**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 December 31, 2005**




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)




**800
      West Cypress Creek Road, Suite 580**


**Fort
      Lauderdale, FL 33309**


(Former
      name, former address and former fiscal year, if changed since last
      report)




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 (as defined 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 a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
o .
      No
x .





As
      of
      February 7, 2006 there were 9,813,962 shares of the registrant’s common stock
      outstanding.








**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 December 31, 2005 and June 30,
                  2005
              3Condensed
                  Unaudited Consolidated Statements of Operations for the three-month
                  and
                  six-month periods ended December 31, 2005 and 2004
              4Condensed
                  Unaudited Consolidated Statements of Cash Flows for the six-month
                  periods
                  ended December 31, 2005 and 2004
              5Notes
                  to Condensed Unaudited Consolidated Financial Statements
              6Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              15Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              29Item
                  4.
              Controls
                  and Procedures
              29Part
                  II
              Other
                  InformationItems
                1. thru 6.
              30
                  - 34Signature
                Page
              35Certifications
              36
                  - 38


2


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


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**DECEMBER
      31, 2005 and JUNE 30, 2005**


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




**ASSETS**
            
            **December
                31, 2005**
            
            **June
                30, 2005**Current
                assets:
            
            **Unaudited**Cash
                and cash equivalents
            
            $
            3,445
            
            $
            4,108Accounts
                receivable, less allowances of $2,682 and $1,806
            
            
            25,625
            
            
            14,129Inventories
            
            
            3,661
            
            
            495Prepaid
                expenses and other current assets
            
            
            227
            
            
            660Total
                current assets
            
            
            32,958
            
            
            19,392Property
                and equipment, net
            
            
            10,930
            
            
            9,555Goodwill
                and intangible assets
            
            
            5,166
            
            
            100Deferred
                debt costs, net
            
            
            1,028
            
            
            991Other
                assets
            
            
            97
            
            
            87Total
                assets
            
            $
            50,179
            
            $
            30,125


**LIABILITIES
                AND SHAREHOLDERS’ EQUITY**Current
                liabilities:Bank
                line of credit payable
            
            $
            13,236
            
            $
            4,801Accounts
                payable and other liabilities
            
            
            13,020
            
            
            7,345Current
                portion of long-term debt
            
            
            1,385
            
            
            1,385Total
                current liabilities
            
            
            27,641
            
            
            13,531Long-term
                liabilities:Promissory
                notes, net of unamortized debt discount of $2,327and
                $2,056
            
            
            11,620
            
            
            9,584Deferred
                tax liability
            
            
            1,400
            
            
            —Note
                payable
            
            
            178
            
            
            172Long-term
                debt, net
            
            
            13,198
            
            
            9,756Total
                liabilities
            
            
            40,839
            
            
            23,287Shareholders’
                equity:Common
                stock, par value $.01 per share; 50,000,000 shares
                authorized;
              9,813,962
                and 8,953,444 issued and outstanding at December 31, 2005 and June
                30,
                2005, respectively
            
            
            98
            
            
            90Additional
                paid-in capital
            
            
            18,346
            
            
            16,325Accumulated
                deficit
            
            
            (9,104
            )
            
            (9,577
            )Total
                shareholders’ equity
            
            
            9,340
            
            
            6,838Total
                liabilities and shareholders’ equity
            
            $
            50,179
            
            $
            30,125





**See
      accompanying notes to condensed unaudited consolidated financial
      statements.**


3





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


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


**FOR
      THE THREE AND SIX-MONTH PERIODS ENDED**


**DECEMBER
      31, 2005 and 2004**


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




**Three-Month
                Periods Ended**
            
            **Six-Month
                Periods Ended****December
                31,**
            
            **December
                31,****2005**
            
            **2004**
            
            **2005**
            
            **2004**Petroleum
                product sales and service revenues
            
            $
            59,437
            
            $
            23,493
            
            $
            105,633
            
            $
            46,224Fuel
                taxes
            
            
            8,113
            
            
            6,154
            
            
            15,556
            
            
            12,332Total
                revenues
            
            
            67,550
            
            
            29,647
            
            
            121,189
            
            
            58,556Cost
                of petroleum product sales and service
            
            
            55,608
            
            
            22,049
            
            
            97,991
            
            
            42,980Fuel
                taxes
            
            
            8,113
            
            
            6,154
            
            
            15,556
            
            
            12,332Total
                cost of sales
            
            
            63,721
            
            
            28,203
            
            
            113,547
            
            
            55,312Gross
                profit
            
            
            3,829
            
            
            1,444
            
            
            7,642
            
            
            3,244Selling,
                general and administrative expenses
            
            
            3,007
            
            
            1,232
            
            
            5,541
            
            
            2,355Operating
                income
            
            
            822
            
            
            212
            
            
            2,101
            
            
            889Interest
                expense
            
            
            (964
            )
            
            (393
            )
            
            (1,639
            )
            
            (775
            )Interest
                and other income
            
            
            —
            
            
            —
            
            
            11
            
            
            —Income
                (loss) before income taxes
            
            
            (142
            )
            
            (181
            )
            
            473
            
            
            114


Income
                tax expense
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                income (loss)
            
            $
            (142
            )
            $
            (181
            )
            $
            473
            
            $
            114Basic
                net income (loss) per share
            
            $
            (0.01
            )
            $
            (0.02
            )
            $
            0.05
            
            $
            0.02Diluted
                net income (loss) per share
            
            $
            (0.01
            )
            $
            (0.02
            )
            $
            0.05
            
            $
            0.01Basic
                weighted average common sharesOutstanding
            
            
            9,776,362
            
            
            7,435,835
            
            
            9,557,761
            
            
            7,384,174Diluted
                weighted average common shares outstanding
            
            
            9,776,362
            
            
            7,435,835
            
            
            10,453,356
            
            
            8,185,749





**See
      accompanying notes to condensed unaudited consolidated financial
      statements**


4


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


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


**FOR
      THE SIX-MONTH PERIODS ENDED DECEMBER 31, 2005 and 2004**


***(in
      000’s)***


****** ****


**2005**
            
            **2004**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                income
            
            $
            473
            
            $
            114Adjustments
                to reconcile net income to net cash(used
                in) provided by operating activities:Depreciation
                and amortization:Cost
                of sales
            
            
            735
            
            
            532Selling,
                general and administrative
            
            
            199
            
            
            93Amortization
                of deferred debt costs
            
            
            182
            
            
            112Amortization
                of debt discount
            
            
            334
            
            
            168Amortization
                of stock compensation expense
            
            
            194
            
            
            —Provision
                for allowance for doubtful accounts
            
            
            86
            
            
            45Changes
                in operating assets and liabilities:Decrease
                in restricted cash
            
            
            —
            
            
            13Increase
                in accounts receivable
            
            
            (5,309
            )
            
            (55
            )Decrease
                (increase) in inventories, prepaid expenses and other
                assets
            
            
            1,056
            
            
            (345
            )Decrease
                in accounts payable and other liabilities
            
            
            (126
            )
            
            (318
            )Net
                cash (used in) provided by operating activities, net ofacquisition
                effect
            
            
            (2,176
            )
            
            359CASH
                FLOWS FROM INVESTING ACTIVITIES:Purchases
                of property and equipment
            
            
            (970
            )
            
            (158
            )Cash
                used in business acquisition
            
            
            (2,124
            )
            
            —Net
                cash used in investing activities
            
            
            (3,094
            )
            
            (158
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Advance
                on private placement note offering
            
            
            —
            
            
            1,000Net
                borrowings on line of credit payable
            
            
            1,741
            
            
            397Net
                proceeds from exercise of common stock warrants
            
            
            1,230
            
            
            157Proceeds
                from issuance of promissory notes
            
            
            3,000
            
            
            —Payments
                of debt issuance costs
            
            
            (219
            )
            
            —Repayments
                of promissory notes
            
            
            (452
            )
            
            —Principal
                payment on promissory notes
            
            
            (693
            )
            
            —Net
                cash provided by financing activities
            
            $
            4,607
            
            $
            1,554NET
                (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
            
            
            (663
            )
            
            1,755CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            4,108
            
            
            2,708CASH
                AND CASH EQUIVALENTS, end of period
            
            $
            3,445
            
            $
            4,463SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Cash
                paid for-Interest
            
            $
            628
            
            $
            486Income
                taxes
            
            $
            —
            
            $
            —




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




In
      the
      period ended December 31, 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.




**See
      accompanying notes to condensed unaudited consolidated financial
      statements.**





5


**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
      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 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, 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 December 31, 2005, the Company was
      conducting operations in California, Florida, Georgia, Maryland, North Carolina,
      Pennsylvania, Tennessee, Texas, Virginia and Washington, D.C.




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 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;
      and charges for transportation logistics services. Cost of sales is comprised
      primarily of the cost of fuel, lubricants and chemicals 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.




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 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 quarterly 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 during a fiscal year 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 through 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
      consummation 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, which was related to H & W
      through some common shareholder ownership (together
      with the acquisition of the shares of H & W, the “H & W
      Acquisition”) .
      In
      addition to providing service to the greater Houston metropolitan area, the
      combined H & W and Harkrider operations also serve the Dallas/Fort Worth,
      Freeport, Longview, Lufkin, San Antonio, and Waco markets in Texas.


6




**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
      with current period presentation. Operating results for the three and six months
      ended December 31, 2005 are not necessarily indicative of the results that
      may
      be expected for any subsequent period or the full year ending June 30, 2006.
      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,
      2005.





**(3)**
            **LINE
                OF CREDIT PAYABLE**





The
      Company has a $20 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. Interest is payable monthly (prime plus 0.75% at December
      31, 2005) 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 25, 2007. Although
      the line of credit expires on September 25, 2007, it is classified as a current
      liability due to certain provisions in the agreement related to subjective
      acceleration clauses and due to an agreement requiring the Company to maintain
      a
      lockbox arrangement whereby cash deposits are automatically utilized to reduce
      amounts outstanding under the line of credit.





In
      February 2005, the Company and its bank line of credit lender amended the loan
      and security agreement for the credit facility in connection with the Company’s
      issuance of the 2005 Notes and the Shank Services acquisition. This amendment
      (1) lowered the requirements on the fixed charge covering ratio; (2) eliminated
      the effective net worth requirement except when availability is below $1.0
      million; (3) extended the term to September 25, 2006; (4) reduced the unused
      line fee from .75% to .25% after September 25, 2005; and (5) imposes a .50%
      fee
      if the Company terminates the line of credit after September 26, 2005, but
      prior
      to September 26, 2006.





