10. Commitments and Contingencies

12 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

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 has accrued $35,711 towards this lease and has vacated the property. The Company also entered into a 60-month lease, at $7,700 per month; relating to IT hardware infrastructure, see litigation below. The Company is currently in default in all of these arrangements.

We have been paying rent for Smith Systems Transportation to a facility  owned by Colorado Holdings, a company controlled by Mr. Smith, Annual rental rate is $48,000, which we accrue but are not being required to pay until Smith Systems Transportation’s cash flow is adequate.

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 $325,393 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.

Active litigation:

Plaintiff Name	Defendant Name(s)	Case No.	Court	Basis of Claim and Amount
Hillair Capital Investments, L.P.	Integrated Freight Corporation, Smith Systems Transportation, Inc., Morris Transportation, Inc., Cross Creek Trucking, Inc., Paul Henley, Henry P. Hoffman, Matthew A. Veal	12-Civ-7164	U.S. District Court Southern District of New York	default on two notes totaling $339,660 Hillair is seeking $1,200,000 plus unspecified damages
Datum Corporation	Integrated Freight	2012 CA 003737 NC	Twelve Judicial	Unpaid and future
	Corporation		Circuit	rents under
			Sarasota County,	agreement
			Florida	$174,463.69.
				Judgment entered in
				favor of plaintiff.
Batten Capital	Integrated Freight	12OV1983-08	Superior Court,	Break-up fee for
Group, LLC	Corporation		DeKalb	unconsummated
			County, Georgia	financing $60,000.
				Judgment entered in
				favor of plaintiff.
Integrated Freight	Craig White and	11-248	District Court	Rescission of Stock
Corporation	Vonnie White		Douglas, Nebraska	Exchange
				Agreement and
				unspecified
				damages. Summary
				judgment entered
				against defendant
				due to lack of
				defense.
Chapman	Integrated Freight	12-2302	U.S. District Court	Unpaid acquisition
Associates General	Corporation		Northern District of	fees and costs.
Business, Inc.			Illinois	Judgment for
				$835,971.19 entered
				in favor of plaintiff.
Alan Stone &	Integrated Freight	2012CA003801	15th Circuit Court,	Unpaid acquisition
Company,  LLC	Corporation	MB	Palm Beach County,	fees and costs
			Florida	$31,000.00
				Judgment for
				$31,000 entered in
				favor of plaintiff.

Luberski, Inc.	Integrated Freight	30-2012-00601745-	Superior Court for	IFCR's default on
	Corporation, Paul	CU-BC-CJC	State of California	two notes totaling
	Henley, Smith			$400,000 plus
	Systems			interest
	Transportation, Inc.,
	Morris
	Transportation, Inc.,
	Cross Creek
	Trucking, Inc., and
	DOEs 1-100,
	inclusive
Weiss, as receiver for	Integrated Freight	11-CV-03130	U.S. District Court	Judgment for
the	Corporation		Northern District of	$167,000 entered in
Nutmeg/Fortuna			Illinois	favor of plaintiff.
Fund
Robins Consulting, LLC	Integrated Freight	DC13-00432	191st Judicial District	900,201.39 for
	Corporation		Dallas County	unpaid note accrued
			Texas	interest and decline
				in value of stock
Morris Transportation, Inc.	Integrated Freight	CV13-52-4	In the Circuit Court of	Rescission and
	Corporation		Ashley County, Arkansas	Damages
Terry Brown Corporation	Integrated Freight	2012 OA868 3NC	Circuit Court	$59,502.70
	Corporation		in and for	plus interest
			Sarasota County, Florida
Hampton Growth	Integrated Freight	SC119965	Superior Court of the	$135,835
Resources	Corporation		State of California	plus interest
			County of Los Angeles
			West Judicial District

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.

Other settlements:

On August 25, 2011 we entered into a confidential settlement with Steven E. Lusty, our former chief operating officer, for breach of his employment agreement and unspecified damages. As part of the settlement we 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 our financial statements. Since December 31, 2011 we have been delinquent in a portion of the payments outlined in the agreement.

On April 16, 2012 we entered into a forbearance agreement with Michael S. DeSimone, former owner of Cross Creek Trucking, Inc. As part of the agreement we issued a confession of judgment to Mr. DeSimone in the amount of $3,745,415.54 plus accrued interest. All other amounts have been previously recorded on our financial statements. We agreed to pay $5,000 per month commencing September 1, 2012 and we are not currently in compliance with the agreement.

We incurred $84,372 of expenses in connection with our litigation for the year ended March 31, 2012.

Litigation in the normal course of business

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.

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.