Our Financial Profile

The following financial information is based on SMF’s most recently filed Form 10-K for the year ended June 30, 2009. Unless otherwise noted, all stock information is as of June 30, 2009, except that all share numbers have been adjusted to reflect the October 1, 2009, reverse stock split, by which 4.5 pre-split shares were converted into 1 post-split share.

Market Capitalization of $13.62 million based on 8,153,899 million shares of common stock outstanding at June 30, 2009, based on the official NASDAQ closing price of $1.67 on that date.

52 Week High/Low closing prices of $2.07/$0.63 as of October 14, 2009.

Average Daily Trading Volume of 82,713 shares based on the 90 day period ending October 14, 2009.

Total common shares are 8,555,337 as of October 14, 2009.

Total common shares authorized are 50,000,000.

FIRST QUARTER FISCAL 2010 HIGHLIGHTS

• A 29% increase in EBITDA (a non-GAAP measure) to $1.1 million and a 13% increase in net margin to $0.26 per gallon for the first quarter of fiscal 2010 compared to the fourth quarter of 2009, achieved in spite of the continuing worst recession in modern times.¹
• Continued delivery of improvements in financial results reporting net income of $20,000, which included non-cash, non-recurring charges of $280,000. Without these charges, adjusted net income (a non-GAAP measure) for the period was $300,000, which is a $597,000 improvement from $297,000 net loss before the $1.7 million non-cash ASC 470-20 (formerly FAS No. 84) inducement charge for the extinguishment of the convertible debt securities in the fourth quarter of fiscal 2009. In the first quarter of fiscal 2009, reported net income of $512,000, however, the first quarter of fiscal 2010 included the $280,000 in non-cash, non-recurring charges and did not include income from emergency response work which did occur in the prior year. ²
• An improvement in gross profit of $558,000, or 16%, an increase in operating income of $120,000, or 87%, and an EBITDA increase of $258,000, or 29% compared to the fourth quarter of fiscal 2009. The net margin per gallon increased to 25.6 cents in the first quarter of fiscal 2010 from 22.7 cents in the fourth quarter of fiscal 2009.³
• Lower debt and lower costs to service existing debt has resulted in lower interest expense of $230,000 in the first quarter of fiscal 2010 a decrease of $316,000 compared to the fourth quarter of fiscal 2009. A decrease of $453,000 in interested expense when compared to $683,000 in the same quarter in the prior year.
• A 1 for 4.5 reverse stock split, which took effect on October 1, 2009. The reverse stock split preserved the Nasdaq Stock Market listing by increasing the market price of the common stock above the $1.00 minimum bid price for the required period of time. All share and per share information in the accompanying selected data was retroactively adjusted to give effect to the reverse stock split.
• Conversion of $1.1 million of the Series D Preferred stock, which was issued during the June 2009 Recapitalization, into 594,012 shares of Common Stock, further reducing fixed charge cash requirements as future dividend payments were reduced.

¹ EBITDA (Non-GAAP measure) Reconciliation to the Net income (loss) for Quarterly periods ending September 30, 2009, June 30, 2009 and September 30, 2008 (All amounts in thousands of dollars)

¹ See definition below under Non-GAAP measure and other definition.
² Non-GAAP measure – see below for definition.

² Adjusted net income (loss) before non-cash, non-recurring charges (Non-GAAP measure) Reconciliation to the Net income (loss) for Quarterly periods ending September 30, 2009, June 30, 2009 and September 30, 2008 (All amounts in thousands of dollars)

¹ See definition below under Non-GAAP measure definitions and other.
² Non-GAAP measure – see below for definition.
³ Non-GAAP measure – see below for definition.

FISCAL 2009 HIGHLIGHTS:

