XML 39 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
15. Subsequent Event – Disputed Subsidiary
12 Months Ended
Mar. 31, 2012
Subsequent Events [Abstract]  
15. Subsequent Event – Disputed Subsidiary

Note 15. Subsequent Event – Disputed Subsidiary

 

On April 30, 2013, the Company received service of a suit brought by Mark Morris and Morris Transportation, Inc. alleging breach of contract, damages of a generally unspecified amount and seeking rescission of the Company’s 2008 purchase of one of our wholly owned subsidiaries, Morris Transportation, Inc. ("MTI"). The suit is filed in the Circuit Court in Ashley County, Arkansas, Case No. CV13-52-4.

 

The Company believes the claim for rescission is devoid of legal and factual merit, and as an equitable remedy, is barred by the principle of laches. The Company would assert that Mr. Morris’ claims would be limited to amounts in default, plus interest, and specific performance on stock issues. The Company substantially performed its financial obligations under the acquisition of MTI, in cash and in conversion promissory notes to stock. The Company has every intention of satisfying any remaining outstanding obligation to Mr. Morris; of which Mr. Morris is aware. Furthermore, the Company has made significant loans and advances to MTI, all of which Mr. Morris is aware, as both an officer of MTI and Board Member of the Company since 2008. The Company intends to consider counterclaims it may have against Mr. Morris. There is no assurance the Company will be able to devote the necessary legal resources to the case needed to prevail. Furthermore, the time required to resolve the litigation may be long, with uncertainty as to the financial and operational impact of the outcome on the Company. The remedy of rescission generally requires each party to return all consideration paid and received in the form of stock, notes and cash, beginning in 2008. But, the Company may not recover the costs associated with the acquisition or investments subsequently made directly in MTI. There is no assurance we will prevail in such litigation and therefore the outcome of the litigation may have a negative effect on the Company’s financials and prospects.

 

Nonetheless, the Company possesses rights beyond those provided in the August 2012 Board of Directors’ settlement and resolutions to which Mr. Morris was a signatory

Financial data related to the MTI segment are as follows:

 

Assets $4,293,671

Liabilities $4,253,252