Audiogenesis Systems, Inc.                               
and Subsidiaries)                                                       

We have audited the accompanying consolidated balance sheet of              
Allstates WorldCargo, Inc. and Subsidiaries (the "Company") ,               
formerly known as Audiogenesis Systems, Inc. and Subsidiaries, as           
of September 30, 1999, and the related statement of                         
operations, stockholders' equity (deficit), and cash flows for              
the fiscal year then ended.  These consolidated financial                   
statements (see Note 1) are the responsibility of the                       
Company's management.  Our responsibility is to express an                  
opinion on these consolidated financial statements based on                 
our audit.  The accompanying consolidated financial statements              
of Allstates Air Cargo, Inc. and Subsidiaries as of and for                 
the fiscal year ended September 30, 1998 were audited by other              
auditors whose report thereon dated May 19, 1999, expressed an              
unqualified opinion on those statements.                                    

We conducted our audit in accordance with generally accepted                
auditing standards.  Those standards require that we plan and               
perform the audit to obtain reasonable assurance about whether              
the financial statements are free of material misstatement.                 
An audit includes examining, on a test basis, evidence                      
supporting the amounts and disclosures in the financial                     
statements.  An audit also includes assessing the accounting                
principles used and significant estimates made by management,               
as well as evaluating the overall financial statement                       
presentation.  We believe that our audit provides a reasonable              
basis for our opinion.                                                      

In our opinion, the consolidated financial statements referred              
to above present fairly, in all material respects, the                      
consolidated financial position of Allstates WorldCargo, Inc. and           
Subsidiaries (formerly known as Audiogenesis Systems, Inc.                  
and Subsidiaries) as of September 30, 1999, and the                         
consolidated results of their operations and cash flows for                 
the year then ended in conformity with generally accepted                   
accounting principles.                                                      

     /s/ Cowan, Gunteski & Co., P.A.

January 6, 2000                                                             

F-1         

10KSB 16th Page of 42 TOC 1st Previous Next ↓Bottom Just 16th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Consolidated Balance Sheets       
As of September 30,     

Assets                                                                          

                                         1999                       1998
                                         ----                       ----
Current Assets                                                                  
    Cash                               $406,842                 $175,673
Accounts Receivable - trade,                                    
net of allowance for doubtful                                 
accounts of $316,815 and                                      
     $410,501, respectively           3,920,495                3,796,346
Inventories                          39,139                    -
Prepaid Expenses and                                            
     Other Assets                       100,006                   85,659
Deferred Income Taxes -                                         
      Current Portion                   128,028                  165,502
                                     ----------                ---------
       Total Current Assets           4,594,510                4,223,180
                                     ----------                ---------

Property, Plant and Equipment                                                   
    Buildings and Improvements          210,294                  210,294
    Vehicles                            652,184                  633,287
    Equipment and Software              484,979                  354,192
    Furniture and Fixtures               47,541                   36,780
                                     ----------                ---------
                                      1,394,998                1,234,553
    Less:  Accumulated Depreciation     869,945                  757,104
                                     ----------                ---------
Net Property, Plant and Equipment       525,053                  477,449
                                     ----------                ---------

Other Assets                                                                    
    Deposits                             79,823                  104,759
Goodwill, net of accumulated                                    
 amortization of $5,305              631,347                     -
Acquisition Costs, net of                                       
 accumulated amortization of $389     46,249                     -
    Deferred Income Taxes                 9,430                   34,090
    Other Assets                        183,252                  184,629
                                     ----------                ---------
        Total Other Assets              950,101                  323,478
                                     ----------                ---------

Total Assets                             $6,069,664               $5,024,107    
                                     ==========                =========

F-2     

10KSB 17th Page of 42 TOC 1st Previous Next ↓Bottom Just 17th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         

Consolidated Balance Sheets   
As of September 30,   

Liabilities and Stockholders' Equity (Deficit)  

                                  1999            1998
                                  ----            ----
Current Liabilities                                                             
Accounts Payable                   $2,408,239       $2,824,374  
Accrued Expenses                      755,177          482,063  
Short-Term Bank Borrowings               -             400,000  
Taxes Payable                         526,873             -     
Shareholder Loan Payable                5,000             -     
Current Portion of Notes Payable      116,245          101,084  
                                  ---------        ---------
      Total Current Liabilities   3,811,534        3,807,521
                                  ---------        ---------
Long-Term Portion of Notes Payable          2,564,064           69,618          
                                  ---------        ---------
      Total Liabilities           6,375,598        3,877,139
                                  ---------        ---------
Stockholders' Equity (Deficit)                                                  
Common Stock, $.0001 par value,                                 
50,000,000 shares authorized,                                 
32,509,872 and 18,000,000                                     
shares issued and outstanding,                                
respectively                           3,251            1,800 
Additional Paid In Capital                -              4,200  
Deferred Financing Costs                  -            (60,000) 
Accumulated Other                                               
Comprehensive Income:                                         
Foreign currency                                      
     translation adjustments        (14,323)           (9,824)
Retained Earnings (Deficit)         (294,862)        1,210,792  
                                  ---------        ---------
Total Stockholders' Equity (Deficit)    (305,934)        1,146,968      
                                  ---------        ---------
Total Liabilities and                                                           
Stockholders' Equity (Deficit)          $6,069,664        $5,024,107        
                                ==========        ==========

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

F-3   

10KSB 18th Page of 42 TOC 1st Previous Next ↓Bottom Just 18th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Consolidated Statements of Operations     
For the Fiscal Years Ended September 30,    

                                         1999                   1998
                                         ----                   ----

Revenues (Net of Discounts)                 $31,229,694           $25,997,927   
Cost of Sales                                18,783,408            16,304,751   
                                          ----------            ----------
             Gross Profit                 12,446,286             9,693,176

Selling, General and Administrative Expenses 11,339,779             9,416,799   
                                          ----------            ----------
             Income from Operations        1,106,507               276,377
                                          ----------            ----------
Other Income (Expense)                                                          
     Interest Income                         30,169                  9,512
      Interest Expense                       (53,622)               (54,061)
 Loss on Sale of Assets                  (3,624)                 -
     Other Income                            90,135                 19,733
                                          ----------            ----------
      Total Other Income (Expense)            63,058                (24,816)
                                          ----------            ----------
  Income Before Income Tax Provision      1,169,565                251,561

Provision for Income Taxes                    (689,134)             (130,954)   
                                          ----------            ----------
Net Income Applicable to                                              
    Common Shareholders                    $480,431               $120,607
                                          ==========            ==========

Net Income from Continuing Operations                                           
     Per Common Share - Basic                 $0.01                  $0.00
                                          ==========            ==========

Shares Used in                                                                  
Per Share Calculation - Basic              32,509,872            32,509,872 
                                          ==========            ==========

Net Income from Continuing Operations                                           
     Per Common Share - Diluted                $0.01                 $0.00
                                          ==========            ==========

Shares Used in Per Share                                                        
Calculation - Diluted                      32,522,872            32,522,872 
                                          ==========            ==========

The accompanying notes are an integral part of these consolidated               
financial statements.                                                         
F-4   

10KSB 19th Page of 42 TOC 1st Previous Next ↓Bottom Just 19th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Consolidated Statements of Stockholders' Equity (Deficit)     
For the Fiscal Years Ended September 30, 1999 and 1998    

                                                        [Enlarge/Download Table]

                                                                                                                      
                            Common Stock                                                                              
                                                 Additional   Deferred     Other          Retained    Total           
                       Number of                 Paid in      Financing    Comprehensive  Earnings    Stockholders'   
                       Shares        Par Value   Capital      Costs        Income (Loss)  (Deficit)   Equity (Deficit)
                      ----------    ----------   ---------    ---------   ---------       ----------  ----------------
Balance at                                                                                                            
 September 30, 1997*  18,000,000     $1,800         $4,200    $(50,000)    $(1,447)       $1,090,185    $1,044,738    

Deferred                                                                                                              
 Financing Costs                                               (10,000)                                    (10,000)   

Net income for                                                                                                        
 the year ended                                                                                                       
 September 30, 1998                                                                          120,607       120,607    

Other Comprehensive                                                                                                   
 Income (Currency                                                                                                     
 Translation                                                                                                          
 Adjustment) for the                                                                                                  
 year ended September                                                                                                 
 30, 1998                                                                   (8,377)                         (8,377)   

