SC 13E3/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

AMENDMENT NO. 3 TO

FORM 13E-3

RULE 13E-3 TRANSACTION STATEMENT UNDER SECTION 13(e)
SECURITIES EXCHANGE ACT OF 1934

Mercury Air Group, Inc.

(Name of Issuer)

Mercury Air Group, Inc.

Joseph A. Czyzyk
Frederick H. Kopko, Jr.
CK Partners
(Name of Person(s) Filing Statement)

Common Stock, par value $.01 per share
(Title of Class of Securities)

589354406
(CUSIP Number of Class of Securities)

Joseph A. Czyzyk
Mercury Air Group, Inc.
5456 McConnell Avenue
Los Angeles, California 90066
(310) 827-2737
(Name, Address, and Telephone Numbers of Person Authorized to Receive
Notices and Communications on Behalf of Persons Filing Statement)

With a copy to:

James R. Stern, Esq.
McBreen & Kopko
20 North Wacker Drive
Suite 2520
Chicago, Illinois 60606

This statement is filed in connection with (check the appropriate box):

a.	x	The filing of solicitation materials or an information statement subject to Regulation 14A (§§240.14a-1 through 240.14b-2), Regulation 14C (§§240.14c-1 through 240.14c-101) or Rule 13e-3(c) (§240.13e-3(c)) under the Securities Exchange Act of 1934 (the “Act”).
b.		The filing of a registration statement under the Securities Act of 1933.
c.		A tender offer.
d.		None of the above.

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: x

Check the following box if the filing is a final amendment reporting the results of the transaction: o

Calculation of Filing Fee

Transaction Valuation	Amount of Filing Fee
$770,452	$90.68

*Calculated solely for purposes of determining the filing fee. The transaction valuation assumes the payment for 192,613 shares of common stock of the subject company at $4.00 per share in cash.

Check the box if any part of the fee is offset as provided by §240.1-11(1)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. x

Amount Previously Paid: $90.68	Filing Party: Mercury Air Group, Inc.
Form or Registration No.: Schedule 13E-3 (5-34478)	Date Filed: April 1, 2005

-2-

TABLE OF CONTENTS

	Item 1. Summary Term Sheet
	Item 2. Subject Company Information
	Item 3. Identity and Background of Filing Person
	Item 4. Terms of the Transaction
	Item 5. Past Contacts, Transactions, Negotiations and Agreements
	Item 6. Purposes of the Transaction and Plans or Proposals
	Item 7. Purposes, Alternatives, Reasons and Effects
	Item 8. Fairness of the Transaction
	Item 9. Reports, Opinions, Appraisals and Negotiations
	Item 10. Source and Amounts of Funds or Other Consideration
	Item 11. Interest in Securities of the Subject Company
	Item 12. The Solicitation or Recommendation
	Item 13. Financial Statements
	Item 14. Persons/Assets, Retained, Employed, Compensated or Used
	Item 15. Additional Information
	Item 16. Exhibits
EXHIBIT INDEX
SIGNATURE
Exhibit 99(a)(1)
Exhibit 99(a)(2)
Exhibit 99(c)(1)
Exhibit 99(c)(2)
Exhibit 99(c)(3)
Exhibit 99(c)(4)
Exhibit 99(c)(5)
Exhibit 99(c)(6)
Exhibit 99(c)(7)
Exhibit 99(c)(8)
Exhibit 99(c)(9)
Exhibit 99(c)(10)
Exhibit 99(c)(11)
Exhibit 99(c)(12)
Exhibit 99(c)(13)
Exhibit 99(c)(14)
Exhibit 99(c)(15)
Exhibit 99(c)(16)
Exhibit 99(c)(17)
Exhibit 99(c)(18)
Exhibit 99(c)(19)
Exhibit 99(c)(20)
Exhibit 99(c)(21)
Exhibit 99(c)(22)
Exhibit 99(c)(23)
Exhibit 99(c)(24)
Exhibit 99(c)(25)
Exhibit 99(c)(26)
Exhibit 99(c)(27)
Exhibit 99(c)(28)
Exhibit 99.(c)(29)

EXPLANATORY NOTE

     This Amendment No. 3 to Rule 13e-3 Transaction Statement is being filed concurrently with the filing of a preliminary proxy statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 (the “Proxy Statement”). The information contained in the Proxy Statement, including all annexes thereto, is hereby expressly incorporated herein by reference. As of the date hereof, the Proxy Statement is in preliminary form and is subject to completion or amendment. Capitalized terms used but not defined in this Amendment No. 3 to Schedule 13E-3 (this “Schedule”) shall have the meanings given to them in the Proxy Statement.

Item 1. Summary Term Sheet.

     The section entitled “Summary Term Sheet” set forth in the Proxy Statement is incorporated herein by reference.

Item 2. Subject Company Information.

     (a) Name and Address. The name of the subject company is Mercury Air Group, Inc., a Delaware corporation (the “Company”). The Company’s principal executive offices are located at 5456 McConnell Avenue, Los Angeles, California 90066. The Company’s telephone number is (310) 827-2737.

     (b) Securities. The subject class of equity securities to which this Schedule relates is the Company’s common stock, par value $.01 per share (the “Common Stock”), of which 3,056,355 shares were outstanding as of May 1, 2005.

     (c) Trading, Market and Prices. The information set forth in the Proxy Statement under “Market for Common Stock and Related Stockholder Matters – Market Prices of the Common Stock” is incorporated herein by reference.

     (d) Dividends. The information set forth in the Proxy Statement under “Market for Common Stock and Related Stockholder Matters – Dividends” is incorporated herein by reference.

     (e) Prior Public Offerings. The Company has not made an underwritten public offering of the Common Stock for cash during the three years preceding the date of the filing of this Schedule.

     (f) Prior Stock Purchases. The information set forth in the Proxy Statement under “Stock Purchases by Mercury and Transaction Affiliates” is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

-3-

     (a) Name and Address. The filing persons are the Company, Joseph A. Czyzyk (Chairman, Chief Executive Officer, President and principal stockholder of the Company), Frederick H. Kopko, Jr. (director and principal stockholder of the Company) and CK Partners, a partnership owned and controlled by Messrs. Czyzyk and Kopko. Mr. Kopko also serves as outside legal counsel on various corporate legal matters. The Company’s address and telephone number are provided in Item 2(a) above. The address and telephone number of Mr. Czyzyk and CK Partners are also provided in Item 2(a) above. The address and telephone number of Mr. Kopko is 20 North Wacker Drive, Suite 2520, Chicago, Illinois 60606, (312) 332-6405. The address of each executive officer is c/o Mercury Air Group, Inc. 5456 McConnell Avenue, Los Angeles, California 90066, telephone number (310) 827-2737. The names of the executive officers, and the names and addresses of the directors are set forth below.

Executive Officers

Joseph A. Czyzyk, Chairman, Chief Executive Officer and President
Kent Rosenthal, Chief Financial Officer
William L. Silva, Executive Vice President and President of Maytag Aircraft Corporation
Wayne J. Lovett, Executive Vice President, Secretary and General Counsel

Directors

Frederick H. Kopko, Jr., 20 North Wacker Drive, Suite 2520, Chicago, IL 60606
Gary J. Feracota, 904 Williams Street, River Forest, IL 60305
Michael J. Janowiak, 6540 West Joliet Road, #38, Countryside, IL 60525
Angelo Pusateri, 17 Cary Road, New Hyde Park, NY 11040

     (b) Business and Background of Entities. CK Partners is an Illinois general partnership owned and controlled by Messrs. Czyzyk and Kopko.

     (c) Business and Background of Natural Persons. The information set forth in Item 2(a) above and in the Proxy Statement under “Management of Mercury—Directors” and “Management of Mercury—Executive Officers Who Are Not Directors” is incorporated herein by reference. All directors and executive officers are United States citizens. During the last five years, neither the Company nor, to its knowledge, any of its directors or executive officers has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or was a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of those laws.

Item 4. Terms of the Transaction.

     (a) Material Terms. The information set forth in the Proxy Statement under “Summary Term Sheet,” “The Proposed Amendment,” “The Special Meeting —Vote Required,”

-4-

“Special Factors—Purpose of and Reasons for the Transaction,” “Special Factors—Background of the Transaction; Board and Special Committee Deliberations” and “Special Factors—U.S. Federal Income Tax Consequences” is incorporated herein by reference.

     (b) [Reserved]

     (c) Different Terms. The information set forth in the Proxy Statement under “Special Factors – Certain Effects of the Transaction”, is incorporated herein by reference.

     (d) Appraisal Rights. The information set forth in the Proxy Statement under “Special Factors—No Appraisal or Dissenters’ Rights; Escheat Laws” is incorporated herein by reference.

     (e) Provisions for Unaffiliated Security Holders. The Company has not made any provision in connection with the transaction to grant unaffiliated security holders access to the Company’s corporate files or to obtain counsel or appraisal services at the Company’s expense.

     (f) Eligibility for Listing or Trading. Not applicable.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

     (a) Transactions. The information set forth in the Proxy Statement under “Certain Transactions” is incorporated herein by reference.

     (b) Significant Corporate Events. The information set forth in the Proxy Statement under “Security Ownership of Certain Beneficial Owners” and “Certain Transactions” is incorporated herein by reference.

     (c) Negotiations or Contacts. The information set forth in the Proxy Statement under “Security Ownership of Certain Beneficial Owners” and “Certain Transactions” is incorporated herein by reference.

     (d) [Reserved]

     (e) Agreements Involving the Subject Company’s Securities. The information set forth in the Proxy Statement under “Special Factors – Certain Effects of the Transaction” and “Security Ownership of Certain Beneficial Owners” is incorporated herein by reference.

Item 6. Purposes of the Transaction and Plans or Proposals.

     (b) Use of Securities Acquired. Shares to be acquired will be kept in the Company’s treasury and thereafter may be reissued or retired.

     (c) Plans. The information set forth in the Proxy Statement under “Summary Term Sheet- Purpose of and Reasons for the Transaction”, “Summary Term Sheet – Benefits of the

-5-

Transaction”, “Summary Term Sheet – Disadvantages of the Transaction”, “Summary Term Sheet – Effects of the Transaction”, “Special Factors – Purpose of and Reasons for the Transaction”, “Special Factors – Benefits of the Transaction”, “Special Factors – Disadvantages of the Transaction”, “Special Factors – Certain Effects of the Transaction” and “Special Factors – Conduct of Mercury’s Business after the Transaction” is incorporated herein by reference.

Item 7. Purposes, Alternatives, Reasons and Effects.

     (a) Purposes. The information set forth in the Proxy Statement under “Summary Term Sheet – Purpose of and Reasons for the Transaction,” “Special Factors – Purpose of and Reasons for the Transaction” and “Special Factors—Background of the Transaction; Board and Special Committee Deliberations” is incorporated herein by reference.

     (b) Alternatives. The information set forth in the Proxy Statement under “Summary Term Sheet - - Alternatives Considered” and “Special Factors – Alternatives Considered” is incorporated herein by reference.

     (c) Reasons. The information set forth in the Proxy Statement under “Summary Term Sheet – Purpose of and Reasons for the Transaction” and “Special Factors—Purpose of and Reasons for the Transaction” is incorporated herein by reference.

     (d) Effects. The following information is incorporated by reference to the Proxy Statement: “Summary Term Sheet — Purpose of and Reasons for the Transaction,” “Summary Term Sheet - Disadvantages of the Transaction,” “Summary Term Sheet – Benefits of the Transaction,” Summary Term Sheet – The Transaction,” “Summary Term Sheet – Effects of the Transaction,” “Summary Term Sheet – U.S. Federal Income Tax Consequences,” “Special Factors – Purpose of and Reasons for the Transaction,” “Special Factors – Benefits of the Transaction,” “Special Factors – Disadvantages of the Transaction,” “Special Factors – Certain Effects of the Transaction,” and “Special Factors – U.S. Federal Income Tax Consequences.”

Item 8. Fairness of the Transaction.

     (a) Fairness. The information set forth in the Proxy Statement under “Summary Term Sheet - Determination of Fairness of the Transaction by the Special Committee, the Board and the Transaction Affiliates,” “Special Factors — Recommendation of the Board; Fairness of the Transaction” and “Special Factors – Determination of Fairness of the Transaction by the Transaction Affiliates” is incorporated herein by reference.

     (b) Factors Considered in Determining Fairness. The information set forth in the Proxy Statement under “Summary Term Sheet – Determination of Fairness of the Transaction by the Special Committee, the Board and the Transaction Affiliates,” “Special Factors — Recommendation of the Board; Fairness of the Transaction” and “Special Factors – Determination of Fairness of the Transaction by the Transaction Affiliates” is incorporated herein by reference.

-6-

     (c) Approval of Security Holders. The information set forth in the Proxy Statement under “Special Factors – Recommendation of the Board; Fairness of the Transaction” is incorporated herein by reference.

     (d) Unaffiliated Representatives. The information set forth in the Proxy Statement under “Special Factors — Recommendation of the Board; Fairness of the Transaction” is incorporated herein by reference.

     (e) Approval of Directors. The information set forth in the Proxy Statement under “Summary Term Sheet — Recommendation of the Special Committee and the Board of Directors” and “Special Factors — Recommendation of the Board; Fairness of the Transaction” is incorporated herein by reference.

     (f) Other Offers. The information set forth in the Proxy Statement under “Special Factors – Corporate Developments in Last Four Years” and “Special Factors – Background of the Transaction; Board and Special Committee Deliberations” is incorporated herein by reference.

Item 9. Reports, Opinions, Appraisals and Negotiations.

     (a) Report, Opinion or Appraisals. The information set forth in the Proxy Statement under “Summary Term Sheet — Fairness Opinion of Imperial Capital, LLC,” “Special Factors – Corporate Developments in Last Four Years,” “Special Factors – Background of the Transaction; Board and Special Committee Deliberations” and “Special Factors — Opinion of Imperial Capital, LLC” is incorporated herein by reference.

     (b) Preparer and Summary of the Report, Opinion or Appraisal. The information set forth in the Proxy Statement under “Summary Term Sheet — Fairness Opinion of Imperial Capital, LLC,” “Special Factors – Corporate Developments in Last Four Years,” “Special Factors – Background of the Transaction; Board and Special Committee Deliberations” and “Special Factors — Opinion of Imperial Capital, LLC” is incorporated herein by reference.

     (c) Availability of Documents. The full text of the fairness opinion of Imperial Capital, LLC, dated March 21, 2005, is attached as Appendix B to the Proxy Statement. The full text of the reports of SenPro Consulting/Casey & Co. and Parson Consulting dated February 1, 2005 and March 8, 2005, respectively, are attached as exhibits (c)(2) and (c)(3) to this Schedule 13e-3. The full text of all other reports presented by Imperial Capital, LLC are attached as Exhibits (c)(4) to (c)(25) to this Schedule 13e-3. All such documents referenced are also available for inspection and copying at the Company’s principal executive offices, 5456 McConnell Avenue, Los Angeles, California 90066.

Item 10. Source and Amounts of Funds or Other Consideration.

     (a) Source of Funds, (b) Conditions, (c) Expenses and (d) Borrowed Funds. The information set forth in the Proxy Statement under “Summary Term Sheet — Source of Funds;

-7-

Financing of the Transaction” and “Special Factors—Source of Funds; Financing of the Transaction” is incorporated herein by reference.

Item 11. Interest in Securities of the Subject Company.

     (a) Securities Ownership. The information set forth in the Proxy Statement under “Security Ownership of Certain Beneficial Owners” is incorporated herein by reference

     (b) Securities Transactions. The Company and the Transaction Affiliates have not and to the best of the Company’s knowledge, none of its directors or executive officers has effected any transaction in the Common Stock during the 60 days preceding the date of filing this Schedule.

Item 12. The Solicitation or Recommendation.

     (a), (b) and (c) [Reserved]

     (d) Intent to Tender or Vote in a Going Private Transaction and (e) Recommendations of Others. The information set forth in the Proxy Statement under “The Special Meeting — Vote Required,” “The Special Meeting -Recommendation of the Board of Directors,” “Special Factors — Purpose of and Reasons for the Transaction,” “Special Factors – Benefits of the Transaction,” “Special Factors - Alternatives Considered,” “Special Factors — Recommendation of the Board; Fairness of the Transaction” and “Special Factors – Determination of the Fairness of the Transaction by the Transaction Affiliates” is incorporated herein by reference.

Item 13. Financial Statements.

     (a) Financial Information. The audited financial statements and unaudited interim financial statements are incorporated by reference in the proxy statement from the Company’s Annual Report on Form 10-K for the year ended June 30, 2004, and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, which are annexed to the Proxy Statement. The information set forth in the Proxy Statement under “Selected Per Share Financial Information,” “Financial Information,” “Documents Incorporated by Reference” and “Where You Can Find More Information” is incorporated herein by reference.

     (b) Pro forma Information. The information set forth in the Proxy Statement under “Financial Information — Pro Forma Consolidated Financial Statements (Unaudited)” is incorporated herein by reference.

Item 14. Persons/Assets, Retained, Employed, Compensated or Used.

     (a) Solicitation or Recommendation and (b) Employees and Corporate Assets. The information set forth in the Proxy Statement under “Cost of Solicitation of Proxies” is incorporated herein by reference.

-8-

Item 15. Additional Information.

     The information contained in the Proxy Statement, including all appendices attached thereto, is incorporated herein by reference.

-9-

Item 16. Exhibits.

