Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 3. Commitments and Contingencies

Legal Matters

From time to time, we may become involved in litigation relating to claims arising out of our operations in the normal course of business. Other than as set forth below, no legal proceedings, government actions, administrative actions, investigations or claims are currently pending against us or involve us which, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business or financial condition.

On October 28, 2011, Mr. Robert Weinstein, our former Chief Financial Officer, filed a Demand for Arbitration with the New York office of the American Arbitration Association against GEM seeking unpaid wages and benefits that Mr. Weinstein claimed he was owed under the terms of his employment agreement with GEM. In February 2012, Mr. Weinstein was awarded a judgment totaling $391,914 and on October 5, 2012, Mr. Weinstein obtained a judgment against GEM for the sum of $414,235 in the Supreme Court of the State of New York, New York Count. During the first quarter of 2013, we settled this litigation and obtained a full mutual release with Mr. Weinstein in consideration of us paying Mr. Weinstein an aggregate amount of $150,000. During the fourth quarter of 2012, Mr. Weinstein agreed in principle to a settlement of $150,000 which is recorded as a liability at December 31, 2012. During the first quarter of 2013, we formally settled the litigation with Mr. Weinstein and obtained a full mutual release from Mr. Weinstein in consideration of us paying Mr. Weinstein an aggregate amount of $150,000. A gain on the settlement of these liabilities of $243,953 was recorded in our statement of income for the year ended December 31, 2012.

On September 8, 2011, an action entitled Cooper Electric Supply Co. v. Southside Electric, Inc. was filed in the Superior Court of New Jersey. GEM succeeded to the business of Southside Electric, Inc. ("Southside") pursuant to a share exchange between Southside and GEM in May of 2010. We were served in October 2011. The plaintiff asserts damages in the amount of approximately $23,700 for non-payment for goods supplied by the plaintiff to Southside. Our management believes the resolution of this matter will not materially affect our financial position, results of operations or liquidity. As of March 31, 2013, this amount is reflected in accounts payable. On May 9, 2013, we entered into a settlement agreement with Cooper Electric Supply Co. for a structured payoff. The terms call for $500 payments for May and June 2013, then $1,000 monthly payments from July 2013 through January 2014 (inclusive) and seven consecutive monthly installment payments of $2,000 from February 2014 through August 2014 (inclusive). A final payment of approximately $1,700 is due in September 2014.