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 |
Delaware
|
65-0707824
|
|
(State
of Incorporation)
|
(IRS
Employer Identification Number)
|
200
West Cypress Creek Road, Suite 400, Fort Lauderdale,
Florida
|
33309
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large accelerated filer o
Smaller reporting company x
|
Accelerated
filer o
|
Non-accelerated
filer
o
|
Form
10-Q Part and Item No.
|
|||
Part
I
|
Financial Information: | ||
Item
1.
|
Condensed
Unaudited Consolidated Financial Statements
|
||
Condensed
Consolidated Balance Sheets as of March 31, 2008 (unaudited)
and
June
30, 2007
|
3
|
||
|
|
||
Condensed
Unaudited Consolidated Statements of Operations for the three
and
nine
months ended March 31, 2008 and 2007
|
4
|
||
Condensed
Unaudited Consolidated Statements of Cash Flows for the nine
months
ended March 31, 2008 and 2007
|
5
|
||
Notes
to Condensed Unaudited Consolidated Financial Statements
|
7
|
||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
20
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
36
|
|
Item
4.
|
Controls
and Procedures
|
37
|
|
Part
II
|
Other Information: | ||
Items 1. through 6. |
39
|
||
|
|||
Signatures |
40
|
||
Certifications |
41-43
|
ASSETS
|
March
31, 2008
|
June
30, 2007
|
||||
Current
assets:
|
(unaudited)
|
|||||
Cash
and cash equivalents
|
$
|
36
|
$
|
987
|
||
Accounts
receivable, net of allowances of $1,295 and $1,401
|
24,299
|
25,442
|
||||
Inventories,
net of reserve of $187 and $238
|
2,308
|
2,283
|
||||
Prepaid
expenses and other current assets
|
436
|
471
|
||||
Total
current assets
|
27,079
|
29,183
|
||||
Restricted
cash
|
140
|
1,145
|
||||
Property
and equipment, net of accumulated depreciation of
|
||||||
$13,435
and $11,807
|
10,478
|
10,017
|
||||
Identifiable
intangible assets, net of accumulated amortization of
|
||||||
$965
and $681
|
2,488
|
2,771
|
||||
Goodwill
|
228
|
228
|
||||
Deferred
debt costs, net of accumulated amortization of $463 and
$1,197
|
||||||
and
other assets
|
481
|
581
|
||||
Total
assets
|
$
|
40,894
|
$
|
43,925
|
||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||
Current
liabilities:
|
||||||
Line
of credit payable
|
$
|
14,848
|
$
|
17,297
|
||
Accounts
payable
|
9,112
|
7,887
|
||||
Accrued
expenses and other liabilities
|
4,096
|
3,831
|
||||
Total
current liabilities
|
28,056
|
29,015
|
||||
Long-term
liabilities:
|
||||||
Promissory
notes, net of unamortized debt discount of $72
|
||||||
and
$1,027
|
8,787
|
10,250 | ||||
Other
long-term liabilities
|
463
|
546
|
||||
Total
liabilities
|
37,306
|
39,811
|
||||
Contingencies
|
||||||
Shareholders’
equity:
|
||||||
Preferred
stock, $0.01 par value; 10,000 Series A shares
|
||||||
authorized,
and 4,587 issued and outstanding at
|
||||||
March
31, 2008
|
-
|
-
|
||||
Preferred
stock, $0.01 par value; 2,000 Series B shares
|
||||||
authorized,
and 1,985 issued and outstanding at
|
||||||
March
