**SECURITIES      AND EXCHANGE COMMISSION **

**Washington,      D.C. 20549**

**FORM      10Q**

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

**For      the quarterly period ended March 31, 2007**

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

**SMF      ENERGY CORPORATION**

| **Delaware**                                  |   | **65-0707824**                                            |
|-----------------------------------------------|--------|-----------------------------------------------------------|
|  (State                of Incorporation) |   |  (IRS                Employer Identification Number) |

| **200                West Cypress Creek Road, Suite 400,****Fort                Lauderdale, Florida** |   | **33309**                       |
|-------------------------------------------------------------------------------------------------------|--------|---------------------------------|
|  (Address                of principal executive offices)                                         |   |  (Zip                Code) |

**(954)      308-4200**

  Non-accelerated      filer x

----

**SMF      ENERGY CORPORATION**

**FORM      10-Q**

**INDEX**

| Part                    I  |   | Financial                    Information:                                                                                                                                              |   |                       |
|----------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Item                    1. Condensed Unaudited Consolidated Financial Statements                                                                                                       |   |                       |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Condensed                    Unaudited Consolidated Balance Sheets as of March 31, 2007 and                    Audited                    June 30, 2006                                |   | 3                          |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Condensed                    Unaudited Consolidated Statements of Operations for each of the                    three and                    nine months ended March 31, 2007 and 2006 |   | 4                          |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Condensed                    Unaudited Consolidated Statements of Cash Flows for the nine                    months ended                    March 31, 2007 and 2006                   |   | 5                          |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Notes                    to Condensed Unaudited Consolidated Financial Statements                                                                                                      |   | 6                          |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Item                    1A . Risk Factors                                                                                                                                              |   | 18                         |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Item                    2. Management’s Discussion and Analysis of Financial Condition and Results                    of Operations                                              |   | 18                         |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Item                    3. Quantitative and Qualitative Disclosures About Market                    Risk                                                                               |   | 32                         |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Item                    4. Controls and Procedures                                                                                                                                     |   | 32                         |
|                       |   |                                                                                                                                                                                   |   |                       |
| Part                    II |   | Other                    Information                                                                                                                                                   |   |                       |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Items                    1. thru 6.                                                                                                                                                    |   | 34                    - 35 |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Signature                    Page                                                                                                                                                      |   | 36                         |
|                       |   |                                                                                                                                                                                   |   |                       |
|                       |   | Certifications                                                                                                                                                                         |   | 37                    - 39 |

**SMF      Energy Corporation and Streicher Mobile Fueling, Inc. **

----

**SMF      ENERGY CORPORATION (FORMALLY KNOWN AS STREICHER MOBILE FUELING, INC.) AND      SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**MARCH      31, 2007 (Unaudited) and JUNE 30, 2006**

***(in      000’s, except share and per share data)***

|                                                                                                               |   | **March                    31, 2007**  |   | **June                    30, 2006**  |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------------------------------------------|--------|
|                                                                                                               |   | **(unaudited)**                             |   |                                       |   |
|  **ASSETS**                                                                                              |   |                                        |   |                                       |   |   |   |
| Current                  assets:                                                                              |   |                                        |   |                                       |   |   |   |
| Cash                    and cash equivalents                                                                  |   | $                                           | 3,485  |                                       | $      | 4,103 |   |
| Accounts                    receivable, less allowances of $1,400 (June 30, 2006 -                    $1,252) |   |                                        | 21,240 |                                       |   | 24,345 |   |
| Inventories,                    less slow moving reserves of $376 (June 30, 2006 - $276)                      |   |                                        | 2,251  |                                       |   | 3,321 |   |
| Prepaid                    expenses and other current assets                                                  |   |                                        | 400    |                                       |   | 413 |   |
| Total                    current assets                                                                  |   |                                        | 27,376 |                                       |   | 32,182 |   |
|                                                                                                          |   |                                        |   |                                       |   |   |   |
| Property                    and equipment, net                                                                |   |                                        | 10,829 |                                       |   | 11,739 |   |
| Identifiable                    intangible assets, net                                                        |   |                                        | 2,866  |                                       |   | 3,148 |   |
| Goodwill                                                                                                      |   |                                        | 228    |                                       |   | 228 |   |
| Deferred                    debt costs, net                                                                   |   |                                        | 615    |                                       |   | 749 |   |
| Other                    assets                                                                               |   |                                        | 59     |                                       |   | 68 |   |
|                                                                                                          |   |                                        |   |                                       |   |   |   |
| Total                    assets                                                                               |   | $                                           | 41,973 |                                       | $      | 48,114 |   |

| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                                                                                                                                           |   |   |         |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|
| Current                  liabilities:                                                                                                                                                                     |   |   |         |   |   |
| Line                  of credit payable                                                                                                                                                                   |   | $      | 14,805       |   | $      | 15,612 |   |
| Accounts                  payable                                                                                                                                                                         |   |   | 6,794   |   |   | 10,367  |   |
| Accrued                  expenses and other liabilities                                                                                                                                                   |   |   | 3,981        |   |   | 2,787 |   |
| Current                  portion of long-term debt                                                                                                                                                        |   |   | 3,304        |   |   | 2,118 |   |
| Total                  current liabilities                                                                                                                                                                |   |   | 28,884       |   |   | 30,884 |   |
| Long-term                  liabilities:                                                                                                                                                                   |   |   |         |   |   |   |   |
| Promissory                  notes, net of unamortized debt discount of $1,386 (June 30, 2006                  - $1,652)                                                                                   |   |   | 7,564        |   |   | 10,993 |   |
| Capital                  lease obligations                                                                                                                                                                |   |   | —      |   |   | 25 |   |
| Long-term                  debt, net                                                                                                                                                                      |   |   | 7,564        |   |   | 11,018  |   |
| Deferred                  revenue                                                                                                                                                                         |   |   | 511          |   |   | 555 |   |
| Other                  long-term liabilities                                                                                                                                                              |   |   | 123          |   |   | 117 |   |
| Total                  liabilities                                                                                                                                                                        |   |   | 37,082  |   |   | 42,574  |   |
|                                                                                                                                                                                                      |   |   |         |   |   |   |   |
| Shareholders’                  equity:                                                                                                                                                              |   |   |         |   |   |   |   |
| Common                  stock, par value $.01 per share; 50,000,000 shares authorized;                  12,645,143                  issued and outstanding at March 31, 2007 (June 30, 2006 - 10,491,143) |   |   | 130          |   |   | 105 |   |
| Additional                  paid-in capital                                                                                                                                                               |   |   | 24,191       |   |   | 19,890 |   |
| Accumulated                  deficit                                                                                                                                                                      |   |   | (19,430      | )      |   | (14,455 | ) |
| Total                  shareholders’ equity                                                                                                                                                         |   |   | 4,891        |   |   | 5,540 |   |
| Total                  liabilities and shareholders’ equity                                                                                                                                         |   | $      | 41,973       |   | $      | 48,114 |   |

**The      accompanying notes to condensed unaudited financial statements are an integral      part of these consolidated balance sheets.**