Balance at September                                                                                                  
 30, 1998 *           18,000,000      1,800          4,200     (60,000)     (9,824)        1,210,792     1,146,968    
                      ----------    -------      ---------    ---------   ---------       ----------    -----------   
Issuance of common                                                                                                    
 stock for the                                                                                                        
 acquisition of                                                                                                       
 Audiogenesis Systems,                                                                                                
 Inc. (reverse                                                                                                        
 acquisition)                                                                                                         
 inclusive of                                                                                                         
 the net income for                                                                                                   
 the subsidiary                                                                                                       
 (i.e. Audiogenesis                                                                                                   
 Systems, Inc.)                                                                                                       
 through August 24,                                                                                                   
 1999 (Date of                                                                                                        
 Acquisition) included                                                                                                
 in accumulated                                                                                                       
 deficit              14,509,872      1,451      1,290,224          -          -          (1,256,833)        34,842   

Adjustment to                                                                                                         
 additional paid                                                                                                      
 in capital &                                                                                                         
 retained earnings                                                                                                    
 resulting from the                                                                                                   
 elimination of                                                                                                       
 investment in                                                                                                        
 subsidiary               -               -     (1,294,424)         -          -            (729,252)    (2,023,676)  

Deferred financing                                                                                                    
 costs expensed for                                                                                                   
 the year ended                                                                                                       
 September 30, 1999       -               -          -          60,000         -                -            60,000   

Other Comprehensive                                                                                                   
 Income (Currency                                                                                                     
 Translation                                                                                                          
 Adjustment)                                                                                                          
 for the year ended                                                                                                   
 September 30, 1999       -               -          -              -       (4,499)              -           (4,499)  

Consolidated net income                                                                                               
 for the year ended                                                                                                   
 September 30, 1999       -               -          -              -          -             480,431        480,431   
                      ----------    -------      ---------    ---------   ---------       ----------    -----------   

Balance at                                                                                                            
 September 30, 1999   32,509,872     $3,251         $-             $-     $(14,323)        $(294,862)     $(305,934)  
                      ==========   ========      =========   ==========  =========        ==========     ===========  

*  Common stock of Allstates Air Cargo, Inc. at October 1, 1998, was 210        
shares issued and outstanding with a book value of $6,000 and no par value.     
As a result of the reverse acquisition, the common stock of Allstates Air       
Cargo, Inc. has been restated to equal the number of shares and the par value   
of Audiogenesis Systems, Inc. for the shares acquired by the pre-acquisition    
100% shareholder of Allstates Air Cargo, Inc. as if the reverse acquisition     
had occurred on October 1, 1997.                                                

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

F-5   

10KSB 20th Page of 42 TOC 1st Previous Next ↓Bottom Just 20th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Consolidated Statements of Cash Flows   
For the Fiscal Years Ended September 30,  

                                              1999            1998
                                              ----            ----
Cash flows from operating activities:                                           
Net Income                                       $480,431        $120,607   
Adjustments to reconcile net income                                     
to net cash used in operating activities:                               
  Depreciation                                 187,659         179,012
Amortization                                   5,694            - 
  Provision for doubtful account               112,095           6,703
  (Gain) Loss on sale of equipment              (3,624)          2,328
Compensation paid through stock issuance      28,000            - 
  Deferred income taxes                         62,134          34,347
(Increase) decrease in assets:                                    
     Accounts receivable                      (202,954)        255,856
  Inventories                               (15,657)           -
      Prepaid expenses and other assets         (12,870)        (50,773)
      Deposits                                   26,893         (84,245)
Increase (decrease) in liabilities:                               
      Accounts payable and accrued expenses    (165,380)       (339,174)
      Interest payable, related party              -            (20,384)
      Taxes payable                             526,873          (4,379)
                                              ---------        ---------
Net cash provided by                                    
        operating activities                 1,029,294          99,898
                                              ---------        ---------
Cash flows from investing activities:                                           
Purchase of equipment                             (83,554)       (110,924)  
Proceed from sale of equipment                     29,688          42,343   
Cash received from reverse merger                   7,684             -     
Acquisition costs                                (20,638)             -     
Purchase of treasury stock of subsidiary        (202,597)             -     
                                              ---------        ---------
 Net cash used in investing activities        (269,417)         (68,581)
                                              ---------        ---------
Cash flows from financing activities:                                           
Repayments under notes payable                  (184,209)        (157,944)  
Repayments under short-term bank borrowings     (470,000)        (280,000)  
Borrowing under short-term bank borrowings        70,000          400,000   
Deferred financing costs                          60,000          (10,000)  
                                              ---------        ---------
 Net cash used in financing activities        (524,209)         (47,944)
                                              ---------        ---------
Net increase (decrease) in cash                                                 
and cash equivalents                             235,668          (16,627)  
Currency translation adjustments                    (4,499)          (8,678)    
Cash and cash equivalents, beginning of year       175,673          200,978     
                                              ---------        ---------
Cash and cash equivalents, end of year            $406,842         $175,673     
                                              =========        =========
The accompanying notes are an integral part of these consolidated               
financial statements.                                                         

F-6   

10KSB 21st Page of 42 TOC 1st Previous Next ↓Bottom Just 21st
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements    
September 30, 1999 and 1998 

1.   Organization and Nature of Business                                    

On August 24, 1999, Audiogenesis Systems, Inc. (Audiogenesis),    
entered into a reverse acquisition with Allstates Air Cargo, Inc. 
  and its subsidiaries (Allstates).  On August 24, 1999, Allstates Air
Cargo, Inc. became a wholly-owned subsidiary of Audiogenesis.  On 
November 4, 1999, Audiogenesis Systems, Inc. filed a Certificate  
of Amendment to the Certificate of Incorporation, officially      
changing its name to Allstates WorldCargo, Inc. (WorldCargo). As a
result of this transaction, the sole shareholder of Allstates Air 
Cargo, Inc. became a 55.37% shareholder of WorldCargo.  Management
  has elected to utilize the new name (Allstates WorldCargo, Inc.) for
purposes of these financial statements.  The entities that are    
included in these financial statements are as follows:            

Audiogenesis Systems, Inc.   Audiogenesis was incorporated in the 
state of New Jersey on January 14, 1997 as the result of a reverse
acquisition by Genesis Safety Systems, Inc.  The Company's        
operations include sales and distribution of safety equipment,    
development of audio-visual products, including safety training   
programs and sales and marketing presentations, development of a  
 device to treat tinnitus, and development of an echolocation device
to assist sighted persons in conditions of low visibility and the 
 blind.  The Company intends to defer any further development of the
tinnitus device, but continues to pursue opportunities concerning 
the device.  The Company has ceased all efforts concerning the    
echolocation device, and has terminated its license for the       
intellectual property underlying the device.                      

Biowaste Technologies Systems, Inc.   Biowaste is a wholly owned  
  subsidiary of Audiogenesis.  Biowaste was formed on July 1, 1988 for
the purpose of engaging in the business of the management of      
infectious waste. Biowaste is in the developmental stage, and no  
 revenues have been produced to date.  Presently, such subsidiary is
inactive, and the Company does not anticipate that it will become 
active in the near future.                                        

 Allstates Air Cargo, Inc.   Allstates was incorporated in the state
of New Jersey on October 3, 1962.  The Company  provides domestic 
and international air freight forwarding services.  Allstates     
 maintains operating facilities throughout the United States and has
offices or agents in Europe and South America.                    

Allstates Allcargo (US), Inc.   Allstates Allcargo (US), Inc. is a
wholly owned subsidiary of Allstates Air Cargo, Inc. Allstates    
Allcargo (US), Inc. owns 100% of Allstates Allcargo (UK), Ltd., a 
corporation organized under the laws of England.  All appropriate 
  foreign currency translation adjustments have been made for purposes
of these financial statements.                                    

Allstates Logistics, Inc.   Allstates Logistics is also a wholly  
owned subsidiary of Allstates Air Cargo, Inc.  Allstates Logistics
was incorporated in the state of New Jersey in December 1997, and 
provides ocean freight services to its customers.                 