Concurrently
      with the October 1, 2005 H & W Acquisition, in order to finance the acquired
      accounts receivable and inventory, the Company and its bank line of credit
      lender amended the credit facility. Among other changes, the amendment (1)
      added
      H & W as a borrower; (2) increased the facility to $20 million; (3) provided
      financing for the acquired and ongoing accounts receivable and inventory
      resulting from the H & W Acquisition; (4) extended the term of the original
      loan and security agreement to September 26, 2007; (5) reduced the interest
      rate
      to prime plus 0.75% per annum; (6) eliminated the effective net worth covenant;
      and (7) 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
      December 31, 2005 and June 30, 2005, the Company had outstanding borrowings
      of
      $13.2 and $4.8 million, respectively, under its $20 million bank line of credit.
      Based on eligible receivables outstanding at December 31, 2005, the Company
      had
      $6.8 million of cash availability on its bank line of credit, versus $5.2
      availability on June 30, 2005, and remained in compliance with all financial
      covenants required by the loan and security agreement.





**(4)**
            **NET
                INCOME PER 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.





7
 
 **NOTES
          TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL
          STATEMENTS**


At
      December 31, 2005 and 2004, 2,665,175 and 4,605,761 common stock equivalents,
      respectively, consisting of employee, director and unrelated third party stock
      options and common stock warrants, were outstanding at prices ranging from
      $.86
      to $9.49 per share. For the six month period ended December 31, 2005 893,595
      of
      these common stock equivalents were dilutive and included in the computation
      of
      diluted net income per share. For the six month period ended December 31, 2004,
      801,575 of these common stock equivalents were dilutive and were included in
      the
      computation of diluted net income per share. For the three month periods ended
      December 31, 2005 and 2004 none of these common stock equivalents were dilutive
      and were not included in the computation of diluted net income per share.





For
      the
      three month periods ending December 31, 2005 and 2004, the Company lost $0.01and
      $0.02 per share, respectively. For the six month period ended December 31,
      2005,
      the Company earned net income of $473,000 or $0.05 per basic and $0.05 per
      dilutive share. For the six month period ended December 31, 2004, the Company
      earned net income of $114,000 or $0.02 per basic and $0.01 per dilutive
      share.





On
      December 6, 2005, the Company extended from December 11, 2005 to December 27,
      2005 the exercise period for 1,349,900 outstanding common stock warrants that
      were issued in connection with the December 11, 1996 initial public offering.
      In
      addition, the Company lowered the exercise price of the warrants to $3.50 per
      share. Prior to the expiration date of December 27, 2005, 240 of these warrants
      were exercised for gross proceeds of $840. The remaining warrants expired
      unexercised on December 27, 2005 and are no longer outstanding.





**(5)**
            **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
      209,710 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.





Information
      concerning both the 1996 and 2000 employee stock option plans for the six months
      ending December 31, 2005 is summarized as follows:





**Shares**
            
            **Weighted
                average exercise price**Outstanding
                July 1, 2005
            
            
            1,206,152
            
            $
            1.78Granted
            
            
            302,000
            
            $
            2.89Exercised
            
            
            (2,000
            )
            $
            1.24Terminated
            
            
            (65,700
            )
            $
            2.27Outstanding
                December 31, 2005
            
            
            1,440,452
            
            $
            1.99Exercisable
                December 31, 2005
            
            
            896,652
            
            $
            1.84





8
 
  **NOTES
          TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


The
      weighted average remaining contractual life for employee stock options
      outstanding and exercisable at December 31, 2005 is 6.6 years and 4.9 years,
      respectively. The weighted average remaining contractual life for 543,800
      options vested or expected to vest in future periods at December 31, 2005 is
      9.3
      years with a weighted average exercise price of $2.06.




A
      summary
      of the status of the Company’s nonvested employee stock options as of December
      31, 2005 is presented below:




**Shares**
            
            **Weighted
                average grant-date fair value**Nonvested
                at July 1, 2005
            
            
            319,000
            
            $
            1.51Granted
            
            
            302,000
            
            $
            2.63Vested
            
            
            (24,000
            )
            $
            1.27Forfeited
            
            
            (53,200
            )
            $
            2.30Nonvested
                at December 31, 2005
            
            
            543,800
            
            $
            2.06





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 625 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 261,250 shares of common stock are outstanding
      at December 31, 2005 under the Directors Plan and 88,750 shares of stock are
      available to be granted in the future. The weighted average grant date
      fair-value of director options granted during the six months ended December
      31,
      2005 was $2.42.





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 December 31, 2005 are vested. The weighted average
      remaining contractual life for the outstanding and vested director stock options
      is 6.6 years.





Information
      concerning the Director stock option plan for the six months ending December
      31,
      2005 is summarized as follows:




**Shares**
            
            **Weighted
                average exercise price**Outstanding
                July 1, 2005
            
            
            233,750
            
            $
            1.52Granted
            
            
            27,500
            
            $
            2.81Exercised
            
            
            —
            
            
            —Terminated
            
            
            —
            
            
            —Outstanding
                December 31, 2005
            
            
            261,250
            
            $
            1.66Exercisable
                December 31, 2005
            
            
            261,250
            
            $
            1.66





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 and six months ended December 31,
      2005
      was $102,000 and $194,000, respectively, and is included in selling, general
      and
      administrative expenses in the Company’s Condensed Consolidated Statement of
      Operations. The effect of this accounting change is reflected prospectively;
      therefore no stock based employee compensation expense was recognized in the
      Company’s Condensed Consolidated Statement of Operations for the three months
      and six months ended December 31, 2004. As a result of adopting SFAS 123R,
      there
      was a reduction of net income for the three months and six months ended December
      31, 2005 of $102,000 and $194,000, respectively, and a reduction in basic and
      diluted income per share of $0.01 for the three months ended December 31, 2005
      and $0.02 for the six months ended December 31, 2005. There was no effect on
      cash flow from operations or cash flow from financing activities. Supplemental
      disclosure, as if the change had been retroactively applied is as follows
      (dollars in thousands, except share data):




9
 
 **NOTES
          TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL
          STATEMENTS**




**For
                the Three Months Ended December 31,**
            
            **For
                the Six**
              **Months
                Ended December 31,****2004**
            
            **2004**Net
                (loss) income, as reported
            
            $
            (181
            )
            $
            114Stock-based
                employee compensation expenseincluded
                in reported net income
            
            $
            —
            
            $
            —Stock-based
                employee compensation expensenot
                included in reported net income
            
            $
            (24
            )
            $
            (55
            )Net
                income - pro forma
            
            $
            (205
            )
            $
            59Basic
                net (loss) income per share - as reported
            
            $
            (0.02
            )
            $
            0.02Basic
                net (loss) income per share - proforma
            
            $
            (0.03
            )
            $
            0.01Diluted
                net (loss) income per share - as reported
            
            $
            (0.02
            )
            $
            0.01Diluted
                net (loss) income per share - proforma
            
            $
            (0.03
            )
            $
            0.01




**For
                the Three Months Ended December 31,**
            
            **For
                the Six Months Ended December 31,**Assumptions:
            
            
            **2005**
            
            
            **2004**
            
            
            **2005**
            
            
            **2004**Risk
                free interest rate
            
            
            6.75%
            
            
            4.25%
            
            
            5.68%
            
            
            4.25%Dividend
                yield
            
            
            0%
            
            
            0%
            
            
            0%
            
            
            0%Expected
                volatility
            
            
            110%
            
            
            100%
            
            
            110%
            
            
            100%Expected
                life
            
            
            9.6
                years
            
            
            10
                years
            
            
            8.8
                years
            
            
            10
                years





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 December 31, 2005
      there was $859,000 of total unrecognized compensation cost related to non-vested
      share-based compensation arrangements. The fair value of the stock options
      are
      expensed on a straight-line basis over the vesting period.


10


**NOTES
      TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**





**(6)**
            **LONG-TERM
                DEBT**





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





**December
                31, 2005**
            
            **June
                30, 2005**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 18.9% includes cost of warrants
                and
                other debt issue costs
            
            $
            3,000
            
            $
            —January
                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 19.6% 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 23.7% includes cost of warrants
                and
                other debt issue costs
            
            $
            6,232
            
            $
            6,925Note
                Payable (contingent deferred promissory note subject to earn-out
                provisions related to Shank Services acquisition if payable, due
                March 31,
                2007)
            
            
            178
            
            
            172Unamortized
                debt discount, net of amortization
            
            
            (2,327
            )
            
            (2,056
            )Less:
                current portion
            
            
            (1,385
            )
            
            (1,385
            )Long-term
                debt, net
            
            $
            11,798
            
            $
            9,756





***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 to
      fund the H & W acquisition referred to above, 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%. 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 and are being amortized over
      the
      four-year life of the Notes.




***Other***





Unamortized
      debt discounts of $2,327,000 at December 31, 2005 and $2,056,000 at June 30,
      2005 were recorded in connection with the August 2003 Notes, January 2005 Notes
      and September 2005 Notes and are being amortized as interest expense over the
      respective term of the debt issued under the effective interest method. These
      are non-cash discounts related 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 $15.332 million and $13.025
      million of the notes at December 31 and June 30, 2005, respectively. The common
      stock warrants were valued using the Black-Scholes option pricing model and
      recorded as an increase to additional paid-in capital.





11
 
  NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED
        FINANCIAL STATEMENTS


The
      Company’s debt agreements for its line of credit facility and for the August
      2003 Notes, January 2005 Notes 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. At December 31, 2005 the Company was in
      compliance with all covenants required by the debt agreements.





