<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 1996
REGISTRATION NO. 333-14501
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2 TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
STREICHER MOBILE FUELING, INC.
(Name of Small Business Issuer in its Charter)
------------------------
<TABLE>
<S> <C> <C>
FLORIDA 5172 APPLIED FOR
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
<TABLE>
<S> <C>
STREICHER MOBILE FUELING, INC. STANLEY H. STREICHER, PRESIDENT
2720 NORTHWEST 55TH COURT 2720 NORTHWEST 55TH COURT
FT. LAUDERDALE, FLORIDA 33309 FT. LAUDERDALE, FLORIDA 33309
(954) 739-3880 (954) 739-3880
(Address and telephone number of principal (Name, address and telephone number of agent for
executive service)
offices and principal place of business)
</TABLE>
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Copies to:
<TABLE>
<S> <C>
KENNETH HOFFMAN, ESQ. ROBERT ALTENBACH, ESQ.
GREENBERG, TRAURIG, HOFFMAN, JOHNSON & MONTGOMERY
LIPOFF, ROSEN & QUENTEL, P.A. 3060 PEACHTREE ROAD,
1221 BRICKELL AVENUE SUITE 400
MIAMI, FLORIDA 33131 ATLANTA, GEORGIA 30303
PHONE NO. (305) 579-0500 PHONE NO. (404) 262-1000
FAX NO. (305) 579-0717 FAX NO. (404) 262-1222
</TABLE>
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value(2)................. $22,298,500 $6,758
- ------------------------------------------------------------------------------------------------------------------
Redeemable Common Stock Purchase
Warrants(3)(4)................................ $ 161,000 $ 48
- ------------------------------------------------------------------------------------------------------------------
Total....................................... $22,459,500 $6,806(5)
==================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
(2) Includes (i) 1,000,000 shares of Common Stock offered hereby, (ii) 1,000,000
shares of Common Stock issuable upon exercise of the Redeemable Common Stock
Purchase Warrants (the "Warrants") offered hereby, (iii) 150,000 shares of
Common Stock subject to the Underwriters' over-allotment option, (iv)
150,000 shares of Common Stock issuable upon exercise of Warrants subject to
Underwriters' over-allotment option, (v) 115,000 shares of Common Stock
issuable upon exercise of Underwriters' Warrants and (vi) 115,000 shares of
Common Stock underlying the Warrants issuable upon exercise of Underwriters'
Warrants.
(3) Includes (i) 1,000,000 Warrants offered hereby, (ii) 150,000 Warrants
subject to the Underwriters' over-allotment option and (iii) 115,000
Warrants subject to the Underwriters' Warrants.
(4) Pursuant to Rule 416, this Registration Statement also covers such
indeterminate number of shares of Common Stock as may be issuable upon
exercise of the Warrants pursuant to antidilution provisions.
(5) The Registrant has previously paid such amount.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND CAPTION CAPTION IN PROSPECTUS
------------------------------------------ ------------------------------------------
<C> <S> <C>
1. Front of Registration Statement and
Outside Front Cover Page of
Prospectus.............................. Facing Page of Registration Statement;
Cross Reference Sheet; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus........................... Inside Front and Outside Back of Cover
Pages Prospectus
3. Summary Information and Risk Factors...... Prospectus Summary; The Company; Risk
Factors
4. Use of Proceeds........................... Use of Proceeds
5. Determination of Offering Price........... Risk Factors; Underwriting
6. Dilution.................................. Risk Factors; Dilution
7. Selling Security Holders.................. Principal and Selling Shareholder
8. Plan of Distribution...................... Outside Front and Outside Back Cover Pages
of Prospectus; Underwriting
9. Legal Proceedings......................... Business
10. Directors, Executive Officers, Promoters
and Control Persons..................... Management
11. Security Ownership of Certain Beneficial
Owners and Management................... Principal and Selling Shareholder
12. Description of Securities................. Description of Securities
13. Interest of Named Experts and Counsel..... *
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. *
15. Organization Within Last Five Years....... Certain Transactions
16. Description of Business................... Prospectus Summary; Business
17. Management's Discussion and Analysis or
Plan of Operation....................... Management's Discussion and Analysis of
Financial Condition and Results of
Operations
18. Description of Property................... Business
19. Certain Relationships and Related
Transactions............................ Certain Transactions
20. Market for Common Equity Related
Stockholder Matters..................... Outside Front Cover Page of and
Prospectus; Dividend Policy; Description
of Securities; Shares Eligible for
Future Sale
21. Executive Compensation.................... Management
22. Financial Statements...................... Financial Statements
23. Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure.............................. *
</TABLE>
- ---------------
* Not applicable or answer thereto is negative.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 4, 1996
PROSPECTUS
STREICHER MOBILE FUELING, INC.
1,000,000 SHARES OF COMMON STOCK AND
1,000,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Streicher Mobile Fueling, Inc., a Florida corporation (the "Company"),
hereby offers 1,000,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), and 1,000,000 Redeemable Common Stock Purchase Warrants (the
"Warrants"). The shares of Common Stock and the Warrants offered hereby
(sometimes hereinafter collectively referred to as the "Securities") will be
purchased separately. Each Warrant is transferable immediately upon issuance and
entitles the holder thereof to purchase one share of Common Stock at a price of
$6.90 per share (assuming an initial offering price of $6.00 per share) during
the four-year period commencing on the first anniversary of the effective date
of this Offering (the "First Exercise Date"). The Warrants are redeemable by the
Company at a redemption price of $.01 per Warrant, at any time after the First
Exercise Date, upon thirty days' written notice to the holders thereof, if the
average closing price of the Common Stock equals or exceeds $10.50 per share for
the twenty consecutive trading days ending three days prior to the date of the
notice of redemption. See "Description of Securities."
Prior to this Offering, there has been no public market for the Common
Stock or Warrants and there can be no assurance that any such market will
develop. It is currently anticipated that the initial offering price of the
Common Stock will be between $5 and $7 per share and the initial public offering
price of the Warrants will be $.125 per Warrant. The initial public offering
price of the shares of Common Stock, the Warrants and the exercise price and
other terms of the Warrants have been determined by negotiations between the
Company and Argent Securities, Inc., as representative of the Underwriters (the
"Representative"). See "Underwriting." The Company has applied to include the
shares of Common Stock and Warrants on the Nasdaq SmallCap Market under the
symbols "FUEL" and "FUELW," respectively, and on the Chicago Stock Exchange,
(the "CSE") and upon "Official Notice of Issuance" will trade under the symbols
FUL and FULW, respectively.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION FROM THE PUBLIC OFFERING PRICE.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED UNDER THE
CAPTION "RISK FACTORS" WHICH APPEAR BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
===========================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share of Common Stock................... $ $ $
- -----------------------------------------------------------------------------------------------------------
Per Warrant................................. $ $ $
===========================================================================================================
Total(3)............................... $ $ $
===========================================================================================================
</TABLE>
(1) Does not reflect additional compensation to be received by the Underwriters
in the form of: (i) a non-accountable expense allowance equal to 3% of the
gross proceeds of this Offering, $ of which has already been paid, and
(ii) an option to purchase up to 100,000 shares of Common Stock at 120% of
the initial public offering price 100,000 Warrants at an exercise price of
$.01 per Warrant (the "Underwriters' Warrants"), exercisable for a period of
four years, commencing one year after the effective date of the Registration
Statement of which this Prospectus is a part, and (iii) fees payable
pursuant to a consulting agreement with the Representative for consulting
services up to an aggregate amount of $100,000 which, at the
Representative's election, become payable upon the closing of this Offering.
The Company, the Selling Shareholder named herein and the Underwriters have
agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses of the Offering payable by the Company estimated
at approximately $644,027, including the Underwriters' nonaccountable
expense allowance (assuming no exercise of the Underwriters' over-allotment
option).
(3) Does not include 150,000 additional shares of Common Stock and Warrants to
cover over-allotments which the Underwriters have an option to purchase for
45 days from the date of this Prospectus at the initial public offering
price, less the Underwriters' discount. If such over-allotment option is
exercised, of the 150,000 shares of Common Stock, the first 75,000 of such
shares will be sold by the Selling Shareholder named herein and the balance
will be sold by the Company. If the Underwriters' over-allotment option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Selling Shareholder will be
$ , $ , $ and $ respectively.
The Securities offered by this Prospectus are being offered by the
Underwriters on a "firm commitment" basis subject to prior sale, when, as and if
accepted by the Underwriters, approval of certain legal matters by counsel for
the Underwriters and certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify such offer without notice and reject any
order in whole or in part. It is expected that delivery of the certificates
representing the Securities will be made in Atlanta, Georgia on or about
December , 1996.
ARGENT SECURITIES, INC.
THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE> 4
[INSIDE FRONT COVER]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OR
WARRANTS OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
The Company intends to furnish to its security holders annual reports
containing audited financial statements and such other periodic reports as the
Company may determine to be appropriate or as may be required by law.
FOR CALIFORNIA RESIDENTS ONLY: The following investor suitability standards
are required of all California residents: $65,000 of income and $250,000 of net
worth, excluding principal residence, home furnishings, and automobiles, or in
the alternative, a minimum net worth of at least $500,000, excluding principal
residence, home furnishings, and automobiles, for all sales of Securities of the
Company to residents of the State of California. California residents wishing to
invest must show their eligibility by completing a confidential purchaser
questionnaire. They must also sign a form letter acknowledging that this
offering does not meet certain guideline of the Commissioner. Rule 260.141.11 of
the Commissioner substantially restricts the resale of the Securities and a copy
of the Rule must be provided to all California investors. The secondary trading
exemption ordinarily provided by Section 25104(h) will be withheld. The
Securities will not be eligible for public trading in California, and the
Company will not be entitled to apply for a secondary trading exemption under
Section 25104(h) for ninety days from the date hereof.
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information, and the financial statements and
notes thereto, appearing elsewhere in this Prospectus. Unless otherwise
indicated, the information in this Prospectus assumes (i) that the Underwriters'
over-allotment option has not been exercised and (ii) that the Underwriters'
Warrants have not been exercised. See "Underwriting." EACH PROSPECTIVE INVESTOR
IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.
THE COMPANY
The Company provides mobile fueling services, primarily to customers which
operate large fleets of vehicles (such as national courier services, major
trucking lines, hauling and delivery services, utilities and governmental
agencies). Company-owned custom fuel trucks deliver fuel on a regularly
scheduled or as needed basis directly to vehicles at customers' locations,
assuring the Company's customers a dependable supply of fuel at competitive
rates. The Company utilizes its proprietary electronic fuel management system to
measure, record and track fuel dispensed to each vehicle fueled at a customer
location. This allows the Company to verify the amount of fuel delivered and
provides its customers with customized fleet fuel data for management analysis
and tax reporting. The Company believes that mobile fueling provides several
economic and other advantages to its customers, including eliminating the costs
and potential environmental liabilities associated with equipping and
maintaining fuel storage and dispensing facilities, reducing labor and
administrative costs associated with fueling vehicles and providing centralized
control over fuel inventories and usage. The Company also believes that federal
and state environmental regulations have created a "window of opportunity" for
the Company to convert fleet operators that currently utilize underground fuel
storage tanks to mobile fueling customers. Under current federal regulations,
the owners of such underground storage tanks are required, by December 1998, to
remove or retrofit such tanks to comply with technical requirements pertaining
to their construction and operation. See "Business -- The Mobile Fueling
Industry."
Founded by Stanley H. Streicher, the Company's President and Chief
Executive Officer, the Company's predecessor, Streicher Enterprises, Inc.
("Enterprises"), commenced its mobile fueling operations in 1983. Mr. Streicher
has been involved in the business of mobile fueling of vehicles since 1979. The
Company presently has operations in six locations throughout Florida and in Los
Angeles and San Diego, California, Atlanta and Columbus, Georgia, Chattanooga
and Kingsport, Tennessee and Dallas/Fort Worth, Texas. At July 31, 1996, the
Company operated a fleet of 49 custom fuel trucks and was servicing
approximately 200 customers at more than 500 locations nightly, delivering fuel
at a rate of over 2,000,000 gallons per month.
The Company intends to grow both through internal means and acquisitions.
The Company's internal growth strategy focuses on obtaining contracts to service
large fleets in or near major metropolitan areas, both through extending
existing customer relationships to new geographic areas and marketing its
services to potential new customers. After establishing operations in a new
market area, the Company seeks to build route density and achieve economies of
scale by providing fueling services to small and medium-sized local and regional
companies. The Company also expects to evaluate acquisition opportunities that
will allow strategic entry into new geographic markets or increase its customer
base within existing markets. See "Business -- Growth Strategy."
The Company was incorporated in the State of Florida in October 1996. Prior
to the closing of this Offering, the Company's business has been conducted
through Enterprises, which was incorporated in Florida in 1983. Immediately
prior to the closing of this Offering, Enterprises will complete a corporate
reorganization (the "Reorganization"), which will result in the Company
succeeding to all of Enterprises' mobile fueling assets, liabilities and
operations. Unless otherwise indicated, all references herein to the "Company"
include the mobile fueling business of Enterprises prior to the Reorganization.
See "Certain Transactions" and Note 1 of Notes to Financial Statements. The
Company's principal executive offices are located at 2720 N.W. 55th Court, Fort
Lauderdale, Florida 33309, (954) 739-3880.
3
<PAGE> 6
THE OFFERING
Securities Offered.................. 1,000,000 shares of Common Stock and
1,000,000 Warrants. See "Description
of Securities."
Warrants............................ Each Warrant entitles the holder
thereof to purchase one share of
Common Stock at a price of $6.90 per
share (assuming an initial offering
price of $6.00 per share) during the
four year period commencing on the
first anniversary of the effective
date of this Offering (the "First
Exercise Date"). The Warrants are
each redeemable by the Company at a
redemption price of $.01 per Warrant,
at any time after the First Exercise
Date, upon thirty days' prior written
notice to the holders thereof, if the
average closing price of the Common
Stock equals or exceeds $10.50 per
share, for the twenty consecutive
trading days ending three days prior
to the date of the notice of
redemption. See "Description of
Securities."
Securities Outstanding Prior to the
Offering............................ 1,500,000 shares of Common Stock
Securities Outstanding Subsequent to
the Offering(1)..................... 2,500,000 shares of Common Stock and
1,000,000 Warrants
Use of Proceeds by Company.......... Fuel truck and equipment purchases,
repayment of indebtedness and the
balance for working capital and other
corporate purposes. See "Use of
Proceeds."
Risk Factors........................ This Offering involves a high degree
of risk and immediate and substantial
dilution. See "Risk Factors" and
"Dilution."
Proposed Nasdaq Symbols(2).......... Common Stock -- FUEL
Warrants -- FUELW
Proposed CSE Symbols(2)............. Common Stock -- FUL
Warrants -- FULW
- ---------------
(1) Does not include (i) the 1,000,000 shares of Common Stock issuable upon the
exercise of the Warrants offered hereby, (ii) up to 75,000 shares of Common
Stock and 150,000 Warrants issuable upon exercise of the Underwriters'
over-allotment option, (iii) the 150,000 shares of Common Stock issuable
upon exercise of the Warrants included in the Underwriters' over-allotment
option, (iv) the 230,000 shares of Common Stock issuable upon exercise of
the Underwriters' Warrants (including the Warrants therein), (v) 1,000,000
shares of Common Stock issuable upon the exercise of stock options to be
granted on the effective date of this Offering at the initial public
offering price to the Company's President, Stanley H. Streicher, or (vi)
100,000 shares of Common Stock reserved for issuance upon the exercise of
stock options that may be granted under the Company's stock option plan.
See "Management -- Employment Agreement" and "-- Stock Option Plan,"
"Description of Securities" and "Underwriting."
(2) The Company's securities have not yet been approved for quotation on Nasdaq
or the CSE and there can be no assurance that the Company will be able to
meet the requirements for quotation, or that a public trading market will
develop or that if such market develops, it will be sustained. See "Risk
Factors -- Lack of Prior Market for Securities."
4
<PAGE> 7
SUMMARY FINANCIAL INFORMATION
The following table presents summary historical data of the Company as of
January 31, 1996 and for the two years ended January 31, 1995 and 1996 which
have been derived from the Company's audited financial statements included
elsewhere in this Prospectus, and unaudited historical financial data. The
selected financial data as of July 31, 1996 and for the six month periods ended
July 31, 1995 and 1996 have been derived from the unaudited financial statements
of the Company which include all adjustments, consisting of only normal
recurring adjustments, which the Company considers necessary for a fair
presentation and results of operations for these periods. The summary financial
information should be read in conjunction with "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and the notes thereto appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTH PERIODS
YEARS ENDED JANUARY 31, ENDED JULY 31,
------------------------- -------------------------
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue................................. $16,663,371 $23,989,358 $10,776,470 $13,887,855
Gross profit............................ 1,445,426 2,237,008 829,236 1,126,926
Operating expenses...................... 1,348,028 1,752,485 855,491 1,244,393
Income (loss) from operations........... 97,398 484,523 (26,255) (117,467)
Interest expense........................ 168,991 343,967 154,062 260,252
Income (loss) before provision for
income taxes......................... (58,089) 173,775 (161,111) (371,332)
Net income (loss)....................... (50,174) 98,606 (104,391) (237,481)
Net income (loss) per share............. (.03) .07 (.07) (.16)
Weighted average number of shares of
common stock outstanding............. 1,500,000 1,500,000 1,500,000 1,500,000
</TABLE>
<TABLE>
<CAPTION>
JULY 31, 1996
---------------------------
JANUARY 31, AS
1996 ACTUAL ADJUSTED (1)
----------- ----------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......................... $ 725,419 $ 977,317 $ 5,845,317
Total assets............................ 6,357,936 7,121,674 11,989,674
Total liabilities....................... 5,972,870 6,974,089 6,974,089
Shareholders' equity.................... 385,066 147,585 5,015,585
</TABLE>
- ---------------
(1) Adjusted to give effect to (i) the sale of 1,000,000 shares of Common Stock
and 1,000,000 Warrants offered hereby at assumed initial public offering
prices of $6.00 per share and $0.125 per Warrant, respectively, and the
application of the net proceeds therefrom. See "Use of Proceeds." No effect
has been given to the exercise of (i) the Warrants, (ii) the Underwriters'
over-allotment option, (iii) the Underwriters' Warrants (including the
Warrants therein), (iv) stock options to purchase 1,000,000 shares of
Common Stock to be granted on the effective date of this Offering at the
initial public offering price to the Company's President, Stanley H.
Streicher, or (v) options to purchase up to 100,000 shares of Common Stock
that may be granted under the Company's Stock Option Plan. See
"Management -- Employment Agreement" and " -- Stock Option Plan,"
"Description of Securities" and "Underwriting."
5
<PAGE> 8
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND SUBSTANTIAL DILUTION AND SHOULD ONLY BE PURCHASED BY INVESTORS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS, PRIOR TO MAKING
AN INVESTMENT, SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND SPECULATIVE
FACTORS, AS WELL AS OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS,
ASSOCIATED WITH THIS OFFERING, INCLUDING THE INFORMATION CONTAINED IN THE
FINANCIAL STATEMENTS HEREIN.
LOSSES FROM OPERATIONS; ACCUMULATED DEFICIT; COVENANT VIOLATION AND WAIVER; NO
ASSURANCES OF PROFITABILITY
Although the Company operated profitably in the fiscal year ended January
31, 1996, the Company experienced net losses in the year ended January 31, 1995
and in the six month period ended July 31, 1996 of $50,174 and $237,481,
respectively, and there can be no assurance that the Company will not incur net
losses in the future. The Company had an accumulated deficit of $113,075 at July
31, 1996. The Company's expansion over the past several years and its negative
cash flows from operating activities have been financed by additional bank
borrowings and lease financing. Subsequent to January 31, 1996, the Company was
not in compliance with the tangible net worth covenant and covenant requiring
delivery of audited financial statements to the bank within 120 days after the
fiscal year end of its line of credit agreement and obtained a waiver from the
bank of such covenants through August 1, 1997. The Company's operating expenses
have increased as its business has grown and can be expected to increase
significantly as a result of the Company's expansion efforts into new markets.
There can be no assurance that the Company will be able to generate sufficient
revenue to meet its operating expenditures or to operate profitably. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
NEED FOR CAPITAL
The mobile fueling business is capital intensive and the Company will
continue to require substantial capital in order to operate and expand its
business. The Company's primary long-term and working capital requirements have
been to fund capital expenditures for custom fuel trucks and related equipment
and working capital for its inventory requirements and the financing of customer
accounts receivable. Historically, the Company has depended primarily on debt
financing for its purchases of custom fuel trucks. If the Company is unable to
obtain additional equity or debt financing in the future, the Company may have
to limit its growth. Following this Offering, the Company expects that its debt
will increase in the future as the Company utilizes borrowed funds to acquire
new vehicles, for acquisitions, working capital or other corporate purposes. The
interest rate on the Company's principal credit facility fluctuates with the
prime lending rate, resulting in greater interest costs to the Company in the
event of rising interest rates. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
GROWTH DEPENDENT UPON EXPANSION; RISKS ASSOCIATED WITH EXPANSION INTO NEW
MARKETS
A significant element of the Company's future growth strategy involves the
expansion of the Company's business into new markets. The Company intends to
expand its business into additional major metropolitan areas. Expansion of the
Company's operations will be dependent on, among other things, the Company's
ability to demonstrate the benefits of mobile fueling to potential new
customers; successfully establish and operate new locations; hire and retain
qualified management; marketing and other personnel; obtain adequate financing
for vehicle purchases and working capital purposes; secure adequate sources of
supply on a timely basis and on commercially reasonable terms and successfully
manage growth (including monitoring operations, controlling costs and
maintaining effective quality controls). The Company's growth prospects will be
largely dependent upon its ability to achieve greater penetration in new
markets. The Company may also seek to expand its operations through the
acquisition of existing companies or their customer bases. There can be no
assurance that the Company will be able to successfully expand its operations.
