Integrated Freight 10Q/A 2012 Q1 Quarterly report (amended)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

AMENDMENT NO. 1

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2011 [First Quarter]

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _____________ to _____________

COMMISSION FILE NO. 000–14273

INTEGRATED FREIGHT CORPORATION

(Exact name of registrant as specified in its charter)

Florida		84–0868815
State or other jurisdiction of incorporation or organization		I.R.S. Employer Identification No.

Suite 200, 6371 Business Boulevard Sarasota, Florida		34240
(Address of principal executive offices)		(Zip code)

Issuer’s telephone number: (941) 907-8372

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Title of each class:		Name of Exchange on which registered:
Common Stock, $0.001 par value		(None)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES oNO þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

The number of shares outstanding of each of the issuer’s classes of common stock at August 17, 2011 was 37,642,089 shares of $0.001 par value common stock.

TABLE OF CONTENTS

		PAGE
Part I - Financial Information

Item 1.	Financial Statements (Unaudited)		4
Consolidated Balance Sheets			F-1
Consolidated Statements Of Operations			F-2
Consolidated Statement of Changes in Stockholders’ Deficit			F-3
Consolidated Statements Of Cash Flows			F-4
Notes To The Financial Statements			F-5

Item 2.	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations		6

Item 3.	Quantitative And Qualitative Disclosures About Market Risk		13

Item 4.	Controls And Procedures		13

Part II - Other Information

Item 1.	Legal Proceedings		14

Item 2.	Unregistered Sales Of Equity Securities And Use Of Proceeds		15

Item 3.	Defaults Upon Senior Securities		15

Item 4.	Submission Of Matters To A Vote Of Security Holders		15

Item 5.	Other Information		15

Item 6.	Exhibits		15

SUMMARIES OF REFERENCED DOCUMENTS

This quarterly report on Form 10–Q may contain references to, summaries of and selected information from agreements and other documents. These agreements and documents are not incorporated by reference; but, they are filed as exhibits to this quarterly report or to other reports we have filed with the U.S. Securities and Exchange Commission. The summaries of and selected information from those agreements and other documents are not complete and are qualified in their entirely by the full text of the agreements and documents, which you may obtain from the Public Reference Section of or online from the Commission.

WHERE YOU CAN FINDAGREEMENTS AND OTHER DOCUMENTS REFERRED TO

IN THIS ANNUAL REPORT

We file reports with the U.S. Securities and Exchange Commission pursuant to Section 13 of the Securities Exchange Act of 1934. You may read and copy any reports and other materials we have filed with the Commission at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site at which you may obtain all reports, proxy and information statements, and other information that we file with the Commission. The address of that web site is http://www.sec.gov.

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10–Q may include “forward–looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. We intend the forward–looking statements to be covered by the safe harbor provisions for forward–looking statements as described in those sections.

This quarterly report contains forward-looking statements that involve risks and uncertainties. We use words such as “project”, “believe”, “anticipate”, “plan”, “expect”, “estimate”, “intend”, “should”, “would”, “could”, or “may”, or other such words, verbs in the future tense and words and phrases that convey similar meaning and uncertainty of future events or outcomes to identify these forward-looking statements. There are a number of important factors beyond our control that could cause actual results to differ materially from the results anticipated by these forward-looking statements. While we make these forward–looking statements based on various factors and derived using numerous assumptions, we have no assurance the factors and assumptions will prove to be materially accurate when the events they anticipate actually occur in the future.

The forward-looking statements are based upon our beliefs and assumptions using information available at the time the statements are made. We caution you not to place undue reliance on our forward-looking statements as (i) these statements are neither a prediction nor a guaranty of future events or circumstances and (ii) the assumptions, beliefs, expectations and projections about future events may differ materially from actual results. We undertake no obligation to publicly update any forward-looking statement to reflect developments occurring after the date of this quarterly report.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The financial statements of Cross Creek Trucking, Inc., which we acquired effective as of April 1, 2011 are consolidated in our financial statements included herein at and for the quarter ended June 30, 2011. We have encountered unexpected complications and delays in completing an audit Cross Creek Trucking, Inc.’s financial statements at and for the twelve months ended March 31, 2011 and 2010, including financial costs and staff time to complete the audit. Accordingly, we do not have audited financial statements of Cross Creek Trucking, Inc. as the starting point for Cross Creek Trucking, Inc.’s financial statements at and for the third quarter ended June 30, 2011. Our consolidated financial statements included herein are subject to adjustment with respect to Cross Creek Trucking, Inc.’s financial statements for the concurrent period which may and are expected to result from completion of Cross Creek Trucking, Inc.

INDEX

CONSOLIDATED FINANCIAL STATEMENTS OF

INTEGRATED FREIGHT CORPORATION

	Page



Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and March 31, 2011		F-1

Consolidated Statements of Operations For the Three Months Ended June 30, 2011 and 2010 (Unaudited)		F-2

Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2011 and 2010 (Unaudited)		F-3

Notes to Consolidated Financial Statements (Unaudited)		F-4

INTEGRATED FREIGHT CORPORATION

Consolidated Balance Sheets

	June 30, 2011			March 31, 2011
	(Unaudited)
Assets
Current assets:
Cash	$	131,386		$	54,158
Accounts receivables, net of allowance for doubtful accounts of $50,000		5,042,981			2,564,352
Prepaid expenses and other assets		614,900			545,930
Total current assets		5,789,267			3,164,440

Property and equipment, net of accumulated depreciation		14,108,393			4,141,068
Intangible assets, net of accumulated amortization		1,522,627			268,785
Assets of discontinued operations		28,469			236,279
Total assets	$	21,448,756		$	7,810,572

Liabilities and Stockholders’ Deficit
Current liabilities:
Bank overdraft	$	386,311		$	214,303
Accounts payable		2,578,937			1,151,337
Accrued expenses and other liabilities		2,329,209			1,112,778
Line of credit		2,476,343			895,153
Notes payable - related parties		996,697			1,180,987
Current portion of notes payable		6,631,397			2,709,111
Total current liabilities		15,398,894			7,263,669

Derivative liability		332,288			513,471
Notes payable - related parties		4,127,140			120,000
Notes payable, net of current portion and debt discount		6,271,057			4,235,242
Liabilities of discontinued operations		1,893,269			1,765,313
Total long-term liabilities		12,623,754			6,634,026

Total liabilities		28,022,648			13,897,695

Stockholders’ deficit:
Common stock, $0.001 par value, 2,000,000,000 shares authorized,
37,642,089 and 31,574,883 shares issued and outstanding at June 30, 2011 and		37,641			31,575
March 31, 2011, respectively
Additional paid-in capital		8,388,844			6,013,911
Accumulated deficit		(15,352,750	)		(12,475,539	)
Total Integrated Freight Corporation stockholders’ deficit		(6,926,265	)		(6,430,053	)
Non controlling interest		352,373			342,930
Total stockholders’ deficit		(6,573,892	)		(6,087,123	)

Total liabilities and stockholders’ deficit	$	21,448,756		$	7,810,572

See Notes to Consolidated Financial Statements.

F - 1

INTEGRATED FREIGHT CORPORATION

Consolidated Statements of Operations

	(Unaudited)
	Three Months Ended June 30,
	2011			2010

Revenue	$	13,036,079		$	4,781,048

Operating Expenses
Rents and transportation		2,029,481			1,035,787
Wages, salaries and benefits		4,015,553			1,325,899
Fuel and fuel taxes		4,923,539			1,458,551
Depreciation and amortization		1,261,335			518,274
Insurance and claims		279,572			191,621
Operating taxes and licenses		418,403			40,903
General and administrative		1,919,862			475,207
Total Operating Expenses		14,847,745			5,046,242

Loss from continuing operations		(1,811,666	)		(265,194	)

(Loss)/Gain from discontinued operations		(420,756	)		2,348

Other Income (Expense)
Gain/(loss) on change of fair value of derivative liability		(26,817	)		-
Interest		(797,003	)		(143,659	)
Interest - related parties		(19,848	)		(39,898	)
Other income (expense)		198,879			111,054
Total Other Income (Expense)		(644,789	)		(72,503	)
Net loss before noncontrolling interest		(2,877,211	)		(335,349	)
Noncontrolling interest share of subsidiary net income (loss)		9,443			5,961
Net loss	$	(2,867,768	)	$	(329,388	)

Net loss per share - basic and diluted
Loss from continuing operations	$	(0.07	)	$	(0.02	)
Loss from discontinued operations		(0.01	)		0.00
Net loss per common share-basic and diluted	$	(0.08	)	$	(0.02	)

Weighted average common shares outstanding - basic and diluted		36,332,331			21,089,749

See Notes to Consolidated Financial Statements.

F - 2

INTEGRATED FREIGHT CORPORATION

Consolidated Statements of Cash Flows


	(Unaudited) Three Months Ended
	June 30,
Cash flows from operating activities:	2011			2010
Net loss	$	(2,877,211	)	$	(329,658	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		1,261,335			518,273
Debt discount amortization		97,417			-
Common stock issued in payment of derivative		208,000			-
Warrants issued for interest		101,280			-
Loss on asset dispositions		(1,833	)		-
Minority interest in earnings of subsidiary		9,443			(5,691	)
Stock issued for stock based compensation		-			1,000
Warrants issued for services performed		79,600			-
Stock issued for interest		197,120			-
Stock issued for services		322,500			-
Loss from discountinued operations		335,765			-
Increases/decreases in operating assets and liabilities					-
Accounts receivable		(383,531	)		(315,282	)
Prepaid expenses and other assets		693,547			(120,114	)
Accounts payable		-			148,911
Derivative liability		(181,183	)		-
Accrued and other liabilities		7,232			211,991
Net cash (used) in/provided by operating activities		(130,519	)		109,430

Cash flows from investing activities:
Purchase of property and equipment		-			(6,674	)
Purchase of discontinued operations-Triple C		-			(100,000	)
Net cash used in investing activities		-			(106,674	)

Cash flows from financing activities:
Repayments of notes payable		(661,946	)		(464,029	)
Proceeds of long term debt		-			388,000
Net proceeds/(repayments) from line of credit		665,185			150,899
Bank overdraft		172,008			-
Proceeds from exercise of warrants		32,500			-
Net cash (used) in/provided by financing activities		207,747			74,870
Net change in cash		77,228			77,626
Cash, beginning of period		54,158			48,101
Cash, end of period	$	131,386		$	125,727

See notes to consolidated financial statements.