**(7)**
            **SHAREHOLDERS’
                EQUITY**





For
      the
      six-month period ended December 31, 2005 shareholder’s equity increased by
      $2,502,000 due to: (1) $1,230,000 in proceeds realized from the exercise of
      warrants related to the issuance of the January 2005 Notes and the August 2003
      Notes, which exercises were at prices ranging from $1.00 to $1.60; (2) $605,000
      from the valuation of warrants issued in connection with the September 2005
      Notes; and (3) $473,000 in net income for the period. The following reflects
      the
      change in shareholders equity for six-month period ended December 31, 2005
      (in
      thousands):




**Common**
              **Stock**
            
            **Additional**
              **Paid-in
                Capital**
            
            **Accumulated**
              **Deficit**
            
            **Total**
              **Shareholders’**
              **Equity**June
                30, 2005
            
            $
            90
            
            $
            16,325
            
            $
            (9,577
            )
            $
            6,838Exercise
                of options and warrants
            
            
            8
            
            
            1,222
            
            
            —
            
            
            1,230Issuance
                of
              warrants
            
            
            —
            
            
            605
            
            
            —
            
            
            605Amortization
                of stock compensation expense
            
            
            —
            
            
            194
            
            
            —
            
            
            194Net
                income
            
            
            —
            
            
            —
            
            
            473
            
            
            473December
                31, 2005
            
            $
            98
            
            $
            18,346
            
            $
            (9,104
            )
            $
            9,340





**(8)**
                **H
                    & W PETROLEUM COMPANY, INC. ACQUISITION**





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 consummation 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, which was related to H & W
      through some common shareholder ownership (together
      with the acquisition of the shares of H & W, the “H & W
      Acquisition”) .
      In
      addition to providing service to the greater Houston metropolitan area, the
      combined H & W and Harkrider operations also serve the Dallas/Fort Worth,
      Freeport, Longview, Lufkin, San Antonio, and Waco markets in Texas.





12
 
  NOTES
          TO CONDENSED UNAUDITED CONSOLIDATED
          FINANCIAL STATEMENTS


H
&
W
      provides lubricants and fueling services to over 3,800 customers, with its
      primary emphasis on those companies requiring large volumes of specialty
      industrial oils, motor and gear lubricants and greases subject to rigid
      technical and performance specifications. Harkrider has distributed solvents
      and
      specialty petroleum products to dry cleaners and industrial customers in the
      Houston, Beaumont and San Antonio areas since 1946. Today, it is one of the
      largest dry cleaning solvents distributors in those Texas markets with over
      800
      customers. Together, 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 and Harkrider operations currently employ
      approximately 75 personnel.




The
      purchase price of approximately $5.9 million, when including the payments due
      upon collection of certain receivables totaling $1.964 million, was paid with
      a
      combination of cash, the assumption of specified liabilities and the issuance
      of
      two year 10% promissory notes totaling $2.463 million, which are subject to
      an
      earn out provision based on the performance of H & W and Harkrider after the
      H & W acquisition. The preliminary purchase price allocation, including
      goodwill and intangibles, which represents the excess of the purchase price
      over
      the fair value of the net assets acquired, may change during the year of
      acquisition as more detailed analysis is completed and additional information
      on
      the fair value of assets and liabilities becomes available. To reflect the
      excess purchase price over the estimated fair value of the tangible net assets
      acquired, the purchase price and the preliminary purchase price allocation
      are
      summarized as follows (in thousands):




Cash
                at closing
            
            $
            82Borrowings
                under bank line of credit
            
            
            1,454Acquisition
                costs — direct
            
            
            588Contingent
                earnout
            
            
            2,463Total
                purchase price
            
            
            
            
            $
            4,587Less:
                Fair value of identifiable assets acquired:Cash
            
            $
            392Plant,
                property and equipment
            
            
            1,206Accounts
                receivable (Includes $250 from Harkrider)
            
            
            5,961Inventory
            
            
            3,565Other
                current assets
            
            
            249Fair
                value of identifiable assets acquired
            
            
            
            
            $
            11,373Plus:
                Fair value of liabilities assumed:Bank
                line of credit payable (Includes $387 from Harkrider)
            
            $
            7,086Accounts
                payable and other liabilities
            
            
            5,489Deferred
                taxes on intangible assets
            
            
            1,400Current
                portion of long-term debt
            
            
            452$
            14,427Less:
                Contingent earnout not achieved
            
            
            
            
            $
            2,463Excess
                of purchase price over fair value of net assets acquired to be allocated
                among intangible assets and goodwill
            
            
            
            
            $
            5,178





13




NOTES
        TO CONDENSED UNAUDITED CONSOLIDATED
        FINANCIAL STATEMENTS


The
      following is the allocation of the fair value of net assets acquired over cost
      (in thousands):




Amortizable
                intangible assets:Customer
                relationships
            
            $
            1,673Supplier
                contracts
            
            
            801Trademarks
            
            
            687Favorable
                leases
            
            
            196Total
                amortizable intangible assets
            
            
            3,357Accumulated
                amortization
            
            
            (90
            )Net
                book value at 12/31/05
            
            $
            3,267Goodwill
            
            $
            1,821





Amortization
      expense is computed by straight-line method over the useful lives of the assets,
      which range from five to fifteen years. Amortization expense for the three
      months ended December 31, 2005 was $90,000. Estimated amortization expense
      for
      the remainder of fiscal year 2006, for the five succeeding fiscal years and
      thereafter is as follows (in thousands):




Fiscal
                year:2006
                (remainder)
            
            $
            1802007
            
            
            3602008
            
            
            3602009
            
            
            3602010
            
            
            3602011
            
            
            208Thereafter
            
            
            1,439$
            3,267





The
      following unaudited pro forma condensed consolidated statements of operations
      have been prepared as if the H & W Acquisition had occurred at July 1, 2005
      and July 1, 2004, respectively, (in thousands, except per share data). ****




**Six
                months ended December 31, 2005**
            
            **Year
                ended**
              **June
                30, 2005**Fuel,
                tax and service revenue
            
            $
            138,690
            
            $
            191,417Cost
                of fuel, tax and service
            
            
            129,615
            
            
            179,975Gross
                Profit
            
            $
            9,075
            
            $
            11,442Net
                income (loss)
            
            $
            201
            
            $
            (1,988
            )Basic
                net income (loss) per share
            
            $
            0.02
            
            $
            (0.25
            )Diluted
                net income (loss) per share
            
            $
            0.02
            
            $
            (0.25
            )





The
      pro
      forma information is presented for informational purposes only and is not
      necessarily indicative of the results of operations that actually would have
      been achieved had the H & W Acquisition been consummated as of those dates,
      nor is it intended to be a projection of future results.





14


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





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. In addition to the Risk
      Factors included
      in Part II, Item 1A, of this report, the inaccuracy of any of the following
      assumptions 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 future net losses




·
            the
                avoidance of adverse consequences relating to our outstanding
                debt




·
            our
                continuing ability to pay interest and principal on our bank line
                of
                credit; the $6.232 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




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




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




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




·
            generally
                positive economic and market
                conditions




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




15


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




·
            successful
                execution of our acquisition and diversification strategy, including
                the
                availability of sufficient capital to acquire additional businesses
                and to
                support the infrastructure requirements of a larger combined
                company




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




**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 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 December 31, 2005, we were conducting operations in California,
      Florida, Georgia, Maryland, North Carolina, Pennsylvania, Tennessee, Texas,
      Virginia and Washington, D.C.




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 Petroleum
      Company, Inc. (‘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, and Waco markets. The
      purchase price of approximately $5.9 million, which was based on a multiple
      of
      4.5 times a projected annualized EBITDA *(earnings
      before interest, taxes, depreciation and amortization - a non-GAAP financial
      measure)* of
      approximately $1.4 million, was adjusted to $5.964 million at closing by working
      capital and other closing adjustments.




We
      provide our 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 dramatic fuel price volatility
      can affect customers’ demand for fuel and can also increase the fuel costs of
      operating our fleet of trucks and equipment, our gross profit on sales is
      generally not directly affected by fuel price fluctuations since we pass on
      fuel
      price changes to customers and charge for our services on a per gallon basis
      based on a targeted rate per hour. While there may be a perceived correlation
      between customer resistance to payment of higher service charges when fuel
      prices rise sharply, as they have recently, 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 supply. We also believe that
      higher fuel prices should not have a long-term effect on our margins. During
      the
      fiscal year ended June 30, 2005 and the six months ended December 31, 2005,
      market prices for fuel were significantly higher than in the two prior fiscal
      years. Our delivered volumes in the current six-month period increased primarily
      due to the addition of new accounts, market expansion, the acquisition of Shank
      Services and H & W and the increase in emergency response services related
      to Hurricanes Dennis, Katrina, Rita and Wilma. The increase in our revenue,
      while significant, was not as meaningful as the increase in volume, since we
      pass through petroleum product price increases to our customers.





16




·
            Financial
                Performance




During
      the quarter and six months ended December 31, 2005 total revenues, gross profit,
      operating income, net income and EBITDA all were positively impacted by the
      inclusion of both the Shank and H & W acquisitions and the emergency
      response services contribution in the aftermath of the devastation caused by
      the
      summer and fall hurricanes. The Shank and H & W acquisitions, together with
      our ongoing marketing and sales programs, resulted in a 10.5 and 16.1 million
      increase in gallons sold and a net margin improvement per gallon of over five
      cents aggregating $2.5 and $4.5 million. We believe that our financial results
      for the quarter and six months ended December 31, 2005 are highly encouraging.
      Those results reflect the progress we have made in our continuing acquisition
      and services diversification program that began during the past fiscal year.
      For
      the current quarter and last six months, our operating profit has improved
      over
      last year by $610,000 and $1.2 million, respectively, and the bottom line result
      has improved by $39,000 and $359,000, respectively. Our earnings before
      interest, taxes, depreciation and amortization (“EBITDA”) which are discussed
      below have improved for the quarter and six months ended December 31, 2005
      by
      $933,000 and $1.7 million, respectively. 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.





Additionally,
      during the quarter and six months ended December 31, 2005, we continued to
      incur
      costs associated with the integration of both Shank and H & W, as well as
      non-cash charges from the recently required implementation of FASB 123R
      amounting to $102,000 and $194,000, respectively, of stock option amortization
      expense which were not incurred in the same periods last year. We also incurred
      during the quarter and six months ended December 31, 2005 non-cash interest
      of
      $127,000 and $227,000, respectively, from debt incurred in connection with
      the
      acquisitions of Shank and H & W which was not incurred in the prior periods.
      Importantly, for the current quarter and six months we incurred total non-cash
      interest of $260,000 and $516,000, respectively, in connection with all of
      our
      debt securities and total interest expense was $964,000 and $1.639 million.
      We
      are currently pursuing alternatives to convert or retire a substantial portion
      of this debt which would significantly reduce this interest cost, after a
      one-time, non-cash write-off of the related debt discount and deferred debt
      costs.