31, 2008
|
-
|
-
|
||||
Common
stock, $.01 par value; 50,000,000 shares authorized;
|
||||||
14,556,295
and 13,702,426 issued and outstanding
|
||||||
at
March 31, 2008 and June 30, 2007, respectively
|
146
|
137 | ||||
Additional
paid-in capital
|
30,889
|
25,021
|
||||
Accumulated
deficit
|
(27,447
|
)
|
(21,044
|
)
|
||
Total
shareholders’ equity
|
3,588
|
4,114
|
||||
Total
liabilities and shareholders’ equity
|
$
|
40,894
|
$
|
43,925
|
Three
Months Ended March 31,
|
Nine
Months Ended March 31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Petroleum
product sales and service revenues
|
$
|
57,744
|
$
|
45,450
|
$
|
159,838
|
$
|
152,368
|
|||||
Petroleum
product taxes
|
6,418
|
6,367
|
18,815
|
19,875
|
|||||||||
Total
revenues
|
64,162
|
51,817
|
178,653
|
172,243
|
|||||||||
Cost
of petroleum product sales and service
|
54,869
|
42,972
|
151,216
|
142,658
|
|||||||||
Petroleum
product taxes
|
6,418
|
6,367
|
18,815
|
19,875
|
|||||||||
Total
cost of sales
|
61,287
|
49,339
|
170,031
|
162,533
|
|||||||||
Gross
profit
|
2,875
|
2,478
|
8,622
|
9,710
|
|||||||||
Selling,
general and administrative expenses
|
3,445
|
4,077
|
11,036
|
11,886
|
|||||||||
Operating
loss
|
(570
|
)
|
(1,599
|
)
|
(2,414
|
)
|
(2,176
|
)
|
|||||
Interest
expense
|
(780
|
)
|
(1,023
|
)
|
(2,340
|
)
|
(2,808
|
)
|
|||||
Other
income
|
60
|
4
|
100
|
9
|
|||||||||
Loss
on extinguishment of promissory notes
|
(108
|
)
|
-
|
(1,749
|
)
|
-
|
|||||||
Loss
before income taxes
|
(1,398
|
)
|
(2,618
|
)
|
(6,403
|
)
|
(4,975
|
)
|
|||||
Income
tax expense
|
-
|
-
|
-
|
-
|
|||||||||
Net
loss
|
$
|
(1,398
|
)
|
$
|
(2,618
|
)
|
$
|
(6,403
|
)
|
$
|
(4,975
|
)
|
|
Basic
and diluted net loss per share computation:
|
|||||||||||||
Net
loss
|
$
|
(1,398
|
)
|
$
|
(2,618
|
)
|
$
|
(6,403
|
)
|
$
|
(4,975
|
)
|
|
Less:
Preferred stock dividends
|
(56
|
)
|
-
|
(56
|
)
|
-
|
|||||||
Net
loss attributable to common stockholders
|
$
|
(1,454
|
)
|
$
|
(2,618
|
)
|
$
|
(6,459
|
)
|
$
|
(4,975
|
)
|
|
Basic
and diluted net loss per share
|
|||||||||||||
attributable
to common stockholders
|
$
|
(0.10
|
)
|
$
|
(0.23
|
)
|
$
|
(0.45
|
)
|
$
|
(0.46
|
)
|
|
Basic
and diluted weighted average common
|
|||||||||||||
shares
outstanding
|
14,556
|
11,600
|
14,438
|
10,867
|
|||||||||
Nine
Months Ended March 31,
|
||||||
2008
|
2007
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
||||
Net
loss
|
$
|
(6,403
|
)
|
$
|
(4,975
|
)
|
Adjustments
to reconcile net loss to net cash provided by (used in)
|
||||||
operating
activities:
|
||||||
Depreciation
and amortization:
|
||||||
Cost
of sales
|
1,121
|
1,316
|
||||
Selling,
general and administrative
|
897
|
672
|
||||
Amortization
of deferred debt cost
|
224
|
248
|
||||
Amortization
of debt discount
|
74
|
573
|
||||
Stock-based
compensation amortization expense
|
382
|
304
|
||||
Gain
from sale of assets
|
(59
|
)
|
-
|
|||
Inventory
reserve
|
(51
|
)
|