F - 3

INTEGRATED FREIGHT CORPORATION

Consolidated Statement of Cash Flows – (Continued)

Note 1. Nature of Operations and Summary of Significant Accounting Policies

Nature of Business

Integrated Freight Corporation (a Florida corporation) [formerly PlanGraphics, Inc. (a Colorado corporation)] and subsidiaries (the “Company”) is a short to medium-haul truckload carrier of general commodities headquartered in Sarasota, Florida. The Company provides dry van, hazardous materials, and temperature controlled truckload services. The Company is subject to regulation by the Department of Transportation and various state regulatory authorities.

Pursuant to an agreement in connection with Integrated Freight Corporation’s (“Original IFC”) acquisition of control of the Company on May 1, 2009, the Company completed the sale of its historic operations to its former director and chief executive officer. This transaction closed on December 27, 2009. As part of the acquisition, the Company executed a 244.8598 for 1 reverse split in August, 2010, and all amounts have been presented on a post-split basis. Since the Company had, due to the sale of its historical operations, minimal assets and limited operations, the recapitalization has been accounted for as the sale of 404,961 shares of Original IFC common stock for the net liabilities of the Company. Therefore, the historical financial information prior to the date of the recapitalization is the financial information of IFC. Costs of the transaction have been charged to the period in which they are incurred.

Following are the terms of the merger agreement:

On December 24, 2009, Original IFC filed articles of merger in the State of Florida; and, on December 23, 2009, the Company filed articles of merger in the State of Colorado. Pursuant to these articles of merger, Original IFC merged into the Company and the Company is the legal surviving corporation.

Original IFC acquired 1,639,957 shares of the Company’s common stock, or 80.2 percent of the Company’s issued and outstanding common stock, as of May 1, 2009, for the purpose of merging the Company into Original IFC, with Original IFC being the surviving corporation. Uncertainty as to when Original IFC could obtain an effective registration statement on Form S-4 (which it filed and has now withdrawn) to complete the merger caused delays in Original IFC obtaining debt and equity funding and completing negotiations for additional acquisitions. On November 11, 2009, Original IFC and the Company agreed to restructure the transaction to provide for the Company’s acquisition of more than ninety percent of Original IFC’s issued and outstanding common stock and its merger into the Company. Colorado corporation law permits the merger of a subsidiary company owned ninety percent or more by a parent company into the parent company without stockholder approval.

In furtherance of this change to the plan to combine Original IFC and the Company, 20,228,246 shares of Original IFC’s outstanding common stock were transferred by its stockholders to Jackson L. Morris, trustee for The Integrated Freight Stock Exchange Trust, a Florida business trust (“Trust”). Original IFC also transferred the 1,639,957 shares of the Company’s common stock it owned to the Trust. The Company then exchanged 18,899,666 shares of its unissued common stock for the 20,228,246 shares of Original IFC held in the Trust. As a result of this transfer and exchange, the Trust held 20,539,623 of the Company’s shares. The number of shares of the Company’s common stock that it exchanged for the number of shares of Original IFC stock was not based on any financial or valuation considerations, but solely on the number of shares of the Company’s authorized but unissued shares in relation to the percentage of Original IFC’s outstanding common stock included in the exchange and the requirements of Colorado law that the Company own ninety percent or more of Original IFC in order to complete the merger without stockholder approval.

F - 4

As part of the merger, the Company executed a 244.8598 for 1 reverse split effective August 17, 2010. All share amounts have been presented on a post-split basis.

Accordingly, the Company accounted for the acquisition and merger as a recapitalization because Original IFC stockholders gained control of a majority of the Company’s common stock upon completing these transactions. Accordingly, Original IFC is deemed to be the acquirer for accounting purposes. The consolidated financial statements have been retroactively restated to give effect to these transactions for all periods presented, except the statement of stockholders’ deficit with regard to common shares outstanding.

Certain items in the 2010 consolidated financial statements have been reclassified to conform to the presentation in the 2011 consolidated financial statements. Such reclassifications did not have a material impact on the presentation of the overall consolidated financial statements.

Principles of Consolidation

The consolidated financial statements include the financial statements of the Company, and its wholly owned subsidiaries, Morris Transportation, Inc. (“Morris”), Smith Systems Transportation, Inc. (“Smith”), Integrated Freight Services, Inc. (“IF Services”) incorporated in February, 2011; Cross Creek Trucking, Inc. (Cross Creek), acquired April 1, 2011, and Triple C Transport, Inc. (“Triple C”).- although Triple C is shown as a discontinued operation – See Notes 2, 10, 11 and 13. Smith holds a 60% ownership interest in SST Financial Group, LLC (“SSTFG”). All significant intercompany balances and transactions within the Company have been eliminated upon consolidation.

Use of Estimates

The consolidated financial statements contained in this report have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these statements requires us to make estimates and assumptions that directly affect the amounts reported in such statements and accompanying notes. Management evaluates these estimates on an ongoing basis utilizing historical experience, consulting with experts and using other methods we consider reasonable in the particular circumstances. Nevertheless, the Company’s actual results may differ significantly from the estimates.

Management believes that certain accounting policies and estimates are of more significance in the Company’s financial statement preparation process than others. Management believes the most critical accounting policies and estimates include the economic useful lives of our assets, provisions for uncollectible accounts receivable, and estimates of exposures under our insurance and claims plans. To the extent that actual, final outcomes are different than our estimates, or additional facts and circumstances cause us to revise our estimates, the Company’s earnings during that accounting period will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company had no cash equivalents at June 30, 2011 and March 31, 2011.

Accounts Receivable Allowance

The Company makes estimates of the collectability of accounts receivable. The Company specifically analyzes accounts receivable and historical bad debts, client credit-worthiness, current economic trends, and changes in our client payment terms and collection trends when evaluating the adequacy of our allowance for doubtful accounts. Any change in the assumptions used in analyzing a specific account receivable may result in additional allowance for doubtful accounts being recognized in the period in which the change occurs.

Accordingly, the Company has a $50,000 allowance for uncollectible accounts and revenue adjustments as of June 30, 2011 and March 31, 2011.

F - 5

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is calculated on the straight-line method over the following estimated useful lives:

		Years
Buildings / improvements		20 - 40
Furniture and fixtures		3 – 5
Shop and service equipment		2 – 5
Tractors and trailers		5 – 9
Leasehold improvements		1 – 5

The Company expenses repairs and maintenance as incurred. The Company periodically reviews the reasonableness of its estimates regarding useful lives and salvage values for revenue equipment and other long-lived assets based upon, among other things, the Company's experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice. Salvage values are typically 15% to 20% for tractors and trailer equipment and consider any agreements with tractor suppliers for residual or trade-in values for certain new equipment. The Company capitalizes tires placed in service on new revenue equipment as a part of the equipment cost. Replacement tires and costs for recapping tires are expensed at the time the tires are placed in service. Gains and losses on the sale or other disposition of equipment are recognized at the time of the disposition.

Intangible Assets

The Company accounts for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, which requires that the purchase method of accounting be used for all business combinations. ASC 805 requires intangible assets acquired in a business combination to be recognized and reported separately from goodwill.

Goodwill represents the cost of the acquired businesses in excess of the fair value of identifiable tangible and intangible net assets purchased. The Company assigns all the assets and liabilities of the acquired business, including goodwill, to reporting units in accordance with ASC 350, Intangible – Goodwill and Other. Our business combinations did not result in any goodwill as of June 30, 2011 and March 31, 2011.

The Company evaluates intangible assets for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If these assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets.

F - 6

Furthermore, ASC 350 requires purchased intangible assets other than goodwill to be amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets are carried at cost less accumulated amortization. See Notes 2, 10, and 11 for the treatment of intangibles related to Triple C. No other impairment of intangibles has been identified since the date of acquisition.

Impairment of Long-lived Assets

In accordance with ASC 360, Property, Plant and Equipment, long-lived assets and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to estimated undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment as of June 30, 2011 and March 31, 2011.

Revenue Recognition

The Company recognizes revenues on the date the shipments are delivered to the customer. Revenue includes transportation revenue, fuel surcharges, loading and unloading activities, equipment detention, and other accessorial services. Revenue is recorded on a gross basis, without deducting third party purchased transportation costs, as the Company acts as a principal with substantial risks as primary obligor.

Advertising Costs

The Company charges advertising costs to expense as incurred. During the three months ended June 30, 2011 and 2010, advertising expense was approximately $1,139 and $15,225.

Derivative Liability

The Company issued warrants to purchase the Company’s common stock in connection with the issuance of common stock and convertible debt, which contain certain ratchet provisions that reduce the exercise price of the warrants or the conversion price in certain circumstances. Upon the Company’s adoption of the Derivative and Hedging Topic of the FASB Accounting Standards Codification (“ASC 815”) on January 1, 2009, the Company determined that the warrants with provisions that reduce the exercise price of the warrants did not qualify for a scope exception under ASC 815 as they were determined not to be indexed to the Company’s stock as prescribed by ASC 815.