We
      consider the implementation of our new information management system to be
      essential to our efforts to fully integrate and manage, on an ongoing basis,
      the
      acquired Shank and H & W operations. We are confident that this new system
      will increase operational efficiencies, facilitate integration and improve
      management of pre-existing commercial mobile and bulk fueling operations as
      well
      as those of the acquired companies and help control our operating costs and
      improve our profitability. When this system is fully implemented on or before
      the end of the Company’s current fiscal year, we believe that we will have the
      information available to achieve efficiencies and streamline the management
      of
      our operations. We also believe that it will facilitate the integration of
      future acquisitions, shortening the ramp up time to efficiently integrate newly
      acquired locations and operations. The new information management system
      involves a significant investment by the Company. As of December 31, 2005 we
      had
      capitalized $850,000 in property and equipment related to the design and
      installation of the system with a total estimated cost of up to $1.5 million.





17


The
      following is selected comparative financial information for the three and six
      month periods ended December 31, 2005 and 2004:





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




**Three
                Month Periods Ended**
              **(Unaudited)**
            
            **Increase****12/31/2005****(1)**
            
            **12/31/2004**
            
            **$**
            
            **%**Total
                revenues
            
            $
            67,550
            
            $
            29,647
            
            $
            37,903
            
            
            128
            %Gross
                profit
            
            
            3,829
            
            
            1,444
            
            
            2,385
            
            
            165
            %Operating
                income
            
            
            822
            
            
            212
            
            
            610
            
            
            288
            %


Net
                (loss)
            
            
            (142
            )
            
            (181
            )
            
            39
            
            
            22
            %EBITDA******2,5**
            
            
            1,455
            
            
            522
            
            
            933
            
            
            179
            %Basic
                net loss per share
            
            $
            (0.01
            )
            $
            (0.02
            )
            $
            0.01
            
            
            50
            %Diluted
                net loss per share
            
            $
            (0.01
            )
            $
            (0.02
            )
            $
            0.01
            
            
            50
            %Basic
                weighted average shares outstanding
            
            
            9,776,362
            
            
            7,435,835
            
            
            2,340,527
            
            
            31
            %Diluted
                weighted average shares outstanding
            
            
            9,776,362
            
            
            7,435,835
            
            
            2,340,527
            
            
            31
            %Depreciation
                and amortization******3**
            
            $
            531
            
            $
            310
            
            $
            221
            
            
            71
            %Gallons
                sold (in thousands)
            
            
            25,249
            
            
            14,795
            
            
            10,454
            
            
            71
            %Average
                net margin per gallon (in cents)******4**
            
            
            16.7
            
            
            11.5
            
            
            5.2
            
            
            45
            %




**Six-Month
                Periods Ended**
              **(Unaudited)**
            
            **Increase****12/31/2005****(1)**
            
            **12/31/2004**
            
            **$**
            
            **%**Total
                revenues
            
            $
            121,189
            
            $
            58,556
            
            $
            62,633
            
            
            107
            %Gross
                profit
            
            
            7,642
            
            
            3,244
            
            
            4,398
            
            
            136
            %Operating
                income
            
            
            2,101
            
            
            889
            
            
            1,212
            
            
            136
            %


Net
                income
            
            
            473
            
            
            114
            
            
            359
            
            
            315
            %EBITDA******2,5**
            
            
            3,240
            
            
            1,514
            
            
            1,726
            
            
            114
            %Basic
                net income per share
            
            $
            0.05
            
            $
            0.02
            
            $
            0.03
            
            
            150
            %Diluted
                net income per share
            
            $
            0.05
            
            $
            0.01
            
            $
            0.04
            
            
            400
            %Basic
                weighted average shares outstanding
            
            
            9,557,761
            
            
            7,384,174
            
            
            2,173,587
            
            
            29
            %Diluted
                weighted average shares outstanding
            
            
            10,453,356
            
            
            8,185,749
            
            
            2,267,607
            
            
            28
            %Depreciation
                and amortization******3**
            
            $
            934
            
            $
            625
            
            $
            309
            
            
            49
            %Gallons
                sold (in thousands)
            
            
            46,068
            
            
            29,948
            
            
            16,120
            
            
            54
            %Average
                net margin per gallon (in cents)******4**
            
            
            18.2
            
            
            12.6
            
            
            5.6
            
            
            44
            %







1 Reflects
      the Company’s September 1, 2005 issuance of $3,000,000 in Five Year 10% Senior
      Subordinated Notes (the “September 2005 Notes”)
      and 360,000 four year stock purchase warrants at $2.28 per share and reflects
      the October 1, 2005 acquisition of H & W, certain assets of which secure the
      payment of the September 2005 Notes.




18


2 Earnings
      before interest, taxes, depreciation and amortization and amortization of stock
      compensation expense


3 Depreciation and amortization included in cost of sales was $397,000 and
      $735,000 for the three and six months ended December 31, 2005 and $262,000
      and
      $532,000 for the three and six months ended December 31, 2004


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


5 See
      Non-GAAP measure EBITDA Reconciliation:





**Non-GAAP
      Measure EBITDA Reconciliation:**





**3
                Months Ended****Increase**
            
            **Increase****12/31/2005**
            
            **12/31/2004**
            
            $
            
            %**Net
                income (loss)**
            
            $
            (142
            )
            $
            (181
            )
            $
            39
            
            
            22
            %**Add
                back:****Interest,
                net**
            
            
            964
            
            
            393
            
            
            571
            
            
            145
            %**Depreciation
                and amortization:*********Cost
                of sales***
            
            
            397
            
            
            262
            
            
            135
            
            
            52
            %*******Sales,
                general and administrative***
            
            
            134
            
            
            48
            
            
            86
            
            
            179
            %**Amortization
                of stock compensation expense**
            
            
            102
            
            
            —
            
            
            102
            
            
            100
            %**EBITDA**
            
            $
            1,455
            
            $
            522
            
            $
            933
            
            
            179
            %





**6
                Months Ended****Increase**
            
            **Increase****12/31/2005**
            
            **12/31/2004**
            
            $
            
            %**Net
                income**
            
            $
            473
            
            $
            114
            
            $
            359
            
            
            315
            %**Add
                back:****Interest,
                net**
            
            
            1,639
            
            
            775
            
            
            864
            
            
            111
            %**Depreciation
                and amortization:*********Cost
                of sales***
            
            
            735
            
            
            532
            
            
            203
            
            
            38
            %*******Sales,
                general and administrative***
            
            
            199
            
            
            93
            
            
            106
            
            
            114
            %**Amortization
                of stock compensation expense**
            
            
            194
            
            
            —
            
            
            194
            
            
            100
            %**EBITDA**
            
            $
            3,240
            
            $
            1,514
            
            $
            1,726
            
            
            114
            %





Additional
      paid-in capital included in shareholder equity increased during the six months
      ended December 31, 2005 by $2.0 million as a result of the issuance and
      exercise of warrants to purchase our stock, and the recording of stock option
      compensation equity resulting from the implementation of FASB 123R.





During
      the six months ended December 31, 2005 total revenues, gross profit, operating
      income and EBITDA all were positively impacted by the inclusion of both the
      Shank and H & W acquisitions and the emergency response services
      contribution in the aftermath of the devastation caused by the summer and fall
      hurricanes.





The
      Shank
      and H & W acquisitions together with our on-going marketing and sales
      programs resulted in a 16.1 million increase in gallons sold and a net margin
      improvement per gallon of over five cents aggregating $4.5 million.





The
      current six month performance was also affected by non-cash amortization
      expenses of deferred debt costs, debt discount and stock compensation totaling
      $710,000 while stated rate interest expense of $1.1 million represented a 127%
      increase over the prior year period of which both had a significant impact
      in
      reducing net income for the period.





·
            Organic
                Growth Opportunities





Besides
      our ongoing commitment to evaluate our existing operations, one of our primary
      objectives continues to be the expansion of our market presence in the
      packaging, distribution and sale of lubricant products in the areas where we
      presently have operating locations. As one of the largest Chevron Texaco
      lubricants distributors in the United States, we believe that H & W provides
      us with an opportunity to grow our specialized lubricants volume and revenues
      at
      higher margins than those typically generated from commercial mobile and bulk
      fueling businesses. On the other hand, we also believe that our existing fueling
      customers, as well as our new business development initiatives, will be integral
      to the growth we hope to achieve in our lubricants program.





19


Because
      of effective advance planning and preparation we were able to successfully
      respond to the emergency fueling service demands and opportunities which
      resulted from the unprecedented 2005 hurricane season. We were able to mobilize
      and deliver uninterrupted fuel supplies to utilities, governmental agencies,
      communication services and numerous others at margins which fairly compensated
      us for the emergency, and frequently hazardous, services provided. We consider
      our emergency response services to be an increasingly important part of our
      business, which has been bolstered by Shank Services, since that transaction
      gave us greater depth, in personnel, equipment and facilities to respond to
      emergency conditions. While weather conditions are unpredictable, we expect
      that
      emergency response services, especially in the Gulf Coast area, will be a
      recurring and profitable source of business; and that our ability to provide
      this critical support will be further enhanced by the H & W
      acquisition.





We
      recognize that our internal growth will largely depend on a well organized
      and
      effectively implemented market and sales effort and we are committing the
      necessary financial resources and personnel to achieve targeted volume and
      margin objectives. Our operations in several of the fastest growing business
      and
      population centers in the United States offers us the opportunity to grow
      without incurring significant incremental start-up and overhead
      costs.





·
            Expansion
                and Diversification Through
                Acquisitions





Our
      business model reflects an acquisition program to further develop existing
      business and diversify into other energy products and related services markets.
      Our objective is to selectively identify and evaluate those companies which
      would immediately be accretive to our cash flow and earnings goals; would
      provide compatible and capable management to further grow the acquired business;
      would enable us to expand into markets which offer an opportunity to become
      a
      leading product and service provider; and can be acquired on terms and prices
      which recognize our value as a growing public company.