EXHIBIT INDEX

(a)(1)	Press Release issued by the Company on March 8, 2005.*
(a)(2)	Press Release issued by the Company on March 22, 2005.*
(b)(1)	Loan Agreement dated as of July 29, 2004 by and among Bank of America, N.A., Mercury Air Group, Inc. and certain subsidiaries. Such document was previously filed as an Exhibit to the Company’s Current Report on Form 8-K on July 30, 2004 and is incorporated herein by reference.*
(b)(2)	First Amendment to Loan Agreement by and among Bank of America, N.A., Mercury Air Group, Inc. and certain subsidiaries. Such document was previously filed as an Exhibit to the Company’s Current Report on Form 8-K on October 27, 2004 and is incorporated herein by reference.*
(c)(1)	Report compiled by Mercury based on Analysis of SenPro Consulting/Casey & Co. dated February 1, 2005 and presented at Special Committee Meeting of February 21, 2005.*
(c)(2)	Agenda dated February 15, 2005 and presented at Special Committee Meeting of February 15, 2005.*
(c)(3)	Draft Delisting/Deregistration process memorandum dated February 15, 2005 and presented at Special Committee Meeting of February 15, 2005.*
(c)(4)	Step by Step Memorandum dated February 18, 2005, and presented at the Special Committee Meeting of February 21, 2005.
(c)(5)	Comparable Stock Splits Since 2004 presented at Special Committee Meeting of February 25, 2005.*
(c)(6)	Pink Sheets Liquidity Analysis presented at Special Committee Meeting of February 25, 2005.*
(c)(7)	Share Premium Analysis presented at Special Committee Meeting of February 25, 2005.*
(c)(8)	Draft Fairness Opinion & Backup dated February 25, 2005 and presented at Special Committee meeting of February 25, 2005.*
(c)(9)	Distribution of Shares Analyses presented at Special Committee Meeting of February 25, 2005.*
(c)(10)	Revised Step by Step Memorandum dated February 23, 2005 and presented at the Special Committee Meeting of February 25, 2005.
(c)(11)	Pink Sheets Liquidity Analysis — Distressed Breakout presented at Special Committee Meeting of March 1, 2005.*
(c)(12)	Revised Step by Step Memorandum dated February 28, 2005 and presented at the Special Committee Meeting of March 1, 2005.
(c)(13)	Draft Fairness Opinion & Backup v3 dated February 25, 2005 and presented at the Special Committee Meeting of March 1, 2005.**
(c)(14)	Comparable Stock Splits since 2004 presented at Special Committee Meeting of March 3, 2005.**
(c)(15)	Cash to Buy-Out Fractional Shares at Various Premiums presented at Special Committee Meeting of March 3, 2005.**
(c)(16)	Mercury Historical Price and Volume Analysis presented at Special Committee Meeting of March 8, 2005.*
(c)(17)	Cash to Buy-Out Fractional Shares at Various Premiums presented at Special Committee Meeting of March 8, 2005.*

-10-

(c)(18)	Cash to Buy-Out Fractional Shares at Various Premiums presented at Special Committee Meeting of March 9, 2005.*
(c)(19)	Cash to Buy-Out Fractional Shares at Various Premiums presented at Special Committee Meeting of March 10, 2005.*
(c)(20)	Comparable Stock Splits since 2004 presented at Special Committee Meeting of March 10, 2005.*
(c)(21)	Draft Fairness Opinion & Backup dated March 10, 2005 presented at Special Committee Meeting of March 10, 2005.*
(c)(22)	Report of Parson Consulting dated March 8, 2005 presented at Special Committee Meeting of March 10, 2005.**
(c)(23)	Draft Fairness Opinion & Backup dated March 14, 2005 presented at Special Committee Meeting of March 14, 2005.**
(c)(24)	Cash to Buy-Out Fractional Shares at Various Premiums presented at Special Committee Meeting of March 14, 2005.**
(c)(25)	Sarbanes-Oxley cost estimates presented at Special Committee Meeting of March 14, 2005.
(c)(26)	Cash to Buy-Out Fractional Shares at Various Premiums presented at Special Committee Meeting of March 21, 2005.**
(c)(27)	Expanded Cash to Buyout Fractional Shares at various premiums presented at Special Committee Meeting of March 21, 2005.**
(c)(28)	Draft Fairness Opinion & Backup dated March 21, 2005 presented at Special Committee Meeting of March 21, 2005.**
(c)(29)	Financial Projections dated March 1, 2005**
(d)(1)	Amended and Restated Partnership Agreement dated as of July 30, 2004 of CK Partners by and among Frederick H. Kopko, Jr. and Joseph A. Czyzyk. Such document was previously filed as an Exhibit to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004 and is incorporated herein by reference.

*	Previously filed under the same exhibit number. For purposes of clarification, documents (c)(1) through (c)(29) have been renumbered, and in certain instances renamed, and are being refiled herewith.
**	Previously filed under a different exhibit number. For purposes of clarification, documents (c)(1) through (c)(29) have been renumbered, and in certain instances renamed, and are being refiled herewith.

-11-

SIGNATURE

     After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: July 21, 2005	MERCURY AIR GROUP, INC.
		By:	/s/ Joseph A. Czyzyk
			Joseph A. Czyzyk
			Chief Executive Officer and
			Chairman of the Board of Directors
			JOSEPH A. CZYZYK
			/s/ Joseph A. Czyzyk
			FREDERICK H. KOPKO, JR.
			/s/ Frederick H. Kopko, Jr.
		CK PARTNERS
		By:	/s/ Joseph A. Czyzyk
			Joseph A. Czyzyk
			General Partner

EX-99.A1

Exhibit (a)(1)

Mercury Air Group, Inc. Special Committee Evaluates Proposed Reverse/Forward Split; Subsequent Deregistration Contemplated

via COMTEX

Mar 8, 2005 7:29:00 PM

LOS ANGELES, March 8, 2005 /PRNewswire-FirstCall via COMTEX/ —

Mercury Air Group, Inc. (Amex: MAX) today announced that a special committee of its Board of Directors, comprised of two independent directors, is in the process of evaluating a proposed reverse/forward stock split. The proposal contemplates an amendment to Mercury’s certificate of incorporation, which, if approved by its Board of Directors and stockholders, would result in a reverse stock split of Mercury’s common stock in such a ratio as to reduce the number of stockholders of record from its current level of approximately 331 to less than 300.

Under Mercury’s proposal, holders of less than a specified number of shares prior to the reverse stock split who would otherwise be entitled to receive fractional shares as a result of the reverse stock split, would instead receive a cash payment for those shares. It is anticipated that less than 200,000 shares will be repurchased for cash as a result of the reverse split. Under Mercury’s proposal, the payment for the fractional shares is expected to be between $3.75 and $4.25 per pre-reverse split share.

The special committee has appointed a financial adviser to advise it concerning valuation and liquidity issues relating to the reverse stock split. The reverse stock split and the price to be paid for fractional shares will be subject to amendments of Mercury’s current credit agreement, the special committee’s deliberation and recommendation of the reverse stock split to the full Board of Directors and the approval by Mercury’s Board of Directors and stockholders. Holders of a number of shares in excess of the designated exchange ratio prior to the reverse stock split will continue to be stockholders after the reverse stock split and will not be entitled to have such shares repurchased. It is contemplated that immediately following the reverse stock split there will be a forward stock split in the same ratio, so that stockholders owning a number of shares above the designated number will continue to own the same number of shares as they did prior to the reverse stock split.

If the reverse split were affected as planned, Mercury would have fewer than 300 stockholders of record. If that is the case, Mercury would deregister its common stock under the Securities Exchange Act of 1934, Mercury’s common stock would no longer be traded on the American Stock Exchange, and Mercury would be relieved of the previous cost estimates associated with implementing the Section 404 internal controls provisions of the Sarbanes-Oxley Act of 2002. In its quarterly report on Form 10-Q for the period ended December 31, 2004, Mercury estimated that such compliance costs could exceed $2.5 million.

Although Mercury’s shares no longer will be quoted on the American Stock Exchange, Mercury expects that its common stock will trade in the over-the-counter (OTC) market and will be quoted on the Pink Sheets. The Pink Sheets is a provider of pricing and financial information for OTC securities. It is a centralized quotation service that collects and publishes market maker quotes in real time primarily through its website, www.pinksheets.com, which provides stock and bond price quotes, financial news and information about securities traded.

No assurance can be given that any transaction will take place on these or any other terms or that the Company’s stock will be quoted on the Pink Sheets.

About Mercury Air Group

Los Angeles-based Mercury Air Group (Amex: MAX) provides aviation petroleum products, air cargo services and transportation, and support services for international and domestic commercial airlines, general and government aircraft and specialized contract services for the United States government. Mercury Air Group operates three business segments worldwide: MercFuel, Inc., Maytag Aircraft Corporation and Mercury Air Cargo, Inc. For more information, please visit www.mercuryairgroup.com.

Certain statements contained in this news release, which are not historical facts, are forward looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company’s filings with the Securities and Exchange Commission. The Company intends these forward-looking statements to speak only as of the time of the news release and does not undertake to update or revise them, as more information becomes available.

Company Contact: Joseph Czyzyk Mercury Air Group, Inc. (310) 827-2737

SOURCE Mercury Air Group, Inc.

Joseph Czyzyk of Mercury Air Group, Inc., +1-310-827-2737

http://www.prnewswire.com

Copyright (C) 2005 PR Newswire. All rights reserved.

EX-99.A2

Exhibit (a)(2)

Mercury Air Group’s Board of Directors Approves Reverse/Forward Stock Split

via COMTEX

Mar 22, 2005 6:01:00 AM

LOS ANGELES, March 22, 2005 /PRNewswire-FirstCall via COMTEX/ —

Mercury Air Group, Inc. (Amex: MAX) today announced that a Special Committee of independent directors of its Board of Directors recommended and its full Board of Directors approved an amendment to its certificate of incorporation, which, if approved by Mercury’s stockholders, would result in a one-for-501 reverse stock split of Mercury’s common stock followed by a 501-for-one forward stock split. Stockholders whose shares are converted into less than one share in the reverse split because they have fewer than 501 shares at the effective date of the reverse split would receive a cash payment from Mercury of $4.00 for each share of common stock that they held immediately prior to the reverse stock split, a premium of 19% over the American Stock Exchange closing price on March 21, 2005.

Stockholders who own 501 or more shares before the reverse stock split would not be affected by the transaction. The reverse/forward stock split is subject to Mercury’s lender’s consent and the approval of Mercury’s stockholders. The Board would also have the discretion if and when to affect the transaction and reserves the right to abandon the transaction even if it is approved by Mercury’s stockholders.

If the reverse/forward split is affected, Mercury is expected to have fewer than 300 common stockholders of record. And in that event, Mercury intends to deregister its common stock under the Securities Exchange Act of 1934, and Mercury’s common stock would no longer be traded on the American Stock Exchange.

Although Mercury’s shares no longer would be traded on the American Stock Exchange, Mercury expects that its common stock would be quoted on the Pink Sheets. The Pink Sheets, LLC is a provider of pricing and financial information for the over-the-counter (OTC) securities markets. It is a centralized quotation service that collects and publishes market maker quotes in real time primarily through its website, www.pinksheets.com, which provides stock and bond price quotes, financial news and information about securities traded.

No assurance can be given that any transaction will take place on these or any other terms or that the Company’s stock will be quoted and traded on the Pink Sheets.

“The transaction would result in Mercury no longer being required to comply with Section 404 of the Sarbanes-Oxley Act, the cost of which has been estimated to be up to $3,000,000 or more through June 30, 2007 and approximately $500,000 per year thereafter” said Joseph A. Czyzyk, Mercury’s Chairman and Chief Executive Officer, and further commenting: “We continue to evaluate practices that can be implemented if we deregister, including providing quarterly and annual audited financial information for our stockholders. We also anticipate having annual stockholders meetings.”

Important Legal Information: Investors and holders of Mercury common stock are urged to read the proxy statement (which will contain a list of the names, affiliations and interests of participants in the solicitation of proxies) regarding the proposed transaction when it becomes available, because it will contain important information. The proxy statement will be filed with the U.S. Securities and Exchange Commission by Mercury, and investors and holders of Mercury common stock may obtain a free copy of the proxy statement when it becomes available, and other documents filed with the SEC by Mercury, at the SEC’s website at www.sec.gov. The proxy statement and other documents filed by Mercury may also be obtained free by directing a request to Mercury Air Group, Inc., 5456 McConnell Avenue, Los Angeles, California 90066, telephone number (310) 827-2737.

About Mercury Air Group

Los Angeles-based Mercury Air Group (Amex: MAX) provides aviation petroleum products, air cargo services and transportation, and support services for international and domestic commercial airlines, general and government aircraft and specialized contract services for the United States government. Mercury Air Group operates three business segments worldwide: MercFuel, Inc., Maytag Aircraft Corporation and Mercury Air Cargo, Inc. For more information, please visit www.mercuryairgroup.com.

Company Contact: Joseph Czyzyk Mercury Air Group, Inc. (310) 827-2737

SOURCE Mercury Air Group, Inc.

Joseph Czyzyk of Mercury Air Group, Inc., +1-310-827-2737

http://www.prnewswire.com

Copyright (C) 2005 PR Newswire. All rights reserved.

EX-99.C1

Exhibit 99.(c)(1)

Mercury Air Group, Inc. SOX 404 Project February 1st, 2005 Kent Rosenthal

Sarbanes Oxley Overview Benefits of improved control over financial reporting Improved effectiveness and efficiency of internal control processes Better information for investors Enhanced investor confidence Challenges for corporate boards and management The need to devote significant time and resources to ensure compliance The need for management to evaluate and report annually on the effectiveness of internal control over financial reporting The requirement for external auditors to opine on management's assessment of the effectiveness of the internal control over financial reporting the need to assess the implications of reporting this new information to the marketplace The need for board of director and audit committee oversight of management's process, findings, and remediation efforts as management scopes and executes its Section 404 plan Changing the way Corporate America Operates

Process Contracted with the Casey Group to provide assistance in 404 project Casey Group identified six phases Phase I - Observation - Walk-Through, Discovery and Gap Analysis Phase II - Documentation, Risk Assessment, Remediation Phase III - Control Testing Phase IV - Remediation Phase V - Control Testing (second cycle) Phase VI - Remediation Contracted with Casey Group to complete Phase I Gain an understanding of the Financial and Accounting policies, procedures and processes in place Provide an overview of the project scope Gain an understanding of the Corporate and Business Unit goals and objectives Review Financial and Accounting applications and General Computer Controls, Application Level Controls, IT infrastructure, locations and staff Identify high level SOA Control Objective Gaps with current Finance and IT Operations Prepare and present a detailed project plan for subsequent phases including a cost estimate

Process Phase II - Documentation, Risk Assessment, Remediation Document financial policies, procedures and processes Perform risk assessment and produce Risk Assessment Matrix including the identification of key processes and controls to be documented and tested Develop COSO/COBIT Internal control framework Document policies, procedures and processes for all critical financial systems Update all existing IT and financial documentation for key processes and IT systems Document financial and IT process narratives and control activities Request SAS 70 reports from 3rd Party Vendors Implement new procedures ad controls (if required) Phase III - Control Testing Ensure that new control framework and policies, procedures and processes have been operating long enough for samples Request procedure, and control output samples Test all controls to ensure controls are operating effectively, document exceptions Compile results and review with key management personnel for remediation services Phase I complete, need to start on Phase II

Financial systems, IT, decentralization driving hours Phase I Results Sub-Processes Hours Lack of documented policies and procedures Multiple locations and systems increases risk and level of effort Excel spreadsheets used extensively in reporting and consolidation function IT controls/systems expertise Segregation of duties Preliminary Results Outside Costs

Sox Projected Costs External Internal Significant Resource Commitment

Common System Reduces Risk, Improves Financial Reporting Lawson Conversion Annual cost savings for conversion Reduces non-compliance risk Reduces financial reporting risk Streamlines closing process Accounting consistency Benefits Systems Accounting Systems/Convert to Lawson Also would have savings on audit fees due to lower risk. External 404 Savings Convert to Lawson

Next Steps/Recommendation Policies & Procedures Look externally for templates Update as necessary to meet needs System Conversions Continue gap analysis for converting Maytag, Excel, Hermes Mexico and Canada to Lawson Determine cost/benefit analysis Perform conversions before preparing SOX documentation SOX Phase II kick-off Currently getting hourly rates for outside consultants Number of personnel required - Project Leader with 2 additional plus IT specialist Start at Corporate and MercFuel Start date late February, early March Need Decision on Lawson

EX-99.C2

Exhibit 99.(c)(2)
Page 1 of 2

EXHIBIT A

McKinzie, Carl W.
From:	Carolina Gutierrez [cgutierrez@mercuryair.com]
Sent:	Tuesday, February 15, 2005 1:03 PM
To:	Mike Janowiak; nyangel7@optonline.net; McKinzie, Carl W.
Cc:	Wayne Lovett; Joe Czyzyk
Subject:	Tomorrow’s Telephonic Special Committee Meeting

Gentlemen:

This is to confirm that the Special Committee meeting will take place tomorrow, February 16, 2005 at 9:30 a.m. (PST) to discuss the following items:

1. Discuss scope of duties and responsibilities of Special Committee

2. Confirm independence of Special Committee Members and discuss business judgment rule (duty of loyalty and duty of care)

3. Confirm engagement of Bingham McCutchen as special counsel

4. Discuss advantages and disadvantages of delisting/deregistration and request examples of companies who have moved to trading on the Pink Sheets

5. Discuss the delisting/deregistration process, including reverse stock split

6. Confirm engagement of Imperial Capital to perform Pink Sheet liquidity study and to render fairness opinion

7. Obtain (review?) written cost estimates for Section 404 SOX compliance by independent consultant to Audit Committee

8. Request confirmation that PwC will not require SOX Section 404 compliance even though Mercury becomes deregistered under Exchange Act

9. Discuss whether majority of directors should continue to be independent if delisting/deregistration occurs, continued availability of financial information to stockholders and other “best practices,” etc.\

10. Other business

To join the meeting please call (303)664-6041 and refer to conference code 9280760.

Thank you.

Carolina Gutierrez
MERCURY AIR GROUP, INC.