GTD Logistics, Inc.   GTD Logistics, Inc. was incorporated in the 
 state of New Jersey on October 27, 1998.  GTD Logistics is a wholly
 owned subsidiary of Allstates Air Cargo, Inc. GTD Logistics is also
in the business of freight forwarding.                            

F-7     

10KSB 22nd Page of 42 TOC 1st Previous Next ↓Bottom Just 22nd
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements      
September 30, 1999 and 1998   

1.   Organization and Nature of Business (cont'd)                           

Reverse Acquisition                                               

For purposes of these financial statements, the purchase of       
Allstates Air Cargo, Inc. by Audiogenesis Systems, Inc. is treated
  as a reverse acquisition under the purchase method of accounting, as
outlined in Accounting Principles Board Opinion No. 16.  For      
accounting purposes, Allstates Air Cargo, Inc. is considered the  
acquiror in the reverse acquisition.  The statement of operations 
   for WorldCargo for the fiscal year ended September 30, 1999, includes
   a full year of revenues and expenses of Allstates Air Cargo, Inc. and
its subsidiaries for the period from the date of acquisition,     
August 24, 1999, through September 30, 1999.                      

2.   Summary of Significant Accounting Policies                             

Principles of Consolidation                                       

For purposes of the accompanying financial statements, Allstates Air        
Cargo, Inc. is considered the accounting "Parent" company and Audiogenesis  
Systems, Inc. is considered the subsidiary.  Therefore, these financial     
statements include the combined assets and liabilities of Allstates Air     
Cargo, Inc. and its subsidiaries as of September 30, 1999.  The statement   
of operations includes the income and expenses of Allstates Air Cargo,      
Inc. and its subsidiaries for the complete year ended September 30, 1999    
and the income and expenses of Audiogenesis Systems, Inc. for the period    
from August 24, 1999 through September 30, 1999.  All material              
intercompany payables, receivables, revenues and expenses have been         
eliminated for purposes of this consolidation.                              

Use of Estimates                                                  

The preparation of the financial statements in conformity with    
  generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the 
financial statements and accompanying notes.  Actual results could
differ from those estimates.                                      

Reclassifications                                                 

Certain items presented in the financial statements for the fiscal
year ended September 30, 1998 have been reclassified to conform to
the current year presentation.                                    

Concentration of Credit Risk                                      

The Company maintains cash balances at several banks.  Accounts at
each institution are insured by the Federal Deposit Insurance     
Corporation (FDIC) up to $100,000.  As of September 30, 1999, the 
Company had a cash balance on deposit with one bank that exceeded 
 the $100,000 balance insured by the FDIC.  Management considers the
risk of loss to be minimal.                                       

Cash Equivalents                                                  

For purposes of the statement of cash flows, the Company considers
all highly liquid investments with original maturities of three   
months or less to be cash equivalents.                            

F-8 

10KSB 23rd Page of 42 TOC 1st Previous Next ↓Bottom Just 23rd
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements
September 30, 1999 and 1998   

2.   Summary of Significant Accounting Policies (cont'd)                    

Fair Value of Financial Instruments                               

The carrying value of cash, accounts receivable, accounts payable,
accrued expenses, taxes payable, notes payable and other current  
 liabilities approximates fair value because of the relatively short
maturity of these instruments.                                    

Inventory                                                         

For both financial reporting and income tax purposes, inventory is
stated at the cost basis.  Cost is determined using the first-in, 
first-out method.                                                 

Property, Plant and Equipment                                     

Property and equipment consist principally of buildings and       
improvements, vehicles, computers and software, office equipment, 
and furniture and fixtures are stated at historical cost.         
Depreciation is provided on the straight-line method over the     
estimated useful lives of the assets, which are generally three to
fifteen years.  Expenditures for maintenance and repairs, which do
not extend the economic useful life of the related assets, are    
charged to operations as incurred.  Gains or losses on disposal of
equipment are reflected in the statement of operations.           

Income Taxes                                                      

The Company follows the provisions of Statement of Financial      
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 
  109).  SFAS 109 requires recognition of deferred tax liabilities and
 assets for the expected future tax consequences of events that have
been included in the financial statements or tax returns.  Under  
this method, deferred tax liabilities and assets are determined   
based on the difference between the financial statement and tax   
bases of assets and liabilities using enacted tax rates in effect 
for the year in which the differences are expected to reverse.    

Translation of Foreign Currencies                                 

  Assets and liabilities of the affiliate whose functional currency is
British pounds are translated at year-end.  Rates of exchanges for
  revenues and expenses are translated using a weighted average method
during the applicable year.  Resulting translation adjustments and
the related income tax effects are accumulated in the currency    
 translation adjustment component of stockholders' equity.  Currency
translation gains and losses are recognized in income currently.  

Revenue Recognition                                               

  Revenues are recognized at the time the freight departs the terminal
of origin.  This method approximates recognizing revenues when    
shipment is completed.                                            

F-9         

10KSB 24th Page of 42 TOC 1st Previous Next ↓Bottom Just 24th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements        
September 30, 1999 and 1998               

2.   Summary of Significant Accounting Policies (cont'd)          

Earnings per Share                                                          

During the fiscal year ended September 30, 1999, the Company adopted        
Statement of Financial Accounting Standards No. 128, "Earnings per Share"   
("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.  Prior year's EPS have been    
restated to conform to the standards established by SFAS No. 128.           

EPS is calculated by dividing net income by the weighted-average number of  
outstanding shares of Common Stock for each year. As a result of the        
reverse acquisition in which the sole shareholder of Allstates Air Cargo,   
Inc.  (formerly known as Audiogenesis Systems, Inc. acquired a              
controlling interest in Audiogenesis Systems, Inc., the                     
shares issued during the fiscal year ended September 30, 1999 are treated   
as being outstanding for each fiscal year presented.                        

3.      Bad Debts                                                 

The Company uses the allowance method to account for uncollectible          
accounts receivable.  The allowance for doubtful accounts is based on       
prior years' experience and is estimated by management.  Bad debt           
recoveries are charged against the allowance account as realized.  Bad      
debt expense for the years ended September 30, 1999 and 1998 was $112,095   
and $182,267, respectively.                                                 

4.   Property, Plant and Equipment                                          
Property, plant and equipment costs consist of the following as of
September 30, 1999:                                                         
                              Accumulated   Net Book     Depreciable
             Cost       Depreciation  Value        Lives
Buildings                                                                   
and Improvements $  210,294     $ 178,311    $  31,983    10 - 15 years 
Vehicles              652,184       366,340      285,844    5 years         
Equipment and                                                               
Software            484,979       280,148      204,831    3 - 5 years   
Furniture and                                                               
Fixtures             47,541        45,146        2,395    5 - 7 years   
  ---------    ----------   ----------
Totals             $1,394,998     $ 869,945    $ 525,053                    
===========    ==========   ==========

Depreciation expense charged to income from operations for the  
years ended September 30, 1999 and 1998 was $187,659 and        
$179,012, respectively.                                         

5.   Customs and Excise Bond                                                

On April 14, 1997, Allstates Air Cargo, Inc. pledged $165,573 as a          
condition of obtaining a HM Customs and Excise bond.  The purpose of the    
bond is to guarantee payment of value added taxes and excise taxes that     
the Company's affiliate will collect from its customers.  The cash pledged  
is maintained in a certificate of deposit in a financial institution        
earning interest at approximately 5%.  The certificate of deposit matured   
on April 14, 1999 and was renewed for one year.  As of September 30, 1999   
and 1998, the cost basis of the asset plus earned interest approximated     
the fair market value totaling $183,252 and $174,410, respectively.  These  
amounts have been included in Other Assets.                                 