----

**SMF      ENERGY CORPORATION (FORMERLY KNOWN AS STREICHER MOBILE FUELING, INC.) AND      SUBSIDIARIES **

**CONDENSED      UNAUDITED CONSOLIDATED **
**STATEMENTS      OF OPERATIONS**

**FOR      THE THREE AND NINE MONTHS ENDED**

**MARCH      31, 2007 and 2006**

***(in      000’s, except per share data)***
** **

|                                                                                                                      |   | **Three                  Months Ended****March                  31,** |    | **Nine                  Months Ended****March                  31,** |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|---------|----------------------------------------------------------------------|--------|
|                                                                                                                      |   | **2007**                                                              |    | **2006**                                                             |   | **2007** |   | **2006** |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |
| Petroleum                  product sales and service revenues                                                             |   | $                                                                     | 45,450  |                                                                 | $      | 51,806 |   | $ | 152,368 |   | $ | 157,060 |   |
| Petroleum                  product taxes                                                                                  |   |                                                                  | 6,367   |                                                                 |   | 7,490 |   |   | 19,875 |   |   | 21,408 |   |
| Total                  revenues                                                                                           |   |                                                                  | 51,817  |                                                                 |   | 59,296 |   |   | 172,243 |   |   | 178,468 |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Cost                  of petroleum product sales and service                                                              |   |                                                                  | 42,972  |                                                                 |   | 49,548 |   |   | 142,658 |   |   | 147,166 |   |
| Petroleum                  product taxes                                                                                  |   |                                                                  | 6,367   |                                                                 |   | 7,490 |   |   | 19,875 |   |   | 21,408 |   |
| Total                  cost of sales                                                                                      |   |                                                                  | 49,339  |                                                                 |   | 57,038 |   |   | 162,533 |   |   | 168,574 |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Gross                  profit                                                                                             |   |                                                                  | 2,478   |                                                                 |   | 2,258 |   |   | 9,710 |   |   | 9,894 |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Selling,                  general and administrative expenses                                                             |   |                                                                  | 4,077   |                                                                 |   | 3,569 |   |   | 11,886 |   |   | 9,109 |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Operating                  (loss) income                                                                                  |   |                                                                  | (1,599  | )                                                                    |   | (1,311 | ) |   | (2,176 | ) |   | 785 |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                                         |   |                                                                  | (1,023  | )                                                                    |   | (905 | ) |   | (2,808 | ) |   | (2,539 | ) |
| Interest                  and other income                                                                                |   |                                                                  | 4       |                                                                 |   | — |   |   | 9 |   |   | 11 |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Loss                  before income taxes                                                                            |   |                                                                  | (2,618  | )                                                                    |   | (2,216 | ) |   | (4,975 | ) |   | (1,743 | ) |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Income                  tax expense                                                                                       |   |                                                                  | — |                                                                 |   | — |   |   | — |   |   | — |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                                                 |   | $                                                                     | (2,618  | )                                                                    | $      | (2,216 | ) | $ | (4,975 | ) | $ | (1,743 | ) |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Basic                  and diluted net loss per share                                                                     |   | $                                                                     | (.23    | )                                                                    | $      | (.23 | ) | $ | (.46 | ) | $ | (.18 | ) |
|                                                                                                                      |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Basic                  and diluted weighted average number of shares outstanding                  during the period  |   |                                                                  | 11,600  |                                                                 |   | 9,814 |   |   | 10,867 |   |   | 9,642 |   |

**The        accompanying notes to condensed unaudited financial statements are an integral        part of these consolidated statements of operations**

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**SMF      ENERGY CORPORATION (FORMERLY KNOWN AS STREICHER MOBILE FUELING, INC.) AND      SUBSIDIARIES **

**CONDENSED      UNAUDITED CONSOLIDATED STATEMENTS OF **
**CASH      FLOWS**

**FOR      THE NINE MONTHS ENDED MARCH 31, 2007 AND 2006**

***(in            000’s)***

|                                                                                                      |   | **Nine                Months Ended March 31** |     |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|----------|
|                                                                                                      |   | **2007**                                      |     | **2006** |   |
| CASH                FLOWS USED IN OPERATING ACTIVITIES:                                                   |   |                                          |     |   |   |
| Net                loss                                                                                   |   | $                                             | (4,975   | ) | $ | (1,743 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities: |   |                                          |     |   |   |   |   |
| Depreciation                and amortization:                                                             |   |                                          |     |   |   |   |   |
| Cost                of sales                                                                         |   |                                          | 1,316    |   |   | 1,130 |   |
| Selling,                general and administrative                                                        |   |                                          | 672      |   |   | 342 |   |
| Amortization                of deferred debt costs                                                        |   |                                          | 248      |   |   | 276 |   |
| Amortization                of debt discount                                                              |   |                                          | 573      |   |   | 518 |   |
| Stock                based compensation expense                                                           |   |                                          | 304      |   |   | 280 |   |
| Provision                for allowance for doubtful accounts                                              |   |                                          | 370      |   |   | 248 |   |
| Provision                for slow moving inventory                                                        |   |                                          | 100      |   |   | — |   |
| Other                                                                                                     |   |                                          | 17       |   |   | — |   |
| Changes                in operating assets and liabilities:                                               |   |                                          |     |   |   |   |   |
| Decrease                (increase) in accounts receivable                                                 |   |                                          | 2,735    |   |   | (3,646 | ) |
| Decrease                in inventories, prepaid expenses and other assets                                 |   |                                          | 992      |   |   | 1,059 |   |
| Decrease                in accounts payable and other liabilities                                         |   |                                          | (2,398   | ) |   | (477 | ) |
| Net                cash used in operating activities                                                 |   |                                          | (46      | ) |   | (2,013 | ) |
|                                                                                                      |   |                                          |     |   |   |   |   |
| CASH                FLOWS USED IN INVESTING ACTIVITIES:                                                   |   |                                          |     |   |   |   |   |
| Cash                used for business acquisitions, net of cash acquired                                  |   |                                          | —  |   |   | (1,751 | ) |
| Purchases                of property and equipment                                                        |   |                                          | (796     | ) |   | (2,018 | ) |
| Net                cash used in investing activities                                                      |   |                                          | (796     | ) |   | (3,769 | ) |
|                                                                                                      |   |                                          |     |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                      |   |                                          |     |   |   |   |   |
| Proceeds                from line of credit                                                               |   |                                          | 185,882  |   |   | 187,145 |   |
| Repayments                of line of credit                                                               |   |                                          | (186,689 | ) |   | (185,685 | ) |
| Proceeds                from private placement of common stock and warrants                issuance       |   |                                          | 3,274    |   |   | — |   |
| Costs                related to the issuance of common stock and warrants                                 |   |                                          | (256     | ) |   | — |   |
| Proceeds                from exercise of common stock options and warrants                                |   |                                          | 31       |   |   | 1,211 |   |
| Proceeds                from issuance of promissory notes                                                 |   |                                          | —  |   |   | 3,000 |   |
| Payments                of debt issuance costs                                                            |   |                                          | (114     | ) |   | (235 | ) |
| Principal                payment on promissory notes                                                      |   |                                          | (1,794   | ) |   | (1,385 | ) |
| Repayments                of promissory notes                                                        |   |                                          | —  |   |   | (452 | ) |
| Capital                lease payments                                                                     |   |                                          | (110     | ) |   | (11 | ) |
| Net                cash provided by financing activities                                                  |   |                                          | 224      |   |   | 3,588 |   |
|                                                                                                      |   |                                          |     |   |   |   |   |
| NET                DECREASE IN CASH AND CASH EQUIVALENTS                                                  |   |                                          | (618     | ) |   | (2,194 | ) |
|                                                                                                      |   |                                          |     |   |   |   |   |
| CASH                AND CASH EQUIVALENTS, beginning                of the period                          |   |                                          | 4,103    |   |   | 4,108 |   |
| CASH                AND CASH EQUIVALENTS, end                of the period                                |   | $                                             | 3,485    |   | $ | 1,914 |   |
|                                                                                                      |   |                                          |     |   |   |   |   |
| SUPPLEMENTAL                DISCLOSURE OF CASH FLOW INFORMATION:                                          |   |                                          |     |   |   |   |   |
| Cash                paid for interest                                                                     |   | $                                             | 2,084    |   | $ | 1,083 |   |
|                                                                                                      |   |                                          |     |   |   |   |   |
| SUPPLEMENTAL                CASH FLOW INFORMATION OF NON-CASH ACTIVITIES:                                 |   |                                          |     |   |   |   |   |
| Conversion                of promissory notes to common shares                                            |   | $                                             | 630      |   | $ | — |   |
| Amortization                of stock compensation                                                    |   | $                                             | 304      |   | $ | 280 |   |
| Unamortized                debt discount related to warrants and warrants extension                  |   | $                                             | 327      |   | $ | 605 |   |