We
      intend
      to follow the 2005 Shank services and H & W acquisitions with the addition
      of other businesses which can be efficiently integrated into our corporate
      structure resulting in specific, realizable operating and administrative cost
      reduction synergies. Our new management reporting and operating system will
      enable us to rapidly integrate acquisitions without incurring significant
      incremental costs or experiencing business disruptions. We recognize that
      acquisitions will likely involve business operations which have both different
      management styles as well as operating procedures and reporting systems. Our
      objectives will be to achieve cost-effective and controlled integration of
      each
      acquisition.





Our
      acquisition plan could be affected by the size, nature, cost, contribution
      and
      availability of acquisition targets; debt and equity financing alternatives;
      regulatory reporting and compliance considerations; and overall market and
      economic conditions.





·
            Challenges
                to Progress





The
      present highly competitive business environment requires that we have an
      understanding of the markets in which we operate; that we effectively utilize
      our management skills and financial resources; that we remain committed to
      and
      focused on our strategic growth plan; and that our organization is structured
      for effective and efficient performance. Our senior management is responsible
      for decisions relating to overall business strategy, business acquisitions,
      cash
      management, risk management, debt and equity financing and information,
      reporting and internal control systems. As our operations expand we expect
      to
      identify and add to our executive group those experienced individuals who will
      increase our management depth and expertise.





We
      view
      the future of our business optimistically yet realistically and recognize that
      continuing improvements, modifications and upgrading will be necessary in order
      to successfully compete, grow and enhance the value of our shareholders’
investment. We intend to:





20


·
            Continue
                our aggressive marketing and sales
                programs





·
            Re-engineer
                our balance sheet by reducing debt and increasing shareholder
                equity





·
            Identify
                acquire, finance and integrate diversified business
                opportunities





·
            Compete
                effectively with both larger and smaller companies without adversely
                affecting our service quality, margins or customer
                retention





·
            Control
                our operating and administrative costs at all
                levels





·
            Manage
                our cash requirements, expand our credit lines and reduce our interest
                expense





·
            Achieve
                quarter-to-quarter improvements in our cash flows and earnings
                performance





**Capital
      Resources and Liquidity**





At
      December 31, 2005 and June 30, 2005, we had a total of cash and cash
      availability on our line of credit of $10.2 million and $9.3 million,
      respectively.





On
      September 1, 2005, we closed a $3.0 million private debt placement with
      institutional and other accredited investors (the “September 2005 Notes”) 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.





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 January 2005 Notes are secured by a first
      priority security interest in the Shank Services assets.





In
      August
      2003, we raised $6.925 million from the issuance of five-year 10% promissory
      notes (the “August 2003 Notes”) and 2,008,250 five-year warrants to purchase our
      common stock at $1.00 per share. The August 2003 Notes are collateralized by
      a
      first priority security interest in our truck fleet and related equipment and
      by
      the patents on our proprietary fuel management system. The liquidity impact
      of
      this financing transaction was the repayment of all outstanding equipment and
      subordinated debt; the generation of $2.8 million of additional working capital
      for business expansion; and a $2.8 million improvement in cash flow resulting
      from a moratorium of principal payments during the first two years of the
      five-year term of the August 2003 Notes. We made our first semi-annual principal
      payment on August 28, 2005.




The
      September 2005, January 2005 and August 2003 financings significantly
      strengthened our financial position, enabling us to achieve a stronger balance
      sheet as well as to improve cash flow as a result of the two-year moratorium
      on
      principal payments under all the financings. We believe that this 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.





During
      the six months ended December 31, 2005, we recorded an increase in shareholders’
equity of $0.6 million for the value of the 360,000 warrants issued in
      connection with the September 2005 Notes. Also, during the six months ended
      December 31, 2005, warrants issued in connection with the January 2005 Notes
      and
      August 2003 Notes were exercised resulting in cash proceeds of approximately
      $1.2 million.





21


On
      December 6, 2005, we extended from December 11, 2005 to December 27, 2005 the
      exercise period for 1,349,900 outstanding common stock warrants related to
      the
      December 11, 1996 initial public offering. In addition, we lowered the exercise
      price to $3.50 per share. Prior to the expiration date of December 27, 2005,
      240
      of these warrants were exercised for gross proceeds of $840. The remaining
      warrants expired unexercised on December 27, 2005 and are no longer
      outstanding.





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.





Our
      business requires us to use substantial working capital for fuel, labor and
      equipment costs prior to receiving payments from customers. The fuel we purchase
      for resale to customers generally must be paid for within 10 to 15 days of
      purchase, with labor costs and taxes paid bi-weekly and equipment related costs
      generally paid within 30 days. We invoice customers both daily and weekly and
      generally collect on our accounts within 30 to 45 days.





During
      the six months ended December 31, 2005, our cash used in operating activities
      was $2.2 million compared to cash provided by operations of $0.4 million in
      the
      prior year, representing a change of $2.6 million. This use of working capital
      primarily related to the net increase in accounts receivable of $5.3 million
      offset by other operating activities netting to the $2.6 million change. This
      change in receivables does not include the acquisition of H & W. The higher
      receivable balance at December 31, 2005 compared to June 30, 2005, was
      principally due to increased billings for first and second quarter emergency
      response services due to Hurricanes Dennis, Katrina, Rita and
      Wilma.





Our
      material financial commitments, other than fuel purchases, payroll and general
      expenses, primarily relate to maintaining our bank 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.





We
      believe the additional liquidity derived from the January 2005 Notes and the
      August 2003 Notes and the two-year principal payment moratorium on the January
      2005 Notes and September 2005 Notes will satisfy our anticipated liquidity
      requirements for the foreseeable future, although we may seek additional sources
      of financing if a cash flow deficiency were to arise in the future or if we
      close an acquisition requiring a cash investment. There is no assurance that
      additional financing would be available to us on acceptable terms, or at all.
      If
      we do not comply with the covenants in our debt agreements, or if adequate
      funds
      are not available to finance operations or to pay debt service obligations
      as
      they become due, we may be required to significantly alter our
      operations *.*





***$20
      Million Credit Facility***





As
      of
      December 31, 2005, we had a $20 million credit facility with a national
      financial institution, which permitted 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 0.75 % at December 31, 2005) 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 December 31,
      2005, the maturity date of the line of credit was September 26, 2007.





In
      August
      2003, the loan and security agreement for the credit facility was amended in
      connection with the August 2003 financing which (1) released the lender’s lien
      on patents, patent rights and patent applications; (2) increased the unused
      line
      of credit fee by .50%; (3) revised the effective book net worth covenant to
      include the August 2003 Notes in its calculation; (4) established a covenant
      to
      maintain a minimum cumulative quarterly fixed charge coverage ratio as defined
      in the amended loan agreement; (5) established a covenant to maintain a minimum
      excess availability of $500,000; and (6) eliminated the loan prepayment fee.
      We
      utilized a portion of the proceeds of the August 2003 Notes to pay down the
      line
      of credit. The proceeds that were used to pay down the outstanding line of
      credit balance are available to us for future working capital
      purposes.





22


On
      February 18, 2005, the credit facility was again amended in connection with
      the
      issuance of the January 2005 Notes and the Shank Services acquisition. This
      amendment (1) lowered the requirements on the fixed charge covering ratio;
      (2)
      eliminated the effective net worth requirement except when availability is
      below
      $1.0 million; (3) extended the term to September 25, 2006; (4) reduced the
      unused line fee from .75% to .25% after September 25, 2005, and (5) imposes
      a
      .50% fee if we terminate the line of credit after September 26, 2005, but prior
      to September 26, 2006.





Concurrently
      with the October 1, 2005 H & W Acquisition, in order to finance the acquired
      accounts receivable and inventory, we and our primary lender amended the credit
      facility. Among other changes, the amendment (1) added H & W as a borrower;
      (2) increased the facility to $20 million; (3) provided financing for the
      acquired and ongoing accounts receivable and inventory resulting from the H
      & W Acquisition; (4) extended the term of the original loan and security
      agreement to September 26, 2007; (5) reduced the interest rate to prime plus
      0.75% per annum; (6) eliminated the effective net worth covenant; and (7)
      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
      December 31, 2005 and June 30, 2005, we had outstanding borrowings of $13.2
      and
      $4.8 million, respectively, under our $20 million (at June 30, 2005 it was
      $10
      million) bank line of credit. Based on eligible receivables outstanding at
      December 31, 2005, we had $6.8 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.





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 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 (the “September 2005 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.





***January
      2005 Promissory Notes***




On
      January 25, 2005, we closed an offering of $6.1 million five year 10% promissory
      notes (the “January 2005 Notes”) and four-year warrants to purchase 1,006,500
      shares of our common stock at $1.60 to a limited group of institutions and
      other
      accredited investors in connection with the acquisition of the assets and
      business of Shank Services. The January 2005 Notes provide for (1) no principal
      payments until January 24, 2007; (2) six $610,000 semi-annual principal payments
      commencing on January 24, 2007 through July 24, 2009; (3) a balloon payment
      of
      $2,440,000 at maturity on January 24, 2010; and (4) semi-annual interest
      payments on June 30, and December 31, which payments commence on June 30, 2005.
      The funding provided by the January 2005 Notes was used for the Shank Services
      acquisition and for other general corporate purposes. The net cash proceeds
      from
      the financing were $5.8 million, after payment of related fees and expenses,
      professional fees and other costs totaling $282,000. The total transaction
      costs
      were $471,000, including $291,000 cash costs and non-cash broker commission
      warrants valued at $180,000, which are being amortized over the five-year term
      of the notes. The January 2005 Notes are secured by a first priority security
      interest in the Shank Services assets.





23


The
      issuance of approximately one million warrants in connection with the January
      2005 Notes resulted in our recording an increase to shareholders’ equity of $1.3
      million; a $1.1 million debt discount; and an increase to deferred debt costs
      of
      $0.2 million for the warrants related to the broker commissions. The debt
      discount and the deferred debt costs are being amortized as interest expense
      over the five-year term of the notes.





The
      $1.1
      million debt discount is a non-cash discount related to the issuance of the
      warrants and does not reduce the amount of cash payments we are required to
      make
      on the outstanding balance of $6.1 million owed at December 31,
      2005.