EX-99.C3

Exhibit 99.(c)(3)

February 15, 2005

Mercury Air Group, Inc.
DELISTING/DEREGISTRATION PROCESS

1.   Reverse Stock Split

1.1	Committee of Independent Directors considers reverse stock split, including advantages and disadvantages, and resulting failure to qualify for listing on AMEX
1.2	Full Board of Directors considers recommendation of Committee of Independent Directors and reasons therefor
1.3	If reverse stock split approved, Directors authorize preparation of proxy materials requesting stockholders to amend Certificate of Incorporation
1.4	Prepare and file SEC Schedule 13E-3
1.5	Hold Special Stockholders Meeting
1.6	Verify that after reverse stock split, there are fewer than 300 holders of records

2.   Delist Common Stock from AMEX

2.1	Comply with AMEX procedures for delisting and removal under §1010 and Rule 18 of AMEX Company Guide
2.2	Comply with SEC procedures under SEC Rule 12d2-2 and deregister Mercury’s common stock under §12(b) of Exchange Act
2.3	Under SEC Rule 12g-2, delisting on the AMEX causes Mercury to be deemed registered pursuant to §12(g)(i) if its securities are held of record by 300 or more persons

3.   Deregister Common Stock with SEC

3.1	File SEC Form 15 requesting deregistration under all appropriate Rules of the Exchange Act AND FILE Form 8-K
3.2	Section 15(d) of the Exchange Act independently requires the filing of periodic reports with the SEC but such obligation is immediately

1

	suspended upon Mercury’s filing of a certification on SEC Form 15 pursuant to Rule 12h-3
3.3	Filing SEC Form 15 terminates registration under §12(g) of the Exchange Act 90 days after filing or such shorter period as may be determined by the SEC
3.4	Under §12g-4 of the Exchange Act, Mercury’s duty to file periodic reports under §13(a) and §15(d) of the Exchange Act is immediately suspended on filing SEC Form 15 (but not proxy statements and Forms 3, 4 and 5)

4.   Issues to Consider

4.1	Exemptions from registration requirements and number of common shares to be issued following reverse stock split for purposes of issuance of stock on exercise of options, conversion of preferred stock or exercise of warrants
4.2	Existence of any registration rights or covenants to continue to be registered held by third parties
4.3	Credit agreement or other contractual covenants to supply other contracting party with SEC type periodic reports
4.4	Impact on future capital raising and/or acquisitions
4.5	Verify that auditors or other third parties will not insist on Sarbanes-Oxley standards, even though not required (some privately held companies are being held to Sarbanes-Oxley standards by auditors, creditors, insurance providers, etc.) and certain Sarbanes-Oxley standard will continue to apply following delisting/deregistration
4.6	Review of rights of stockholders under Delaware corporate law

2

EX-99.C4

Exhibit 99.(c)(4)

Exhibit “A”

February 18, 2005
DRAFT

Mercury Air Group, Inc.

STEPS TO BE TAKEN BY SPECIAL COMMITTEE of Mike Janowiak (Chair) and Angelo Pusateri, Independent Directors of Mercury Air Group, Inc. (“Mercury”), in considering and voting on a reverse/forward stock split in connection with Mercury delisting its common stock from the American Stock Exchange (“AMEX”) and deregistering its common stock under the Securities Exchange Act of 1934 (“Exchange Act”), including the following:

*1.	Establish scope and responsibilities of Special Committee (i.e., should Mercury delist and deregister its common stock by implementing a reverse/forward stock split)
*2.	Confirm independence of Special Committee members and discuss business judgment rule (duties of loyalty and due care)
3.	Obtain and review management’s summary of proposed transaction that will reduce the stockholders of record of Mercury’s common stock to less than 300
*4.	Confirm engagement of Bingham McCutchen as Special Committee’s independent counsel
*5.	Confirm engagement and negotiate terms of engagement of Imperial Capital as independent financial adviser to Special Committee to perform (i) study of trading volume and price fluctuations for companies trading on Pink Sheets vs. trading on major stock exchanges for NASDAQ and (ii) render opinion that the proposed transaction is fair to unaffiliated stockholders who will be cashed out in the proposed transaction and fair to unaffiliated stockholders who will remain stockholders after the proposed transaction
6.	Review trading volume and price fluctuation on AMEX for Mercury common stock and consider the likely trading range for the post reverse/forward split shares on the Pink Sheets and determine whether this is an acceptable trading range
7.	Review press releases and other desired data on companies who recently have delisted and/or deregistered and the stated reasons therefore
8.	Enumerate and determine relative importance of advantages and disadvantages of delisting/deregistering
9.	Have management and outside consultants quantify in a written report anticipated cost savings resulting from delisting/deregistration

1

10.	Have management verify that current or proposed outside firm will not require Sarbanes-Oxley standards (e.g., Section 404) as “best practice” in order to render clean opinion on audited financial statements
11.	Ask management to submit for Special Committee consideration its proposed plan for corporate governance (e.g., majority of independent directors, independent director approval of related party transactions, continuance of compensation committee and audit committee, etc.) and communications with stockholders (quarterly financial reports, audited financial statements, etc.) after delisting/deregistration
12.	Receive confirmation from management that any necessary approvals or modifications under the Credit Agreement with Bank of America or any other contracts with third parties have been obtained, including requirements to issue financial reports in accordance with the Exchange Act or to file reports with the SEC
13.	Receive confirmation from management that no registration rights exist and ask management to set forth the manner in which outstanding stock options, warrants and convertible preferred stock will be adjusted and shares issued thereunder if exercised or converted
14.	Negotiate with Mercury the price to be paid for fractional shares and verify that proposed transaction, if implemented, would result in fewer than 300 stockholders of record for Mercury’s common stock
15.	Consider any increase in the percentage ownership of Mercury by the significant owners of Mercury’s common stock resulting from the proposed transaction (e.g., Messrs. Czyzyk and Kopko)
16.	Consider the amount and source of funding for payment of fractional shares
17.	Have management confirm that employment agreements will not be affected by the proposed transaction or, if affected, set forth how affected
18.	Discuss with Imperial Capital whether there are more attractive alternatives than the proposed transaction
19.	Confirmation from management that a market maker will gather, review and retain certain information about Mercury and file a Form 211 with the NASD OTC Compliance Unit in accordance with SEC Rules 15c2-11 so as to initiate a quotation on the Pink Sheets
20.	After thorough, deliberate and careful consideration of the foregoing and any other material information, the Special Committee should determine whether to recommend the proposed transaction to Mercury’s full Board of Directors as being in the best interests of Mercury and its stockholders

*completed at meeting of Special Committee on 2/16/05

2

EX-99.C5

Exhibit 99(c)(5)

Mercury Air

Comparable Stock-Split Transactions

Stock Split

Ticker

Pink Sheet

LTM

Market Cap

Transaction

Date

Company

Ratio

Pre

Post

Purpose of Stock Split

Quotation

Revenue

EBITDA

At Split

1.

2/1/2005

Fidelity Federal Bancorp

1:30,000

FFED

FFED

Termination of SEC Registration (S-Ox)

N/A

$

1.5

N/M

$

19.9

2.

1/19/2005

Max & Ermas Restaurants, Inc.

1:200

MAXE

MAXE

Termination of SEC Registration (S-Ox)

Possible

183.0

12.0

32.6

3.

1/10/2005

Trek Resources, Inc.

1:100

TREK

TREK.OB

Termination of SEC Registration (S-Ox)

N/A

9.6

4.1

6.4

4.

12/22/2004

KS Bancorp, Ltd.

1:200

KSAV

KSAV.OB

Termination of SEC Registration (S-Ox)

Possible

11.6

N/M

26.3

5.

12/8/2004

MAI Systems Corp.

1:150

MAIY

MAIY.OB

Termination of SEC Registration (S-Ox)

Possible

19.6

1.5

6.4

6.

10/12/2004

Spectrum Laboratories, Inc.

1:25,000

SPTM

SPTM.PK

Termination of SEC Registration (S-Ox)

N/A

13.3

1.9

12.4

7.

9/30/2004

Giant Group, Ltd.

1:300

GGLT

GGLT.OB

Termination of SEC Registration (S-Ox)

N/A

5.3

N/M

5.4

8.

3/5/2004

Steel City Products, Inc.

1:300,000

SCTP

N/A

Termination of SEC Registration (S-Ox)

N/A

N/A

N/A

N/A

9.

2/26/2004

Big Buck Brewery & Steakhouse, Inc.

1:10

BBUCQ

BBUC.PK

Termination of SEC Registration (S-Ox)

Possible

16.4

1.3

0.1

10.

2/20/2004

Pacific Aerospace & Electronics, Inc.

1:11,000

PARO

N/A

Going Private - GSC Partners

N/A

62.2

(5.0

)

3.1

11.

1/28/2004

Daleen Technologies, Inc.

1:500

DALN

DALN.OB

Termination of SEC Registration (S-Ox)

Possible

18.2

0.2

5.5

12.

1/9/2004

Safeguard Health Enterprises, Inc.

1:1,500

SFGH

N/A

Termination of SEC Registration (S-Ox)

N/A

126.5

7.2

11.7

EX-99.C6

Exhibit 99.(c)(6)

Mercury Air Group

Summary Transfer Analysis — Companies Transferred to Pink Sheets Since July 1, 2004

	Company		Trimmed Average Change in Volume in %									Trimmed Average Change in Price in %
	Sample		Pre to Post Transfer									Pre to Post Transfer
	Size		1 Week			1 Month			Overall			1 Week			1 Month			Overall
From NASDAQ		64		-37.3	%		-23.0	%		-14.5	%		-8.3	%		-13.5	%		-36.2	%
From NYSE		9		94.4	%		54.3	%		70.3	%		-18.2	%		-35.2	%		-56.7	%
From AMEX		9		-18.2	%		-13.4	%		-9.4	%		-15.1	%		-31.2	%		-44.8	%
All Exchanges		82		-30.5	%		-14.4	%		-7.5	%		-9.7	%		-18.5	%		-40.2	%
Only Illiquid Securities (1)		36		-1.2	%		28.6	%		4.5	%		-5.0	%		-9.8	%		-20.4	%

(1) Securities trading in average volumes less than 15,000 per day in the year prior to transfer.