Derivatives are required to be recorded on the balance sheet at fair value (see Note 6). These derivatives, including embedded derivatives in the Company’s structured borrowings, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates. In addition, additional disclosures is required about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.

F - 7

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable. Valuations may be obtained from, or corroborated by, third-party pricing services.

Level 3: Unobservable inputs to measure fair value of assets and liabilities for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based upon the best information at the time, to the extent that inputs are available without undue cost and effort.

Fair Value of Financial Instruments

The Company’s financial instruments, including cash and cash equivalents, receivables, accounts payable and accrued liabilities and notes payable are carried at cost, which approximates their fair value, due to the relatively short maturity of these instruments.

Common stock redemption is carried at cost, which approximates their fair value, because it is anticipated that it will be redeemed at this specific amount. The carrying value of the Company’s long-term debt approximates fair value based on borrowing rates currently available to the Company for loans with similar terms.

Our derivative financial instruments, consisting of embedded conversion features in our convertible debt, which are required to be measured at fair value on a recurring basis under FASB ASC 815-15-25 or FASB ASC 815 as of June 30, 2011 and March 31, 2011, are all measured at fair value, using a Black-Scholes valuation model which approximates a binomial lattice valuation methodology utilizing Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities (see Note 6). Significant assumptions used in this model as of June 30, 2011 and March 31, 2011 included a remaining expected life of 1 year, an expected dividend yield of zero, estimated volatility of 172%, and risk-free rates of return of approximately 1-2%. For the risk-free rates of return, we use the published yields on zero-coupon Treasury Securities with maturities consistent with the remaining term of the feature and volatility is based on a trucking company with characteristics comparable to our own.

The carrying amounts of cash, accounts receivable and accounts payable approximate fair value because of their short maturities. At June 30, 2011 and March 31, 2011, the Company had $2,476,343 and $895,153 outstanding under its revolving credit agreement, and $18,029,041 and $8,245,340, including $5,123,837 and $1,300,987 with related parties, outstanding under promissory notes with various lenders. The carrying amount of the revolving credit agreement approximates fair value as the rate of interest on the revolving credit facility approximate current market rates of interest for similar instruments with comparable maturities, and the interest rate is variable. The fair value of notes payable to various lenders is based on current rates at which the Company could borrow funds with similar remaining maturities.

F - 8

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.

The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

Stock-based Compensation

The Company has adopted the fair value recognition provisions of ASC 505, Equity and ASC 718, Compensation – Stock Compensation, using the modified prospective application method. Under ASC 505 and ASC 718, stock-based compensation expense is measured at the grant date based on the value of the option or restricted stock and is recognized as expense, less expected forfeitures, over the requisite service period.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, include cash and trade receivables. For the three months ended June 30, 2011 and 2010, the Company’s top four customers, based on revenue, accounted for approximately 26% and 48%, of total revenue. The Company’s top four customers, based on revenue, accounted for approximately 22% and 37% of total trade accounts receivable at June 30, 2011 and March 31, 2011.

Financial instruments with significant credit risk include cash. The Company deposits its cash with high quality financial institutions in amounts less than the federal insurance limit of $250,000 in order to limit credit risk. As of June 30, 2011 and March 31, 2011, the Company's bank deposits did not exceed insured limits.

Claims Accruals

Losses resulting from personal liability, physical damage, workers' compensation, and cargo loss and damage are covered by insurance subject to deductible, per occurrence. Losses resulting from uninsured claims are recognized when such losses are known and can be estimated. We estimate and accrue a liability for our share of ultimate settlements using all available information. We accrue for claims reported, as well as for claims incurred but not reported, based upon our past experience. Expenses depend on actual loss experience and changes in estimates of settlement amounts for open claims which have not been fully resolved. These accruals are based on our evaluation of the nature and severity of the claim and estimates of future claims development based on historical trends. Insurance and claims expense will vary based on the frequency and severity of claims and the premium expense. At June 30, 2011 and March 31, 2011, management estimated $-0- in claims accrual above insurance deductibles.

F - 9

However, from time to time the various business units are subject to premium audits on workers compensation. When the results of these audits are available, the various business units record the additional premiums due when they are advised by the respective carriers. Such amounts are generally amortized over the following 12 months.

Earnings per Share

The Company calculates earnings per share in accordance with ASC, Earnings per Share. Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

At June 30, 2011 and March 31, 2011, there was no variance between the basic and diluted loss per share. The 14,394,890 and 12,403,890 warrants and 6,409,480 and 6,514,111 issuable upon conversion of debt to purchase common shares outstanding at June 30, 2011 and March 31, 2011, were not included in the weighted-average number of shares computation for diluted earnings per common share, as the warrants are anti-dilutive.

Recent Accounting Pronouncements

The Company has reviewed recent accounting pronouncements through August 2011 (Update 2011-05) and does not believe that any recently issued accounting pronouncements will have a material impact on its financial statements.

Note 2. Discontinued Operations

As previously reported, on May 14, 2010, the Company had acquired 100% of the common stock of Triple C Transport, Inc. (“Triple C”). As was our practice with previous acquisitions, the former owners continued to manage the day to day operations of Triple C and it was leasing approximately ninety-one power units and ninety-nine trailers from companies owned by the former owners for payments equal to the payment those companies make on its financing agreements for that equipment, which was approximately $300,000 a month. Triple C headquarters was leased from another company owned by the former owners for approximately $5,250 per month. The acquisition agreement provided that one of the former owners would serve on the Company’s Board of Directors and he would be employed as the general manager of Triple C for three years.

During the latter part of October, 2010, the former owners of Triple C notified the Company in writing that entities controlled by them and receiving lease payments from Triple C were having difficulty servicing the debt of the related entities. Two of those entities White Farms Trucking, Inc. (“WFT”) and Craig Carrier Corporation, LLC (“CCC”) ultimately filed Chapter 11 bankruptcy in the United States Bankruptcy Court for the district of Nebraska, which were filed on December 21, 2010 and have been assigned case numbers 10-43797 and 10-43798.

During November, 2010 both the former owners resigned as officers and directors of Triple C, but one of the former owners continued to serve on our (IFC) Board of Directors through April, 2011. Triple C installed new management to operate the business on a day to day basis and in an effort to insure Triple C’s continued operations with minimum disruption from potential bankruptcy related issues, moved substantially all of the Triple C ongoing operations away from the facility it leased from one of the related entities. The physical move occurred in Mid-January 2011. In order to preserve liquidity, Triple C had temporarily suspended lease payments for the equipment leased by Triple C from WFT/CCC. Under the terms of the May 14, 2010 “Stock Purchase Agreement” IFC executed a corporate guaranty for all lease and other payments arising from the leases between WFT/CCC and Triple C.

F - 10

On May 2, 2011, we filed a complaint against Craig White and Vonnie White in the District Court for Douglas County, Nebraska and served notice on the defendants pursuant to the Stock Purchase Agreement under which we acquired Triple C Transport, Inc. from the defendants on or about May 14, 2010. In the complaint, we ask the court to rescind the Stock Purchase Agreement, alleging multiple, material breaches of representations and warranties which individually and in the aggregate constitute fraud upon us. We are also seeking damages in unspecified amounts. We intend to pursue this litigation aggressively. Because of actions taken by the defendants subsequent to closing of our acquisition, undisclosed liabilities of Triple C Transport, breaches of the defendants’ representations and warranties, and the bankruptcies of entities they control and which were Triple C Transport’s equipment lessors, we believe that rescission will not have a materially negative impact on our financial performance going forward; even though we will not enjoy the benefits of the acquisition which we expected at the time of the transaction but which do not seem now available in fiscal year 2012, in view of the fact that Triple C Transport has lost its licenses to operate based on actions by Mr. and Mrs. White and other entities they control both before and after the closing of the transaction.

In August 2011, the Company estimated a loss in the amount of $1,893,269 to be realized upon completion of the rescission of this business unit, as well as an estimated operating loss of $420,756 to be incurred during the phase-out period. For the period May 14, 2010 through March 31, 2011 the Company incurred actual operating losses associated with this discontinued unit of $1,529,033.

Summarized operating resultes for discontinued operations is as follows:

					Quarter			May 14, 2010			May 14, 2010
					Ending			through June 30,			through March 31,
					June 30, 2011			2010			2011

Revenue					$	322,664		$	1,925,199		$	13,674,634
Operating Expenses						743,420			1,971,903			14,968,828
Operating Income (Loss)						(420,756	)		(46,704	)		(1,294,194	)

Other Income (Expense)						-			49,052			234,839
Loss from operations						(420,756	)		2,348			(1,529,033	)
Income tax benefit						-			-			-
Gain (loss) to be recognized from discontinued operations, net of tax					$	(420,756	)	$	2,348		$	(1,529,033	)


The gain (loss) from discontinued operations above do not include any income tax effect as the Company was not in a taxable position due
to its continued losses and a full valuation allowance

Summary of assets and liabilities of discontinued operations is as follows:
		June 30,			June 30,			March 31,			May 14,
		2011			2010			2011			2010

	Accounts receivable	$	-		$	91,588		$	179,000		$	120,172
	Other Assets		28,469			39,185			57,279			9,283
	Intangible assets		-			-			-			466,424

	Total assets from discontinued operations	$	28,469		$	130,773		$	236,279		$	595,879


	Accrued liabilities and other current liabilities	$	1,893,269		$	130,773		$	1,765,313		$	145,879
			-			-			-			-
			1,893,269			130,773			1,765,313			145,879
			-			-			-			-
	Total liabilities associated with discontinued operations	$	1,893,269		$	130,773		$	1,765,313		$	145,879

		$	(1,864,800	)	$	-		$	(1,529,034	)	$	450,000

Note 3. Property and Equipment

Property and equipment consist of the following at June 30, 2011:

	IFC			Morris			Smith			Cross Creek			Consolidated
Land, Buildings and leasehold Improvements	$	-		$	1,969		$	443,266		$	483,859		$	929,095
Tractors and Trailers		1,516,246			5,619,954			3,891,646			9,333,780			20,361,626
Vehicles		46,472			64,280			114,406			144,437			369,595
Furniture, Fixtures and Equipment		68,610			225,485			298,566			200,362			793,023
Less: accumulated depreciation		(799,788	)		(3,458,411	)		(3,829,904	)		(256,843	)		(8,344,946	)
Total	$	831,540		$	2,453,277		$	917,980		$	9,905,595		$	14,108,393

Depreciation expense totaled $599,346 for the three months ended June 30, 2011.