***August
      2003 Promissory Notes***




On
      August
      29, 2003, we closed a $6.925 million offering to institutions and other
      accredited lenders consisting of five-year 10% promissory notes ( the “August
      2003 Notes”) and five-year warrants to purchase a total of 2,008,250 shares of
      our common stock at $1.00 per share. The August 2003 Notes are collateralized
      by
      a first priority security interest in our specialized fueling truck fleet and
      related equipment and by patents on our proprietary fuel management system.
      The
      August 2003 Notes provide for (1) no principal payments until August 28,
      2005; (2) six $692,500 semi-annual principal payments commencing on August
      28,
      2005 through February 28, 2008; (3) a balloon payment of $2,770,000 at maturity
      on August 28, 2008; (4) semi-annual interest payments on June 30 and December
      31,  which
      payments commenced on December 31, 2003; and (5) a right to call after August
      1,
      2005 at 105% of par plus accrued but unpaid interest. The net cash proceeds
      from
      the financing were $2.8 million, after payment of related fees and expenses
      and
      repayment of all outstanding equipment and subordinated debt. The transaction
      costs, including commissions, professional fees and other costs, totaled
      $824,000 and are being amortized over the five-year term of the notes. We made
      our first semi-annual principal payment on August 28, 2005.




The
      issuance of the approximately two million warrants from the August 2003
      financing resulted in our recording an increase to shareholders’ equity of $1.87
      million; a $1.61 million debt discount; and an increase in deferred debt costs
      of $0.3 million for the warrants related to the broker commissions. The debt
      discount and deferred debt costs are being amortized as interest expense over
      the five-year term of the notes.





The
      $1.61
      million debt discount is a non-cash discount related to the issuance of the
      warrants and does not reduce the amount of cash payments we are required to
      make
      for the outstanding balance of $6.232 million owed at December 31,
      2005.





24


**Results
      of Operations**





The
      following is a summary of the Company’s selected condensed consolidated results
      of operations for the three-month and six-month periods ending December 31,
      2005
      and 2004 (in 000s):


**For
                  the Three-Month Periods Ended December 31**
              
              **For
                  the Six-Month Periods Ended December 31****Increase
                  (decrease)**
              
              
              
              
              
              **Increase
                  (decrease)****2005**
              
              **2004**
              
              **Dollars**
              
              **Percent**
              
              **2005**
              
              **2004**
              
              **Dollars**
              
              **Percent**Total
                  revenues
              
              $
              67,550
              
              $
              29,647
              
              $
              37,903
              
              
              128
              %
              $
              121,189
              
              $
              58,556
              
              $
              62,633
              
              
              107
              %Total
                  cost of sales andServices
              
              
              63,721
              
              
              28,203
              
              
              35,518
              
              
              126
              %
              
              113,547
              
              
              55,312
              
              
              58,235
              
              
              105
              %Gross
                  profit
              
              
              3,829
              
              
              1,444
              
              
              2,385
              
              
              165
              %
              
              7,642
              
              
              3,244
              
              
              4,398
              
              
              136
              %Selling,
                  general andadministrative
                  expenses
              
              
              3,007
              
              
              1,232
              
              
              1,775
              
              
              144
              %
              
              5,541
              
              
              2,355
              
              
              3,186
              
              
              135
              %Interest
                  expense
              
              
              (964
              )
              
              (393
              )
              
              (571
              )
              
              145
              %
              
              (1,639
              )
              
              (775
              )
              
              (864
              )
              
              111
              %Interest
                  and other income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              11
              
              
              —
              
              
              11
              
              
              100
              %Net
                  (loss) income
              
              $
              (142
              )
              $
              (181
              )
              $
              39
              
              
              22
              %
              $
              473
              
              $
              114
              
              $
              359
              
              
              315
              %Gallons
                  delivered
              
              
              25,249
              
              
              14,795
              
              
              10,454
              
              
              71
              %
              
              46,068
              
              
              29,948
              
              
              16,120
              
              
              54
              %EBITDA
                  non GAAP Measure
              
              $
              1,455
              
              $
              522
              
              $
              933
              
              
              179
              %
              $
              3,240
              
              $
              1,514
              
              $
              1,726
              
              
              114
              %





**Comparison
      of Three Months Ended** **December
      31, 2005 to December 31, 2004**




***Revenues***





Revenues
      increased $37.9 million, or 128%, in the current quarter compared to the prior
      year quarter. This increase was principally due to a 71% increase in net new
      business and higher fuel prices which averaged 55 cents per gallon higher than
      the earlier period. We sold 25.2 million gallons of fuel in the current quarter,
      compared to the 14.8 million gallons in the prior year quarter, a 10.4 million
      gallon increase in net new business. The results for the current quarter include
      a revenue contribution of $17.0 million and gallons sold of 5.9 million from
      Shank Services and a revenue contribution of $16.1 million and gallons sold
      of
      5.4 million from H & W. The increase in fuel prices was directly
      attributable to the volatility of world fuel markets and continuing uncertain
      economic and political conditions, including unprecedented escalation in crude
      oil prices and greater global fuel demand.





***Gross
      Profit***





Gross
      profit increased by $2.4 million or 165%, for the current quarter compared
      to
      the prior year quarter. This improvement resulted from the increase of 10.4
      million gallons in net new business sold and an overall gross profit increase
      of
      165% generated from the services provided and the emergency response services
      related to hurricanes that devastated wide areas of Florida and the Gulf Coast
      region, including Hurricanes Katrina, Rita and Wilma. The overall net margin
      per
      gallon was 16.7 cents for the current quarter compared to 11.5 cents for the
      prior year quarter representing a 5.2 cent, or 45%, increase in net margin
      per
      gallon. There can be no assurance that the gross and net margin improvement
      trends will continue in the future or that margins will not decrease as a result
      of increased competition, customer resistance to higher prices for our services
      and/or reduction in emergency response services.





25


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




Selling,
      general and administrative expenses increased $1.8 million, or 144%, in the
      current quarter compared to the prior year quarter. This increase resulted
      primarily from an increase in payroll of $256,000 due to the hiring of new
      officers in July and August 2005 to strengthen our corporate infrastructure;
      the
      addition of Shank Services in February 2005 and H & W in October 2005
      resulting in $1,133,000 of additional expense; the new FASB 123R accounting
      rule
      requiring amortization of stock based compensation expense of $102,000 which
      became effective July 1, 2005 and $101,000 of additional professional service
      fees related to our public company reporting costs.




***Interest
      Expense***




As
      a
      result of the issuance of the September 2005 Notes and the January 2005 Notes,
      and increased borrowings under our $20 million bank line of credit, interest
      expense increased $571,000, or 145%, in the current quarter compared to the
      prior year quarter. The increase in the bank line of credit principally relates
      to the H & W acquisition. The components of interest expense are as follows
      (in thousands):





**Three
                Months Ended**
              **December
                31,****2005**
            
            **2004****Stated
                Rate Interest Expense**:Bank
                line of credit
            
            $
            276
            
            $
            71Long
                term debt
            
            
            383
            
            
            173Other
            
            
            45
            
            
            5**Total
                stated rate interest expense**
            
            
            **704**
            
            
            **249****Non-Cash
                Interest Amortization:**Amortization
                of deferred debt costs
            
            
            90
            
            
            57Amortization
                of debt discount
            
            
            170
            
            
            87**Total
                amortization of interest expense**
            
            
            **260**
            
            
            **144****Total
                interest expense**
            
            $
            964
            
            $
            393





***Income
      Taxes***





We
      recorded no income tax expense for the current year quarter. Our net operating
      loss carryforward at June 30, 2005 was $15.1 million.




***Net
      Income***




The
      $39,000 decrease in net loss for the current year quarter over the prior year
      quarter resulted from the increase in gross profit of $2.4 million offset by
      the
      increase in selling, general and administrative expenses of $1.8 million and
      higher interest expense of $0.6 million.




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


Earnings
        before interest, taxes, depreciation, and amortization (“EBITDA”) increased $0.9
        million, or 170%, in the current year quarter ****** compared
        to the prior
        year quarter .
        This
        increase was primarily due to the increase in gross profit of $2.4 million,
        offset by the increase in selling, general and administrative expenses of
        $1.8
        million less $102,000 of amortization of stock compensation expense and
        $134,000 of depreciation included in selling, general and administrative expense. Components of EBITDA for the quarters ended December 31,
        2005 ****** and
        2004
        are as follows (in thousands):


26





**For
                the Three Months Ended****December
                31, 2005**
            
            **December
                31, 2004**Net
                income (loss)
            
            $
            (142
            )
            $
            (181
            )Add back:Interest
                expense
            
            
            704
            
            
            249Non-cash
                interest expense
            
            
            260
            
            
            144Depreciation
                and amortization expense:Cost
                of sales
            
            
            397
            
            
            262Selling,
                general and administrative
            
            
            134
            
            
            48Amortization
                of stock compensation expense
            
            
            102
            
            
            —EBITDA
            
            $
            1,455
            
            $
            522





**Comparison
      of Six Months Ended** **December
      31, 2005 to December 31, 2004**




***Revenues***





Revenues
      increased $62.6 million, or 107%, in the six months ended December 31, 2005
      compared to the same period in the prior year. This increase was principally
      due
      to a 54% increase in net new business and higher fuel prices which averaged
      64
      cents per gallon higher than the earlier period. We sold 46.1 million gallons
      of
      fuel during the six months ended December 31, 2005, compared to the 29.9 million
      gallons during the same period in the prior year, a 16.1 million gallon, or
      54%,
      increase in net new business. The results for the six months ended December
      31,
      2005 include a revenue contribution of $34.5 million and gallons sold of 12.3
      million from Shank Services acquired in February 2005, and a revenue
      contribution of $16.1 million and gallons sold of 5.4 million for the three
      months ended December 31, 2005 from H & W since it was acquired as of
      October 1, 2005. The increase in fuel prices was directly attributable to the
      volatility of world fuel markets and uncertain economic and political
      conditions, including unprecedented escalation in crude oil prices and greater
      global fuel demand.





***Gross
      Profit***





Gross
      profit increased by $4.4 million, or 136%, for the six months ended December
      31,
      2005 compared to the same period in the prior year. This improvement resulted
      from the increase of 16.1 million gallons in net new business sold and an
      overall higher gross profit of 136% margin generated from the services provided
      and the emergency response services related to hurricanes that devastated wide
      areas of Florida and the Gulf Coast region, including Hurricanes Dennis,
      Katrina, Rita and Wilma. The overall net margin per gallon was 18.2 cents for
      the six months ended December 31, 2005 compared to 12.6 cents for the same
      period in the prior year representing an overall 5.6 cent, or 44% increase
      in
      net margin per gallon. There can be no assurance that the gross and net margin
      improvement trend will continue in the future or that margins will not decrease
      as the result of increased competition, customer resistance to higher prices
      for
      our services and/or reduction in emergency response services.