**The      accompanying notes to condensed unaudited financial statements are an integral      part of these**

**consolidated      statements of cash flows.**

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**(**
**1**
**)**
**NATURE      OF OPERATIONS**

**(**
**2**
**)          **
**BASIS          OF PRESENTATION**

**(3)         **
**RECLASSIFICATIONS**

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL        STATEMENTS**

**(4)         **
**RECENT        ACCOUNTING PRONOUNCEMENTS**

**(5)        **
**CASH        AND CASH EQUIVALENTS**

**(6)**
**INVENTORIES**

**(7)**
**LINE      OF CREDIT PAYABLE**

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL        STATEMENTS**

**(8)      **
**OTHER      LONG-TERM LIABILITIES**

*Accounting      for Asset Retirement Obligations”.*

**(9)      **
**DEFERRED      REVENUE**

**(10)      **
**NET      LOSS PER SHARE**

----

**NOTES      TO CONDENSED UNAUDITED CONSOLIDATED      FINANCIAL STATEMENTS**

**(11)      **
**STOCK-BASED      COMPENSATION **

|                                         |   | **Three                Months Ended March 31, 2007** |      |
|----------------------------------------------|--------|------------------------------------------------------|-----------|
|                                         |   |   **Shares**                               |      | **Weighted                Average****Exercise****Price** |   | **Weighted                Average****Grant-date                Fair Value** |   | **Aggregate                Intrinsic Value** |   |
| Outstanding                December 31, 2006 |   |                                                 | 1,558,352 |   | $ | 2.03 |   | $ | 1.85 |   |   |   |   |
| Granted                                      |   |                                                 | 30,000    |   | $ | 1.61 |   | $ | 1.35 |   |   |   |   |
| Exercised                                    |   |                                                 | —   |   |   | — |   |   | — |   |   |   |   |
| Terminated                                   |   |                                                 | (61,500   | ) | $ | 3.52 |   | $ | 5.47 |   |   |   |   |
| Outstanding                March 31, 2007    |   |                                                 | 1,526,852 |   | $ | 1.96 |   | $ | 1.69 |   | $ | 229,337 |   |
| Exercisable                March 31, 2007    |   |                                                 | 1,049,752 |   | $ | 1.74 |   | $ | 1.47 |   | $ | 209,857 |   |

|                                      |   | **Nine                Months Ended March 31, 2007** |      |
|-------------------------------------------|--------|-----------------------------------------------------|-----------|
|                                      |   |   **Shares**                              |      | **Weighted                Average Exercise****Price** |   | **Weighted                Average****Grant-date                Fair Value** |   |  **Aggregate                Intrinsic Value** |   |
| Outstanding                June 30, 2006  |   |                                                | 1,443,852 |   | $ | 2.05 |   | $ | 1.86 |   |   |   |   |
| Granted                                   |   |                                                | 157,000   |   | $ | 1.86 |   | $ | 1.67 |   |   |   |   |
| Exercised                                 |   |                                                | —   |   |   | — |   |   | — |   |   |   |   |
| Terminated                                |   |                                                | (74,000   | ) | $ | 3.44 |   | $ | 4.99 |   |   |   |   |
| Outstanding                March 31, 2007 |   |                                                | 1,526,852 |   | $ | 1.96 |   | $ | 1.69 |   | $ | 229,337 |   |
| Exercisable                March 31, 2007 |   |                                                | 1,049,752 |   | $ | 1.74 |   | $ | 1.47 |   | $ | 209,857 |   |

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL        STATEMENTS**

|                                       |   |  **Shares** |     | **Weighted                average grant-date fair value** |   |
|--------------------------------------------|--------|------------------|----------|-----------------------------------------------------------|--------|
| Nonvested                at June 30, 2006  |   |             | 497,900  |                                                      | $      | 2.21 |   |
| Granted                                    |   |             | 157,000  |                                                      | $      | 1.67 |   |
| Vested                                     |   |             | (149,300 | )                                                         | $      | 1.66 |   |
| Forfeited                                  |   |             | (28,500  | )                                                         | $      | 2.62 |   |
| Nonvested                at March 31, 2007 |   |             | 477,100  |                                                      |   |   |   |

|                                         |   | **Three                Months Ended March 31, 2007** |    |
|----------------------------------------------|--------|------------------------------------------------------|---------|
|                                         |   |   **Shares**                               |    | **Weighted                Average Exercise****Price** |   | **Weighted                Average****Grant-date                Fair Value** |   | **Aggregate                Intrinsic Value** |   |
| Outstanding                December 31, 2006 |   |                                                 | 298,650 |   | $ | 1.75 |   | $ | 1.56 |   |   |   |   |
| Granted                                      |   |                                                 | 9,000   |   | $ | 1.67 |   | $ | 1.48 |   |   |   |   |
| Exercised                                    |   |                                                 | — |   |   | — |   |   | — |   |   |   |   |
| Terminated                                   |   |                                                 | — |   |   | — |   |   | — |   |   |   |   |
| Outstanding                March 31, 2007    |   |                                                 | 307,650 |   | $ | 1.75 |   | $ | 1.56 |   | $ | 41,100 |   |
| Exercisable                March 31, 2007    |   |                                                 | 307,650 |   | $ | 1.75 |   | $ | 1.56 |   | $ | 41,100 |   |

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL        STATEMENTS**

|                                      |   | **Nine                Months Ended March 31, 2007** |    |
|-------------------------------------------|--------|-----------------------------------------------------|---------|
|                                      |   |   **Shares**                              |    | **Weighted                Average Exercise****Price** |   | **Weighted                Average****Grant-date                Fair Value** |   | **Aggregate                Intrinsic Value** |   |
| Outstanding                June 30, 2006  |   |                                                | 289,950 |   | $ | 1.75 |   | $ | 1.56 |   |   |   |   |
| Granted                                   |   |                                                | 17,700  |   | $ | 1.72 |   | $ | 1.53 |   |   |   |   |
| Exercised                                 |   |                                                | — |   |   | — |   |   | — |   |   |   |   |
| Terminated                                |   |                                                | — |   |   | — |   |   | — |   |   |   |   |
| Outstanding                March 31, 2007 |   |                                                | 307,650 |   | $ | 1.75 |   | $ | 1.56 |   | $ | 41,100 |   |
| Exercisable                March 31, 2007 |   |                                                | 307,650 |   | $ | 1.75 |   | $ | 1.56 |   | $ | 41,100 |   |

|                                   |   | **Three                Months Ended****March                31,** |   | **Nine                Months Ended****March                31,** |   |
|----------------------------------------|--------|-------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|
|                                   |   | **2007**                                                          |   | **2006**                                                         |   | **2007** |   | **2006** |   |
| Assumptions:                           |   |                                                              |   |                                                             |   |   |   |   |   |
| Risk                free interest rate |   |                                                              | 4.53   | %                                                                |   | 4.69 | % |   | 4.69 | % |   | 4.69 | % |
| Dividend                yield          |   |                                                              | -0-    |                                                             |   | -0- |   |   | -0- |   |   | -0- |   |
| Expected                volatility     |   |                                                              | 105.7  | %                                                                |   | 108.7 | % |   | 107.0 | % |   | 108.7 | % |
| Expected                life           |   |                                                              | 8.0    |                                                             |   | 9.3 |   |   | 8.0 |   |   | 9.3 |   |
| Forfeiture                rate         |   |                                                              | 17.05  | %                                                                |   | 2.48 | % |   | 10.20 | % |   | 2.41 | % |