F - 11

Property and equipment consist of the following at March 31, 2011:

	IFC			Morris			Smith			Consolidated
Buildings	$	-		$	1,969		$	809,266		$	811,235
Tractors and Trailers		-			5,498,173			5,144,477			10,642,650
Vehicles		46,472			64,280			114,406			225,158
Furniture, Fixtures and Equipment		68,610			221,828			298,566			589,004
Less: accumulated depreciation		(27,792	)		(3,529,092	)		(4,570,095	)		(8,126,979	)
Total	$	87,290		$	2,257,158		$	1,796,620		$	4,141,068

Depreciation expense totaled $344,045 for the three months ended June 30, 2010.

Note 4. Intangible Assets

The Company purchased the stock of Morris and Smith in 2008, which resulted in the recognition of intangible assets. These intangible assets include the “employment and non-compete agreements” which are critical to the Company because of the management team’s business intelligence and customer relationship value which is required to execute the Company’s business plan. The intangibles also include their “company operating authority” and “customer lists.” In April, 2011 additional intangibles were recognized when the Company purchased the stock of Cross Creek.

A company’s operating authorities is tied to itsmotor carrier number issued and monitored by the U.S. Department of Transportation (FDOT). The FDOT issues a rating to each company which has a direct impact on that company’s ability to attract and maintain a stable customer base as well as reduce the company’s insurance costs, one of the most significant expenditures for freight companies. Morris and Smith and Cross Creek have the DOT’s highest rating, “Satisfactory,” which provides the Company with significant value. The customer lists adds value to the Company by providing an established cliental with established rates as well as predictable freight volume. A detailed review of the Cross Creek intangibles is in process.

These intangible are as follows:

	June 30, 2011			March 31, 2011
Employment and non-compete agreements	$	1,043,293		$	1,043,293
Company operating authority and customer lists		891,958			891,958
Newly acquired (April 2011) identified intangibles		1,910,112			-
Total intangible assets		3,845,363			1,935,251
Less: accumulated amortization		(2,322,736	)		(1,666,466	)
Intangible assets, net	$	1,522,627		$	268,785

In addition, when the Company originally purchased Triple C (see Notes 2 and 11) $466,424 of identified intangible assets were recognized. However, when the Company rescinded the Triple C purchase and reported Triple C as a “discontinued operation” previously identified intangible assets of Triple C were reported as impaired.

Amortization expense totaled $661,989 for the three months ended June 30, 2011, including $495,000 for the newly identified Cross Creek intangibles. Amortization expense for the three months ended June 30, 2010 was $174,228, including $12,957 applicable to discontinued operations.

Note 5. Line of Credit

Morris Revolving Credit

At June 31, 2011 and March 31, 2011, Morris has $1,018,565 and $895,153 outstanding under a revolving credit line agreement that allows it to borrow up to a total of $1,200,000. The line of credit is secured by accounts receivable, guaranteed by a previous owner and is due August 27, 2012. The applicable interest rate under this agreement is based on the Prime Rate, plus 3.5% with a floor of 4.00%.

Cross Creek Line of Credit

At June 30 2011, Cross Creek has $1,457,778 outstanding under a line of credit agreement that allows it to borrow up to a total of $1,800,000. The line of credit is secured by accounts receivable and is due March 28, 2013. The applicable interest rate under this agreement is based on the Prime Rate, plus 2.0% with a floor of 6.0%.

F - 12

Note 6. Notes Payable

Notes payable owed by Morris consisted of the following:

	June 30, 2011		March 31, 2011

Notes payable to Daimler Truck Financial, payable in monthly installments ranging from $569 to $5,687 including interest, through May 2013, with interest rates ranging from 5.34% to 8.07%, secured by equipment	$	1,022,755	$	1,191,577

Notes payable to GE Financial, payable in monthly installments ranging from $2,999 to $7,535 including interest, through April 2013, with interest rates ranging from 6.69% to 8.53%, secured by equipment		929,964		450,942

Note payable to Chrysler Credit, payable in monthly installments of $5,687 including interest, through November 2011, with interest at 6.9%, secured by equipment		-		50,298

Note payable to Wells Fargo Bank, payable in monthly installments of $4,271 including interest, through October 2011, with interest at 6.59%, secured by equipment		83,958		92,606

Totals	$	2,036,677	$	1,785,423

F - 13

Notes payable owed by Smith consisted of the following:

	June 30, 2011		March 31, 2011

Notes payable to bank, payable in monthly installments of $60,000 including interest, through December 2012, with interest at 9%, collateralized by substantially all of Smith assets	$	1,704,115	$	1,803,578

Notes payable to bank, payable in monthly instruments including interest, through June 2011, with interest at 6.5%, collateralized by substantially all of Smith assets		1,518,220		1,530,191

Note payable to Platte Valley National Bank, payable in monthly installments of $1,471 with interest, through May 2011, with interest at 6.75%, collateralized by vehicle.		15,630		19,689


Note payable to Floyds, payable in monthly installments of $2,084, through November 2012, with interest at 8%, secured by a vehicle.		31,293		37,062

Note payable to Nissan Motors, payable in monthly installments of $505 including interest, through June 2011, with interest at 5.6%, secured by a vehicle.		-		1,225

Note payable to Ally, payable in monthly installments of $599 including interest, through December 2015, with interest at 6%, secured by a vehicle.		28,730		30,113

Unsecured, non-interest bearing note payable to Colorado Holdings Valley Bank, payable in monthly installments of $5,000, through 2023.		682,000		686,999
Total	$	3,979,988	$	4,108,857

F - 14

Notes payable owed by Cross Creek consisted of the following:

	June 30, 2011		March 31, 2011

Notes payable to All Points Capital, payable in monthly installments ranging from $1,495 to $9,912 including interest, through December 2012, with interest rates ranging from 5.84% to 8.45%, secured by equipment	$	234,575	$	-

Notes payable to Edison Financial, payable in monthly installments ranging from $2,058 to $11,411 including interest, through April 2014, with interest rates ranging from 8.09% to 11.50%, secured by equipment		363,366

Notes payable to FCC Equipment Financing, payable in monthly installments ranging from $654 to $17,078 including interest, through April 2014, with interest rates ranging from 6.43% to 8.69%, secured by equipment		1,343,511		-

Notes payable to GE Capital, payable in monthly installments ranging from $1,885 to $14,476 including interest, through May 2014, with interest rates ranging from 6.90% to 8.74%, secured by equipment		741,825		-

Note payable to Zion Credit Corporation, payable in monthly installments of $16,789 including interest, through March 2012, with interest at 7.35%, secured by equipment		146,574		-

Note payable to Capital One Bank, payable in monthly installments of $7,406 including interest, through September 2014, with interest at 5.65%, secured by equipment		263,293		-

Note payable to Transportation Alliance Bank, payable in monthly installments of $17,353 including interest, through August 2011, with interest at 12.75%, secured by equipment		34,327		-

Notes payable to Double Dee Finance, payable in monthly installments ranging from $1,615 to $7,760 including interest, through May 2013, with interest rates ranging from 10.00% to 12.00%, secured by equipment		244,594		-

Notes payable to Ford Motor Credit, payable in monthly installments ranging from $434 to $946 including interest, through July 2015, with interest rates ranging from 0.00% to 9.15%, secured by vehicles		120,572

Notes payable to Daimler Chrysler Financial, payable in monthly installments ranging from $2,264 to $15,529 including interest, through January 2014, with interest rates ranging from 5.26% to 8.12%, secured by equipment		1,641,726		-

Notes payable to Cascade Sierra Solutions, payable in monthly installments currently totaling $8,010 including interest, through January 2015, with interest rates ranging from 5.01% to 7.50%, secured by equipment		216,134		-

Total	$	5,350,497	$	-

F - 15

Notes payable owed by IFC consisted of the following:

	June 30, 2011			March 31, 2011

Various notes payable with maturity dates ranging from 05/10/10 to 12/28/11. Interest rates ranging from 4.0% to 18%. Various warrants issued with an exercise price ranging between $0.10 and $0.50 per share. Various notes contain a conversion feature allowing the holder to convert the debt into shares of common stock at a strike price between $0.30 and $0.50 per share.		1,160,476			1,160,476

Note payable to Ford Credit, payable in monthly installments of $885 including interest, through October 2013, with interest at 16.84% , collateralized by a truck, used by an executive.		22,847			25,141

Note payable to Ally, payable in monthly installments of $715 including interest, through October 2016, with interest at 7.74%, collateralized by a truck, used by former executive.		37,417			38,821

Note payable to a former related party, with interest at 12.00%, a default judgment has been awarded to the holder, the Company intends to comply with the judgment when funds are available		45,115			45,115

Note payable to Robins Consulting, payable in quarterly installments of $60,000, through March 2012 and a final payment of $222,640 on June 39, 2012, with interest at 7.50%, secured by 1,056,300 shares of Integrated Freight Corporation stock		391,500			-

Less: unamortized discount on notes payable		(122,063	)		(219,480	)

Totals	$	1,535,292		$	1,050,073

The Company valued the Notes Payable at their face value and calculated the beneficial conversion feature of the warrants using Black Scholes in deriving a discount that is being amortized over the term of the Notes as interest expense using a straight line method.