Mercury Air Group

Summary Pink Sheet Transfer Analysis

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/7/05	Vestin Group, Inc.	VSTN	NASDAQ	$	2.75	$	3.00		2,194		29,994		10,029		5,986		5,326	$	3.05	$	3.02	$	3.61		1,978		N/A		2,014	$	2.62		N/A	$	2.65		-80.3	%		N/A			-62.2	%		-14.0	%		N/A			-26.7	%
2/4/05	Avalon Correctional Services, Inc.	CITY	NASDAQ		2.00		1.97		12,700		117,957		27,061		49,456		16,309		2.24		2.41		2.25		28,388		N/A		20,779		2.01		N/A		2.01		4.9	%		N/A			27.4	%		-10.2	%		N/A			-10.7	%
2/4/05	Troy Group, Inc.	TROY	NASDAQ		2.25		2.88		662		100		3,197		5,818		13,382		2.80		2.87		3.14		2,878		N/A		2,878		2.34		N/A		2.34		-10.0	%		N/A			-78.5	%		-16.5	%		N/A			-25.4	%
2/3/05	Tower Automotive, Inc.	TWRAQ	NYSE		0.28		0.77		1,782,167		333,000		3,838,500		3,644,320		1,295,672		0.85		1.66		3.46		14,010,754		N/A		8,320,238		0.30		N/A		0.29		265.0	%		N/A			542.2	%		-64.9	%		N/A			-91.7	%
2/2/05	American Business Financial Services, Inc.	ABFIQ	NASDAQ		0.50		0.65		625		21,148		47,600		53,010		17,357		0.66		0.74		3.39		12,904		N/A		15,525		0.61		N/A		0.55		-72.9	%		N/A			-10.6	%		-7.6	%		N/A			-83.8	%
2/2/05	Hanover Direct, Inc.	HNVD	AMEX		0.80		1.44		18,790		6,400		9,260		13,970		42,928		1.40		1.48		1.94		7,816		N/A		9,469		1.16		N/A		1.05		-15.6	%		N/A			-77.9	%		-17.0	%		N/A			-45.8	%
1/31/05	Great American Bancorp, Inc.	GTPS	NASDAQ		29.00		28.50		559		750		5,570		2,481		1,955		28.66		27.16		30.94		7,880		N/A		6,394		28.65		N/A		28.75		41.5	%		N/A			227.1	%		0.0	%		N/A			-7.1	%
1/28/05	Arlington Hospitality, Inc.	HOST	NASDAQ		2.76		2.87		1,100		100		7,022		7,307		4,854		2.84		2.88		3.40		1,640		N/A		1,213		2.81		N/A		2.81		-76.6	%		N/A			-75.0	%		-1.3	%		N/A			-17.6	%
1/27/05	Data Systems & Software, Inc.	DSSI	NASDAQ		0.90		0.65		3,260		12,275		23,145		12,717		13,516		0.81		0.89		1.85		5,855		N/A		8,115		0.82		N/A		0.82		-74.7	%		N/A			-40.0	%		1.7	%		N/A			-55.4	%
1/25/05	ShoLodge, Inc.	LODG	NASDAQ		4.00		3.80		3,000		1,400		16,436		5,921		2,863		3.92		4.34		4.67		5,190		N/A		2,951		3.76		N/A		3.91		-68.4	%		N/A			3.1	%		-4.0	%		N/A			-16.3	%
1/21/05	TransTechnology Corp.	TTLG	NYSE		6.46		6.53		22,095		27,100		36,320		17,420		13,469		6.66		7.02		7.50		20,902		N/A		13,360		6.43		N/A		6.49		-42.5	%		N/A			-0.8	%		-3.4	%		N/A			-13.6	%
1/20/05	HealtheTech, Inc.	HETC	NASDAQ		0.78		1.15		10,000		423		14,467		23,055		18,066		1.16		1.24		2.00		30,856		N/A		26,275		0.85		N/A		0.79		113.3	%		N/A			45.4	%		-26.9	%		N/A			-60.7	%
1/10/05	Kirlin Holding Corp.	KILN	NASDAQ		1.55		2.68		1,000		3,600		5,238		5,420		4,607		2.72		2.94		6.40		12,611		N/A		5,814		1.87		N/A		1.79		140.8	%		N/A			26.2	%		-31.3	%		N/A			-72.1	%
1/7/05	Webco Industries, Inc.	WEBO	AMEX		8.60		9.45		24,180		79,800		150,360		250,850		38,585		10.27		10.54		5.02		151,144		73,771		60,422		7.11		6.88		7.30		0.5	%		-70.6	%		56.6	%		-30.8	%		-34.7	%		45.4	%
1/5/05	Mueller (PAUL) Co.	MUEL	NASDAQ		24.05		30.11		2,900		1,935		996		825		1,586		30.20		30.46		34.79		11,068		12,348		9,498		25.30		23.64		24.56		1011.0	%		1396.1	%		498.8	%		-16.2	%		-22.4	%		-29.4	%
1/3/05	AMB Financial Corp.	AMFC	NASDAQ		14.00		14.00		200		1,108		1,789		1,786		1,208		13.74		14.30		15.08		N/A		N/A		294		N/A		N/A		14.13		N/A			N/A			-75.7	%		N/A			N/A			-6.3	%
1/3/05	CKF Bancorp, Inc.	CKFB	NASDAQ		15.25		16.49		4,700		10,612		3,184		1,766		2,038		17.34		17.93		15.03		1,004		N/A		1,556		16.81		N/A		15.72		-68.5	%		N/A			-23.6	%		-3.1	%		N/A			4.6	%
1/3/05	Pioneer Railcorp	PRRR	NASDAQ		3.15		3.00		2,440		68,628		29,549		25,838		10,875		2.94		2.85		2.36		17,428		10,592		9,617		2.98		2.98		3.03		-41.0	%		-59.0	%		-11.6	%		1.4	%		4.7	%		28.7	%
1/3/05	Storage Computer Corp.	SOSO	AMEX		0.17		0.23		1,950		143,500		267,560		167,180		129,853		0.25		0.27		0.37		153,976		138,304		106,743		0.21		0.20		0.18		-42.5	%		-17.3	%		-17.8	%		-15.1	%		-27.7	%		-50.7	%
12/31/04	Tropical Sportswear International Corp.	TSICQ	NASDAQ		0.03		0.18		298,850		730,302		1,313,335		1,390,145		260,093		0.20		0.78		1.73		633,075		339,048		281,577		0.20		0.17		0.13		-51.8	%		-75.6	%		8.3	%		1.5	%		-78.4	%		-92.5	%
12/22/04	Merisel, Inc.	MSEL	NASDAQ		6.10		4.70		2,200		8,580		6,586		8,002		9,021		4.85		4.87		4.73		25,763		18,221		16,792		4.89		5.71		5.84		291.2	%		127.7	%		86.1	%		0.8	%		17.3	%		23.6	%
12/21/04	Bestway, Inc.	BSTW	NASDAQ		10.75		10.99		150		1,611		2,280		1,286		1,395		10.77		11.36		13.42		955		N/A		662		11.37		N/A		11.15		-58.1	%		N/A			-52.6	%		5.6	%		N/A			-16.9	%
12/20/04	DynTek, Inc.	DYTK	NASDAQ		0.54		0.62		118,774		10,570,024		2,851,595		2,304,482		1,717,912		0.61		0.63		0.78		941,733		621,324		436,207		0.58		0.59		0.58		-67.0	%		-73.0	%		-74.6	%		-5.2	%		-7.6	%		-26.1	%
12/17/04	Trico Marine Services, Inc.	TMARQ	NASDAQ		0.23		0.21		314,875		1,059,972		2,765,580		2,104,313		1,390,776		0.20		0.26		0.80		936,189		538,589		593,253		0.18		0.17		0.17		-66.1	%		-74.4	%		-57.3	%		-7.9	%		-35.9	%		-78.7	%
12/16/04	Andrea Electronics Corp.	ANDR	AMEX		0.06		0.08		283,406		1,628,600		1,750,960		2,038,980		662,578		0.09		0.12		0.22		855,405		591,461		390,990		0.07		0.07		0.06		-51.1	%		-71.0	%		-41.0	%		-22.3	%		-46.1	%		-71.5	%
12/16/04	Home Products International Inc.	HOMZ	NASDAQ		1.30		2.23		272		28,014		19,654		12,755		16,355		2.25		2.23		1.50		2,403		7,295		5,458		2.30		2.13		1.89		-87.8	%		-42.8	%		-66.6	%		2.2	%		-4.8	%		25.4	%
12/13/04	Canterbury Consulting Group, Inc.	CITI	NASDAQ		0.40		0.38		10,000		29,969		12,604		20,871		14,782		0.40		0.43		0.95		29,344		12,213		17,725		0.39		0.39		0.38		132.8	%		-41.5	%		19.9	%		-3.0	%		-9.2	%		-59.4	%
12/6/04	ACMAT Corp.	ACMTA	NASDAQ		12.55		12.45		199		8,000		2,280		1,484		1,998		12.61		12.60		11.35		15,812		15,295		14,576		13.12		12.82		12.80		593.5	%		930.6	%		629.4	%		4.0	%		1.7	%		12.8	%
12/1/04	First Investors Financial Services Group, Inc	FIFS	NASDAQ		4.75		4.21		1,200		200		3,639		5,571		3,163		4.48		4.46		4.69		4,340		N/A		13,988		4.07		N/A		4.46		19.3	%		N/A			342.2	%		-9.1	%		N/A			-4.9	%
11/26/04	Rexhall Industries, Inc.	REXL	NASDAQ		0.26		0.71		20,395		23,590		14,515		19,753		7,881		0.72		0.78		2.29		29,764		35,767		21,821		0.45		0.30		0.27		105.1	%		81.1	%		176.9	%		-38.1	%		-61.4	%		-88.1	%
11/23/04	Applied Extrusion Technologies, Inc.	AETCQ	NASDAQ		0.14		0.16		151,215		287,621		135,012		219,764		110,988		0.16		0.16		1.54		131,178		180,308		100,967		0.16		0.16		0.16		-2.8	%		-18.0	%		-9.0	%		-0.6	%		2.2	%		-89.7	%
11/15/04	Xcelera, Inc.	XLACF	AMEX		0.36		0.36		12,359		631,900		1,047,860		300,510		239,262		0.33		0.60		1.70		158,568		135,278		100,517		0.31		0.35		0.36		-84.9	%		-55.0	%		-58.0	%		-6.0	%		-41.8	%		-78.6	%
11/11/04	Travis Boats & Motors, Inc.	TRVS	NASDAQ		0.37		0.39		8,800		21,332		10,369		7,152		11,423		0.37		0.38		0.80		48,143		38,473		22,901		0.38		0.38		0.38		364.3	%		437.9	%		100.5	%		1.1	%		-0.1	%		-52.6	%
11/9/04	ELXSI Corp.	ELXS	NASDAQ		3.75		3.35		905		616		1,635		2,196		3,182		3.56		3.17		3.70		4,031		26,050		15,235		3.01		2.94		3.49		146.5	%		1086.1	%		378.8	%		-15.4	%		-7.3	%		-5.8	%
11/8/04	Major Automotive Companies, Inc. (The)	MAJR	NASDAQ		1.23		0.85		6,000		11,947		6,113		7,073		37,285		0.85		0.90		0.84		7,747		6,478		8,612		0.75		0.81		0.98		26.7	%		-8.4	%		-76.9	%		-12.2	%		-9.9	%		17.2	%
11/5/04	ATA Holdings Corp.	ATAHQ	NASDAQ		1.20		0.74		63,886		474,352		365,165		427,841		94,339		0.84		1.73		6.63		118,876		147,368		166,509		0.81		1.02		1.20		-67.4	%		-65.6	%		76.5	%		-2.6	%		-41.3	%		-81.9	%
11/2/04	Kennedy-Wilson, Inc.	KWIC	NASDAQ		8.10		7.17		5,638		6,400		4,276		13,879		8,742		7.21		7.51		6.76		5,520		7,427		7,568		7.28		7.21		7.58		29.1	%		-46.5	%		-13.4	%		1.0	%		-4.0	%		12.0	%
10/29/04	Crown Andersen Inc.	CRAN	NASDAQ		1.11		1.73		850		6,627		3,689		6,464		4,187		1.77		1.72		2.14		2,109		6,970		7,483		1.54		1.15		1.08		-42.8	%		7.8	%		78.7	%		-13.4	%		-33.2	%		-49.6	%
10/21/04	Intelligroup, Inc.	ITIG	NASDAQ		1.18		1.00		16,650		1,206,301		297,222		223,465		342,875		1.25		1.44		5.01		150,509		117,923		92,860		0.98		1.27		1.24		-49.4	%		-47.2	%		-72.9	%		-21.7	%		-12.2	%		-75.2	%
10/20/04	Falcon Products, Inc.	FCPR	NYSE		0.09		2.25		31,100		12,800		12,920		17,685		25,172		2.09		2.12		3.67		71,165		36,001		147,377		1.74		1.53		0.62		450.8	%		103.6	%		485.5	%		-16.8	%		-27.7	%		-83.1	%
10/20/04	Netopia, Inc.	NTPA	NASDAQ		3.47		2.09		69,469		612,960		193,524		183,825		183,825		2.84		2.64		2.64		264,573		292,165		199,506		2.38		2.38		3.20		36.7	%		58.9	%		8.5	%		-16.3	%		-9.9	%		21.2	%
10/19/04	Commerce One, Inc.	CMRCQ	NASDAQ		0.17		0.04		116,812		1,665,139		5,524,726		2,549,586		593,277		0.06		0.19		1.23		688,061		849,779		455,504		0.05		0.10		0.16		-87.5	%		-66.7	%		-23.2	%		-13.8	%		-47.0	%		-87.3	%
10/15/04	BAM! Entertainment, Inc.	BFUN	NASDAQ		0.14		0.14		23,450		5,110,401		1,117,284		467,903		661,827		0.28		0.35		0.84		388,960		238,385		141,730		0.13		0.15		0.15		-65.2	%		-49.1	%		-78.6	%		-52.5	%		-57.4	%		-82.3	%
10/14/04	eXegenics, Inc.	EXEG	NASDAQ		0.38		0.47		25,617		371,651		85,686		37,851		94,391		0.59		0.70		0.72		47,334		68,923		56,498		0.46		0.43		0.38		-44.8	%		82.1	%		-40.1	%		-23.2	%		-38.8	%		-47.4	%
10/14/04	Fog Cutter Capital Group, Inc.	FCCG	NASDAQ		3.70		3.97		1,200		114,922		28,948		13,138		14,487		3.98		3.98		5.00		43,264		18,224		11,616		3.23		3.29		3.28		49.5	%		38.7	%		-19.8	%		-18.9	%		-17.4	%		-34.4	%
10/12/04	INTERMET Corp.	INMTQ	NASDAQ		0.34		0.18		261,148		1,241,515		2,272,396		3,386,086		312,047		0.25		0.76		4.11		904,048		604,422		484,610		0.17		0.17		0.22		-60.2	%		-82.1	%		55.3	%		-33.1	%		-77.0	%		-94.6	%
10/5/04	Clarus Corp.	CLRS	NASDAQ		8.90		8.18		25,713		1,555,585		956,465		285,228		99,240		8.53		8.89		9.16		237,987		128,427		62,555		7.70		7.63		8.71		-75.1	%		-55.0	%		-37.0	%		-9.7	%		-14.2	%		-4.9	%
9/28/04	British Energy Plc	BGYNY	NYSE		14.75		19.40		1,610		93,300		131,180		52,940		24,656		22.39		28.26		13.63		64,296		23,256		9,117		19.51		18.69		18.54		-51.0	%		-56.1	%		-63.0	%		-12.8	%		-33.8	%		36.1	%
9/28/04	CVF Technologies Corp.	CNVT	AMEX		0.37		0.33		115,045		48,000		12,460		11,125		47,547		0.33		0.33		0.38		70,300		65,105		46,298		0.29		0.28		0.34		464.2	%		485.2	%		-2.6	%		-13.3	%		-16.5	%		-11.5	%
9/28/04	Webster City Federal Bancorp	WCFB	NASDAQ		12.75		13.89		727		400		1,082		1,524		2,204		13.60		13.57		13.01		2,268		2,235		2,788		12.12		12.44		12.88		109.7	%		46.7	%		26.5	%		-10.9	%		-8.3	%		-1.0	%
9/23/04	HyperFeed Technologies, Inc.	HYPR	NASDAQ		2.50		2.90		650		47,973		18,775		9,387		7,684		3.83		4.14		4.92		2,295		2,100		3,916		2.83		2.79		2.74		-87.8	%		-77.6	%		-49.0	%		-26.2	%		-32.5	%		-44.3	%
9/23/04	Interstate Bakeries Corp.	IBCIQ	NYSE		5.22		2.05		73,219		1,011,700		5,099,380		2,975,140		631,153		3.08		5.00		12.39		13,530,161		4,238,916		1,271,061		4.07		4.15		5.13		165.3	%		42.5	%		101.4	%		32.4	%		-17.0	%		-58.6	%
9/22/04	US Airways Group Inc.	UAIRQ	NASDAQ		1.16		0.65		39,613		1,168,858		2,037,803		2,860,160		502,056		0.73		1.58		4.61		990,091		1,165,594		529,959		0.74		1.00		1.07		-51.4	%		-59.2	%		5.6	%		0.5	%		-37.0	%		-76.8	%
9/20/04	RadView Software Ltd.	RDVWF	NASDAQ		0.17		0.20		29,000		250,620		247,048		100,784		271,425		0.25		0.28		0.64		13,667		29,168		62,683		0.23		0.20		0.19		-94.5	%		-71.1	%		-76.9	%		-8.9	%		-27.3	%		-70.1	%
9/10/04	JPS Industries, Inc.	JPST	NASDAQ		4.60		3.19		1,228		11,450		65,994		38,699		45,055		3.23		3.02		2.61		27,971		27,368		25,159		3.12		3.19		3.93		-57.6	%		-29.3	%		-44.2	%		-3.3	%		5.6	%		50.7	%
9/3/04	GB Holdings, Inc.	GBHD	AMEX		4.05		2.50		2,000		2,800		1,560		8,415		13,461		2.36		2.78		2.74		23,154		45,394		26,559		2.29		2.51		3.26		1384.2	%		439.4	%		97.3	%		-3.0	%		-9.8	%		19.1	%
9/2/04	Net Perceptions, Inc.	NETP	NASDAQ		0.74		0.88		650		263,034		206,474		147,589		621,098		0.90		0.84		0.55		342,414		244,995		144,886		0.82		0.80		0.80		65.8	%		66.0	%		-76.7	%		-8.3	%		-3.9	%		46.1	%
9/2/04	Universal Access Global Holdings, Inc.	UAXSQ	NASDAQ		0.16		0.17		240		102,855		45,826		39,935		29,072		0.13		0.13		2.77		20,771		118,302		41,132		0.11		0.09		0.13		-54.7	%		196.2	%		41.5	%		-13.8	%		-31.6	%		-95.5	%
8/30/04	Acclaim Entertainment, Inc.	AKLMQ	NASDAQ		0.01		0.10		427,043		20,458,299		6,601,482		3,480,245		4,418,607		0.13		0.16		0.54		11,418,639		4,793,439		1,689,250		0.04		0.02		0.01		73.0	%		37.7	%		-61.8	%		-67.9	%		-85.9	%		-97.9	%
8/25/04	First Virtual Communications, Inc.	FVCCQ	NASDAQ		0.03		0.37		4,800		1,034,503		286,844		123,866		402,769		0.61		0.73		1.91		78,079		79,767		121,252		0.46		0.45		0.25		-72.8	%		-35.6	%		-69.9	%		-24.6	%		-39.0	%		-86.9	%
8/23/04	Ohio Art Company (The)	OART	AMEX		7.10		9.20		1,500		100		600		1,195		2,557		9.47		9.50		11.45		1,249		3,302		2,354		9.85		8.62		7.10		108.2	%		176.3	%		-7.9	%		4.0	%		-9.2	%		-38.0	%
8/19/04	AESP, Inc.	AESP	NASDAQ		0.27		0.14		30,000		60,768		15,474		15,132		122,460		0.19		0.22		0.73		77,076		41,807		22,550		0.16		0.24		0.27		398.1	%		176.3	%		-81.6	%		-16.0	%		8.2	%		-62.5	%
8/19/04	Counsel Corp.	CXSNF	NASDAQ		0.30		0.56		1,500		20,000		12,050		12,973		36,842		0.55		0.55		0.95		8,000		15,652		15,446		0.55		0.50		0.47		-33.6	%		20.7	%		-58.1	%		-0.4	%		-9.2	%		-50.7	%
8/16/04	Huffy Corp.	HUFCQ	NYSE		0.10		0.58		93,824		37,900		98,720		103,880		120,019		0.70		0.94		4.17		257,045		181,463		240,832		0.38		0.32		0.21		160.4	%		74.7	%		100.7	%		-45.3	%		-65.9	%		-95.1	%
8/13/04	Sonus Networks, Inc.	SONS	NASDAQ		5.47		3.70		6,305,067		36,684,017		9,531,066		7,335,077		6,240,454		4.15		4.50		6.38		9,490,541		4,792,663		4,720,396		3.62		4.84		5.60		-0.4	%		-34.7	%		-24.4	%		-12.9	%		7.6	%		-12.2	%
8/12/04	Schlotzky's, Inc.	BUNZQ	NASDAQ		0.03		0.27		1,750		171,147		530,345		207,271		30,941		0.29		1.51		2.09		114,005		73,772		98,729		0.34		0.29		0.16		-78.5	%		-64.4	%		219.1	%		14.7	%		-80.8	%		-92.2	%
8/10/04	Trump Hotels & Casino Resorts, Inc.	DJTCQ	NYSE		1.43		1.85		199,949		102,600		82,200		71,220		130,833		1.94		2.06		2.05		2,490,108		1,269,847		762,782		0.45		0.33		1.05		2929.3	%		1683.0	%		483.0	%		-76.7	%		-84.0	%		-48.8	%
8/9/04	Sobieski Bancorp, Inc	SOBI	NASDAQ		6.35		6.52		100		100		2,539		2,030		4,028		6.56		6.42		9.90		2,340		2,444		2,543		6.55		6.46		6.43		-7.9	%		20.4	%		-36.9	%		-0.1	%		0.6	%		-35.0	%
8/9/04	VaxGen, Inc.	VXGN	NASDAQ		14.95		6.97		45,230		7,097,539		1,848,375		768,270		987,359		9.92		11.86		10.39		2,455,007		826,601		529,524		8.79		9.87		13.98		32.8	%		7.6	%		-46.4	%		-11.4	%		-16.8	%		34.7	%
8/6/04	Winmill & Co. Incorporated	WNMLA	NASDAQ		2.40		2.30		500		26,239		17,822		15,487		9,416		2.47		3.10		3.75		7,070		5,181		5,478		2.23		2.33		2.26		-60.3	%		-66.5	%		-41.8	%		-9.7	%		-24.7	%		-39.8	%
8/5/04	Granite Broadcasting Corp.	GBTVK	NASDAQ		0.39		0.67		56,000		69,605		58,375		59,912		32,809		0.62		0.58		1.77		28,265		38,550		97,704		0.62		0.52		0.38		-51.6	%		-35.7	%		197.8	%		0.6	%		-9.7	%		-78.6	%
7/30/04	Annuity & Life Re (Holdings), Ltd.	ANNRF	NYSE		0.78		0.70		4,700		113,100		90,480		45,090		79,807		0.75		0.83		1.18		34,615		65,758		75,192		0.57		0.46		0.44		-61.7	%		45.8	%		-5.8	%		-24.9	%		-44.2	%		-62.8	%
7/21/04	Fresh Choice, Inc.	SALDQ	NASDAQ		0.17		0.57		500		463,482		207,125		178,805		20,147		0.48		1.23		1.83		90,013		32,314		21,997		0.64		0.64		0.44		-56.5	%		-81.9	%		9.2	%		33.3	%		-48.1	%		-75.9	%
7/16/04	Logansport Financial Corp.	LOGN	NASDAQ		19.50		18.75		534		662		496		1,486		1,934		18.89		19.02		19.35		2,722		2,108		1,451		17.59		18.04		18.29		448.9	%		41.9	%		-25.0	%		-6.9	%		-5.2	%		-5.5	%
7/16/04	Liquidmetal Technologies, Inc.	LQMT	NASDAQ		1.80		0.77		94,068		2,338,201		559,006		308,443		360,547		1.32		1.31		3.03		315,559		149,545		164,905		1.04		1.18		1.87		-43.6	%		-51.5	%		-54.3	%		-21.4	%		-9.9	%		-38.4	%
7/15/04	EquiFin, Inc.	EQUI	AMEX		0.05		0.09		2,500		71,900		43,980		20,980		11,084		0.15		0.22		0.52		26,551		18,963		22,572		0.08		0.08		0.05		-39.6	%		-9.6	%		103.7	%		-48.1	%		-63.4	%		-90.5	%
7/14/04	Middleton Doll Company (The)	DOLL	NASDAQ		2.40		0.96		3,200		155,661		35,875		21,449		9,407		1.29		1.34		4.09		12,531		7,319		13,564		0.82		0.83		1.29		-65.1	%		-65.9	%		44.2	%		-36.9	%		-38.3	%		-68.5	%
7/13/04	Rural/Metro Corp.	RURL	NASDAQ		5.34		1.40		312,744		10,741		11,127		16,162		34,781		1.46		1.50		1.63		12,998		18,064		151,111		1.46		1.32		3.21		16.8	%		11.8	%		334.5	%		0.3	%		-11.8	%		96.6	%
7/9/04	Baran Group Ltd.	BRANF	NASDAQ		9.05		8.20		1,000		800		1,500		1,320		1,244		8.44		8.24		7.71		440		1,530		2,827		7.97		7.54		6.87		-70.7	%		15.9	%		127.3	%		-5.6	%		-8.6	%		-10.9	%
7/8/04	Renaissance Capital Growth & Income Fund	RENN	NASDAQ		13.40		13.25		1,596		7,091		8,762		8,818		14,661		13.17		14.41		13.59		20,402		14,390		13,357		12.54		11.67		12.01		132.9	%		63.2	%		-8.9	%		-4.8	%		-19.0	%		-11.7	%
7/1/04	Financial Industries Corp.	FNIN	NASDAQ		7.40		9.28		954		12,804		112,723		36,581		13,840		9.77		10.06		13.62		4,833		9,388		13,190		9.05		8.67		7.99		-95.7	%		-74.3	%		-4.7	%		-7.4	%		-13.8	%		-41.3	%
7/1/04	Orbital Corp., Ltd.	OBTLY	NYSE		3.15		3.90		4,480		11,400		11,900		8,945		5,729		3.93		3.99		4.56		1,456		2,930		6,239		4.02		4.16		3.78		-87.8	%		-67.2	%		8.9	%		2.4	%		4.1	%		-17.1	%
																																Trimmed Average:					-30.5	%		-14.4	%		-7.5	%		-9.7	%		-18.5	%		-40.2	%
																																		Max:			2929.3	%		1683.0	%		629.4	%		33.3	%		17.3	%		96.6	%
																																		Min:			-95.7	%		-82.1	%		-81.6	%		-76.7	%		-85.9	%		-97.9	%

