**Table
            of Contents**





**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




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




**For
      the quarterly period ended September 30, 2006**




OR




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




Commission
      File Number 000-21825




**STREICHER
      MOBILE FUELING, INC.**


(Exact
      name of registrant as specified in its charter)







**Florida**
            
            **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**


(Issuer's
      telephone number, including area code)




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





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):





Large
      accelerated filer o   Accelerated
      filer o    Non-accelerated
      filer x





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act). Yes o .
      No
x .





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





As
      of
      November10, 2006 there were 10,526,143 shares of the registrant’s common stock
      outstanding.





**Table
        of Contents**




**STREICHER
      MOBILE FUELING, INC.**




**FORM
      10-Q**




**INDEX**




Form
      10-Q Part and Item No.





Part
                I
            Financial
                Information:Item
                1.
            Condensed
                Unaudited Consolidated Financial
                StatementsCondensed
                Consolidated Balance Sheets as of September 30, 2006
                (unaudited) and June 30, 2006
            3Condensed
                Unaudited Consolidated Statements of Operations for
                the three-months ended September 30, 2006 and 2005
            4Condensed
                Unaudited Consolidated Statements of Cash Flows for
                the three-months ended September 30, 2006 and 2005
            5Notes
                to Condensed Unaudited Consolidated Financial
                Statements
            6Item
                1A.
            Risk
                Factors
            17Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition
                and Results of Operations
            17Item
                3.
            Quantitative
                and Qualitative Disclosures About Market
                Risk
            28Item
                4.
            Controls
                and Procedures
            28Part
                II
            Other
                InformationItems
                1. thru 6.
            30
                - 31Signatures
            32Certifications
            33
                - 35




-2-
 **Table
          of Contents**




**STREICHER
      MOBILE FUELING, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**SEPTEMBER
      30, 2006 AND JUNE 30, 2006**


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




**ASSETS**
            
            **September
                30,**
            
            **June
                30,****2006**
            
            **2006****(unaudited)**Current
                assets:Cash
                and cash equivalents
            
            $
            513
            
            $
            4,103Accounts
                receivable, less allowances of $1,238 and $1,252,
                respectively
            
            
            23,998
            
            
            24,345Inventories,
                less slow moving reserves of $276 at September 30, 2006 and June
                30,
                2006
            
            
            3,009
            
            
            3,321Prepaid
                expenses and other current assets
            
            
            214
            
            
            413Total
                current assets
            
            
            27,734
            
            
            32,182Property
                and equipment, net
            
            
            11,304
            
            
            11,739Identifiable
                intangible assets, net
            
            
            3,056
            
            
            3,148Goodwill
            
            
            228
            
            
            228Deferred
                debt costs, net
            
            
            699
            
            
            749Other
                assets
            
            
            71
            
            
            68Total
                assets
            
            $
            43,092
            
            $
            48,114




**LIABILITIES
                AND SHAREHOLDERS’ EQUITY**Current
                liabilities:Line
                of credit payable
            
            $
            13,624
            
            $
            15,612Accounts
                payable
            
            
            9,102
            
            
            10,367Accrued
                expenses and other liabilities
            
            
            1,799
            
            
            2,787Current
                portion of long-term debt
            
            
            2,970
            
            
            2,118Total
                current liabilities
            
            
            27,495
            
            
            30,884Long-term
                liabilities:Promissory
                notes, net of unamortized debt discount of $1,502 and$1,652,
                respectively
            
            
            9,781
            
            
            10,993Capital
                lease obligations
            
            
            40
            
            
            25Long-term
                debt, net
            
            
            9,821
            
            
            11,018Other
                long-term liabilities
            
            
            118
            
            
            117Deferred
                revenue
            
            
            537
            
            
            555Total
                liabilities
            
            
            37,971
            
            
            42,574Shareholders’
                equity:Common
                stock, par value $.01 per share; 50,000,000 shares authorized;10,508,643
                and 10,491,143 issued and outstanding at September 30, 2006 and June
                30,
                2006, respectively
            
            
            105
            
            
            105Additional
                paid-in capital
            
            
            19,933
            
            
            19,890Accumulated
                deficit
            
            
            (14,917
            )
            
            (14,455
            )Total
                shareholders’ equity
            
            
            5,121
            
            
            5,540Total
                liabilities and shareholders’ equity
            
            $
            43,092
            
            $
            48,114


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


-3-
 **Table
          of Contents**




**STREICHER
      MOBILE FUELING, INC. AND SUBSIDIARIES**


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


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




**Three
                Months Ended**
              **September
                30,****2006**
            
            **2005**Petroleum
                product sales and service revenues
            
            $
            58,981
            
            $
            46,196Petroleum
                product taxes
            
            
            6,984
            
            
            6,600Total
                revenues
            
            
            65,965
            
            
            52,796Cost
                of petroleum product sales and service
            
            
            54,859
            
            
            42,383Petroleum
                product taxes
            
            
            6,984
            
            
            6,600Total
                cost of sales
            
            
            61,843
            
            
            48,983Gross
                profit
            
            
            4,122
            
            
            3,813Selling,
                general and administrative expenses
            
            
            3,650
            
            
            2,534Operating
                income
            
            
            472
            
            
            1,279Interest
                expense
            
            
            (949
            )
            
            (675
            )Other
                income
            
            
            15
            
            
            11Income
                (loss) before income taxes
            
            
            (462
            )
            
            615Income
                tax expense
            
            
            —
            
            
            —Net
                income (loss)
            
            $
            (462
            )
            $
            615Basic
                net income (loss) per share
            
            $
            (0.04
            )
            $
            0.07Diluted
                net income (loss) per share
            
            $
            (0.04
            )
            $
            0.06Basic
                weighted average common shares outstanding
            
            
            10,496
            
            
            9,339Diluted
                weighted average common shares outstanding
            
            
            10,496
            
            
            10,198


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


-4-
 **Table
          of Contents**


**STREICHER
      MOBILE FUELING, INC. AND SUBSIDIARIES**


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


***(in
      000’s)*** ****


**Three
                Months Ended**
              **September
                30**,**2006**
            
            **2005**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                income (loss)
            
            $
            (462
            )
            $
            615Adjustments
                to reconcile net income (loss) to net:Adjustments
                to reconcile net income (loss) by operating activities:Depreciation
                and amortization:Cost
                of sales
            
            
            431
            
            
            336Sales,
                general, and administrative
            
            
            223
            
            
            66Amortization
                of deferred debt costs
            
            
            79
            
            
            92Amortization
                of debt discount
            
            
            150
            
            
            164Stock
                based compensation expense
            
            
            27
            
            
            92Gain
                on disposal of asset
            
            
            —
            
            
            (11
            )Provision
                for allowance for doubtful accounts
            
            
            32
            
            
            200Other
            
            
            (9
            )
            
            —Changes
                in operating assets and liabilities, net of effects of
                acquisitions:Increase
                (decrease) in accounts receivable
            
            
            315
            
            
            (8,497
            )Increase
                in inventories, prepaid expenses, and other assets
            
            
            508
            
            
            200(Decrease)
                increase in accounts payable and other liabilities
            
            
            (2,261
            )
            
            2,571Net
                cash used in operating activities
            
            
            (967
            )
            
            (4,172
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Purchases
                of property and equipment
            
            
            (127
            )
            
            (185
            )Proceeds
                from disposal of property and equipment
            
            
            —
            
            
            40Other
            
            
            —
            
            
            (2
            )Net
                cash used in investing activities
            
            
            (127
            )
            
            (147
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from issuance of promissory notes
            
            
            —
            
            
            3,000Net
                (repayments) borrowings on line of credit payable
            
            
            (1,988
            )
            
            (1,448
            )Proceeds
                from exercise of common stock warrants and options
            
            
            16
            
            
            1,155Payments
                of debt issuance costs
            
            
            (29
            )
            
            (146
            )Capital
                lease payments
            
            
            (43
            )
            
            —Principal
                payment on promissory notes
            
            
            (452
            )
            
            (693
            )Net
                cash (used in) provided by financing activities
            
            
            (2,496
            )
            
            1,868NET
                DECREASE IN CASH AND CASH EQUIVALENTS
            
            
            (3,590
            )
            
            (2,451
            )CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            4,103
            
            
            4,108CASH
                AND CASH EQUIVALENTS, end of period
            
            $
            513
            
            $
            1,657SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Cash
                paid for-Interest
            
            $
            811
            
            $
            380Income
                taxes
            
            $
            —
            
            $
            —


**Supplemental
      Cash Flow Information of Non-Cash Activities:**





In
      the
      period ended September 30, 2006 and 2005, the Company recorded amortization
      of
      stock compensation expense of $27 and $92, respectively.





In
      the
      period ended September 30, 2005, the Company recorded unamortized debt discount
      of $605 related to the valuation of the common stock warrants issued in
      connection with its September 2005 issuance of private placement debt.







**The
      accompanying notes to the condensed unaudited financial statements are an
      integral part of these** **consolidated statements of cash flows.**


-5-
 **Table
          of Contents**


**NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL
        STATEMENTS**


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





Streicher
      Mobile Fueling, Inc., a Florida corporation (the “Company”) was formed in
      1996.




The
      Company provides commercial mobile and bulk fueling; integrated out-sourced
      fuel
      management; packaging, distribution and sale of lubricants and chemicals;
      transportation logistics and emergency response services. The Company’s fleet of
      custom specialized tank
      wagons, tractor-trailer transports, box trucks and customized flatbed vehicles
      deliver diesel
      fuel and gasoline to customers’ locations on a regularly scheduled or as needed
      basis, refueling vehicles and equipment and re-supplying fixed-site and
      temporary bulk storage tanks, and emergency power generation systems.
      A wide
      variety of specialized petroleum products, lubricants and chemicals are also
      distributed to refineries, manufacturers and other industrial customers. In
      addition, the Company’s fleet of  special
      duty tractor-trailer units provides heavy and ultra-heavy haul transportation
      logistics services over short and long distances to customers requiring the
      movement of over-sized and/or over-weight equipment
      and heavy manufactured products. At September 30, 2006, the Company was
      conducting operations in Alabama, California, Florida, Georgia, Louisiana,
      Mississippi, North Carolina, South Carolina, Tennessee and Texas.




The
      Company has historically generated substantially all of its revenues from
      commercial mobile and bulk fueling and integrated out-sourced fuel management
      services. As a result of the Shank Services and H & W Petroleum
      Company, Inc. acquisitions, discussed below, the Company now generates revenues
      from packaging, distribution and sales of lubricants and chemicals and provides
      transportation logistic services in addition to commercial mobile and bulk
      fueling and fuel management services. Revenues are comprised primarily of
      delivery service charges; the related sale of diesel fuel, gasoline, lubricants
      and chemicals products; and charges for transportation logistics services.
      Cost
      of sales is comprised primarily of the cost of fuel and lubricants and direct
      operating expenses. Included in both revenues and cost of sales are federal
      and
      state fuel taxes, which are collected by the Company from customers, when
      required, and then remitted to the appropriate taxing authorities or their
      collecting agent. The Company accounts for taxes collected from its customers
      that are assessed from government authorities on a gross basis if the Company
      bears risk of loss.