F-10      

10KSB 25th Page of 42 TOC 1st Previous Next ↓Bottom Just 25th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements    
September 30, 1999 and 1998       

6.   Amortization of Goodwill and Acquisition Costs                         

The excess of cost over the fair value of net assets acquired (goodwill)    
is being amortized on the straight-line basis over a ten year period.       
Amortization expense for the years ended September 30, 1999 and 1998 is     
$5,305 and $0, respectively.                                                

The costs associated with the acquisition of Audiogenesis by Allstates are  
being amortized on the straight-line basis over a ten-year period.          
Amortization expense for the years ended September 30, 1999 and 1998 is     
$389 and $0, respectively.                                                  

7.   Notes Payable                                                          

The following is a summary of long-term debt as of September 30,  
1999 and 1998:                                                              
                                                   1999         1998
                                                   ----         ----
Notes Payable from Joseph M. Guido to the Estate                            
of A.G. Hoffman, Jr., assumed by the Company, in                            
the aggregate total of  $2,511,730, with                                    
repayment over 101 years at annual principal                                
payments of $25,000 plus interest at 7% per                                 
year.  All or any of the notes may be paid at                               
any time before maturity without any prepayment                             
penalty.  In the event of a default under the                               
notes by the Company, Joseph M. Guido remains                               
personally liable for the notes, and the 101                                
shares of Allstates Air Cargo, Inc. common stock                            
held as security under the notes (representing                              
48.1% of the issued and  outstanding common                                 
stock of Allstates Air Cargo, Inc.) may be sold                             
at                                                                          
public or private sale.                            $2,511,730     $    -0-  

Notes Payable to First Union in the aggregate                               
total $122,683, with repayment over 36 months at                            
monthly principal payments ranging from $523.52                             
to $744.79 plus interest ranging from 7.50% to                              
7.70%.  These loans are secured by the vehicles                             
to                                                                          
which they relate.                                    37,220        98,393  

Notes Payable to GMAC in the aggregate total                                
$176,227, with repayment over 36 months at                                  
monthly principal payments ranging from $513.00                             
to $638.02 plus interest ranging from 1.90% to                              
2.90%.  These loans are secured by the vehicles                             
to                                                                          
which they relate.                                   124,359        72,309  

Note Payable to Virginia Commonwealth University                            
(VCU) for $10,000, due in monthly payments of                               
$1,000 of principal only.  Loan matures on April                            
15, 2000.  Note payable represents payment in                               
full for the mutual termination of the                                      
Echolocation License Agreement between                                      
Audiogenesis and                                                            
VCU.                                                  7,000            -0-  
                                                  ---------      ---------

Totals                                           $2,680,309      $ 170,702  
Less:  Current Portion of Notes Payable             116,245        101,084  
                                                ---------      ---------
Long-Term Portion of Notes Payable              $2,564,064     $   69,618 
                                               ==========     ==========

F-11    

10KSB 26th Page of 42 TOC 1st Previous Next ↓Bottom Just 26th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements          
September 30, 1999 and 1998             

7.    Notes Payable (cont'd)                                                

Maturities                                                                  
For the years ended September 30,  2000   $   116,245                   
                2001        79,718
                2002        47,616
                2003        25,000
                2004        25,000
        Thereafter       2,386,730
                         ---------
        Total           $2,680,309
                        ==========

8.   Short-Term Bank Borrowing                                              

Allstates Air Cargo, Inc. has a $1,350,000 line of credit agreement with    
a bank, which expires December 31, 2000.  Interest on outstanding           
borrowings currently accrues at the Wall Street Journal's (WSJ) prime rate  
of interest less 1/4% per annum (8.25% as of September 30, 1999).  The      
interest rate is predicated upon the Company maintaining a compensating     
account balance in a non-interest bearing account equal to at least 15% of  
the outstanding principal balance.  If, at any time, the Company fails to   
maintain the compensating balance, the interest rate will increase by  %    
over the WSJ's prime rate at the time of failure.  The balance outstanding  
on the line of credit as of September 30, 1999 and 1998 was $0 and          
$400,000, respectively.                                                     

Loan collateral includes the Company's accounts receivable and the          
unlimited, unconditional guarantees of Joseph Guido, Teresa Guido and       
Allstates Allcargo (US), Inc.                                               

9.  Income Taxes                                                            

The Company's provision for income taxes as of September 30, 1999 and       
1998 consisted of the following:                                            
    1999                1998
    ----                ----
Current                                                                     
Federal          $474,000         $ 73,675                
State             153,000           22,932                
  -------         --------
Total - Current   627,000           96,607                
  -------         --------
Deferred                                                                    
Federal            52,814           27,909                
State               9,320            6,438                
  -------         --------
Total - Deferred   62,134           34,347                
  -------         --------
TOTALS            $689,134         $130,954                 
  =======         ========

The tax effect of temporary differences that make up the significant        
components of the deferred tax asset for financial reporting purposes at    
September 30, 1999 and 1998 are as follows:                                 

                      1999                1998
                      ----                ----
Deferred Tax Assets                                               
Accounts Receivable          $128,028           $165,502        
Equipment                       9,430             34,090        
                     --------           --------
Deferred Tax Assets           $137,458           $199,592         
                    =========          =========

F-12              

10KSB 27th Page of 42 TOC 1st Previous Next ↓Bottom Just 27th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements        
September 30, 1999 and 1998         

9.        Income Taxes (cont'd)                                       

Net Operating Loss Carryforward                                   

Audiogenesis generated net operating losses prior to its acquisition of     
Allstates Air Cargo, Inc.  As a result of the reverse acquisition, the      
ownership structure of Audiogenesis changed as of August 24, 1999; thereby  
limiting and reducing the future utilization of the Audiogenesis net        
operating loss carryforwards.  These pre-reverse acquisition net operating  
loss carryforwards will be limited and reduced based upon the Federal and   
New Jersey change in ownership net operating loss carryforward rules.  Any  
net operating loss carryforwards to future tax years after limitation and   
reduction will generally be available to offset future taxable income of    
Allstates WorldCargo, Inc. (formerly known as Audiogenesis Systems, Inc.)   
only, and will not be available to offset any future income                 
of Allstates Air Cargo, Inc. or any other affiliated corporation.  The      
income tax provisions do not include any of the Audiogenesis pre-reverse    
acquisition net operating losses.  In addition, the income tax provisions   
in these financial statements do not utilize the current year operating     
loss of the Allstates Allcargo (UK), Ltd. subsidiary operations.  The       
deferred tax asset as a result of this carryforward has been offset in      
full by a valuation allowance.                                              

10. Pension Plan                                                            

Effective May 1994, the Company adopted a discretionary non-        
standardized 401(k) profit sharing plan.  The terms of the plan     
provide for eligible employees who have met certain age and service 
requirements to participate by electing to contribute up to the     
lesser of 25% of an employees' qualified compensation of which 15%  
is tax deductible, or $10,000.  The Company may make matching       
contributions equal to a discretionary percentage, as determined by 
 the Company, up to 6% of  a participants' salary. The Company did not
make a discretionary contribution to the plan for the years ended   
September 30, 1999 and 1998.  The plan also allows employer         
discretionary contributions allocated in accordance with            
participants' compensation.  The Company did not make any           
 discretionary contributions to the plan for the years ended September
30, 1999 and 1998.                                                  

11. Related Party Transactions                                              

Allstates Air Cargo, Inc. leases real estate in two locations from  
a majority stockholder of the Company.  Rent expense under these    
leases totaled $92,500 and $90,300 for the years ended September 30,
1999 and 1998, respectively.                                        

The Company has entered into royalty agreements for its Los Angeles 
and Chicago licensee locations with an officer and director of the  
Company, whereby the Company agrees to pay the officer a royalty    
equal to 5% of the gross profit per the contract.  Royalty payments 
to this individual for the years ended September 30, 1999 and 1998  
totaled $143,253 and $0, respectively.                              

F-13          

10KSB 28th Page of 42 TOC 1st Previous Next ↓Bottom Just 28th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements  
September 30, 1999 and 1998 

11.      Related Party Transactions (cont'd)                        

On August 24, 1999, the Company entered into Employment Agreements  
with three of the Company's stockholders.  The Employment           
Agreements  are effective for the term beginning August 24, 1999    
through December 31, 2004.    The following is a summary of the     
terms of these agreements:                                          

                    Annual                                     Stock
Position            Salary           Bonus                   Options
  --------           -------          -----------------      -----------
Chairman of                                                         
The Board          $308,000        3% of fiscal year            Yes*
                         Increase in net profits
President/Chief                                                     
Executive Officer  $208,000        3% of fiscal year            Yes*
                         Increase in net profits

Executive                                                           
Vice President/                                                     
Chief Operating                                                     
Officer            $207,922        3% of fiscal year           Yes* 
                         Increase in net profits

*  No options have been granted to date.  Options are to be         
granted when and if the Company adopts a stock option plan.   