Mercury Air Group

Summary Pink Sheet Transfer Analysis — Only Prior NYSE

		Current	Old	Last		Last Price				Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Last Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/3/05	Tower Automotive, Inc.	TWRAQ	NYSE	$	0.28	$	0.77		1,782,167		333,000		3,838,500		3,644,320		1,295,672	$	0.85	$	1.66	$	3.46		14,010,754		N/A		8,320,238	$	0.30		N/A	$	0.29		265.0	%		N/A			542.2	%		-64.9	%		N/A			-91.7	%
1/21/05	TransTechnology Corp.	TTLG	NYSE		6.46		6.53		22,095		27,100		36,320		17,420		13,469		6.66		7.02		7.50		20,902		N/A		13,360		6.43		N/A		6.49		-42.5	%		N/A			-0.8	%		-3.4	%		N/A			-13.6	%
10/20/04	Falcon Products, Inc.	FCPR	NYSE		0.09		2.25		31,100		12,800		12,920		17,685		25,172		2.09		2.12		3.67		71,165		36,001		147,377		1.74		1.53		0.62		450.8	%		1			485.5	%		-16.8	%		-27.7	%		-83.1	%
9/28/04	British Energy Plc	BGYNY	NYSE		14.75		19.40		1,610		93,300		131,180		52,940		24,656		22.39		28.26		13.63		64,296		23,256		9,117		19.51		18.69		18.54		-51.0	%		(1	)		-63.0	%		-12.8	%		-33.8	%		36.1	%
9/23/04	Interstate Bakeries Corp.	IBCIQ	NYSE		5.22		2.05		73,219		1,011,700		5,099,380		2,975,140		631,153		3.08		5.00		12.39		13,530,161		4,238,916		1,271,061		4.07		4.15		5.13		165.3	%		0			101.4	%		32.4	%		-17.0	%		-58.6	%
8/16/04	Huffy Corp.	HUFCQ	NYSE		0.10		0.58		93,824		37,900		98,720		103,880		120,019		0.70		0.94		4.17		257,045		181,463		240,832		0.38		0.32		0.21		160.4	%		1			100.7	%		-45.3	%		-65.9	%		-95.1	%
8/10/04	Trump Hotels & Casino Resorts, Inc.	DJTCQ	NYSE		1.43		1.85		199,949		102,600		82,200		71,220		130,833		1.94		2.06		2.05		2,490,108		1,269,847		762,782		0.45		0.33		1.05		2929.3	%		17			483.0	%		-76.7	%		-84.0	%		-48.8	%
7/30/04	Annuity & Life Re (Holdings), Ltd.	ANNRF	NYSE		0.78		0.70		4,700		113,100		90,480		45,090		79,807		0.75		0.83		1.18		34,615		65,758		75,192		0.57		0.46		0.44		-61.7	%		0			-5.8	%		-24.9	%		-44.2	%		-62.8	%
7/1/04	Orbital Corp., Ltd.	OBTLY	NYSE		3.15		3.90		4,480		11,400		11,900		8,945		5,729		3.93		3.99		4.56		1,456		2,930		6,239		4.02		4.16		3.78		-87.8	%		(1	)		8.9	%		2.4	%		4.1	%		-17.1	%
																																Trimmed Average:					94.4	%		1			70.3	%		-18.2	%		-35.2	%		-56.7	%
																																Max:					2929.3	%		17			542.2	%		32.4	%		4.1	%		36.1	%
																																Min:					-87.8	%		-67.2	%		-63.0	%		-76.7	%		-84.0	%		-95.1	%

Mercury Air Group

Summary Pink Sheet Transfer Analysis — Only Prior AMEX

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/2/05	Hanover Direct, Inc.	HNVD	AMEX	$	0.80	$	1.44		18,790		6,400		9,260		13,970		42,928	$	1.40	$	1.48	$	1.94		7,816		N/A		9,469	$	1.16		N/A	$	1.05		-15.6	%		N/A			-77.9	%		-17.0	%		N/A			-45.8	%
1/7/05	Webco Industries, Inc.	WEBO	AMEX		8.60		9.45		24,180		79,800		150,360		250,850		38,585		10.27		10.54		5.02		151,144		73,771		60,422		7.11		6.88		7.30		0.5	%		-70.6	%		56.6	%		-30.8	%		-34.7	%		45.4	%
1/3/05	Storage Computer Corp.	SOSO	AMEX		0.17		0.23		1,950		143,500		267,560		167,180		129,853		0.25		0.27		0.37		153,976		138,304		106,743		0.21		0.20		0.18		-42.5	%		-17.3	%		-17.8	%		-15.1	%		-27.7	%		-50.7	%
12/16/04	Andrea Electronics Corp.	ANDR	AMEX		0.06		0.08		283,406		1,628,600		1,750,960		2,038,980		662,578		0.09		0.12		0.22		855,405		591,461		390,990		0.07		0.07		0.06		-51.1	%		-71.0	%		-41.0	%		-22.3	%		-46.1	%		-71.5	%
11/15/04	Xcelera, Inc.	XLACF	AMEX		0.36		0.36		12,359		631,900		1,047,860		300,510		239,262		0.33		0.60		1.70		158,568		135,278		100,517		0.31		0.35		0.36		-84.9	%		-55.0	%		-58.0	%		-6.0	%		-41.8	%		-78.6	%
9/28/04	CVF Technologies Corp.	CNVT	AMEX		0.37		0.33		115,045		48,000		12,460		11,125		47,547		0.33		0.33		0.38		70,300		65,105		46,298		0.29		0.28		0.34		464.2	%		485.2	%		-2.6	%		-13.3	%		-16.5	%		-11.5	%
9/3/04	GB Holdings, Inc.	GBHD	AMEX		4.05		2.50		2,000		2,800		1,560		8,415		13,461		2.36		2.78		2.74		23,154		45,394		26,559		2.29		2.51		3.26		1384.2	%		439.4	%		97.3	%		-3.0	%		-9.8	%		19.1	%
8/23/04	Ohio Art Company (The)	OART	AMEX		7.10		9.20		1,500		100		600		1,195		2,557		9.47		9.50		11.45		1,249		3,302		2,354		9.85		8.62		7.10		108.2	%		176.3	%		-7.9	%		4.0	%		-9.2	%		-38.0	%
7/15/04	EquiFin, Inc.	EQUI	AMEX		0.05		0.09		2,500		71,900		43,980		20,980		11,084		0.15		0.22		0.52		26,551		18,963		22,572		0.08		0.08		0.05		-39.6	%		-9.6	%		103.7	%		-48.1	%		-63.4	%		-90.5	%
																																Trimmed Average:					-18.2	%		-13.4	%		-9.4	%		-15.1	%		-31.2	%		-44.8	%
																																Max:					1384.2	%		485.2	%		103.7	%		4.0	%		-9.2	%		45.4	%
																																Min:					-84.9	%		-71.0	%		-77.9	%		-48.1	%		-63.4	%		-90.5	%