See "Business -- Growth Strategy."
6
<PAGE> 9
ACQUISITION AVAILABILITY; DIFFICULTY IN ASSIMILATING ACQUISITIONS
An important element of the Company's future growth strategy involves the
acquisition of fuel distributors in new and existing markets. Although the
Company intends to pursue acquisition opportunities as a means of achieving its
growth objectives, there can be no assurance that the Company will be able to
locate or acquire suitable acquisition candidates on acceptable terms or that
future acquired operations will be effectively and profitably integrated into
the Company. Acquisitions involve a number of risks that could adversely affect
the Company's operating results, including diverting management attention, the
assimilation of the operations and personnel of the acquired operations, the
amortization of acquired intangible assets and the potential loss of key
employees of the acquired operations. Properly managing any growth through
acquisitions, avoiding the problems often attendant therewith, and continuing to
operate in the manner which has proven successful to the Company to date will be
important to the future success of the Company's business. See
"Business -- Growth Strategy."
DEPENDENCE ON OFFERING PROCEEDS TO IMPLEMENT PROPOSED EXPANSION;
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company's capital requirements have been and will continue to be
significant. The Company is dependent on and intends to use a substantial
portion of the proceeds of this Offering to implement its proposed expansion.
The Company anticipates, based on currently proposed plans and assumptions
relating to its operations (including the anticipated costs associated with, and
timetable for, its proposed expansion), that the proceeds of this Offering,
together with cash flow from operations and amounts available under its line of
credit, will be sufficient to satisfy its contemplated cash requirements for at
least 12 months following the consummation of this Offering. In the event that
the Company's plans change, its assumptions change or prove to be inaccurate or
if the proceeds of this Offering or cash flows otherwise prove to be
insufficient to fund expansion (due to unanticipated expenses, delays, problems,
difficulties or otherwise), the Company will be required to minimize cash
expenditures and/or obtain additional financing in order to support its plan of
operations. The Company has no current arrangements with respect to, or sources
of, additional financing and there can be no assurance that any additional
financing will be available to the Company on acceptable terms, or at all.
BROAD DISCRETION IN APPLICATION OF PROCEEDS
While management of the Company presently intends to limit the application
of the Offering proceeds to the categories set forth in the Use of Proceeds
table, management may adjust the application and allocation of the net proceeds
of this Offering, including funds received upon exercise of the Underwriters'
over-allotment option or the exercise of any Warrants, if such adjustment is
determined to be in the best interests of the Company in order to address
changed circumstances and opportunities. Furthermore, to the extent that the
Company's expenditures are less than projected, the resulting balance will be
retained and used for working capital and corporate purposes. As a result of the
foregoing, the success of the Company will be substantially dependent upon the
judgment of the management of the Company with respect to the application and
allocation of the net proceeds of this Offering. See "Use of Proceeds."
ABSENCE OF WRITTEN AGREEMENTS
Most of the Company's customers do not have written agreements with the
Company and can terminate the Company's mobile fueling services at any time and
for any reason. If the Company were to experience a high rate of terminations,
the Company's business and financial performance could be materially adversely
affected.
RISKS ASSOCIATED WITH CUSTOMER CONCENTRATION
The Company's revenue have often been concentrated among a few major
customers. In fiscal 1995, fiscal 1996 and through the six months of fiscal
1997, revenues from customers representing 10% or more of the Company's total
revenue, were approximately 14.8%, 12.8% and 24.5%, respectively. Customers
account-
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ing for more than 10% of total revenue have consisted of: Florida Power & Light
Company, (14.8%) in fiscal 1995, (12.8%) in fiscal 1996 and (10.8%) in the first
six months of fiscal 1997; and the United States Postal Service, (13.7%) in the
first six months of fiscal 1997. Although the Company has contracts to provide
mobile fuel services to several of its larger customers, generally the Company
does not obtain written agreements with its customers. In those instances in
which the Company does enter into written agreements, such agreements are
terminable upon notice by either party. As a result of this customer
concentration and absence of written agreements, the Company's business, results
of operations and financial condition could be materially adversely affected by
the loss of one or more of these customers representing more than 10% of
revenue.
LIMITED AVAILABILITY OF MANAGERIAL PERSONNEL
The Company has experienced significant growth over the past several years.
Since 1993, the Company's service area has expanded from Florida and Tennessee
to include California, Georgia and Texas, and the number of custom fuel trucks
operated by the Company has increased from 14 at February 1, 1993 to 49 at July
31, 1996. In addition, during the past three years, the number of the Company's
full-time employees increased from 26 at February 1, 1993 to approximately 139
at July 31, 1996, and further increases in personnel are anticipated as the
Company expands. For the Company to be able to continue to grow effectively it
will need to continue to improve its operational, financial and other internal
systems, and to attract, train, motivate, manage and retain its employees. If
the Company is unable to manage growth effectively, the Company's results of
operations could be adversely affected.
COMPETITION
The Company competes directly and indirectly with other distributors of
fuel, including several regional distributors and numerous small independent
operators. Some of the Company's competitors have significantly greater
financial or marketing resources than the Company. The Company's competitors
also could introduce services that are superior to the Company's or that achieve
greater market acceptance. The Company also competes for customers whose drivers
fuel their own vehicles at retail gas stations. Although there is no market data
available for the mobile fueling industry, the Company believes it has no major
competitors in its principal markets (e.g., regions where the Company services
approximately between 2,000 adn 6,000 vehicles weekly and delivers approximately
between 50,000 and 150,000 gallons of fuel per week.) The Company could
encounter potential competition from a number of well capitalized companies
which distribute fuel and other similar oil products, some of which are larger,
more established and have greater financial, marketing and other resources than
the Company. In addition, some of the Company's customers are capable of
providing the same services to their vehicles directly. The Company believes
that its ability to compete depends on a number of factors, including price,
reliability, credit terms, name recognition, delivery time and service and
support. There can be no assurance that the Company will be able to continue to
compete successfully with respect to these factors. See
"Business -- Competition."
BENEFITS TO AFFILIATES AND INSIDERS FROM PROCEEDS OF PUBLIC OFFERING
Although the Company's shareholders and management will not receive any of
the Company's proceeds from this Offering, except as described below, certain
benefits will accrue to them as a result of the Offering. To the extent that the
Company applies a portion of the net proceeds of this Offering to reduce the
Company's bank debt, Mr. Streicher will be relieved of his personal guaranty of
such indebtedness. See "Use of Proceeds." In addition, if the Underwriters'
over-allotment option is exercised, Mr. Streicher will be selling up to 75,000
shares of Common Stock for net proceeds to him, after underwriting discounts or
commissions (including the Underwriters' 3% non-accountable expense allowance)
of up to $391,500 (assuming an initial public offering price of $6.00 per share
of Common Stock). The Company will bear the balance of the costs of the Offering
estimated at $460,277. See "Use of Proceeds" and "Certain Transactions."
CONTROL BY MANAGEMENT
Upon completion of this Offering, Stanley H. Streicher, the Company's
President and Chief Executive Officer, will beneficially own or have voting
control over approximately 1,500,000 shares of Common Stock, or approximately
60.0% (55.3% if the Underwriters' over-allotment option is exercised in full) of
the then
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outstanding shares of Common Stock. Additionally, the Company intends to enter
into an employment agreement with Mr. Streicher which will provide him with
stock options that will enable him upon the exercise thereof, subject to certain
performance thresholds, to acquire up to an aggregate of 1,000,000 shares of
Common Stock. Mr. Streicher will therefore be in a position to control the
outcome of matters submitted for shareholder approval, including election of the
Company's directors, and could thereby affect the selection of management and
direct the policies of the Company. See " -- Impact of Employment Agreement and
Stock Options," "Management -- Employment Agreement" and "Principal and Selling
Shareholder."
CONFLICTS OF INTEREST BETWEEN MAJORITY SHAREHOLDER AND THE COMPANY; CERTAIN
TRANSACTIONS
Stanley H. Streicher, currently the majority shareholder and sole director
of the Company, and his affiliates have in the past engaged in certain
transactions with the Company. The Company leases its Fort Lauderdale and
Jacksonville properties from Mr. Streicher. Additionally, Mr. Streicher has
personally guaranteed the Company's $2.7 million bank line of credit. To the
extent such guarantee remains, the Company intends to compensate Mr. Streicher
for providing such guarantees at the rate of 2% per annum of the average monthly
outstanding balance under the line of credit. The Company intends to enter into
an employment agreement with Mr. Streicher upon completion of this Offering,
pursuant to which Mr. Streicher will serve as President and Chief Executive
Officer of the Company. See "Management -- Employment Agreement." The Company
also retains the services of its minority shareholder, Milton H. Barbarosh, and
an affiliate, Stenton Leigh Capital Corp., pursuant to a consulting agreement
pursuant to which they provide consulting services at the rate of $10,000 per
month. The Company believes that the terms of these transactions with affiliates
are no less favorable to the Company than could be obtained in arms' length
negotiations with unaffiliated third parties. Any future transactions with
affiliates will be approved by a majority of disinterested directors then
serving on the Board of Directors. See "Risk Factors -- Impact of Employment
Agreement and Stock Options," and "Certain Transactions".
MANAGEMENT BY SOLE DIRECTOR
Stanley H. Streicher is currently the sole director of the Company and as
such has sole authority to manage the policies and direction of the Company. The
Company has agreed with the Representative to increase up to five the number of
individuals serving on the Board of Directors within 30 days of the closing of
this Offering. The additional directors will be elected in accordance with the
provisions of the Florida Business Corporations Act, which permits incumbent
directors (initially Mr. Streicher) to appoint individuals to fill any vacancies
on the Board of Directors. As of this date, no person has been identified by the
Company for election as a director.
FUEL PRICING; EFFECT ON PROFITABILITY
Gasoline and diesel fuel are commodities and, as such, their wholesale
prices are subject to fluctuations in response to changes in supply or other
market conditions over which the Company has no control. Because the Company
sells fuel to its customers at fixed amounts over its wholesale cost, the
Company's gross profit as a percentage of revenue may fluctuate as a result of
changes in wholesale gasoline and diesel fuel prices. In addition, the Company
may not be able to fully pass on future increases in the wholesale prices of
gasoline or diesel fuel to its customers. Currently, the Company does not engage
in derivatives or futures trading to hedge fuel price movements. See
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations."
DEPENDENCE ON SUPPLIERS OF CUSTOM FUEL TRUCKS; FEW SOURCES OF SUPPLY
The Company currently orders and purchases custom fuel trucks from two
manufacturers. Any event adversely affecting the supply and manufacture of these
trucks, including the inability of such manufacturers to meet the Company's
demand for new truck purchases, could have a material adverse effect on the
Company's operations. The Company has no control over the manufacturing process,
quality assurance or the timing of delivery of trucks. The Company also does not
have any contracts or other written agreement with the manufacturers of custom
fuel trucks for the purchase of such vehicles.
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Additionally, the Company may from time to time make purchases of
previously owned fuel trucks and convert such trucks to the Company's
specifications. However, there can by no assurance that such trucks will be
available in the market for purchase by the Company. See "Business -- Custom
Fuel Truck Purchases."
OPERATING RISKS MAY NOT BE COVERED BY INSURANCE
The Company's operations are subject to all of the operating hazards and
risks normally incidental to handling, storing and transporting gasoline and
diesel fuel, which are classified as hazardous materials. The Company maintains
insurance policies in such amounts and with such coverages and deductibles as
the Company believes are reasonable and prudent. However, there can be no
assurance that such insurance will be adequate to protect the Company from
liabilities and expenses that may arise from claims for personal and property
damage arising in the ordinary course of business or that such levels of
insurance will be maintained by the Company or will be available at economical
prices.
GOVERNMENTAL REGULATION
The Company's operations are affected by numerous federal, state and local
laws, including those relating to protection of the environment and worker
safety. The transportation of gasoline and diesel fuel is subject to regulation
by various federal, state and local agencies, including the U.S. Department of
Transportation ("DOT"). These regulatory authorities have broad powers, and the
Company is 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. The
regulations provide that, among other things, the Company's drivers must possess
a commercial drivers license with a hazardous materials endorsement thereon. The
Company is also subject to the rules and regulations of the Hazardous Materials
Transportation Act. For example, the Company's drivers and their equipment must
comply with DOT's pre-trip inspection rules, documentation regulations
concerning hazardous materials (i.e., certificates of shipments which describe
type and amount of product transported), and limitations on the amount of fuel
transported as well as driver time limitations. Additionally, the Company is
subject to DOT inspections which occur at random intervals. Any material
violation of DOT rules or the Hazardous Materials Transportation Act may result
in citations and/or fines upon the Company. In addition, the Company depends on
the supply of gasoline and diesel fuel from the oil and gas industry and,
therefore, is affected by changing taxes, price controls and other laws and
regulations relating to the oil and gas industry generally. The Company cannot
determine the extent to which its 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 the Company to liability for
the conduct of or conditions caused by others, or for acts of the Company that
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,
companies 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.
Although the Company believes that it is 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 the Company's operations if there were any continuing substantial
violations of these rules and regulations. Moreover, it is possible that other
developments, such as stricter environmental laws, regulations and enforcement
policies thereunder, could result in additional, presently unquantifiable, costs
or liabilities to the Company. See "Business -- Governmental Regulation."
CHANGES IN ENVIRONMENTAL REQUIREMENTS
The Company expects to derive a significant amount of its future business
by converting to mobile fueling customers fleet operators that currently utilize
underground fuel storage tanks for their fueling needs. Under
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current federal regulations, the owners of such underground storage tanks are
required, by December 1998, to remove or retrofit such tanks to comply with
technical requirements pertaining to their construction and operation. If the
date for compliance with such regulations is extended, or if other, more
economical means, of compliance are developed or adopted by owners of
underground storage tanks, the opportunity for the Company to market its
services to such persons may be adversely affected.
DEPENDENCE ON KEY PERSONNEL
The success of the Company will be largely dependent on the continued
services and efforts of Stanley H. Streicher, the Company's President and Chief
Executive Officer, and other key personnel. The loss of the services of Mr.
Streicher or certain other key personnel could have a material adverse effect on
the Company's business and prospects. The Company currently maintains a $2
million key-man life insurance policy on the life of Mr. Streicher, under which
the Company is the beneficiary. The Company's success and plans for future
growth will also depend on its ability to attract and retain additional
qualified management and other personnel. There can be no assurance that the
Company will be able to hire or retain such personnel on terms satisfactory to
the Company. Mr. Streicher and the Company have entered into an employment
agreement which is automatically renewable unless otherwise terminated. The
Company has no other employment agreements with its other key personnel. See
"Management -- Employment Agreement."
EFFECT OF ANTI-TAKEOVER LEGISLATION; POSSIBLE ADVERSE EFFECT OF ISSUANCE OF
PREFERRED STOCK ON MARKET PRICE AND RIGHTS OF COMMON STOCK
The State of Florida has enacted legislation that may deter or frustrate
takeovers of Florida corporations. The Florida Control Share Act generally
provides that shares acquired in excess of certain specified thresholds will not
possess any voting rights unless such voting rights are approved by a majority
vote of a corporation's disinterested shareholders. The Florida Affiliated
Transactions Act generally requires supermajority approval by disinterested
directors or shareholders of certain specified transactions between a public
corporation and holders of more than 10% of the outstanding voting shares of the
corporation (or their affiliates). The Company's Articles of Incorporation
authorize the issuance of 1,000,000 shares of "blank check" Preferred Stock
("Preferred Stock") with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors is empowered, without shareholder approval, to issue Preferred
Stock with dividend, liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the holders of the Common
Stock. The issuance of any series of Preferred Stock having rights superior to
those of the Common Stock may result in a decrease in the value or market price
of the Common Stock. Holders of Preferred Stock to be issued in the future may
have the right to receive dividends and certain preferences in liquidation and
conversion rights. The issuance of such Preferred Stock could make the possible
takeover of the Company or the removal of management of the Company more
difficult, discourage hostile bids for control of the Company in which
shareholders may receive premiums for their Common Stock and adversely affect
the voting and other rights of the holders of the Common Stock. The Company may
in the future issue additional shares of its Preferred Stock. See "Description
of Securities."
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
The Company's Articles of Incorporation provide that shareholders seeking
to bring business before an annual meeting of shareholders, or to nominate
candidates for election as directors at an annual or special meeting of
shareholders, must provide timely notice thereof in writing. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 60 days nor more than
90 days prior to the meeting; provided, however, that in the event that less
than 80 day's notice or prior public disclosure of the date of the meeting is
given or made to shareholders, notice by the shareholder, to be timely, must be
received no later than the close of business on the 10th day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever is first. The Bylaws of the Company also specify
certain requirements for a shareholder's notice to be in proper
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written form. These provisions may preclude shareholders from bringing matters
before the shareholders at an annual or special meeting or from making
nominations for directors at an annual or special meeting.
DILUTION
Based upon the net tangible book value of the Company at July 31, 1996,
investors in this Offering will suffer an immediate and substantial dilution of
their investment of approximately $3.97 or 66.2% in net tangible book value per
share. See "Dilution."
LACK OF PRIOR MARKET FOR SECURITIES
Prior to this Offering, there has been no public trading market for the
Securities and there can be no assurances that a public trading market for the
Securities will develop or, if developed, will be sustained. The Company's
Securities have not yet been approved for quotation on the Nasdaq SmallCap
Market and there can be no assurance that a regular trading market for the
Securities will develop for the Securities offered hereby, or, if developed,
that it will be maintained. If for any reason the Company fails to maintain
sufficient qualifications for continued listing on the Nasdaq SmallCap Market or
the CSE, or a public trading market does not develop, purchasers of the
Securities may have difficulty in selling their Securities should they desire to
do so. In any event, because certain restrictions may be placed upon the sale of
securities at prices under $5, unless such securities qualify for an exemption
from the "penny stock" rules, such as a listing on the Nasdaq SmallCap Market or
CSE, some brokerage firms will not effect transactions in the Securities if they
trade below $5, and it is unlikely that any bank or financial institution will
accept the Securities as collateral, which could have an adverse effect in
developing or sustaining any market for the Securities. See "Risk Factors --
Listing and Maintenance Criteria for Nasdaq System; Penny Stock Regulations."
ARBITRARY DETERMINATION OF OFFERING PRICE AND WARRANT EXERCISE PRICE
The initial public offering price of the Common Stock and the Warrants have
been determined by negotiations between the Company and the Representative and
do not necessarily bear any relationship to the Company's assets, net worth or
results of operations, or any other established criteria of value. The offering
price set forth on the cover page of this Prospectus should not be considered an
indication of the actual value of the Securities offered hereby. After
completion of this Offering, such price may vary as a result of market
conditions and other factors. See "Description of Securities" and
"Underwriting."
IMPACT ON MARKET OF WARRANT EXERCISE
In the event of the exercise of a substantial number of Warrants within a
reasonably short period of time after the right to exercise commences, the
resulting increase in the amount of Common Stock of the Company in the trading
market could substantially affect the market price of the Common Stock. See
"Description of Securities -- Warrants."
IMPACT OF EMPLOYMENT AGREEMENT AND STOCK OPTIONS
Upon the completion of this Offering, the Company will enter into an
employment agreement with Stanley H. Streicher, the Company's principal
shareholder, pursuant to which Mr. Streicher will serve as the Company's
President and Chief Executive Officer. The agreement provides Mr. Streicher with
(i) an initial base salary of $275,000, (ii) eligibility to participate in the
Company's bonus pool which will provide him additional compensation of up to 10%
of the Company's pre-tax earnings, and (iii) stock options to acquire up to an
aggregate of 1,000,000 shares of Common Stock at the initial public offering
price with the exercise thereof contingent upon the Company's achievement of
certain performance thresholds. Following the Offering, the Company's annual
operating expenses will increase by approximately $125,000 due to compensation
payable to Mr. Streicher and by amounts payable, if any, pursuant to the bonus
pool. The increase in the Company's operating expenses could have an adverse
effect on the Company's results of operations. See "Management -- Employment
Agreement."
Additionally, Mr. Streicher, to the extent of his holdings of stock
options, will have the opportunity to profit from a rise in the market price of
the Common Stock, if any, without assuming the risk of ownership. The Company
may find it more difficult to raise additional equity capital if it should be
needed for the
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business of the Company while Mr. Streicher's stock options are outstanding. At
any time when Mr. Streicher might be expected to exercise them (the vesting
thereof subject to certain performance thresholds), the Company would probably
be able to obtain additional capital on terms more favorable than those provided
by Mr. Streicher's stock options. Furthermore, in the event of Mr. Streicher's
exercise of a substantial number of stock options in a relatively short period
of time, the resulting increase in the amount of Common Stock in the trading
market could substantially affect the market price of the Common Stock, as well
as have a future dilutive effect on the ownership interest of the Company's
shareholders and earnings per share in future periods. See
"Management-- Employment Agreement" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
ADJUSTMENTS TO WARRANT EXERCISE PRICE AND EXERCISE DATE
The Company, in its sole discretion and in accordance with the terms of the
warrant agreement with the Transfer Agent, may reduce the exercise price of the
Warrants and/or extend the time within which the Warrants may first be exercised
depending on current market conditions, the price of the Common Stock and the
Company's need for additional capital. Further, in the event the Company issues
certain securities or makes certain distributions to its Common Stock
shareholders, the exercise price of the Warrants may be reduced. Any such price
reductions (assuming exercise of the Warrants) will provide less money for the
Company and possibly adversely affect the market price of the Company's
securities.
POSSIBLE RESTRICTIONS ON MARKET MAKING ACTIVITIES IN THE SECURITIES
Although they have no legal obligation to do so, the Underwriters from time
to time may act as market makers and otherwise effect transactions in the
Securities. Unless granted an exemption by the Commission from Rule 10b-6 under
the Securities Exchange Act of 1934 (the "Exchange Act"), the Underwriters will
be prohibited from engaging in any market making activities or solicited
brokerage activities with respect to the Securities for the period from nine
business days prior to any solicitation of the exercise of any Warrant or nine
business days prior to the exercise of any Warrant based on a prior solicitation
until the later of the termination of such solicitation activity or the
termination (by waiver or otherwise) of any right the Underwriters may have to
receive such a fee for the exercise of the Warrants following such solicitation.