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL        STATEMENTS**

**(12)          **
**LONG-TERM          DEBT**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **March                31, 2007** |   | **June                30, 2006** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|----------------------------------|--------|
| September                2005 promissory notes (the “September 2005 Notes”); 10% interest due                semi-annually, February 28 and August 31; principal payments of                $300,000 due beginning August 31, 2007 and thereafter semi-annually                on                August 31 and February 28; and a balloon payment of $1,200,000 due at                maturity on August 31, 2010; effective interest rate of 19.9% includes                cost of warrants and other debt issue costs |   | $                                 | 3,000  |                             | $      | 3,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                              |   |                             |   |   |   |
| January                2005 promissory notes (the “January 2005 Notes”); 10% interest due                semi-annually, July 24 and January 24; principal payments of $540,000                due                July 24, 2007, and thereafter semi-annually on January 24 and July                24; and                a balloon payment of $2,160,000 due at maturity on January 24, 2010;                effective interest rate of 22.8% includes cost of warrants and other                debt                issue costs |   |                              | 4,860  |                             |   | 6,100 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                              |   |                             |   |   |   |
| August                2003 promissory notes (the August 2003 Notes”); 10% interest due                semi-annually, December 31 and June 30; principal payments of                $692,500 due August 28, 2007, and thereafter semi-annually on                August 28 and February 28; and a balloon payment of $2,770,000 due at                maturity on August 28, 2008; effective interest rate of 18.6% includes                cost of warrants and other debt issue costs                                        |   |                              | 4,355  |                             |   | 5,540 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                              |   |                             |   |   |   |
| Various                capital leases; interest rates range from 12.0% to 15% with monthly                principal and interest payments; leases expire between February 2008                and                March 2008                                                                                                                                                                                                                                                                                                                   |   |                              | 39     |                             |   | 148 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                              |   |                             |   |   |   |
| Unamortized                debt discount, net of amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                              | (1,386 | )                                |   | (1,652 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                              |   |                             |   |   |   |
| Less:                current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                              | (3,304 | )                                |   | (2,118 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                              |   |                             |   |   |   |
| Long-term                debt, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                                 | 7,564  |                             | $      | 11,018 |   |

***September      2005 Promissory Notes***

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

***Warrants      to Convert a Portion of August 2003 Notes and January 2005 Notes to      Equity***

***Other***

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL        STATEMENTS**

**(13)          **
**SHAREHOLDERS’          EQUITY **

|                                                                                                                                  |   |  **Common****Stock** |    | **Additional****Paid-in                Capital** |   |  **Accumulated****Deficit** |   | **Total****Shareholders’****Equity** |    |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|---------|--------------------------------------------------|--------|----------------------------------|--------|--------------------------------------------|---------|
|                                                                                                                                  |   |                      |    |                                             |   |                             |   |                                       |    |
| June                30, 2006                                                                                                          |   | $                         | 105     |                                             | $      | 19,890                           |   | $                                          | (14,455 | ) | $ | 5,540 |   |
|                                                                                                                                  |   |                      |    |                                             |   |                             |   |                                       |    |   |   |   |   |
| Issuance                of common stock through the exercise of warrants                                                              |   |                      | — |                                             |   | 31                               |   |                                       | — |   |   | 31 |   |
|                                                                                                                                  |   |                      |    |                                             |   |                             |   |                                       |    |   |   |   |   |
| Issuance                of common stock through the exercise of warrants related to the conversion                of promissory notes |   |                      | 4       |                                             |   | 642                              |   |                                       | — |   |   | 646 |   |
|                                                                                                                                  |   |                      |    |                                             |   |                             |   |                                       |    |   |   |   |   |
| Issuance                of common stock and warrants from private placement, net of issue                costs                        |   |                      | 21      |                                             |   | 2,997                            |   |                                       | — |   |   | 3,018 |   |
|                                                                                                                                  |   |                      |    |                                             |   |                             |   |                                       |    |   |   |   |   |
| Valuation                adjustment for warrants extension                                                                            |   |                      | — |                                             |   | 327                              |   |                                       | — |   |   | 327 |   |
|                                                                                                                                  |   |                      |    |                                             |   |                             |   |                                       |    |   |   |   |   |
| Amortization                of employee stock compensation expense                                                                    |   |                      | — |                                             |   | 304                              |   |                                       | — |   |   | 304 |   |
|                                                                                                                                  |   |                      |    |                                             |   |                             |   |                                       |    |   |   |   |   |
| Net                loss for the period                                                                                                |   |                      | — |                                             |   | —                          |   |                                       | (4,975  | ) |   | (4,975 | ) |
|                                                                                                                                  |   |                      |    |                                             |   |                             |   |                                       |    |   |   |   |   |
| March                31, 2007                                                                                                         |   | $                         | 130     |                                             | $      | 24,191                           |   | $                                          | (19,430 | ) | $ | 4,891 |   |

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**(14)**
**ACQUISITION      TRANSACTIONS**

**Shank      Services Acquisition and Related Financing**

**Acquisition      of H & W and Related Financing**

----

**NOTES        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL        STATEMENTS**

|                                                |   | **Nine                Months****Ended****March                31, 2006** |    |
|-----------------------------------------------------|--------|--------------------------------------------------------------------------|---------|
| Total                revenues                       |   | $                                                                        | 185,376 |   |
| Total                cost of sales and service      |   |                                                                     | 174,772 |   |
|                                                |   |                                                                     |    |   |
| Gross                profit                         |   |                                                                     | 10,604  |   |
|                                                |   |                                                                     |    |   |
| Net                loss                             |   | $                                                                        | (3,768  | ) |
|                                                |   |                                                                     |    |   |
| Basic                and diluted net loss per share |   | $                                                                        | (0.35   | ) |

**(15)**
**IDENTIFIABLE      INTANGIBLE ASSETS AND GOODWILL**

|                                        |   | **March                31, 2007** |   | **June                30, 2006**                  |   |
|---------------------------------------------|--------|-----------------------------------|--------|---------------------------------------------------|--------|
|                                        |   | **Gross****Carrying****Amount**   |   |  **Accumulated                Amortization** |   | **Net****Carrying****Amount** |   | **Gross****Carrying****Amount** |   |  **Accumulated****Amortization** |   | **Net****Carrying****Amount** |   |
| Amortized                intangible assets: |   |                              |   |                                              |   |   |   |   |   |   |   |   |   |
| Customer                relationships       |   | $                                 | 1,768  |                                              | $      | 218 |   | $ | 1,550 |   | $ | 1,768 |   | $ | 121 |   | $ | 1,647 |   |
| Favorable                leases             |   |                              | 196    |                                              |   | 59 |   |   | 137 |   |   | 196 |   |   | 29 |   |   | 167 |   |
| Trademarks                                  |   |                              | 687    |                                              |   | 69 |   |   | 618 |   |   | 687 |   |   | 34 |   |   | 653 |   |
| Supplier                contracts           |   |                              | 801    |                                              |   | 240 |   |   | 561 |   |   | 801 |   |   | 120 |   |   | 681 |   |
| Total                                       |   | $                                 | 3,452  |                                              | $      | 586 |   | $ | 2,866 |   | $ | 3,452 |   | $ | 304 |   | $ | 3,148 |   |
|                                        |   |                              |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Goodwill                                    |   |                              |   |                                              |   |   |   | $ | 228 |   |   |   |   |   |   |   | $ | 228 |   |

|                                     |   |   |   |
|------------------------------------------|--------|--------|--------|
| Remainder                of fiscal 2007: |   | $      | 95     |   |
| Fiscal                2008:              |   |   | 382    |   |
| Fiscal                2009:              |   |   | 370    |   |
| Fiscal                2010               |   |   | 357    |   |
| Fiscal                2011:              |   |   | 206    |   |
| Other:                                   |   |   | 1,456  |   |
| Total:                                   |   | $      | 2,866  |   |