100
|
|||
Provision
for doubtful accounts
|
213
|
370
|
||||
Non-cash
loss on extinguishment of debt
|
1,479
|
-
|
||||
Other
|
-
|
17
|
||||
Changes
in operating assets and liabilities:
|
||||||
Decrease
in accounts receivable
|
930
|
2,735
|
||||
Decrease
in inventories, prepaid expenses and other assets
|
55
|
992
|
||||
Increase
(decrease) in accounts payable and other liabilities
|
1,419
|
(2,398
|
)
|
|||
Net
cash provided by (used in) operating activities
|
281
|
(46
|
)
|
|||
CASH
FLOWS USED IN INVESTING ACTIVITIES:
|
||||||
Purchases
of property and equipment
|
(2,222
|
)
|
(796
|
)
|
||
Proceeds
from sale of equipment
|
85
|
-
|
||||
Decrease
in restricted cash
|
1,005
|
-
|
||||
Net
cash used in investing activities
|
(1,132
|
)
|
(796
|
)
|
||
CASH
FLOWS USED IN FINANCING ACTIVITIES:
|
||||||
Proceeds
from line of credit
|
184,908
|
185,882
|
||||
Repayments
of line of credit
|
(187,357
|
)
|
(186,689
|
)
|
||
Proceeds
from issuance of promissory notes
|
7,690
|
-
|
||||
Proceeds
from issuance of common stock and warrants
|
1,170
|
3,274
|
||||
Proceeds
from issuance of preferred stock
|
516
|
-
|
||||
Principal
payments on promissory notes
|
(6,359
|
)
|
(1,794
|
)
|
||
Debt
issuance costs
|
(541
|
)
|
(114
|
)
|
||
Common
stock and preferred stock issuance costs
|
(101
|
)
|
(256
|
)
|
||
Capital
lease payments
|
(26
|
)
|
(110
|
)
|
||
Net
proceeds from exercise of common stock options and warrants
|
-
|
31
|
||||
Net
cash provided by (used in) financing activities
|
(100
|
)
|
224
|
|||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(951
|
)
|
(618
|
)
|
||
CASH
AND CASH EQUIVALENTS, beginning of period
|
987
|
4,103
|
||||
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
36
|
$
|
3,485
|
(Continued)
|
Nine
Months Ended March 31,
|
||||||
2008
|
2007
|
||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|||||||
Cash
paid for interest
|
$
|
2,183
|
$
|
2,084
|
|||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH ACTIVITIES:
|
|||||||
Refinancing
of August 2003, January 2005, and September 2005
|
|||||||
notes
into August 2007 notes
|
$
|
4,918
|
$
|
-
|
|||
Non-cash
costs related to issuance of stock, warrants and
|
|||||||
August
2007 notes
|
$
|
134
|
$
|
-
|
|||
Debt
discount costs related to issuance of stock, warrants and
|
|||||||
August
2007 notes
|
$
|
112
|
$
|
-
|
|||
Exchange
of promissory notes and accrued interest
|
|||||||
for
preferred stock
|
$
|
3,793
|
$
|
-
|
|||
Accrued
dividends related to preferred stock
|
$
|
56
|
$
|
-
|
|||
Conversion
of promissory notes to common shares
|
$
|
-
|
$
|
630
|
|||
Unamortized
debt discount related to warrants and
|
|||||||
warrants'
extension
|
$
|
-
|
$
|
327
|
1.
|
NATURE
OF OPERATIONS
|
2.
|
BASIS
OF PRESENTATION
|
3. |
RECENT
ACCOUNTING
PRONOUNCEMENTS
|
4.
|
CASH
AND CASH EQUIVALENTS
|
5.
|
RESTRICTED
CASH
|
6.
|
LINE
OF CREDIT PAYABLE
|
7.
|
CURRENT
PROMISSORY NOTES
|
8.