The Company maintains debt obligations in which the maturity dates have passed. The Company is currently in negotiation with these debt holders and intends to extend the terms of the maturity dates or convert the debt into equity.

F - 16

Summary of notes payable:

	IFC		Morris		Smith		Cross Creek		Total

Current portion of notes payable	$	1,535,292	$	1,038,157	$	590,309	$	3,467,639	$	6,631,397

Notes payable, net of current portion		-		998,520		3,389,679		1,882,858		6,271,057


Total as of June 30, 2011	$	1,535,292	$	2,036,677	$	3,979,988	$	5,350,497	$	12,902,454


Current portion of notes payable	$	1,001,284	$	1,115,818	$	592,009	$	-	$	2,709,111

Notes payable, net of current portion		48,789		669,605		3,516,848		-		4,235,242


Total as of March 31, 2011	$	1,050,073	$	1,785,423	$	4,108,857	$	-	$	6,944,353

During the three months ended June 30, 2011, the Company entered into convertible notes (the “Agreements”) with an investor (the “Investor”) pursuant to which the Investor purchased an aggregate principal amount of $33,750 (the “Convertible notes”). The convertible notes bear interest at 15% and maturity dates of nine months from the date of issuance. The convertible notes are convertible at the option of the holder at any time into shares of common stock, at a conversion price equal to $0.30.

The conversion price of the convertible note is subject to full ratchet and anti-dilution adjustment for subsequent lower price issuances by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like.

As a result of the convertible note, the Company has determined that the conversion feature of the convertible notes and the warrants issued with the convertible debentures are embedded derivative instruments pursuant to ASC 815-40-05 “Derivatives and Hedging-Contracts in Entity’s Own Equity” and ASC 815-10-05 “Derivatives and Hedging – Overall,” the accounting treatment of these derivative financial instruments requires that the Company record the derivatives at their fair values as of the inception date of the note agreements and at fair value as of each subsequent balance sheet date as a liability. Any change in fair value is recorded as non-operating, non-cash income or expense at each balance sheet date.

The fair value of the derivative liability at June 30, 2011 and March 31, 2011 was $332,288 and $513,471 respectively and are reflected on the Consolidated Balance Sheets. During the three months ended June 30, 2011 the change in fair value of $181,183 was comprised of $208,000of stock issued in payment of previously described “full ratchet” provisions and offset by $26,817 as change in fair value reflected on the Consolidated Statements of Operations.

F - 17

Note 7. Notes Payable – Related Parties

Notes payable owed by the Company to related parties are as follows:

	June 30, 2011		March 31, 2011

Various notes payable with maturity dates ranging from 05/10/10 to 12/28/11. Interest rates ranging from 4.0% to 18%. Various warrants issued with an exercise price ranging between $0.10 and $0.50 per share. Various notes contain a conversion feature allowing the holder to convert the debt into shares of common stock at a strike price between $0.30 and $0.50 per share.	$	596,694	$	562,944

Notes payable to related party, from acquisition described in note 11, to previous owners of Smith, with interest of 8%, secured by all shares of Smith common stock, principal and interest due May 15, 2011.		210,000		210,000

Notes payable to related party, from acquisition described in note 11, to previous owners of Triple C, payment due November 10, 2010. The Company is currently in negotiations to extend maturity.		150,000		150,000

Note payable to shareholder, with interest at 8.5%, due on demand.		275,138		328,138

Note payable to shareholder, with interest at 8.0%, due on demand.		40,000		40,000

Note payable to shareholder, with interest at 5.0%, due on June 1, 2011.		-		9,900

Note payable to related party, from acquisition described in note 11, to previous owners of Cross Creek, with interest at 5.0%, principal and interest due on March 31, 2019.		3,800,000		-

Note payable to related party, with interest at 10.0%, due on November 10, 2011.		52,000		-
	$	5,123,832	$	1,300,982

Note 8. Income Taxes

At June 30, 2011, the Company estimated that it had approximately $28,000,000 of net operating loss carry forwards, which if unused will expire through 2031. Of the $28 million, approximately $20.8 million is subject to limitations under IRC Section 382 due to owner shifts during the period.

The Company and some of its operating entities have undergone tax status changes and is delinquent in filing certain of its income and payroll tax returns in certain jurisdictions, but the company believes it has sufficient loss carryforwards available for any income tax liability that may be due and has set aside sufficient reserves in accounts payable, accrued expenses and other liabilities for any payroll tax obligations.

F - 18

Note 9. Shareholders’ Deficit

Common Stock

2011

For the three months ended June 30, 2011, the Company issued 2,500,000 shares of common stock for the acquisition of Cross Creek Trucking Inc. The stock was valued at $0.40 per share, its fair market value at the date of issuance.

For the three months ended June 30, 2011, the Company issued 1,976,206 shares of common stock to various holders for services provided to the Company. The stock was valued between $0.275 and $0.40 per share, its fair market value at the date of issuance.

For the three months ended June 30, 2011, the Company issued 616,000 shares of common stock to various debt holders as an equity inducement. The stock was valued at $0.32 per share, its fair market value at the date of issuance.

For the three months ended June 30, 2011, the Company issued 650,000 shares of common stock to various holders as a result of a ratchet provision in their debt agreement, which enabled the holders to benefit from any deal done after their investment that had better terms. The stock was valued at $0.32 per share, its fair market value at the date of issuance.

For the three months ended June 30, 2011, the Company issued 325,000 shares of common stock as a result of an exercise of stock purchase warrants. The stock was converted at $0.10 per share.

2010

For the three months ended, June 30, 2010, the Company issued 2,042 shares of common stock as compensation under contract. The stock was valued at $0.49 per share, its fair market value at the date of issuance.

Warrants to Purchase Common Stock

2011

For the three months ended June 30, 2011, the Company issued 300,000 common stock purchase warrants, at an exercise price of $0.40, an expiration of 6 years, relating to a maturity extension of a convertible note.

For the three months ended June 30, 2011, the Company issued 1,500,000 common stock purchase warrants, at an exercise price ranging from $0.50 to $3.00, an expiration of 3 years, relating to acquisition of Cross Creek.

For the three months ended June 30, 2011, the Company issued 400,000 common stock purchase warrants, at an exercise price of $0.40, an expiration of 3 years, relating to a services rendered.

For the three months ended June 30, 2011, the Company issued 116,000 common stock purchase warrants, at an exercise price of $0.40, an expiration of 5 years, relating to the issuance of debt obligations.

F - 19

2010

For the three months ended June 30, 2010, the Company issued 318,500 common stock purchase warrants to various holders, at an exercise price ranging from $0.40 to $0.50, with a termination period from 3 to 5 years, relating to the issuance of debt obligations.

For the three months ended June 30, 2010, the Company issued 620,883 common stock purchase warrants, with an exercise price of $0.30, an expiration of 5 years, relating to services provided to the Company.

The fair value for the warrants was estimated at the date of valuation using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate		1.27- 2.19	%
Dividend yield		0.00	%
Volatility factor		172	%
Expected life	3-5 years

The relative fair value of the warrants issued for the year ended June 30, 2011, calculated in accordance with ASC 470-20, Debt with Conversion and Other Options; totaled $620,880. The relative fair value of the warrants issued for the year ended March 31, 2011, totaled $219,480. The relative fair value of the warrants issued with the debenture has been charged to additional paid-in capital with a corresponding discount on the note payable. The discount is amortized over the life of the debt. As the discount is amortized, the reported outstanding principal balance of the notes will approach the remaining unpaid value.

A summary of the grant activity for the year ended June 30, 2011 is presented below:

Weighted

Average

Stock Awards

Average

Remaining

Outstanding

Exercise

Contractual

& Exercisable

Price

Term

Balance, March 31, 2011

12,403,890

0.35

3 years

Granted

2,316,000

0.62

3 years

Exercised

325,000

0.10

N/A

Expired/Cancelled

N/A

Balance, June 30, 2011

14,394,890

0.49

3 years

As of June 30, 2011 and March 31, 2011, the number of warrants that were currently vested and expected to become vested was 14,394,890 and 12,403,890, respectively.

F - 20

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.

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.

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.

F - 21

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
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
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
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
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

Steven E. Lusty	Plangraphics - Integrated Freight Corporation	2011-002523-NC	12th Circuit Sarasota County, Florida	Breach of contract and unspecified damages

________________

*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 IFC 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 booked as a liability on our consolidated balance sheet even though the Company would have no liability to pay any such judgment. The Company would have exposure to direct liability only in the above listed cases in which the Company is a named defendant. If the action for rescission of the Stock Exchange Agreement is successful, of which we have no assurance, pursuant to which we acquired Triple C Transport from Mr. and Mrs. White, then the Company would not expect to book any liability for Triple C Transport’s litigation losses, or to incur any direct liability with respect to the Company’s 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. The Company intends to aggressively pursue its case for rescission of the Company’s 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.

The suite 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. The Company 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.

The Company’s ability to aggressively defend and to prosecute the litigation described in the preceding table will depend on our ability to fund legal fees and related costs of litigation.

F - 22

The Company expects 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. The Company has programs and policies which are designed to minimize the events that result in such claims. The Company maintains insurance against workers’ compensation, auto liability, general liability, cargo and property damage claims. The Company is responsible for deductible amounts up to $3,000 per accident. The Company 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 the Company could raise our deductible when our policies are renewed. The Company believes 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.

Note 11. Related Party Transactions

The Company has not entered into any transactions with the Company’s directors and executive officers, outside of normal employment transactions, or with their relatives and entities they control, and in the day to day operations of our business.

Note 12. Business Combinations

Triple C Transport, Inc.