As a result, the Underwriters may be unable to continue to provide a market for
the Securities during certain periods while the Warrants are exercisable. The
prices and liquidity of the Securities may be materially and adversely affected
by the cessation of the Underwriters' market making activities. In addition,
there is no assurance that the Underwriters will continue to be market makers in
the Securities. The prices and liquidity of the Securities may be affected
significantly by the degree, if any, of the Underwriters' participation in the
market. The Underwriters may voluntarily discontinue such participation at any
time. Further, the market for, and liquidity of, the Securities may be adversely
affected by the fact that a significant amount of the Securities may be sold to
customers of the Underwriters. See "Underwriting."
REDEMPTION OF REDEEMABLE WARRANTS
The Warrants are subject to redemption by the Company, at any time after
the First Exercise Date at a price of $.01 per Warrant at any time after the
First Exercise Date, upon thirty days' prior written notice to the holders
thereof, if the average closing bid price for the Common Stock equals or exceeds
$10.50 per share (assuming an initial offering price of $6.00 per share) for the
twenty consecutive trading days ending on the third day prior to the date of
notice of redemption. In the event that the Warrants are called for redemption
by the Company, Warrantholders will have thirty days during which they may
exercise their rights to purchase shares of Common Stock. In the event a current
prospectus is not available, the Warrants may not be exercised and the Company
will be precluded from redeeming the Warrants. If holders of the Warrants elect
not to exercise them upon notice of redemption thereof, and the Warrants are
subsequently redeemed prior to exercise, the holders thereof would lose the
benefit of the difference between the market price of the underlying Common
Stock as of such date and the exercise price of such Warrants, as well as any
possible future price appreciation in the Common Stock. As a result of an
exercise of the Warrants, existing shareholders would be diluted and the market
price of the Common Stock may be adversely affected. If a
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Warrantholder fails to exercise his rights under the Warrants prior to the date
set for redemption, then the Warrantholder will be entitled to receive only the
redemption price, $.01 per Warrant. See "Description of Securities -- Warrants."
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN CONNECTION WITH THE
EXERCISE OF THE WARRANTS
The Company will be able to issue shares of its Common Stock upon the
exercise of the Warrants only if (i) there is a current prospectus relating to
the Common Stock issuable upon exercise of the Warrants under an effective
registration statement filed with the Commission, and (ii) such Common Stock is
then qualified for sale or exempt therefrom under applicable state securities
laws of the jurisdictions in which the various holders of Warrants reside.
Although the Company has undertaken to use its best efforts to maintain the
effectiveness of a current prospectus covering the Common Stock subject to the
Warrants offered hereby, there can be no assurance that the Company will be
successful in doing so. After a registration statement becomes effective, it may
require continuous updating by the filing of post-effective amendments. A post-
effective amendment is required (i) when, for a prospectus that is used more
than 9 months after the effective date of the registration statement, the
information contained therein (including the certified financial statements) is
as of a date more than 16 months prior to the use of the prospectus, (ii) when
facts or events have occurred which represent a fundamental change in the
information contained in the registration statement, or (iii) when any material
change occurs in the information relating to the plan of distribution of the
securities registered by such registration statement. The Company anticipates
that this Registration Statement will remain effective for at least nine months
following the date of this Prospectus, assuming a post-effective amendment is
not filed by the Company. The Company intends to qualify the sale of the
Securities in a limited number of states, although certain exemptions under
certain state securities laws may permit the Warrants to be transferred to
purchasers in states other than those in which the Warrants were initially
qualified. The Company will be prevented, however, from issuing Common Stock
upon exercise of the Warrants in those states where exemptions are unavailable
and the Company has failed to qualify the Common Stock issuable upon exercise of
the Warrants. The Company may decide not to seek, or may not be able to obtain
qualification of the issuance of such Common Stock in all of the states in which
the ultimate purchasers of the Warrants reside. In such a case, the Warrants of
those purchasers will expire and have no value if such Warrants cannot be
exercised or sold. Accordingly, the market for the Warrants may be limited
because of the foregoing requirements. See "Description of Securities".
UNDERWRITERS' WARRANTS
In connection with the Offering, the Company will sell to the Underwriters,
for nominal consideration, warrants to purchase an aggregate of 115,000 shares
of Common Stock and 115,000 Warrants (assuming 1,000,000 shares of Common Stock
and 1,000,000 Warrants are sold and assuming the Underwriters' over-allotment is
exercised) (the "Underwriters' Warrants"). The Underwriters' Warrants will be
exercisable for a period of four years, commencing one year after the date of
closing of this Offering, at an exercise price of 120% of the initial public
offering price of the Common Stock and Warrants. The terms of the Warrants
underlying such Underwriters' Warrants will be the same as those offered to the
public hereby. The holders of the Underwriters' Warrants will have the
opportunity to profit from a rise in the market price of the Securities, if any,
without assuming the risk of ownership. The Company may find it more difficult
to raise additional equity capital if it should be needed for the business of
the Company while the Underwriters' Warrants are outstanding. At any time when
the holders thereof might be expected to exercise them, the Company would
probably be able to obtain additional capital on terms more favorable than those
provided by the Underwriters' Warrants.
The Underwriters have "piggyback" and demand registration rights with
respect to the Common Stock, the Warrants and the underlying Common Stock
subject to the Underwriters' Warrants. Any future exercise of these registration
rights may cause the Company to incur substantial expense and could impair the
Company's ability to raise capital through the public sale of its securities.
See "Dilution," "Shares Eligible for Future Sale" and "Underwriting."
14
<PAGE> 17
CONTINUING RELATIONSHIP WITH UNDERWRITER; POTENTIAL INFLUENCE
In connection with this Offering, the Company will have certain continuing
relationships with the Representative some of which may adversely affect the
Company's results of operations. The Company has agreed with the Representative
that (i) it will sell to the Underwriters the Underwriters' Warrant (including
the grant of "piggyback" and demand registration rights), (ii) it will pay,
under certain conditions, to the Underwriters a warrant solicitation fee equal
to 5% of the exercise price of the Warrants exercised, (iii) it will not, for a
period of 24 months commencing on the effective date of the Offering, issue or
sell any shares of its capital stock, or sell or grant options, warrants or
rights to purchase any shares of its capital stock without the consent of the
Representative (except for the Securities described herein), (iv) it will use
its best efforts to cause the election to its Board of Directors one designee of
the Representative and (v) it will enter into a consulting agreement with the
Representative for consulting services for a two year period for aggregate fees
payable to the Representative of $100,000. Any of the foregoing relationships
may adversely impact the Company's business, operating results or financial
condition, or its ability to raise additional capital for its business should
the need arise during the term of the above agreements. See "Risk
Factors -- Underwriters' Warrants" and "Underwriting."
LISTING AND MAINTENANCE CRITERIA FOR NASDAQ SYSTEM; "PENNY STOCK" REGULATIONS
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers Nasdaq, requires that, in order for a company's securities to be
listed on the Nasdaq SmallCap Market, the Company must have $4,000,000 in total
assets, a $1,000,000 market value of the public float and $2,000,000 in total
capital and surplus. Further, initial listing requires two market makers and a
minimum bid price of $3.00 per share. Continued inclusion on the Nasdaq SmallCap
Market currently requires two market makers and a minimum bid price of $1.00 per
share; provided, however, if the Company falls below the minimum bid price, it
will remain eligible for continued inclusion if the market value of the public
float is at least $1,000,000 and the Company has $2,000,000 in capital and
surplus. The CSE has similar listing and maintenance requirements, although its
numerical thresholds are generally lower than Nasdaq's. If the Company fails to
maintain the Nasdaq minimum threshold requirements, it would lose its Nasdaq
listing and trading, if any, in the securities would be conducted in the
over-the-counter market known as the NASD OTC Electronic Bulletin Board. As a
result, an investor may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's Common Stock.
The Commission has adopted regulations which generally define "penny stock"
to be any equity security that has a market price (as defined) less than $5 per
share or an exercise price of less than $5 per share subject to certain
exceptions. Since the Securities have been accepted for quotation on Nasdaq and
CSE, they will initially be exempt from the definition of "penny stock". If the
Securities are later removed from listing by Nasdaq and CSE, and are traded at a
price below $5, the Securities may become subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
Securities to persons other than established customers and institutional
accredited investors. For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
Securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a disclosure schedule prepared by the Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
Securities, and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Securities and may affect the
ability of purchasers in this Offering to sell the Securities in the secondary
market.
FUTURE SALES OF COMMON STOCK PURSUANT TO RULE 144
The 1,500,000 shares of Common Stock issued prior to this Offering are
"restricted securities" as that term is defined by Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act"), and, in the future, may be sold
in compliance with Rule 144 or pursuant to an effective registration statement.
Of such
15
<PAGE> 18
shares, the 1,426,500 shares presently owned by Stanley H. Streicher and 73,500
owned by Milton H. Barbarosh, a consultant to the Company, are subject to the
provisions of lock-up agreements between Mr. Streicher, Mr. Barbarosh and the
Representative. Ordinarily, under Rule 144, a person who is an affiliate of the
Company (as that term is defined in Rule 144) and has beneficially owned
restricted securities for a period of two years may, every three months, sell in
brokerage transactions an amount that does not exceed the greater of (i) 1% of
the outstanding number of shares of a particular class of such securities, or
(ii) the average weekly trading volume in such securities on all national
exchanges and/or reported through the automated quotation system of a registered
securities association during the four weeks prior to the filing of a notice of
sale by a securities holder. A person who is not an affiliate of the Company who
beneficially owns restricted securities and who has held such securities for at
least two years is also subject to the foregoing limitation pursuant to Rule
144(k). Therefore, the 1,426,500 shares and 73,500 shares (assuming the release
thereof from the lock-up restrictions set forth below) will be available for
sale, subject to volume and resale restrictions, beginning December 1998 and
they will be free from these restrictions one year later. In the future, sales
of restricted stock pursuant to Rule 144 may have an adverse effect on the
market price of the Company's Common Stock should a public trading market
develop for such shares.
In addition to the restrictions under Rule 144, the 1,426,500 shares of
Common Stock owned by Mr. Streicher upon completion of the Offering will be
subject to a lock-up period of 60 months, subject to earlier release if
consented to by the Representative or upon the Company's achievement of certain
performance goals. Of the shares subject to the lock-up (i) 75,000 shares shall
be released from the lock-up restrictions in the event such shares are not sold
pursuant to the over-allotment option and (ii) thereafter 40,000 shares shall be
released from the lock-up restrictions on each of the second, third and fourth
anniversary dates of the closing of the offering. Regardless of the Company's
performance, any shares held by Mr. Streicher remaining subject to lock-up shall
be released on February 1, 2002. The 73,500 shares owned by Mr. Barbarosh upon
completion of the Offering will be subject to a lock-up period based upon the
same terms and conditions as Mr. Streicher unless otherwise agreed to by the
Representative. See "Shares Available for Future Sale."
Prior to this Offering, there has been no market for the Common Stock. The
Company can make no prediction as to the effect, if any, that sales of shares of
Common Stock, or the availability of such shares for sale, will have on the
market price of Common Stock prevailing from time to time. Nevertheless, sales
of substantial amounts of Common Stock in the public market could adversely
affect prevailing market prices.
NO DIVIDENDS ANTICIPATED
The Company intends to retain all future earnings for use in the
development of its business and does not anticipate paying any cash dividends on
the Common Stock in the foreseeable future. In addition, the payment of cash
dividends on the Common Stock is restricted by financial covenants in the
Company's loan agreements. See "Dividend Policy."
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK
Management believes that this prospectus contains forward looking
statements, including statements regarding, among other items, the Company's
future plans and growth strategies and anticipated trends in the industry in
which the Company operates. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control. Actual results
could differ materially from these forward-looking statements as a result of the
factors described herein, including, among others, regulatory or economic
influences. In light of these risks and uncertainties, there can be no assurance
that the forward-looking information contained in this Prospectus will in fact
transpire or prove to be accurate.
16
<PAGE> 19
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the shares
of Common Stock and Warrants offered by the Company hereby are estimated to be
approximately $4,868,000, based on an assumed initial public offering price of
$6.00 per share of Common Stock and $.125 per Warrant (approximately $5,276,000
if the Underwriters' over-allotment option is exercised in full). The Company
expects such net proceeds (assuming no exercise of the Underwriters'
over-allotment option) to be utilized approximately as follows:
<TABLE>
<CAPTION>
APPROXIMATE
APPROXIMATE PERCENTAGE OF
APPLICATION OF PROCEEDS DOLLAR AMOUNT NET PROCEEDS
----------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Purchases Of Custom Fuel Trucks(1)............................... $ 2,400,000 49.3%
Repayment of Indebtedness(1)(2).................................. 1,737,800 35.7
Working Capital & Other Corporate Purposes(2).................... 730,200 15.0
------------- ------
Total........................................................ $ 4,868,000 100.0%
=============== ==============
</TABLE>
- ---------------
(1) During the next 12 months, the Company plans to acquire approximately 15
custom fuel trucks at a cost of approximately $160,000 each. A portion of
the cost of the trucks will be paid in cash by the Company and the balance
will be financed. In the past, the Company has financed approximately
between 85% and 95% of the purchase price of fuel trucks. However, the
Company is unable to accurately estimate the amount of cash which will be
required to purchase such trucks, because such amount will be dependent upon
the terms and conditions of financing available to the Company at the time
of purchase. Any proceeds not utilized in the purchase of fuel trucks will
be applied to temporarily reduce amounts borrowed under the Company's line
of credit up to an amount of $500,000 and the balance applied to working
capital and other corporate purposes.
(2) A portion of the net proceeds allocated to working capital and other
corporate purposes may be used for acquisitions. The Company presently has
no agreements or commitments with respect to any acquisitions. The Company
intends to utilize working capital to fund the expansion of the Company
which includes costs related to the opening of new offices, the hiring of
additional personnel and marketing and sales efforts. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 4 of Notes to
Financial Statements for a description of the terms of the line of credit.
The foregoing represents the Company's current estimate of its allocation
of the net proceeds of this Offering based upon the current status of its
business operations, its current plans, and current economic and industry
conditions. Future events, as well as changes in economic or competitive
conditions or the Company's business and the results of the Company's sales and
marketing activities may make shifts in the allocation of funds within or
between each of the items referred to above necessary or desirable. While
management of the Company presently intends to limit the application of the
Offering proceeds to the categories set forth above, should a reapportionment or
redirection of funds be determined by management to be in the best interests of
the Company, the actual amount expended to finance any category of expenses may
be increased or decreased.
If the Underwriters exercise the over-allotment option in full, the Company
will realize additional net proceeds of approximately $408,000, which will be
added to the Company's working capital. The Company will not realize any
proceeds from the sale by the Selling Shareholder of up to 75,000 shares of
Common Stock subject to the Underwriters' over-allotment option. See
"Underwriting."
The Company believes that the proceeds of this Offering, together with cash
flow from operations, will be sufficient to satisfy its contemplated cash
requirements for at least 12 months following the consummation of this Offering.
The Company's financial requirements will depend upon, among other things, the
number of additional custom fuel trucks acquired, the growth rate of the
Company's business, the amount of cash flow generated by operations and the
Company's ability to borrow funds or enter into lease or purchase financing
arrangements for the acquisition of new vehicles or for working capital
purposes. Should the Company require additional debt or equity financing to
support its operations, there can be no assurance that such additional financing
will be available to the Company on commercially reasonable terms, or at all.
Proceeds not immediately required for the purposes described above will be
invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest-bearing
investments.
The Company anticipates that the proceeds, if any, received from any
exercise of the Warrants or the Underwriters' Warrants (including the Warrants
therein) will be utilized for working capital and other corporate purposes.
17
<PAGE> 20
DILUTION
The difference between the initial public offering price per share of
Common Stock and the pro forma net tangible book value per share of Common Stock
after this Offering constitutes the dilution to investors in this Offering. Net
tangible book value per share is determined by dividing the net tangible book
value of the Company (total assets less intangible assets and liabilities) by
the total number of shares of Common Stock outstanding.
At July 31, 1996, the net tangible book value of the Company was $107,426,
or approximately $0.07 per share. After giving effect to the sale by the Company
of the 1,000,000 shares of Common Stock (at an assumed initial offering price of
$6.00 per share) and the Company's use of the estimated net proceeds therefrom
as set forth under "Use of Proceeds," the pro forma net tangible book value of
the Common Stock at July 31, 1996 would have been $5,080,426, or approximately
$2.03 per share. This represents an immediate increase in pro forma net tangible
book value of $1.96 per share to the Company's present shareholders and an
immediate dilution of $3.97 per share (66.2%) to the purchasers of shares of
Common Stock in this Offering. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C> <C>
Initial public offering price (per share of Common
Stock)(1)................................................. $6.00
Net tangible book value at July 31, 1996.................... $0.07
Increase per share attributable to shares offered hereby.... 1.96
-----
Pro forma net tangible book value per share after
Offering.................................................. 2.03
-----
Dilution of net tangible book value per share to purchasers
in this Offering(2)....................................... $3.97 (66.2%)
=====
</TABLE>
- ---------------
(1) Represents the anticipated initial public offering price per share of Common
Stock (excluding Warrants) before deduction of underwriting discounts and
commissions and estimated expenses of the Offering.
(2) Assuming no exercise of Warrants, Underwriters' over-allotment option,
options to be granted to the Company's President, Stanley H. Streicher, and
options that may be granted under the Company's Stock Option Plan. See
"Description of Securities" and "Underwriting."
The following table sets forth on a pro forma basis as of July 31, 1996 the
number and percentage of shares of Common Stock issued, and the amount and
percentage of consideration and average price per share paid by existing
shareholders of the Company, and to be paid by purchasers pursuant to this
Offering (based upon an assumed initial public offering price of $6.00 per share
of Common Stock and before deducting underwriting discounts and commissions and
estimated expenses of this Offering):
<TABLE>
<CAPTION>
OWNERSHIP
-------------------- CONSIDERATION
NUMBER OF -------------------- AVERAGE PRICE
SHARES PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders................. 1,500,000 60.0% $ 253,588 4.0% $0.17
New Shareholders...................... 1,000,000 40.0% $6,000,000 96.0% $6.00
------- ---------- -------
Total............................ 2,500,000 100.00% $6,253,588 100.00%
======= ========= =======
</TABLE>
The foregoing table gives effect to the sale of the shares of Common Stock
offered hereby and does not give effect to the exercise of the Underwriters'
over-allotment option, any Warrants or the Underwriters' Warrants, options to
purchase up to an aggregate of 1,000,000 shares of Common Stock to be granted on
the effective date of this offering at the initial public offering price to the
Company's President, Stanley H. Streicher and options to purchase up to an
aggregate of 100,000 shares of Common Stock that may be granted pursuant to the
Company's Stock Option Plan. See "Management -- Employment Agreement" and " --
Stock Options", "Description of Securities" and "Underwriting".
18
<PAGE> 21
CAPITALIZATION
The following table sets forth the capitalization of the Company as of July
31, 1996 and as adjusted giving effect to the sale by the Company of the
1,000,000 shares of Common Stock and 1,000,000 Warrants offered hereby and the
application of estimated net proceeds therefrom as set forth under "Use of
Proceeds." The table has not been adjusted to give effect to the exercise of the
Underwriters' over-allotment option, the exercise of the Warrants, or the
exercise of the Underwriters' Warrants. This table should be read in conjunction
with the Financial Statements, including the notes thereto, appearing elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
JULY 31, 1996
--------------------------
PRO FORMA
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
Long-term borrowings:
Line of credit borrowings....................................... $2,471,398 $2,471,398
Long-term debt, excluding current portion....................... 1,394,404 1,394,404
Capital lease obligations, excluding current portion............ 168,415 168,415
---------- ----------
4,034,217 4,034,217
---------- ----------
Shareholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares authorized,
none issued and outstanding.................................. -- --
Common Stock, $.01 par value, (20,000,000 shares authorized,
1,500,000 shares issued and outstanding; as adjusted,
2,500,000 shares issued and outstanding)(1).................. 15,000 25,000
Additional paid-in capital........................................ 238,588 5,106,588
Unrealized gain on investment..................................... 7,072 7,072
Retained earnings (deficit)....................................... (113,075) (113,075)
---------- ----------
Total shareholders' equity.............................. 147,585 5,025,585
---------- ----------
Total capitalization.................................... $4,181,802 $9,059,802
========== ==========
</TABLE>
- ---------------
(1) Does not include (i) the 1,000,000 shares of Common Stock issuable upon the
exercise of the Warrants offered hereby, (ii) up to 75,000 shares of Common
Stock and 150,000 Warrants issuable upon exercise of the Underwriters'
over-allotment option, (iii) the 150,000 shares of Common Stock issuable
upon exercise of the Warrants included in the Underwriters' over-allotment
option, (iv) the 230,000 shares of Common Stock issuable upon exercise of
the Underwriters' Warrants (including the Warrants therein), (v) stock
options to purchase 1,000,000 shares of Common Stock to be granted on the
effective date of this Offering at the initial public offering price to the
Company's President, Stanley H. Streicher, or (vi) options to purchase up
to 100,000 shares of Common Stock that may be granted under the Company's
stock option plan. See "Management -- Employment Agreement" and "-- Stock
Option Plan," "Description of Securities" and "Underwriting."
DIVIDEND POLICY
The Company intends to retain any future earnings for the operation and
expansion of its business and does not anticipate paying any cash dividends in
the foreseeable future. In addition, the payment of cash dividends on the Common
Stock is restricted by financial covenants in the Company's loan agreements. Any
future determination as to the payment of cash dividends will depend upon a
number of factors, including the Company's earnings, capital requirements,
financial condition and other factors considered relevant by the Company's Board
of Directors.