|
LONG-TERM
DEBT
|
March
31,
|
June
30,
|
|||||
2008
|
2007
|
|||||
August
2007 senior secured convertible subordinated promissory notes (the
“August
2007 Notes”) (11.5% interest due semi-annually, January 1 and July
1); matures December 31, 2009 in its entirety; effective interest
rate of
14.0% including cost of warrants and other debt issue
costs.
|
$
|
8,859
|
$
|
-
|
||
September
2005 promissory notes (the “September 2005 Notes”). The notes were
refinanced on August 8, 2007.
|
-
|
3,000
|
||||
January
2005 promissory notes (the “January 2005 Notes”). The notes were
refinanced on August 8, 2007.
|
-
|
4,860
|
||||
August
2003 promissory notes (the “August 2003 Notes”). The notes were refinanced
on August 8, 2007.
|
-
|
3,417
|
||||
Various
capital leases
|
-
|
26
|
||||
Unamortized
debt discount
|
(72
|
)
|
(1,027
|
)
|
||
8,787
|
10,276
|
|||||
Less:
current portion
|
-
|
(26
|
)
|
|||
Long-term
debt, net
|
$
|
8,787
|
$
|
10,250
|
Three
Months
|
Nine
Months
|
|||||
Ended
|
Ended
|
|||||
March
31,
2008
|
||||||
Write
offs of costs and gain related to the converted August 2003,
January
2005 and September 2005 Notes:
|
||||||
Unamortized
debt costs
|
$
|
-
|
$
|
443
|
||
Unamortized
debt discounts
|
-
|
978
|
||||
Cash
pre-payment penalty
|
-
|
270
|
||||
Gain
on extinguishment
|
-
|
(50
|
)
|
|||
Write
off of unamortized debt costs related to exchanged November 2007
Notes
|
24
|
24
|
||||
Write
offs related to exchanged August 2007 Notes:
|
||||||
Unamortized
debt costs
|
69
|
69
|
||||
Unamortized
debt discounts
|
15
|
15
|
||||
Loss
on extinguishment of promissory notes, net
|
$
|
108
|
$
|
1,749
|
9.
|
WARRANTS
|
10. |
NET
INCOME (LOSS) PER SHARE
|
11.
|
SHAREHOLDERS’
EQUITY
|
|
Additional
|
|
Total
|
||||||||||
Common
|
Paid-in
|
Accumulated
|
Shareholders’
|
||||||||||
Stock
|
Capital
|
Deficit
|
Equity
|
||||||||||
Balance
at June 30, 2007
|
$
|
137
|
$
|
25,021
|
$
|
(21,044
|
)
|
$
|
4,114
|
||||
Issuance
of common stock and warrants
|
|||||||||||||
from
August 2007 offering, net of
|
|||||||||||||
issuance
costs of $112,000
|
9
|
1,245
|
-
|
1,254
|
|||||||||
Issuance
of Series A preferred stock, net of
|
|||||||||||||
issuance
costs of $12,000
|
-
|
2,510
|
-
|
2,510
|
|||||||||
Issuance
of Series B preferred stock
|
-
|
1,787
|
-
|
1,787
|
|||||||||
Series
A preferred stock dividend
|
-
|
(39
|
)
|
-
|
(39
|
)
|
|||||||
Series
B preferred stock dividend
|
-
|
(17
|
)
|
-
|
(17
|
)
|
|||||||
Stock-based
compensation expense
|
-
|
382
|
-
|
382
|
|||||||||
Net
loss
|
-
|
-
|
(6,403
|
)
|
(6,403
|
)
|
|||||||
Balance
at March 31, 2008
|
$
|
146
|
$
|
30,889
|
$
|
(27,447
|
)
|
$
|
3,588
|
12. |
CONTINGENCIES
|
13.
|
INCOME
TAXES
|
· |
Our
beliefs regarding our position in the market for commercial mobile
fueling
and bulk fueling; lubricant and chemical packaging, distribution
and
sales; integrated out-sourced fuel management services; and transportation
logistics;
|
· |
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;
and
|
· |
Our
plans to expand and diversify our business through acquisitions of
existing companies or their operations and customer
bases.