On May 14, 2010, the Company acquired 100% of the common stock of Triple C Transport, Inc. (“Triple C”), a Nebraska-based refrigerated motor freight business, under the terms of a Stock Exchange Agreement. The accounting date of the acquisition was May 14, 2010 and the transaction was accounted for under the purchase method in accordance with ASC 805. Initially, Triple C’s results of operations were included in our consolidated financial statements since the date of acquisition. Identifiable intangible assets acquired as part of the acquisition included definite-lived intangibles which totaled $466,424, with a weighted average amortization period of 3 years.

However, because of events during the past several months (as fully described in Note 2) the Company fully impaired the $466,424 of intangible assets, is attempting to rescind the Triple C purchase and reported Triple C as a “discontinued operation”.

Cross Creek Trucking, Inc.

On April 1, 2011, the Company acquired 100% of the common stock of Cross Creek Trucking, Inc. (Cross Creek), an Oregon-based motorized freight business, under the terms of a Stock exchange Agreement. The accounting date of the acquisition was April 1, 2011 and the transaction was accounted for under the purchase method in accordance with ASC 805. Cross Creek’s results of operations have been included in our consolidated financial statements since the date of acquisition. Identified intangible assets acquired as part of the acquisition included definite-lived intangibles which totaled $1,910,112. The weighted average amortization period is under study during the measurement period.

The aggregate purchase price was $6,515,000, including 2,500,000 shares of the Company’s common stock valued at $0.40 per share. Transaction costs of $795,000 were expensed in accordance with ASC 805 and included on the Statement of Operations

F - 23

Below is a summary of the total purchase price:


Gross Purchase Price	$	6,515,000
Indebtedness for Transaction costs	$	575,000
Net Purchase Price to Cross Creek Trucking, Inc.	$	5,940,000



Accounts Receivables	$	2,095,094
Prepaid expenses and other assets	$	60,631
Property and Equipment	$	10,174,097
Other Assets	$	31,416

Total Assets Acquired	$	12,361,238

Accounts Payable	$	746,564
Accrued expenses and other liabilities	$	709,164
Line of Credit	$	916,005
Notes Payable	$	5,990,823

Total Liabilities Assumed	$	8,362,556

Net Assets Acquired	$	3,998,682

Net intangible assets	$	1,941,318

See Note 9 for description of warrants.

The following table represents the initial purchase price allocation to the estimated fair value of the assets Acquired and liabilities assumed:

Accounts receivables	$	2,095,094
Prepaid expenses and other assets		60,631
Property and equipment		10,174,097
Other assets		31,416

Total Assets acquired	$	12,361,238
Accounts Payable	$	746,564
Accrued expenses and other liabilities		709,194
Line of Credit		916,005
Notes Payable		5,878,463
Total liabilities assumed	$	8,250,226
Net Assets acquired	$	4,111,012

F - 24

Pro forma results

If the Company had purchased Cross Creek as of April 1, 2010, the results of operations for the three months ended June 30, 2010 would be as follow:

	IFC			Morris			Smith			Cross Creek			Total
Revenue	$	-		$	2,982,581		$	1,798,467		$	7,117,741 $			11,898,789
Operating Expenses
Rents and transportation		-			447,813			638,027			480,134			1,565,974
Wages, salaries & benefits		108,987			797,813			419,099			2,467,901			3,793,800
Fuel and fuel taxes		-			1,091,907			366,644			2,247,690			3,706,241
Other operating expenses		450,004			401,168			374,835			1,859,612			3,085,619
Total Operating Expenses		558,991			2,738,701			1,798,605			7,055,337			12,151,634
Other Expenses (Income)		78,129			(10,983	)		5,357			(425	)		72,078
Net income (loss) before minority i		(637,120	)		254,863			(5,495	)		62,829			(324,923	)
Minority interest share of
subsidiary net income		-			-			5,691			-			5,691
Net loss	$	(637,120	)	$	254,863		$	196		$	62,829 $			(319,232	)

The Company incurred transaction costs of $795,000 and, losses from discontinued operations of $2,348 which are not reflected in the above amounts for the quarter ended June 30, 2010.

Triple C Transport, Inc.

However, because of events during the past several months (as fully described in Note 2) the Company fully impaired the $466,424 intangible assets, rescinded the Triple C purchase and reported Triple C as a “discontinued operation”.

Note 13. Business Segment Information

The Company follows the provisions of ASC 280, Segment Reporting, which established standards for the reporting of information about operating segments in annual and interim financial statements. Operating segments are defined as components of an enterprise for which financial information is available that is evaluated regularly by the chief operating decision makers(s) in deciding how to allocate resources and in assessing performance. In the past, the Company operated its subsidiaries (Morris Transportation and Smith Systems) as independent companies under separate management of their respective founders. Management of the Company makes decisions about allocating resources based on these operating segments. Since April, 1, 2011 the Company now operates all subsidiaries (including Morris Transportation and Smith Systems) under the same operating manager. The following tables depict the information expected by ASC 280:

F - 25

	Revenue		Net Income (Loss)			Total Assets
Three Months Ended
June 30, 2011
IFC	$	-	$	(3,049,064	)	$	1,864,204
IF Services		271,784		13,972			21,901
Cross Creek		7,594,399		13,575			13,030,160
Morris		3,011,950		140,514			4,037,856
Smith		2,157,946		13,235			2,494,635
	$	13,036,079	$	(2,867,768	)	$	21,448,756

June 30, 2010
IFC	$	-	$	(584,448	)	$	568,737
Morris		2,982,581		254,863			4,375,402
Smith		1,798,467		197			2,866,433
	$	4,781,048	$	(329,388	)	$	7,810,572

Note 14. Subsequent Events

In July 2011, the Company entered into a Securities Purchase Agreement in connection with the issuance of an 8% Convertible Note for $103,500. The Note is due April 11, 2012 and has various prepayment, share conversion, share reservation, and penalty interest provisions. The proceeds were used for general corporate purposes.

In August 2011, the Company entered into two Promissory Notes for $200,000 each or an aggregate of $400,000. The Notes are due within 90 days together with simple interest of 5% per month. The proceeds were used for general corporate purposes.

Management has evaluated events and transactions that occurred subsequent to June 30, 2011, through August 22, 2011, the date at which the consolidated financial statements were available to be issued. Other than the disclosures shown, management did not identify any events or transactions that should be recognized or disclosed in the consolidated financial statements.

See Note 10 – Litigation – for Summary of recent legal activity.

F - 26

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

The following analysis of our consolidated financial condition and results of operations for the three months ended June 30, 2011 and 2010 should be read in conjunction with the consolidated financial statements, including footnotes, appearing elsewhere in this quarterly report.

Overview

The main factors that traditionally affect our results of operation are the number of tractors we operate, our revenue per tractor (which includes primarily our revenue per total mile and our number of miles per tractor), and our ability to control our costs. We have also begun to use the brokerage of vehicles owned by other companies to fulfill excess demand from our customer base.

Three months ended June 30, 2011 Compared to the Three Months Ended June30, 2010

The following table presents and compares the results of our operations for the three months ending June 30, 2011 and 2010. We began operations at Integrated Freight Services, Inc. our brokerage operation and purchased our Cross Creek Trucking, Inc. subsidiary April 1, 2011. In reading this information, we encourage you to consider the differential in the periods being compared.

	Three Months Ended									%
	June 30,						Increase			Increase
	2011			2010			(Decrease)			(Decrease)

Revenue	$	13,036,079		$	4,781,048		$	8,255,031			172.7	%

Operating Expenses
Rents and transportation		2,029,481			1,035,787			993,694			95.9	%
Wages, salaries and benefits		4,015,553			1,325,899			2,689,654			202.9	%
Fuel and fuel taxes		4,923,539			1,458,551			3,464,988			237.6	%
Depreciation and amortization		1,261,335			518,274			743,061			143.4	%
Insurance and claims		279,572			191,621			87,951			45.9	%
Operating taxes and licenses		418,403			40,903			377,500			922.9	%
General and administrative		1,919,862			475,207			1,444,655			304.0	%
Total Operating Expenses		14,847,745			5,046,242			9,801,503			194.2	%

Loss from continuing operations		(1,811,666	)		(265,194	)		(1,546,472	)		583.1	%

(Loss)/Gain from discontinued operations		(420,756	)		2,348			(423,104	)		100.6	%

Other Income (Expense)
Gain/(loss) on change of fair value of derivative liabilit		(26,817	)		-			(26,817	)		100.0	%
Interest		(797,003	)		(143,659	)		(653,344	)		454.8	%
Interest - related parties		(19,848	)		(39,898	)		20,050			-50.3	%
Other income (expense)		198,879			111,054			87,825			79.1	%
Total Other Income (Expense)		(644,789	)		(72,503	)		(572,286	)		789.3	%
Net loss before noncontrolling interest		(2,877,211	)		(335,349	)		(2,541,862	)		758.0	%
Noncontrolling interest share of subsidiary net incom		9,443			5,961			3,482			58.4	%
Net loss	$	(2,867,768	)	$	(329,388	)	$	(2,538,380	)		770.6	%

Revenues

For the three months ended June 30, 2011, we reported revenues of $13,036,079 as compared to revenues of $4,781,048 for the three months ended June 30,2011 an increase of $8,255,031 or approximately 172.7%. The increase is due to three primary factors: the acquisition of Cross Creek Trucking, Inc. on April 1, 2011, the effect of the brokerage operation, and the increase in freight revenue in correlation to the US economy.

Seasonality

Typically, revenue generally decreases as customers reduce shipments during the winter holiday season and as inclement weather impedes operations. At the same time, operating expenses generally increase, with fuel efficiency declining because of engine idling and weather, creating more equipment repairs. Harvests also create additional demand for our refrigerated trucks. For the reasons stated, our fiscal first and second quarter results have historically has been higher than results in each of the other two quarters of the fiscal year excluding charges. Our equipment utilization typically improves substantially fiscal third and fourth quarters of each fiscal year because of the trucking industry's seasonal shortage of equipment on traffic related to produce and because of general increases in shipping demand during those months.