19
<PAGE> 22
SELECTED FINANCIAL DATA
The following table presents selected financial data as of and for each of
the fiscal years ended January 31, 1996 which have been derived from the
Company's audited financial statements included elsewhere in this Prospectus.
The selected financial data as of July 31, 1996 and for the six month periods
ended July 31, 1995 and 1996 have been derived from the unaudited financial
statements of the Company which include all adjustments, consisting of only
normal recurring adjustments, which the Company considers necessary for a fair
presentation and results of operations for these periods. The results of
operations for the six months ended July 31, 1996 are not indicative of results
that may be expected for the full year. The information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements and the related notes
thereto. The Company has not paid dividends on its Common Stock during any of
the periods presented below.
<TABLE>
<CAPTION>
SIX MONTH PERIODS
YEARS ENDED JANUARY 31, ENDED JULY 31,
------------------------- -------------------------
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................................... $16,663,371 $23,989,358 $10,776,470 $13,887,855
Cost of sales..................................... 15,217,945 21,752,350 9,947,234 12,760,929
Operating expenses................................ 1,348,028 1,752,485 855,491 1,244,393
Income (loss) from operations..................... 97,398 484,523 (26,255) (117,467)
Interest expense.................................. 168,991 343,967 154,062 260,252
Income (loss) before provision for income taxes... (58,089) 173,775 (161,111) (371,332)
Net income (loss)................................. (50,174) 98,606 (104,391) (237,481)
Net income (loss) per share....................... (.03) .07 (.07) (.16)
Average number of common shares outstanding (1)... 1,500,000 1,500,000 1,500,000 1,500,000
</TABLE>
<TABLE>
<CAPTION>
JULY 31, 1996
---------------------------
JANUARY 31, AS
1996 ACTUAL ADJUSTED (2)
----------- ----------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................................... $ 725,419 $ 977,317 $ 5,845,317
Current assets.................................... 3,151,793 3,543,430 8,411,430
Total assets...................................... 6,357,936 7,121,674 11,989,674
Current liabilities............................... 2,426,374 2,566,113 2,566,113
Long-term borrowings.............................. 3,172,737 4,034,217 4,034,217
Total liabilities................................. 5,972,870 6,974,089 6,974,089
Shareholders' equity.............................. 385,066 147,585 5,015,585
</TABLE>
- ---------------
(1) The average number of shares used in the calculation of earnings per share
includes all shares outstanding during the periods presented. Such number
does not include (i) the 1,000,000 shares of Common Stock offered by the
Company hereby, (ii) the 1,000,000 shares of Common Stock issuable upon
exercise of the Warrants offered hereby, (iii) up to 75,000 shares of
Common Stock issuable by the Company upon exercise of the Underwriters'
over-allotment option, (iv) the 150,000 shares of Common Stock issuable
upon exercise of the Warrants included in the Underwriters' over-allotment
option, (v) the 230,000 shares of Common Stock issuable upon exercise of
the Underwriters' Warrants (including the Warrants therein), (vi) 1,000,000
shares of Common Stock issuable upon the exercise of stock options to be
granted on the effective date of this Offering at the initial public
offering price to the Company's President, Stanley H. Streicher, and (vii)
100,000 shares of Common Stock reserved for issuance upon the exercise of
options that may be granted under the Company's stock option plan, none of
which has been granted to date. See "Management -- Employment Agreement"
and "-- Stock Option Plan" and "Description of Securities."
(2) Adjusted to give effect to (i) the sale of 1,000,000 shares of Common Stock
and 1,000,000 Warrants offered hereby at assumed initial public offering
prices of $6.00 per share and $0.125 per Warrant, respectively, and the
application of the net proceeds therefrom. See "Use of Proceeds". No effect
has been given to the exercise of the (i) Warrants, (ii) Underwriters'
over-allotment option, (iii) Underwriters' Warrants (including the Warrants
therein), (iv) stock options to purchase 1,000,000 shares of Common Stock
to be granted on the effective date of this Offering to the Company's
President, Stanley H. Streicher, or (v) options to purchase up to 100,000
shares of Common Stock reserved for issuance upon the exercise of stock
options that may be granted under the Company's Stock Option Plan. See
"Management -- Employment Agreement" and " -- Stock Option Plan,"
"Description of Securities" and "Underwriting." See "Underwriting."
20
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis of the Company's financial condition as of July 31,
1996 and the Company's results of operations for the years ended January 31,
1995 and 1996 and the six month periods ended July 31, 1995 and 1996 should be
read in conjunction with the Company's financial statements and notes thereto
included elsewhere in this Prospectus. The following discussion contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results may differ significantly from the results discussed in the
forward-looking statements.
OVERVIEW
The Company derives all of its revenue from providing mobile fueling
services. Revenue is comprised principally of sales of gasoline and diesel fuel
and related service charges. Cost of sales is comprised principally of the cost
of fuel and transportation costs (primarily payroll). Included in both revenue
and cost of sales is federal and state excise taxes on fuel, which are collected
by the Company from its customers, when required, and remitted to the
appropriate taxing authority.
RESULTS OF OPERATIONS
Year Ended January 31, 1995 compared to Year Ended January 31, 1996
Revenue increased $7,326,000, or 44.0%, for the year ended January 31, 1996
("fiscal 1996") compared to the year ended January 31, 1995 ("fiscal 1995").
Excluding fuel taxes, revenue increased $5,099,000, or 47.7%. The increase in
revenue resulted from a higher volume of fuel sales due to increased services to
existing customers, acquisition of new customers in existing locations and the
introduction of mobile fueling operations into additional metropolitan areas.
Gross profit increased $792,000, or 54.8%, in fiscal 1996 compared to
fiscal 1995, primarily as a result of the increase in revenue. As a percentage
of revenue, gross profit increased from 8.7% in fiscal 1995 to 9.3% in fiscal
1996, primarily as a result of increased route efficiency due to expanded
operations and increased pricing of the Company's fuel and service charges in
the second half of fiscal 1996.
Operating expenses increased $404,000, or 30.0%, in fiscal 1996 compared to
fiscal 1995. As a percentage of revenue, operating expenses decreased from 8.1%
in fiscal 1995 to 7.3% in fiscal 1996. The Company continued to expand its route
system within existing geographic service areas, resulting in more efficient
operations.
Interest expense increased $175,000, or 103.6%, in fiscal 1996 compared to
fiscal 1995 as a result of increased borrowings to fund the Company's expansion
into new markets and to acquire new custom fuel trucks for existing and new
locations.
The Company recorded an income tax benefit of $8,000 in fiscal 1995
compared to an income tax provision of $75,000 in fiscal 1996.
The Company had a net loss of $50,000, or $.03 per share, in fiscal 1995
and net income of $99,000, or $.07 per share, in fiscal 1996. The Company's
profitability in fiscal 1996 resulted from the above-mentioned efficiency and
pricing improvements.
Six Months Ended July 31, 1995 Compared to Six Months Ended July 31, 1996
Revenue increased $3,111,000, or 28.9%, in the first six months of fiscal
1997 compared to the same period in fiscal 1996. Excluding fuel taxes, revenue
increased by $3,347,000, or 48.0%. Sales to several large customers which are
exempt from certain fuel taxes resulted in the significantly higher percentage
increase in revenue excluding fuel taxes. The increase in revenue resulted from
a higher volume of fuel sales due to increased services to existing customers,
acquisition of new customers in existing locations and the introduction of
mobile fueling operations into additional metropolitan areas.
21
<PAGE> 24
Gross profit increased $298,000, or 35.9%, in the first six months of
fiscal 1997 compared to the first six moths of fiscal 1996. As a percentage of
revenue, gross profit increased from 7.7% in the first six months of fiscal 1996
to 8.1% in the corresponding period of fiscal 1997. The Company increased the
pricing of its fuel sales and service charges in the second half of fiscal 1996.
The Company has not lost any customers because of such increased prices of fuel
and service charges and does not believe that such increases will affect demand
for the Company's services in the future. However, the Company's gross margin
percentage decreased in the six month period ended July 31, 1996 from the year
ended January 31, 1996 due to the addition of new lower margin services to
certain customers.
Operating expenses increased $389,000, or 45.5%, in the first six months of
fiscal 1997 compared to the same period in fiscal 1996. As a percentage of
revenue, operating expenses increased from 7.9% in the first six months of
fiscal 1996 to 9.0% in corresponding period of fiscal 1997. The increase in
operating expenses resulted from the continued expansion of existing locations,
additional expenses incurred at recently opened locations and an overall
increase in insurance expense. Upon completion of the Offering, the Company's
annual operating expenses will increase by approximately $125,000 as a result of
compensation payable to Mr. Streicher pursuant to his employment agreement. See
"Management -- Employment Agreement." Pursuant to the employment to be entered
into between the Company and Mr. Streicher, the Company will grant Mr. Streicher
stock options to acquire up to an aggregate of 1,000,000 shares of Common Stock
at the initial public offering price with the timing of exercise thereof
contingent upon the Company's achievement of certain performance thresholds.
These outstanding options may adversely affect the Company's ability to raise
capital in the future, and if exercised, have a future dilutive effect upon the
ownership interest of the Company's shareholders and on the Company's earnings
per share in future periods.
Interest expense increased $106,000, or 68.9%, in the first six months of
fiscal 1997 compared with the corresponding period in fiscal 1996 as a result of
an increase in borrowings to fund the Company's acquisition of new trucks,
primarily for existing locations.
The Company had an income tax benefit of $57,000 in the first six months of
fiscal 1996 and $134,000 in the first six months of fiscal 1997.
The Company had a net loss of $104,000, or $.07 per share, for the first
six months of fiscal 1996 and $237,000, or $.16 per share, for the first six
months of fiscal 1997. Net losses for both periods resulted primarily from
additional operating expenses and interest expense relating to expansion of the
Company's operations.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which
requires adoption by the Company in fiscal 1997. SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used, and for long-lived assets and certain identifiable intangibles to be
disposed of. The adoption of SFAS No. 121 did not have a material effect on the
Company's financial condition or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $725,000 as of January 31, 1996 and
$977,000 as of July 31, 1996. The Company's primary long-term and working
capital requirements have been to fund capital expenditures for custom fuel
trucks and related equipment and working capital for its inventory requirements
and the financing of customer accounts receivable. The Company's expansion over
the past several years and its negative cash flows from operating activities
have been financed by additional bank borrowings and lease financing. In the
past, the Company has financed approximately between 85%% and 95% of the
purchase price of fuel trucks. Presently, the Company is unable to estimate the
amount of cash required for the purchase of fuel trucks because such amount will
be dependent upon the terms and conditions of financing, if any, available to
the Company at the time of purchase. The Company's cash and unrestricted
investments totalled $38,000 as of July 31, 1996. In addition, at July 31, 1996,
the Company had $229,000 available under its revolving line of credit.
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<PAGE> 25
The Company has a credit facility with BankAtlantic providing for a $2.7
million revolving line of credit which the Company utilizes to purchase custom
fuel trucks and for working capital. Borrowings are subject to a borrowing base
determined by eligible accounts receivable and bear interest at 1.5% per annum
over the prime rate. The facility is secured by substantially all of the
Company's assets (including accounts receivables). The credit facility contains
covenants that, among other things, include the maintenance of a minimum
tangible net worth of $375,000, restrict mergers, dispositions of assets and
certain business acquisitions. As a result of the Company's losses and expenses
related to the Offering, the Company's tangible net worth was reduced to 107,426
at July 31, 1996 which amount included Offering expenses of $33,543. Subsequent
to January 31, 1996, the Company was not in compliance with the tangible net
worth covenant and covenant requiring delivery of audited financial statements
to the bank within 120 days after the fiscal year end of its line of credit
agreement and obtained a waiver from the bank of such covenants through August
1, 1997. See Note 4 of Notes to Financial Statements. After giving effect to the
Offering and the receipt of proceeds therefrom, the Company will be in
compliance with the terms of its credit facility.
Cash flows provided by (used in) operating activities totalled $234,000 in
fiscal 1995, ($212,000) in fiscal 1996, ($352,000) for the six months ended July
31, 1995 and ($567,000) for the six months ended July 31, 1996. Cash flows from
operating activities have been adversely affected by the Company's net losses as
well as the funding of continually increasing number of accounts receivable
resulting from the Company's expansion. The Company has experienced an increase
of approximately ten days in the average period of time for accounts receivable
collection from 24 days at fiscal year end 1995 to 34 days at July 31, 1996. The
Company recently has taken steps to improve its cash flows from operating
activities, including improving accounts receivable collection methods;
increasing the prices of certain of the Company's services; introducing a new
daytime delivery service at an hourly rate; eliminating certain unprofitable
services; and revising certain routes to increase truck utilization.
Cash flows used in investing activities totalled $1,581,000 in fiscal 1995,
$1,174,000 in fiscal 1996, $690,000 for the six months ended July 31, 1995 and
$390,000 for the six months ended July 31, 1996. Cash flows used in investing
activities in all periods principally represents expenditures for the purchase
of custom fuel trucks and related equipment. In the past, the Company has
financed approximately between 85% and 95% of the purchase price of fuel trucks.
Cash flows from financing activities totalled $1,277,000 in fiscal 1995,
$1,318,000 in fiscal 1996, $842,000 for the six months ended July 31, 1995 and
$774,000 for the six months ended July 31, 1996. Cash flows from investing
activities in each period principally represent the increase in net borrowings
under the Company's line of credit and the repayment of obligations for
equipment under capital leases.
The Company believes that the proceeds of this Offering, together with cash
flow from operations, will be sufficient to satisfy its contemplated cash
requirements for at least 12 months following the consummation of this Offering.
The Company's financial requirements will depend upon, among other things, the
number of additional custom fuel trucks acquired, the growth rate of the
Company's business, the amount of cash flow generated by operations and the
Company's ability to borrow funds or enter into lease or purchase financing
arrangements for the acquisition of new trucks or for working capital purposes.
Should the Company require additional debt or equity financing to support its
operations, there can be no assurance that such additional financing will be
available to the Company on commercially reasonable terms, or at all.
NEW ACCOUNTING PRONOUNCEMENTS
In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation,"
was issued. SFAS No. 123 establishes a fair value method for accounting for
stock-based compensation plans either through recognition or disclosure. The
Company intends to account for stock option grants in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
and, accordingly, will not recognize compensation expense for stock option
grants made at an exercise price equal to or in excess of the fair market value
at the date of grant. Changes in the accounting for stock-based compensation are
optional and the Company intends to adopt only the disclosure requirements of
SFAS No. 123 as of January 31, 1997.
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<PAGE> 26
BUSINESS
The Company provides mobile fueling services, primarily to customers which
operate large fleets of vehicles (such as national courier services, major
trucking lines, hauling and delivery services, utilities and governmental
agencies). Company-owned custom fuel trucks deliver fuel on a regularly
scheduled or as needed basis directly to vehicles at customers' locations,
assuring the Company's customers a dependable supply of fuel at competitive
rates. The Company utilizes its proprietary electronic fuel management system to
measure, record and track fuel dispensed to each vehicle fueled at a customer
location. This allows the Company to verify the amount of fuel delivered and
provides its customers with customized fleet fuel data for management analysis
and tax reporting. Additionally, the Company's fuel management system reduces
the risk of employee theft by dispensing fuel only to authorized vehicles. The
Company believes that mobile fueling provides several economic and other
advantages to its customers, including eliminating the costs and potential
environmental liabilities associated with equipping and maintaining fuel storage
and dispensing facilities, reducing labor and administrative costs associated
with fueling vehicles and providing centralized control over fuel inventories
and usage. The Company also believes that federal and state environmental
regulations have created a "window of opportunity" for the Company to convert
fleet operators that currently utilize underground storage tanks to mobile
fueling customers. See "-- The Mobile Fueling Industry."
Founded by Stanley H. Streicher, the Company's President and Chief
Executive Officer, the Company's predecessor commenced its mobile fueling
operations in 1983. The Company presently has operations in six locations
throughout Florida and in Los Angeles and San Diego, California, Atlanta and
Columbus, Georgia, Chattanooga and Kingsport, Tennessee and Dallas/Fort Worth,
Texas. At July 31, 1996, the Company operated a fleet of 49 custom fuel trucks
and was servicing approximately 200 customers at more than 500 locations
nightly, delivering fuel at a rate of over 2,000,000 gallons per month.
THE MOBILE FUELING INDUSTRY
Traditionally, business and other entities that operate large fleets of
vehicles have met their fueling requirements by either maintaining their own
supply of fuel in on-site storage tanks or fueling vehicles with credit card
purchases or other credit arrangements at local retail gas stations. On-site
storage tanks and fueling facilities can be expensive to construct and maintain
and expose the property owner and operator to potential liability associated
with fuel leaks or spills. In addition, increasingly stringent federal and state
environmental regulation of underground storage tanks will require businesses
that maintain their own fuel supplies to spend significant amounts to remove or
retrofit underground storage tanks to meet regulatory standards. For example,
federal regulations designed to protect the nation's soil and groundwater from
contamination by leaking underground petroleum storage tanks currently require
that all new storage tanks and, by December 1998, all existing storage tanks
comply with certain construction standards and contain leak detection systems.
Some states, including Florida, have promulgated their own detailed criteria for
new underground storage tanks and the retrofitting of older underground storage
tanks, and in some instances such criteria are more stringent than the federal
regulations. The Company believes that many fleet operators currently utilizing
underground storage tanks will choose to meet their fueling requirements by
other means, including mobile fueling, instead of investing in upgrading
existing facilities.
Fueling fleet vehicles at retail gas stations is an inefficient use of
employee time, creates a significant amount of unnecessary paperwork and exposes
the fleet operator to an increased risk of employee fraud. In addition, while
large users often are able to negotiate favorable fuel pricing from retail gas
stations, the labor time expended by having employees fuel their own vehicles as
well as the costs associated with management and administration of fuel
purchases can exceed the benefits associated with price discounts.
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<PAGE> 27
Mobile fueling services, such as those provided by the Company, offer
several benefits over traditional fueling methods:
- Reduced Operating Costs and Increased Labor Productivity. Mobile fueling
enables businesses to reduce operating costs by eliminating the need for
company employees to fuel vehicles either on-site or at local retail gas
stations. Overnight fueling prepares fleet vehicles for operation at the
beginning of each work day and increases labor productivity by allowing
employees to use their vehicles during time that would otherwise be spent
fueling. Mobile fueling also reduces the administrative burden required
to oversee and administer fuel purchases and inventories.
- Provides Centralized Inventory Control and Management. The Company's
fuel management system provides customers with weekly reports detailing,
among other things, the location, description and daily and weekly fuel
consumption of each vehicle fueled by the Company. This eliminates
customers' need to invest working capital to maintain adequate fuel
supplies, and allows customers to centralize their fuel inventory
controls and track and analyze vehicle movement and fuel consumption for
management and tax reporting purposes.
- Provides Tax Reporting Benefits. The Company's fuel management system's
ability to track fuel consumption to specific vehicles and fuel tanks
provides tax benefits to customers who consume fuel in uses that are
tax-exempt, such as for off-road vehicles, government-owned vehicles and
fuel used to run refrigerator units on vehicles. For such uses, the
customers receive reports which provide them with the information
required to substantiate such tax exemptions.
- Eliminates Expenses and Liabilities of On-site Storage. Fleet operators
who previously satisfied their fuel requirements using on-site storage
tanks can eliminate the capital expenditures and operating costs required
to equip and maintain fuel storage and dispensing facilities and
inventory and to comply with increasingly stringent environmental
regulations. In addition, by removing on-site storage tanks and relying
on mobile fueling, customers avoid potential liabilities associated with
the handling and storage of fuel.
- Prevents Fuel Theft. Fleet operators that rely on employees to fuel
vehicles, whether at on-site facilities or at retail gas stations, often
experience shrinkage of fuel inventories or excess fuel purchases due to
employee fraud. The Company's fuel management system reduces the risk of
employee theft by dispensing fuel only to authorized vehicles. Utilizing
an independent contractor such as the Company for fueling services rather
than allowing employees to purchase fuel at local retail stations also
eliminates employee fraud due to credit card abuse.
- Emergency Fuel Supplies. Emergency preparedness, including fuel
availability, is critical to the operation of utilities, delivery
services and other fleet operators. The Company provides access to
emergency fuel supplies to allow customers to respond more effectively to
severe local weather conditions or other emergency situations.
- Comparable Pricing. The Company generally prices its fueling services at
rates comparable to the retail market price of gasoline and diesel fuel.
This has proven to be an effective inducement to cause customers to
convert to mobile fueling services from on-site and credit card based
fueling methods.
GROWTH STRATEGY
The Company intends to grow by consolidating its position in its existing
markets and expanding into additional geographic markets. The long-term
objective of the Company is to become a major national supplier of gasoline and
diesel fuel for vehicle fleets. The Company intends to implement its strategy
through (i) internal market development by which it builds route densities to
become the lowest cost operator and (ii) seeking strategic acquisition
opportunities to enter new market areas or increase its customer base in an
existing market.
Internal Market Development. The Company typically has entered new markets
only after securing contracts to service large fleets in or near major
metropolitan areas, typically through existing customer
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<PAGE> 28
relationships. After establishing operations in a new market area, the Company
attempts to increase its customer base and achieve economies of scale by
providing fueling services to small and medium-sized local and regional
companies.
Strategic Acquisitions. The Company believes that opportunities exist for
the Company to enter new geographic markets through the acquisition of smaller
local or regional fuel distributors. The Company also intends to seek
acquisition opportunities in existing market areas to increase the Company's
customer base and complement its existing operations. Such acquisitions would
likely involve the purchase of mobile fueling equipment and customer lists and
require little additional administrative expense to operate. The Company
believes that it can introduce operating efficiencies into existing business by
integrating their operations with its own and that it can increase the sales
potential of acquired operations by providing their existing and potential
customers the additional benefits associated with the deployment of the
Company's fuel management system.