|
· |
The
avoidance of future net losses;
|
· |
The
avoidance of adverse consequences relating to our outstanding
debt;
|
· |
Our
continuing ability to pay interest and principal on our debt instruments,
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;
|
· |
The
continuing demand for our products and services at competitive prices
and
acceptable margins;
|
· |
The
avoidance of negative customer reactions to new or existing marketing
strategies;
|
· |
The
avoidance of significant inventory reserves for slow moving
products;
|
· |
Our
continuing ability to acquire sufficient trade credit from fuel and
lubricants suppliers and other
vendors;
|
· |
The
successful integration of acquired companies into our existing operations,
and enhancing the profitability of the integrated businesses;
|
· |
The
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;
|
· |
The
success in responding to competition from other providers of similar
services;
|
· |
The
impact of generally positive economic and market conditions; and
|
· |
The
ability to retire or convert debt to
equity.
|
· |
In
the third quarter of fiscal 2008, we had a net loss of $1.4 million.
These
results include $971,000 in non-cash charges, such as depreciation
and
amortization of assets, debt costs, debt discounts, stock based
compensation, provision for doubtful accounts and loss on extinguishment
of promissory notes. The quarterly results also include stated interest
expense associated with servicing of our debt of
$675,000.
|
· |
Our
net loss for the quarter decreased $1.2 million, from $2.6 million
last
year to $1.4 million this year as the result of a $397,000 increase
in
gross profit, a reduction of $632,000 in selling, general and
administrative costs and a decrease of $243,000 in interest expense.
|
· |
We
strengthened our balance sheet in the quarter, as reflected in the
$2.9
million increase in shareholder’s equity when compared to last quarter.
The increase resulted from the issuance of $4.3 million in preferred
stock, offset by the quarterly net loss of $1.4 million.
.
|
· |
We
reduced our senior secured subordinated debt by exchanging $3.8 million
in
promissory notes for shares of non-redeemable preferred stock. While
this
exchange of the promissory notes resulted in an additional non-cash
loss
on extinguishment of debt expense of $108,000 as a result of the
write-offs of the related debt discounts and deferred debt costs,
it
favorably impacts our future cash needs by reducing the debt service
requirements on the former notes.
|
· |
In
addition to the exchange of debt, we raised $516,000 in cash from
selling
shares of preferred stock to a small group of investors, including
some of
the Company’s officers.
|
· |
We
entered into an amendment to the line of credit to extend the maturity
date from June 30, 2008 to December 31, 2008 and modified certain
financial covenants. We believe that this extension will enable us
to
continue to meet the working capital needs of our business.
|
· |
Escalating
fuel prices, resulting in decreased demand from our existing customers,
have continued to impact our results of operations. While fuel price
fluctuations affect our revenues, our gross profits were historically
not
affected by such fluctuations since we were able to pass the increased
market cost of the product on to our customers. More recently, however,
the unprecedented increases in petroleum and fuel prices have dampened
the
demand for the services and goods provided by most of the transportation,
manufacturing, services and other industries that comprise the majority
of
our customer base and have raised the fuel running costs of our own
delivery fleet. In addition, these higher fuel prices have substantially
increased the amount of short-term credit that we need to obtain
to cover
the time between our receipt of fuel from the suppliers and our receipt
of
payment from our customers. Our higher demand for credit has led
to
limitations on the availability of supplier credit and has increased
our
borrowing costs. These developments have negatively affected our
profitability.
|
· |
Increasing
the overall size of the Company while diversifying the services and
products we offer to the industry are integral to the execution of
our
strategic business plan and critical to the utilization of the
infrastructure and systems that we now have in place. We believe
that this
infrastructure and these systems are today unique in the industry
and give
us the ability to rapidly and effectively integrate operations and
gain
efficiencies. To this end, we are actively pursuing merger and acquisition
opportunities and are in discussions with key targets that we believe
would meet our goals. While there can be no assurance that we will
be able
to acquire or merge with these targets, we do believe that,
notwithstanding the current conditions in the credit markets, the
capital
necessary to execute this strategy will be available to us, including
the
opportunity to raise additional working capital in conjunction with
these
transactions.
|
· |
The
net loss from operations for the third quarter of fiscal 2008 was
$1.4
million compared
to a net loss of $2.6 million for the same period in the prior year.