**(16)**
**LEGAL      PROCEEDINGS **

----

** ****NOTES      TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**(17)      **
**SUBSEQUENT EVENTS**

**Conversion      of Debt**

*** ***
*Warrants      to Convert a Portion of August 2003 Notes and January 2005 Notes to      Equity*

**Sale      of Equipment**

----

**ITEM      1A. RISK FACTORS**

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

**Forward      Looking Statements**

| ·   | our                beliefs regarding our position in the commercial mobile fueling and                bulk                fueling; lubricant and chemical packaging, distribution and sales;                integrated out-sourced fuel management services; and transportation                logistics markets. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                strategies, plan, objectives and expectations concerning our future                operations, cash flows, margins, revenues, profitability, liquidity                and                capital resources. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                efforts to improve operational, financial and management controls                and                reporting systems and procedures. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                plans to expand and diversify our business through acquisitions of                existing companies or their operations and customer                bases. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·                 | the                avoidance of future net losses; |
|----------------------------------|----------------------------------------------------|

| ·                 | the                avoidance of adverse consequences relating to our outstanding                debt; |
|----------------------------------|-------------------------------------------------------------------------------------------------------|

----

| ·                 | our                continuing ability to pay interest and principal on our bank line                of                credit; the outstanding balances of $4.4 million of the August 2003                Notes;                $4.9 million of the January 2005 Notes; and $3.0 million of the September                2005 Notes; and to pay our accounts payable and other liabilities                when                due; |
|----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·                 | our                continuing ability to comply with financial covenants contained in                our                credit agreements; |
|----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·                 | our                ability to retire or convert debt to equity                ; |
|----------------------------------|---------------------------------------------------------------------------------|

| ·                 | the                avoidance of significant provisions for bad debt reserves on our                accounts                receivable; |
|----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·                 | continuing                demand for our products and services at competitive prices and acceptable                margins; |
|----------------------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ·                 | the                avoidance of negative customer reactions to new or existing marketing                strategies; |
|----------------------------------|---------------------------------------------------------------------------------------------------------------------|

|  ·               ** ** | avoidance                of significant inventory reserves for slow moving                products; |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------|

| ·                 | our                continuing ability to acquire sufficient trade credit from fuel and                lubricants suppliers and other                vendors; |
|----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·**  ** | successful                completion of the process of integrating the Shank Services and H& W                operations into our existing operations, and enhancing the profitability                of the integrated businesses; |
|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·**  ** | our                continuing ability to make acquisitions and diversify, including                the                availability of sufficient capital to finance additional businesses                and to                support the infrastructure requirements of a larger combined                company; |
|------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·**  ** | successful                completion of the implementation of our new information management                system; |
|------------------------|---------------------------------------------------------------------------------------------------------------------|

| ·**  ** | success                in responding to competition from other providers of similar                services; |
|------------------------|--------------------------------------------------------------------------------------------------------------|

| ·                 | the                impact of economic and market                conditions. |
|----------------------------------|-----------------------------------------------------------------------------|

**Overview**

***Our      Business***

----

***Acquisitions***

***Key      Developments***

| ·   | We                strenthened our balance sheet, as reflected in the $1.5 million or                45%                increase in stockholder’s                equity                when compared to last quarter. This was the result of a capital raise                and                conversion of debt partially offset by the net loss incurred during                the                third quarter of 2007. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                have completed, as of May 15, 2007, the implementation of our information                systems to better support our key initiatives of diversification                and                acquisition and to integrate the companies acquired in 2005. The                Enterprise Resource Planning (“ERP”) operating and accounting systems                replaced three legacy systems. The effective utilization of the new                systems will enable us to realize economies of scale and eliminate                duplicative costs while creating an improved capability to integrate                future acquisitions on an accelerated basis. We believe that the                distractions associated with this implementation impacted our ability                to                manage the acquisitions and, to a lesser extent, the legacy business                was                severely hampered by an incomplete and disjointed set of information                tools, impairing our profitability. We also believe that the disruptions                created by the implementation of the new system are now behind                us. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                raised additional capital through a $3.3 million private placement                of 2.1                million shares of our common stock and warrants to purchase an additional                423,800 shares. The proceeds from the placement were used to satisfy                $732,300 in payment obligations related to our August 2003 promissory                notes. The remaining funds will be used for an additional $200,200                repayment on the same promissory notes (which payment was deferred                to                August 2007), a related interest payment and general working capital                purposes. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                reduced our outstanding promissory notes by an additional $630,000                through                their conversion into common stock as a result of the exercise of                common                stock purchase warrants with the conversion of promissory notes by                certain                investors. While the conversion or retirement of the promissory notes                resulted in immediate additional non-cash interest expense as a result                of                the write-offs of the related debt discount and deferred debt costs,                it                favorably impacts our future cash needs by reducing principal payment                and                debt service costs. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | After                March 31, 2007, the aggregate principal amount of our promissory                notes was                reduced an additional $302,000 by another conversion into common                stock resulting from the exercise of warrants. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                entered into an amendment to the line of credit to extend the maturity                date from September 25, 2007 to June 30, 2008 and modified certain                financial covenants. We believe that the extension will enable us                to                continue to meet the working capital needs of the base business. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | External                factors beyond our control have continued to impact the Company’s results                of operations. Market prices for fuel continued to increase during                the                third quarter of fiscal 2007. While fuel price fluctuations affect                our                revenues, our gross profits are generally not affected by such                fluctuations as we are able to pass the increased cost of the product                on                to our customers. However, higher fuel prices coupled with a slowing                economy have decreased the demand for the services and goods provided                by                the transportation, manufacturing, services and other industries                which                make up the majority of our customer base. While we have                continued to increase the organic growth in our mobile fueling services                through the addition of new customers seeking to reduce fuel costs,                the                decrease in our existing customers’ business has resulted in lower volumes                of fuel being supplied by us to these customers. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Net                loss from operations for the third quarter 2007 was $2.6 million                compared                to $2.2 million for the same period of 2006. The primary reason for                the                $402,000 increase in the net loss was the $508,000 increase in selling,                general and administrative expenses due to the incremental corporate                infrastructure costs of $477,000 incurred to support the acquisition                and                diversification strategies of the Company; and an increase in                interest expense of $118,000 which was mainly attributable to a non-cash                write-off of unamortized debt discount related to the conversion                of the                debt into common stock. These increases in expenses were partially                offset                by a $220,000 increase in gross profit resulting from our emphasis                on                developing new business with higher overall net margin per gallon                contribution. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Earnings                before interest, taxes, depreciation and amortization (“EBITDA”), a                non-GAAP measure, for the third quarter 2007 was $(787,000) compared                to an                EBITDA of $(687,000) for the same period of 2006. The primary reason                for                the $100,000 decrease was the increase in selling, general and                administrative expenses discussed above, partially offset by the                $220,000                increase in gross profit. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **·  ** | Financial                results from our commercial mobile and bulk fueling services business                continue to be largely dependent on the number of gallons of fuel                sold and                the net margin per gallon achieved. The 3.7 million gallon reduction                in                the current quarter compared to the prior year quarter was primarily                due                to the termination of operations in our Baltimore location in March                2006                and the curtailment in August 2006 of a portion of the low margin                fuel                transport services business in our Mid-Continent division. In addition,                we                believe our volume decrease is also a result of a decrease in industry                demand as reflected in the contraction in activity in the trucking                industry. |
|------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | For                the quarter ended March 31, 2007, net margin per gallon was 14.3                cents per                gallon compared to 11.0 cents per gallon for the prior year quarter.                The                increase in net margin per gallon was the result of our elimination                or                reduction of prior low margin business, including the termination                of                operations in our Baltimore location and the curtailment of low margin                fuel transport services business. With the completion of the                implementation of our ERP systems, we anticipate that, in the future,                management will be in a better position to evaluate and identify                lower                margin operations and services and respond                accordingly. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Results      of Operations**