Prior to August 24, 1999, the Company issued 4,500,000 shares of    
common stock to one officer, three employees and three consultants  
for their participation in the Company's restructuring as a result  
 of the reverse acquisition.  The Company recorded $26,000 of non-cash
acquisition costs and $156,000 of non-cash compensation expense     
related to this transaction.                                        

The Company has an unsecured, non-interest bearing loan from a      
shareholder.  Principal amount outstanding as of September 30, 1999 
and 1998 are $5,000 and $0, respectively.  Loan is payable and due  
upon demand.                                                        

12. Stock Option Plan                                                       

The Company adopted a non-qualified stock option plan which was     
terminated effective December 31, 1999.  The following shares have  
been reserved to be issued to the holders of certain options which  
remained outstanding after a reverse acquisition transaction by     
Genesis Safety Systems, Inc. (predecessor of Audiogenesis Systems,  
 Inc.) pursuant to the anti-dilution provisions of such options.  Such
shares will be issued, at no cost to the option holders, only in the
event that such option holders exercise their options in the        
Company's predecessor. No options were exercised during the fiscal  
years ended September 30, 1999 and 1998.                            

# of Options       Expiration                           
------------       ----------                           
3,000            11/27/00                         
10,000            07/31/00                          

F-14            

10KSB 29th Page of 42 TOC 1st Previous Next ↓Bottom Just 29th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements      
September 30, 1999 and 1998   

13.  Leases                                                                 

The Company leases certain terminal facilities and its corporate            
headquarters under operating leases that expire over the next ten years.    
These operating leases provide the Company with the option to renew its'    
lease at the fair rental value at end of the lease term.  Management        
expects that leases will be renewed or replaced by other leases in the      
normal course of business.  In September 1998, the Company's affiliate      
leased terminal facilities in the U.K. for approximately $80,000 annually   
for ten years.  The affiliate currently subleases a portion of the space    
for approximately $21,600 annually.                                         

Future minimum lease payments under all leases with initial or remaining    
noncancellable lease terms in excess of one year are as follows as of       
September 30, 1999:                                                         

Years Ending                            
September 30,                           

2000  $  394,363          
2001     269,230          
2002     222,515          
2003     207,715          
2004     207,715          
Thereafter     740,275                
----------  ----------                
Total       $2,041,813                
==========    

Rent expense under operating leases for the years ended 
September 30, 1999 and 1998 was $397,783 and $365,968,  
respectively.                                           

     The Company sublets office space and has recorded $34,032 and
  $17,360 of rental income for the years ended September 30,
1999 and 1998, respectively.                            

14.  Supplemental Cash Flow Disclosures                                     
                 1999         1998
Cash paid for:                        ----         ----                     
Income Taxes                   $166,735      $100,986             
                  ========      ========
Interest                      $ 36,281      $ 75,411            
                  ========      ========

Noncash Investing and Financing Activities                        

(a)  Equipment acquired through notes payable for the years 
    ended September 30, 1999 and 1998 totaled $174,086 and $113,867,
respectively.                                               

  (b)  The Company assumed $2,511,730 of debt owed to the Estate
of Hoffman, which represents a portion of the Company's     
investment in its subsidiary at September 30, 1999.         

   (c)  The Company recorded goodwill in the amount of $636,652 as
    a result of the acquisition.  Additionally, the Company recorded
    $5,305 of related amortization expense for the fiscal year ended
September 30, 1999.                                         

F-15        

10KSB 30th Page of 42 TOC 1st Previous Next ↓Bottom Just 30th
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         
Notes to the Consolidated Financial Statements  
 September 30, 1999 and 1998

15.       Litigation                                                  

In March 1999, the Company settled a lawsuit against the United   
States Government (the "Government") for delinquent accounts      
 receivable.  The Government paid Allstates Air Cargo, Inc. $282,000
in satisfaction of the full outstanding receivable.               

In April 1999, the Company reached a favorable settlement with certain      
former employees arising out of their activities in leaving the Company's   
employ and establishing a business to act as an exclusive sales agent for   
a competing air freight forwarder.                                          

On December 15, 1999, the Company also reached a favorable settlement       
agreement with the competing air freight forwarder mentioned above.  The    
action has not been formally discontinued, as the written Stipulation of    
Settlement has not yet been signed by all of the required signatories.      

On July 22, 1999, the Company settled a case with a former employee         
involving the former employee's claims for breach of contract, sex          
discrimination and sexual harassment.  The Company paid the employee        
$17,500 in settlement of this case.                                         

The Company is involved in an on-going environmental proceeding.  In        
December 1996, five underground storage tanks ("UST's") and two             
aboveground storage tanks were removed from a facility in which the         
Company leases office space.  Post-excavation sampling results confirmed    
that certain soil contamination remained present after the removals at the  
location of two of the UST's.  Also, at the time of the removals, free-     
floating groundwater contamination was observed in the area of these two    
former UST's.  During 1999, the Company engaged Carpenter Environmental     
Associates to prepare a Preliminary Assessment/Site Investigation Report    
("PA/SI Report").  Carpenter's PA/SI Report stated that the chlorinated     
groundwater contamination is emanating from an off-site source.  The New    
Jersey Department of Environmental Protection approved Carpenter's PA/SI    
report and agreed that no further investigation of the site was needed.     

A Remedial Action Workplan was submitted in November 1999.  The Company is  
awaiting approval from the NJDEP.  The Company has made claims against      
their liability insurance carriers for coverage.  Due to the uncertain      
nature and extent of any additional remedial activities that may be         
required regarding the existing site conditions, management or its counsel  
cannot estimate potential future costs at this time.  If an adverse         
judgment is entered, the potential effect on the consolidated financial     
position and consolidated results of operations, in the period in which     
resolved, cannot be ascertained at this time, but may be material.          

F-16    

SUPPLEMENTAL INFORMATION      

ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         

BASIS OF PRESENTATION TO UNAUDITED PRO FORMA      
COMBINED STATEMENTS OF OPERATIONS   
For the Years Ended September 30, 1998 and 1999   

The Unaudited Pro Forma Combined Statements of Operations gives effect to the   
merger of Audiogenesis Systems, Inc. ("Audiogenesis") and Allstates Air         
Cargo, Inc. ("Allstates") as a recapitalization of Allstates with               
Allstates as the acquiror (reverse acquisition). This event has been            
presented as if it had occurred at the beginning of each year.  The Unaudited   
Pro Forma Combined Statements of Operations gives effect to the merger under    
the purchase method of accounting in accordance with Accounting Principles      
Board Opinion No. 16.  In the opinion of management, all significant            
adjustments necessary to reflect the effects of the merger have been made.      

The Unaudited Pro Forma Combined Statements of Operations is presented for      
comparative purposes only and is not necessarily indicative of what the actual  
combined financial position of Audiogenesis and Allstates would have been,      
nor does it purport to represent the future combined financial position of      
ASI and Allstates.  This Unaudited Pro Forma Combined Statement of Operations   
should be read in conjunction with, and is qualified in its entirety by, the    
financial statements and notes thereto referenced into the 10K.                 