The
      Company’s commercial mobile fueling operations include the use of its patented
      proprietary electronic fuel tracking control system to measure, record and
      track
      fuel dispensed to each vehicle and tank fueled at a customer’s location,
      allowing verification of the amount and type of fuel delivered and providing
      customers with customized fleet fuel data for management analysis and tax
      reporting. The Company makes a majority of the commercial mobile and bulk
      fueling service deliveries on workdays, Monday through Friday, to coincide
      with
      customers’ fuel service requirements. Thus, the number of workdays in any given
      month will impact the financial performance of the Company. In addition, a
      downturn in customer demand generally takes place on and/or in conjunction
      with
      national holidays, resulting in decreased volumes of fuel delivered. This
      downturn may be offset by emergency mobile fueling services and fuel deliveries
      resulting from impending or actual severe meteorological or geological events,
      including hurricanes, tropical storms, ice and snow storms, forest fires and
      earthquakes.





On
      February 18, 2005, the Company acquired substantially all of the assets and
      business operations of Shank C&E Investments, L.L.C. (“Shank Services”) a
      Houston, Texas based provider of commercial fuel, petroleum lubricants
      distribution and sales and heavy haul transportation services. Shank Services,
      which conducts its operations in the Company’s subsidiary, SMF Services, Inc.,
      generates revenues from the sale of commercial fuel, petroleum lubricants and
      heavy haul operations in the Houston, Dallas/Fort Worth, Austin and San Antonio
      markets in Texas.





On
      October 1, 2005, the Company acquired all of the stock of H & W Petroleum
      Company, Inc. (“H & W”), a Houston, Texas based marketer and
      distributor of lubricants, commercial fuels and petroleum products. Immediately
      prior to the closing of this transaction, H & W acquired the operating
      assets of Harkrider Distributing Company, Incorporated (“Harkrider”), a Houston
      based marketer and distributor of dry cleaning solvents, chemicals and petroleum
      products, that was related to H & W through some common shareholder
      ownership. In addition to providing service to the greater Houston metropolitan
      area, the combined H & W and Harkrider operations also serve the
      Beaumont, Freeport, Longview, Lufkin, San Antonio, Waco and Waxahachie markets
      in Texas and the New Orleans market in Louisiana.


-6-
 **Table
          of Contents**




**NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


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





The
      condensed unaudited consolidated financial statements include the accounts
      of
      Streicher Mobile Fueling, Inc. and its wholly owned subsidiaries, SMF Services,
      Inc., H & W Petroleum Company, Inc. and Streicher Realty, Inc. All
      significant intercompany balances and transactions have been eliminated in
      consolidation.





The
      condensed unaudited consolidated financial statements included herein have
      been
      prepared in accordance with the instructions of Form 10-Q and Rule 10-01 of
      Regulation S-X, and do not include all the information and footnotes required
      by
      generally accepted accounting principles; however, they do include all
      adjustments of a normal recurring nature which, in the opinion of management,
      are necessary to present fairly the results of operations of the Company for
      the
      interim periods presented. Certain amounts have been reclassified to conform
      to
      current period presentation. Operating results for the three months ended
      September 30, 2006 are not necessarily indicative of the results that may be
      expected for any subsequent period or the full year ending June 30, 2007. These
      interim financial statements should be read in conjunction with the Company’s
      audited consolidated financial statements and related notes included in the
      Company’s Annual Report on Form 10-K for the year ended June 30,
      2006.





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





Certain
      amounts have been reclassified to conform to current period presentation. These
      changes had no impact on previously reported results of operations or
      shareholders’ equity. The Company has reclassified its treatment of reporting
      for taxes on petroleum products that are sold to customers for which it does
      not
      bear risk of loss from a gross basis to a net basis. In the quarter ended
      September 30, 2005, revenues and cost of sales were reduced by $843,000 to
      report these petroleum product taxes on a net basis.





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





In
      June
      2006, FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes - an interpretation of FASB Statement No. 190” (“FIN No. 48”). FIN
      No. 48 clarifies the accounting for uncertainty in income taxes by prescribing
      a
      recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. The interpretation also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods, and
      disclosure. FIN No. 48 is effective for fiscal years beginning after December
      15, 2006. We are in the process of evaluating the impact of FIN No. 48 on our
      financial condition and results of operations.





In
      September 2006, FASB issued FASB Statement No. 157 “Fair Value Measurements”
(“FAS 157”). This new standard provides guidance for using fair value to measure
      assets and liabilities. Under FAS 157, fair value refers to the price that
      would
      be received to sell an asset or paid to transfer a liability in an orderly
      transaction between market participants in the market in which the reporting
      entity transacts. In this standard, the FASB clarifies the principle that fair
      value should be based on the assumptions market participants would use when
      pricing the asset or liability. In support of this principle, FAS 157
      establishes a fair value hierarchy that prioritizes the information used to
      develop those assumptions. The fair value hierarchy gives the highest priority
      to quoted prices in active markets and the lowest priority to unobservable
      data,
      for example, the reporting entity’s own data. Under the standard, fair value
      measurements would be separately disclosed by level within the fair value
      hierarchy. The provisions of FAS 157 are effective for financial statements
      issued for fiscal years beginning after November 15, 2007, and interim periods
      within those fiscal years. The Company has not yet determined the impact that
      the adoption of FAS 157 will have on its consolidated financial position,
      results of operations or cash flows.





In
      September 2006, the SEC Office of the Chief Accountant and Divisions of
      Corporation Finance and Investment Management released SAB No. 108, “Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements” (SAB No. 108”), which provides interpretive
      guidance on how the effects of the carryover or reversal of prior year
      misstatements should be considered in quantifying a current year misstatement.
      The SEC staff believes that registrants should quantify errors using both a
      balance sheet and an income statement approach and evaluate whether either
      approach results in quantifying a misstatement that, when all relevant
      quantitative and qualitative factors are considered, is material. This guidance
      is


-7-
 **Table
          of Contents**




**NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


effective
      for fiscal years ending after November 15, 2006. The Company does not expect
      the
      adoption of SAB No. 108 to have a material impact on its financial position,
      results of operations, or cash flows.





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





On
      September 29, 2006, the Company paid down $2.0 million on its line of credit
      payable. Total cash and cash availability was $5.7 million and $8.3 million
      at
      September 30, 2006 and June 30, 2006, respectively, and was $7.0 million at
      November 9, 2006.





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





The
      inventory balance at September 30, 2006 related principally to the lubricants
      warehouse in Texas. Inventories, consisting primarily of lubricants, diesel
      fuel, and gasoline, are stated at the lower of cost or market and include
      federal and state fuel taxes payable to vendors. Cost is determined on a
      first-in, first-out basis. At September 30, 2006, $276,000 was reserved for
      slow
      moving inventory.





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





The
      Company has a $25 million credit facility with a national financial institution,
      which permits the Company to borrow up to 85% of the total amount of eligible
      accounts receivable and 65% of eligible inventory. Interest is payable monthly
      (9.0% at September 30, 2006) and outstanding borrowings under the line are
      secured by substantially all of the Company assets other than its truck fleet
      and related equipment. The credit facility maturity was extended by mutual
      consent of the Company and the financial institution from September 25, 2006
      to
      September 26, 2007. The
      Company endeavors to manage its cash and cash equivalents in a manner that
      minimizes interest expense under the line of credit.





On
      September 26, 2006, the Company and its primary lender entered into the Seventh
      Amendment to its credit facility, effective September 22, 2006, that increased
      the maximum amount for revolving loans from $20 million to $25 million and
      modified the covenant in the agreement which limits the Company’s loans and
      advances to other persons to permit loans to customers for their purchases
      of
      certain supplier equipment.





Effective
      March 31, 2006, the Company and its line of credit lender amended the credit
      facility to, among other things, (1) add (a) an interest rate option based
      on
      the London interbank offered rate (LIBOR) and (b) exclude certain lease vehicles
      and equipment from the collateral, and (2) amend the capital expenditures
      covenant of the agreement.





Concurrently
      with the October 1, 2005 H & W Acquisition, in order to finance the acquired
      accounts receivable and inventory, the Company and its line of credit lender
      amended the credit facility. Among other changes, the amendment (1) added H
      & W as a borrower; (2) provided financing for the acquired and ongoing
      accounts receivable and inventory resulting from the H & W Acquisition; (3)
      extended the term of the original loan and security agreement to September
      26,
      2007; (4) reduced the interest rate to prime plus 0.75% per annum; (5)
      eliminated the effective net worth covenant; and (6) lowered the fixed charge
      coverage ratio covenant to 1.0 to 1.0 and made such covenant effective only
      when
      there is less than $3 million available on the facility.





As
      of
      September 30, 2006 and 2005, the Company had outstanding borrowings of $13.6
      and
      $15.6 million, respectively, under its line of credit. Based on eligible
      receivables and inventories outstanding at September 30, 2006, the Company
      had
      $5.2 million of cash availability on its line of credit, and was in compliance
      with all financial covenants required by the loan and security agreement.




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





The
      Company accounts for asset retirement obligations in accordance with the
      provisions of FASB Statement No. 143, *Liability
      Recognition - Asset Retirement Obligations with Indeterminate Settlement
      Dates.* This
      Statement addresses financial accounting and reporting for obligations
      associated with the retirement of tangible long-lived assets and the associated
      asset retirement costs. Retirement is defined as the
      other-than-temporary-removal of a long-lived asset from service. The term
      encompasses sale, abandonment, recycling or disposal in some


-8-
 **Table
          of Contents**




**NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


other
      manner. The Company has estimated an associated liability for the removal and
      clean-up of three underground fuel storage tanks and has estimated the remaining
      useful life of those tanks to be ten years, with an estimated liability
      associated with the asset retirement obligation of the tanks to be $118,000
      at
      September 30, 2006.





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





At
      September 30, 2006, deferred revenues of $537,000 were recorded which relate
      to
      a 5 year supplier contract that expires December 31, 2010. For the quarter
      ended
      September 30, 2006 the Company recognized $18,000 as an increase to gross
      profit. Pursuant to this contract the Company is obligated to certain purchase
      requirements each year. If the required quantities stated in the contract are
      not purchased, the Company may be obligated to refund a portion of the deferred
      revenue to the supplier. At September 30, 2006, no refund was due under the
      contract provisions.





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





Net
      loss
      per share is determined by dividing net loss by the weighted average common
      shares outstanding during the year. Common stock equivalents, consisting of
      stock options and common stock warrants in the amount of 3,085,567 at prices
      ranging from $.86 to $7.63 per share for the period ending September 30, 2006,
      were antidilutive and were not included in the computation of net loss per
      share. For the period ended September 30, 2006, the Company had a net loss
      of
      $462,000 or $0.04 net loss per basic and diluted share.





Basic
      income per share is computed by dividing the net income attributable to common
      shareholders by the weighted-average number of common shares outstanding during
      the period. Diluted income per share is computed by dividing income attributable
      to common shareholders by the weighted-average number of common shares
      outstanding during the period, increased to include the number of additional
      common shares that would have been outstanding if the dilutive potential common
      shares had been issued. The dilutive effect of outstanding stock options and
      warrants is reflected in diluted earnings per share by application of the
      treasury stock method.





At
      September 30, 2005 there were 3,926,525 shares of common stock equivalents
      outstanding consisting of employee, director and unrelated third party stock
      options and common stock warrants at prices ranging from $.86 to $9.49 per
      share. For the period ended September 30, 2005, 858,632 of these outstanding
      common stock equivalents were dilutive and were included in the computation
      of
      diluted net income per share.