Total Operating Expenses

Our total operating expenses increased approximately 194.2% to $14,847,745 for the three months ended June 30, 2011 as compared to $5,046,242 for the three months ended June 30, 2010. The principle reason for the percentage increase is the same reasons cited above for revenue, plus additional transaction costs in the Cross Creek Trucking, Inc. acquisition that were charged to general and administrative expenses. The main components of operating expense include:

Rents and Transportation. For the three months ended June 30, 2011, rents and transportation costs were $2,029,481 as compared to $1,035,787 for the three months ended June 30,2011, an increase of $993,694 or 95.9%. The increase was due to the acquisition of Cross Creek Trucking, Inc.

Wages, salaries and benefits. For the three months ended June 30, 2011, wages, salaries and benefits costs were $4,015,553 as compared to $1,325,899 for the three months ended June 30,2010, an increase of $2,689,654 or 202.9%. The increase was due to the acquisition of Cross Creek Trucking, Inc.

Fuel and fuel taxes. For the three months ended June 30, 2011, fuel and fuel taxes costs were $4,923,539 as compared to $1,458,551 for the three months ended June 30, 2010, an increase of $3,464,988 or 237.6%. A correlating fuel price instability is a contributing factor in these increases, along with the acquisition of Cross Creek Trucking, Inc.

Depreciation and amortization. For the three months ended June 30, 2011, depreciation and amortization costs were $1,261,335 as compared to $518,274 for the three months ended June 30, 2011, an increase of $743,061 or 143.4%. The increase was due to the acquisition of Cross Creek Trucking, Inc.

Insurance claims. For the three months ended June 30, 2011, insurance claims costs were $279,572 as compared to $191,621 for the three months ended June 30, 2010, an increase of $87,951 or 45.9%. The increase was due to the acquisition of Cross Creek Trucking, Inc.

Operating taxes and licenses. For the three months ended June 30, 2011, operating taxes and licenses costs were $418,403 as compared to $40,903 for the three months ended June 30, 2010, an increase of $377,500 or 922.9%. The increase was due to the acquisition of Cross Creek Trucking, Inc.

General and administrative expenses. For the three months ended June 30, 2011, general and administrative expenses costs were $1,919,862 as compared to $475,207 for the three months ended June 30, 2010, an increase of $1,444,655 or 304.0%. The increase was due to the acquisition of Cross Creek Trucking, Inc. and included $795,000 of transactions costs related to the acquisition.

Our large expenses, for example truck lease and financing costs, are fixed. Our driver payroll tends to fluctuate with the freight shipped; however, we do have fixed payroll expenses for the office, management and the shop that do not increase in correlation to the increase on freight income. For us to achieve success, in addition to the cost cutting measures we are initiating in areas such as insurance, we will need to pass through more of our fuel costs increases to our customers either in the form of surcharges or rate increases for this to occur.

Loss from Continuing Operations

We reported a loss from continuing operations of $1,811,666 for the fiscal quarter ended June 30, 2011 as compared to a loss from operations of $265,194 for the fiscal quarter ended June 30, 2011, an increase of $1,546,472 or 583.1%. The increase was due to the acquisition of Cross Creek Trucking, Inc. and included $795,000 of transactions costs related to the acquisition and the fuel cost situation described above.

Discontinued Operations - Triple C Transport

As more fully discussed in Note 2 to our consolidated financial statements, we shut down Triple C Transport’s operations due to the loss of the tractor and trailer fleet it was leasing from the former owners. As was our practice with previous acquisitions, the former owners continued to manage the day to day operations of Triple C Transport and it was leasing approximately ninety-one power units and ninety-nine trailers from companies owned by the former owners for payments equal to the payment those companies were making on their financing agreements for that equipment, which was approximately $ 300,000 a month. During the latter part of October, 2010, the former owners of Triple C Transport notified us in writing that entities controlled by them and receiving lease payments from Triple C Transport were having difficulty servicing the debt of the related entities. Two of those entities White Farms Trucking, Inc. (“WFT”) and Craig Carrier Corporation, LLC (“CCC”) ultimately filed Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Nebraska, on December 21, 2010 which have been assigned case numbers 10-43797 and 10-43798.

On May 2, 2011, we filed a complaint against Craig White and Vonnie White in the District Court for Douglas County, Nebraska and served notice on the defendants pursuant to the Stock Purchase Agreement under which we acquired Triple C Transport from the defendants on or about May 14, 2011. In the complaint, we ask the court to rescind the Stock Purchase Agreement, alleging multiple, material breaches of representations and warranties which individually and in the aggregate constitute fraud upon us. We are also seeking damages in unspecified amounts. We intend to pursue this litigation aggressively. Because of actions taken by the defendants subsequent to closing of our acquisition, undisclosed liabilities of Triple C Transport, breaches of the defendants’ representations and warranties, and the bankruptcies of entities they control and which were Triple C Transport’s equipment lessors, Our management believes that rescission will not have a materially negative impact on our financial performance going forward; even though we will not enjoy the benefits of the acquisition which we expected at the time of the transaction but which do not seem now available in fiscal year 2012 in view of the fact that Triple C Transport has lost its licenses to operate based on actions by Mr. and Mrs. White and other entities they control both before and after the closing of the transaction.

We incurred cumulative losses of $1,949,789, including $420,756 for the quarter ending June 30, 2011, associated with this transaction and have reserved $1,893,269 to cover any liabilities incurred in relation to it. The ultimate disposition of these liabilities and losses hinge with the results of the litigation, which we cannot estimate an outcome of at this time.

Other Income (Expenses)

We reported total other expense of $644,789 for the fiscal quarter ended June 30, 2011 as compared to total other expenses of $72,503 for the fiscal quarter ended June 30, 2010, an increase of $572,786 or 789.3%. While interest expense continues to increase due to a greater debt level, other income increased during the period. Other income and expense reflects interests costs (net of interest income), including derivatives, as discussed below.

Interest expense for the fiscal quarter ended June 30, 2011 was $816,851 compared to $183,557 for the fiscal quarter ended June 30, 2010, an increase of 633,294. This was due to greater debt levels, default interest on past due notes, acquisition indebtedness for Cross Creek Trucking, Inc., increases from the acquisition of Cross Creek Trucking, Inc. and expenses incurred to renegotiate and extend existing debt.

We had interest costs related derivative expense of $26,817_on the sale of convertible notes for the fiscal quarter ended June 30, 2011 compared to $-0- for the fiscal quarter ended June 30, 2010, when we sold no significant such convertible notes.

Segments

Morris Transportation

For the fiscal quarter ended June 30, 2011, Morris Transportation had revenues of $3,011,950 compared with revenues of $2,982,581 for the fiscal quarter ended June 30, 2010, an increase of $29,369 or 1.0%. This increase is primarily due to a general improvement in the trucking industry.

For the fiscal quarter ended June 30, 2011, Morris Transportation had net income of $140,514 compared with net income of $254,863 for the fiscal quarter ended June 30, 2010. The decrease in net income is due to the increase in fuel costs, net of surcharge.

Total assets at June 30, 2011, were $4,037,856, as compared to total assets of $4,375,402 at of June 30, 2010. This decrease is primarily due to the sale of several tractors and continued depreciation of other existing equipment.

Smith Systems Transportation

For the fiscal quarter ended June 30, 2011, Smith Systems Transportation had revenues of $2,157,946 compared with revenues of $1,798,467 for the fiscal quarter ended June 30, 2010. This increase is primarily due to a general improvement in the trucking industry, particularly in the part of the country (Nebraska, Wyoming, and surrounding states) where Smith Systems Transportation operates.

For the fiscal quarter ended June 30, 2011, Smith Systems Transportation had net income of $13,234 compared with a net income of $197 for the fiscal quarter ended June 30, 2010, an improvement of $13,037. This increase is primarily due to a general sales increase and successful cost reduction programs.

Total assets at June 30, 2011, totaled $2,494,635, as compared to total assets of $2,866,433 at June 30, 2010, a decrease of $371,798, due to equipment disposals.

Cross Creek Trucking, Inc.

We acquired Cross Creek Trucking, Inc. on April 1, 2011, so the results of operations for the quarter ending June 30, 2010, are not included in our results of operations.

For the fiscal quarter ended June 30, 2011, Cross Creek Transportation had revenues of $7,594,399 compared with revenues of $7,117,741 for the fiscal quarter ended June 30, 2010, an increase of $476,658 or 6.7%. This increase is primarily due to business that we added from other sectors as result of the acquisition.

For the fiscal quarter ended June 30, 2011, Cross Creek Transportation had net income of $13,575 compared with net income of $62,829 for the fiscal quarter ended June 30, 2010. The decrease in net income is due to the increase in fuel costs, net of surcharge.

Integrated Freight Services

We began our brokerage operations for Integrated Freight Services on April 1, 2011 from unfulfilled business opportunities we had in in our other subsidiaries. Integrated Freight Services has no prior period results for comparison.

For the fiscal quarter ended June 30, 2011, Integrated Freight Services had revenues of $271,784. For the fiscal quarter ended June 30, 2011, Integrated Freight Services had net income of $13,972. Total assets at June 30, 2011, totaled $21,901.