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




Selling,
      general and administrative expenses increased $3.2 million, or 135%, in the
      six
      months ended December 31, 2005 compared to the same period in the prior year.
      This increase in these expenses resulted primarily from an increase in payroll
      of $418,000 due to the hiring of new officers in July and August 2005 as well
      as
      additional personnel to strengthen our corporate infrastructure; the addition
      of
      Shank Services in February 2005 and H & W in October 2005 resulting in an
      increase of $1,710,000 of additional expense; the new FASB 123R accounting
      rule
      requiring amortization of stock based compensation expense of $194,000 which
      became effective July 1, 2005; credit card fees of $216,000 and professional
      service fees of $222,000 for our public company reporting requirements.




***Interest
      Expense***




As
      a
      result of the issuance of the September 2005 Notes and the January 2005 Notes
      and increased borrowings under the bank line of credit, interest expense
      increased $864,000, or 111%, in the six months ended December 31, 2005 compared
      to the same period in the prior year. This increase in the bank line of credit
      primarily relates to the H & W acquisition. The components of interest
      expense are as follows (in thousands):





27


**Six
                Months Ended**
              **December
                31,****2005**
            
            **2004****Stated
                Rate Interest Expense**:Bank
                line of credit
            
            $
            344
            
            $
            137Long
                term debt
            
            
            728
            
            
            346Other
            
            
            51
            
            
            12**Total
                stated rate interest expense**
            
            
            **1,123**
            
            
            **495****Non-Cash
                Interest Amortization:**Amortization
                of deferred debt costs
            
            
            182
            
            
            112Amortization
                of debt discount
            
            
            334
            
            
            168**Total
                amortization of interest expense**
            
            
            **516**
            
            
            **280****Total
                interest expense**
            
            **$**
            **1,639**
            
            **$**
            **775**





***Income
      Taxes***





We
      recorded no income tax expense for the six months ended December 31, 2005.
      Our
      net operating loss carryforward at June 30, 2005 was $15.1 million.




***Net
      Income***




The
      $359,000 improvement in net income for the six months ended December 31, 2005
      compared to the six months ended December 31, 2004 resulted from the increase
      in
      gross profit of $4.4 million, partially offset by the increase in selling,
      general and administrative expenses of $3.2 million and higher interest expense
      of $0.9 million.




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


Earnings
        before interest, taxes, depreciation, and amortization (“EBITDA”) increased $1.7
        million, or 114%, in the current year quarter ****** compared
        to the prior
        year quarter .
        This
        increase was primarily due to the increase in gross profit of $4.4 million,
        offset by the increase in selling, general and administrative expenses of
        $3.2 million less $194,000 of amortization of stock compensation expense and
        $199,000 of depreciation included in selling, general and administrative expense. Components of EBITDA for the quarters ended December 31,
        2005 ****** and
        2004
        are as follows (in thousands):





**For
                the Six Months Ended****December
                31, 2005**
            
            **December
                31, 2004**Net
                income
            
            $
            473
            
            $
            114Add
                back:Interest
                expense
            
            
            1,123
            
            
            495Non-cash
                interest expense
            
            
            516
            
            
            280Depreciation
                and amortization expense:Cost
                of sales
            
            
            735
            
            
            532Selling,
                general and administrative
            
            
            199
            
            
            93Amortization
                of stock compensation expense
            
            
            194
            
            
            —EBITDA
            
            $
            3,240
            
            $
            1,514





28


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





The
      Company’s exposure to market risk is limited primarily to the fluctuating
      interest rates associated with the variable rate portion of its outstanding
      debt. 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. The Company does not currently use, and has 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
      the financial condition, results of operations and cash flows of the Company.





The
      interest on the Company’s bank line of credit of up to $20,000,000 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 bank
      line of credit. If the Company’s line of credit average outstanding balance was
      $2.5 million ,
      an
      increase of 1% in the variable interest rate would result in additional interest
      expense of $25,000 per annum. The interest on our $3.0 million, $6.1 million
      and
      $6.925 million promissory notes is fixed for the term of the notes at 10% per
      annum.





**ITEM
              4.**
            **CONTROLS
                AND PROCEDURES**





As
      of the
      end of the period reported on in this report, the Company has undertaken an
      evaluation under the supervision and with the participation of the Company’s
      management, including our Chief Executive Office and Chief Financial Officer,
      of
      the effectiveness of the design and operation of disclosure controls and
      procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934.
      Based
      upon that evaluation, the Chief Executive Officer and Chief Financial Officer
      concluded that our disclosure controls and procedures were effective, in all
      material respects, with respect to the recording, processing, summarizing and
      reporting, within the time periods specified in the SEC’s rules and forms, of
      information required to be disclosed in the reports that are filed or submitted
      under the Exchange Act.





During
      the three and six months ended December 31, 2005, the impact of Hurricanes
      Dennis, Katrina, Rita and Wilma on Florida and the Gulf Coast region led us
      to
      deploy emergency response procedures and controls in order to manage some of
      our
      operations and administration. Certain of these procedures and controls required
      us to use alternative technology and/or different processes than we customarily
      use for communication and documentation. We believe that these alternatives
      were
      adequate to ensure the proper recording of our expenses and revenues during
      this
      period. Other than these temporary emergency response procedures and controls,
      however, there have been no significant changes in the Company’s internal
      controls during the quarter ended December 31, 2005, or in other factors that
      could significantly affect internal controls subsequent to the date of the
      evaluation described above.





29


**PART
      II. Other Information**





**ITEM
      1. LEGAL PROCEEDINGS**





None.





**ITEM
      1A. RISK FACTORS**





***No
      Assurances of Future Profitability; Losses from Operations; Need for
      Capital.*** We
      incurred net losses for the fiscal years ended June 30, 2005, 2004 and 2003.
      In
      order to earn profits in the future, we need to increase volumes at profitable
      margins, control costs, fully integrate acquisitions and generate sufficient
      cash flow to support working capital and debt service requirements. There is
      no
      assurance that our management will be able to accomplish our business plan
      or
      continue to raise capital at terms which are acceptable to us in order to
      support working capital requirements or debt service shortfalls during any
      business downturns. At June 30, 2005 ,
      our
      working capital was $5.9 million compared to $2.5 million on June 30, 2004.
      The
      $3.4 million increase principally relates to an increase in net margin per
      gallon of 2.2 cents per gallon and the increase in gallons sold of 11.8 million
      for the year ended June 30, 2005 compared
      to the year ended June 30, 2004. There
      can
      be no assurance that this trend will continue in the future. The October 1,
      2005
      acquisition of H & W Petroleum Company, Inc. is likely to affect the
      Company’s future profitability and working capital. While we believe that this
      acquisition will have a positive impact on the Company’s future profitability
      and working capital, there can be no assurance that it will be positive.
      Moreover, the interest and associated costs of the $3.0 million September 2005
      notes used to finance the H & W acquisition are expected to burden the
      generation of future income from operations and working capital,; the extent
      to
      which such costs will be offset by income from H & W cannot be assured. In
      addition, adverse market conditions, negative customer reactions to new or
      existing marketing strategies, or depressed economic conditions generally may
      cause net margins not to improve further or even to diminish.




***Trading
      Market for Common Stock.*** During
      the six months ended December 31, 2005, our common stock frequently traded
      in
      large daily volumes and at wide price variances. This volatility could make
      it
      difficult for our shareholders to sell shares at a predictable price or at
      specific times. In addition, there may be volatility in the market price of
      the
      common stock due to factors beyond our control. Quarterly operating results,
      changes in general conditions in the economy, the financial markets or other
      developments affecting us could cause the market price of our common stock
      to
      fluctuate.





***Growth
      Dependent Upon Future Expansion; Risks Associated With Expansion into New
      Markets.*** We
      intend
      to continue to expand through the acquisition of existing companies or their
      operations and customer bases. Our growth will also depend upon the ability
      to
      achieve greater penetration in existing markets and to successfully enter new
      markets in both additional major and secondary metropolitan areas. Market
      penetration and expansion into new markets will largely be dependent on our
      ability to demonstrate the benefits of our services and products to potential
      new customers; successfully establish and operate new locations; hire, train
      and
      retain qualified management, operating, marketing and sales personnel; finance
      capital expenditures and working capital requirements; secure reliable sources
      of product supply on a timely basis and on commercially acceptable credit terms;
      and successfully manage growth by effectively supervising operations,
      controlling costs and maintaining appropriate quality controls. There can be
      no
      assurance that we will be able to successfully expand our operations into new
      markets.





***Acquisition
      Availability; Integrating Acquisitions.*** ** Our
      future growth strategy contemplates the acquisition of businesses engaged in
      wholesale commercial bulk and mobile fueling, marketers and distributors of
      petroleum lubricants and chemicals and transportation logistics services
      businesses in existing and new markets. 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 and ultra-heavy haul transportation services.
      On October 1, 2005, we acquired the stock of H & W, a Houston based
      distributor of lubricants, fuels, other petroleum products and chemicals. There
      can be no assurance that we will be able to fully integrate the acquired
      operations with our pre-existing operations or that we will identify or be
      in a
      position to make suitable acquisitions on acceptable terms in the future.
      Similarly, there is no certainty that we will be able to obtain acceptable
      financing for such acquisitions or that any future acquisitions will be
      effectively and profitably integrated into our operations. In particular, to
      finance future acquisitions, we believe that it will be important for us to
      control our interest expense, by the issuance of equity securities or otherwise,
      since that expense increased significantly as a result of the debt financing
      used for our recent acquisitions. All acquisitions involve risks that could
      adversely affect our operating results, including management commitment;
      integration of the operations and personnel of the acquired business; future
      write downs of acquired intangible assets; and the failure to retain key
      personnel of the acquired business.