MARKETING AND CUSTOMERS
The Company markets its services primarily to customers which operate large
fleets of vehicles in connection with their business (such as national courier
corporations, major trucking lines, hauling and delivery services, utilities and
governmental agencies). The Company also seeks to obtain the business of smaller
fleet operators which are in physical proximity to its larger customers. Once
engaged to provide fueling services, the Company is usually the exclusive
service for the fueling of a customer's entire fleet or a particular yard of
vehicles. For potential customers with larger fleets, the Company generally
obtains approval from regional corporate offices to supply fuel within a newly
designated area. Whereas large fleet operators offer immediate market
penetration on a regional basis, small fleet operators are equally important
accounts because they provide geographic density which optimizes fuel delivery
efficiency and reduces cost.
The Company's sales representatives focus their marketing efforts on fleet
operators within the Company's established service areas. The Company's sales
representatives identify and directly contact candidates for the Company's
services. Many of the Company's sales presentations, particularly to major fleet
operators, are conducted by Stanley H. Streicher, the Company's President.
Direct marketing, including telephone solicitation, has played a primary role in
the Company's development of new business. Another important marketing source
has been referrals from existing customers.
The Company distributes gas and diesel fuel to over 200 customers. Florida
Power & Light Company ("FP&L") accounted for more than 10% of the Company's
revenue in the years ended January 31, 1995 and 1996; and in the six months
ended July 31, 1996, FP&L and the United States Postal Service each accounted
for more than 10% of the Company's revenues. Commencing in approximately three
months, the Company has been selected to conduct a test of its mobile fueling
services for the United States Postal Service's bulk mail delivery operations
division. There can be no assurance that such trial period will result in the
Company's continuing fueling service to such bulk mail division. Although the
Company has contracts to provide mobile fueling services to several of its
larger customers, generally the Company does not obtain written agreements with
its customers. See "Risk Factors -- Absence of Written Agreements."
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<PAGE> 29
The following table identifies certain of the Company's customers, along
with the number of customer locations serviced and the states in which the
Company provides mobile fueling services.
<TABLE>
<CAPTION>
CUSTOMER NAME NUMBER OF LOCATIONS STATES
- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
ABF Freight 13 California, Florida, Georgia
Tennessee & Texas
AT&T 1 California
Coca Cola 13 California and Florida
Consolidated Freight 4 Florida
Conway Southern Express 6 Florida
Emery Freight 5 Florida and Tennessee
Federal Express 22 Florida
Florida Power Corp. 2 Florida
Florida Power & Light Co. 108 Florida
Frito-Lay, Inc. 8 Florida
Old Dominion Freight 3 California and Florida
Overnite Transportation 3 Florida
Roadway Express 6 California and Florida
SouthEastern Freight 4 Florida and Texas
BellSouth 108 Florida
USF Holland 2 Florida, Georgia and Tennessee
USF Dugan 5 Florida, Georgia and Texas
U.S. Postal Service 163 Florida
</TABLE>
OPERATIONS
The Company currently operates from 13 locations in California, Florida,
Georgia, Tennessee and Texas. The Company delivers fuel utilizing its own fleet
of 49 custom fuel trucks, each of which is equipped with the Company's
proprietary electronic fuel tracking and reporting system. The Company's
vehicles have fuel capacities ranging from 2,800 to 4,200 gallons. Each vehicle
services generally between five and 15 customer locations per day or night,
depending on size of the customers, market density and the individual customers'
fuel requirements. Generally, the custom fuel trucks acquire fuel inventory
daily at local port facilities or large wholesale gas distributor locations and
are assigned to a specified delivery route. The Company conducts all dispatch
and billing functions from corporate headquarters. Route drivers and service
personnel operate from all the Company's offices.
The Company's fuel management system derives its data from the Fuel
Tracking Controller (the "FTC Computer"), which is a computer installed on a
customized fuel truck. The FTC Computer can be programmed to control a variety
of truck configurations; single, dual, or triple storage container trucks; and
any number of pumps and hoses attached to the fuel truck. The FTC Computer
details fueling from the Company's trucks to each vehicle in the customer's
vehicle fleet to a measurement of 1/100 of a gallon by reading the
state-calibrated meter installed on the fuel trucks. To accomplish this
measurement, the FTC Computer interfaces with hand-held devices operated by the
Company's driver or operator. The Company currently has a patent application
pending with the United States Patent and Trademark Office for its proprietary
electronic fuel management system which application has received an indication
of allowable subject matter. There can be no assurance that such patent will be
granted.
To permit the Company's customers to track their use of fuel, each fleet
vehicle or piece of equipment fueled by the Company is electronically identified
from a list of the customer's asset number previously registered in the
Company's computer. For security and tracking purposes, the FTC Computer will
not permit fuel to be dispensed from the Company's truck unless both the fleet
yard and the individual vehicle to be fueled electronically correspond to the
FTC Computer registration. A hand-held radio connected to a scanning device
links the operator or driver of the fuel truck with the FTC Computer. Only after
verification of both the
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<PAGE> 30
yard and the truck or piece of equipment will the FTC Computer allow operation
of the fuel pump on the fuel truck to dispense fuel.
All fuel dispensing from a fuel truck is recorded by the FTC Computer and
stored in a tamper free solid state memory cartridge ("SSC") for downloading at
an operations control center where the data is assimilated into reports and
invoices for the customer. The FTC Computer will not allow fuel to be dispensed
unless this removable SSC cartridge is inserted into the FTC Computer. The SSC
has no moving parts and is not susceptible to damage or data loss under normal
conditions. The SSC also is protected by a dual battery back-up system and a
dual disk system to protect data. The Company also maintains a backup computer
system in the event of failure of the primary system.
The Company also has adapted its FTC Computer for use with fixed site
tanks. Upon conversion of a customer tank, the Company services and manages fuel
delivery to the tank and provides the customer with reports detailing fuel
dispensed by the customer from the tank into each fleet vehicle.
FUEL SUPPLY
Gas and diesel fuel are commodities which are processed and sold by various
sources. The Company purchases fuel from several suppliers at spot market prices
and often qualifies for volume discounts. The Company is currently purchasing
fuel from major suppliers. The Company monitors fuel prices and price trends in
each of its markets on a daily basis and seeks to purchase at the lowest
available prices with the best terms satisfactory to the Company.
CUSTOM FUEL TRUCK PURCHASES
The Company presently orders and purchases custom fuel trucks from two
manufacturers of trucks suitable for the Company's operations. These companies
provide their customers with the option of purchasing standard equipment fuel
trucks or custom designing a fuel truck to particular specifications.
The typical configuration of the Company's custom fuel trucks is a Ford
L-9000 with a 4400 gallon multi-compartment aluminum tank, a vapor recovery
system and the Company's proprietary FTC Computer, which records and regulates
fuel flow from the storage compartments.
For maintenance of the fuel trucks, the Company relies upon equipment
warranties, fixed fee service contracts and on-site repairs. To date, the
Company has not experienced significant down-time on any of its customized fuel
trucks.
COMPETITION
The Company competes with other distributors of fuel, including several
regional distributors and numerous small independent operators. Some of the
Company's competitors have significantly greater financial or marketing
resources than the Company. The Company's competitors also could introduce
services that are superior to the Company's or that achieve greater market
acceptance. The Company also competes for customers whose drivers fuel their own
vehicles at retail gas stations. Although there is no market data available for
the mobile fueling industry, the Company believes it has no major competitors in
its principal markets (e.g., regions where the Company services approximately
between 2,000 and 6,000 vehicles weekly and delivers approximately between
50,000 and 150,000 gallons of fuel per week. The Company could encounter
potential competition from a number of well capitalized companies which
distribute fuel and other similar oil products, some of which are larger, more
established and have greater financial, marketing and other resources than the
Company. In addition, some of the Company's customers are capable of providing
the same services to their vehicles directly. The Company believes that its
ability to compete depends on a number of factors, including price, reliability,
credit terms, name recognition, delivery time and service and support. There can
be no assurance that the Company will be able to continue to compete
successfully with respect to these factors.
EMPLOYEES
At July 31, 1996, the Company had 139 full-time employees, of whom 20 were
involved in executive, managerial, supervisory and sales capacities, 98 were
route drivers and 21 served in various clerical and other capacities. None of
the Company's employees is covered by a collective bargaining agreement or is a
member of a union. The Company considers its relationship with its employees to
be good.
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<PAGE> 31
PROPERTIES
The Company's corporate headquarters are located in a 10,000 square foot
facility in Fort Lauderdale, Florida. This facility accommodates the Company's
corporate, administrative, marketing and sales personnel, as well as truck yard
space and warehouse space. The lease expires July 31, 2014, and the fixed annual
rent is $51,000. The Company also leases service and supply depots at the
following locations: California (San Diego and Gardenia); Florida (Ft. Myers,
Tampa, Melbourne, Orlando and Jacksonville); Georgia (Atlanta and Columbus);
Tennessee (Kingsport and Chattanooga); and Texas (Dallas/Fort Worth). Certain of
the Company's facilities are leased from Stanley H. Streicher, the Company's
President and Chief Executive Officer. See "Certain Transactions." The Company
believes that its existing facilities are adequate for its current needs and
that additional facilities in its existing service areas are available to meet
future needs.
GOVERNMENTAL REGULATION
The Company's operations are affected by numerous federal, state and local
laws, including those relating to protection of the environment and worker
safety. The transportation of gasoline and diesel fuel is subject to regulation
by various federal, state and local agencies, including the U.S. Department of
Transportation ("DOT"). These regulatory authorities have broad powers, and the
Company is 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.The
regulations provide that, among other things, the Company's drivers must possess
a commercial drivers license with a hazardous materials endorsement thereon. The
Company is also subject to the rules and regulations of the Hazardous Materials
Transportation Act. For example, the Company's drivers and their equipment must
comply with DOT's pre-trip inspection rules, documentation regulations
concerning hazardous materials (i.e., certificates of shipments which describe
type and amount of product transported), and limitations on the amount of fuel
transported as well as driver time limitations. Additionally, the Company is
subject to DOT inspections which occur at random intervals. Any material
violation of DOT rules or the Hazardous Materials Transportation Act may result
in citations and/or fines upon the Company. In addition, the Company depends on
the supply of gasoline and diesel fuel from the oil and gas industry and,
therefore, is affected by changing taxes, price controls and other laws and
regulations relating to the oil and gas industry generally. The Company cannot
determine the extent to which its 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 the Company to liability for
the conduct of or conditions caused by others, or for acts of the Company that
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,
companies 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.
Although the Company believes that it is 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 the Company's operations if there were any continuing substantial
violations of these rules and regulations. Moreover, it is possible that other
developments, such as stricter environmental laws, regulations and enforcement
policies thereunder, could result in additional, presently unquantifiable, costs
or liabilities to the Company. See "Business -- Governmental Regulation."
LEGAL PROCEEDINGS
The Company has no material legal proceedings pending. From time to time,
the Company may become a party to litigation incidental to its business. There
can be no assurance that any future legal proceedings will not have a material
adverse effect on the Company's business, reputation, financial condition or
results of operations.
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<PAGE> 32
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, ages, addresses and positions
with the Company as of the date of this Prospectus of all of the officers and
directors of the Company. Also set forth below is information as to the
principal occupation and background for each person in the table.
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION AND OFFICE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Stanley H. Streicher.......... 53 President, Chief Executive Officer, Director and
Founder
Timothy Koshollek............. 32 Vice President of Marketing and Operations
Kenneth C. Day................ 66 Controller, Chief Financial Officer
</TABLE>
Mr. Streicher has served as President and Chief Executive Officer of the
Company since its inception. Mr. Streicher has also served as the President and
Chief Executive Officer of Enterprises, the Company's predecessor, since its
inception in 1983. During the period 1979 to 1983, Mr. Streicher operated a
mobile fueling business which became the Company's predecessor. From 1972 to
1979, Mr. Streicher served as supervisor of receiving of AT&T's Montgomery
Material Management Center, where he designed systems to expedite material and
equipment handling. From 1965 to 1972, Mr. Streicher served to the rank of
Captain in the United States Military in various leadership capacities,
including the command of an aviation division together with the responsibility
for scheduling aircraft and their refueling.
Mr. Koshollek has served as the Vice President of Marketing and Operations
of Enterprises since 1994. From 1991 to 1994, Mr. Koshollek was responsible for
sales and management of a wholesale seafood company. From 1989 to 1991, he was
the operations manager of Enterprises responsible for its Southeast division
fuel delivery operations.
Mr. Day has served as the Controller and the Company's Chief Financial
Officer of the Company since May 1994. From 1987 to 1994 he was Controller and
Treasurer of Century Elevator Company, a manufacturer of elevators. From 1983 to
1986 he was the Controller of Ski Rixen International, Inc., a distributor of
waterskiing accessories. From 1978 to 1982, he served as a finance officer at
Sikes Tile Distributors, Inc., a distributor of tiles in South Florida. From
1972 to 1978, he was Controller at Fremont Company, a national distributor of
food products.
The Company has agreed with the Representative that, within 30 days after
the completion of this Offering, the Company will increase to five the number of
individuals serving on the Company's Board of Directors, at least two of whom
will be independent directors. The additional directors will be elected in
accordance with the provisions of the Florida Business Corporations Act, which
permits incumbent directors (initially Mr. Streicher) to appoint individuals to
fill any vacancies on the Board of Directors. As of this date, no person has
been identified by the Company for election as a director. The Company has also
agreed that, for a period of five years following the completion of this
Offering, it will use its best efforts to cause the election to its Board of
Directors, one designee of the Representative, provided that such designee is
reasonably acceptable to and approved by the Company. Alternatively, the
Representative may appoint an observer to attend all meetings of the Board of
Directors during such period. As of this date, no person has been identified by
the Representative for election as a director or for appointment as an observer.
The Company's directors will be reimbursed for any out-of-pocket expenses
incurred by them for attendance at meetings of the Board of Directors or
committees thereof. The Board of Directors intends to establish and form a
Compensation Committee and Audit Committee upon the completion of this Offering.
The Board of Directors also intends to compensate non-employee Directors $1,000
per month.
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<PAGE> 33
EXECUTIVE COMPENSATION
The following table sets forth compensation paid to the Company's Chief
Executive Officer during the fiscal years ended January 31, 1996, 1995 and 1994.
No other executive officer's salary and bonus equaled or exceeded $100,000 for
services rendered to the Company during such years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
--------------------------------- ------------
FISCAL YEAR ALL OTHER
NAME AND PRINCIPAL POSITION ENDED 1/31 SALARY BONUS COMPENSATION
- ------------------------------------------------------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Stanley H. Streicher............................. 1996 $150,113 -- --
President & Chief 1995 150,021 -- --
Executive Officer 1994 110,000 -- --
</TABLE>
- ---------------
(1) The Company provides certain perquisites and personal benefits to the
President and Chief Executive Officer, the aggregate amount of which does
not exceed $50,000 or 10% of such officer's total annual salary and bonus.
EMPLOYMENT AGREEMENT
The Company intends to enter into an employment agreement with Stanley H.
Streicher effective upon completion of this Offering, pursuant to which Mr.
Streicher will serve as President and Chief Executive Officer of the Company.
The term of the agreement is five years. The term of agreement will
automatically renew for two successive two-year terms, unless notice of
termination is given prior to a renewal period. The agreement provides that Mr.
Streicher shall receive an initial annual base salary of $275,000 which shall be
increased to reflect the change of the cost of living, based upon the change,
from the preceding January 1, in the consumer price index for All Urban
Consumers, as published by the U.S. Bureau of Labor Statistics. In addition to
salary, Mr. Streicher will be eligible to participate in a bonus pool which will
provide him additional compensation of up to 10% of the Company's pre-tax
earnings.
The agreement provides that if Mr. Streicher's employment is terminated as
a result of his death or disability, he or his estate will receive for a period
of six months his base salary in effect as of the date of termination and a
prorated amount of any bonuses. The agreement also provides that in the event
Mr. Streicher's employment is terminated "without cause" or for "good reason,"
Mr. Streicher will receive, in addition to any salary, bonus and other
compensation accrued through the date of termination, a lump sum equal to the
greater of the full amount of salary, bonuses and other compensation due under
the agreement for the remainder of the term and three times the then-existing
salary and most recent annual bonus. The agreement further provides that Mr.
Streicher will not compete with the Company (i) while employed by the Company,
and (ii) for a period of two years following termination of employment. In the
event that his employment is terminated without cause, as a result of his death
or disability, or upon a change of control (as defined in the employment
agreement), all options to purchase Common Stock held by Mr. Streicher shall
become immediately exercisable. The Company may terminate the agreement for
"justifiable cause" which as defined therein means Mr. Streicher's conviction of
a felony involving moral terpitude, fraud, dishonesty, or any crime in
connection with his employment which causes the Company substantial detriment;
continual gross neglect of his duties; unauthorized dissemination or use of
confidential information of the Company; or engaging in competition with the
Company during the term of the agreement. Pursuant to the agreement, the Company
is obligated to pay all legal expenses associated with any legal proceedings
concerning the interpretation of the agreement.
The agreement further provides Mr. Streicher with stock options that will
enable him to acquire up to an aggregate of 1,000,000 shares of Common Stock at
an exercise price equal to the initial offering price of the Company following
the closing of this Offering. The exercise of the stock options is contingent
upon the Company achieving either a specified earnings per share level or a
specified stock price level (the "performance threshold"), for the corresponding
fiscal year-end. Commencing with fiscal year-ended January 31, 1998 and at each
of the four fiscal year ends thereafter, 200,000 of such options will become
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<PAGE> 34
exercisable if the Company achieves earnings per share of $.36, $.43, $.52, $.62
and $.74 for the fiscal years ended January 31, 1998, 1999, 2000, 2001 and 2002,
respectively, (or cumulative earnings per share after fiscal 1998 of $.66,
$1.09, $1.61, $2.23 and $2.97, respectively,) or the closing bid price of the
Company's Common Stock on any 20 consecutive trading days during such fiscal
year is $7.25, $8.75, $10.50, $12.50 and $15.00, respectively, or the Company
has cumulative net income of $2 million, $3 million, $4 million, $5 million and
$6 million, respectively. For any fiscal year after January 31, 1998 in which
the Company attains the foregoing earnings per share, stock price or cumulative
net income targets any options eligible for vesting in prior years which were
not vested and exercisable because the targets for such fiscal years were not
achieved, shall become exercisable. In addition, for any fiscal year in which
the Company attains the earnings per share, stock price or cumulative net income
targets applicable to a subsequent fiscal year, all options eligible for vesting
in such subsequent fiscal year shall vest and become exercisable. If any of the
Warrants are exercised, the options shall vest and become exercisable pro rata
(based on the number of Warrants exercised) to the extent not already vested in
accordance with the foregoing. Regardless of the Company's performance, all of
the stock options granted to Mr. Streicher shall vest and become exercisable ten
years from the date of the grant.
STOCK OPTION PLAN
The Company has adopted a Stock Option Plan (the "Plan"), under which
100,000 shares of Common Stock are reserved for issuance upon exercise of
options. The Plan is designed to serve as an incentive for retaining qualified
and competent employees. The Company's Board of Directors, or a committee
thereof (the "Committee"), administers and interprets the Plan and is authorized
to grant options thereunder to all eligible employees of the Company, including
officers and directors (whether or not employees) of the Company and
Consultants.
The Plan provides for the granting of both "incentive stock options" (as
defined in Section 422A of the Internal Revenue Code) and nonqualified stock
options. Options are granted under the Plan on such terms and at such prices as
determined by the Committee, except that the per share exercise price of
incentive stock options cannot be less than the fair market value of the Common
Stock on the date of grant and the per share exercise price of nonqualified
stock options will not be less than 85% of the fair market value on the date of
grant. Each option is exercisable after the period or periods specified in the
option agreement, but no option can be exercised until six months after the date
of grant or after the expiration of 10 years from the date of grant. Options
granted under the Plan are not transferable other than by will or by the laws of
descent and distribution. The Plan also authorizes the Company to make loans to
optionees to enable them to exercise their options and to allow them to use
Common Stock to pay for the exercise of their options. Such loans must (i)
provide for recourse to the optionee, (ii) bear interest at a rate no less than
the rate of interest payable by the Company to its principal lender at the time
the loan is made, and (iii) be secured by the shares of Common Stock purchased.
To date, no options have been granted under the Plan.
32
<PAGE> 35
PRINCIPAL AND SELLING SHAREHOLDER
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock immediately prior to this
Offering, and as adjusted to reflect the sale of the shares of Common Stock
offered by the Company by (i) each person known by the Company to beneficially
own more than five percent of the Common Stock, (ii) each director and the
Company's Chief Executive Officer and (iii) all directors and executive officers
of the Company as a group. Except as otherwise indicated, the address of each
beneficial owner of five percent of such Common Stock is the same as the
Company. See "Management."
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK BENEFICIALLY OWNED BENEFICIALLY
PRIOR TO THE OFFERING OWNED AFTER THE
-------------------------------- OFFERING
SHARES ----------------------
NUMBER OF BEING NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES PERCENT OFFERED SHARES PERCENT(1)
- -------------------------------------- --------- -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C>
Stanley H. Streicher.................. 1,500,000(3) 100% --(2) 1,500,000 60.0%
All directors and executive officers
as a group (3 persons).............. 1,500,000(3) 100% --(2) 1,500,000 60.0%
</TABLE>
- ---------------
(1) Assumes the Underwriters' over-allotment option is not exercised.
(2) Does not reflect the possible sale by Mr. Streicher of up to 75,000 shares
of Common Stock pursuant to the Underwriters' over-allotment option. See
"Underwriting."
(3) Of such shares, (i) 1,426,500 are owned by Enterprises, of which Stanley H.
Streicher owns 100% of the outstanding capital stock and (ii) 73,500 shares
owned by Milton H. Barbarosh are subject to a voting trust agreement
pursuant to which Mr. Streicher has been granted a proxy to vote such
shares.