For
      the
      period ended September 30, 2005, the Company earned net income of $615,000
      or
      $0.07 and $0.06 net income basic and diluted shares, respectively.





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





The
      Company has adopted two stock option plans (the “1996 Plan” and the “2000 Plan”)
      under which options to purchase shares of the Company’s common stock may be
      granted to employees. The purpose of the 1996 Plan and the 2000 Plan is to
      provide an incentive to attract, motivate and retain qualified competent
      employees whose efforts and judgment are important to the Company’s success
      through the encouragement of the ownership of stock by such
      persons.





Under
      the
      1996 Plan 500,000 shares of common stock are reserved for issuance upon exercise
      of options granted. Under the 2000 Plan, 1,000,000 shares of common stock are
      reserved for issuance upon the exercise of options, with the amount reserved
      being increased each year by ten percent of the total shares subject to the
      2000
      Plan at the end of the previous calendar year. Options to purchase 0 shares
      of
      stock are available to be granted under the 1996 Plan and options to purchase
      185,210 shares of stock are available to be granted under the 2000 Plan. The
      Board of Directors has determined that no additional options will be granted
      under the 1996 Plan.




Options
      granted under the 1996 Plan and the 2000 Plan generally vest over three years
      of
      continuous service and expire no later than ten years from the date of grant.
      Options granted under the 1996 Plan and the 2000 Plan are not exercisable after
      the period or periods provided in the respective option agreements.


-9-
 **Table
          of Contents**




**NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


Information
      concerning both the 1996 and 2000 employee stock option plans for the three
      months ending September 30, 2006 is summarized as follows:





**Shares**
            
            **Weighted
                average exercise price**
            
            **Weighted
                average grant-date fair value**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding
                June 30, 2006
            
            
            1,443,852
            
            $
            2.05
            
            $
            1.86Granted
            
            
            32,000
            
            $
            2.80
            
            $
            2.57Exercised
            
            
            —
            
            $
            —
            
            $
            —Terminated
            
            
            (12,500
            )
            $
            3.04
            
            $
            2.62Outstanding
                September 30, 2006
            
            
            1,463,352
            
            $
            2.05
            
            $
            1.87
            
            $
            3,005,548Exercisable
                September 30, 2006
            
            
            955,952
            
            $
            1.82
            
            $
            1.68
            
            $
            1,740,547





The
      weighted average remaining contractual life for employee stock options
      outstanding and exercisable at September 30, 2006 is 5.95 years and 4.43 years,
      respectively. The weighted average remaining contractual life for 955,952
      options vested or expected to vest in future periods at September 30, 2006
      is
      4.43 years with a weighted average exercise price of $1.82.





A
      summary
      of the status of the Company’s nonvested employee stock options as of September
      30, 2006 is presented below:





**Shares**
            
            **Weighted
                average grant-date fair value**Nonvested
                at June 30, 2006
            
            
            497,900
            
            $
            2.24Granted
            
            
            32,000
            
            $
            2.57Vested
            
            
            (10,000
            )
            $
            2.05Forfeited
            
            
            (12,500
            )
            $
            2.62Nonvested
                at September 30, 2006
            
            
            507,400
            
            $
            2.22





The
      Company adopted effective as of May 2001 a separate stock option plan for
      non-employee members of the Company’s Board of Directors (the “Directors Plan”).
      The purpose of the Directors Plan is to provide an additional incentive to
      attract and retain qualified competent directors whose efforts and judgment
      are
      important to the Company’s success by encouraging ownership of stock by such
      persons.




Under
      the
      Directors Plan, 350,000 shares of common stock are reserved for issuance upon
      the exercise of options granted. Each non-employee who serves as a member of
      the
      Company’s board of directors as of the effective date of the Directors Plan, and
      each non-employee who is elected or otherwise appointed as one of the Company’s
      directors thereafter, will receive a fully vested option to purchase 20,000
      shares of stock. On the last day of each fiscal quarter while the Directors
      Plan
      is in effect, each non-employee director will receive an additional grant of
      an
      option to purchase 725 shares of stock. Further, in accordance with the
      Directors Plan, additional options may be granted to non-employee directors
      from
      time to time. Options to purchase 294,300 shares of common stock are outstanding
      at September 30, 2006 under the Directors Plan and 55,700 shares of stock are
      available to be granted in the future. The weighted average grant date
      fair-value of director options granted during the three months ended September
      30, 2006 was $1.93.




Options
      granted under the Directors Plan expire no later than ten years from the date
      of
      grant and are with limited exceptions exercisable as of the grant date. All
      outstanding options as of September 30, 2006 are vested. The weighted average
      remaining contractual life for 294,300 outstanding and vested director stock
      options is 6.31 years with a weighted average exercise price of
      $1.76.


-10-
 **Table
          of Contents**




**NOTES
      TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**






Information
      concerning the Director stock option plan for the three months ending September
      30, 2006 is summarized as follows:





**Shares**
            
            **Weighted
                average exercise price**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding
                June 30, 2006
            
            
            289,950
            
            $
            1.75Granted
            
            
            4,350
            
            $
            2.16Exercised
            
            
            —
            
            $
            —Terminated
            
            
            —
            
            $
            —Outstanding
                September 30, 2006
            
            
            294,300
            
            $
            1.76
            
            $
            517,649Exercisable
                September 30, 2006
            
            
            294,300
            
            $
            1.76
            
            $
            517,649





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      SFAS 123R, “Share-Based Payment,” a revision of SFAS 123. In March 2005,
      the SEC issued Staff Bulletin No. 107 (SAB 107) regarding its
      interpretation of SFAS 123R. The standard requires companies to expense the
      grant-date fair value of stock options and other equity-based compensation
      granted to employees. The Company adopted SFAS 123R on July 1, 2005 using the
      modified prospective method in which compensation cost is recognized beginning
      with the effective date (a) based on the requirements of SFAS 123R for all
      share-based payments granted after July 1, 2005 and (b) based on the
      requirements of SFAS 123R for all awards granted to employees prior to July
      1,
      2005 that remain unvested on July 1, 2005. The amortization of stock
      compensation expense for the three months ended September 30, 2006 and 2005
      was
      $27,000 and $92,000, respectively, and is included in selling, general and
      administrative expenses in the Company’s Condensed Consolidated Statement of
      Operations. As a result of adopting SFAS 123R, there was an increase in net
      loss
      and basic net loss per share for the three months ended September 30, 2006
      of
      $27,000 and $0.00, respectively, and there was a reduction of net income and
      basic net income per share for the same period a year ago of $92,000 and $0.01,
      respectively.





The
      fair
      value of each option award is estimated on the date of grant using the
      Black-Scholes valuation model that uses the assumptions noted in the above
      table. Expected volatilities are based on the historical volatility of the
      Company’s stock. The Company uses historical data to estimate option exercise
      and employee termination within the valuation model. The expected term of
      options granted is derived from the output of the option valuation model and
      represents the period of time that options granted are expected to be
      outstanding. The risk-free rate for periods within the contractual life of
      the
      option is based on the rate for U.S. Treasury bonds. As of September 30, 2006
      there was $833,000 of total unrecognized compensation cost related to non-vested
      share-based compensation arrangements. The total unrecognized compensation
      cost
      will be expensed over the weighted average of 1.7 years. The fair value of
      the
      stock options is expensed on a uniform straight-line basis over the vesting
      period.





**Three
                Months Ended**
              **September
                30,****2006**
            
            **2005**Assumptions:Risk
                free interest rate
            
            
            4.6%
            
            
            4.3%Dividend
                yield
            
            
            0%
            
            
            0%Expected
                volatility
            
            
            107.42%
            
            
            110%Expected
                life
            
            
            7.9
                years
            
            
            7.8
                yearsForfeiture
                rate
            
            
            17.89%
            
            
            17.66%




-11-
 **Table
          of Contents**




**NOTES
      TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**






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





Long-term
      debt consists of the following (in thousands):





**September
                30,**
              **2006**
            
            **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, semi-annually on August 31 and February
                28;
                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
            
            
            3,000January
                2005 promissory notes (the “January 2005 Notes”) (10% interest due
                semi-annually, July 24 and January 24); principal payments of $610,000
                due
                beginning January 24, 2007, semi-annually on January 24 and July
                24;
                balloon payment of $2,440,000 due at maturity on January 24, 2010;
                effective interest rate of 18.4% includes cost of warrants and other
                debt
                issue costs
            
            
            6,100
            
            
            6,100August
                2003 promissory notes (the “August 2003 Notes”) (10% interest due
                semi-annually, December 31 and June 30); principal payments of
                $692,500 due beginning August 28, 2005, semi-annually on August 28
                and February 28; balloon payment of $2,770,000 due at maturity on
                August
                28, 2008; effective interest rate of 18.4% includes cost of warrants
                and
                other debt issue costs
            
            
            5,088
            
            
            5,540Various
                capital leases, interest rates range from 5.27% to 15.24%, monthly
                principal and interest payments, leases expire August 2006 to March
                2008
            
            
            105
            
            
            148Unamortized
                debt discount, net of amortization
            
            
            (1,502
            )
            
            (1,652
            )Less:
                current portion
            
            
            (2,970
            )
            
            (2,118
            )Long-term
                debt, net
            
            $
            9,821
            
            $
            11,018





***September
      2005 Promissory Notes***




On
      September 1, 2005, the Company closed a $3.0 million private debt placement
      (the
“September 2005 Notes”) with institutional and other accredited investors in
      order to fund the H & W acquisition discussed in Note 14, develop its
      operations and for other general working capital purposes. The Company issued
      $3.0 million in 10% five-year Senior Secured Notes that require six semi-annual
      payments commencing on August 31, 2007 and a 40% balloon payment on August
      31,
      2010. The September 2005 Notes are redeemable by the Company, in whole or in
      part, by payment of a percentage of the principal amount, together with accrued
      but unpaid interest, if any, as follows: September 1, 2005 - August 31, 2006,
      102%; September 1, 2006 - August 31, 2007, 101%; and September 1, 2007 - August
      31, 2010, 100%. The September 2005 Notes are secured by a first priority
      interest in the vehicles, equipment and other physical assets, other than
      inventory of H & W. The H & W inventory is subject to the first priority
      security interest held by the primary lender. In connection with the financing,
      the Company also issued four year warrants to purchase a total of 360,000 shares
      of the Company’s common stock at an exercise price of $2.28 per share, including
      customary redemption and registration rights. These warrants were valued at
      $605,000, using Black-Scholes option pricing model and recorded as an increase
      to additional paid in capital, and the imputed interest is being amortized
      into
      interest expense over the five-year life of the Notes.





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




On
      June
      30, 2006, the Company issued 1,057,283 warrants, exercisable for 90 days, to
      certain note holders to purchase the Company’s common stock at an exercise price
      of $2.54 per share. The note holders have the option to exercise these warrants
      in consideration for the retirement of 2.6 million existing August 2003 and
      January 2005 notes. In addition, the Company agreed to pay 50% of the 5% call
      penalty or a 2.5% penalty with 25,787


-12-
 **Table
          of Contents**




**NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


warrants
      valued at $65,500. The issuance of the warrants created a modification to the
      notes by adding a conversion feature that did not previously exist under the
      original notes which substantially changed the instrument to have a non-cash
      conversion feature that was not in the original note, which substantially
      changed the debtor’s cash flow requirement. As a result of this modification,
      the effective interest rate of the January 2005 Notes and the August 2003 Notes
      changed from 19.7% and 23.6%, respectively, to 18.4%. The warrants were issued
      at the closing market price and are non-detachable. If the warrants are
      exercised they can only be settled by satisfaction of the notes. The 25,787
      warrants are accounted for as a liability with mark to market feature
      adjustments. At September 30, 2006, the warrants were not exercised. The
      exercise period of the warrants was extended until November 30, 2006 in
      exchange for a corresponding extension of the suspension of the Company’s
      obligation to make principal payments until November 30, 2006. In addition,
      the Company recorded a mark-to-market adjustment related to the 2.5% penalty
      which reduced the $65,500 liability to approximately $56,500. The Company
      recorded a mark-to-market adjustment of $9,000. The closing price of the common
      stock at September 30, 2006 was $2.16 per share. The Company trades on the
      NASDAQ under the stock ticker symbol “FUEL.”