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***Management
      of Growth; Accounting and Information Technology Systems Implementation.*** Our
      future growth strategy is dependent on effective operational, financial and
      other internal systems, and the ability to attract, train, motivate, manage
      and
      retain our employees. If we are unable to manage growth effectively, results
      of
      operations will be adversely affected. In particular, the results of operations
      will be influenced by the redesign and implementation project relating to our
      accounting and information technology systems in order to reduce operating
      costs
      and improve our ability to effectively manage our business and integrate
      acquisitions. While we are optimistic about this project based on preliminary
      results, there can be no assurance that such redesign and implementation will
      be
      completed as planned, or that it will have the intended results.





***Dependence
      on Key Personnel*** *.* Our
      future success will be largely dependent on the continued services and efforts
      of Richard E. Gathright, our Chief Executive Officer and President, and on
      other
      key executive personnel. The loss of the services of Mr. Gathright or other
      executive personnel could have a material adverse effect on our business and
      prospects. Our success and plans for future growth will also depend on our
      ability to attract and retain additional qualified management, operating,
      marketing, sales and financial personnel. There can be no assurance that we
      will
      be able to hire or retain such personnel on terms satisfactory to us. While
      we
      have recently extended Mr. Gathright’s existing employment agreement so that it
      now expires February 28, 2007 ,
      and
      automatically renews each year for additional one year terms unless either
      party
      gives prior notice of an intent to terminate, his long term future employment
      is
      not guaranteed by such agreement. We have also entered into written employment
      agreements with certain other key executive personnel.





***Fuel
      Pricing and Supply Availability; Effect on
      Profitability*** *.* Diesel
      fuel and gasoline are commodities which are refined and distributed by numerous
      sources. We purchase the fuel delivered to our customers from multiple suppliers
      at daily market prices and in some cases qualify for certain discounts. We
      monitor fuel prices and trends in each of our service markets on a daily basis
      and seek to purchase our supply at the lowest prices and under the most
      favorable terms. For our fueling operations, commodity price risk is mitigated
      since we purchase and deliver our fuel supply daily and generally utilize
      cost-plus pricing when billing our customers. If we cannot continue to utilize
      cost-plus pricing when billing our customers, margins would likely decrease
      and
      losses could be incurred. We have not engaged in derivatives or futures trading
      to hedge fuel price movements. In addition, diesel fuel and gasoline may be
      subject to supply interruptions due to a number of factors, including natural
      disasters, refinery and/or pipeline outages and labor disruptions. The reduction
      of available supplies could impact our ability to provide commercial bulk and
      mobile fueling, and emergency response services and impact profitability. While
      we maintained our record of obtaining supplies for our customers and for
      emergency work during difficult conditions encountered in the extraordinary
      hurricane season of 2005, particularly Hurricane Katrina and the resulting
      massive flooding in the New Orleans area, there is no assurance that this record
      will continue in the future or that our business will not be adversely affected
      by supply problems in the future.





***Dependence
      on Suppliers.*** While
      multiple suppliers of diesel fuel and gasoline are typically available to our
      wholesale commercial bulk and mobile fueling operations, our lubricants and
      chemicals operations are more dependent on relationships with a limited number
      of suppliers. While there can be no assurance that our relationship with any
      supplier of lubricants or chemicals will not change, we believe that, if it
      became necessary to change suppliers or to alter the nature or extent of the
      relationship with one or more of these suppliers, we have the ability to do
      so
      without a material adverse effect on our lubricants and chemicals operations.





***Risks
      Associated with Customer Concentration; Absence of Written Agreements.*** Although
      we provide services to numerous customers, a significant portion of our revenue
      is generated from a few of our larger customers. While we have formal, length
      of
      service written contracts with some of these larger customers, such agreements
      are not customary in our business and have not been entered into with the
      majority of our customers. As a result, most of our customers can terminate
      their business with us at any time and for any reason, and we can similarly
      discontinue providing products or services to any of those customers. We may
      elect to discontinue service to a customer if changes in the service conditions
      or other factors cause us not to meet minimum levels of margins and rates,
      and
      the pricing or delivery arrangements cannot be re-negotiated. As a result of
      this customer concentration and the limited number of written agreements, our
      business, results of operations and financial condition could be materially
      adversely affected if one or more of our larger customers were lost or if we
      were to experience a high rate of service terminations.





31


***Competition.*** In our
      commercial mobile fueling operations, we compete with other mobile fueling
      service providers, including several regional companies and numerous small,
      independent operators who provide these services. We also compete with retail
      marketing where fleet operators have the option of fueling their own equipment
      at retail stations and other third-party service locations such as card lock
      facilities. Our heavy and ultra-heavy haul transportation business competes
      with
      other providers, including larger regional companies and smaller local
      companies. Our lubricants, chemicals and wholesale commercial fuel distribution
      operations compete with other large and small providers of similar services.
      Our
      ability to compete is dependent on numerous factors, including price, delivery
      dependability, credit terms, service locations and the quality of the customer
      service we provide, including reporting and invoicing services. There can be
      no
      assurance that we will be able to continue to compete successfully as a result
      of these or other factors.




***Operating
      Risks May Not Be Covered by Insurance.*** The bulk
      of our operations are subject to operating hazards and risks normally incidental
      to handling, storing and transporting diesel fuel, gasoline, petroleum
      lubricants and chemicals, almost all of which are classified as hazardous
      materials. We maintain insurance policies in amounts and with coverages and
      deductibles we believe are reasonable and prudent. However, there can be no
      assurance that our insurance will be adequate to protect us from liabilities
      and
      expenses that may arise from claims for personal and property damage arising
      in
      the ordinary course of business; that we will be able to maintain acceptable
      levels of insurance; or that insurance will be available at economical prices.




***Changes
      in Environmental Requirements*** *.* We hope
      to generate future business for our commercial mobile fueling operations by
      converting fleet operators who are currently utilizing underground fuel storage
      tanks for their fueling needs to commercial mobile fueling. The owners of
      underground fuel storage tanks are being required to remove or retrofit those
      tanks to comply with technical regulatory requirements pertaining to their
      construction and operation. If other more economical means of compliance are
      developed or adopted by owners of underground storage tanks, the opportunity
      to
      market our services to these owners may be adversely affected. Correspondingly,
      new or changed environmental regulations could also affect the costs involved
      in
      providing commercial mobile fueling services or the sale of petroleum lubricants
      and chemicals.





***Governmental
      Regulation.*** Our
      operations are affected by numerous federal, state and local laws, regulations
      and ordinances, including those relating to protection of the environment and
      worker safety. Various federal, state and local agencies have broad powers
      under
      these laws, regulations and ordinances. In particular, the operation of our
      commercial mobile fueling fleet and its transportation of diesel fuel and
      gasoline are subject to extensive regulation by the U.S. Department of
      Transportation (“DOT”) under the Federal Motor Carrier Safety Act (“FMCSA”) and
      the Hazardous Materials Transportation Act (“HMTA”). We are subject to
      regulatory and legislative changes that can affect the economics of the industry
      by requiring changes in operating practices or influencing the demand for,
      and
      the cost of providing, its services. In addition, we depend on the supply of
      diesel fuel, gasoline, petroleum based lubricants and chemicals from the oil
      and
      gas industry so that we are affected by changing taxes, price controls and
      other
      laws and regulations generally relating to the oil and gas industry. We cannot
      determine the extent to which our future operations and earnings may be affected
      by new legislation, new regulations or changes in existing regulations.




The
      technical requirements of these laws and regulations are becoming increasingly
      expensive, complex and stringent. These laws may impose penalties or sanctions
      for damages to natural resources or threats to public health and safety. Such
      laws and regulations may also expose us to liability for the conduct of or
      conditions caused by others, or for acts of which we were in compliance with
      all
      applicable laws at the time such acts were performed. Sanctions for
      noncompliance may include revocation of permits, corrective action orders,
      administrative or civil penalties and criminal prosecution. Certain
      environmental laws provide for joint and several liability for remediation
      of
      spills and releases of hazardous substances. In addition, we may be subject
      to
      claims alleging personal injury or property damage as a result of alleged
      exposure to hazardous substances, as well as damage to natural
      resources.





32


Although
      we believe that we are in substantial compliance with existing laws and
      regulations, there can be no assurance that substantial costs for compliance
      will not be incurred in the future. There could be an adverse affect upon our
      operations if there were any substantial violations of these rules and
      regulations. Moreover, it is possible that other developments, such as stricter
      environmental laws, regulations and enforcement policies, could result in
      additional, presently unquantifiable, costs or liabilities to us.





The
      compliance requirements of the Sarbanes-Oxley Act of 2002 have placed an
      increasing time burden on our personnel and significantly increased the costs
      associated with being a publicly traded company. We cannot determine the future
      costs of compliance with this Act; whether our compliance efforts will satisfy
      its compliance requirements; or whether, or the extent to which, our future
      operations or earnings may be affected by the Act’s impact on our business
      operations.





**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**





The
      2005
      Annual Meeting of Shareholders of Streicher Mobile Fueling, Inc. was held at
      the
      Westin Hotel, Fort Lauderdale, 400 Corporate Drive, Ft. Lauderdale, Florida
      on
      December 9, 2005. At the meeting, the shareholders approved the following
      proposal with the vote as set forth thereunder:





·
            Election
                of seven directors to the Company’s Board of Directors to serve until the
                next Annual Meeting of Shareholders or until their successors are
                elected:





**Director**
            
            **FOR**
            
            **WITHHELD**Wendell
                R. Beard
            
            
            7,507,380
            
            
            53,790Richard
                E. Gathright
            
            
            7,479,680
            
            
            81,490Steven
                R. Goldberg
            
            
            7,509,600
            
            
            51,570Larry
                S. Mulkey
            
            
            7,513,290
            
            
            47,880C.
                Rodney O’Connor
            
            
            7,497,890
            
            
            63,280Robert
                S. Picow
            
            
            7,513,290
            
            
            47,880W.
                Greg Ryberg
            
            
            7,512,810
            
            
            48,360





Abstentions
      and broker non-votes were counted for purposes of establishing a quorum only.
      Only those votes cast for the proposals were counted as voted in favor or
      affirmative votes.





**ITEM
      5. OTHER INFORMATION**





None.





33


**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 200232.1
            Certificate
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of 2002




34


**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.February
              14, 2006
            By:
            /s/
              Richard E. GathrightRichard
              E. GathrightChief
              Executive Officer and President


By:
            /s/
              Michael S. ShoreMichael
              S. ShoreSenior
              Vice President and Chief Financial Officer





35