----

**Three      Months Ended **
**March      31, 2007 as Compared to Three Months Ended March 31, 2006**

|                                                                       |   | **For                the Three Months Ended March 31,** |   |
|----------------------------------------------------------------------------|--------|---------------------------------------------------------|--------|
|                                                                       |   |                                                    |   |   |   | **Increase                (decrease)** |   |
|                                                                       |   | **2007**                                                |   | **2006** |   | $  |   | **%** |   |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |
| Total                revenues                                              |   | $                                                       | 51,817 |   | $ | 59,296 |   | $ | (7,479 | ) |   | (13 | )% |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Total                cost of sales and services                            |   |                                                    | 49,339 |   |   | 57,038 |   |   | (7,699 | ) |   | (13 | )% |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Gross                profit                                                |   |                                                    | 2,478  |   |   | 2,258 |   |   | 220 |   |   | 10 | % |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and administrative                expenses |   |                                                    | 4,077  |   |   | 3,569 |   |   | 508 |   |   | 14 | % |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense                                            |   |                                                    | 1,023  |   |   | 905 |   |   | 118 |   |   | 13 | % |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Interest                and other income                                   |   |                                                    | (4     | ) |   | — |   |   | (4 | ) |   | (100 | )% |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                    |   | $                                                       | (2,618 | ) | $ | (2,216 | ) | $ | (402 | ) |   | 18 | % |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Gallons                sold                                                |   |                                                    | 20,407 |   |   | 24,079 |   |   | (3,672 | ) |   | (15 | )% |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Net                margin                                                  |   | $                                                       | 2,915  |   | $ | 2,652 |   | $ | 263 |   |   | 10 | % |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Net                margin per gallon (in cents)                            |   |                                                    | 14.30  |   |   | 11.00 |   |   | 3.30 |   |   | 30 | % |
|                                                                       |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |
| EBITDA                (non-GAAP measure)                                   |   | $                                                       | (787   | ) | $ | (687 | ) | $ | (100 | ) |   | (15 | )% |

***Revenues***

----

***Gross      Profit***

***Selling,      General and Administrative Expenses***

| Corporate                infrastructure costs, including those related to the development                and                implementation of a new fully integrated accounting, operations,                internal                control and management information system |   | $      | 477    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Public                company compliance expenses, including legal and auditing fees, proxy                statements and name incorporation changes                                                                                                                          |   |   | 352    |   |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Employee                stock compensation expense attributable                to SFAS 123(R)                                                                                                                                                                                 |   |   | 67     |   |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Credit                card fees                                                                                                                                                                                                                                               |   |   | (49    | )      |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Provision                for doubtful accounts                                                                                                                                                                                                                                |   |   | (121   | )      |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Increase                in SG&A depreciation and amortization                                                                                                                                                                                                             |   |   | 75     |   |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Reduction                in facilities expenses related to the integration of Dallas and Houston                locations                                                                                                                                                     |   |   | (101   | )      |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Reduction                of acquired SG&A costs associated with H & W and Shank                primarily related to payroll expenses                                                                                                                        |   |   | (216   | )      |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Other                                                                                                                                                                                                                                                                         |   |   | 24     |   |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Total                increase                                                                                                                                                                                                                                                 |   | $      | 508    |   |

----

***Interest      Expense***

|                                                               |   | **Three                Months Ended****March                31,** |    |           |   |
|--------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|----------------|--------|
|                                                               |   |  **2007**                                                    |    |  **2006** |   | **Increase****(decrease)** |   |
| **Stated                Rate Interest Expense**:                   |   |                                                              |    |           |   |   |   |
| Line                of credit                                      |   | $                                                                 | 252     |           | $      | 221 |   | $ | 31 |   |
| Long                term debt                                      |   |                                                              | 372     |           |   | 377 |   |   | (5 | ) |
| Other                                                              |   |                                                              | 29      |           |   | 30 |   |   | (1 | ) |
| **Total                stated rate interest expense**              |   |                                                              | **653** |           |   | **628** |   |   | **25** |   |
|                                                               |   |                                                              |    |           |   |   |   |   |   |   |
| **Non-Cash                Interest Amortization:**                 |   |                                                              |    |           |   |   |   |   |   |   |
| Amortization                of deferred debt costs                 |   |                                                              | 92      |           |   | 94 |   |   | (2 | ) |
| Amortization                of debt discount                       |   |                                                              | 278     |           |   | 183 |   |   | 95 |   |
| **Total                amortization of non-cash interest expense** |   |                                                              | **370** |           |   | **277** |   |   | **93** |   |
|                                                               |   |                                                              |    |           |   |   |   |   |   |   |
| **Total                interest expense**                          |   | $                                                                 | 1,023   |           | $      | 905 |   | $ | 118 |   |

***Income      Taxes***

***Net      Loss***

----

***EBITDA        - Non-GAAP Measure***

|                                                               |   | **For                the Three Months Ended****March                31,** |   |  **Increase** |   |
|--------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|--------------------|--------|
|                                                               |   | **2007**                                                                  |   | **2006**           |   | **(decrease)** |   |
|                                                               |   |                                                                      |   |               |   |   |   |
| Net                loss                                            |   | $                                                                         | (2,618 | )                  | $      | (2,216 | ) | $ | (402 | ) |
| Add              back:                                             |   |                                                                      |   |               |   |   |   |   |   |   |
| Interest                expense                                    |   |                                                                      | 653    |               |   | 628 |   |   | 25 |   |
| Non-cash                interest expense                           |   |                                                                      | 370    |               |   | 277 |   |   | 93 |   |
| Depreciation                and amortization expense:              |   |                                                                      |   |               |   |   |   |   |   |   |
| Cost                of sales                                       |   |                                                                      | 436    |               |   | 394 |   |   | 42 |   |
| Selling,                general and administrative                 |   |                                                                      | 219    |               |   | 144 |   |   | 75 |   |
| Amortization                of employee stock compensation expense |   |                                                                      | 153    |               |   | 86 |   |   | 67 |   |
| EBITDA                                                             |   | $                                                                         | (787   | )                  | $      | (687 | ) | $ | (100 | ) |

**Nine      Months Ended **
**March      31, 2007 as Compared to Nine Months Ended March 31, 2006**
** **

|                                                                       |   |  **For                the Nine Months Ended March 31,**  |
|----------------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                       |   |                                                               |   |   |   | **Increase                (decrease)**  |   |
|                                                                       |   |                                                               | **2007** |   |   | **2006** |   |   | **$ ** |   |   | **%** |   |
| Total                revenues                                              |   | $                                                                  | 172,243 |   | $ | 178,468 |   | $ | (6,225 | ) |   | (3 | )% |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Total                cost of sales and services                            |   |                                                               | 162,533 |   |   | 168,574 |   |   | (6,041 | ) |   | (4 | )% |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Gross                profit                                                |   |                                                               | 9,710 |   |   | 9,894 |   |   | (184 | ) |   | (2 | )% |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and administrative                expenses |   |                                                               | 11,886 |   |   | 9,109 |   |   | 2,777 |   |   | 30 | % |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense                                            |   |                                                               | 2,808 |   |   | 2,539 |   |   | 269 |   |   | 11 | % |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest                and other income                                   |   |                                                               | (9 | ) |   | (11 | ) |   | (2 | ) |   | (18 | )% |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                    |   | $                                                                  | (4,975 | ) | $ | (1,743 | ) | $ | 3,232 |   |   | 185 | % |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Gallons                sold                                                |   |                                                               | 65,221 |   |   | 70,147 |   |   | (4,926 | ) |   | (7 | )% |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                margin                                                  |   | $                                                                  | 11,026 |   | $ | 11,024 |   | $ | 2 |   |   | 0 | % |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                margin per gallon (in cents)                            |   |                                                               | 16.90 |   |   | 15.70 |   |   | 1.20 |   |   | 8 | % |
|                                                                       |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| EBITDA                (non-GAAP measure)                                   |   | $                                                                  | 125 |   | $ | 2,548 |   | $ | (2,423 | ) |   | 95 | % |