***Other***




Unamortized
      debt discounts of $1.5 million at September 30, 2006 and $1.7 million at June
      30, 2006 were recorded in connection with the August 2003, January 2005 and
      September 2005 Notes and are being amortized as non-cash interest expense over
      the respective term of the debt issued under the effective interest method.
      These non-cash discounts relate to the valuation of the common stock warrants
      issued to the note holders and the placement agent in the financing transactions
      that do not reduce the amount of principal cash repayments required to be made
      by the Company for the outstanding balance of $14.2 million and $14.6 million
      of
      the notes at September 30, 2006 and June 30, 2006, respectively. The common
      stock warrants were valued using the Black-Scholes option pricing model and
      recorded as an increase to additional paid in capital.





The
      Company’s debt agreements for its line of credit facility and for the August
      2003 Notes, January and September 2005 Notes have covenants establishing certain
      financial requirements and operating restrictions. The Company’s failure to
      comply with any covenant or material obligation contained in these debt
      agreements, absent a waiver or forbearance from the lenders, would result in
      an
      event of default which could accelerate the Company’s debt repayment obligations
      under the debt agreements. Due to cross-default provisions contained in its
      debt
      agreements, an event of default under one agreement could accelerate repayment
      terms under the other agreements. A default under any of the debt agreements
      would have a material adverse effect on the Company’s liquidity and capital
      resources. The Company is in compliance with all covenants required by the
      debt
      agreements.





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




For
      the
      three-month period ended September 30, 2006, shareholder’s equity increased by
      $43,000 due to the exercise of certain warrants and the amortization of stock
      based compensation which increase was offset by the net loss during the period
      of $462,000. The following reflects the change in shareholders equity for
      three-month period ended September 30, 2006 (in thousands):




**Common**
              **Stock**
            
            **Additional**
              **Paid
                in**
              **Capital**
            
            **Accumulated**
              **Deficit**
            
            **Total**
              **Shareholders’**
              **Equity**June
                30, 2006
            
            $
            105
            
            $
            19,890
            
            $
            (14,455
            )
            $
            5,540Exercise
                of options and warrants
            
            
            
            
            
            16
            
            
            
            
            
            16Amortization
                of stockcompensation
                expense
            
            
            
            
            
            27
            
            
            
            
            
            27Net
                loss
            
            
            
            
            
            
            
            
            (462
            )
            
            (462
            )September
                30, 2006
            
            $
            105
            
            $
            19,933
            
            $
            (14,917
            )
            $
            5,121




-13-
 **Table
          of Contents**




**NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


**(14)**
            **SHANK
                AND H & W PETROLEUM COMPANY, INC.
                ACQUISITIONS**




**Shank
      Services Acquisition and Related Financing**




In
      its
      February 2005 acquisition of Shank Services, the Company acquired a fleet of
      24
      commercial fueling vehicles, including specialized fuel delivery, transport,
      oil
      and lubricant flatbed and tanker trucks and related support equipment; over
      600
      portable fuel and lubricant tanks with more than 500,000 gallons of capacity
      used by customers to store products provided by Shank Services; 15 heavy and
      ultra-heavy haul tractor-trailer units designed to transport heavy construction
      equipment and other over-sized and/or over weight loads weighing up to 250,000
      pounds; a limited quantity of fuel and lubricant inventories; office and
      computer equipment and related specialized software technology; customer lists
      and agreements; certain other intangible assets; and outstanding customer
      accounts receivable. The Company did not assume any material Shank Services’
liabilities or debt. Shank Services employs approximately 80 personnel and
      continues to operate its business under the trade name Shank Services. The
      Company has integrated its pre-existing Houston and Dallas/Fort Worth commercial
      mobile and bulk fueling operations with those of Shank Services and H & W.




The
      purchase price of this acquisition was $6.4 million, including acquisition
      costs
      of $639,000, of which the Company paid $5.8 million in cash.




In
      January 2005, in anticipation of the February closing of the Shank Services
      acquisition, the Company completed a $6.1 million private placement to fund
      the
      acquisition, to develop its operations and for other general corporate purposes.
      See note 12 above.




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





In
      its
      October 2005 purchase of all the common stock of H &
      W, the Company acquired H & W’s Houston-based business of marketing
      and distributing branded and non-branded lubricants, fuels and other petroleum
      products in Texas. Since H & W acquired the operating assets and limited
      inventory of Houston-based Harkrider
      Distributing Company, Incorporated (“Harkrider”) immediately prior to the
      purchase by the Company, Harkrider’s business of marketing
      and distributing dry cleaning solvents, chemicals and petroleum products became
      an operating division of H & W. H
&
W
      and Harkrider service the Houston, Beaumont, Dallas/Fort Worth, Freeport,
      Longview, Lufkin, San Antonio, Waco and Waxahachie markets in Texas, and the
      New
      Orleans market in Louisiana.




H
&
W
      provides lubricants and fueling services to over 3,800 customers, primarily
      servicing those companies requiring large volumes of specialty industrial oils,
      motor and gear lubricants and greases that must adhere to rigid technical and
      performance specifications. Harkrider distributes solvents and specialty
      petroleum products to dry cleaners and industrial customers and is one of the
      largest dry cleaning solvents distributors in those Texas markets with over
      800
      customers. H & W and Harkrider operate a combined fleet of 52
      specialized lubricant, fuel and chemical delivery “bobtail” trucks; oil and
      lubricant flatbed and box trucks; tanker transports; and related support
      equipment, including approximately 200 storage tanks with over 1,200,000 gallons
      of capacity.




The
      H
& W purchase price was approximately $5.9 million, including the payments
      due upon collection of certain receivables totaling $2.0 million and was paid
      with a combination of cash, the assumption of specified liabilities and the
      issuance of two year 10% promissory notes totaling $2.5 million. The promissory
      notes are subject to an earn out provision based on the performance of H & W
      and Harkrider.


-14-
 **Table
          of Contents**




**NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


The
      following unaudited pro forma consolidated statement of operations has been
      prepared as if the acquisition of H & W occurred at July 1, 2005 (in
      thousands, expect per share data).




**Three
                Months**
              **Ended**
              **September
                30, 2005**Total
                revenues
            
            $
            70,918Total
                cost of sales and service
            
            
            65,672Gross
                profit
            
            
            5,246Net
                income
            
            $
            343Basic
                net income per share
            
            $
            0.04Diluted
                net income per share
            
            $
            0.03





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





The
      following table summarizes the Company’s identifiable intangible assets and
      goodwill balances as of September 30, 2006 and June 30, 2006 (in
      thousands):





**September
                30, 2006**
            
            **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
            
            $
            172
            
            $
            1,596
            
            $
            1,768
            
            $
            121
            
            $
            1,647Favorable
                leases
            
            
            196
            
            
            34
            
            
            162
            
            
            196
            
            
            29
            
            
            167Trademarks
            
            
            687
            
            
            51
            
            
            636
            
            
            687
            
            
            34
            
            
            653Supplier
                contracts
            
            
            801
            
            
            139
            
            
            662
            
            
            801
            
            
            120
            
            
            681Total
            
            $
            3,452
            
            $
            396
            
            $
            3,056
            
            $
            3,452
            
            $
            304
            
            $
            3,148Goodwill
            
            
            
            
            
            
            
            $
            228
            
            
            
            
            
            
            
            $
            228





**(1****6)**
            **401(k)**





Effective
      October 1, 2006, The Company is implementing a 401(k) Plan through a third
      party
      administrator that is being offered to all eligible employees who work at least
      1,000 hours per year. The Plan Year will be on a calendar year basis and there
      will be no employer match.




**(17)**
            **LEGAL
                PROCEEDINGS**





On
      October 10, 2006, the Company filed a civil complaint (the “Complaint”) in
      Broward County, Florida Circuit Court against Financial Accounting Solutions
      Group, Inc., (“FAS”), Kramer Professional Staffing, Inc., (“KPS”), and Mitchell
      Kramer, an officer, director, shareholder and control person of FAS and KPS
      (“Kramer”). The Complaint alleges that, in early 2005, Kramer, FAS and KPS
      (collectively, the “Defendants”) induced the Company to engage FAS to provide
      critical management consulting services with respect to (a) the implementation
      of certain Information Technology (“IT”) functions, including the integration of
      the Company’s IT system with those of its new subsidiaries, (b) the
      modernization and expansion of the Company’s accounting and business technology
      capabilities, and (c) ensuring compliance with public company accounting
      internal requirements and the Sarbanes-Oxley Act (the “IT Projects”). The
      Complaint further alleges that the Defendants made numerous misrepresentations
      to the Company concerning the experience, capabilities and background of FAS
      and
      FAS’ personnel, which misrepresentations were relied upon by the Company when it
      decided to hire FAS to undertake these tasks and subsequently to continue with
      the engagement. After persistent delays and failures to perform by FAS, the
      Company determined that FAS’ performance of the IT Projects was grossly
      inadequate and that FAS had violated various promises and agreements made by
      FAS, and the Company therefore terminated the engagement. The Complaint seeks
      damages from FAS for, among other things, its breach of its
      contractual


-15-
 **Table
          of Contents**




**NOTES
      TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**






obligations
      to the Company, failure to provide services in accordance with any reasonable
      standard of care within the IT industry, negligence, and unjust enrichment
      from
      inflated and fraudulent billing practices. The Complaint also seeks damages
      from
      all of the Defendants for negligent and fraudulent misrepresentations with
      respect to FAS’ experience, capabilities and background and seeks the return
      from FAS of an unspecified portion of the fees previously paid to FAS for the
      IT
      Projects. FAS subsequently filed a countersuit in the same court seeking payment
      of additional fees allegedly due from the Company. The Company anticipates
      the
      dismissal of the countersuit and the inclusion of the FAS claims in the original
      suit as counterclaims.


-16-
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          of Contents**




**ITEM
      1A. RISK FACTORS**




During
      the quarter ended September 30, 2006, there were no material changes in the
      Risk
      Factors applicable to our business from those reported in our Form 10-K for
      the
      year ended June 30, 2006.




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




**Forward
      Looking Statements**





This
      report, including but not limited to this Item 2 and the footnotes to the
      financial statements in Section F, contains “forward looking statements” within
      the meaning of Section 21E of the Securities Exchange Act of 1934, as amended
      (the “Exchange Act”). These statements concern expectations, beliefs,
      projections, future plans and strategies, anticipated events or trends and
      similar expressions concerning matters that are not historical facts. Statements
      preceded by, followed by, or that include the words “believes,” “expects,”
“anticipates,” or similar expressions are generally considered to be
      forward-looking statements.





