x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OF 15(D) OR THE SECURITIES EXCHANGE
ACT OF
1934
|
Florida
|
65-0707824
|
|
(State
of Incorporation)
|
(IRS
Employer
Identification
Number)
|
800
West Cypress Creek Road, Suite 580, Fort Lauderdale,
Florida,
|
33309
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Form
10-Q Part and Item No.
|
||||
Part
I
|
Financial
Information:
|
|||
Item
1.
|
Condensed
Unaudited Consolidated Financial Statements
|
|||
Condensed
Consolidated Balance Sheets as of September 30, 2005 (unaudited)
and June
30, 2005
|
3
|
|||
Condensed
Unaudited Consolidated Statements of Operations for the three-months
ended
September 30, 2005 and 2004
|
4
|
|||
Condensed
Unaudited Consolidated Statements of Cash Flows for the three-months
ended
September 30, 2005 and 2004
|
5
|
|||
Notes
to Condensed Unaudited Consolidated Financial Statements
|
6
|
|||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
23
|
||
Item
4.
|
Controls
and Procedures
|
23
|
||
Part
II
|
Other
Information
|
|||
Items
1. thru 6.
|
24
|
|||
Signature
Page
|
25
|
|||
Certifications
|
26
- 28
|
ASSETS
|
September
30,
2005
(Unaudited)
|
June
30,
2005
|
|||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
1,657
|
$
|
4,108
|
|||
Accounts
receivable, less allowances of $1,975 and $1,806
|
22,426
|
14,129
|
|||||
Inventories
|
603
|
495
|
|||||
Prepaid
expenses and other current assets
|
342
|
660
|
|||||
Total
current assets
|
25,028
|
19,392
|
|||||
|
|||||||
Property
and equipment, net
|
9,325
|
9,555
|
|||||
Deferred
debt costs, net
|
1,045
|
991
|
|||||
Other
assets
|
181
|
187
|
|||||
|
|||||||
Total
assets
|
$
|
35,579
|
$
|
30,125
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Bank
line of credit payable
|
$
|
3,353
|
$
|
4,801
|
|||
Accounts
payable and other liabilities
|
9,908
|
7,345
|
|||||
Current
portion of long-term debt
|
1,385
|
1,385
|
|||||
Total
current liabilities
|
14,646
|
13,531
|
|||||
|
|||||||
Long-term
liabilities:
|
|||||||
Promissory
notes, net of unamortized debt discount of $2,497 and
$2,056
|
11,450
|
9,584
|
|||||
Note
payable
|
178
|
172
|
|||||
Long-term
debt, net
|
11,628
|
9,756
|
|||||
|
|||||||
Total
liabilities
|
26,274
|
23,287
|
|||||
|
|||||||
Shareholders’
equity:
|
|||||||
Common
stock, par value $.01 per share; 50,000,000 shares
authorized;
9,766,762 and 8,953,444 issued and outstanding at September 30, 2005 and June 30, 2005, respectively |
98
|
90
|
|||||
Additional
paid-in capital
|
18,169
|
16,325
|
|||||
Accumulated
deficit
|
(8,962
|
)
|
(9,577
|
)
|
|||
Total
shareholders’ equity
|
9,305
|
6,838
|
|||||
|
|||||||
Total
liabilities and shareholders’ equity
|
$
|
35,579
|
$
|
30,125
|
2005
|
2004
|
||||||
Petroleum
product sales and service revenues
|
$
|
46,196
|
$
|
22,731
|
|||
Fuel
taxes
|
7,443
|
6,178
|
|||||
Total
revenues
|
53,639
|
28,909
|
|||||
Cost
of petroleum product sales and service
|
42,383
|
20,931
|
|||||
Fuel
taxes
|
7,443
|
6,178
|
|||||
Total
cost of sales
|
49,826
|
27,109
|
|||||
Gross
profit
|
3,813
|
1,800
|
|||||
Selling,
general and administrative expenses
|
2,534
|
1,123
|
|||||
Operating
income
|
1,279
|
677
|
|||||
Interest
expense
|
(675
|
)
|
(382
|
)
|
|||
Interest
and other income
|
11
|
—
|
|||||
Income
before income taxes
|
615
|
295
|
|||||
Income
tax expense
|
—
|
—
|
|||||
Net
income
|
$
|
615
|
$
|
295
|
|||
Basic
net income per share
|
$
|
0.07
|
$
|
0.04
|
|||
Diluted
net income per share
|
$
|
0.06
|
$
|
0.04
|
|||
Basic
weighted average common shares outstanding
|
9,339,196
|
7,331,945
|
|||||
Diluted
weighted average common shares outstanding
|
10,197,828
|
7,869,780
|
2005
|
2004
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
615
|
$
|
295
|