CERTAIN TRANSACTIONS
The Company leases its Fort Lauderdale, Florida headquarters from Stanley
H. Streicher pursuant to a lease expiring on July 31, 2014 for $4,000 per month.
Rent expense on this facility totaled $42,000 and $51,000 for the fiscal years
ended January 31, 1995 and 1996, respectively. The Company also leases its
Jacksonville, Florida facilities from Mr. Streicher pursuant to a lease expiring
on August 31, 2015 for $1,000 per month. Rent expense for this facility totaled
$5,000 for the year ended January 31, 1995 and $13,000 for the year ended
January 31, 1996. See Note 7 of Notes to Financial Statements.
Mr. Streicher has personally guaranteed the Company's $2.7 million bank
line of credit and has received no compensation for such guaranty. To the extent
that the Company applies a portion of the net proceeds of this Offering to
reduce the Company's bank debt, Mr. Streicher will be relieved of his personal
guaranty of such indebtedness. See "Use of Proceeds." Pursuant to the employment
agreement to be entered into by the Company and Mr. Streicher upon completion of
this Offering, the Company will use its best efforts to remove and cause to be
terminated all guarantees provided by Mr. Streicher. If the Company is unable to
do so prior to July 31, 1997, the Company will compensate Mr. Streicher for
providing such guarantees. See "Management -- Employment Agreements."
The Company entered into a consulting agreement with its minority
shareholder, Milton H. Barbarosh and Stenton Leigh Capital Corp., a Florida
corporation ("Stenton Leigh") pursuant to which Mr. Barbarosh and Stenton Leigh
will provide financial consulting, business consulting, accounting consulting,
investor relations and strategic planning services for a two year period
expiring in May 1998 at the rate of $10,000 per month. The consulting agreement
may be terminated by either party at any time upon written notice. See Note 7 of
Notes to Financial Statements.
The Company believes that the terms of the foregoing transactions with the
affiliates are no less favorable to the Company than could be obtained in arms'
length negotiations with unaffiliated third parties. Any future transactions
with affiliates will be approved by a majority of disinterested directors then
serving on the Board of Directors.
33
<PAGE> 36
Prior to the closing of this Offering, the Company's business has been
conducted through Enterprises. Immediately prior to the closing of this
Offering, Enterprises will complete a corporate reorganization, which will
result in the Company succeeding to all of Enterprises' mobile fueling assets,
liabilities and operations. In exchange therefore, Enterprises will receive 100%
of the Common Stock of the Company.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, $0.01 par value, and 1,000,000 shares of Preferred Stock, $0.01
par value. As of the date of this Prospectus, 1,500,000 shares of Common Stock
were issued and outstanding and no shares of Preferred Stock were outstanding.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share. The holders of
Common Stock are entitled to receive ratably such dividends, if any, as may be
declared by the Board of Directors out of legally available funds. Upon
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets of the Company which are
legally available for distribution, after payment of or provisions for all debts
and liabilities and the liquidation preferences of any outstanding shares of
Preferred Stock. Holders of Common Stock have no preemptive, subscription, or
redemption rights. The shares of Common Stock offered hereby will be, when and
if issued, fully paid and nonassessable.
PREFERRED STOCK
The Company is authorized to issue Preferred Stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without shareholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the value or market price of
the Common Stock and voting power or other rights of the holders of Common
Stock. In the event of issuance, the Preferred Stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. See "-- Certain Effects of Authorized but
Unissued Stock."
WARRANTS
Each Warrant entitles the holder thereof to purchase one share of Common
Stock at a price of $6.90 per share (assuming an initial offering price of $6.00
per share) for a period of four years commencing on the first anniversary of the
effective date of this Offering (the "First Exercise Date"). Each Warrant is
redeemable by the Company at a redemption price of $0.01 per Warrant, at any
time after the First Exercise Date, upon thirty days' prior written notice to
the holders thereof, if the average closing bid price of the Common Stock, as
reported on the principal exchange on which the Common Stock is traded, equals
or exceeds $10.50 per share for twenty consecutive trading days ending three
days prior to the date of the notice of redemption. Pursuant to applicable
federal and state securities laws, in the event a current prospectus is not
available, the Warrants may not be exercised by the holders thereof and the
Company will be precluded from redeeming the Warrants. There can be no assurance
that the Company will not be prevented by financial or other considerations from
maintaining a current prospectus. Any Warrant holder who does not exercise prior
to the redemption date, as set forth in the Company's notice of redemption, will
forfeit the right to purchase the Common Stock underlying the Warrants, and
after the redemption date or upon conclusion of the exercise period any
outstanding Warrants will become void and be of no further force or effect,
unless extended by the Board of Directors of the Company. See "Underwriting" for
the terms of the Warrants issuable pursuant to the Underwriters' Warrants.
The number of shares of Common Stock that may be purchased is subject to
adjustment upon the occurrence of certain events including a dividend
distribution to the Company's shareholders, or a subdivision, combination or
reclassification of the outstanding shares of Common Stock. Further, the Warrant
exercise price is subject to adjustment in the event the Company issues
additional stock or rights to acquire stock at a price per share than is less
than the current market price per share of Common Stock on the record date
34
<PAGE> 37
established for the issuance of additional stock or rights to acquire stock. The
term "current market price" is defined as the average of the daily closing
prices for the twenty consecutive trading days ending three days prior to the
record date. However, the Warrant exercise price will not be adjusted in the
case of the issuance or exercise of options pursuant to the Company's stock
option plans, the issuance or exercise of the Underwriters' Warrants (or the
Warrants included therein) or any other options or warrants outstanding as of
the date of this Offering. The Warrant exercise price is also subject to
adjustment in the event of a consolidation or merger where a distribution by the
Company is made to its stockholders of the Company's assets or evidences of
indebtedness (other than cash or stock dividends) or pursuant to certain
subscription rights or other rights to acquire Common Stock.
The Company may at any time, and from time to time, extend the exercise
period of the Warrants, provided that written notice of such extension is given
to the Warrant holders prior to the expiration of the date then in effect. Also,
the Company may reduce the exercise price of the Warrants for limited periods or
through the end of the exercise period in accordance with the terms of the
Company's warrant agreement with the Transfer Agent if deemed appropriate by the
Board of Directors. Any extension of the term and/or reduction of the exercise
price of the Warrants will be subject to compliance with Rule 13e-4 under the
Exchange Act including the filing of a Schedule 13E-4. Notice of any extension
of the exercise period and/or reduction of the exercise price will be given to
the Warrant holders. The Company does not presently contemplate any extension of
the exercise period nor does it contemplate any reduction in the exercise price
of the Warrants. Factors which the Board of Directors may consider in taking
such action include the current market conditions, the price of the Common Stock
and the Company's need for additional capital. The Warrants are also subject to
price adjustment upon the occurrence of certain events including subdivisions or
combinations of the Common Stock.
The Warrants will be issued pursuant to the terms and conditions of a
Warrant Agreement between the Company and American Stock Transfer & Trust
Company.
ANTI-TAKEOVER PROVISIONS OF FLORIDA LAW
Florida has enacted legislation that may deter or frustrate takeovers of
Florida corporations. The "Control Share Acquisitions" section of the Florida
Business Corporation Act ("FBCA") generally provides that shares acquired in
excess of certain specified thresholds, beginning at 20% of a corporation's
outstanding voting shares, will not possess any voting rights unless such voting
rights are approved by a majority vote of a corporation's disinterested
shareholders. The "Affiliated Transactions" section of the FBCA generally
requires majority approval by disinterested directors or supermajority approval
of disinterested shareholders of certain specified transactions (such as a
merger, consolidation, sale of assets, issuance of transfer of shares or
reclassifications of securities) between a corporation and a holder of more than
10% of the outstanding shares of the corporation, or any affiliate of such
shareholder.
The directors of the Company are subject to the "general standards for
directors" provisions set forth in the FBCA. These provisions provide that in
discharging his or her duties and determining what is in the best interests of
the Company, a director may consider such factors as the director deems
relevant, including the long-term prospects and interests of the Company and its
shareholders and the social, economic, legal or other effects of any proposed
action on the employees, suppliers or customers of the Company, the community in
which the Company operates and the economy in general. Consequently, in
connection with any proposed action, the Board of Directors is empowered to
consider interests of other constituencies in addition to the Company's
shareholders, and directors who take into account these other factors may make
decisions which are less beneficial to some, or a majority, of the shareholders
than if the law did not permit consideration of such other factors.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
The Company's Articles of Incorporation provide that shareholders seeking
to bring business before an annual meeting of shareholders, or to nominate
candidates for election as directors at an annual or special meeting of
shareholders, must provide timely notice thereof in writing. To be timely, a
shareholder's notice
35
<PAGE> 38
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 80 day's notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder, to be timely, must be received no later than the
close of business on the 10th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made, whichever is
first. The Bylaws of the Company also specify certain requirements for a
shareholder's notice to be in proper written form. These provisions may preclude
shareholders from bringing matters before the shareholders at an annual or
special meeting or from making nominations for directors at an annual or special
meeting.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The authorized but unissued shares of Common Stock and Preferred Stock are
available for future issuance without shareholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans.
The existence of authorized but unissued and unreserved Common Stock and
Preferred Stock may enable the Board of Directors to issue shares to persons
friendly to current management which could render more difficult or discourage
an attempt to obtain control of the Company by means of a proxy contest, tender
offer, merger, or otherwise, and thereby protect the continuity of the Company's
management.
LIMITED LIABILITY AND INDEMNIFICATION
Under the FBCA, a director is not personally liable for monetary damages to
the corporation or any other person for any statement, vote, decision, or
failure to act unless (i) the director breached or failed to perform his duties
as a director and (ii) a director's breach of, or failure to perform, those
duties constitutes (1) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful, (2) a transaction from which the director
derived an improper personal benefit, either directly or indirectly, (3) a
circumstance under which an unlawful distribution is made, (4) in a proceeding
by or in the right of the corporation or procure a judgment in its favor or by
or in the right of a shareholder, conscious disregard for the best interest of
the corporation or willful misconduct, or (5) in a proceeding by or in the right
of someone other than the corporation or a shareholder, recklessness or an act
or omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety, or
property. A corporation may purchase and maintain insurance on behalf of any
director or officer against any liability asserted against him and incurred by
him in his capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the FBCA.
The Articles and Bylaws of the Company provide that the Company shall, to
the fullest extent permitted by applicable law, as amended from time to time,
indemnify all directors of the Company, as well as any officers or employees of
the Company to whom the Company has agreed to grant indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar and warrant agent for the Securities is
American Stock Transfer and Trust Company.
36
<PAGE> 39
SHARES AVAILABLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
2,500,000 shares of Common Stock. Of these shares, the 1,000,000 shares of
Common Stock offered hereby will be freely tradeable by persons other than
"affiliates" of the Company without restriction or further registration under
the Securities Act.
Persons who are deemed affiliates of the Company are generally entitled
under Rule 144 as currently in effect to sell within any three-month period a
number of shares that does not exceed 1% of the number of shares of the Common
Stock then outstanding or the average weekly trading volume of Common Stock
during the four calendar weeks preceding the making of a filing with the
Securities and Exchange Commission (the "Commission") with respect to such sale.
Such sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about the Company. The Company is unable to estimate accurately the number of
shares of Common Stock that ultimately will be sold under Rule 144 because the
number of shares will depend in part on the market price for the Common Stock,
the personal circumstances of the sellers and other factors. However, the
1,426,500 shares of Common Stock presently owned by Stanley H. Streicher, the
Company's President and 73,500 shares owned by Milton H. Barbarosh, a consultant
to the Company, (assuming the release thereof from the lock-up restrictions set
forth below) will be available for sale, subject to volume and manner
restrictions, beginning December 1998 and will be free from these restrictions
one year later. In addition to the restrictions under Rule 144, Mr. Streicher
has agreed, subject to certain limitations, not to sell any of the 1,426,500
shares of Common Stock, presently owned by him, or securities convertible into
or exchangeable for Common Stock, for a period of 60 months after the date of
this Prospectus without the prior consent of the Representative. See
"Underwriting." Additionally, Mr. Barbarosh, the owner of 73,500 shares has
agreed, subject to certain limitations, not to sell any shares of Common Stock,
or securities convertible into or exchangeable for Common Stock under the same
terms and conditions as Mr. Streicher unless otherwise agreed to by the
Representative.
In addition to the restrictions under Rule 144, the 1,426,500 shares of
Common Stock owned by Mr. Streicher upon completion of the Offering will be
subject to a lock-up period of 60 months, subject to earlier release if
consented to by the Representative or upon the Company's achievement of certain
performance goals. Of the shares subject to the lock-up (i) 75,000 shares shall
be released from the lock-up restrictions in the event such shares are not sold
pursuant to the over-allotment option and (ii) thereafter 40,000 shares shall be
released from the lock-up restrictions on each of the second, third and fourth
anniversary dates of the closing of the offering. Regardless of the Company's
performance, any shares held by Mr. Streicher remaining subject to lock-up shall
be released on February 1, 2002. The 73,500 shares owned by Mr. Barbarosh upon
completion of the Offering will be subject to a lock-up period under the same
terms and conditions as Mr. Streicher unless otherwise agreed to by the
Representative. See "Shares Available for Future Sale."
Beginning with the fiscal year ended January 31, 1999, if the Company
achieves earnings per share of $.43, $.52, $.62 and $.74 for the fiscal years
ended January 31, 1999, 2000, 2001 and 2002, respectively, (or cumulative
earnings per share after fiscal 1996 of $.94, $1.46, $2.08 and $2.82,
respectively,) or the closing bid price of the Company's Common Stock on the
last trading day prior to such fiscal year end is $8.75, $10.50, $12.50 and
$15.50, respectively, or the Company has cumulative net income of $3 million, $4
million, $5 million and $6 million, respectively, then one-quarter of any shares
not previously released shall be released in each fiscal year from the lock-up
restrictions. For any fiscal year after January 31, 1996 in which the Company
attains the foregoing earnings per share, stock price or cumulative net income
targets, any shares eligible for release in prior fiscal years which were not
released because the targets for such fiscal years were not achieved, shall also
be released. In addition, for any fiscal year in which the Company attains
earnings per share, stock price or cumulative net income targets applicable to a
subsequent fiscal year, any shares eligible for release in such subsequent
fiscal year shall also be released. Regardless of whether the foregoing earnings
per share, stock price, or cumulative net income targets are achieved all of the
shares subject to the lock-up restrictions shall be released February 1, 2002.
37
<PAGE> 40
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, a copy
of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part, the Company has agreed to sell to the Underwriters, and
the Underwriters, severally and not jointly, have agreed to purchase from the
Company, on a "firm commitment" basis, if any are purchased, the number of
shares of Common Stock and Warrants (exclusive of shares of Common Stock and
Warrants issuable upon exercise of the Underwriters' over-allotment option) set
forth opposite their respective names below:
<TABLE>
<CAPTION>
SHARES OF
UNDERWRITERS COMMON STOCK WARRANTS
- ---------------------------------------------------------------- ------------ ---------
<S> <C> <C>
Argent Securities, Inc..........................................
--------- ---------
Total................................................. 1,000,000 1,000,000
========= =========
</TABLE>
The Company has agreed to sell the shares of Common Stock and Warrants to
the Underwriters at a discount of ten percent of the initial public price
thereof. The Underwriters will offer the shares of Common Stock and Warrants to
the public at $ per share of Common Stock and $ per Warrant as set forth
on the cover page of this Prospectus and may allow to certain dealers who are
National Association of Securities Dealers, Inc. ("NASD") members concessions
not to exceed $ per share of Common Stock and Warrant, of which not in
excess of $ per share of Common Stock and $ per Warrant may be reallowed
to other dealers who are members of the NASD. After the initial public offering,
the public offering price, concession and reallowances may be changed by the
Underwriters.
Prior to this Offering, there has not been any public market for the Common
Stock or the Warrants. The initial public offering prices of the shares of
Common Stock and the Warrants and the exercise price and other terms of the
Warrants were determined by negotiations between the Company and the
Representative and do not necessarily relate to the assets, book value or
results of operations of the Company or any other established criteria of value.
The Underwriters do not intend to sell any securities to accounts for which it
exercises discretionary authority.
The Company and the Selling Shareholder have granted an option to the
Underwriters, exercisable during the 45-day period from the date of this
Prospectus, to purchase in the aggregate up to a maximum of 150,000 additional
shares of Common Stock and Warrants at the price set forth on the cover page of
this Prospectus, minus the underwriting discount and commissions. Of the 150,000
shares of Common Stock which are subject to the Underwriters' over-allotment
option, the first 75,000 shares will be sold by the Selling Shareholder and
75,000 shares will be sold by the Company. All of the 150,000 Warrants subject
to the over-allotment option will be offered by the Company. The Underwriters'
over-allotment option is exercisable upon the same terms and conditions as are
applicable to the sale of the shares of Common Stock and Warrants offered
hereby.
The Underwriting Agreement provides for reciprocal indemnification between
the Company, the Selling Shareholder and the Underwriters against certain
liabilities in connection with the Registration Statement, including liabilities
under the Securities Act. Pursuant to the Underwriting Agreement, the Selling
Shareholder's indemnification is limited to the amount of proceeds received from
the sale of his shares. Insofar as indemnification for liabilities arising under
the Securities Act may be provided to officers, directors or persons controlling
the Company, the Company has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy and is therefore unenforceable.
The Company has agreed to pay certain blue sky legal fees of the
Underwriters and to pay to the Underwriters at the closing of the Offering a
non-accountable expense allowance of 3% of the aggregate offering price of the
shares of Common Stock and Warrants offered hereby (including any shares of
Common
38
<PAGE> 41
Stock and Warrants purchased pursuant to the Underwriters' over-allotment
option), of which $ has been paid on account.
The Company has agreed to sell to the Underwriters, or their respective
designees, for an aggregate purchase price of $1,000, an option (the
"Underwriters' Warrant") to purchase up to an aggregate of 100,000 shares of
Common Stock and Warrants (an aggregate of 115,000 shares of Common Stock and
115,000 Warrants assuming the exercise of the Underwriters' over-allotment
option) exercisable at 120% of the initial public offering price of the
securities. The Underwriters' Warrant shall be exercisable during a four-year
period commencing one year after the closing date of this Offering. The
Underwriters' Warrant may not be assigned, transferred, sold or hypothecated by
the Underwriters until twelve months after the Effective Date, except to
officers or partners of the Underwriters, to a successor to the Underwriters, to
a purchaser of substantially all of the assets of the Underwriters, or by
operation of law. Any profits realized by the Underwriters upon the sale of the
Common Stock and Warrants (or the underlying Securities) issuable upon exercise
of the Underwriters' Warrants may be deemed to be additional underwriting
compensation. The exercise price of the Warrants issuable upon exercise of the
Underwriters' Warrants during the period of exercisability shall be $6.90 per
Warrant (assuming an initial offering price of $6.00 per share). The exercise of
the Warrants subject to the Underwriters' Warrants and the number of shares of
Common Stock covered thereby are subject to adjustment in certain events to
prevent dilution. For the life of the Underwriters' Warrant, the holders thereof
are given, at a nominal cost, the opportunity to profit from a rise in the
market price of the Securities with a resulting dilution in the interest of
other shareholders. The Company may find it more difficult to raise capital for
its business if the need should arise while the Underwriters' Warrant is
outstanding. At any time when the holders of the Underwriters' Warrant might be
expected to exercise it, the Company would probably be able to obtain additional
capital on more favorable terms.
The Company has agreed with the Underwriters that the Company will pay to
the Underwriters a warrant solicitation fee (the "Warrant Solicitation Fee")
equal to 5% of the exercise price of the Warrants exercised beginning one year
after the Effective Date and to the extent not inconsistent with the guidelines
of the NASD and the rules and regulations of the Commission (including NASD
Notice to Members 81-38). Such Warrant Solicitation Fee will be paid to the
Underwriters if (a) the market price of the Common Stock on the date that any
Warrant is exercised is greater than the exercise price of the Warrant; (b) the
exercise of such Warrant was solicited by the Underwriters; (c) prior specific
written approval for exercise is received from the customer if the Warrant is
held in a discretionary account; (d) disclosure of this compensation agreement
is made prior to or upon the exercise of such Warrant; (e) solicitation of the
exercise is not in violation of Rule 10b-6 of the Exchange Act; (f) the
Underwriter provided bona fide services in exchange for the Warrant Solicitation
Fee; and (g) the Underwriter has been specifically designated in writing by the
holders of the Warrants as the broker. The Company and Transfer and Warrant
Agent have been advised that the Warrant exercise may only be effected in New
Jersey pursuant to a registered broker dealer or in reliance on an exemption or
exception pursuant to New Jersey Statutes Annotated 49:3-47, et sec. In
addition, unless granted an exemption by the Commission from Rule 10b-6 under
the Exchange Act, the Underwriters will be prohibited from engaging in any
market making activities or solicited brokerage activities with respect to the
Securities for the period from nine business days prior to any solicitation of
the exercise of any Warrant or nine business days prior to the exercise of any
Warrant based on a prior solicitation until the later of the termination of such
solicitation activity or the termination (by waiver or otherwise) of any right
the Underwriters may have to receive such a fee for the exercise of the Warrants
following such solicitation. As a result, the Underwriters may be unable to
continue to provide a market for the Securities during certain periods while the
Warrants are exercisable.
The Underwriters have been given certain "piggyback" and demand
registration rights with respect to the Common Stock underlying the
Underwriters' Warrants for a period of four years commencing one year from the
date of this Prospectus. The exercise of any such registration rights by the
Underwriters may result in dilution to the interest of the Company's
shareholders, hinder efforts by the Company to arrange future financing of the
Company and/or have an adverse effect on the market price of the Securities.