The
      forward-looking statements include, but are not limited, to the
      following:




·
            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
      forward-looking statements reflect our current view about future events and
      are
      subject to risks, uncertainties and assumptions. We caution readers of this
      report that certain important factors may have affected and could in the future
      affect our actual results and could cause actual results to differ significantly
      from those expressed in any forward-looking statement. The following important
      factors, in addition to factors discussed under
      the
      caption “Certain Factors Affecting Future Operating Results,” included in the
      Company’s filing on Form 10-K for the fiscal year ended June 30, 2006, and in
      this Form 10-Q, could
      prevent us from achieving our goals, and cause the assumptions underlying the
      forward-looking statements and the actual results to differ materially from
      those expressed in or implied by those forward-looking statements:





·
            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 line of credit;
                the $5.1 million of August 2003 Notes; the $6.1 million of January
                2005
                Notes; and the $3.0 million of 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
                continuing ability to obtain all necessary waivers of covenant violations,
                if any, in our debt agreements




·
            our
                ability to retire or convert debt to
                equity




-17-
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          of Contents**




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




·
            the
                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




·
            the
                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




·
            the
                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




·
            the
                successful completion of the implementation of our new information
                management system




·
            the
                success in responding to competition from other providers of similar
                services




·
            the
                impact of generally positive economic and market
                conditions




**Overview**





**Our
      Business**





We
      provide commercial mobile and bulk fueling; integrated out-sourced fuel
      management; packaging, distribution and sale of lubricants and chemicals;
      transportation logistics; and emergency response services. Our fleet of custom
      specialized tank wagons, tractor-trailer transports, box trucks and customized
      flatbed vehicles delivers diesel fuel and gasoline to customers’ locations on a
      regularly scheduled or as needed basis, refueling vehicles and equipment,
      re-supplying fixed-site and temporary bulk storage tanks, and providing fuel
      for
      emergency power generation systems; and distributes a wide variety of
      specialized petroleum products, lubricants and chemicals to refineries,
      manufacturers and other industrial customers. In addition, our fleet
      of special duty tractor-trailer units provides heavy and ultra-heavy haul
      transportation logistics services over short and long distances to customers
      requiring the movement of over-sized and/or over-weight equipment and heavy
      manufactured products. At September 30, 2006, we were conducting operations
      in
      Alabama, California, Florida, Georgia, Louisiana, Mississippi, North Carolina,
      South Carolina, Tennessee and Texas.




On
      February 18, 2005, we acquired substantially all of the assets and business
      operations of Shank Services, a Houston, Texas based provider of commercial
      fuel, petroleum lubricants distribution and sales and heavy haul transportation
      services in the Houston, Dallas/Fort Worth, Austin and San Antonio markets
      in
      Texas.




On
      October 1, 2005, we acquired all of the stock of H & W, a Houston,
      Texas based marketer and distributor of lubricants, commercial fuels and
      petroleum products. Prior to closing this acquisition, H & W acquired the
      operating assets of Harkrider Distributing Company, a Houston based marketer
      and
      distributor of dry cleaning solvents, chemicals and petroleum products. The
      combined H & W and Harkrider operations serve the Houston, Dallas/Fort
      Worth, Freeport, Longview, Lufkin, San Antonio, Beaumont, Waco and
      Waxahachie markets in Texas, and the New Orleans market in Louisiana.




We
      provide commercial mobile and bulk fueling and other services at a competitive
      rate for those services plus the cost of products and procurement, generally
      based on market prices of fuels and lubricants. As a result, revenue levels
      for
      much of our operations are largely dependent on the upward or downward movement
      of petroleum product prices in each market and are not as significantly
      influenced by the revenues derived from the service component of our fuel and
      lubricant based business. Although fuel price volatility can affect customers’
demand for fuel and can also increase the fuel costs of operating our fleet
      of
      trucks and equipment, gross profit on


-18-
 **Table
          of Contents**


sales
      is
      generally not directly affected by fuel price fluctuations since we pass on
      fuel
      price changes to customers and we charge customers for services on a per gallon
      basis at a targeted rate per hour. While there may be a short term correlation
      between customer resistance to paying higher service charges when fuel prices
      rise sharply, we believe that we market labor savings, fuel theft reduction
      and
      other benefits of our services which reduce or limit the overall cost of our
      customers’ fuel supplies. During our fiscal years ended June 30, 2006 and 2005
      market prices for fuel reached unprecedented high levels. Our delivered volumes
      and revenues during the quarter ended September 30, 2006 increased
      primarily due to the addition of new accounts, market expansion and the
      acquisition of H & W.





Our
      business is highly competitive with numerous large and small distributors,
      jobbers and others offering services in the same markets in which we also
      provide services. We believe that these markets offer us opportunities for
      consolidation as customers increasingly demand one-stop shopping for their
      fueling and specialty lubricants requirements as well as assured supply
      deliveries, particularly to prevent business interruptions during emergencies,
      both of which we can provide. Competitors, many of which are family owned and
      operated, are frequently unable to provide the level of services required due
      to
      capital constraints, supplier credit limitations, out-dated technology and
      after-sale support services.





We
      believe that continuing opportunities exist to expand the services we provide,
      including commercial mobile and bulk fueling; integrated out-sourced fuel
      management; packaging, distribution and sale of lubricants; emergency response
      services; and transportation logistics. The growth of our petroleum related
      services would result in increased volumes of fuel and lubricants sold and
      delivered. Marketing and sales efforts are responsible for growing our business
      as well as customer retention, pricing, billing and specialized fuel utilization
      reporting. This growth is dependent upon a number of business and economic
      factors, including the success of our sales and marketing programs and other
      business strategies; consistent and acceptable margin business in new and
      existing markets; retention of qualified personnel to provide the level of
      service required by customers; generation of increasing cash flow from operating
      activities; sufficient debt or equity capital to meet our financing
      requirements; and favorable economic conditions in the transportation or
      petroleum industries, some of which factors are beyond our control.


-19-
 **Table
          of Contents**





Selected
      Comparative Financial Information for the Quarters Ended September 30 and
      June 30, 2006 and September 30, 2005




****** ***(All amounts in thousands of dollars, except per share and volume
      data)***


**Three-Month
                Periods Ended**
            
            **Increase
                (decrease)****(Unaudited)**
            
            **September**
            
            **June****9/30/2006**
            
            **9/30/2005**
            
            **6/30/2006**
            
            **$**
            
            **%**
            
            **$**
            
            **%**Total
                revenues
            
            
            65,965
            
            
            52,796
            
            
            70,558
            
            
            13,169
            
            
            25
            %
            
            (4,593
            )
            
            (7
            )%Gross
                profit
            
            
            4,122
            
            
            3,813
            
            
            2,509
            
            
            309
            
            
            8
            %
            
            1,613
            
            
            64
            %Selling,
                general and administrative expenses
            
            
            3,650
            
            
            2,534
            
            
            4,152
            
            
            1,116
            
            
            44
            %
            
            (502
            )
            
            (12
            )%Operating
                income (loss)
            
            
            472
            
            
            1,279
            
            
            (1,643
            )
            
            (807
            )
            
            (63
            )%
            
            2,115
            
            
            129
            %


Interest
                expense, net
            
            
            (949
            )
            
            (675
            )
            
            (1,481
            )
            
            274
            
            
            41
            %
            
            (532
            )
            
            (36
            )%Other
                income (expense)
            
            
            15
            
            
            11
            
            
            (11
            )
            
            4
            
            
            36
            %
            
            26
            
            
            236
            %Net
                income (loss)
            
            
            (462
            )
            
            615
            
            
            (3,135
            )
            
            (1,077
            )
            
            (175
            )%
            
            2,673
            
            
            85
            %EBITDA****
            
            
            1,168
            
            
            1,784
            
            
            (767
            )
            
            (616
            )
            
            (35
            )%
            
            1,935
            
            
            252
            %Basic
                net income (loss) per share
            
            
            (.04
            )
            
            0.07
            
            
            (0.30
            )Diluted
                net income (loss) per share
            
            
            (.04
            )
            
            0.06
            
            
            (0.30
            )Basic
                weighted average shares outstanding
            
            
            10,496
            
            
            9,339
            
            
            10,350Diluted
                weighted average shares outstanding
            
            
            10,496
            
            
            10,198
            
            
            10,350Depreciation
                and amortization
            
            
            654
            
            
            402
            
            
            651
            
            
            252
            
            
            63
            %
            
            3
            
            
            0
            %Gallons
                sold (in thousands)
            
            
            23,429
            
            
            20,819
            
            
            24,591
            
            
            2,610
            
            
            13
            %
            
            (1,162
            )
            
            (5
            )%Net
                margin per gallon (in cents)******1**
            
            
            19.4
            
            
            19.9
            
            
            12.4
            
            
            (0.5
            )
            
            (3
            )%
            
            7.0
            
            
            56
            %





1
            Net
                margin per gallon equals gross profit plus cost of sales depreciation
                and
                amortization divided by number of gallons
                sold




Non-GAAP
      Measure Reconciliation - EBITDA Reconciliation Table





***(All
      amounts in thousands of dollars)***


**Three-Month
                Periods Ended**
            
            **Increase
                (decrease)****(Unaudited)**
            
            **September**
            
            **June****9/30/2006**
            
            **9/30/2005**
            
            **6/30/2006**
            
            **$**
            ****
            **%**
            ****
            **$**
            ****
            **%**Net
                income (loss)
            
            
            (462
            )
            
            615
            
            
            (3,135
            )
            
            (1,077
            )
            
            (175
            )%
            
            2,673
            
            
            85
            %Add
                back:Interest
                expense
            
            
            949
            
            
            675
            
            
            1,486
            
            
            274
            
            
            41
            %
            
            (537
            )
            
            (36
            )%Depreciation
                and amortization:*Cost
                of sales*
            
            
            431
            
            
            336
            
            
            537
            
            
            95
            
            
            28
            %
            
            (106
            )
            
            (20
            )%*Selling,
                general and administrative*
            
            
            223
            
            
            66
            
            
            114
            
            
            157
            
            
            238
            %
            
            109
            
            
            96
            %Amortization
                of stock compensation expense
            
            
            27
            
            
            92
            
            
            231
            
            
            (65
            )
            
            (71
            )%
            
            (204
            )
            
            (88
            )%EBITDA
            
            
            1,168
            
            
            1,784
            
            
            (767
            )
            
            (616
            )
            
            (35
            )%
            
            1,935
            
            
            252
            %




In
      the
      quarter ended September 30, 2006, revenues, gross profit, operating income
      and
      net income increased (decreased) over the same period in the prior year by
      $13.2
      million, $309,000, $(807,000) and $(1.1 million), respectively. These changes
      primarily related to a lower net margin per gallon of 0.5 cents offset by a
      13%
      increase in volume sold as discussed below. In addition, operating and selling,
      general and administrative expenses increased due to the acquisition of H &
W completed on October 1, 2005 for the quarter ended September 30, 2006
      compared to the same period in 2005. The decrease in EBITDA was primarily due
      to
      the increase in selling, general and administrative expenses of $1.1 million
      offset by higher gross profit of $309,000 and the add back of $187,000 in
      depreciation, amortization and stock compensation expense.