|||
Adjustments
to reconcile net income to net cash used in operating
activities:
|
|||||||
Depreciation
and amortization:
|
|||||||
Cost
of sales
|
336
|
271
|
|||||
Sales,
general, and administrative
|
66
|
44
|
|||||
Amortization
of deferred debt costs
|
92
|
55
|
|||||
Amortization
of debt discount
|
164
|
81
|
|||||
Amortization
of stock compensation expense
|
92
|
—
|
|||||
Gain
on disposal of asset
|
(11
|
)
|
—
|
||||
Provision
for allowance for doubtful accounts
|
200
|
15
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Increase
in restricted cash
|
—
|
(28
|
)
|
||||
Increase
in accounts receivable
|
(8,497
|
)
|
(2,389
|
)
|
|||
Decrease
in inventories, prepaid expenses, and other assets
|
200
|
153
|
|||||
Increase
in accounts payable and other liabilities
|
2,571
|
611
|
|||||
Net
cash used in operating activities
|
(4,172
|
)
|
(892
|
)
|
|||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property and equipment
|
(185
|
)
|
(57
|
)
|
|||
Proceeds
from disposal of property and equipment
|
40
|
—
|
|||||
Other
|
(2
|
)
|
—
|
||||
Net
cash used in investing activities
|
(147
|
)
|
(57
|
)
|
|||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from issuance of promissory notes
|
3,000
|
—
|
|||||
Net
(repayments) borrowings on line of credit payable
|
(1,448
|
)
|
1,359
|
||||
Proceeds
from exercise of common stock warrants and options
|
1,155
|
95
|
|||||
Payments
of debt issuance costs
|
(146
|
)
|
—
|
||||
Principal
payment on promissory notes
|
(693
|
)
|
—
|
||||
Net
cash provided by financing activities
|
1,868
|
1,454
|
|||||
|
|||||||
NET
(DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS
|
(2,451
|
)
|
505
|
||||
CASH
AND CASH EQUIVALENTS, beginning of period
|
4,108
|
2,708
|
|||||
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
1,657
|
$
|
3,213
|
|||
|
|||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|||||||
Cash
paid for-
|
|||||||
Interest
|
$
|
380
|
$
|
71
|
|||
Income
taxes
|
$
|
—
|
$
|
—
|
(1)
|
NATURE
OF OPERATIONS
|
(2)
|
BASIS
OF PRESENTATION
|
(4)
|
NET
INCOME PER SHARE
|
Shares
|
Weighted
average
exercise
price
|
||||||
Outstanding
July 1, 2005
|
1,206,152
|
|
$1.78
|
||||
Granted
|
120,000
|
|
$2.29
|
||||
Exercised
|
(800
|
)
|
|
$1.24
|
|||
Terminated
|
(15,700
|
)
|
|
$2.60
|
|||
Outstanding
September 30, 2005
|
1,309,652
|
|
$1.82
|
||||
Exercisable
September 30, 2005
|
873,852
|
|
$1.85
|
Shares
|
Weighted
average
grant-date
fair value
|
||||||
Nonvested
at July 1, 2005
|
319,000
|
|
$1.51
|
||||
Granted
|
120,000
|
|
$2.03
|
||||
Vested
|
—
|
—
|
|||||
Forfeited
|
(3,200
|
)
|
|
$1.27
|
|||
Nonvested
at September 30, 2005
|
435,800
|
|
$1.65
|
Shares
|
Weighted
average
exercise
price
|
||||||
Outstanding
July 1, 2005
|
233,750
|
|
$1.52
|
||||
Granted
|
23,750
|
|
$2.81
|
||||
Exercised
|
—
|
—
|
|||||
Terminated
|
—
|
—
|
|||||
Outstanding
September 30, 2005
|
257,500
|
|
$1.64
|
||||
Exercisable
September 30, 2005
|
257,500
|
|
$1.64
|
For
the Three Months Ended
September
30,
|
|||||||
2004
|
|||||||
Net
income, as reported
|
$
|
295
|
|||||
Stock-based
employee compensation expense included
in reported net income
|
|
$
|
—
|
||||
|
|||||||
Stock-based
employee compensation expense not
included in reported net income
|
|
$
|
(31
|
)
|
|||
Net
income - pro forma
|
|
$
|
264
|
||||
Basic
net income per share - as reported
|
$
|
0.04
|
|||||
Basic
net income per share - proforma
|
$
|
0.04
|
|||||
Diluted
net income per share - as reported
|
$
|
0.04
|
|||||
Diluted
net income per share - proforma
|
$
|
0.03
|
|||||
Assumptions:
|
|||||||
2005
|
2004
|
||||||
Risk
free interest rate
|
4.3%
|
|
3%
|
|
|||
Dividend
yield
|
0%
|
|
0%
|
|
|||
Expected
volatility
|
110%
|
|
100%
|
|
|||