**Revenues**

----

***Gross      Profit***

***Selling,      General and Administrative Expenses***

| Corporate                infrastructure costs, including those related to the development                and                implementation of a new fully integrated accounting, operations,                internal                control and management information system |   | $      | 1,657  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Public                company compliance expenses, including legal and auditing fees, proxy                statements, and name incorporation changes                                                                                                                         |   |   | 851    |   |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Employee                stock compensation expense attributable                to SFAS 123(R)                                                                                                                                                                                 |   |   | 24     |   |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Credit                card fees                                                                                                                                                                                                                                               |   |   | 72     |   |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Increase                in depreciation and amortization SG&A related to ERP system                implementation                                                                                                                                                         |   |   | 328    |   |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Reduction                in acquired SG&A costs associated with H & W and Shank                primarily related to facilities expense                                                                                                                           |   |   | (134   | )      |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Other                                                                                                                                                                                                                                                                         |   |   | (21    | )      |
|                                                                                                                                                                                                                                                                          |   |   |   |   |
| Total                increase                                                                                                                                                                                                                                                 |   | $      | 2,777  |   |

----

***Interest      Expense***

|                                                      |   | **Nine                Months Ended****March                31,** |      |           |   |
|-----------------------------------------------------------|--------|------------------------------------------------------------------|-----------|----------------|--------|
|                                                      |   |  **2007**                                                   |      |  **2006** |   | **Increase****(decrease)** |   |
| **Stated                Rate Interest Expense**:          |   |                                                             |      |           |   |   |   |
| Line                of credit                             |   | $                                                                | 858       |           | $      | 535 |   | $ | 323 |   |
| Long                term debt                             |   |                                                             | 1,046     |           |   | 1,105 |   |   | (59 | ) |
| Other                                                     |   |                                                             | 83        |           |   | 106 |   |   | (23 | ) |
| **Total                stated rate interest expense**     |   |                                                             | **1,987** |           |   | **1,746** |   |   | **241** |   |
|                                                      |   |                                                             |      |           |   |   |   |   |   |   |
| **Non-Cash                Interest Amortization:**        |   |                                                             |      |           |   |   |   |   |   |   |
| Amortization                of deferred debt costs        |   |                                                             | 248       |           |   | 276 |   |   | (28 | ) |
| Amortization                of debt discount              |   |                                                             | 573       |           |   | 517 |   |   | 56 |   |
| **Total                amortization of interest expense** |   |                                                             | **821**   |           |   | **793** |   |   | **28** |   |
|                                                      |   |                                                             |      |           |   |   |   |   |   |   |
| **Total                interest expense**                 |   | **$**                                                            | **2,808** |           | **$**  | **2,539** |   | **$** | **269** |   |

***Income      Taxes***

***Net      Loss***

----

***EBITDA        - Non-GAAP Measure***

*** ***

|                                                      |   | **For                the Nine Months Ended****March                31,** |   |  **Increase** |   |
|-----------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|--------------------|--------|
|                                                      |   | **2007**                                                                 |   | **2006**           |   | **(decrease)** |   |
| Net                loss                                   |   | $                                                                        | (4,975 | )                  | $      | (1,743 | ) | $ | (3,232 | ) |
| Add                back: Interest                expense  |   |                                                                     | 1,987  |               |   | 1,746 |   |   | 241 |   |
| Non-cash                interest expense                  |   |                                                                     | 821    |               |   | 793 |   |   | 28 |   |
| Depreciation                and amortization expense:     |   |                                                                     |   |               |   |   |   |   |   |   |
| Cost                of sales                              |   |                                                                     | 1,316  |               |   | 1,130 |   |   | 186 |   |
| Selling,                general and administrative        |   |                                                                     | 672    |               |   | 342 |   |   | 330 |   |
| Amortization                of stock compensation expense |   |                                                                     | 304    |               |   | 280 |   |   | 24 |   |
|                                                      |   | $                                                                        | 125    |               | $      | 2,548 |   | $ | (2,423 | ) |

**Pro      forma EBITDA**

|                                                                                 |   |  **Three                Months Ended**  |   |  **Nine                Months Ended**  |   |
|--------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                 |   |                                              |   |                                             |   | **Increase                (decrease)**  |   |   |   |   |   | **Increase                (decrease)**  |   |
|                                                                                 |   | **3/31/07**                                  |   | **3/31/06**                                 |   | **$**  |   | **%**  |   |  **3/31/07** |   | **3/31/06**  |   | **$**  |   | **% ** |   |
| EBITDA                                                                               |   | $                                                 | (787   | )                                                | $      | (687 | ) | $ | (100 | ) |   | (15 | )% | $ | 125 |   | $ | 2,548 |   | $ | (2,423 | ) |   | (95 | )% |
| Add:                                                                                 |   |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate                infrastructure and ongoing                integration costs |   |                                              | 477    |                                             |   | 439 |   |   | 38 |   |   | 9 | % |   | 1,657 |   |   | 1,240 |   |   | 417 |   |   | 34 | % |
| Non-cash                provisions for doubtful                accounts and other    |   |                                              | 151    |                                             |   | 272 |   |   | (121 | ) |   | (44 | )% |   | 370 |   |   | 248 |   |   | 122 |   |   | 49 | % |
| Non-cash                provisions for slow                moving inventory          |   |                                              | 100    |                                             |   | — |   |   | 100 |   |   | 100 | % |   | 100 |   |   | — |   |   | 100 |   |   | 100 | % |
| Pro                forma EBITDA                                                      |   | $                                                 | (59    | )                                                | $      | 24 |   | $ | (83 | ) |   | (346 | )% | $ | 2,252 |   | $ | 4,036 |   | $ | (1,784 | ) |   | (44 | )% |