F-17        

10KSB 31st Page of 42 TOC 1st Previous Next ↓Bottom Just 31st
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS      
For the Year Ended September 30, 1999   

                                                  Pro Forma     WorldCargo
                      Audiogenesis  Allstates     Merger       Pro Forma
                       Historical  Historical  Adjustments    Combined
                        -----------  -----------  ----------    ------------

Revenues                     $710,523  $31,195,581  $(330,000)(A)  $31,576,104  
Cost of revenues              211,212   18,765,807        -         18,977,019  
                          ---------  -----------  ----------    ------------
Gross profit                  499,311   12,429,774   (330,000)      12,599,085  
                          ---------  -----------  ----------    ------------
Operating expenses:                                                             
Selling, general                                                              
and administrative          397,411   11,317,580   (271,645)(B)   11,443,346
Research and development       25,000       -               -           25,000  
                          ---------  -----------  ----------    ------------

Total operating expenses      422,411   11,317,580   (271,645)      11,468,346  
                          ---------  -----------  ----------    ------------
Income from operations         76,900    1,112,194   ( 58,355)      1,130,739   

Other income (expense):                                                         
Interest income                  -         30,169        -             30,169 
Interest expense              (5,175)   (  53,622)  (164,471)(C)    (223,268) 
Loss on sale of assets           -      (   3,624)       -           (  3,624)
Other income (loss)          149,880       90,135        -            240,015 
                          ---------  -----------  ----------    ------------
Income before income taxes    221,605    1,175,252   (222,826)       1,174,031  

Income tax provision              -        692,088   ( 85,443)(D)      606,645  
                          ---------  -----------  ----------    ------------

Net income (loss)            $221,605    $ 483,164  $(137,383)      $  567,386  
                          =========  ===========  ==========    ============

Weighted average of                                                             
common shares                                                                 
outstanding                            18,000,000  14,509,872(E)   32,509,872 
                                     ===========  ==========    ============

Net income per common share             $     0.03                 $      0.02  
                                     ===========                ============

F-18      

10KSB 32nd Page of 42 TOC 1st Previous Next ↓Bottom Just 32nd
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS      
For the Year Ended September 30, 1999   

                                                  Pro Forma     WorldCargo
                      Audiogenesis  Allstates     Merger       Pro Forma
                       Historical  Historical  Adjustments    Combined
                        -----------  -----------  ----------    ------------

Revenues                     $475,275  $25,997,927   $   -         $26,473,202  
Cost of revenues              197,429   16,304,751       -          16,502,180  
                          ---------  -----------  ----------    ------------
Gross profit                  277,846    9,693,176       -           9,971,022  
                          ---------  -----------  ----------    ------------
Operating expenses:                                                             
Selling, general and                                                          
administrative              339,019    9,416,799    63,660 (F)     9,819,478
Research and development     100,000        -           -             100,000 
                          ---------  -----------  ----------    ------------
Total operating expenses      439,019    9,416,799    63,660         9,919,478  
                          ---------  -----------  ----------    ------------
Income from operations       (161,173)     276,377  ( 63,660)           51,544  

Other income (expense):                                                         
Interest income                 -           9,512      -                9,512 
Interest expense             (14,669)   (  54,061) (179,200)(G)      (247,930)
Other income (loss)             -          19,733      -               19,733 
                          ---------  -----------  ----------    ------------
Income before income taxes    175,842)     251,561  (242,860)         (167,141) 

Income tax provision             -         130,954  ( 73,472)(H)        57,482  
                          ---------  -----------  ----------    ------------
Net income (loss)           $(175,842)  $  120,607 $(169,388)     $(   224,623) 
                          =========  ===========  ==========    ============
Weighted average of common                                                      
shares outstanding                     18,000,000 14,509,872(I)   $32,509,872 
                                     ===========  ==========    ============
Net income per common share             $     0.01                 $     (0.01) 
                                     ===========                ============

F-19    

10KSB 33rd Page of 42 TOC 1st Previous Next ↓Bottom Just 33rd
ALLSTATES WORLDCARGO, INC. AND SUBSIDIARIES             
(Formerly Known as Audiogenesis Systems, Inc. and Subsidiaries)         

NOTES TO UNAUDITED PRO FORMA COMPARATIVE      
COMBINED STATEMENT OF OPERATIONS      
For the Fiscal Years Ended September 30, 1999 and 1998        

A.  Eliminates intercompany transactions.                                       

B.  Eliminates intercompany transactions and charges eleven months of           
amortization of goodwill.                                               

C.  Represents interest on the assumed note payable of $2,560,000 for eleven    
months at 7%.                                                           

D.  Represents the tax adjustment for the additional interest expense.          

E.  Recapitalizes Allstates' shares to 18,000,000, the equivalent number of     
 shares received in the transaction and shows the shares retained by ASI's
shareholders as issued for the reverse acquisition.                     

F.  Represents one year of amortization of goodwill.                            

G.  Represents interest on the assumed note payable of $2,560,000 for one       
year at 7%.                                                             

H.  Represents the tax adjustment for the additional interest expense.          

I.  Recapitalizes Allstates' shares to 18,000,000, the equivalent number of     
 shares received in the transaction and shows the shares retained by ASI's
shareholders as issued for the reverse acquisition.                     

F-20      

10KSB 34th Page of 42 TOC 1st Previous Next ↓Bottom Just 34th
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND        
FINANCIAL DISCLOSURE                                          

Fallon & Fallon LLP, the independent accountant which was previously engaged    
as the principal accountant to audit the Registrant's financial statements,     
was replaced on September 30, 1999 with the accounting firm of Cowan,           
Gunteski & Co., P.A.  The reason for the replacement was based solely on        
Registrant's determination that its anticipated accounting requirements         
subsequent to the acquisition of Allstates Air Cargo, Inc. necessitated a       
larger accounting firm with more personnel regularly engaged in securities-     
related accounting matters.  Such change in the certifying accountant was not   
due to any disagreement between the Registrant and its former independent       
accountant or the declination of such accountant to stand for re-election.      

PART III                                                                        

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;          
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                           

NAME                  AGE            POSITION                                   
------------------------------------------------------------------              
Joseph M. Guido        64             Chairman of the Board                     
Sam DiGiralomo         56             President, CEO, Director                  
Barton C. Theile       53             Executive Vice President, COO, Director   
Craig Stratton         48             CFO, Secretary, Treasurer, Director       

None of the above persons is related to any other of the above-named persons    
by blood or marriage.                                                           

Based upon a review of filings with the Securities and Exchange Commission      
and written representations that no other reports were required, the Company    
believes that all of the Company's directors and executive officers complied    
during fiscal 1999 with the reporting requirements of Section 16(a) of the      
Securities Exchange Acts of 1934.                                               

JOSEPH M. GUIDO, Chairman of the Board, is the founder of Allstates Air         
Cargo, Inc., having served as its President and CEO since 1961.  Mr. Guido      
became Chairman of the Board of the Company upon the acquisition of Allstates   
Air Cargo, Inc. on August 24, 1999.  Prior to forming Allstates Air Cargo,      
Inc., Mr. Guido served as a freight supervisor with American Airlines, and as   
a sales and station manager for Air Cargo  Consolidators.                       

SAM DIGIRALOMO, became President, CEO and a director of the Company upon the    
acquisition of Allstates Air Cargo, Inc. on August 24, 1999.  Prior to such     
acquisition, Mr. DiGiralomo had served as the President, Treasurer, CEO and a   
director of Audiogenesis Systems, Inc. since it was formed in January, 1997.    
From July 1981 through January 1997, Mr. DiGiralomo had been the President of   
the predecessor of Audiogenesis Systems, Inc., Genesis Safety Systems, Inc.     
Mr. DiGiralomo has more than 20 years of management and marketing experience.   
He has lectured at various trade associations and universities, and designed  
and authored several employee training programs.  Mr. DiGiralomo is a member    
of the American Society of Safety Engineers.                                    

14    

10KSB 35th Page of 42 TOC 1st Previous Next ↓Bottom Just 35th
BARTON C. THEILE, became Executive Vice President, COO and a director of the    
Company upon the acquisition of Allstates Air Cargo, Inc. on August 24, 1999.   
Prior to such acquisition, Mr. Theile had served Allstates Air Cargo, Inc.,     
as a sales representative, operations manager, and Executive Vice President     
over a period of 19 years.  In addition to his experience at Allstates, Mr.     
Theile was President of Cargo Logistics Group, LLC.  Mr. Theile has been        
involved in sales, marketing operations and administration in the               
transportation industry for over 25 years.                                      

CRAIG STRATTON, became CFO, Secretary, Treasurer and a director of the          
Company upon the acquisition of Allstates Air Cargo, Inc. on August 24, 1999.   
Prior to such acquisition, Mr. Stratton served as  Chief Financial Officer      
for Allstates Air Cargo, Inc. since November 1997.   Before joining             
Allstates, for three years, Mr. Stratton held the position of Corporate         
Controller for Programmer's Paradise, Inc. a cataloger and distributor of       
technical software.  From 1990 through 1994, he was Controller for Baronet      
Corporation, an importer and distributor of leather goods accessories.  From    
1981 through 1990, he was employed by the finance department of Contel IPC, a   
specialty telephone systems manufacturer and service provider, where he held    
various positions of increasing responsibility in corporate accounting,         
including an appointment to Assistant Controller in 1987.  In 1973, Mr.         
Stratton received his B.S. in accounting, and in 1980 he earned his MBA.  Mr.   
Stratton has been a CPA since 1986.                                             