Gross
      profit in the current year quarter was $4.1 million, an increase of $1.6
      million, or 64%, over the $2.5 million gross profit in the fourth quarter of
      the
      prior year. This increase was primarily due to improved net margins in all
      petroleum products and services we sell of approximately $1.1 million together
      with a reduction of approximately $240,000 in operating expenses included in
      the
      cost of petroleum product sales and service, a decrease in depreciation of
      approximately $106,000 and approximately $172,000 attributable to not providing
      any additional provision to the slow moving inventory reserve.


-20-
 **Table
          of Contents**




Commercial
      mobile and bulk fueling services business continues to be largely dependent
      on
      the number of gallons of fuel sold and the net margin per gallon achieved.
      We
      increased gallons sold in the current year quarter by 2.6 million gallons to
      23.4 million gallons, or 13%, from 20.8 million gallons in the prior year
      quarter primarily due to the acquisition of H & W.





For
      the
      quarter ended September 30, 2006, net margin per gallon decreased to 19.4 cents
      per gallon compared to 19.9 cents per gallon for the first quarter ending
      September 30, 2005. The decrease was the result of both lower fuel prices and
      a
      reduction in emergency response services since the severe hurricane activity
      experienced in 2005 did not reoccur during the 2006 hurricane season. In the
      current quarter net margin was 19.4 cents per gallon compared to 12.4 cents
      per
      gallon, an increase of 56% over the fourth quarter ending June 30, 2006. This
      increase was the result of an increase in higher net margin new business,
      together with overall higher net margins, including emergency response
      preparation for Hurricane Ernesto, and lower direct operating expenses. There
      can be no assurance that the higher net margin trend will continue in the future
      or that margins will not decrease as the result of increased competition or
      customer resistance to higher prices for our services and/or reduction in
      emergency response services **.**





Earnings
      before interest, taxes, depreciation and amortization, including amortization
      of
      stock compensation expense, “EBITDA”, a non-GAAP measure, decreased by $616,000
      to $1.2 million for the current quarter compared to the prior year quarter
      of
      $1.8 million, a reduction of 35%. This decrease related primarily to a lower
      net
      margin per gallon of 0.5 cent resulting from less emergency response services
      than a year ago and higher selling, general and administrative expenses related
      to $653,000 of corporate infrastructure and ongoing integration costs and
      expenses acquired from H & W of $728,000. EBITDA in the current year quarter
      increased over the fourth quarter 2006 ended June 30, 2006 by $1.9 million
      primarily due to higher net margins, lower operating and selling, general and
      administrative expenses and emergency response preparation services related
      to
      Hurricane Ernesto.




EBITDA
      is
      determined before providing for debt service payments and capital expenditures.
      EBITDA, while a non-GAAP measure, is a key indicator used by management and
      the
      financial community to gauge financial performance of the actual operations
      of a
      business without considering the impact of non-cash charges for equipment aging,
      debt financing expenses, stock compensation expense and income taxes. EBITDA
      isolates actual financial performance of operations independent of the
      utilization of capital resources, level of debt financing and the tax position
      of the business owning those operations.




We
      believe that pricing for commercial mobile fueling, bulk fueling and fuel
      management services, as well as for lubricants and chemicals, will continue
      to
      increase as price cutting declines by competitors attempting to offer similar
      services, and existing and new customers recognize that the quality services
      we
      provide result in net cost savings when compared to other refueling
      alternatives.




**Our
      Acqui** **sition
      and Diversification Strategy**




We
      intend
      to acquire companies, assets or business operations which will compliment or
      offer diversified opportunities for us to grow in those markets where we have
      an
      established presence or that permit us to expand into new markets. We believe
      that carefully selected future acquisitions can provide us with valuable market
      share, volumes and margins. Such acquisitions can enhance operational and
      administrative efficiencies, by economies of scale and otherwise, that in turn
      has a material positive impact on our cash flow and earnings. Our strategic
      plan
      is to identify and evaluate suitable targets and negotiate acquisitions at
      fair
      prices and on reasonable business terms. While numerous factors will receive
      close consideration in determining the suitability of an acquisition, emphasis
      will be placed on market presence; growth potential of product and service
      lines; margin contribution; competition impact; customer loyalty and retention;
      management and other personnel commitment; integration efficiencies and
      controls; and transaction financing alternatives. An important objective is
      to
      achieve timely and cost-effective integration of all future acquisitions.




Our
      organic growth strategy is based on increasing market share in existing
      operating locations and geographically compatible areas through a concentrated
      market penetration and sales program aimed at offering a broader line of product
      services to both existing and prospective customers based on providing a
      value-added service initiative to what is generally perceived as a commodity
      business. The implementation of our new corporate


-21-
 **Table
          of Contents**




infrastructure
      capability, including new ERP (Enterprise Resource Planning) operating systems
      technologies should enable us to reduce operating costs and administrative
      expenses; meet the compliance requirements of the Sarbanes-Oxley Act of 2002
      when they become applicable to us; more efficiently integrate new acquisitions;
      consolidate financial management reporting and analysis functions; improve
      management controls; and facilitate a paperless environment from data capture
      to
      accounting. It will also provide a wide range of operating information to
      customers’ management on a virtual real time basis which is anticipated to
      further distinguish the level of our services from competitors. As we continue
      to emphasize our ability to serve more lubricants customers, we believe we
      will
      gain market share and recognition as the supplier of choice based on service
      dependability, technical knowledge and price acceptability.




Since
      the
      acquisition of Shank Services and H & W, the delays in implementing our ERP
      system have slowed the pace of acquisitions. It is our expectation that, with
      the anticipated completion of the implementation of the ERP system by our new
      IT
      vendor in the next several months, we will be in a position to make additional
      acquisitions consistent with our long term strategy.




**Our
      Marketing a** **nd
      Customers**




We
      market
      our commercial mobile and bulk fueling services and lubricant sales and
      distribution services to customers operating all size fleets of vehicles and
      equipment, including governmental agencies, utilities, trucking companies,
      bus
      lines, hauling and delivery services, courier services, construction companies
      and others. While large fleet operators offer immediate market penetration
      on a
      regional basis, small fleet operators can be equally important customers since
      they can provide the geographic market density which optimizes delivery
      efficiency and minimizes cost. Once engaged to provide commercial mobile fueling
      services, we are usually the exclusive service provider for the fueling of
      a
      customer’s entire fleet or a particular location of vehicles and equipment in a
      market which is consistent with the other products and services we provide
      to
      our expanding customer base.




Our
      marketing efforts are focused on fleet operators within established service
      areas. Fleet size and type, fuel requirements, fueling logistics and credit
      worthiness are factors in identifying potential new customers for our services.
      Direct marketing is our primary method of developing new business. Referrals
      from existing customers and our personnel are also important sources of
      potential business. In addition, we are actively developing new service markets.
      A minimum level of business commitments in both volumes and margins is required
      prior to our entry into a new market. The ability to provide service to an
      existing customer in a new market and the prior identification of local new
      customers meeting our operating criteria are important considerations in a
      decision to enter a market.




We
      distribute diesel, gasoline, alternative fuels, lubricants, chemicals and other
      related products and services to approximately 4,000 customers. Although we
      have
      formal, length of service written contracts with certain larger customers,
      these
      types of agreements are not customary in our business and we do not have them
      with the majority of our customers. Most customers can terminate our services
      at
      any time and for any reason, and we can similarly discontinue service to any
      customer. We will discontinue service to a customer if changes in service
      conditions or other factors cause us not to meet our minimum level of volumes
      and margins, and we are unable to re-negotiate a satisfactory arrangement with
      the customer.




**Capital
      Resources and Liquidity**





At
      September 30, 2006 and June 30, 2006, we had a total of cash and cash
      availability on our line of credit of $5.7 million and $8.3 million. On
      September 26, 2006, we increased our line of credit from $20 to $25 million.
      Our
      line of credit facilitates financing the timing difference between petroleum
      product purchases payable generally in 10 days and collecting receivables from
      our customers generally in 30 to 45 days. We
      endeavor to manage our cash and cash equivalents in a manner that minimizes
      interest expense under the line of credit. As
      of
      November 9, 2006, our cash and cash availability was $7.0 million.


-22-
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          of Contents**




In
      September 2005, we closed a $3.0 million private debt placement with
      institutional and other accredited investors (the “September 2005 Notes”) in
      order to fund the H & W acquisition, develop our operations and for other
      general working capital purposes. We issued $3.0 million in 10% five-year Senior
      Secured Notes that require six semi-annual payments commencing on August 31,
      2007 and a 40% balloon payment on August 31, 2010. In connection with the
      financing, we also issued four year warrants to purchase a total of 360,000
      shares of our common stock at an exercise price of $2.28 per share, including
      customary redemption and registration rights.





In
      January 2005, we raised $6.1 million from the issuance of five-year 10%
      promissory notes (the “January 2005 Notes”) and 1,006,500 four-year warrants to
      purchase our common stock at $1.60 per share. The funding provided by the
      January 2005 Notes was used for the Shank Services acquisition and for other
      general corporate purposes. The first principal payment of $610,000 will be
      due
      in January 2007 and is included in the current portion of long-term debt on
      our
      September 30, 2006 condensed consolidated balance sheet.





In
      August
      2003, we raised $6.925 million from the issuance of five-year 10% promissory
      notes (the “August 2003 Notes”) and issued 2,008,250 five-year warrants to
      purchase our common stock at $1.00 per share. At September 30, 2006, the
      outstanding balance of these notes was $5.1 million.




The
      September 2005, January 2005 and August 2003 financings significantly
      strengthened our financial position, enabling us to achieve a stronger balance
      sheet. We believe that this stronger balance sheet has enhanced our business
      credibility with present and prospective customers, fuel suppliers, trade
      creditors, other lenders and the investment community, as well as our ability
      to
      compete more effectively. The increased interest burden associated with these
      financings, however, including the imputed non-cash interest charges resulting
      from our issuance of common stock purchase warrants in connection with those
      financings, has negatively affected our reported earnings since that time We
      are
      pursuing the conversion to equity or retirement of some or all of this debt
      in
      order to reduce recurring interest costs, although we will likely incur
      additional, non-cash write-offs of the related debt discount and deferred debt
      costs.




During
      the quarter ended September 30, 2006, we recorded an increase in shareholders’
equity of $43,000 for the value of the 17,500 warrants exercised in connection
      with the May 2003 private placement. Also, during the quarter ended September
      30, 2006 warrants exercised resulted in cash proceeds of $16,000. We recorded
      compensation expense for options issued of $27,000 as required by
      FAS123R.




Our
      debt
      agreements have covenants establishing certain financial requirements and
      operating restrictions. Our failure to comply with any covenant or material
      obligation contained in these debt agreements, absent a waiver or forbearance
      from the lenders, would result in an event of default which could accelerate
      debt repayment terms under the debt agreements. Due to cross-default provisions
      contained in its debt agreements, an event of default under one agreement could
      accelerate repayment terms under the other agreements, which would have a
      material adverse effect on our liquidity and capital resources.





During
      the quarter ended September 30, 2006, our net cash used in operating activities
      was $967,000, compared to $4.2 million in the prior year, representing a change
      of $3.2 million. This
      change was a decrease in the accounts receivable of $8.8 million which relates
      to improved collections and the change in petroleum prices being not as
      significant as the same period a year ago which was offset by uses of cash
      to
      pay down accounts payable and other liabilities of $4.8 million, and the net
      results being lower by $1.1 million over the same period a year ago.




Our
      material financial commitments, other than fuel purchases, payroll and general
      expenses, primarily relate to maintaining our line of credit and servicing
      the
      September 2005 Notes, the January 2005 Notes and August 2003 Notes.