Mercury Air Group

Summary Pink Sheet Transfer Analysis — Only Prior NASDAQ

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer							Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week			1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/7/05	Vestin Group, Inc.	VSTN	NASDAQ	$	2.75	$	3.00		2,194		29,994		10,029		5,986		5,326	$	3.05	$	3.02	$	3.61		1,978		N/A		2,014	$	2.62			N/A	$	2.65		-80.3	%		N/A			-62.2	%		-14.0	%		N/A			-26.7	%
2/4/05	Avalon Correctional Services, Inc.	CITY	NASDAQ		2.00		1.97		12,700		117,957		27,061		49,456		16,309		2.24		2.41		2.25		28,388		N/A		20,779		2.01			N/A		2.01		4.9	%		N/A			27.4	%		-10.2	%		N/A			-10.7	%
2/4/05	Troy Group, Inc.	TROY	NASDAQ		2.25		2.88		662		100		3,197		5,818		13,382		2.80		2.87		3.14		2,878		N/A		2,878		2.34			N/A		2.34		-10.0	%		N/A			-78.5	%		-16.5	%		N/A			-25.4	%
2/2/05	American Business Financial Services, Inc.	ABFIQ	NASDAQ		0.50		0.65		625		21,148		47,600		53,010		17,357		0.66		0.74		3.39		12,904		N/A		15,525		0.61			N/A		0.55		-72.9	%		N/A			-10.6	%		-7.6	%		N/A			-83.8	%
1/31/05	Great American Bancorp, Inc.	GTPS	NASDAQ		29.00		28.50		559		750		5,570		2,481		1,955		28.66		27.16		30.94		7,880		N/A		6,394		28.65			N/A		28.75		41.5	%		N/A			227.1	%		0.0	%		N/A			-7.1	%
1/28/05	Arlington Hospitality, Inc.	HOST	NASDAQ		2.76		2.87		1,100		100		7,022		7,307		4,854		2.84		2.88		3.40		1,640		N/A		1,213		2.81			N/A		2.81		-76.6	%		N/A			-75.0	%		-1.3	%		N/A			-17.6	%
1/27/05	Data Systems & Software, Inc.	DSSI	NASDAQ		0.90		0.65		3,260		12,275		23,145		12,717		13,516		0.81		0.89		1.85		5,855		N/A		8,115		0.82			N/A		0.82		-74.7	%		N/A			-40.0	%		1.7	%		N/A			-55.4	%
1/25/05	ShoLodge, Inc.	LODG	NASDAQ		4.00		3.80		3,000		1,400		16,436		5,921		2,863		3.92		4.34		4.67		5,190		N/A		2,951		3.76			N/A		3.91		-68.4	%		N/A			3.1	%		-4.0	%		N/A			-16.3	%
1/20/05	HealtheTech, Inc.	HETC	NASDAQ		0.78		1.15		10,000		423		14,467		23,055		18,066		1.16		1.24		2.00		30,856		N/A		26,275		0.85			N/A		0.79		113.3	%		N/A			45.4	%		-26.9	%		N/A			-60.7	%
1/10/05	Kirlin Holding Corp.	KILN	NASDAQ		1.55		2.68		1,000		3,600		5,238		5,420		4,607		2.72		2.94		6.40		12,611		N/A		5,814		1.87			N/A		1.79		140.8	%		N/A			26.2	%		-31.3	%		N/A			-72.1	%
1/5/05	Mueller (PAUL) Co.	MUEL	NASDAQ		24.05		30.11		2,900		1,935		996		825		1,586		30.20		30.46		34.79		11,068		12,348		9,498		25.30			23.64		24.56		1011.0	%		1396.1	%		498.8	%		-16.2	%		-22.4	%		-29.4	%
1/3/05	AMB Financial Corp.	AMFC	NASDAQ		14.00		14.00		200		1,108		1,789		1,786		1,208		13.74		14.30		15.08		N/A		N/A		294		N/A			N/A		14.13		N/A			N/A			-75.7	%		N/A			N/A			-6.3	%
1/3/05	CKF Bancorp, Inc.	CKFB	NASDAQ		15.25		16.49		4,700		10,612		3,184		1,766		2,038		17.34		17.93		15.03		1,004		N/A		1,556		16.81			N/A		15.72		-68.5	%		N/A			-23.6	%		-3.1	%		N/A			4.6	%
1/3/05	Pioneer Railcorp	PRRR	NASDAQ		3.15		3.00		2,440		68,628		29,549		25,838		10,875		2.94		2.85		2.36		17,428		10,592		9,617		2.98			2.98		3.03		-41.0	%		-59.0	%		-11.6	%		1.4	%		4.7	%		28.7	%
12/31/04	Tropical Sportswear International Corp.	TSICQ	NASDAQ		0.03		0.18		298,850		730,302		1,313,335		1,390,145		260,093		0.20		0.78		1.73		633,075		339,048		281,577		0.20			0.17		0.13		-51.8	%		-75.6	%		8.3	%		1.5	%		-78.4	%		-92.5	%
12/22/04	Merisel, Inc.	MSEL	NASDAQ		6.10		4.70		2,200		8,580		6,586		8,002		9,021		4.85		4.87		4.73		25,763		18,221		16,792		4.89			5.71		5.84		291.2	%		127.7	%		86.1	%		0.8	%		17.3	%		23.6	%
12/21/04	Bestway, Inc.	BSTW	NASDAQ		10.75		10.99		150		1,611		2,280		1,286		1,395		10.77		11.36		13.42		955		N/A		662		11.37			N/A		11.15		-58.1	%		N/A			-52.6	%		5.6	%		N/A			-16.9	%
12/20/04	DynTek, Inc.	DYTK	NASDAQ		0.54		0.62		118,774		10,570,024		2,851,595		2,304,482		1,717,912		0.61		0.63		0.78		941,733		621,324		436,207		0.58			0.59		0.58		-67.0	%		-73.0	%		-74.6	%		-5.2	%		-7.6	%		-26.1	%
12/17/04	Trico Marine Services, Inc.	TMARQ	NASDAQ		0.23		0.21		314,875		1,059,972		2,765,580		2,104,313		1,390,776		0.20		0.26		0.80		936,189		538,589		593,253		0.18			0.17		0.17		-66.1	%		-74.4	%		-57.3	%		-7.9	%		-35.9	%		-78.7	%
12/16/04	Home Products International Inc.	HOMZ	NASDAQ		1.30		2.23		272		28,014		19,654		12,755		16,355		2.25		2.23		1.50		2,403		7,295		5,458		2.30			2.13		1.89		-87.8	%		-42.8	%		-66.6	%		2.2	%		-4.8	%		25.4	%
12/13/04	Canterbury Consulting Group, Inc.	CITI	NASDAQ		0.40		0.38		10,000		29,969		12,604		20,871		14,782		0.40		0.43		0.95		29,344		12,213		17,725		0.39			0.39		0.38		132.8	%		-41.5	%		19.9	%		-3.0	%		-9.2	%		-59.4	%
12/6/04	ACMAT Corp.	ACMTA	NASDAQ		12.55		12.45		199		8,000		2,280		1,484		1,998		12.61		12.60		11.35		15,812		15,295		14,576		13.12			12.82		12.80		593.5	%		930.6	%		629.4	%		4.0	%		1.7	%		12.8	%
12/1/04	First Investors Financial Services Group, Inc.	FIFS	NASDAQ		4.75		4.21		1,200		200		3,639		5,571		3,163		4.48		4.46		4.69		4,340		N/A		13,988		4.07			N/A		4.46		19.3	%		N/A			342.2	%		-9.1	%		N/A			-4.9	%
11/26/04	Rexhall Industries, Inc.	REXL	NASDAQ		0.26		0.71		20,395		23,590		14,515		19,753		7,881		0.72		0.78		2.29		29,764		35,767		21,821		0.45			0.30		0.27		105.1	%		81.1	%		176.9	%		-38.1	%		-61.4	%		-88.1	%
11/23/04	Applied Extrusion Technologies, Inc.	AETCQ	NASDAQ		0.14		0.16		151,215		287,621		135,012		219,764		110,988		0.16		0.16		1.54		131,178		180,308		100,967		0.16			0.16		0.16		-2.8	%		-18.0	%		-9.0	%		-0.6	%		2.2	%		-89.7	%
11/11/04	Travis Boats & Motors, Inc.	TRVS	NASDAQ		0.37		0.39		8,800		21,332		10,369		7,152		11,423		0.37		0.38		0.80		48,143		38,473		22,901		0.38			0.38		0.38		364.3	%		437.9	%		100.5	%		1.1	%		-0.1	%		-52.6	%
11/9/04	ELXSI Corp.	ELXS	NASDAQ		3.75		3.35		905		616		1,635		2,196		3,182		3.56		3.17		3.70		4,031		26,050		15,235		3.01			2.94		3.49		146.5	%		1086.1	%		378.8	%		-15.4	%		-7.3	%		-5.8	%
11/8/04	Major Automotive Companies, Inc. (The)	MAJR	NASDAQ		1.23		0.85		6,000		11,947		6,113		7,073		37,285		0.85		0.90		0.84		7,747		6,478		8,612		0.75			0.81		0.98		26.7	%		-8.4	%		-76.9	%		-12.2	%		-9.9	%		17.2	%
11/5/04	ATA Holdings Corp.	ATAHQ	NASDAQ		1.20		0.74		63,886		474,352		365,165		427,841		94,339		0.84		1.73		6.63		118,876		147,368		166,509		0.81			1.02		1.20		-67.4	%		-65.6	%		76.5	%		-2.6	%		-41.3	%		-81.9	%
11/2/04	Kennedy-Wilson, Inc.	KWIC	NASDAQ		8.10		7.17		5,638		6,400		4,276		13,879		8,742		7.21		7.51		6.76		5,520		7,427		7,568		7.28			7.21		7.58		29.1	%		-46.5	%		-13.4	%		1.0	%		-4.0	%		12.0	%
10/29/04	Crown Andersen Inc.	CRAN	NASDAQ		1.11		1.73		850		6,627		3,689		6,464		4,187		1.77		1.72		2.14		2,109		6,970		7,483		1.54			1.15		1.08		-42.8	%		7.8	%		78.7	%		-13.4	%		-33.2	%		-49.6	%
10/21/04	Intelligroup, Inc.	ITIG	NASDAQ		1.18		1.00		16,650		1,206,301		297,222		223,465		342,875		1.25		1.44		5.01		150,509		117,923		92,860		0.98			1.27		1.24		-49.4	%		-47.2	%		-72.9	%		-21.7	%		-12.2	%		-75.2	%
10/20/04	Netopia, Inc.	NTPA	NASDAQ		3.47		2.09		69,469		612,960		193,524		183,825		183,825		2.84		2.64		2.64		264,573		292,165		199,506		2.38			2.38		3.20		36.7	%		58.9	%		8.5	%		-16.3	%		-9.9	%		21.2	%
10/19/04	Commerce One, Inc.	CMRCQ	NASDAQ		0.17		0.04		116,812		1,665,139		5,524,726		2,549,586		593,277		0.06		0.19		1.23		688,061		849,779		455,504		0.05			0.10		0.16		-87.5	%		-66.7	%		-23.2	%		-13.8	%		-47.0	%		-87.3	%
10/15/04	BAM! Entertainment, Inc.	BFUN	NASDAQ		0.14		0.14		23,450		5,110,401		1,117,284		467,903		661,827		0.28		0.35		0.84		388,960		238,385		141,730		0.13			0.15		0.15		-65.2	%		-49.1	%		-78.6	%		-52.5	%		-57.4	%		-82.3	%
10/14/04	eXegenics, Inc.	EXEG	NASDAQ		0.38		0.47		25,617		371,651		85,686		37,851		94,391		0.59		0.70		0.72		47,334		68,923		56,498		0.46			0.43		0.38		-44.8	%		82.1	%		-40.1	%		-23.2	%		-38.8	%		-47.4	%
10/14/04	Fog Cutter Capital Group, Inc.	FCCG	NASDAQ		3.70		3.97		1,200		114,922		28,948		13,138		14,487		3.98		3.98		5.00		43,264		18,224		11,616		3.23			3.29		3.28		49.5	%		38.7	%		-19.8	%		-18.9	%		-17.4	%		-34.4	%
10/12/04	INTERMET Corp.	INMTQ	NASDAQ		0.34		0.18		261,148		1,241,515		2,272,396		3,386,086		312,047		0.25		0.76		4.11		904,048		604,422		484,610		0.17			0.17		0.22		-60.2	%		-82.1	%		55.3	%		-33.1	%		-77.0	%		-94.6	%
10/5/04	Clarus Corp.	CLRS	NASDAQ		8.90		8.18		25,713		1,555,585		956,465		285,228		99,240		8.53		8.89		9.16		237,987		128,427		62,555		7.70			7.63		8.71		-75.1	%		-55.0	%		-37.0	%		-9.7	%		-14.2	%		-4.9	%
9/28/04	Webster City Federal Bancorp	WCFB	NASDAQ		12.75		13.89		727		400		1,082		1,524		2,204		13.60		13.57		13.01		2,268		2,235		2,788		12.12			12.44		12.88		109.7	%		46.7	%		26.5	%		-10.9	%		-8.3	%		-1.0	%
9/23/04	HyperFeed Technologies, Inc.	HYPR	NASDAQ		2.50		2.90		650		47,973		18,775		9,387		7,684		3.83		4.14		4.92		2,295		2,100		3,916		2.83			2.79		2.74		-87.8	%		-77.6	%		-49.0	%		-26.2	%		-32.5	%		-44.3	%
9/22/04	US Airways Group Inc.	UAIRQ	NASDAQ		1.16		0.65		39,613		1,168,858		2,037,803		2,860,160		502,056		0.73		1.58		4.61		990,091		1,165,594		529,959		0.74			1.00		1.07		-51.4	%		-59.2	%		5.6	%		0.5	%		-37.0	%		-76.8	%
9/20/04	RadView Software Ltd.	RDVWF	NASDAQ		0.17		0.20		29,000		250,620		247,048		100,784		271,425		0.25		0.28		0.64		13,667		29,168		62,683		0.23			0.20		0.19		-94.5	%		-71.1	%		-76.9	%		-8.9	%		-27.3	%		-70.1	%
9/10/04	JPS Industries, Inc.	JPST	NASDAQ		4.60		3.19		1,228		11,450		65,994		38,699		45,055		3.23		3.02		2.61		27,971		27,368		25,159		3.12			3.19		3.93		-57.6	%		-29.3	%		-44.2	%		-3.3	%		5.6	%		50.7	%
9/2/04	Net Perceptions, Inc.	NETP	NASDAQ		0.74		0.88		650		263,034		206,474		147,589		621,098		0.90		0.84		0.55		342,414		244,995		144,886		0.82			0.80		0.80		65.8	%		66.0	%		-76.7	%		-8.3	%		-3.9	%		46.1	%
9/2/04	Universal Access Global Holdings, Inc.	UAXSQ	NASDAQ		0.16		0.17		240		102,855		45,826		39,935		29,072		0.13		0.13		2.77		20,771		118,302		41,132		0.11			0.09		0.13		-54.7	%		196.2	%		41.5	%		-13.8	%		-31.6	%		-95.5	%
8/30/04	Acclaim Entertainment, Inc.	AKLMQ	NASDAQ		0.01		0.10		427,043		20,458,299		6,601,482		3,480,245		4,418,607		0.13		0.16		0.54		11,418,639		4,793,439		1,689,250		0.04			0.02		0.01		73.0	%		37.7	%		-61.8	%		-67.9	%		-85.9	%		-97.9	%
8/25/04	First Virtual Communications, Inc.	FVCCQ	NASDAQ		0.03		0.37		4,800		1,034,503		286,844		123,866		402,769		0.61		0.73		1.91		78,079		79,767		121,252		0.46			0.45		0.25		-72.8	%		-35.6	%		-69.9	%		-24.6	%		-39.0	%		-86.9	%
8/19/04	AESP, Inc.	AESP	NASDAQ		0.27		0.14		30,000		60,768		15,474		15,132		122,460		0.19		0.22		0.73		77,076		41,807		22,550		0.16			0.24		0.27		398.1	%		176.3	%		-81.6	%		-16.0	%		8.2	%		-62.5	%
8/19/04	Counsel Corp.	CXSNF	NASDAQ		0.30		0.56		1,500		20,000		12,050		12,973		36,842		0.55		0.55		0.95		8,000		15,652		15,446		0.55			0.50		0.47		-33.6	%		20.7	%		-58.1	%		-0.4	%		-9.2	%		-50.7	%
8/13/04	Sonus Networks, Inc.	SONS	NASDAQ		5.47		3.70		6,305,067		36,684,017		9,531,066		7,335,077		6,240,454		4.15		4.50		6.38		9,490,541		4,792,663		4,720,396		3.62			4.84		5.60		-0.4	%		-34.7	%		-24.4	%		-12.9	%		7.6	%		-12.2	%
8/12/04	Schlotzky's, Inc.	BUNZQ	NASDAQ		0.03		0.27		1,750		171,147		530,345		207,271		30,941		0.29		1.51		2.09		114,005		73,772		98,729		0.34			0.29		0.16		-78.5	%		-64.4	%		219.1	%		14.7	%		-80.8	%		-92.2	%
8/9/04	Sobieski Bancorp, Inc	SOBI	NASDAQ		6.35		6.52		100		100		2,539		2,030		4,028		6.56		6.42		9.90		2,340		2,444		2,543		6.55			6.46		6.43		-7.9	%		20.4	%		-36.9	%		-0.1	%		0.6	%		-35.0	%
8/9/04	VaxGen, Inc.	VXGN	NASDAQ		14.95		6.97		45,230		7,097,539		1,848,375		768,270		987,359		9.92		11.86		10.39		2,455,007		826,601		529,524		8.79			9.87		13.98		32.8	%		7.6	%		-46.4	%		-11.4	%		-16.8	%		34.7	%
8/6/04	Winmill & Co. Incorporated	WNMLA	NASDAQ		2.40		2.30		500		26,239		17,822		15,487		9,416		2.47		3.10		3.75		7,070		5,181		5,478		2.23			2.33		2.26		-60.3	%		-66.5	%		-41.8	%		-9.7	%		-24.7	%		-39.8	%
8/5/04	Granite Broadcasting Corp.	GBTVK	NASDAQ		0.39		0.67		56,000		69,605		58,375		59,912		32,809		0.62		0.58		1.77		28,265		38,550		97,704		0.62			0.52		0.38		-51.6	%		-35.7	%		197.8	%		0.6	%		-9.7	%		-78.6	%
7/21/04	Fresh Choice, Inc.	SALDQ	NASDAQ		0.17		0.57		500		463,482		207,125		178,805		20,147		0.48		1.23		1.83		90,013		32,314		21,997		0.64			0.64		0.44		-56.5	%		-81.9	%		9.2	%		33.3	%		-48.1	%		-75.9	%
7/16/04	Logansport Financial Corp.	LOGN	NASDAQ		19.50		18.75		534		662		496		1,486		1,934		18.89		19.02		19.35		2,722		2,108		1,451		17.59			18.04		18.29		448.9	%		41.9	%		-25.0	%		-6.9	%		-5.2	%		-5.5	%
7/16/04	Liquidmetal Technologies, Inc.	LQMT	NASDAQ		1.80		0.77		94,068		2,338,201		559,006		308,443		360,547		1.32		1.31		3.03		315,559		149,545		164,905		1.04			1.18		1.87		-43.6	%		-51.5	%		-54.3	%		-21.4	%		-9.9	%		-38.4	%
7/14/04	Middleton Doll Company (The)	DOLL	NASDAQ		2.40		0.96		3,200		155,661		35,875		21,449		9,407		1.29		1.34		4.09		12,531		7,319		13,564		0.82			0.83		1.29		-65.1	%		-65.9	%		44.2	%		-36.9	%		-38.3	%		-68.5	%
7/13/04	Rural/Metro Corp.	RURL	NASDAQ		5.34		1.40		312,744		10,741		11,127		16,162		34,781		1.46		1.50		1.63		12,998		18,064		151,111		1.46			1.32		3.21		16.8	%		11.8	%		334.5	%		0.3	%		-11.8	%		96.6	%
7/9/04	Baran Group Ltd.	BRANF	NASDAQ		9.05		8.20		1,000		800		1,500		1,320		1,244		8.44		8.24		7.71		440		1,530		2,827		7.97			7.54		6.87		-70.7	%		15.9	%		127.3	%		-5.6	%		-8.6	%		-10.9	%
7/8/04	Renaissance Capital Growth & Income Fund II	RENN	NASDAQ		13.40		13.25		1,596		7,091		8,762		8,818		14,661		13.17		14.41		13.59		20,402		14,390		13,357		12.54			11.67		12.01		132.9	%		63.2	%		-8.9	%		-4.8	%		-19.0	%		-11.7	%
7/1/04	Financial Industries Corp.	FNIN	NASDAQ		7.40		9.28		954		12,804		112,723		36,581		13,840		9.77		10.06		13.62		4,833		9,388		13,190		9.05			8.67		7.99		-95.7	%		-74.3	%		-4.7	%		-7.4	%		-13.8	%		-41.3	%
																																Trimmed Average:						-37.3	%		-23.0	%		-14.5	%		-8.3	%		-13.5	%		-36.2	%
																																Max:						1011.0	%		1396.1	%		629.4	%		33.3	%		17.3	%		96.6	%
																																Min:						-95.7	%		-82.1	%		-81.6	%		-67.9	%		-85.9	%		-97.9	%

Mercury Air Group

Summary Pink Sheet Transfer Analysis — Only Illiquid (<15,000 shares day average)