15    

10KSB 36th Page of 42 TOC 1st Previous Next ↓Bottom Just 36th
ITEM 10. MANAGEMENT REMUNERATION AND TRANSACTIONS                               

10KSB 37th Page of 42 TOC 1st Previous Next ↓Bottom Just 37th
EXECUTIVE COMPENSATION                                                          

                                                        [Enlarge/Download Table]
                        SUMMARY COMPENSATION TABLE                                          
                                                                                            

             Annual Compensation              Long term compensation                        
             -----------------------         --------------------------                     
Name and     Year    Salary    Bonus    Other      Awards                         All       
Principal              ($)      ($)     Annual    Restrict-    Options/  LTIP     Other     
Position                                Compen-   ed Stock     SARs(#)   Pay-     Compensa- 
                                        sation      ($)         ($)      outs($)  tion ($)  
----------   ----    -------   -----   --------   ---------   ---------  ------   --------  
J.           1999    317,821           92,500(1)                                  202,597(2)
Guido,       1998    294,920          111,600(3)                                            
Chairman     1997    283,415   20,000  85,800(1)                                            
of the                                                                                      
Board                                                                                       

Sam          1999     80,200(4)       143,253(5)                                  120,000(7)
DiGiralomo,  1998     65,000(4)        26,486(5)                                            
President,   1997     65,000(4)                                                             
CEO                                                                                         

B. Theile,   1999    189,411            4,920(6)                                   20,000(7)
COO,         1998    152,328                                                                
Exec. VP     1997          0                                                                

Craig                                                                                       
Stratton,    1999    100,826                                                        8,000(7)
CFO,         1998     77,221                                                                
Secretary,   1997          0                                                                
Treasurer                                                                                   


__________________                                                              

(1)   Rental income from leasing of Newark branch location and Forked River     
corporate office                                                    
(2)   Proceeds from sale to Allstates Air Cargo, Inc. of one share Allstates    
Air Cargo, Inc. stock                                               
(3)   Rental income from leasing of Newark branch location and Forked River     
 corporate office ($90,300), and interest paid in 1996 loan to company
($21,300)                                                           
(4)   Employed by Audiogenesis Systems, Inc. on part time basis at $65,000      
per year                                                            
(5)   Commissions paid for consulting services in connection with site          
licensing agreements                                                
(6)   Commission paid for management services to GTD Logistics, Inc.            
(7)   Excess stock compensation valued at $.04 per share                        

On August 24, 1999, the Company entered into Employment Agreements with three   
of the Company's stockholders.  The Employment Agreements  are effective for    
the term beginning August 24, 1999 through December 31, 2004.    The            
following is a summary of the terms of these agreements:                        

Annual                    
Name/Position              Salary               Bonus                           
-------------              ------               ------                          
Joseph M. Guido,                                                                
Chairman of                                                                     
The Board                  $308,000          3% of fiscal year                  
                                 Increase in net profits

16    

10KSB 38th Page of 42 TOC 1st Previous Next ↓Bottom Just 38th
Sam DiGiralomo,                                                                 
President/Chief                                                                 
Executive Officer          $208,000          3% of fiscal year                  
                                 Increase in net profits

Barton M. Theile,                                                               
Executive Vice President/                                                       
Chief Operating Officer     $207,922         3% of fiscal year                  
                                 Increase in net profits

Under the terms of their respective employment agreements, Mr. Guido, Mr.       
DiGiralomo and Mr. Theile have agreed to work full time.  The agreements also   
provide for health and life insurance benefits, participation in the            
Company's 401(k) plan, disability benefits, expense reimbursements,             
indemnification from civil or criminal actions arising out of the Executive's   
employment, financial and tax advice, tax "gross-up" provisions, severance      
pay (equal to 100% of compensation for  a period of five years), and payments   
in the event of a change of control.                                            

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                    
MANAGEMENT                                                                      

The following table sets forth the beneficial ownership of the Common   
Stock of the  Company  as of February 28, 1999 by each  person who was known    
by the Company to  beneficially  own more than 5% of the common stock, by       
each director and executive officer who owns shares of common stock and by      
all directors and executive officers as a group:                                

Title            Name and Address       No. of Shares            Percent of     
of class        of Beneficial Owner     and nature of             class (1)     
                    Beneficial Ownership
--------        -------------------     -----------------------  -----------    
Common          Joseph Guido                                                    
4 Lakeside Drive South                          
       Forked River, NJ 08731    18,500,000(2)          56.91%

Common          Sam DiGiralomo                                                  
7 Doig Road, Suite 3                            
       Wayne, NJ 07470            5,000,000             15.38%

Common          Barton C. Theile                                                
4 Lakeside Drive South                          
       Forked River, NJ 08731       500,000              1.54%

Common          Craig D. Stratton                                               
4 Lakeside Drive South                          
       Forked River, NJ 08731       200,000              0.62%

Common          All officers & directors                                        
       as a group (4 persons)    25,200,000             74.44%

-----------------                                                               

(1)   Based upon 32,509,872 shares outstanding as of December 17, 1999.         

(2)   Comprised of 18,250,000 shares owned by Joseph Guido and 250,000 shares   
owned by Teresa Guido, who are husband and wife                     

17    

10KSB 39th Page of 42 TOC 1st Previous Next ↓Bottom Just 39th
ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

The following shares have been reserved to be issued to certain non-  
affiliate holders of options which remained outstanding after a reverse         
acquisition transaction by Genesis Safety Systems, Inc. (predecessor of         
Audiogenesis Systems, Inc.) pursuant to the anti-dilution provisions of such    
options.  Such shares will be issued, at no cost to the option holders, only    
in the event that such option holders exercise their options in the Company's   
predecessor.                                                                    

# Options          Terminates:                              
------------       ----------                               
10,000           7/31/00                              
3,000          11/27/00                             

On June 22, 1998 and June 29, 1998, the Company borrowed $12,000 and $1,500,    
respectively, from Sam DiGiralomo, President of the Company, under promissory   
notes bearing interest at 8% per annum.  Such notes have been satisfied in      
full.                                                                           

On September 18, 1998, the Company entered into an agreement with Allstates     
Air Cargo, Inc. to develop customized audio-visual products.  The controlling   
shareholder of Allstates Air Cargo, Inc. was Joseph Guido, Chairman of the      
Board of the Company.  The Company believes that the terms of such agreement    
were the same as would be negotiated through arms-length bargaining with an     
unaffiliated purchaser.  The Company has fulfilled its obligations under such   
agreement.                                                                      

The Company's $1,350,000 line of credit, which expires December 31,   
2000, is personally guaranteed by Joseph M. Guido, Chairman of the Board of     
the Company, and Teresa Guido, his wife.                                        

The Company leases real estate in two locations from Joseph M. Guido. 
Rent expense under these leases totaled $92,500 for the year ended September    
30, 1999.  The Company believes that such leases are commensurate with the      
terms which could be obtained from an unaffiliated third party.                 

   Prior to his becoming President, CEO and a director of the Company, the
Company entered into royalty agreements for its Los Angeles and Chicago         
licensee locations with Sam DiGiralomo, whereby the Company agreed to pay Mr.   
DiGiralomo a royalty equal to 5% of the gross profit per the contract.          
Royalty payments to Mr. DiGiralomo for the year ended September 30, 1999        
totaled $143,253.                                                               

Pursuant to the Stock Purchase Agreement and Plan of Reorganization   
between Audiogenesis Systems, Inc. and Allstates Air Cargo, Inc., the Company   
assumed 101 Notes payable from Joseph M. Guido to the Estate of A.G. Hoffman,   
Jr., aggregating $2,511,730 in principal, with repayment over 101 years at      
annual principal payments of $25,000 plus interest at 7% per year. All or any   
of the notes may be paid at any time before maturity without any prepayment     
penalty. In the event of a default under the notes by the Company, Joseph M.    
Guido remains personally liable for the notes and the 101 shares of Allstates   
Air Cargo, Inc. common stock held as security under the notes  (representing    
48.1% of the issued and outstanding common stock of Allstates Air Cargo,        
Inc.) may be sold at public or private sale.                                    