Our
      liquidity and ability to meet financial obligations is dependent on, among
      other
      things, the generation of cash flow from operating activities; obtaining or
      maintaining sufficient trade credit from vendors; complying with our debt
      covenants; and/or raising any required additional capital through the issuance
      of debt or equity securities or additional borrowings.


-23-
 **Table
          of Contents**




***$25
      Million Credit Facility***




As
      of
      September 30, 2006, we had a $25 million credit facility with a national
      financial institution, which permits us to borrow up to 85% of the total amount
      of eligible accounts receivable. Interest is payable monthly (at an annual
      rate
      of prime plus 9.0% at September 30, 2006) and outstanding borrowings under
      the
      line of credit are secured by substantially all of our assets other than our
      truck fleet and related equipment. As of September 30, 2006, the maturity date
      of the line of credit is September 26, 2007.




As
      of
      September 30, 2006 and June 30, 2006, we had outstanding borrowings of $13.6
      million and $15.6 million, respectively, under our line of credit. Based on
      eligible receivables outstanding at September 30, 2006, we had $5.2 million
      of cash availability on the line of credit, and we were in compliance with
      all
      financial covenants required by the loan and security agreement. At November
      9,
      2006, the outstanding balance in the line of credit was $9.9
      million.




Management
      believes, although there can be no assurance, that our line of credit and cash
      on hand should provide the working capital needed to maintain and grow our
      business and to accomplish our business plan. If additional financing is
      required, there can be no assurance that we will be able to obtain such
      financing from our present line of credit or another lender at acceptable terms,
      or at all. Since borrowings under the line of credit bear interest at variable
      interest rates and represent a large portion of outstanding debt, our financial
      results could be materially affected by significant increases or decreases
      in
      interest rates.




**Debt
      Securities**





***September
      2005 Promissory Notes***





On
      September 1, 2005, we closed a $3.0 million private debt placement with
      institutional and other accredited investors in order to fund the H & W
      Acquisition, develop our operations and for other general working capital
      purposes. We issued $3.0 million in 10% five-year Senior Secured Notes that
      require six semi-annual payments commencing on August 31, 2007 and a 40% balloon
      payment on August 31, 2010. The September 2005 Notes are redeemable by us,
      in
      whole or in part, by payment of a percentage of the principal amount, together
      with accrued but unpaid interest, if any, as follows: September 1, 2005 - August
      31, 2006, 102%; September 1, 2006 - August 31, 2007, 101%; and September 1,
      2007
      - August 31, 2010, 100%. In connection with the financing, we also issued four
      year warrants to purchase a total of 360,000 shares of our common stock at
      an
      exercise price of $2.28 per share, including customary redemption and
      registration rights. Total transaction costs related to the registration of
      the
      warrants was $20,000 and was included in additional paid-in
      capital.





See
      the
      discussion in Note (12) - Long Term Debt in the Notes to the Condensed Unaudited
      Financial Statements.





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




On
      June
      30, 2006, we issued 1,057,283 warrants, exercisable for 90 days, to certain
      note
      holders to purchase our common stock at an exercise price of $2.54 per share.
      The note holders have the option to exercise these warrants in consideration
      for
      the retirement of $2,620,000 of existing August 2003 and January 2005 notes.
      In
      addition, we agreed to pay 50% of the 5% call penalty or a 2.5% penalty with
      warrants totaling 25,787, valued at $65,500. The issuance of the warrants
      created a modification to the notes by adding a conversion feature that did
      not
      previously exist under the original notes which substantially changed the
      instrument to have a non-cash conversion feature from the original note which
      substantially changes the debtor’s cash flow requirement. As a result of this
      modification, the effective interest rate of the January 2005 Notes and the
      August 2003 Notes changed from 19.7% and 23.6%, respectively, to 18.4%. The
      warrants were issued at the closing market price and are non-detachable. If
      the
      warrants are exercised they can only be settled by satisfaction of the notes.
      The 25,787 warrants are accounted for as a liability with mark to market feature
      adjustments. On June 30, 2006, we wrote-off $317,000 and $155,000 of debt
      discount and deferred debt costs, respectively, to interest expense related
      to
      the notes at the time the notes were modified. In addition, the Company recorded
      a mark-to-market adjustment related to the 2.5% penalty which reduced the
      $65,500 liability to approximately $56,500. At September 30, 2006, the warrants
      were


-24-
 **Table
          of Contents**




not
      exercised. The recorded mark-to-market adjustment was $9,000. The exercise
      period of the warrants was extended until November 30, 2006 in exchange for
      a corresponding extension of the suspension of our obligation to make principal
      payments until November 30, 2006. The closing price of our common stock at
      September 30, 2006 was $2.16 per share.




**Results
      of Operations**





The
      following is a summary of selected condensed unaudited consolidated results of operations
      for the three-month periods ending September 30, 2006 and 2005 (in
      thousands):





**For
                the Three-Month Periods Ended**
              **September
                30,****Increase
                (decrease)****2006**
            
            **2005**
            
            **$**
            ****
            **%**Total
                revenues
            
            $
            65,965
            
            $
            52,796
            
            $
            13,169
            
            
            25
            %Total
                cost of sales and services
            
            
            61,843
            
            
            48,983
            
            
            12,860
            
            
            26
            %Gross
                profit
            
            
            4,122
            
            
            3,813
            
            
            309
            
            
            8
            %Selling,
                general, and administrativeExpenses
            
            
            3,650
            
            
            2,534
            
            
            1,116
            
            
            44
            %Interest
                expense
            
            
            (949
            )
            
            (675
            )
            
            274
            
            
            41
            %Other
                income
            
            
            15
            
            
            11
            
            
            4
            
            
            36
            %Net
                income (loss)
            
            $
            (462
            )
            $
            615
            
            $
            (1,077
            )
            
            (175
            )%Gallons
                Sold
            
            
            23,429
            
            
            20,819
            
            
            2,610
            
            
            13
            %





**Comparison
      of Three Months Ended** **September
      30, 2006 to Three Months Ended September 30, 2005**





***Revenues***





Revenues
      increased $13.2 million, or 25%, in the current quarter compared to the prior
      year quarter. We sold 23.4 million gallons of fuel and lubricants in the current
      quarter, compared to the 20.8 million gallons in the prior year quarter, a
      2.6
      million gallon, or 13%, increase in new business. The increase in revenues
      was
      primarily related to the acquisition of H & W and an average 11.0 cent per
      gallon higher market prices for fuel compared to a year ago offset by a
      reduction in emergency response services revenue from the prior year quarter
      when we provided emergency response services related to the four hurricanes
      that
      hit the Gulf Coast and Florida.





***Gross
      Profit***





Gross
      profit increased $309,000, or 8%, in the current quarter compared to the prior
      year quarter. This improvement resulted primarily from the increase of 2.6
      million gallons related to the acquisition of H & W and overall higher
      commercial fueling margins which were offset by the reduction in emergency
      response services in connection with the four hurricanes that hit the Gulf
      Coast
      and Florida a year ago. Net margin per gallon was 19.4 cents for the current
      quarter compared to 19.9 cents for the prior year quarter, a 0.5 cent, or 3%,
      decrease in net margin per gallon. The 19.4 cents net margin per gallon in
      the
      current quarter was 7.0
      cents per gallon, or 56%, higher than the fourth quarter ended June 30, 2006
      net
      margin per gallon of 12.4 cents. The increase over the fourth quarter ended
      June 30, 2006 was related to the higher margins we achieved, including
      emergency response preparation services in anticipation of Hurricane Ernesto;
      lower direct operating expenses and depreciation; and not providing an
      additional provision to the slow moving inventory reserve. There
      can
      be no assurance that the higher net margin trend will continue in the future
      or
      that margins will not decrease as a result of increased competition or customer
      resistance to higher prices for the quality services we provide.





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




Selling,
      general and administrative expenses increased $1.1 million in the current
      quarter compared to the prior
      year quarter. This increase primarily resulted from the $728,000 of selling
      general and administrative expenses, including payroll, depreciation and rent,
      related to the H & W acquisition and $653,000 of corporate infrastructure
      and ongoing integration costs offset by a reduction in the provision for bad
      debts of $168,000.


-25-
 **Table
          of Contents**





***Interest
      Expense***




Total
      interest expense increased $274,000 in the current quarter compared to the
      prior
      year quarter. The increase in the line of credit interest expense is related
      to
      a higher average outstanding balance and an overall prime interest rate increase
      of 1.66% over a year ago. The components of interest expense were as follows
      (in
      thousands):





**Three
                Months Ended**
              **September
                30,****2006**
            
            **2005****Stated
                Rate Interest Expense**:Line
                of credit
            
            $
            338
            
            $
            68Long
                term debt
            
            
            355
            
            
            346Other
            
            
            27
            
            
            5**Total
                stated rate interest expense**
            
            
            **720**
            
            
            **419****Non-Cash
                Interest Amortization:**Amortization
                of deferred debt costs
            
            
            79
            
            
            92Amortization
                of debt discount
            
            
            150
            
            
            164**Total
                amortization of interest expense**
            
            
            **229**
            
            
            **256****Total
                interest expense**
            
            $
            949
            
            $
            675





***Income
      Taxes***





We
      recorded no income tax expense for the current year quarter. The net operating
      loss carryforward at June 30, 2006 was $19.1 million.




***Net
      Income (Loss)***




The
      $1.1
      million increase in the $462,000 net loss for the current quarter over the
      $615,000 net income for the prior year quarter was directly related to the
      $1.1
      million increase in selling, general and administrative expenses and higher
      interest expense of $274,000 offset by the increase in gross profit of $309,000.
      Revenues for the prior year quarter do not include revenues from
      H & W which we acquired on October 1, 2005.




***EBITDA***




Earnings
      before interest, taxes, depreciation, and amortization and amortization of
      stock
      compensation expense (“EBITDA”), a non-GAAP measure, decreased $616,000 in the
      current quarter ****** compared
      to the prior year quarter. The decrease in EBITDA was primarily due to the
      increase in selling, general, and administrative expenses of $1.1 million offset
      by higher gross profit of $309,000 and the add back of the $187,000 increase
      in
      depreciation, amortization and stock compensation expense. Components of EBITDA
      for the current and prior year quarters are as follows (in
      thousands):




**Three
                Months Ended**
              **September
                30,****2006**
            
            **2005**Net
                income
            
            $
            (462
            )
            $
            615Add
              back:Interest
                expense
            
            
            720
            
            
            419Non-cash
                interest expense
            
            
            229
            
            
            256Depreciation
                and amortization expense:Cost
                of sales
            
            
            431
            
            
            336Selling,
                general and administrative
            
            
            223
            
            
            66Amortization
                of stock compensation expense
            
            
            27
            
            
            92EBITDA
            
            $
            1,168
            
            $
            1,784




-26-
 **Table
          of Contents**




***Proforma
      EBITDA***




The
      following is a reconciliation of proforma EBITDA, a non-GAAP measure:





**Quarter
                Ended****9/30/2006**
            
            **6/30/2006**
            
            **Increase**
              **(Decrease)**
            
            **Increase**
              **(Decrease)**EBITDA
            
            
            1,168
            
            
            (767
            )
            
            1,935
            
            
            252
            %Add:Corporate
                infrastructure and on-going
                integration costs
            
            
            653
            
            
            1,044
            
            
            (391
            )
            
            (37
            )%Non-cash
              provisions for doubtful accounts and other
            
            
            23
            
            
            156
            
            
            (133
            )
            
            (85
            )%Non-cash
                provision for slow moving inventory
            
            
            —
            
            
            172
            
            
            (172
            )
            
            (100
            )%Proforma
                EBITDA
            
            
            1,844
            
            
            605
            
            
            1,239
            
            
            205
            %





This
      pro
      forma EBITDA information is intended to demonstrate the financial impact on
      our
      EBITDA of the corporate infrastructure and ongoing integration costs we incurred
      during the current quarter and the last quarter of the year ended June 30,
      2006.
      These costs, which are required to be expensed under GAAP, are directly related
      to executing our business plan; were anticipated by management; and represent
      a
      commitment to our future growth, both organically and by selective acquisitions.
      While a portion of these costs may have been incurred absent infrastructure
      and
      integration considerations, they primarily support our long-term objective
      to
      enhance shareholder value by investing now to benefit future performance. The
      components of corporate infrastructure and ongoing integration costs include
      management and support personnel additions and retention, placement fees,
      information technology consulting, accounting support, acquisition strategies
      and analyses, facility leasing, legal assistance and integration travel and
      ancillary expenses.