Net Loss

In spite of income at each of our operating units, we reported a net loss of $2,867,768 for the fiscal quarter ended June 30, 2010 as compared to a net loss of $329,388 for the fiscal quarter ended June 30, 2010. The increase in loss, all at the IFC corporate level, was a result of the costs of the Triple C discontinued operation, acquisition costs and amortization expense from acquisitions and increased interest and derivative expense and other costs associated with raising capital. The derivative losses resulted from our sale of convertible debentures, as explained in Notes 6 and 9 of the financial statements.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. In addition to the cash flows discussed below, we issued approximately $5,000,000 of debt and $1,440,000 of stock and warrants to acquire Cross Creek Trucking, Inc.

Cash Flows and Working Capital

Our cash flow from operations is insufficient to meet current obligations. In fiscal quarter June 30, 2011, we relied upon additional investment through debt in order to fund our operations. We anticipate the need to raise significant amounts of capital in order to fund our operations in the next fiscal quarter.

As a result of losses we have incurred to date, we have financed our operations primarily through equity and debentures. At June 30, 2011, we had $131,386 in cash and cash equivalents. We had receivables, net of allowances, of $5,042,981 and our current liabilities were $15,398,894.

Our sales cycle can be several weeks or longer, followed by a period of time in which to collect our receivables, with some costs incurred immediately, making our business working-capital intensive. We do not anticipate a profitability level that would resolve its cash flow issues in the foreseeable future and expects to rely upon acquisitions and capital contributed by investors to fund its operations.

We have significant capital expenditures, although leasing and brokerage operations can reduce our equipment cost when justified by the level of sales.

Operating Activities

Net cash used in operating activities was $130,519 for the three months ended June 30,2011 as compared to net cash provided by operating activities of $109,430 for the three months ended June 30, 2010. For the three months ended June 30, 2011, we had a net loss of $2,877,211, along with non-cash items such as depreciation and amortization expense of $1,261,335, share-based compensation and interest expense of $908,500, minority interest in earnings of a subsidiary of $9,443, changes in discontinued assets and liabilities of $335,765 and changes in operating assets and liabilities of $284,601. During the three months ended June 30, 2010, we experienced a net loss of $329,658, along with non-cash items such as depreciation and amortization expense of $518,273, offset by changes in assets and liabilities of $74,494.

Investing Activities

We did not expend or generate any cash from investing activities for the fiscal quarter ended June 30, 2011 as compared to $106,674 of net cash used in investing activities for the fiscal quarter ended June 30, 2011. During the fiscal quarter ended June 30, 2010, we used cash of $100,000 for the purchase of Triple C Transport. We also purchased equipment for $6,674. We were able to acquire Cross Creek Trucking, Inc. entirely through Notes, stocks, and warrants.

Financing Activities

Net cash provided by financing activities for the fiscal quarter ended June 30, 2011, was $207,747, as compared to net cash provided of $74,870 for the fiscal quarter ended June 30, 2010. For the fiscal quarter ended June 30, 2011, net cash provided by financing activities related to proceeds received from notes payable of $837,193 which were funds received from various lenders, proceeds from the exercise of warrants of $32,500, offset by repayments on notes payable of $661,946 which were to pay down the balances on various notes related to the trucks and trailers and other debts. In the prior period there were proceeds from notes payable of $538,899 and repayment of notes payable of $464,029.

Outlook

Notwithstanding our operating losses in the comparative quarters covered by this report on Form 10-Q, we experienced positive cash flows and improvements in our working capital positions at the subsidiary level during the quarter ended June 30, 2011 compared to the same quarter in 2010. As we begin to consolidate the duplicated functions among our subsidiaries, which we have begun in the areas of insurance and fuel purchasing, we expect to achieve further savings which will be reflected in improved cash flows and working capital positions, and profitable operations of which there is no assurance. The expenses associated with maintaining our reporting under the Securities Exchange Act, transaction costs and amortization, and interest costs and other costs associated with the raising of capital at the parent level have significantly contributed to our consolidated negative cash flow and working capital positions. We do not expect a positive change in these factors until we complete additional acquisitions, if any, which should enable us to spread the parent’s expenses, associated with being a publicly traded and reporting company and costs of future acquisition over a larger revenue and cash flow base.

Our management believes that we are in a continuingly uncertain truckload freight market as the operating environment grew slightly positive during the quarter ended June 30, 2011. We expect the trend to continue in future quarters.

Even though our management is uncertain about the overall economic recovery, the transportation industry is generally cash lean with over-leveraged balance sheets. We intend to invest more heavily as demand for truckload services improves, including additional acquisitions. Our management believes we are well-positioned to grow our business as the recovery continues to develop.

Our management believes that our level of profitability, fleet renewal strategy, and use of independent contractors will enable us to eventually internally finance attractive levels of fleet growth when demand conditions are right. Based on our growing network, a history of low cost operations and anticipated access to capital resources, albeit often at high rates, our management believes we have the competitive position and ability to perpetuate our model based on leading growth and profitability.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with United States Generally Accepted Accounting Principles ("GAAP") requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, revenue, and expenses in our consolidated financial statements and accompanying notes. Management evaluates these estimates and assumptions on an ongoing basis, utilizing historical experience, consulting with experts, and using other methods considered reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates and assumptions, and it is possible that materially different amounts would be reported using differing estimates or assumptions. We considers our critical accounting policies to be those that are both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates. A summary of the significant accounting policies followed in preparation of the financial statements is contained in Note 1 to our consolidated financial statements.

Property and Equipment

Property and equipment are entered at acquisition cost and depreciated on a straight-line basis over their anticipated life. We estimate the salvage value of our equipment to be fifteen percent or less for tractors and trailers, if the equipment is kept in service for its entire useful life. This life expectancy is based upon our management’s past experience of operations. The useful life of a typical tractor is seven fiscal years and a typical trailer is nine fiscal years. Our structures are forty fiscal years and leasehold improvements are the lesser of the economic life of the leasehold improvements or the remaining life of the lease.

Cash Requirements

At August 18, 2011, we had a nominal balance in cash and cash equivalents. As discussed below, this amount and our current accounts receivable collections may be adequate to maintain our current level of operations for 60 to 90 days, after which we would need additional capital or face a significant curtailment of operations.

Recent Accounting Pronouncements

See Consolidated Financial Statements beginning on page F-1.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under which we have:

· An obligation under a guaranty contract, although we do have obligations under certain sales arrangements including purchase obligations to vendors,

· A retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,

· Any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument or,

· Any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.

Effect of Changes in Prices

Changes in prices in the past few fiscal years have not been a significant factor in the trucking industry. Prices to the end customer do vary with fuel prices, which are affected by means of a fuel surcharge that is set by the U S. Department of Energy and is common to all companies in the industry, although the ability to recover surcharges varies depending on the customer relationships. The surcharge may affect the industry and the economy as a whole but does not differentiate between companies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

307 – Disclosure controls and procedures: As of June 30, 2011, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, with the participation of our principal executive and principal financial officers. Disclosure controls and procedures are defined in Exchange Act Rule 15d–15(e) as “controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms [and] include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.” Based on our evaluation, our Chief Executive Officer/Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2011, such disclosure controls and procedures were not effective.

The two primary reasons for management’s conclusions are:

Insufficient personnel to implement checks and balances; and

Decentralization of accounting functions in each subsidiary.

We began centralizing our accounting functions at the parent company level in April 2010 and we anticipate substantial completion by March 31 , 2012.

308T(b) – Changes in internal control over financial reporting: Based upon an evaluation by our management of our internal control over financial reporting, with the participation of our principal executive and principal financial officers, there were no changes made in our internal control over financial reporting during the quarter ended June 30, 2011 that have materially affected or are reasonably likely to materially affect this control.

Limitations on the Effectiveness of Internal Control: Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of internal control is also based in part upon certain assumptions about risks and the likelihood of future events, and there is no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances and the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective internal control system, financial reporting misstatements due to error or fraud may occur and not be detected on a timely basis.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

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

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

Weiss, as receiver for the Nutmeg/Fortuna Fund	Integrated Freight Corporation	11-CV-03130	U.S. District Court Northern District of Illinois	Collection $219,891

Steven E. Lusty	PlanGraphics - Integrated Freight Corporation	2011-002523-NC	12th Circuit Sarasota County, Florida	Breach of employment agreement and unspecified damages

________________

*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 booked 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 book 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.

The suite 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.

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. Our management believes 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Except as otherwise noted, all unregistered sales of equity securities through June 30, 2011 have been reported on current reports on Form 8-K.

As of June 8, 2011, we issued 363,636 shares of our restricted common stock to Hampton Growth Resources LLC, a provider of investor relations services, in payment of its fee.

As of August 19, 2011, we issued 769,231 common shares to Paul Henley in payment of $100,000 of accrued and unpaid salary owed to him.

We are relying on Section 4(2) of the Securities Act of 1933 for an exemption from the registration requirements of that Act, in that the offer and sale of the shares did not involve a public offering or the payment of commissions or fees. We negotiated ach transaction directly with the recipient of the shares. We did not receive any cash proceeds from these transactions

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We did not submit any matters to security holders for approval during the three month period ended June 30, 2011.

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

The following exhibits are attached to this report:

Exhibit Number		Description

31.1		Rule 15d-14 (a) Certification by Principal Executive and Principal Operating Officer
31.2		Rule 15d-14 (a) Certification by Principal Financial and Principal Accounting Officer
32		Section 1350 Certification of Principal Executive and Principal Operating Officer and Principal Financial Principal Accounting Officer

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101.INS		XBRL Instance Document*
101SCH		XBRL Taxonomy Extension Schema Document*
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB		XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Integrated Freight Corporation

Date: September 13, 2011

	By:	/s/ Paul A. Henley
		Paul A. Henley, Chief Executive Officer
		(Principal Executive and Principal Operating Officer)

	By:	/s/ Paul A. Henley
		Paul A. Henley
		(Principal Financial and Principal Accounting Officer)

Integrated Freight (PGRA) Inactive 10-Q/A2012 Q1 Quarterly report (amended)