Expected
life
|
7.8
years
|
10
years
|
September
30,
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
|
6,100
|
|||||
August
2003 promissory notes (the August 2003 Notes) (10% interest due
semi-annually, December 31 and June 30); principal payments
of
$692,500 due 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
|
$
|
6,925
|
|||
Note
Payable (contingent deferred promissory note subject to earn-out
provisions related to Shank Services acquisition if payable, due
March 31,
2007)
|
178
|
172
|
|||||
Unamortized
debt discount, net of amortization
|
(2,497
|
)
|
(2,056
|
)
|
|||
Less:
current portion
|
(1,385
|
)
|
(1,385
|
)
|
|||
Long-term
debt, net
|
$
|
11,628
|
$
|
9,756
|
Common
Stock
|
Additional
Paid
in Capital
|
Accumulated
Deficit
|
Total
Shareholders’
Equity
|
||||||||||
June
30, 2005
|
$
|
90
|
$
|
16,325
|
$
|
(9,577
|
)
|
$
|
6,838
|
||||
Exercise
of options and warrants
|
8
|
1,147
|
—
|
1,155
|
|||||||||
Issuance
of warrants
|
—
|
605
|
—
|
605
|
|||||||||
Amortization
of stock compensation expense
|
—
|
92
|
—
|
92
|
|||||||||
Net
income
|
—
|
—
|
615
|
615
|
|||||||||
September
30, 2005
|
$
|
98
|
$
|
18,169
|
$
|
(8,962
|
)
|
$
|
9,305
|
·
|
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
|
·
|
future
net losses
|
|
·
|
adverse
consequences relating to our outstanding debt
|
|
·
|
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
|
|
·
|
ability
to comply with financial covenants contained in our credit
agreements
|
|
·
|
ability
to obtain, if necessary, waivers of covenant violations of our
debt
agreements
|
·
|
significant
provisions for bad debt reserves on our accounts
receivable
|
|
·
|
declines
in demand for our services and the margins generated resulting
from
adverse market conditions; negative customer reactions to new or
existing
marketing strategies; or depressed economic conditions
generally
|
|
·
|
ability
to acquire sufficient trade credit from fuel and lubricants suppliers
and
other vendors
|
|
·
|
ability
to maintain competitive pricing for our services at acceptable
margins
|
|
·
|
ability
to integrate the Shank Services and H & W operations into our existing
operations and to enhance the profitability of the integrated businesses
through joint operating efficiencies and improved
management
|
|
·
|
ability
to execute our acquisition and diversification strategy and obtain
sufficient capital to acquire additional businesses and support
the
infrastructure requirements of a larger combined
company
|
|
·
|
competition
from other providers of similar
services
|
Three-Month
Periods Ended
(Unaudited)
|
Increase
|
||||||||||||
9/30/2005(1)
|
9/30/2004
|
$
|
%
|
||||||||||
Total
revenues
|
$
|
53,639
|
$
|
28,909
|
$
|
24,730
|
86%
|
|
|||||
Gross
profit
|
3,813
|
1,800
|
2,013
|
112%
|
|
||||||||
Operating
income
|
1,279
|
677
|
602
|
89%
|
|
||||||||
Net
income
|
615
|
295
|
320
|
108%
|
|
||||||||
EBITDA 2,5
|
1,784
|
992
|
792
|
80%
|
|
||||||||
Basic
net income per share
|
$
|
0.07
|
$
|
0.04
|
$
|
0.03
|
75%
|
|
|||||
Diluted
net income per share
|
$
|
0.06
|
$
|
0.04
|
$
|
0.02
|
50%
|
|
|||||
Basic
weighted average shares outstanding
|
9,339,196
|
7,331,945
|
2,007,251
|
27%
|
|
||||||||
Diluted
weighted average shares outstanding
|
10,197,828
|
7,869,780
|
2,328,048
|
30%
|
|
||||||||
Depreciation
and amortization 3
|
$
|
402
|
$
|
315
|
$
|
87
|
28%
|
|
|||||
Gallons
sold (in thousands)
|
20,819
|
15,153
|
5,666
|
37%
|
|
||||||||
Average
net margin per gallon (in cents) 4
|
19.9
|
13.7
|
6.2
|
45%
|
|
||||||||
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 but does
not reflect the
October 1, 2005 acquisition of H & W, certain assets of which secure
the payment of the September 2005 Notes.