Although
      proforma EBITDA is not a measure of financial performance under generally
      accepted accounting principles, we believe that the measure provides meaningful
      information relating to the use of resources in growing our business. We use
      proforma EBITDA as an internal measure and believe it is also utilized as a
      measure of performance by the investment community. It is not meant to be
      considered a substitute or replacement for Net Income as prepared in accordance
      with generally accepted accounting principles and should be distinguished from
      conventional EBITDA which is also a non-GAAP measure.




The
      following is a reconciliation of net loss before non-cash items and corporate
      infrastructure and ongoing integration costs to proforma EBITDA, both of which
      are non-GAAP measures:




**Quarter
                Ended****9/30/06**
            
            **6/30/06**Net
                loss
            
            $
            (462
            )
            $
            (3,135
            )Non-Cash
                Items:Depreciation
                - cost of sales
            
            
            431
            
            
            537Depreciation
                and amortization - SG&A
            
            
            223
            
            
            114Amortization
                of deferred debt cost
            
            
            79
            
            
            245Amortization
                of debt discount
            
            
            150
            
            
            491Stock-base
                compensation expense
            
            
            27
            
            
            231Other
                non-cash expenses
            
            
            (9
            )
            
            80Inventory
                reserve
            
            
            —
            
            
            172Provision
                for allowance of doubtful accounts
            
            
            32
            
            
            156Total
                non-cash items
            
            
            933
            
            
            2,026Net
                income (loss) before non-cash items
            
            
            471
            
            
            (1,109
            )Add:
                Corporate infrastructure and ongoing integration costs
            
            
            653
            
            
            1,044Net
                income (loss) before non-cash items and corporateinfrastructure
                and ongoing integration costs
            
            
            1,124
            
            
            (65
            )Add:
                Stated rate interest expense (See interest expense table)
            
            
            720
            
            
            670Proforma
                EBITDA
            
            $
            1,844
            
            $
            605




-27-
 **Table
          of Contents**




This
      reconciliation table reflects the significant impact that the non-cash items,
      corporate infrastructure and ongoing integration costs have in the determination
      of proforma EBITDA and is provided to demonstrate the material affect our
      financing, acquisition and corporate development programs had on the performance
      of our business during the quarters ended September 30, 2006 and June 30,
      2006.





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





Our
      exposure to market risk is limited primarily to the fluctuating interest rates
      associated with variable rate debt outstanding to finance working requirements.
      This debt bears interest at the United States prime interest rate plus a fixed
      markup and is subject to change based upon interest rate changes in the United
      States. We do not currently use, and have not historically used, derivative
      instruments to hedge against such market interest rate risk. Increases or
      decreases in market interest rates could have a material impact on our financial
      condition, results of operations and cash flows. The interest on our $3.0
      million September 2005 promissory note, $6.1 million January 2005 promissory
      notes and our $6.925 million August 2003 promissory notes are fixed for the
      life
      of the notes at 10% per annum. The interest on our line of credit of up to
      $25
      million is variable and may increase or decrease with future changes in interest
      rates but interest rates are not the only factor which could affect interest
      expense on the line of credit. For example, interest expense on the line of
      credit for the period ended September 30, 2006 was $338,000, an increase of
      $270,000 over the same period in 2005, due primarily to an increase in the
      average outstanding line of credit balance and higher prime interest rate.
      If
      our line of credit average outstanding balance were $15.0 million, an increase
      of 1% in the variable interest rate would result in additional interest expense
      of $150,000 per annum.





**ITEM
      4. CONTROLS AND PROCEDURES**





*Disclosure
      Controls and Procedures.*




We
      have
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our Chief Executive Officer and our Chief Financial
      Officer, of the effectiveness of the design and operation of our disclosure
      controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e)
      as of the end of the period covered by this Report on Form 10-Q. Based upon
      this
      evaluation, and in light of the previously identified material weakness in
      our
      internal control over financial reporting described below, the Chief Executive
      Officer and the Chief Financial Officer have concluded that, as of September
      30,
      2006, the Company’s disclosure controls and procedures were not effective in
      alerting them in a timely manner to material information required to be included
      in our periodic filings. Notwithstanding such ineffectiveness, however, these
      officers and the Company believe that all necessary steps have been taken at
      the
      time of this filing to ensure the accuracy and completeness of the information
      contained in this report.




*Internal
      Control over Financial Reporting.*





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. In addition, projections of any evaluation
      of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions or that the degree of compliance
      with the policies or procedures may deteriorate.





In
      connection with the audit of our financial statements for the year ended June
      30, 2006, our management identified a number of significant deficiencies in
      our
      internal controls that, taken together, amounted to a material weakness in
      those
      internal controls. A material weakness as defined in the Public Company
      Accounting Oversight Board’s Auditing Standard #2 is a control deficiency, or a
      combination of control deficiencies, that results in more than a remote
      likelihood that a material misstatement of our annual or interim financials
      statements will not be prevented or detected on a timely basis.





*Material
      weakness in internal control.*





Our
      management identified significant deficiencies related to policies and
      procedures to ensure accurate and reliable interim and annual consolidated
      financial statements. Specifically, we lacked (i) sufficient personnel with
      the
      required technical accounting and SEC financial reporting experience relating
      to
      our business to enable us to maintain adequate controls over our financial
      reporting and processes which control deficiency resulted in our


-28-
 **Table
          of Contents**


recording
      certain adjustments prior to the issuance of our audited consolidated financial
      statements for the year ended June 30, 2006; (ii) adequate segregation of duties
      among accounting personnel; (iii) sufficient review controls over account
      reconciliations, account analyses and operating procedures primarily in
      connection with acquired businesses; and (iv) policies and procedures requiring
      a detailed review on a timely basis of underlying information supporting amounts
      included in the annual and interim consolidated financial statements and
      disclosures. As a result of the aggregation of these significant deficiencies,
      we concluded that there was a material weakness in our internal control over
      financial reporting.





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





Prior
      to
      June 30, 2006, and during the first quarter of fiscal 2007, we implemented
      and
      continue to implement measures to address the material weakness in our internal
      control over financial reporting and to improve the integrity of our reporting
      processes.





It
      is
      management’s objective to remediate the material weakness described above. The
      following describe the measures we have undertaken to improve overall internal
      control over financial reporting prior and subsequent to June 30, 2006, and
      which should materially affect our internal control over financial
      reporting:





·
            We
                have significantly strengthened our management team, including the
                appointments of a new Vice President of Information Services Systems
                (April 2006); Divisional Controller (May 2006); Assistant Corporate
                Controller (May 2006); Vice President of Corporate Administration
                and
                Development (July 2005); Corporate Controller (September 2006); and
                several additional information technology, staff accounting and
                administrative personnel.





·
            We
                have invested over $1.5 million during the calendar year 2006 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 expanded our corporate infrastructure in order to upgrade and
                improve
                all internal accounting procedures and processes supporting our existing
                business and anticipated
                acquisitions.





·
            We
                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 to 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.





Except
      as
      described above, there were no significant changes to our internal controls
      over
      financial reporting nor any changes in other factors that could significantly
      affect such internal controls during the quarter ended September 30,
      2006.


-29-
 **Table
          of Contents**




**PART
      II. Other Information**






**ITEM
      1. LEGAL PROCEEDINGS**





As
      previously reported in our From 10-K for the year ended June 30, 2006, on
      October 10, 2006, the Company filed a civil complaint (the “Complaint”) in
      Broward County, Florida Circuit Court against Financial Accounting Solutions
      Group, Inc., (“FAS”), Kramer Professional Staffing, Inc., (“KPS”), and Mitchell
      Kramer, an officer, director, shareholder and control person of FAS and KPS
      (“Kramer”). The Complaint alleges that, in early 2005, Kramer, FAS and KPS
      (collectively, the “Defendants”) induced the Company to engage FAS to provide
      critical management consulting services with respect to (a) the implementation
      of certain Information Technology (“IT”) functions, including the integration of
      the Company’s IT system with those of its new subsidiaries, (b) the
      modernization and expansion of the Company’s accounting and business technology
      capabilities, and (c) ensuring compliance with public company accounting
      internal requirements and the Sarbanes-Oxley Act (the “IT Projects”). The
      Complaint further alleges that the Defendants made numerous misrepresentations
      to the Company concerning the experience, capabilities and background of FAS
      and
      FAS’ personnel, which misrepresentations were relied upon by the Company when it
      decided to hire FAS to undertake these tasks and subsequently to continue with
      the engagement. After persistent delays and failures to perform by FAS, the
      Company determined that FAS’ performance of the IT Projects was grossly
      inadequate and that FAS had violated various promises and agreements made by
      FAS, and the Company therefore terminated the engagement. The Complaint seeks
      damages from FAS for, among other things, its breach of its contractual
      obligations to the Company, failure to provide services in accordance with
      any
      reasonable standard of care within the IT industry, negligence, and unjust
      enrichment from inflated and fraudulent billing practices. The Complaint also
      seeks damages from all of the Defendants for negligent and fraudulent
      misrepresentations with respect to FAS’ experience, capabilities and background
      and seeks the return from FAS of an unspecified portion of the fees previously
      paid to FAS for the IT Projects. FAS subsequently filed a countersuit in the
      same court seeking payment of additional fees allegedly due from the Company.
      The Company anticipates the dismissal of the countersuit and the inclusion
      of
      the FAS claims in the original suit as counterclaims.





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





None.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None.





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





None.





**ITEM
      5. OTHER INFORMATION**





None.


-30-
 **Table
          of Contents**




**ITEM
      6. EXHIBITS**




**Exhibits**


Exhibit
                  No.
              
              Description31.1
              
              Certificate
                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 200231.2
              
              Certificate
                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002)32.1
              
              Certificate
                  of Chief Executive Officer and Chief Financial Officer pursuant
                  to Section
                  906 of the Sarbanes-Oxley Act of 2002




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 **Table
          of Contents**




**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.




STREICHER
      MOBILE FUELING, INC.




November
      14, 2006


By: /s/
      Richard E. Gathright


Richard
      E. Gathright


Chief
      Executive Officer and President




By: /s/
      Michael S. Shore


Michael
      S. Shore


Chief
      Financial Officer and Senior Vice President


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