The
principal reasons for the $1.2 million decrease in the net loss were
a
$397,000 increase in gross profit, primarily as a result of our emphasis
on developing new business with higher overall net margin per gallon
contribution. The decrease in net loss was also due to a decrease
of
$632,000 in selling, general and administrative costs, primarily
attributable to the integration of the H&W and Shank acquisitions and
lower personnel costs stemming from efficiencies gained from our
new
Enterprise Resource Planning (“ERP”) system. The third major contributor
to the lower net loss was a decrease of $243,000 in interest expense
as a
result of a decrease in non-cash interest amortization expense related
to
the August 2007 refinancing of the secured promissory notes issued
on
August 2003, January 2005 and September 2005 with new senior secured
convertible subordinated notes.
|
· |
In
the third quarter of fiscal 2008, the net margin was 17.8
cents per
gallon compared to 14.3 cents per gallon for the same period in the
prior
year, primarily resulting from our emphasis on developing new business
with higher overall net margin per gallon contribution.
|
· |
Earnings
before interest, taxes, depreciation, amortization, stock-based
compensation expense, and loss on extinguishment of debt (“EBITDA”), a
non-GAAP measure, was $277,000 for
the third quarter of fiscal 2008 compared to a negative EBITDA of
$787,000
for the same period a year ago. The primary reason for the $1.1 million
improvement in EBITDA was the $397,000 increase in gross profit,
and the
decrease of $632,000 in selling, general and administrative costs,
as
discussed above.
|
· |
Financial
results from our commercial mobile and bulk fueling services continue
to
be largely dependent on the number of gallons of fuel sold and the
net
margin per gallon achieved. We experienced an 11% gallon reduction
in the
third quarter of fiscal 2008 when compared to the same period in
the prior
year. This volume reduction was primarily due to lower volume demanded
by
our existing customers, which we believe stems from the general economic
conditions in the industries and the geographic locations we serve,
our
customers’ efforts to reduce fuel consumption in light of increased fuel
prices, and the reduction in business with net margin contributions
below
acceptable levels. However, in the last sequential quarters, our
volumes
have stabilized as reflected in the table
below.
|
· |
We
achieved improvements on our operating results as reflected through
our
net loss, EBITDA and net margin when compared to our most recent
sequential quarterly results. Specifically EBITDA improved $664,000
in the
third quarter ending March 31, 2008 compared to the second quarter
ended
December 31, 2007 due to improvements in net margins and reduction
of our
selling, general and administrative costs. Additionally, our monthly
results show an improving trend from October 30, 2007 through March
31,
2008. The following chart presents certain operating results for
the last
five sequential quarters (in thousands, except net margin per gallon):
|
For