|
2
|
Earnings
before interest, taxes, depreciation and amortization
and amortization of
stock compensation expense
|
3
|
Depreciation
and amortization included in cost of sales was $336,000
and $271,000 for
the respective periods
|
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 Table as
follows:
|
3
Months Ended
|
|||||||||||||
Increase
|
Increase
|
||||||||||||
9/30/2005
|
9/30/2004
|
$
|
%
|
||||||||||
Net
income
|
$
|
615
|
$
|
295
|
$
|
320
|
108%
|
||||||
Add
back:
|
|||||||||||||
Interest,
net
|
675
|
382
|
293
|
77%
|
|||||||||
Depreciation
and amortization:
|
|||||||||||||
Cost
of sales
|
336
|
271
|
65
|
24%
|
|||||||||
Sales,
general and administrative
|
66
|
44
|
22
|
50%
|
|||||||||
Amortization
of stock compensation expense
|
92
|
—
|
92
|
—
|
|||||||||
EBITDA
|
$
|
1,784
|
$
|
992
|
$
|
792
|
80%
|
For
the Three-Month Periods Ended September 30,
|
|||||||||||||
Increase
(decrease)
|
|||||||||||||
2005
|
2004
|
Dollars
|
Percent
|
||||||||||
Total
revenues
|
$
|
53,639
|
$
|
28,909
|
$
|
24,730
|
85.5
%
|
||||||
Total
cost of sales and services
|
49,826
|
27,109
|
22,717
|
83.8
%
|
|||||||||
Gross
profit
|
3,813
|
1,800
|
2,013
|
111.8
%
|
|||||||||
Selling,
general, and administrative
|
|||||||||||||
expenses
|
2,534
|
1,123
|
1,411
|
125.6%
|
|||||||||
Interest
expense
|
(675
|
)
|
(382
|
)
|
293
|
76.7
%
|
|||||||
Interest
and other income
|
11
|
—
|
11
|
—
|
|||||||||
Net
income
|
$
|
615
|
$
|
295
|
$
|
320
|
108.5
%
|
||||||
Gallons
Delivered
|
20,819
|
15,153
|
5,666
|
37.4
%
|
Three
Months Ended
September
30,
|
|||||||
2005
|
2004
|
||||||
Stated
Rate Interest Expense:
|
|||||||
Bank
line of credit
|
$
|
68
|
$
|
66
|
|||
Long
term debt
|
346
|
173
|
|||||
Other
|
5
|
5
|
|||||
Total
stated rate interest expense
|
419
|
244
|
|||||
Non-Cash
Interest Amortization:
|
|||||||
Amortization
of deferred debt costs
|
92
|
56
|
|||||
Amortization
of debt discount
|
164
|
82
|
|||||
Total
amortization of interest expense
|
256
|
138
|
|||||
Total
interest expense
|
$
|
675
|
$
|
382
|
For
the Three Months Ended
|
|||||||
September
30,
2005
|
September
30,
2004
|
||||||
Net
income
|
$
|
615
|
$
|
295
|
|||
Add back: | |||||||
Interest
expense
|
419
|
244
|
|||||
Non-cash
interest expense
|
256
|
138
|
|||||
Depreciation
and amortization expense:
|
|||||||
Cost
of sales
|
336
|
271
|
|||||
Selling,
general and administrative
|
66
|
44
|
|||||
Amortization
of stock compensation expense
|
92
|
—
|
|||||
EBITDA
|
$
|
1,784
|
$
|
992
|
Exhibit
No.
|
Description
|
|
31.1
|
Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2
|
Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1
|
Certificate
of Chief Executive Officer and Chief Financial Officer pursuant to
Section
906 of the Sarbanes-Oxley Act of 2002
|
STREICHER MOBILE FUELING, INC. | ||
|
|
|
Date: November 14, 2005 | By: | /s/ Richard E. Gathright |
Richard E. Gathright |
||
Chief Executive Officer and President |
By: | /s/ Michael S. Shore | |
Michael S. Shore |
||
Chief Financial Officer and Senior Vice President |