The Company has agreed that for a period of 24 months commencing on the
Effective Date, it will not issue or sell, directly or indirectly, any shares of
its capital stock, or sell or grant options, warrants or rights to
39
<PAGE> 42
purchase any shares of its capital stock, without the written consent of the
Representative, except for issuances pursuant to (i) the public offering of the
Company's securities as described herein, (ii) the exercise of the Warrants and
the Underwriters' Warrants, and the Common Stock issuable thereunder, (iii)
outstanding convertible securities or contractual obligations disclosed in this
Prospectus, (iv) the grant of options and the issuance of shares issued upon
exercise of options to be granted under the Company's Stock Option Plan, and (v)
an acquisition, merger or similar transaction provided that the acquirer of such
capital stock does not receive, and will not be entitled to demand, registered
or free trading securities during such 24-month period. The Company has granted
the Underwriters a two year preferential right with respect to future financing
relating to the offering of the Company's securities. In addition, Mr. Streicher
and all of the holders of the Common Stock as of the Effective Date, have agreed
with the Representative in writing not to sell, assign, or transfer any of their
shares of the Company's securities without the Representative's prior written
consent prior to February 1, 2002 and in the case of Mr. Streicher, subject to
earlier release upon the achievement of performance goals. See "Shares Available
for Future Sale."
The Company has entered into a consulting agreement with the
Representative, effective as of August 1, 1996, pursuant to which various
executive and staff personnel of the Representative will provide financial and
investor relation services, public relations services and corporate
communications services for a period of two years at the rate of $4,166 per
month. From August 1, 1996 to December 1, 1996, the monthly payments are accrued
and not payable until December 31, 1996, provided that the agreement has not
been cancelled or rendered void. If the Company does not have shareholder equity
of at least $4 million by December 15, 1996, the agreement is null and void.
However, if termination is after December 31, 1996, the Representative shall not
be required to perform additional services under the agreement and the remainder
of the unpaid balance of funds due to the Representative shall be earned and
shall be immediately due and payable. At the Representative's election, all of
the fees pursuant to the agreement shall be prepaid when the Company attains $4
million in shareholder's equity.
The Company has agreed that, for a period of five years following the
completion of this Offering, it will use its best efforts to cause the election
to its Board of Directors one designee of the Representative, provided that such
designee is reasonably acceptable to and approved by the Company. Alternatively,
the Representative may appoint an observer to attend all meetings of the Board
of Directors during such period. As of this date, no person has been identified
by the Representative for election as a director or for appointment as an
observer.
The foregoing includes a summary of certain provisions of the Underwriting
Agreement which has been filed as an exhibit thereto.
LEGAL MATTERS
The validity of the Securities being offered hereby will be passed upon for
the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
Miami, Florida. Certain matters are being passed upon for the Underwriters by
Johnson & Montgomery, Atlanta, Georgia.
EXPERTS
The financial statements as of January 31, 1996 and for each of the two
years in the period ended January 31, 1996, that are included in this Prospectus
have been audited by Arthur Andersen LLP, independent certified public
accountants, to the extent and for the period set forth in their report
appearing elsewhere herein, and are included in reliance upon such reports given
upon the authority of said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (together with all
amendments, exhibits and schedules thereto, the
40
<PAGE> 43
"Registration Statement") under the Securities Act with respect to the
Securities offered by this Prospectus. This Prospectus does not contain all of
the information set forth in such Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. For further information, reference is made to such registration statement,
including the exhibits thereto, which may be inspected without charge at the
Commission's principal office at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549; and at the following Regional Offices of the Commission, except that
copies of the exhibits may not be available at certain of the Regional Offices:
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and New York Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of all or any part of such material may be obtained from
the Commission at 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549, upon
payment of certain fees prescribed by the Commission. The Commission maintains a
World Wide Web site on the Internet at http://www.sec.gov that contains reports,
proxy, information statements, and registration statements and other information
filed electronically with the Commission.
The Company is not presently a reporting company and does not file reports
or other information with the Commission. However, on the effective date of the
Registration Statement, the Company will become a reporting company. Further,
the Company will register its securities under the Securities Exchange Act of
1934 ("Exchange Act"). Accordingly, the Company will become subject to the
additional reporting requirements of the Exchange Act and in accordance
therewith will file reports, proxy statements and other information with the
Commission. In addition, after the completion of this Offering, the Company
intends to furnish its shareholders with annual reports containing audited
financial statements and such interim reports, in each case as it may determine
to furnish or as may be required by law. The fiscal year of the Company ends on
January 31 of each year.
41
<PAGE> 44
STREICHER MOBILE FUELING, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants.................................... F-2
Balance Sheets as of January 31, 1996 and July 31, 1996 (unaudited)................... F-3
Statements of Operations for the years ended January 31, 1995 and 1996 and for the six
month periods ended July 31, 1995 and 1996 (unaudited).............................. F-4
Statements of Changes in Shareholders' Equity for the years ended January 31, 1995 and
1996 and the six month period ended July 31, 1996 (unaudited)....................... F-5
Statements of Cash Flows for the years ended January 31, 1995 and 1996 and the six
month periods ended July 31, 1995 and 1996 (unaudited).............................. F-6
Notes to Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE> 45
After the corporate reorganization discussed in Note (1) to the Company's
financial statements is effected, we expect to be in a position to render the
following auditors' report.
ARTHUR ANDERSEN LLP
October 9, 1996.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Streicher Mobile Fueling, Inc.:
We have audited the accompanying balance sheet of Streicher Mobile Fueling,
Inc. (the "Company") as of January 31, 1996 and the related statements of
operations, changes in shareholders' equity and cash flows for each of the two
years in the period ended January 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Streicher Mobile Fueling,
Inc. as of January 31, 1996, and the results of its operations and its cash
flows for each of the two years in the period ended January 31, 1996 in
conformity with generally accepted accounting principles.
Fort Lauderdale, Florida,
October 9, 1996.
F-2
<PAGE> 46
STREICHER MOBILE FUELING, INC.
BALANCE SHEETS
JANUARY 31 AND JULY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1996 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...................................... $ 189,508 $ 7,345
Investments (restricted $63,000 and $64,000, respectively)..... 203,743 94,395
Accounts receivable, net of allowance for doubtful accounts of
$28,000 and $30,000, respectively........................... 2,592,559 3,333,991
Inventories.................................................... 65,193 64,272
Prepaid expenses and other..................................... 100,790 43,427
---------- ----------
Total current assets................................... 3,151,793 3,543,430
PROPERTY AND EQUIPMENT, net...................................... 3,136,665 3,460,388
DUE FROM RELATED PARTIES......................................... 32,298 35,131
OTHER ASSETS..................................................... 37,180 82,725
---------- ----------
Total assets........................................... $6,357,936 $7,121,674
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt.............................. $ 471,404 $ 434,206
Current portion of capital lease obligations................... 131,766 102,422
Accounts payable............................................... 1,322,126 1,633,071
Accrued expenses............................................... 318,931 228,491
Customer deposits.............................................. 163,844 167,923
Due to related parties......................................... 18,303 --
---------- ----------
Total current liabilities.............................. 2,426,374 2,566,113
---------- ----------
LONG-TERM LIABILITIES:
Line of credit borrowings...................................... 1,802,795 2,471,398
Long-term debt, excluding current portion...................... 1,116,701 1,394,404
Capital lease obligations, excluding current portion........... 253,241 168,415
Deferred income taxes.......................................... 373,759 373,759
---------- ----------
Total long-term liabilities............................ 3,546,496 4,407,976
---------- ----------
Total liabilities...................................... 5,972,870 6,974,089
---------- ----------
COMMITMENTS AND CONTINGENCIES(Notes 1, 3, 7, 10 and 11)
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none issued and outstanding................................. -- --
Common stock, $.01 par value, 20,000,000 shares authorized,
1,500,000 shares issued and outstanding..................... 15,000 15,000
Additional paid-in capital..................................... 238,588 238,588
Unrealized gain on investment.................................. 7,072 7,072
Retained earnings (deficit).................................... 124,406 (113,075)
---------- ----------
Total shareholders' equity............................. 385,066 147,585
---------- ----------
Total liabilities and shareholders' equity............. $6,357,936 $7,121,674
========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-3
<PAGE> 47
STREICHER MOBILE FUELING, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JANUARY 31, 1995 AND 1996 AND
THE SIX MONTH PERIODS ENDED JULY 31, 1995 AND 1996 (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTH PERIODS ENDED
JANUARY 31, JULY 31,
--------------------------- ---------------------------
1995 1996 1995 1996
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUE, including fuel taxes of
$5,968,000, $8,195,000, $3,802,000
and $3,566,000, respectively........ $16,663,371 $23,989,358 $10,776,470 $13,887,855
COST OF SALES......................... 15,217,945 21,752,350 9,947,234 12,760,929
----------- ----------- ----------- -----------
Gross profit..................... 1,445,426 2,237,008 829,236 1,126,926
OPERATING EXPENSES.................... 1,348,028 1,752,485 855,491 1,244,393
----------- ----------- ----------- -----------
Income (loss) from operations.... 97,398 484,523 (26,255) (117,467)
INTEREST EXPENSE...................... (168,991) (343,967) (154,062) (260,252)
INTEREST INCOME....................... 13,504 33,219 19,206 6,387
----------- ----------- ----------- -----------
Income (loss) before (provision)
benefit for income taxes....... (58,089) 173,775 (161,111) (371,332)
(PROVISION) BENEFIT FOR INCOME
TAXES............................... 7,915 (75,169) 56,720 133,851
----------- ----------- ----------- -----------
Net income (loss)................ $ (50,174) $ 98,606 $ (104,391) $ (237,481)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE........... $ (.03) $ .07 $ (.07) $ (.16)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING......................... 1,500,000 1,500,000 1,500,000 1,500,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-4
<PAGE> 48
STREICHER MOBILE FUELING, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 31, 1995 AND 1996
AND THE SIX MONTH PERIOD ENDED JULY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL UNREALIZED RETAINED
COMMON PAID-IN GAIN ON EARNINGS
STOCK CAPITAL INVESTMENT (DEFICIT) TOTAL
------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, February 1, 1994............. $15,000 $238,588 $ -- $ 75,974 $ 329,562
Net loss............................ -- -- -- (50,174) (50,174)
Change in unrealized gain on
investment....................... -- -- 2,335 -- 2,335
------- -------- ------ --------- ---------
BALANCE, January 31, 1995............. 15,000 238,588 2,335 25,800 281,723
Net income.......................... -- -- -- 98,606 98,606
Change in unrealized gain on
investment....................... -- -- 4,737 -- 4,737
------- -------- ------ --------- ---------
BALANCE, January 31, 1996............. 15,000 238,588 7,072 124,406 385,066
Net loss (unaudited)................ -- -- -- (237,481) (237,481)
------- -------- ------ --------- ---------
BALANCE, July 31, 1996 (unaudited).... $15,000 $238,588 $7,072 $(113,075) $ 147,585
======= ======== ====== ========= =========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-5
<PAGE> 49
STREICHER MOBILE FUELING, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 31, 1995 AND 1996 AND
THE SIX MONTH PERIODS ENDED JULY 31, 1995 AND 1996 (UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTH PERIODS
JANUARY 31, ENDED JULY 31,
--------------------------- ------------------------
1995 1996 1995 1996
----------- ----------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................... $ (50,174) $ 98,606 $(104,391) $ (237,481)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities--
Depreciation and amortization................. 235,502 304,796 178,069 290,980
Deferred income tax provision................. 57,409 110,641 --
Changes in operating assets and liabilities:
Accounts receivable......................... (627,727) (1,105,160) (426,093) (741,432)
Inventories................................. (56,074) (9,119) 9,724 921
Prepaid expenses and other.................. (62,251) (14,239) 23,385 57,363
Due from related parties.................... 180,862 85,852 (63,697) (21,136)
Other assets................................ (28,920) (74,055) (83,196) (107,002)
Accounts payable............................ 351,815 353,318 176,449 310,945
Accrued expenses............................ 149,466 36,424 (58,692) (123,983)
Customer deposits........................... 84,034 640 (2,830) 4,079
--------- ----------- --------- ----------
Net cash provided by (used in) operating
activities............................. 233,942 (212,296) (351,272) (566,746)
--------- ----------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment purchases (sales proceeds)........... (102,924) (70,432) (64,408) 109,348
Purchases of property and equipment............. (1,477,636) (1,103,536) (625,878) (499,220)
--------- ----------- --------- ----------
Net cash used in investing activities.... (1,580,560) (1,173,968) (690,286) (389,872)
--------- ----------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit............. 678,110 768,230 416,062 668,603
Borrowings under long-term debt................. 905,331 1,009,433 636,009 1,126,004
Principal payments on long-term debt............ (216,408) (349,901) (108,675) (885,499)
Principal payments on capital lease
obligations................................... (89,755) (110,132) (101,337) (134,653)
--------- ----------- --------- ----------
Net cash provided by financing
activities............................. 1,277,278 1,317,630 842,059 774,455
--------- ----------- --------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS............. (69,340) (68,634) (199,499) (182,163)
CASH AND CASH EQUIVALENTS, beginning of period.... 327,482 258,142 258,142 189,508
--------- ----------- --------- ----------
CASH AND CASH EQUIVALENTS, end of period.......... $ 258,142 $ 189,508 $ 58,643 $ 7,345
========= =========== ========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for --
Interest...................................... $ 172,727 $ 326,661 $ 136,952 $ 267,926
========= =========== ========= ==========
Income taxes.................................. $ -- $ 53,916 $ 35,000 $ --
========= =========== ========= ==========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligations....................... $ 147,578 $ 96,323 $ 96,323 $ 20,483
========= =========== ========= ==========
Unrealized gain on equity investment............ $ 2,335 $ 4,737 $ 4,024 $ --
========= =========== ========= ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-6
<PAGE> 50
STREICHER MOBILE FUELING, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995 AND 1996 AND
JULY 31, 1995 AND 1996 (UNAUDITED)
(ALL AMOUNTS AND RELATED DISCLOSURES APPLICABLE TO THE
SIX MONTH PERIODS ENDED JULY 31, 1995 AND 1996 ARE UNAUDITED)
(1) NATURE OF OPERATIONS:
Streicher Mobile Fueling, Inc. (the "Company") was incorporated in October
1996. Streicher Enterprises, Inc. ("Enterprises") will complete a corporate
reorganization immediately prior to the closing of the offering discussed in
Note (11) which will result in the transfer of the assets, liabilities and
operations of Enterprises' Mobile Fueling Division to the Company. Such planned
corporate reorganization has been retroactively reflected in the accompanying
financial statements. The Mobile Fueling Division began operations in 1983. The
Company delivers mechanized mobile fleet fueling and electronic fuel management
primarily to customers which operate large fleets of vehicles (such as national
courier services, major trucking lines, hauling and delivery services, utilities
and governmental agencies). The Company has operations in Florida, Georgia,
Tennessee, Southern California and Texas.
A significant element of the Company's future growth strategy involves the
expansion of the Company's business into new markets. Such planned expansion is
dependent on achieving the necessary debt and/or equity financing. Without such
financing the Company may be required to limit its future growth.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of Presentation
The accompanying financial statements include the assets, liabilities and
operations of the Mobile Fueling Division of Enterprises on a retroactive basis
as if such transfer had occurred at inception of the Mobile Fueling Division.
Retained earnings (deficit) represents the cumulative results of the Mobile
Fueling Division.
Included in both revenue and cost of sales in the accompanying statements
of operations is federal and state excise taxes. The Company collects such
excise taxes from its customers and remits the taxes to the taxing authorities.
(b) Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
(c) Investments
Investments consist of two certificates of deposit, with a maturity of
greater than three months, and a marketable equity security, each reported at
market value. One certificate of deposit is collateral for an irrevocable letter
of credit issued under an agreement entered into with a vendor, on behalf of a
customer, for the issuance of credit instruments to purchase selected products
and services. The letter of credit and collateralized certificate of deposit are
required until the credit instruments are returned to the vendor for
cancellation.
The equity security is classified as available-for-sale and is presented at
market value. The unrealized gain, net of income taxes, is recorded directly as
a component of shareholders' equity.
(d) Accounts Receivable, net
Accounts receivable are due from companies within a broad range of
industries. The Company provides for credit losses based on management's
evaluation of collectibility and generally are unsecured.
F-7
<PAGE> 51
STREICHER MOBILE FUELING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(e) Inventories
Inventories, consisting of gasoline and diesel fuel, are carried at cost,
using the moving average method, which approximates the first-in, first-out
method.
(f) Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and
amortization. Ordinary maintenance and repairs are expensed as incurred.
Improvements which significantly increase the value or useful life of property
and equipment are capitalized. Property and equipment is depreciated or
amortized using the straight-line method over the following estimated useful
lives:
<TABLE>
<CAPTION>
YEARS
---------------------
<S> <C>
Auto..................................................... 5
Custom trucks............................................ 10
Mobile fuel tanks........................................ 25
Machinery and equipment.................................. 5
Furniture and fixtures................................... 10
Capital leases and leasehold improvements................ Lesser of lease term
or useful life
</TABLE>
(g) Income Taxes
The Company provides federal and state income taxes at the applicable
federal and state statutory rates. Deferred income taxes are recorded to reflect
the tax consequences on future years of differences between the tax bases of
assets and liabilities and the amounts recorded for financial reporting
purposes. Income taxes are provided as if the Company had been a separate
taxable entity since inception of the Mobile Fueling Division.
(h) Revenue Recognition
The Company recognizes revenue at the time services are performed and fuel
is delivered.
(i) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(j) Fair Value of Financial Instruments
The Company's financial instruments, primarily consisting of cash and cash
equivalents, investments, accounts receivable, borrowings, and accounts payable,
approximate fair value due to their short-term nature or interest rates that
approximate market.
(k) Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which
requires adoption by the Company in fiscal 1997. SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill
F-8
<PAGE> 52
STREICHER MOBILE FUELING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
related to those assets to be held and used, and for long-lived assets and
certain identifiable intangibles to be disposed of. The adoption of SFAS No. 121
did not have a material effect on the Company's financial condition or results
of operations.
In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation",
was issued. SFAS No. 123 establishes a fair value method for accounting for
stock-based compensation plans either through recognition or disclosure. The
Company intends to account for stock option grants in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees",
and, accordingly, will not recognize compensation expense for stock option
grants made at an exercise price equal to or in excess of the fair market value
at the date of grant. Changes in the accounting for stock-based compensation are
optional and the Company intends to adopt only the disclosure requirements of
SFAS No. 123 as of January 31, 1997.
(l) Net Income (Loss) Per Share
Net income (loss) per share is determined by dividing net income (loss) by
the weighted average common shares outstanding. For all periods presented,
outstanding common shares reflect the reorganization of Enterprises and initial
issuance of stock by the Company as if such reorganization had occurred at
inception of the Mobile Fueling Division.
(m) Unaudited Condensed Interim Financial Statements
In the opinion of management, the unaudited condensed interim financial
statements contain all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of July 31, 1996, and the results of its operations and cash flows for the
six month periods ended July 31, 1995 and 1996.
(3) PROPERTY AND EQUIPMENT, NET:
Property and equipment, net consists of the following:
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1996 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Autos, custom trucks and mobile fuel tanks....................... $2,515,027 $3,000,087
Machinery and equipment.......................................... 546,164 559,289
Leasehold improvements........................................... 61,798 61,798
Furniture and fixtures........................................... 34,662 35,697
Capital leases................................................... 577,074 597,557
--------- ---------
3,734,725 4,254,428
Less -- accumulated depreciation and amortization................ 598,060 794,040
--------- ---------
$3,136,665 $3,460,388
========= =========
</TABLE>
The Company is dependent on two manufacturers for its future custom truck
and mobile fuel tank purchases. The Company does not have any contracts or
written agreements with such manufacturers for the purchase of such equipment in
the future.
F-9
<PAGE> 53
STREICHER MOBILE FUELING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(4) LINE OF CREDIT:
As of January 31, 1996, Enterprises owes $1,802,795 under a $2,000,000 line
of credit agreement with a bank. As the line of credit is collateralized by
assets of the Company and repayment will result from the assets and operations
of the Company, such line of credit has been fully allocated to the Company and
reflected in the accompanying balance sheets. At various times during and after
fiscal 1996, the Company fully borrowed up to the line of credit limit. As of
July 15, 1996, the line of credit was increased to $2,700,000. Amounts
outstanding under the line of credit at July 31, 1996 total $2,471,398. Interest
is payable monthly at 1.5% over the prime rate (10% as of January 31, 1996).
Subsequent to January 31, 1996, the maturity of the line of credit was extended
from May 1, 1997 to August 1, 1997 and, accordingly, the line of credit
borrowings as of January 31 and July 31, 1996 have been reflected as a long-term
obligation in the accompanying balance sheets.
Borrowings under the line of credit are secured by substantially all of the
assets of Enterprises and are personally guaranteed by the sole shareholder of
Enterprises. Under the terms of the credit agreement, Enterprises is required to
comply with certain financial covenants and restrictions, including maintaining
a minimum tangible net worth of $375,000 on a consolidated basis. As of January
31, 1996, Enterprises' consolidated tangible net worth exceeded the minimum
required, and Enterprises was in compliance with these financial covenants and
restrictions. Subsequent to January 31, 1996, Enterprises was not in compliance
with the tangible net worth covenant of its line of credit agreement and
obtained a waiver from the bank of such covenant through August 1, 1997.
(5) LONG-TERM DEBT:
Long-term debt of Enterprises has also been fully allocated to the Company
at January 31 and July 31, 1996 and consists of the following:
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1996 1996
----------- ----------
(UNAUDITED)
<S> <C> <C>
Commercial loan and promissory notes payable (10.12% weighted
average fixed interest rate at January 31, 1996) due in monthly
installments with varying maturities from June 1996 through
September 2000................................................... $ 907,137 $1,149,055
Promissory notes payable (Prime + 2%, 10.5% at January 31, 1996)
due in monthly installments with varying maturities from February
1997 through January 2000........................................ 591,835 609,728
Promissory notes payable (Prime + 1.5%, 10% at January 31, 1996)
due in monthly installments through May 1998..................... 89,133 69,827
---------- ----------
Total long-term debt............................................... 1,588,105 1,828,610
Less -- Current portion............................................ 471,404 434,206
---------- ----------
Long-term debt, excluding current portion.......................... $1,116,701 $1,394,404
========== ==========
</TABLE>
The notes payable are collateralized by the vehicles financed by the notes.