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/7/05	Vestin Group, Inc.	VSTN	NASDAQ	$	2.75	$	3.00		2,194		29,994		10,029		5,986		5,326	$	3.05	$	3.02	$	3.61		1,978		N/A		2,014	$	2.62		N/A	$	2.65		-80.3	%		N/A			-62.2	%		-14.0	%		N/A			-26.7	%
2/4/05	Troy Group, Inc.	TROY	NASDAQ		2.25		2.88		662		100		3,197		5,818		13,382		2.80		2.87		3.14		2,878		N/A		2,878		2.34		N/A		2.34		-10.0	%		N/A			-78.5	%		-16.5	%		N/A			-25.4	%
1/31/05	Great American Bancorp, Inc.	GTPS	NASDAQ		29.00		28.50		559		750		5,570		2,481		1,955		28.66		27.16		30.94		7,880		N/A		6,394		28.65		N/A		28.75		41.5	%		N/A			227.1	%		0.0	%		N/A			-7.1	%
1/28/05	Arlington Hospitality, Inc.	HOST	NASDAQ		2.76		2.87		1,100		100		7,022		7,307		4,854		2.84		2.88		3.40		1,640		N/A		1,213		2.81		N/A		2.81		-76.6	%		N/A			-75.0	%		-1.3	%		N/A			-17.6	%
1/27/05	Data Systems & Software, Inc.	DSSI	NASDAQ		0.90		0.65		3,260		12,275		23,145		12,717		13,516		0.81		0.89		1.85		5,855		N/A		8,115		0.82		N/A		0.82		-74.7	%		N/A			-40.0	%		1.7	%		N/A			-55.4	%
1/25/05	ShoLodge, Inc.	LODG	NASDAQ		4.00		3.80		3,000		1,400		16,436		5,921		2,863		3.92		4.34		4.67		5,190		N/A		2,951		3.76		N/A		3.91		-68.4	%		N/A			3.1	%		-4.0	%		N/A			-16.3	%
1/21/05	TransTechnology Corp.	TTLG	NYSE		6.46		6.53		22,095		27,100		36,320		17,420		13,469		6.66		7.02		7.50		20,902		N/A		13,360		6.43		N/A		6.49		-42.5	%		N/A			-0.8	%		-3.4	%		N/A			-13.6	%
1/10/05	Kirlin Holding Corp.	KILN	NASDAQ		1.55		2.68		1,000		3,600		5,238		5,420		4,607		2.72		2.94		6.40		12,611		N/A		5,814		1.87		N/A		1.79		140.8	%		N/A			26.2	%		-31.3	%		N/A			-72.1	%
1/5/05	Mueller (PAUL) Co.	MUEL	NASDAQ		24.05		30.11		2,900		1,935		996		825		1,586		30.20		30.46		34.79		11,068		12,348		9,498		25.30		23.64		24.56		1011.0	%		1396.1	%		498.8	%		-16.2	%		-22.4	%		-29.4	%
1/3/05	AMB Financial Corp.	AMFC	NASDAQ		14.00		14.00		200		1,108		1,789		1,786		1,208		13.74		14.30		15.08		N/A		N/A		294		N/A		N/A		14.13		N/A			N/A			-75.7	%		N/A			N/A			-6.3	%
1/3/05	CKF Bancorp, Inc.	CKFB	NASDAQ		15.25		16.49		4,700		10,612		3,184		1,766		2,038		17.34		17.93		15.03		1,004		N/A		1,556		16.81		N/A		15.72		-68.5	%		N/A			-23.6	%		-3.1	%		N/A			4.6	%
1/3/05	Pioneer Railcorp	PRRR	NASDAQ		3.15		3.00		2,440		68,628		29,549		25,838		10,875		2.94		2.85		2.36		17,428		10,592		9,617		2.98		2.98		3.03		-41.0	%		-59.0	%		-11.6	%		1.4	%		4.7	%		28.7	%
12/22/04	Merisel, Inc.	MSEL	NASDAQ		6.10		4.70		2,200		8,580		6,586		8,002		9,021		4.85		4.87		4.73		25,763		18,221		16,792		4.89		5.71		5.84		291.2	%		127.7	%		86.1	%		0.8	%		17.3	%		23.6	%
12/21/04	Bestway, Inc.	BSTW	NASDAQ		10.75		10.99		150		1,611		2,280		1,286		1,395		10.77		11.36		13.42		955		N/A		662		11.37		N/A		11.15		-58.1	%		N/A			-52.6	%		5.6	%		N/A			-16.9	%
12/13/04	Canterbury Consulting Group, Inc.	CITI	NASDAQ		0.40		0.38		10,000		29,969		12,604		20,871		14,782		0.40		0.43		0.95		29,344		12,213		17,725		0.39		0.39		0.38		132.8	%		-41.5	%		19.9	%		-3.0	%		-9.2	%		-59.4	%
12/6/04	ACMAT Corp.	ACMTA	NASDAQ		12.55		12.45		199		8,000		2,280		1,484		1,998		12.61		12.60		11.35		15,812		15,295		14,576		13.12		12.82		12.80		593.5	%		930.6	%		629.4	%		4.0	%		1.7	%		12.8	%
12/1/04	First Investors Financial Services Group, Inc.	FIFS	NASDAQ		4.75		4.21		1,200		200		3,639		5,571		3,163		4.48		4.46		4.69		4,340		N/A		13,988		4.07		N/A		4.46		19.3	%		N/A			342.2	%		-9.1	%		N/A			-4.9	%
11/26/04	Rexhall Industries, Inc.	REXL	NASDAQ		0.26		0.71		20,395		23,590		14,515		19,753		7,881		0.72		0.78		2.29		29,764		35,767		21,821		0.45		0.30		0.27		105.1	%		81.1	%		176.9	%		-38.1	%		-61.4	%		-88.1	%
11/11/04	Travis Boats & Motors, Inc.	TRVS	NASDAQ		0.37		0.39		8,800		21,332		10,369		7,152		11,423		0.37		0.38		0.80		48,143		38,473		22,901		0.38		0.38		0.38		364.3	%		437.9	%		100.5	%		1.1	%		-0.1	%		-52.6	%
11/9/04	ELXSI Corp.	ELXS	NASDAQ		3.75		3.35		905		616		1,635		2,196		3,182		3.56		3.17		3.70		4,031		26,050		15,235		3.01		2.94		3.49		146.5	%		1086.1	%		378.8	%		-15.4	%		-7.3	%		-5.8	%
11/2/04	Kennedy-Wilson, Inc.	KWIC	NASDAQ		8.10		7.17		5,638		6,400		4,276		13,879		8,742		7.21		7.51		6.76		5,520		7,427		7,568		7.28		7.21		7.58		29.1	%		-46.5	%		-13.4	%		1.0	%		-4.0	%		12.0	%
10/29/04	Crown Andersen Inc.	CRAN	NASDAQ		1.11		1.73		850		6,627		3,689		6,464		4,187		1.77		1.72		2.14		2,109		6,970		7,483		1.54		1.15		1.08		-42.8	%		7.8	%		78.7	%		-13.4	%		-33.2	%		-49.6	%
10/14/04	Fog Cutter Capital Group, Inc.	FCCG	NASDAQ		3.70		3.97		1,200		114,922		28,948		13,138		14,487		3.98		3.98		5.00		43,264		18,224		11,616		3.23		3.29		3.28		49.5	%		38.7	%		-19.8	%		-18.9	%		-17.4	%		-34.4	%
9/28/04	Webster City Federal Bancorp	WCFB	NASDAQ		12.75		13.89		727		400		1,082		1,524		2,204		13.60		13.57		13.01		2,268		2,235		2,788		12.12		12.44		12.88		109.7	%		46.7	%		26.5	%		-10.9	%		-8.3	%		-1.0	%
9/23/04	HyperFeed Technologies, Inc.	HYPR	NASDAQ		2.50		2.90		650		47,973		18,775		9,387		7,684		3.83		4.14		4.92		2,295		2,100		3,916		2.83		2.79		2.74		-87.8	%		-77.6	%		-49.0	%		-26.2	%		-32.5	%		-44.3	%
9/3/04	GB Holdings, Inc.	GBHD	AMEX		4.05		2.50		2,000		2,800		1,560		8,415		13,461		2.36		2.78		2.74		23,154		45,394		26,559		2.29		2.51		3.26		1384.2	%		439.4	%		97.3	%		-3.0	%		-9.8	%		19.1	%
8/23/04	Ohio Art Company (The)	OART	AMEX		7.10		9.20		1,500		100		600		1,195		2,557		9.47		9.50		11.45		1,249		3,302		2,354		9.85		8.62		7.10		108.2	%		176.3	%		-7.9	%		4.0	%		-9.2	%		-38.0	%
8/9/04	Sobieski Bancorp, Inc	SOBI	NASDAQ		6.35		6.52		100		100		2,539		2,030		4,028		6.56		6.42		9.90		2,340		2,444		2,543		6.55		6.46		6.43		-7.9	%		20.4	%		-36.9	%		-0.1	%		0.6	%		-35.0	%
8/6/04	Winmill & Co. Incorporated	WNMLA	NASDAQ		2.40		2.30		500		26,239		17,822		15,487		9,416		2.47		3.10		3.75		7,070		5,181		5,478		2.23		2.33		2.26		-60.3	%		-66.5	%		-41.8	%		-9.7	%		-24.7	%		-39.8	%
7/16/04	Logansport Financial Corp.	LOGN	NASDAQ		19.50		18.75		534		662		496		1,486		1,934		18.89		19.02		19.35		2,722		2,108		1,451		17.59		18.04		18.29		448.9	%		41.9	%		-25.0	%		-6.9	%		-5.2	%		-5.5	%
7/15/04	EquiFin, Inc.	EQUI	AMEX		0.05		0.09		2,500		71,900		43,980		20,980		11,084		0.15		0.22		0.52		26,551		18,963		22,572		0.08		0.08		0.05		-39.6	%		-9.6	%		103.7	%		-48.1	%		-63.4	%		-90.5	%
7/14/04	Middleton Doll Company (The)	DOLL	NASDAQ		2.40		0.96		3,200		155,661		35,875		21,449		9,407		1.29		1.34		4.09		12,531		7,319		13,564		0.82		0.83		1.29		-65.1	%		-65.9	%		44.2	%		-36.9	%		-38.3	%		-68.5	%
7/9/04	Baran Group Ltd.	BRANF	NASDAQ		9.05		8.20		1,000		800		1,500		1,320		1,244		8.44		8.24		7.71		440		1,530		2,827		7.97		7.54		6.87		-70.7	%		15.9	%		127.3	%		-5.6	%		-8.6	%		-10.9	%
7/8/04	Renaissance Capital Growth & Income Fund II	RENN	NASDAQ		13.40		13.25		1,596		7,091		8,762		8,818		14,661		13.17		14.41		13.59		20,402		14,390		13,357		12.54		11.67		12.01		132.9	%		63.2	%		-8.9	%		-4.8	%		-19.0	%		-11.7	%
7/1/04	Financial Industries Corp.	FNIN	NASDAQ		7.40		9.28		954		12,804		112,723		36,581		13,840		9.77		10.06		13.62		4,833		9,388		13,190		9.05		8.67		7.99		-95.7	%		-74.3	%		-4.7	%		-7.4	%		-13.8	%		-41.3	%
7/1/04	Orbital Corp., Ltd.	OBTLY	NYSE		3.15		3.90		4,480		11,400		11,900		8,945		5,729		3.93		3.99		4.56		1,456		2,930		6,239		4.02		4.16		3.78		-87.8	%		-67.2	%		8.9	%		2.4	%		4.1	%		-17.1	%
																																Trimmed Average:					-1.2	%		28.6	%		4.5	%		-5.0	%		-9.8	%		-20.4	%
																																		Max:			1384.2	%		1396.1	%		629.4	%		5.6	%		17.3	%		28.7	%
																																		Min:			-95.7	%		-77.6	%		-78.5	%		-48.1	%		-63.4	%		-90.5	%

EX-99.C7

Exhibit 99(c)(7)

Share Premium Analysis
Acquisition of Minority Interests In Small, Illiquid Companies by Majority Shareholder
(Dollars in millions)

Search Criteria: Closed transactions between 1/1/00 and 2/18/05; Market Capitalization less than $50 million; Percent sought between 5% — 25%; 5-day Premium of 0% — 100%.

						Percent			Target		Target LTM		LTM	Price per		1 Day			5 Day			30 Day
	Date Closed	Seller	Buyer	Deal Size		Sought			Market Cap		Revenue		EBITDA	Share		Premium			Premium			Premium
	$0 - $50 million Market Cap
1	10-Jul-02	Electric Lightwave Inc	Citizens Communications Co.	$	5.4		15.0	%	$	35.9	$	17.4	n/a	$	0.70		105.9	%		79.5	%		55.6%	(a)
2	15-Oct-01	Lincoln Snacks Co.	Brynwood Partners III LP		3.1		10.2	%		30.1		35.9	2.9		3.50		12.9	%		16.7	%		27.3%
3	14-Jan-02	Organic, Inc.	Seneca Investments LLC		5.6		19.1	%		29.3		66.9	(40.9)		0.33		13.8	%		17.9	%		37.5%
4	19-Mar-03	Income Opp. Realty Investors, Inc.	Basic Capital Management, Inc.		4.9		17.9	%		27.4		21.3	9.1		19.00		28.7	%		26.7	%		65.1%
5	3-Jan-02	Enex Resources Corp	3TEC Energy Corp.		3.8		20.0	%		18.8		19.3	2.9		14.00		-2.4	%		0.0	%		-6.4%	(a)
6	12-Dec-00	Quiznos Corp.	Quiznos Corp. / Management		3.4		18.1	%		18.8		15.8	5.5		8.00		18.5	%		18.5	%		28.0%
7	27-Sep-04	United Pacific Industries Ltd.	GSB Holdings, Inc.		2.1		11.7	%		17.8		17.3	2.4		0.03		3.2	%		3.2	%		6.7%
8	6-May-04	Reeds Jewelers, Inc.	Sparkle LLC		2.2		12.5	%		17.4		9.3	1.7		2.05		88.1	%		94.3	%		95.2%	(a)
9	31-Mar-04	Ecogen Inc	ECGN Acquisition, Inc.		1.7		10.0	%		16.8		7.4	(0.5)		0.25		127.3	%		61.3	%		78.6%
			High	$	5.6		20.0	%	$	35.9	$	66.9	$9.1	$	19.00		127.3	%		61.3	%		78.6%
			Median		3.4		15.0	%		18.8		17.4	2.7	$	2.05		16.2	%		18.2	%		32.8%
			Mean		3.6		14.9	%		23.6		23.4	(2.1)	$	5.32		34.1	%		24.0	%		40.5%
			Low		1.7		10.0	%		16.8		7.4	(40.9)	$	0.03		3.2	%		3.2	%		6.7%

(a) Excluded from the range of premiums as outliers.
Source: Factset Mergerstat, LLC.

EX-99.C8

Exhibit 99(c)(8)

TABLE OF CONTENTS

	APPENDIX
FAIRNESS OPINION	I
FAIRNESS OPINION BACKUP	II
INCOME STATEMENT AND BALANCE SHEET FOR THE FYE JUNE 30, 2002 THROUGH 2004 AND UNAUDITED RESULTS FOR DECEMBER 31, 2004	III
FYE JUNE 30, 2005 THROUGH 2008 PROJECTIONS	IV
DISCOUNTED CASH FLOW ANALYSIS	V
WEIGHTED AVERAGE COST OF CAPITAL CALCULATION	VI

150 SOUTH RODEO DRIVE, SUITE 100 BEVERLY HILLS, CA 90212

310-246-3700     800-929-2299     FAX 310-246-3794

[February 25, 2005]

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
5456 McConnell Avenue
Los Angeles, CA 90066

Members of the Board of Directors and the Special Committee:

We understand that Mercury Air Group, Inc. (“Mercury” or the “Company”) intends to effect a 1:500 reverse split of its common stock (the “Transaction”) that will cause the fractional shares of common stock that would otherwise be created from such reverse stock split to be exchanged for cash consideration of [$X.XX] per pre-split share (the “Transaction Consideration”).

You have requested our opinion as to the fairness, from a financial point of view, of the Transaction Consideration to those shareholders receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom we express no view.

In connection with this opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. We have, among other things:

(i)	[Reviewed the draft proxy statement and related documents outlining the Transaction];
(ii)	Analyzed certain publicly available information that we believe to be relevant to our analysis, including the Company’s annual report on Form 10-K for the fiscal year ended (“FYE”) June 30, 2004 and the Company’s quarterly report on Form 10-Q for the quarters ended September 30, 2004 and December 31, 2004;
(iii)	Reviewed certain information including financial forecasts relating to the business, earnings and cash flow of the Company, furnished to us by senior management of Mercury;
(iv)	Reviewed the Company’s projections for FYE June 30, 2004 through 2008 furnished to us by senior management of Mercury;
(v)	Reviewed certain publicly available business and financial information relating to Mercury that we deemed to be relevant;
(vi)	Conducted discussions with members of senior management of Mercury concerning the matters described in clauses (i) through (vi) above, as well as the prospects and strategic objectives of Mercury;

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
February 25, 2005

(vii)   Reviewed public information with respect to certain other companies with financial profiles which we deemed to be relevant; and

(viii)   Conducted such other financial studies, analyses and investigation and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions.

With your consent, we have relied upon the accuracy and completeness of the foregoing financial and other information and have not assumed responsibility for independent verification of such information or conducted or have been furnished with any independent valuation or appraisal of any assets of the Company or any appraisal or estimate of liabilities of the Company, nor have we been furnished with any such valuations or appraisals. With respect to the financial forecasts, we have assumed, with your consent, that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of senior management of Mercury as to the future financial performance of the Company. We have also relied upon the assurances of senior management of Mercury that they are unaware of any facts that would make the information or financial forecasts provided to us incomplete or misleading. We assume no responsibility for, and express no view as to, such financial forecasts or the assumptions on which they are based.

Our opinion is based upon economic, market and other conditions as they exist and can be evaluated on the date hereof and does not address the fairness of the Transaction Consideration as of any other date. The financial markets in general, and the markets for the securities of the Company in particular, are subject to volatility, and our opinion does not purport to address potential developments in the financial markets or in the markets for the securities of the Company after the date hereof.

Our opinion expressed herein has been prepared for the information of the Special Committee and the Board of Directors of the Company in connection with their consideration of the Transaction. Our opinion does not constitute a recommendation as to any action the Company or any shareholder of the Company should take in connection with the Transaction or any aspect thereof. Our opinion does not address the merits of the underlying decision by the Company to engage in the Transaction or the relative merits of any alternatives discussed by the Special Committee or the Board of Directors of the Company. No opinion is expressed herein, nor shall one be implied, as to the fair market value of Mercury’s equity or the prices at which it may trade at any time. This opinion may not be reproduced, disseminated, quoted or referred to at any time without our prior written consent, except that a copy of the Opinion may be reproduced in full and otherwise referred to in the Company’s proxy statement and related filings describing the Transaction.

In the ordinary course of its business and in accordance with applicable state and federal securities laws, Imperial Capital, LLC may actively trade the equity securities of Mercury for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities.

Based on and subject to the foregoing, we are of the opinion that, as of the date hereof, the Transaction Consideration to be received by the shareholders of the Company receiving the Transaction Consideration, other than the Management Holders (as to whom we express no view), is fair, from a financial point of view, to such shareholders.

Very truly yours,


Imperial Capital, LLC

Page 2

INTRODUCTION

The following is a summary of the analysis conducted by Imperial Capital (“IC”) with respect to the fairness, from a financial point of view, of the cash to be paid to holders of fractional shares of Mercury Air Group, Inc.’s (“Mercury” or the “Company”) common stock in connection with a reverse stock split (the “Transaction”). Pursuant to the Transaction, the Company will execute a 500-for-1 reverse stock split of its shares of common stock. Following the reverse split, holders of less than 500 shares on a pre-split basis will receive cash consideration of [$X.XX] per share (the “Transaction Consideration”) on a pre-split basis.

Management and the Board of Directors for a variety of reasons have decided to de-list Mercury’s common stock from the American Stock Exchange. Following the de-listing, the Company will continue to publicly file audited balance sheets and income statements for its fiscal year end.

IC has been engaged to determine the fairness, from a financial point of view, of the Transaction Consideration to be paid to holders of the fractional shares that result from the 500-for-1 reverse stock split. In order to accomplish this, IC has used various valuation methodologies (described more fully below) to determine the fair market value (“FMV”) of Mercury’s common shares, and then compared the FMV to the Fractional Shares Consideration.

Appendix II Page 1

BACKGROUND OF THE COMPANY

Overview of Mercury

Mercury, a Delaware corporation, was organized in 1956 and provides a broad range of services to the aviation industry. Mercury operates through the following three principal operating units: (i) fuel sales; (ii) cargo operations; and (iii) government contract services.

Divisions

Below is a more detailed summary of Mercury’s divisions:

Ø	Aircraft Refueling — Through its wholly owned subsidiary MercFuel, Inc. (“MercFuel”), Mercury provides aircraft refueling and related services at 14 military bases in the United States, one in Greece, and one in Japan. MercFuel facilitates the management and distribution of aviation fuel as a reseller of aviation fuel for major oil companies, affording the oil companies access to certain customers without the credit risk or administrative costs associated with the management of these customer accounts.
Ø	Cargo Operation — Mercury’s cargo operations, conducted through its wholly-owned subsidiary Mercury Air Cargo, Inc. (“Air Cargo”), provides the following services: (i) domestic and international air cargo and airmail handling; (ii) air cargo logistics services; and (iv) general cargo sales agent services. Space logistics involves the contracting, through its network of shipping agents of bulk cargo space on airlines which is sold to customers with shipping needs. Air Cargo also brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America.
Ø	Government Contract Services — Mercury, through its wholly owned subsidiary, Maytag Aircraft Corporation (“Maytag”), provides aircraft refueling, air terminal services, base operating support (“BOS”), and weather data services in 17 countries on four continents. Maytag provides BOS services at Niagara Falls, NY, Westover, MA, Youngstown, OH and Willow Grove, PA Air Reserve Facilities and Patrick Air Force Base on a subcontracted basis and provides weather observation and/or weather forecasting services at 17 locations within the United States pursuant to contracts with the federal government and certain local governmental agencies.

On June 12, 2004, the Company sold its FBO Business, Mercury Air Centers, Inc. (the “FBO Business”), to Allied Capital Corporation. According to the Company’s public filings, the FBO Business contributed a significant portion of the Company’s gross margin (approximately 49.5% in 2003).

Appendix II Page 2

INDUSTRY OVERVIEW

MercFuel

Jet fuel resellers are generally independent third parties that purchase fuel from major oil companies and independent fuel suppliers and resell fuel to commercial airlines, business aircraft management companies and air freight companies. Jet fuel reselling is a byproduct of the United States oil embargo and ensuing energy crisis in 1979. At that time, the major oil companies initiated a fuel allocation program pursuant to which many smaller and regional domestic and international airlines were unable to access sufficient supplies of jet fuel. Resellers took the initiative to find additional sources of fuel for these carriers and have become the suppliers to many of those airlines which the oil companies no longer directly serve.

Commercial and general aviation jet fuel purchases and dispensement occurs at airports and fuel terminals throughout the world. Jet fuel resellers contract directly with the oil company or jet fuel supplier to purchase the fuel and with third party refueling companies handling large commercial aircraft at commercial airports and fuel terminals or with third parties known as fixed base operations, for the actual dispensing of the fuel to the customer. Fixed base operations are third parties that typically handle all other aircraft such as commuter, business and private jets.