the three months ended
|
||||||||||||||||
March
31,
|
June
30,
|
September
30,
|
December
31,
|
March
31,
|
||||||||||||
2007
|
2007
|
2007
|
2007
|
2008
|
||||||||||||
Net
loss
|
$
|
(2,618
|
)
|
$
|
(1,614
|
)
|
$
|
(3,019
|
)
|
$
|
(1,986
|
)
|
$
|
(1,398
|
)
|
|
EBITDA
|
$
|
(787
|
)
|
$
|
127
|
$
|
196
|
$
|
(387
|
)
|
$
|
277
|
||||
Selling,
general and
administrative
expenses
|
$
|
4,077
|
$
|
3,950
|
$
|
3,803
|
$
|
3,788
|
$
|
3,445
|
||||||
Net
margin per gallon
|
$
|
0.14
|
$
|
0.17
|
$
|
0.19
|
$
|
0.16
|
$
|
0.18
|
||||||
Gallons
sold
|
20,407
|
19,678
|
18,695
|
18,050
|
18,102
|
For
the three months ended
|
|||||||||||||||
March
31,
|
June
30,
|
September
30,
|
December
31,
|
March
31,
|
|||||||||||
2007
|
2007
|
2007
|
2007
|
2008
|
|||||||||||
Net
loss
|
$
|
(2,618
|
)
|
$
|
(1,614
|
)
|
$
|
(3,019
|
)
|
$
|
(1,986
|
)
|
$
|
(1,398
|
)
|
Add
back:
|
|||||||||||||||
Interest
expense,
net
of interest
income
|
1,023
|
919
|
778
|
782
|
780
|
||||||||||
Depreciation
and
amortization
expense:
|
|||||||||||||||
Cost
of sales
|
436
|
386
|
388
|
380
|
353
|
||||||||||
Selling,
general
and
administrative
expenses
|
219
|
249
|
282
|
304
|
311
|
||||||||||
Stock-based
compensation
amortization
expense
|
153
|
187
|
126
|
133
|
123
|
||||||||||
Loss
on
extinguishment
of
debt
|
-
|
-
|
1,641
|
-
|
108
|
||||||||||
EBITDA
|
$
|
(787
|
)
|
$
|
127
|
$
|
196
|
$
|
(387
|
)
|
$
|
277
|
Non-legal
public company compliance expense
|
$
|
(226
|
)
|
|
Provision
for doubtful accounts and collection fees
|
(214
|
)
|
||
Reduction
in SG&A costs primarily personnel expense
|
||||
as
a result of efficiencies gained from new systems
|
||||
and
integration of the acquired companies
|
(284
|
)
|
||
Increase
in SG&A depreciation primarily related to ERP system
|
||||
implementation
|
92
|
|||
Total
decrease
|
$
|
(632
|
)
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2008
|
2007
|
||||||
Stated
Rate Interest Expense:
|
|||||||
Line
of credit
|
$
|
295
|
$
|
252
|
|||
Long-term
debt
|
356
|
372
|
|||||
Other
|
24
|
28
|
|||||
Total
stated rate interest expense
|
675
|
652
|
|||||
Non-Cash
Interest Amortization:
|
|||||||
Amortization
of deferred debt costs
|
94
|
92
|
|||||
Amortization
of debt discount
|
11
|
279
|
|||||
Total
amortization of interest expense
|
105
|
371
|
|||||
Total
interest expense
|
$
|
780
|
$
|
1,023
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2008
|
2007
|
||||||
Net
loss
|
$
|
(1,398
|
)
|
$
|
(2,618
|
)
|
|
Add
back:
|
|||||||
Interest
expense
|
780
|
1,023
|
|||||
Depreciation
and amortization expense:
|
|||||||
Cost
of sales
|
353
|
436
|
|||||
Selling,
general and administrative expenses
|
311
|
219
|
|||||
Stock-based
compensation amortization expense
|
123
|
153
|
|||||
Loss
on extinguishment of debt
|
108
|
-
|
|||||
EBITDA
|
$
|
277
|
$
|
(787
|
)
|
Reduction
in SG&A costs primarily personnel expenses
|
||||
as
system efficiencies are gained
and
acquired companies are integrated
|
$
|
(597
|
)
|
|
Non-
legal public company compliance expense
|
(337
|
)
|
||
Provision
for doubtful accounts and collection fees
|
(191
|
)
|
||