The Company's legal counsel, Stephen M. Robinson, Esq., beneficially  
owns 1,200,000 shares of common stock.                                          

18    

10KSB 40th Page of 42 TOC 1st Previous Next ↓Bottom Just 40th
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K                                      
(a)  The following exhibits are filed pursuant to Item 601 of Regulation S-B.   

                                                                [Download Table]
                                                                             
Exhibit No.   Description of Document                                        
-----------   -----------------------                                        

3.01*         Articles of Incorporation of Audiogenesis Systems,             
              Inc. dated January 14, 1997 filed as an exhibit to Registrant's
              Registration Statement on Form 10-SB, filed October 23, 1998   

3.02*         By-laws of Audiogenesis Systems, Inc. filed as an exhibit to   
              Registration Statement on Form 10-SB, filed  October 23, 1998  

10.01*        Echolocation Technology License Agreements filed as an exhibit 
              to Registration Statement on Form 10-SB, filed October 23, 1998

10.02*        Agreement with Allstates Air Cargo, Inc. dated 9/18/98 filed as
              an exhibit to Registration Statement on Form 10-SB, filed      
              October 23, 1998                                               

10.03*        Promissory Note to Marshall E. Levine Ph.D. Profit Sharing Plan
              filed as an exhibit to Registration Statement on Form 10-SB,   
              filed October 23, 1998                                         

10.04*        Genesis Safety Systems, Inc. Stock Option Plan, filed as an    
              exhibit to Amendment No. 1 to Registration Statement on Form   
              10-SB, filed March 11, 1999                                    

10.05*        Stock Purchase Agreement and Plan of Reorganization            
              dated June 30, 1999, filed as an exhibit to Registrant's Form  
              8-K filed July 12, 1999                                        

10.06*        Employment Agreement with Joseph M. Guido, filed as an exhibit 
              to Registrant's Form 8-K filed September 9, 1999               

10.07*        Employment Agreement with Sam DiGiralomo, filed as an exhibit  
              to Registrant's Form 8-K filed September 9, 1999               

10.08*        Employment Agreement with Barton C. Theile, filed as an exhibit
              to Registrant's Form 8-K filed September 9, 1999               

10.09*        Certificate of Amendment to the Certificate of Incorporation   
              of Registrant changing the name of the corporation from        
              Audiogenesis Systems, Inc. to Allstates WorldCargo, Inc.,      
              filed as an exhibit to Registrant's Form 8-K filed             
              December 1, 1999                                               

21.01*        List of Subsidiaries of Registrant filed as an exhibit to      
              Registration Statement on Form 10-SB, filed October 23, 1998   

27.01+        Financial Data Schedule                                        

*Filed previously, incorporated herein by reference                          
+Filed herewith                                                              

(b)  Reports on Form 8-K:                                                    

Report on Form 8-K filed July 12, 1999, date of earliest event June 29, 1999;
filed with respect to (i) Item 2 -  the termination of the Echolocation      
License between VCU-IPF/VCU and the Company, and (ii) Item 5 - the Stock     
Purchase Agreement and Plan of Reorganization with Allstates Air Cargo, Inc. 
and its sole shareholder                                                     

Report on Form 8-K filed August 17, 1999, with respect to Item 7 - amending  
the report filed July 12, 1999 to include financial statements               

                                     19                                      

10KSB 41st Page of 42 TOC 1st Previous Next ↓Bottom Just 41st
Report on Form 8-K filed September 9, 1999, date of earliest event August 24,
1999; filed with respect to Item 1, Item 2, and Item 5 - with respect to the 
closing of the Stock Purchase Agreement and Plan of Reorganization with      
Allstates Air Cargo, Inc. and its sole shareholder                           

Report on Form 8-K filed September 30, 1999, date of earliest event September
30, 1999; filed with respect to Item 4 - the change of independent accountant
from Fallon & Fallon, P.A. to Cowan, Gunteski & Co., P.A.                    

                                     20                                      

10KSB Last Page of 42 TOC 1st Previous Next ↓Bottom Just 42nd
SIGNATURES                                                                   

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the   
registrant caused this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.                                                   

ALLSTATES WORLDCARGO, INC.                                                   

BY:            /s/ SAM DIGIRALOMO                                            
        ---------------------------------                                    
               Sam DiGiralomo, President and CEO                             

DATED:  January 12, 2000                                                     
        ---------------------------------                                    

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on   
the date indicated.                                                          

Signature                      Title                         Date            
---------                      -----                         ----            

BY:   /s/ Joseph M. Guido     Chairman of the Board of      January 12,2000  
      ---------------------   Directors                     ---------------- 
       Joseph M. Guido                                                       

BY:   /s/ Sam DiGiralomo      President, CEO and Director   January 12,2000  
     ---------------------                                  ---------------- 
       Sam DiGiralomo                                                        

BY:   /s/ Barton C. Theile    Exec. Vice President, COO     January 12,2000  
     ---------------------    and Director                  ---------------- 
      Barton C. Theile                                                       

BY:   /s/ Craig D. Stratton   Secretary, Treasurer,         January 12,2000  
     ---------------------    CFO and Director              ---------------- 
      Craig D. Stratton                                                      

                                     21

10KSB	1st Page of 42	TOC	↑Top	Previous	Next	↓Bottom	Just 1st

10KSB	2nd Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 2nd

10KSB	3rd Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 3rd

10KSB	4th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 4th

10KSB	5th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 5th

10KSB	6th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 6th

10KSB	7th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 7th

10KSB	8th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 8th

10KSB	9th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 9th

10KSB	10th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 10th

10KSB	11th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 11th

10KSB	12th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 12th

10KSB	13th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 13th

10KSB	14th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 14th

10KSB	15th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 15th

10KSB	16th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 16th

10KSB	17th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 17th

10KSB	18th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 18th

10KSB	19th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 19th

10KSB	20th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 20th

10KSB	21st Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 21st

10KSB	22nd Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 22nd

10KSB	23rd Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 23rd

10KSB	24th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 24th

10KSB	25th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 25th

10KSB	26th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 26th

10KSB	27th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 27th

10KSB	28th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 28th

10KSB	29th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 29th

10KSB	30th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 30th

10KSB	31st Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 31st

10KSB	32nd Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 32nd

10KSB	33rd Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 33rd

10KSB	34th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 34th

10KSB	35th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 35th

10KSB	36th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 36th

10KSB	37th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 37th

10KSB	38th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 38th

10KSB	39th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 39th

10KSB	40th Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 40th

10KSB	41st Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 41st

10KSB	Last Page of 42	TOC	1st	Previous	Next	↓Bottom	Just 42nd

Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10KSB’ Filing	Date	First	Last	Other Filings

	12/31/04	28	37	10-Q
	12/31/00	26	39	10-Q
	9/30/00	26	29	10-K
	4/15/00	25
	3/31/00	11
Filed on:	1/12/00	42
	1/6/00	15
	12/31/99	28		10QSB
	12/30/99	4
	12/17/99	38
	12/15/99	1	30
	12/1/99	40		8-K
	11/30/99	2
	11/4/99	21
For Period End:	9/30/99	1	41	8-K, NT 10-K, NTN 10K
	9/27/99	11
	9/9/99	40	41	8-K
	8/24/99	2	41	8-K
	8/17/99	40		8-K/A
	7/22/99	30
	7/12/99	40		8-K
	6/30/99	40		10QSB
	6/29/99	40		8-K, 8-K/A
	5/19/99	15
	4/14/99	24
	3/11/99	40		10SB12G/A
	2/28/99	38
	10/27/98	21
	10/23/98	40		10SB12G
	10/1/98	19
	9/30/98	8	33
	9/18/98	39
	6/29/98	39
	6/22/98	39
	10/1/97	19
	9/30/97	9	19
	4/14/97	24
	1/14/97	2	40
				List all Filings

↑Top

Filing Submission 0001009191-00-000003 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Allstates Worldcargo Inc – ‘10KSB’ for 9/30/99

On: Wednesday, 1/12/00 · For: 9/30/99 · Accession #: 1009191-0-3 · File #: 0-24991

Annual Report — Small Business — Form 10-KSBFiling Table of Contents

10KSB — Annual Report — Small BusinessDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents

10KSB — Annual Report — Small Business
Document Table of Contents