• Record EBITDA (a non-GAAP measure) of more than $4.5 million, a $3.3 million improvement, or 265%, over the prior fiscal year.¹
• Operating income of $1.7 million, a $3.7 million improvement over the prior year.
• An adjusted net loss of $688,000 (excluding a $1.7 million FAS 84 accounting charge arising from a $40 million June 2009 recapitalization), an improvement of $6.1 million, or 90%, from fiscal 2008.²
• The $40 million June 2009 recapitalization tremendously strengthened our balance sheet and financial position by (a) lowering total debt by $4.5 million, resulting in a year to year end reduction of $15 million, or 52%; (b) increasing shareholders’ equity by $4.1 million and (c) reducing our debt to equity ratio to 2 to 1, from 9 to 1 a year ago.
• The June 2009 recapitalization extinguished all non bank debt and included a new 5 year term loan and 3 year line of credit from our bank at substantially lower interest rates.
• The June 2009 recapitalization is expected to reduce our cash requirements for interest and dividends in fiscal 2010 by more than $1.0 million.
• Shareholder equity was $6.5 million at June 30, 2009, an increase of $3.5 million, or 114%, over the prior year.
• Net loss in fiscal 2009 was $2.3 million, compared to a loss of $6.8 million in fiscal 2008, an improvement of $4.4 million, or 65%. The net loss in fiscal 2009 includes a $1.7 million non-cash charge for a deemed inducement to convert under FAS 84 in connection with the extinguishment of convertible promissory notes in the June 2009 recapitalization.
• Excluding the FAS 84 charge, the adjusted net loss was $688,000, an improvement of $6.1 million, or 90%, over the prior year.
• The improvements in EBITDA, operating income and net loss were even more noteworthy as annual revenues declined to $199.2 million in fiscal 2009, compared to $260.7 million in fiscal 2008, a reduction of $61.5 million, or 24%, resulting from lower fuel prices and reduced customer demand for fuel, lubricants and chemicals in fiscal 2009.
• Net margin per gallon increased to 25.8 cents in fiscal 2009 from 19.4 in the preceding year.³
• In addition to the $1.7 million FAS 84 non-cash charge, the net loss for fiscal 2009 reflects other non-cash charges of $3.4 million, such as depreciation and amortization of assets, debt costs, debt discounts, stock-based compensation, and provision for doubtful accounts. The net loss also reflects stated rate interest expense associated with servicing of our debt of $2.1 million (which expense is expected to be reduced by more than $1 million in the upcoming fiscal year as a result of the June 2009 Recapitalization), legal expenses of $950,000 and public company costs of $864,000.

¹ EBITDA (Non-GAAP measure) Reconciliation to the Net loss for fiscal years ending June 30, 2009 and 2008 (All amounts in thousands of dollars)

¹ Non-GAAP measure – see below for definition.

² Adjusted net loss before non-cash, non-recurring charges (Non-GAAP measure) Reconciliation to the Net income (loss) for fiscal years ending June 30, 2009 and 2008 (All amounts in thousands of dollars)

³ Non-GAAP Measure – see below for definition.

Non-GAAP Measures and other - Definitions

EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and is a Non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To the extent that gain or loss and the non-cash ASC 470-20 (formerly FAS No. 84) inducement on extinguishment of promissory notes constitute the recognition of previously deferred interest or finance cost, it is considered interest expense for the calculation of certain interest expense amounts. Both stock-based compensation amortization expense and the write-off of unamortized acquisition costs are considered amortization items to be excluded in the EBITDA calculation. We believe that EBITDA provides useful information to investors because it excludes transactions not related to the core cash operating business activities. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.

Adjusted net income (loss) before non-cash, non-recurring charges is shown to provide the reader with information regarding the economic performance of the Company before the impact of charges that do not reflect the on-going performance of the operations such as the technical non-economic substantive accounting treatment charge of $1.7 million in the fourth quarter of fiscal 2009, and the first quarter of fiscal 2010 write-off incurred as new accounting ruling was applied and stock compensation expense that resulted from the repricing of stock options. We believe that this is a meaningful Non-GAAP representation of the ongoing performance of the operations.

Net margin per gallon is calculated by adding gross profit to the cost of sales depreciation and amortization and dividing that sum by the number of gallons sold.

Non-cash ASC 470-20 (formerly FAS No. 84) inducement on extinguishment is a charge we incurred strictly as a result of the June 29, 2009 Recapitalization. The Company extinguished a portion of the August 2007 and the September 2008 Notes (“the Notes”) through the issuance of approximate 1.2 million shares and approximate 278,000shares, respectively, at the negotiated price of $1.71 per share, which was greater than the $1.67 per share closing bid price the day prior to the Recapitalization, but lower than the conversion price applicable to the convertible debt instruments, which resulted in the issuance of more shares in the exchange than would have been issued upon a conversion. The practice of accounting in the interpretation of FAS No. 84 is that an inducement occurs any time when additional shares are issued in the extinguishment of convertible debt regardless of the absence of an economic loss or economic intent of the parties to the transaction. Irrespective of the economic reality of the transaction, FAS No. 84 required the recording of a non-cash “conversion inducement” charge of $1,651,109, based on the difference between the approximate aggregate 471,000 common shares issuable to the applicable note holder under the original conversion rights that existed upon a conversion and the approximate 1.5 million common shares exchanged at $1.71 cents in the transaction that extinguished all of the Notes. This non-cash charge is deemed a financing expense to extinguish the Notes. To the extent that the non cash FAS 84 inducement on extinguishment of promissory notes constitutes the recognition of a finance cost, it is considered interest expense for the calculation of certain interest expense amounts.