F-10
<PAGE> 54
STREICHER MOBILE FUELING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Future principal payments on long-term debt are due as follows as of
January 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDING JANUARY 31,
-------------------------------------------------
<S> <C>
1997............................................. $ 471,404
1998............................................. 582,489
1999............................................. 362,963
2000............................................. 152,269
2001............................................. 18,980
----------
$1,588,105
==========
</TABLE>
(6) CAPITAL LEASE OBLIGATIONS:
Enterprises leases certain equipment and trucks utilized by the Company
which are also fully allocated to the Company and are accounted for as capital
leases. The following is a schedule by year of future minimum lease payments
under such capital leases together with the present value of minimum lease
payments as of January 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDING JANUARY 31,
------------------------------------------------------------------
<S> <C>
1997.............................................................. $167,359
1998.............................................................. 146,516
1999.............................................................. 126,398
2000.............................................................. 39,935
2001.............................................................. 2,041
--------
Total minimum lease payments...................................... 482,249
Less: Amounts representing interest............................. 97,242
--------
Present value of minimum lease payments........................... 385,007
Less: Current portion........................................... 131,766
--------
Long-term portion................................................. $253,241
========
</TABLE>
(7) RELATED PARTY TRANSACTIONS:
The Company engages in certain transactions with Enterprises, certain of
Enterprises' other subsidiaries and Enterprises' shareholder. Amounts due to the
Company from Enterprises and certain of Enterprises' subsidiaries totalled
$32,298 as of January 31, 1996. Amounts due to another subsidiary of Enterprises
totalled $18,303 as of January 31, 1996. Interest income in fiscal 1996 includes
$15,769 relating to a receivable from Enterprises. Rent expense is paid to the
shareholder of Enterprises totalling $63,600 for the year ended January 31,
1996.
The Company has operating leases with Enterprises that expire in July 2014
and August 2015. Total rent expense for these properties will be approximately
$64,000 for each of the next five years and approximately $821,000 thereafter.
The Company paid $22,585 to its minority shareholder for consulting
services rendered for the year ended January 31, 1996. In June 1996, the Company
entered into a consulting agreement with its minority shareholder for $10,000
per month which expires in May 1998. The consulting agreement can be terminated
by either the Company or consultant at any time upon written notice.
(8) INCOME TAXES:
Income taxes are determined for the Company as if it were a separate tax
paying entity. As of January 31, 1996, NOL carryforwards for income tax purposes
of approximately $300,000, which expire between fiscal
F-11
<PAGE> 55
STREICHER MOBILE FUELING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
years ending 2009 through 2011, and alternative minimum tax credit ("AMT")
carryforwards of approximately $87,000, which do not expire, are available for
utilization by the Company through a tax sharing agreement with Enterprises.
Deferred income tax liabilities consisting primarily of the tax effect of
accelerated depreciation for income tax purposes, are offset against deferred
income tax assets which consist primarily of the tax effect of the NOL and AMT
carryforwards.
The (provision) benefit for income taxes consists of the following for the
years ended January 31, 1995 and 1996:
<TABLE>
<CAPTION>
1995 1996
-------- ---------
<S> <C> <C>
Federal............................................... $ 6,758 $ (64,183)
State................................................. 1,157 (10,986)
-------- ---------
$ 7,915 $ (75,169)
======== =========
Current............................................... $ 65,324 $ 35,472
Deferred.............................................. (57,409) (110,641)
-------- ---------
$ 7,915 $ (75,169)
======== =========
</TABLE>
The Company's (provision) benefit for income taxes differs from the
expected income tax (provision) benefit derived by applying the federal
statutory rate of 34% to income (loss) before (provision) benefit for income
taxes for the years ended January 31, 1995 and 1996 as follows:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Expected (provision) benefit for income taxes at
statutory federal income tax rates................... $ 19,750 $(59,084)
State income taxes..................................... 764 (7,251)
Nondeductible expenses................................. (12,599) (8,834)
-------- --------
Actual (provision) benefit for income taxes............ $ 7,915 $(75,169)
======== ========
</TABLE>
(9) MAJOR CUSTOMERS:
Revenue from one major customer (representing over 10% of revenue) was
approximately $2,464,000 in fiscal 1995 and $3,071,000 in fiscal 1996. For the
six month period ended July 31, 1996 the Company had revenue from the
aforementioned major customer and one other major customer of approximately
$1,493,000 and $1,904,000, respectively.
(10) COMMITMENTS AND CONTINGENCIES:
In addition to the operating leases for property owned by the shareholder
of Enterprises discussed in Note 7, the Company has other operating leases that
expire in January and June 1997. Rent expense under these operating leases for
the fiscal years ended 1995 and 1996 was approximately $20,000 and $40,000,
respectively. Remaining payments relating to these properties are approximately
$6,800.
The Company's operations are affected by numerous federal, state and local
laws, including those relating to protection of the environment and worker
safety. The transportation of gasoline and diesel fuel is subject to regulation
by various federal, state and local agencies, including the U.S. Department of
Transportation. These regulatory authorities have broad powers, and the Company
is 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. The Company is also subject
to the rules and regulations of the Hazardous Materials Transportation Act. In
addition, the Company depends on the supply of gasoline and
F-12
<PAGE> 56
STREICHER MOBILE FUELING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
diesel fuel from the oil and gas industry and, therefore, is affected by
changing taxes, price controls and other laws and regulations relating to the
oil and gas industry generally. The Company cannot determine the extent to which
its 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 the Company to liability for
the conduct of or conditions caused by others, or for acts of the Company that
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,
companies 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.
Although the Company believes that it is 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. Moreover, it is possible that
other developments, such as stricter environmental laws, regulations and
enforcement policies thereunder, could result in additional, presently
unquantifiable, costs or liabilities to the Company.
(11) SUBSEQUENT EVENTS:
In October 1996, the articles of incorporation authorized the issuance of
1,000,000 shares of "blank check" preferred stock with such designations, rights
and preferences as may be determined by the Board of Directors of the Company.
In October 1996, the Company adopted a stock option plan (the "Plan") under
which 100,000 shares of common stock are reserved for issuance. The Plan
provides for granting both incentive stock options and nonqualified stock
options. To date, no options have been granted under the Plan.
In October 1996, the Company approved the initial public offering of
securities of the Company, including 1,000,000 shares of common stock and
1,000,000 redeemable common stock purchase warrants, as described in this
prospectus.
The Company intends to enter into an employment agreement with Stanley H.
Streicher, the majority shareholder, effective upon completion of this initial
public offering, pursuant to which Mr. Streicher will serve as President and
Chief Executive Officer of the Company. The term of the agreement is five years.
The term of this agreement will automatically renew for two successive two-year
terms, unless notice of termination is given prior to a renewal period. The
agreement provides that Mr. Streicher shall receive an initial annual base
salary of $275,000, subject to cost-of-living increases; and he will be eligible
to participate in a bonus pool which will provide him additional compensation of
up to ten percent of the Company's pre-tax earnings.
The agreement provides that if Mr. Streicher's employment is terminated as
a result of his death or disability, he or his estate will receive for a period
of six months his base salary in effect as of the date of termination and a
prorated amount of any bonuses. The agreement also provides that in the event
Mr. Streicher's employment is terminated "without cause" or for "good reason,"
Mr. Streicher will receive, in addition to any salary, bonus and other
compensation accrued through the date of termination, a lump sum equal to the
greater of the full amount of salary, bonuses and other compensation due under
the agreement for the remainder of the term and three times the then-existing
salary and most recent annual bonus. The agreement further provides that Mr.
Streicher will not compete with the Company while employed by the Company and
for a period of two years following termination of employment. In the event that
his employment is terminated without cause, as a result of his death or
disability, or upon a change of control (as
F-13
<PAGE> 57
STREICHER MOBILE FUELING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
defined in the employment agreement), all options to purchase common stock held
by Mr. Streicher shall become immediately exercisable.
The agreement further provides Mr. Streicher with stock options that will
enable him to acquire up to an aggregate of 1,000,000 shares of Common Stock at
the initial offering price of the Company following the closing of this
offering. The exercise of the stock options is contingent upon the Company
achieving either a specified earnings per share level or a specified stock price
level (the "performance threshold"), for the corresponding fiscal year-end.
Commencing with fiscal year-ended January 31, 1997 and at each of the five
fiscal year ends thereafter, provided the performance threshold is met, 200,000
of such options will become exercisable at an exercise price equal to the
initial public offering price. Regardless of the Company's performance, all of
the stock options granted to Mr. Streicher shall vest and become exercisable ten
years from the date of the grant.
The Company has entered into a consulting agreement with the Underwriters,
effective as of August 1, 1996, pursuant to which various executive and staff
personnel of the Underwriters will provide financial and investor relation
services, public relations services and corporate communications services for a
period of two years at the rate of $4,166 per month. From August 1, 1996 to
December 1, 1996, the monthly payments are accrued and not payable until
December 31, 1996, provided that the agreement has not been cancelled or
rendered void. If the Company does not have shareholders' equity of at least $4
million by December 15, 1996, the agreement is null and void. However, if
termination is after December 31, 1996, the Representative shall not be required
to perform additional services under the agreement and the remainder of the
unpaid balance of funds due to the Underwriters shall be earned and shall be
immediately due and payable. At the Underwriters' election, all of the fees
pursuant to the agreement shall be prepaid when the Company attains $4 million
in shareholders' equity.
F-14
<PAGE> 58
======================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH AND INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER, OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 17
Dilution.............................. 18
Capitalization........................ 19
Dividend Policy....................... 19
Selected Financial Data............... 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
Business.............................. 24
Management............................ 30
Principal and Selling Shareholder..... 33
Certain Transactions.................. 33
Description of Securities............. 34
Shares Available for Future Sale...... 37
Underwriting.......................... 38
Legal Matters......................... 40
Experts............................... 40
Available Information................. 40
Financial Statements.................. F-1
</TABLE>
------------------
Until , 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
======================================================
======================================================
STREICHER MOBILE
FUELING, INC.
1,000,000 SHARES OF
COMMON STOCK
AND
1,000,000 REDEEMABLE
COMMON STOCK PURCHASE
WARRANTS
------------------------
PROSPECTUS
------------------------
(LOGO)
ARGENT
SECURITIES, INC.
ATLANTA, GEORGIA
(404) 237-1234
------------------------
October __ , 1996
======================================================
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has authority under Section 607.0850 of the Florida Business
Corporation Act to indemnify its directors and officers to the extent provided
for in such statute. The Company's Amended and Restated Articles of
Incorporation provide that the Company shall indemnify and may insure its
officers and directors to the fullest extent permitted by law.
The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of criminal
laws, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful, (b) deriving an
improper personal benefit from a transaction, (c) voting for or assenting to an
unlawful distribution and (d) willful misconduct or conscious disregard for the
best interests of the Company in a proceeding by or in the right of the Company
to procure a judgment in its favor or in a proceeding by or in the right of a
shareholder. The statute does not affect a director's responsibilities under any
other law, such as the federal securities laws.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and is therefore unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table itemizes expenses to be incurred by the Company in
connection with the issuance and distribution of the securities being registered
hereby, other than underwriting discounts and commissions.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....................... $ 6,806
NASD filing fee........................................................... 2,746
Nasdaq listing fee........................................................ 7,725
Printing expenses......................................................... 65,000
Accounting fees and expenses.............................................. 180,000
Legal fees and expenses................................................... 85,000
Fees and expenses (including legal fees) for qualifications under state
securities laws......................................................... 25,000
Miscellaneous............................................................. 88,000
------
Total*.......................................................... $460,277
======
</TABLE>
* All amounts except the Securities and Exchange Commission registration
fee, the NASD filing fee and the Nasdaq listing fee are estimated. The
Company intends to pay all expenses of registration with respect to
shares being sold by the Selling Shareholder pursuant to the
Underwriters' over-allotment, with exception of underwriting discounts
and commissions.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Upon completion of the Offering described in the Prospectus included in
this Registration Statement, the Company will issue 1,500,000 shares of Common
Stock to Streicher Enterprises, Inc. in consideration of the
II-1
<PAGE> 60
transfer to the Company of Streicher Enterprises, Inc.'s mobile fueling
operations. Such shares will be issued pursuant to the exemption set forth in
Section 4(2) of the Securities Act.
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------------- ----------------------------------------------------------------------------------
<C> <S> <C>
1 -- Form of Underwriting Agreement**
3.1 -- Articles of Incorporation**
3.2 -- ByLaws**
4.1 -- Specimen Common Stock Certificate**
4.2 -- Specimen Redeemable Warrant Certificate**
4.3 -- Form of Underwriters' Purchase Option Agreement**
4.4 -- Form of Warrant Agreement**
5.1 -- Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. as to the
validity of the securities to be registered*
10.1 -- Form of Employment Agreement between the Company and Stanley H. Streicher**
10.2 -- Stock Option Plan**
23.1 -- Consent of Arthur Andersen LLP, Independent Certified Public Accountants*
23.2 -- Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (contained
in Exhibit 5.1).*
27.1 -- Financial Data Schedule for period ended July 31, 1996 (for SEC use only).*
27.2 -- Financial Data Schedule for period ended January 31, 1996 (for SEC use only).*
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
ITEM 28. UNDERTAKINGS.
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event
II-2
<PAGE> 61
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
The undersigned Company hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of the registration
statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE> 62
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form SB-2 and has duly caused this Amendment No.
2 to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Ft. Lauderdale, State of Florida, on
the 3rd day of December, 1996.
STREICHER MOBILE FUELING, INC.
By: /s/ Stanley H. Streicher
-------------------------------------
Stanley H. Streicher, President and
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ------------------------------------------------
<S> <C> <C>
/s/ Stanley H. Streicher President, Chief Executive December 3, 1996
- --------------------------------------------- Officer and Director
Stanley H. Streicher
/s/ Kenneth C. Day Controller, Chief Financial December 3, 1996
- --------------------------------------------- Officer (principal
Kenneth C. Day financial officer and
principal accounting
officer)
</TABLE>
II-4
<PAGE> 63
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------------- ----------------------------------------------------------------------------------
<C> <S> <C>
1 -- Form of Underwriting Agreement**
3.1 -- Articles of Incorporation**
3.2 -- ByLaws**
4.1 -- Specimen Common Stock Certificate**
4.2 -- Specimen Redeemable Warrant Certificate**
4.3 -- Form of Underwriters' Purchase Option Agreement**
4.4 -- Form of Warrant Agreement**
5.1 -- Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. as to the
validity of the securities to be registered*
10.1 -- Form of Employment Agreement between the Company and Stanley H. Streicher**
10.2 -- Stock Option Plan**
23.1 -- Consent of Arthur Andersen LLP, Independent Certified Public Accountants*
23.2 -- Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (contained
in Exhibit 5.1).*
27.1 -- Financial Data Schedule for period ended July 31, 1996 (for SEC use only).*
27.2 -- Financial Data Schedule for period ended January 31, 1996 (for SEC use only).*
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
<PAGE> 1
Exhibit 5.1
Kenneth C. Hoffman
(305) 579-0809 December 3, 1996
Streicher Mobile Fueling, Inc.
2720 Northwest 55th Court
Fort Lauderdale, Florida 33309
Re: Public Offering
Gentlemen:
On October 18, 1996, Streicher Mobile Fueling, Inc., a Florida
corporation (the "Company"), filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 (No. 333-14501) (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"). The
Registration Statement relates to: (i) the sale by the Company of up to
1,000,000 shares (the "Shares") of the Company's Common Stock, par value $.01
per share (the "Common Stock") and 1,000,000 Redeemable Common Stock Purchase
Warrants (the "Warrants"), (ii) the sale by the Company of up to 75,000 shares
of Common Stock which may be purchased by the Underwriters' pursuant to an
over-allotment option (the "Over-Allotment Shares" and together with the Shares,
the "Offering Shares"),(iii) the sale by a certain shareholder of the Company of
up to 75,000 shares (the "Selling Shareholder Shares") of Common Stock pursuant
to the Underwriters' over-allotment option, (iv) the sale by the Company of up
to 150,000 Warrants subject to the Underwriters' over-allotment option, (v) the
sale by the Company of 150,000 shares of Common Stock issuable upon exercise of
Warrants subject to the Underwriters' over-allotment option, (vi) the sale by
the Company of 115,000 shares of Common Stock issuable upon exercise of
Underwriters'
<PAGE> 2
Streicher Mobile Fueling, Inc.
December 3, 1996
Page 2
Warrants (vii) the sale by the Company of 115,000 Warrants issuable upon
exercise of the Underwriters' Warrants, and (viii) the sale by the Company of
115,000 shares of Common Stock underlying the Warrants subject to the
Underwriters' Warrants (all of the foregoing securities together hereinafter
referred to as the "Securities"). We have acted as counsel to the Company in
connection with the preparation and filing of the Registration Statement.
In connection therewith, we have examined and relied upon copies of (i)
the Company's Articles of Incorporation and Bylaws; (ii) resolutions of the
Company's Board of Directors authorizing the offering and the issuance of the
Securities, (iii) the Registration Statement, exhibits thereto and the
Prospectus forming a part of the Registration Statement (the "Prospectus"), (iv)
such other documents and instruments as we have deemed necessary for the
expression of opinions herein contained. In making the foregoing examinations,
we have assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals, and the conformity to original documents
of all documents submitted to us as certified or photostatic copies. As to
various questions of fact material to this opinion, we have relied, to the
extent we deemed reasonably appropriate, upon representations or certificates of
officers of directors of the Company and upon documents, records and instruments
furnished to us by the Company, without independently verifying the accuracy of
such documents, records and instruments.
Based upon the foregoing examination, we are of the opinion that:
1. The Offering Shares have been duly and validly authorized and, when
issued and delivered in accordance with the terms of the Underwriting Agreement
and the Prospectus, will be validly issued, fully paid and nonassessable.
2. The Selling Shareholder Shares have been duly and validly issued,
and are fully paid and nonassessable.
3. The Warrants have been duly authorized and when issued and sold in
accordance with the Underwriting Agreement and the terms described in the
Prospectus, will be validly issued, fully paid and nonassessable.
4. The 1,380,000 shares of Common Stock issuable upon exercise of the
Warrants and the Underwriters' Warrants, have been duly authorized and reserved
for issuance and, when issued in accordance with the terms of the Warrants will
be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the prospectus comprising a part of the Registration Statement. In
giving such consent, we do not thereby admit that we are included within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations promulgated thereunder.
Very truly yours,
GREENBERG, TRAURIG, HOFFMAN, LIPOFF,
ROSEN & QUENTEL, P.A.
By: /s/ GREENBERG, TRAURIG, HOFFMAN, LIPOFF,
ROSEN & QUENTEL, P.A.
----------------------------------------
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
As independent certified public accountants, we hereby consent to the use of
our report on the financial statements of Streicher Mobile Fueling, Inc. and to
all references to our Firm included in this Registration Statement on Amendment
No. 2 to Form SB-2.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
December 2, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS OF STREICHER MOBILE FUELING, INC. AS OF JANUARY 31, 1996 AND JULY 31,
1996 (UNAUDITED), AND THE RELATED STATEMENTS OF OPERATIONS, SHAREHOLDERS'
EQUITY AND CASH FLOWS FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED JANUARY 31,
1996 AND THE SIX MONTHS ENDED JULY 31, 1995 AND 1996 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 7,345
<SECURITIES> 94,395
<RECEIVABLES> 3,363,991
<ALLOWANCES> 30,000
<INVENTORY> 64,272
<CURRENT-ASSETS> 3,543,430
<PP&E> 4,254,428
<DEPRECIATION> 794,040
<TOTAL-ASSETS> 7,121,674
<CURRENT-LIABILITIES> 2,566,113
<BONDS> 0
0
0
<COMMON> 15,000
<OTHER-SE> 132,585
<TOTAL-LIABILITY-AND-EQUITY> 7,121,674
<SALES> 13,887,855
<TOTAL-REVENUES> 13,887,855
<CGS> 12,760,929
<TOTAL-COSTS> 12,760,929
<OTHER-EXPENSES> 1,244,393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 260,252
<INCOME-PRETAX> (371,332)
<INCOME-TAX> 133,851
<INCOME-CONTINUING> (237,481)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (237,481)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS OF STREICHER MOBILE FUELING, INC. AS OF JANUARY 31, 1996 AND JULY 31,
1996 (UNAUDITED) AND THE RELATED STATEMENTS OF OPERATIONS, SHAREHOLDERS'
EQUITY AND CASH FLOWS FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED JANUARY 31,
1996 AND THE SIX MONTHS ENDED JULY 31, 1995 AND 1996 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 189,508
<SECURITIES> 203,743
<RECEIVABLES> 2,620,559
<ALLOWANCES> 28,000
<INVENTORY> 65,193
<CURRENT-ASSETS> 3,151,793
<PP&E> 3,734,725
<DEPRECIATION> 598,060
<TOTAL-ASSETS> 6,357,936
<CURRENT-LIABILITIES> 2,426,374
<BONDS> 0
0
0
<COMMON> 15,000
<OTHER-SE> 370,066
<TOTAL-LIABILITY-AND-EQUITY> 6,357,936
<SALES> 23,989,358
<TOTAL-REVENUES> 23,989,358
<CGS> 21,752,350
<TOTAL-COSTS> 21,752,350
<OTHER-EXPENSES> 1,752,485
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 343,967
<INCOME-PRETAX> 173,775
<INCOME-TAX> 75,169
<INCOME-CONTINUING> 98,606
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,606
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
