Commitments and Contingencies

9 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Commitments and Contingencies

Note 10. Commitments and Contingencies

Operating Leases

The Company leases office space in Sarasota, Florida under a one year operating lease with two additional one year extensions at the option of the Company. Beginning August 1, 2010, the Company entered into a new lease for more space at $1,200 per month. The Company also entered into a 60-month lease, at $7,700 per month; relating to IT hardware infrastructure. The Company is currently in default in all of these arrangements.

Employment Agreements

From time to time since 2008, the Company has entered into three year employment agreements with two executives of the Company. The Company is committed to pay the executives a total of approximately $450,000 per year, with certain guaranteed bonuses and increases. The agreements also call for bonuses if the executives meet certain goals which are to be set by the board of directors. A third executive left the Company in January, 2011 with certain portions of his employment agreement not yet funded. That former executive has commenced legal action against the Company – see Litigation-Note 10. Also, a second executive, the former CEO resigned in March, 2012, and all executives are owed $426,945 as a group.

Purchase Commitments

The Company’s purchase commitments for revenue equipment are always under negotiation and review. Upon execution of the purchase commitments, the Company anticipates that purchase commitments under contract will have a net purchase price of approximately $1MM to $3MM and are expected to be financed over an average of 4 to 7 years.

Litigation

The following table provides information about the litigation in which we are now engaged. This litigation has arisen from our acquisition of Triple C Transport.

Plaintiff Name	Defendant Name	Case No.	Court	Basis of Claim and Amount
People's United Equipment Finance Corp.	Triple C Transport, Inc.	4:11-cv-00264	U.S. District Court Southern District of Texas	Triple C’s guaranty of its lessor’s equipment financing $3,603,716
Hilda L. Solis, Secretary of Labor	Triple C Transport*, et al.	A11-4049-TJM	U.S. Bankruptcy Court District of Nebraska	Claim for unpaid wages $39,201
Integrated Freight Corporation	Craig White and Vonnie White	11-248	District Court Douglas, Nebraska	Rescission of Stock Exchange Agreement and unspecified damages.
C&V LLC	Triple C Transport, Inc.	11-316	District Court Douglas, Nebraska	Real estate lease payments $178,972

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*Defense of Triple C Transport has been tendered to Craig White and Vonnie White.

All of the litigation identified above includes claims for interest and attorney’s fees.

Craig Carrier, White Farms Trucking and C&V are entities owned and controlled by Mr. and Mrs. White, from whom we acquired Triple C Transport. The operations of Triple C Transport have been discontinued and it has no assets. One or more judgments against Triple C Transport would be recorded as a liability on our consolidated balance sheet even though we would have no liability to pay any such judgment. We have exposure to direct liability only in the above listed cases in which we are a named defendant. If we are successful in our action for rescission of the Stock Exchange Agreement, of which we have no assurance, pursuant to which we acquired Triple C Transport from Mr. and Mrs. White, then we would not expect to record any liability for Triple C Transport’s litigation losses, to incur any direct liability with respect to our guaranty of Triple C Transport’s leases to the entities owned and controlled by Mr. and Mrs. White or to incur liability for alleged damages in unspecified amounts. We intend to aggressively pursue our case for rescission of our acquisition of Triple C Transport and for damages against Mr. and Mrs. White, based on fraud, breach of material representations and warranties and gross and intentional mismanagement of Triple C Transport.

Other Litigation:

Plaintiff Name	Defendant Name	Case No.	Court	Basis of Claim and Amount
Weiss, as receiver for the Nutmeg/Fortuna Fund	Integrated Freight Corporation	11-CV-03130	U.S. District Court Northern District of Illinois	Collection $167,000
Batten Capital Group, LLC	Integrated Freight Corporation	None assigned	Superior Court, DeKalb County, Georgia	Break-up fee for unconsummated financing $60,000
XTRA Lease LLC	Cross Creek Trucking, Inc.	11SL-CC 04556	Circuit Court, St. Louis County, Missouri,  Division 10	Rental of trailers and related repairs $119,550
Alan Stone & Company,  LLC	Integrated Freight Corporation	2012CA003801 XXXXMB	15th Circuit Court, Palm Beach County, Florida	Unpaid financing fees and costs $31,000

The suit by Nutmeg/Fortuna Fund is for collection on a promissory note that Original Integrated Freight issued in purchase of our preferred stock from the plaintiff in a transaction in which Original Integrated Freight acquired control of us. We will endeavor to negotiate a settlement of this litigation or the purchase of the note from the plaintiff by another party who will restructure the note.

Litigation recently resolved:

On August 25, 2011 the Company entered into a confidential settlement with Steven E. Lusty for breach of his employment agreement and unspecified damages. As part of the settlement the Company issued 50,000 common shares to Mr. Lusty and as of December 31, 2011 had paid a portion of the amounts outlined in the agreement. All other amounts have been previously recorded on the financial statements of the Company. Since December 31, 2011 the Company has been delinquent in a portion of the payments outlined in the agreement.

Our ability to aggressively defend and to prosecute the litigation described in the preceding table will depend significantly on our ability to fund legal fees and related costs of litigation.

We expect to be engaged in litigation from time to time in the normal course of our business as a motor freight carrier. Claims for worker’s compensation, auto accident, general liability and cargo and property damage are routine occurrences in the motor transportation industry. We have programs and policies which are designed to minimize the events that result in such claims. We maintain insurance against workers’ compensation, auto liability, general liability, cargo and property damage claims. We are responsible for deductible amounts up to $3,000 per accident. We periodically evaluate and adjust our insurance and claims reserves to reflect our experience. Our workers’ compensation claims are entirely covered by our insurance. Insurance carriers have raised premiums for many businesses, including truck transportation companies. As a result, our insurance and claims expense could increase, or we could raise our deductible when our policies are renewed. We believe that our policy of self-insuring up to set limits, together with our safety and loss prevention programs, are effective means of managing insurable costs.

Plaintiff Name	Defendant Name	Case No.	Court	Basis of Claim and Amount
White Farms Trucking, Inc.	Triple C Transport* and Integrated Freight Corporation	10-43797-TJM	U.S. Bankruptcy Court District of Nebraska	Unpaid and future rents under Master Lease and our guarantee of Master lease $9,309,476
Craig Carrier Corp., LLC and	Triple C Transport* and Integrated Freight Corporation	10-43798-TJM	U.S. Bankruptcy Court District of Nebraska	Unpaid and future rents under Master Lease and our guarantee of Master lease$9,309,476

The cases above were dismissed with prejudice by the court in December, 2011.

Claims and Assessments

The Company is involved in certain claims and pending litigation arising from the normal conduct of business. Based on the present knowledge of the facts and, in certain cases, opinions of outside counsel, the Company believes the resolution of these claims and pending litigation will not have a material adverse effect on our financial condition, our results of operations or our liquidity.