----

|                                                                                                                           |   |  **Three                Months Ended**  |        |                **Nine                Months Ended** |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|-------------|----------------------------------------------------------|--------|
|                                                                                                                           |   |                                              |        |                                                     |   | **Increase                (decrease)**  |   |   |   |   |   | **Increase                (decrease)**  |   |
|                                                                                                                           |   |                                              | **3/31/07** |                                                     |   | **3/31/06** |   |   | **$** |   |  | **%** |  |   | **3/31/07** |   |   | **3/31/06** |   |   | **$**  |   |   | **%** |   |
|                                                                                                                           |   |                                              |        |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                                        |   | $                                                 | (2,618      | )                                                        | $      | (2,216 | ) | $ | (402 | ) |   | (18 | )% | $ | (4,975 | ) | $ | (1,743 | ) | $ | (3,232 | ) |   | (185 | )% |
|                                                                                                                           |   |                                              |        |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-Cash                Items:                                                                                                 |   |                                              |        |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                - cost of sales                                                                                    |   |                                              | 436         |                                                     |   | 394 |   |   | 42 |   |   | 11 | % |   | 1,316 |   |   | 1,130 |   |   | 186 |   |   | 16 | % |
| Depreciation                - SG&A                                                                                         |   |                                              | 219         |                                                     |   | 144 |   |   | 75 |   |   | 52 | % |   | 672 |   |   | 342 |   |   | 330 |   |   | 96 | % |
| Amortization                of deferred debt cost                                                                              |   |                                              | 92          |                                                     |   | 94 |   |   | (2 | ) |   | (2 | )% |   | 248 |   |   | 276 |   |   | (28 | ) |   | (10 | )% |
| Amortization                of debt discount                                                                                   |   |                                              | 278         |                                                     |   | 183 |   |   | 95 |   |   | 52 | % |   | 573 |   |   | 517 |   |   | 56 |   |   | 11 | % |
| Stock-based                compensation expense                                                                                |   |                                              | 153         |                                                     |   | 86 |   |   | 67 |   |   | 78 | % |   | 304 |   |   | 280 |   |   | 24 |   |   | 9 | % |
| Inventory                reserve                                                                                               |   |                                              | 100         |                                                     |   | — |   |   | 100 |   |   | 100 | % |   | 100 |   |   | — |   |   | 100 |   |   | 100 | % |
| Provision                for allowance for doubtful                accounts                                                    |   |                                              | 151         |                                                     |   | 272 |   |   | (121 | ) |   | (44 | )% |   | 370 |   |   | 248 |   |   | 122 |   |   | 49 | % |
| Total                non-cash items                                                                                            |   |                                              | 1,429       |                                                     |   | 1,173 |   |   | 268 |   |   | 23 | % |   | 3,583 |   |   | 2,793 |   |   | 790 |   |   | 28 | % |
|                                                                                                                           |   |                                              |        |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss before non-cash items                                                                                  |   |                                              | (1,189      | )                                                        |   | (1,043 | ) |   | (146 | ) |   | (14 | )% |   | (1,392 | ) |   | 1,050 |   |   | (2,442 | ) |   | (232 | )% |
|                                                                                                                           |   |                                              |        |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Add:                Corporate infrastructure and on-going                integration costs                                     |   |                                              | 477         |                                                     |   | 439 |   |   | 38 |   |   | 9 | % |   | 1,657 |   |   | 1,240 |   |   | 417 |   |   | 34 | % |
|                                                                                                                           |   |                                              |        |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss before non-cash items and corporate                infrastructure and integration                costs |   |                                              | (712        | )                                                        |   | (604 | ) |   | (108 | ) |   | (18 | )% |   | 265 |   |   | 2,290 |   |   | (2,025 | ) |   | (88 | )% |
|                                                                                                                           |   |                                              |        |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Add:                Stated rate of interest(see                interest expense table)                                         |   |                                              | 653         |                                                     |   | 628 |   |   | 25 |   |   | 4 | % |   | 1,987 |   |   | 1,746 |   |   | 241 |   |   | 14 | % |
|                                                                                                                           |   |                                              |        |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pro                forma EBITDA                                                                                                |   | $                                                 | (59         | )                                                        | $      | 24 |   | $ | (83 | ) |   | (346 | )% | $ | 2,252 |   | $ | 4,036 |   | $ | (1,784 | ) |   | (44 | )% |

**Capital      Resources and Liquidity **

*Sources      and Uses of Cash*

----

*Cash      Flows*

|                                                                                                     |   | **Nine                Months****Ended****March                31,** |    |
|----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|---------|
|                                                                                                     |   | **2007**                                                            |    | **2006** |   |
| Net                proceeds from private placements of common stock and                warrants issuance |   | $                                                                   | 3,018   |   | $ | — |   |
| Proceeds                from exercise of common stock options and warrants                          |   |                                                                | 31      |   |   | 1,211 |   |
| Proceeds                from issuance of promissory notes                                                |   |                                                                | — |   |   | 3,000 |   |
| Net                cash borrowings                                                                       |   |                                                                | — |   |   | 1,460 |   |
|                                                                                                     |   | $                                                                   | 3,049   |   | $ | 5,671 |   |

|                                                   |   | **Nine                Months****Ended****March                31,** |    |
|--------------------------------------------------------|--------|---------------------------------------------------------------------|---------|
|                                                   |   | **2007**                                                            |    | **2006** |   |
| Principal                payments on promissory notes  |   | $                                                                   | 1,794   |   | $ | 1,385 |   |
| Net                repayments of line of credit        |   |                                                                | 807     |   |   | — |   |
| Purchase                of property and equipment      |   |                                                                | 796     |   |   | 2,018 |   |
| Payments                of debt issuance costs         |   |                                                                | 114     |   |   | 235 |   |
| Capital                lease payments                  |   |                                                                | 110     |   |   | 11 |   |
| Cash                used in operations                 |   |                                                                | 46      |   |   | 2,013 |   |
| Acquisition                of business                 |   |                                                                | — |   |   | 1,751 |   |
| Repayments                of promissory notes          |   |                                                                | — |   |   | 452 |   |
|                                                   |   | $                                                                   | 3,667   |   | $ | 7,865 |   |
|                                                   |   |                                                                |    |   |   |   |   |
| Net                change in cash and cash equivalents |   | $                                                                   | (618    | ) | $ | (2,194 | ) |

----

*Adequacy      of Capital Resources*

*.      *

***Debt      and Other Obligations***

----

**ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

**ITEM      4. CONTROLS AND PROCEDURES **

*Disclosure      Controls and Procedures. *

*Internal      Control over Financial Reporting. *

*Material      weakness in internal control. *

----

*Remediation      of Material Weakness in Internal Control over Financial      Reporting.*

| ·   | We                have significantly strengthened our management team, including the                following appointments: Vice President of Finance and Accounting                (April                2007); Controller of Corporate Accounting (September 2006); Senior                Vice                President of Information Services & Administration and Chief                Information Officer (April 2006; promoted December 2006); Senior                Vice                President of Marketing & Sales and Investment Relations Officer (July                2005; promoted December 2006); Controller of General Ledger Accounting                and                Controls (December 2006); Director of Revenue, Inventory and Payable                Accounting and Assistant Controller (May 2005); Mid-Continent Division                Controller (May 2006); and several additional information technology,                staff accounting and administrative                personnel. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                have invested over $1.8 million during the calendar year 2006 and                the                three months ended March 31, 2007 in the development and implementation                of                a new fully integrated accounting and operations internal control                and                management information system. In connection with this project we                found it                necessary to terminate in August 2006 the third party implementer                for its                inability to meet deliverables timelines and budget commitments,                and to                retain a more experienced and qualified                replacement. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                have significantly expanded our corporate infrastructure in order                to                upgrade and improve all internal accounting procedures and processes                supporting our existing business and anticipated                acquisitions. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                have initiated a program to develop and improve policies and procedures                in                connection with the operational performance of our internal finance                and                accounting processes and underlying information and reporting systems;                establish greater organizational accountability and lines of                responsibility and approval; and better support our processes                operations. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                have improved our organizational structure to help achieve the proper                number of, and quality of our, accounting, finance and information                technology functions, including the proper segregation of duties                among                accounting personnel. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                have refined our period-end financial reporting processes to improve                the                quality and timeliness of our financial                information. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PART      II. Other Information**

**ITEM      1. LEGAL PROCEEDINGS**

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

**ITEM      3. DEFAULTS UPON SENIOR SECURITIES**

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

**ITEM      5. OTHER INFORMATION**

----

**ITEM      6. EXHIBITS **

**Exhibits**

| Exhibit              No. |   | Description                                                                                                                                                                                                                             |
|--------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                     |   | Certificate                of Principal Executive Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                                                      |
|                     |   |                                                                                                                                                                                                                                    |
| 31.2                     |   | Certificate              of Principal Financial Officer pursuant to Section 302 of the              Sarbanes-Oxley Act of 2002                                                                                                          |
|                     |   |                                                                                                                                                                                                                                    |
| 32.1                     |   | Certificate              of Principal Executive Officer and Principal Financial Officer pursuant              to              18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the              Sarbanes-Oxley Act of 2002 |

----

**SIGNATURES**

|                                   |                                                                                                                                 |                                       |
|----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|
|                                   | SMF              ENERGY              CORPORATION                                                                                     |
|                              |                                                                                                                            |                                  |
| May              15,              2007 | By:                                                                                                                        | /s/ Richard              E. Gathright |
|                                   | Richard                E. GathrightChief                Executive Officer and President (Principal                Executive Officer) |

|   |                                                                                                                                                         |                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|
|   |                                                                                                                                                              |
|        | By:                                                                                                                                                | /s/ Michael              S. Shore  |
|   | Michael                S. Shore Chief                Financial Officer and Senior Vice President (Principal                Accounting and Financial Officer) |

----