Reduction
in facilities expenses related to the integration
|
||||
of
certain Texas locations
|
(85
|
)
|
||
Increase
in SG&A depreciation primarily related to ERP system
|
||||
implementation
|
226
|
|||
Employee
stock compensation attributable to SFAS No. 123R
|
78
|
|||
Other,
net
|
56
|
|
||
Total
decrease
|
$
|
(850
|
)
|
Nine
Months Ended
|
|||||||
March
31,
|
|||||||
2008
|
2007
|
||||||
Stated Rate Interest Expense: | |||||||
Line
of credit
|
$
|
972
|
$
|
858
|
|||
Long-term
debt
|
1,012
|
1,046
|
|||||
Other
|
58
|
83
|
|||||
Total
stated rate interest expense
|
2,042
|
1,987
|
|||||
Non-Cash
Interest Amortization:
|
|||||||
Amortization
of deferred debt costs
|
224
|
248
|
|||||
Amortization
of debt discount
|
74
|
573
|
|||||
Total
amortization of interest expense
|
298
|
821
|
|||||
Total
interest expense
|
$
|
2,340
|
$
|
2,808
|
Write
offs of costs and gain related to the converted August 2003,
January
2005 and September 2005 Notes:
|
||||
Unamortized
debt costs
|
$
|
443
|
||
Unamortized
debt discounts
|
978
|
|||
Cash
pre-payment penalty
|
270
|
|||
Gain
on extinguishment
|
(50
|
)
|
||
Write
off of unamortized debt costs related to exchanged November 2007
Notes
|
24
|
|||
Write
offs related to exchanged August 2007 Notes:
|
||||
Unamortized
debt costs
|
69
|
|||
Unamortized
debt discounts
|
15
|
|||
Loss
on extinguishment of promissory notes, net
|
$
|
1,749
|
Nine
Months Ended
|
||||||
March
31,
|
||||||
2008
|
2007
|
|||||
Net
loss
|
$
|
(6,403
|
)
|
$
|
(4,975
|
)
|
Add
back:
|
||||||
Interest
expense
|
2,340
|
2,808
|
||||
Depreciation
and amortization expense:
|
||||||
Cost
of sales
|
1,121
|
1,316
|
||||
Selling,
general and administrative expenses
|
897
|
672
|
||||
Stock-based
compensation amortization expense
|
382
|
304
|
||||
Loss
on extinguishment of debt
|
1,749
|
-
|
||||
EBITDA
|
$
|
86
|
$
|
125
|
Nine
Months Ended
|
|||||||
March
31,
|
|||||||
2008
|
2007
|
||||||
Proceeds
from issuance of promissory notes
|
$
|
7,690
|
$
|
-
|
|||
Proceeds
from issuance of common stock and warrants
|
1,170
|
3,274
|
|||||
Decrease
in restricted cash
|
1,005
|
-
|
|||||
Proceeds
from issuance of preferred stock
|
516
|
-
|
|||||
Cash
provided by operating activities
|
281
|
-
|
|||||
Proceeds
from sale of equipment
|
85
|
-
|
|||||
Proceeds
from exercise of common stock options
|
|||||||
and
warrants
|
-
|
31
|
|||||
$
|
10,747
|
$
|
3,305
|
Nine
Months Ended
|
|||||||
March
31,
|
|||||||
2008
|
2007
|
||||||
Principal
payments on promissory notes
|
$
|
6,359
|
$
|
1,794
|
|||
Net
payments on line of credit
|
2,449
|
807
|
|||||
Purchases
of property and equipment
|
2,222
|
796
|
|||||
Payments
of debt and equity issuance costs
|
642
|
370
|
|||||
Capital
lease payments
|
26
|
110
|
|||||
Cash
used in operations
|
-
|
46
|
|||||
$
|
11,698
|
$
|
3,923
|
||||
Net
change in cash and cash equivalents
|
$
|
(951
|
)
|
$
|
(618
|
)
|
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, Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
|
SMF ENERGY CORPORATION | ||
|
|
|
May 15, 2008 | 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
|
||