Typical commercial or business jet fuel resale transactions are as follows:

•   Deliveries from Reseller Inventory. In some cases, the jet fuel reseller has previously contracted with the fuel supplier for the delivery of fuel to a third party refueling company or fixed base operation. These third parties store the fuel for the jet fuel reseller as the reseller’s inventory. In these instances, the third party that delivers the fuel into the wing of the aircraft customer forwards a paper record of the transaction to the jet fuel reseller. The reseller then forwards an invoice to the aircraft customer.

•   Into-Plane Deliveries. Into-plane deliveries are fuel sales where the sale of fuel is made from the fuel supplier’s inventory maintained at the airport or fuel terminal. In these instances, either the fuel supplier or a third party refueling company delivers the fuel into the wing of the aircraft customer and the sale of fuel is consummated at that point. The refueling company, if used, forwards the paper record of the transaction to the fuel supplier and in either case the fuel supplier forwards the paper record to the fuel reseller for payment. The fuel reseller then forwards an invoice to the air carrier.

Each of these methods is a labor intensive and time consuming process that is subject to delays, inefficiencies and mistakes. At times customers and resellers are inaccurately billed for the amount of fuel sold. In addition, the use of paper documents delays the payment by the jet fuel reseller to the supplier in the case of into-plane deliveries. Also, commercial and business customers typically do not receive bills from the jet fuel reseller until between 7 to 30 days after fuel is sold, which delays payments and affects the jet fuel reseller’s cash flow.

Appendix II Page 3

In recent months, rising fuel prices, combined with a reduction of credit terms by MercFuel’s fuel suppliers, has caused the spread between accounts payable and accounts receivable to grow to the point of significant risk to Mercury’s liquidity.

The market for jet fuel reselling is highly competitive. MercFuel is in direct competition with major oil companies, major airlines and other independent fuel suppliers, such as World Fuel Services Corporation (“World Fuel”), and with other aircraft support companies which maintain their own sources of aviation fuel. Many of MercFuel’s competitors have greater financial, technical and marketing resources than the Company.

Air Cargo

•   Cargo Handling. Air Cargo provides domestic and international air cargo handling, air mail handling and bonded warehousing. Air Cargo handles cargo at Los Angeles International Airport (LAX), William B. Hartsfield International Airport (ATL — Atlanta, GA), Dorval International Airport (YUL — Montreal, Canada), Mirabel International Airport (YMX — Montreal, Canada) and Lester B. Pearson International Airport (YYZ — Toronto, Canada). Since February 2001, operations at ATL have been handled by Lufthansa Handling under the terms of a ten-year sub-lease of a 104,646 square foot warehouse and operations area. In fiscal 2004, the cargo handling operations comprised 65% of Air Cargo’s revenue.

•   Cargo Logistics Services. Air Cargo brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America. Cargo logistics involves the contracting for bulk cargo space on airlines and selling that space to customers with shipping needs. Air Cargo has an established network of shipping agents who assist in obtaining cargo for shipment on space purchased from various airlines, and who facilitate the delivery and collection of freight charges for cargo shipped by Air Cargo. Unlike a cargo airline which operates its own aircraft, Air Cargo’s space logistics business arranges for the purchase of cargo space on scheduled flights or supplemental flights at negotiated rates. Air Cargo is thereby able to profit from the sale of air cargo space worldwide without the overhead cost of owning and operating an aircraft. In fiscal 2004, the space logistics revenue comprised 22% of Air Cargo revenue.

•   General Sales Agent. Air Cargo also serves as a general sales agent (“GSA”) directly through its subsidiaries in the United States, Canada, Mexico, Central and South America, and the Far East. In this capacity, Air Cargo sells the transportation of cargo on its client’s airline flights, using our clients’ own airway bills. Air Cargo earns a commission from the airlines for selling their cargo space. As with its space logistics business, the growth for Air Cargo’s GSA business is not constricted by requirements for physical facilities or by large capital commitments. In fiscal 2004, the GSA business revenue comprised 12% of Air Cargo’s total revenue.

Appendix II Page 4

Air Cargo competes with numerous companies who provide air cargo handling services at the same airports where Air Cargo provides these services. At most airports there are at least 3-5 independent cargo handling companies, as well as certain airlines who operate their own warehouses and offer third-party cargo handling in order to reduce overhead costs. Over the last 15 years, a consolidation of independent cargo handling, ramp services providers and FBO’s has evolved into a handful of large operators with multiple airport facilities, such as BBA, Worldwide Aviation and Globe Ground Services. These larger companies have been able to leverage their relationships with airline customers by offering them multi-city pricing and discounts and lower handling rates for each additional airport where the airline’s cargo would be handled, with the intention of freezing out smaller competitors like Air Cargo. While Air Cargo’s warehouses operated profitably until the economic downturn beginning in 2000 and the 9/11 events, air cargo tonnage decreased through 2003 and thereby increased competition among cargo handlers. In an effort to maintain market share, Air Cargo lowered its pricing in order to retain the airline cargo handling business.

Maytag

•   Aircraft Refueling. Maytag has been supplying aircraft refueling and base support services worldwide to the Department of Defense since 1950. Maytag’s aircraft refueling services include supplying all the necessary personnel and equipment to operate government-owned fuel storage facilities and providing 24-hour refueling services for a variety of aircraft for the military. Maytag currently services 12 U.S. military bases, 11 in the U.S. and one in Greece. Maytag’s refueling contracts generally have a term of four years, with expiration dates ranging from June 2004 to January 2008. All contracts are firm-fixed price for specified services. Fuel handled in these operations is government owned and only the fleet of refueling trucks and other support vehicles are owned by Maytag.

•   Air Terminal and Ground Handling Services. Maytag has become a global player in air terminal services as the largest provider to the U.S. Air Force Air Mobility Command at 24 locations including Alaska, Japan, Korea, Kuwait and Latin America. Maytag’s air terminal and ground handling services consist of loading and unloading of passengers and cargo, transient alert, flight planning services, passenger processing and manifesting, baggage handling, travel eligibility, immigration facilitation and flight planning. Air terminal service contracts are generally for a base period of up to one year, with government options for multiple one-year extensions. All contracts provide firm-fixed price for specified services. In order to provide a comprehensive, all-in-one solution to the U.S. military and other government agencies, Maytag provides BOS services and base housing maintenance at several locations where Maytag has contracts. Maytag’s BOS services include fuel management, traffic management, airfield management, vehicle operations and maintenance services, and meteorological services. The Company’s base housing maintenance consists of change of occupancy maintenance for government-provided quarters, such as basic interior upkeep, repairs, painting, and cleaning.

Appendix II Page 5

•   Weather Data Services. Weather Data Services was founded in Clear Lake, Iowa in 1987 and was acquired by the Company to become a division of Maytag on August 1, 1998. This division currently provides weather observation and weather forecasting services at 11 locations within the U.S. pursuant to contracts with the prices for specified services and are generally for a base of one year, with multiple one-year options at the government’s election.

All of Maytag’s government contracts are subject to competitive bidding. Refueling, air terminal, and weather forecasting contracts are usually awarded on a “best value” basis, taking into account price, past performance history of the offeror, and the merit of the technical proposal. Weather observation contracts are generally awarded on the basis of the lowest priced, technically acceptable proposal. Maytag’s contracts are all subject to termination at the discretion of the U.S. Government, in whole or in part.

Maytag does not compete directly with any large government defense contractors. Since Maytag primarily targets government contracts with annual average revenues of approximately $1 million, most of Maytag’s competitors are smaller entities, and unlike Maytag, most of these companies have limited capabilities to operate abroad. According to Management, due to Maytag’s strong competitive position, the Company has been able to capture approximately 40% of the Defense Department’s Energy Support Command’s (DESC) aircraft refueling business and 50% of the Air Mobility Command’s (AMC) air terminals business in the U.S. and abroad.

Financial Summary

A summary of the Company’s historical operating performance is set forth below.

Appendix II Page 6

Summary of Operations

($ in thousands)	Fiscal Year Ended June 30,									LTM
	2002			2003			2004(a)			12/31/2004
MercFuel Revenues	$	232,573		$	280,136		$	322,631		$	428,512
Air Cargo Revenues		28,124			32,691			39,549			42,550
Maytag Revenues		28,228			24,421			23,281			22,213
Total Revenues	$	288,925		$	337,248		$	385,461		$	493,275
Sales Growth %		n/a			16.7	%		14.3	%		28.0	%
MercFuel Gross Profit	$	6,581		$	5,926		$	6,080		$	6,971
Air Cargo Gross Profit		898			2,585			2,100			3,563
Maytag Gross Profit		6,789			4,598			5,146			4,901
Total Gross Profit	$	14,268		$	13,109		$	13,326		$	15,435
Gross Profit Margin %		4.9	%		3.9	%		3.5	%		3.1	%
SG&A Expenses	$	11,771		$	10,818		$	10,894		$	10,783	(b)
Provision for Bad Debts		1,170			1,192			506			894
Total Operating Expenses		12,941			12,010			11,400			11,677
EBITDA	$	1,327		$	1,099		$	1,926		$	3,758
EBITDA Margin		0.5	%		0.3	%		0.5	%		0.8	%
Depreciation & Amortization		3,478			2,782			2,828			2,656
Operating Income		(2,151	)		(1,683	)		(902	)		1,102
Operating Income Margin		-0.7	%		-0.5	%		-0.2	%		0.2	%
Capital Expenditures	$	546		$	390		$	1,184		$	1,505

Note: Divisional Gross Profit includes certain SG&A costs which are charged directly to the operating units.

(a)	Fiscal 2004 SG&A excludes $2.4 million in extraordinary settlement costs, $1.7 million for severance payments to the retiring Chairman, and $311,000 of unusual audit fees. Air Cargo’s 2004 gross profit has been adjusted to exclude $300,000 in severance payments to Air Cargo’s former COO.
(b)	LTM SG&A expenses excludes $2.1 million of one-time charges for legal fees regarding a lawsuit settlement, severance costs, write-off of insurance deposits related to a joint venture, an asset impairment on a plane that was sold, and a loss on a timeshare plane trade-in.

Balance Sheet

($ in thousands)	As of
	12/31/04
Assets
Cash and Cash Equivalents	$	6,316
Accounts Receivable, net		56,912
Inventories		1,619
Prepaid Expenses & Other		5,108
Total Current Assets		69,955
Property, Plant & Equipment, net		7,564
Goodwill & Intangibles		5,011
Restricted Cash		8,418	(a)
Other Assets		3,133
Total Assets	$	94,081
Liabilities and Shareholders’ Equity
Account Payable	$	36,390
Accrued Expenses & Other		8,559
Current Portion of Long-Term Debt		1,021
Total Current Liabilities		45,970
Long-Term Debt		21,221
Other Long-Term Liabilities		10,722
Total Liabilities		77,913
Mandatorily Redeemable Preferred Stock		468
Shareholders’ Equity		15,700
Total Liabilities and Shareholders’ Equity	$	94,081

(a)   Restricted cash consists of cash held for specific purposes and not available for general use by the Company and is comprised primarily of an escrow account associated with the Hartsfield FBO. The funds held in the escrow account are to be distributed to either one or both of the Company and Allied Capital dependent upon the award of a new lease at the Hartsfield International Airport in Atlanta for a new FBO.

Appendix II Page 7

VALUATION METHODOLOGIES

In order to evaluate the fairness of the proposed Transaction, we performed the following:

Ø	estimated a reasonable range of the fair market value (“FMV”) of the total enterprise value (“TEV”) of the Company;
Ø	estimated a reasonable range of the equity value of the Company, based on the Company’s balance sheet as of December 31, 2004; and
Ø	determined that the Total Consideration was fair, from a financial point of view, based on the valuation methodologies contained herein.

IC employed different valuation methodologies to approximate the FMV of the TEV of the Company. IC believes the best estimates of FMV are based on: (i) the Market Approach — Trading History; (ii) the Market Approach — Multiple Analysis; (iii) the Market Approach — Precedent Transactions; and (iv) the Discounted Cash Flow Approach (“DCF”).

Market Approach

The Market Approach is a valuation technique in which the FMV is estimated based on market prices in actual transactions and on asking prices for currently available assets. The valuation process is essentially that of comparison and correlation between the subject asset and other similar assets. Consideration such as similarity, exposure to macroeconomic and/or specific industry factors, location, and time of sale of similar assets are compared to the subject asset to indicate a current value of the subject asset. Additionally, for this approach to be reliable, there are two requisites: (i) an active public market; and (ii) an exchange of comparable assets.

Trading History

As a starting point for an understanding of the FMV of the equity, we reviewed the valuation implied by the current trading price of the common stock.

Appendix II Page 8

(1)	On October 6, 2004, the Company announced a special dividend of $5.70 per share.
(2)	On November 5, 2004, the Company paid the special dividend.

As of [February 23, 2005], the Company’s share price was [$3.54], resulting in a market capitalization of approximately $10.8 million, while the trading volume in Mercury’s stock over the previous 30 days was approximately [4,610] shares per day.

Trading History
	Average		Average
	Price		Volume
Previous 10 Trading Days	$	3.59		4,610
Previous 30 Trading Days	$	3.82		5,010
Previous 60 Trading Days	$	4.16		15,397
Previous 90 Trading Days	$	4.70		20,254
52-Week High	$	8.45		226,300
52-Week Low	$	3.08		100

On November 5, 2004, the Company paid a one-time special cash dividend totaling $17.5 million ($5.70 per share) to holders of its common stock. The one-time special dividend was approximately equal to the trading price of Mercury’s common stock prior to the announcement of the dividend on October 6, 2004. As shown in the chart above, the special dividend had a significant impact on the trading price and volume of Mercury’s stock.

Appendix II Page 9

Multiple Analysis

The Market Approach, utilizing market multiples, indicates the FMV of a business by comparing it to publicly-traded companies in similar lines of business, or with similar risk-return profiles (“Comparables”). The value of different businesses can often be stated in relative terms, such as a multiple of: (i) revenue; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings before interest and taxes (“EBIT”); (iv) free cash flow (“FCF”); or (v) net book value of assets (collectively, the “Market Multiples”). Market Multiples for companies operating in an industry are in part determined by the similar external market conditions that they face (the common opportunities and threats) and in part by each company’s internal factors (its own strengths and weaknesses).

This method is useful in determining the FMV of a company that is currently profitable and is expected to remain profitable in the future. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. Therefore, an analysis of the Market Multiples of companies engaged in similar businesses or in businesses that have similar risk-return profiles yields insight into investor perceptions regarding their return requirements and, therefore, the value of the subject.

Analysis

Outside investors, potential acquirers and stockholders in Mercury will look to public companies and recently acquired companies that are similar to the Company to provide guidance on valuation. In the case of the Company, there are several U.S. publicly traded aviation services companies that we deemed offered economic comparability. In selecting the Comparables, we searched comprehensive lists and directories of public companies. The primary sources used to produce the list of comparable companies included:

•   Capital IQ;

•   Dow Jones Interactive;

•   Bloomberg; and

•   Hoover’s.

Certain determinant factors are: (i) the company had to provide products or services for the aviation industry; (ii) the company had to make its financial information public; and (iii) the company was required to have an active trading market to measure public perception. The Comparables selected were:

Appendix II Page 10

•   Air T, Inc. (NasdaqSC: AIRT)

•   AirNet Systems, Inc. (NYSE: ANS)

•   AutoInfo (OTCBB: AUTO)

•   Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

•   World Fuel Services Corp. (NYSE: INT)

Due to the lack of public companies that provide the same range of services as Mercury, we chose to select Comparables with businesses focused on air cargo handling and fuel services. Our decision to select such companies is due in part to their exposure to similar macroeconomic and industry-specific risks as those faced by the Company including, but not limited to: (i) exposure to commercial and general aviation industry trends; (ii) macroeconomic risks (e.g., post-September 11 downturn in commercial aviation, oil prices, etc.); and (iii) similar customer bases. The following is a brief description of the business operations for the selected Comparables:

Air T, Inc. (NasdaqSC: AIRT)

Air T, Inc. operates small-aircraft air cargo in the United States. It provides overnight air cargo services, and aviation ground support and other equipment products. The company, through its wholly owned subsidiaries, provides small package overnight air freight delivery services on a contract basis to the air express delivery industry throughout the eastern half of the United States and Canada. The company also engages in the manufacture and sale of aircraft deicers and scissor lift trucks, as well as specialized service equipment to passenger and cargo airlines, the U.S. Government, airports, and commercial customers. As of June 24, 2004, the company operated a fleet of single and twin engine turbo-prop aircraft nightly in the eastern half of the United States and Canada, Puerto Rico, and the Virgin Islands.

AirNet Systems, Inc. (NYSE: ANS)

AirNet Systems, Inc. provides aviation services, including time-critical small package delivery and passenger charter services. It operates AirNet Express, an integrated national air transportation network that provides expedited air transportation services for banks and time-critical small package shippers in approximately 100 cities nationwide. The company transports cancelled checks and related information for the U.S. banking industry, as well as offers specialized delivery services to customers, primarily in the medical, critical parts, and entertainment industries. AirNet Systems also provides passenger charter services to individuals and businesses through its subsidiary, Jetride, Inc. In addition, it offers on-demand cargo charter delivery services, and provides ground pick-up and delivery services. As of May 17, 2004, the company operated 120 aircraft, including 40 Learjets, located throughout the United States.

Appendix II Page 11

AutoInfo, Inc. (OTCBB: AUTO)

AutoInfo, Inc., through its wholly owned subsidiary, Sunteck Transport Co., Inc., provides transportation capacity and related transportation services to shippers in the United States and Canada. The company’s non-asset based services include ground transportation coast-to-coast, local pick up and delivery, air freight, and ocean freight. It has strategic alliances with less than truckload, truckload, and air, rail, and ocean common carriers to serve its customers’ needs. Its brokerage services are provided through a network of independent sales agents. As of March 1, 2004, the company had six regional operating centers providing brokerage services and representatives in 15 states and Canada. Its services include arranging for the transport of customers’ freight from the shippers location to the designated destination.

Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

Streicher Mobile Fueling, Inc. provides mobile fueling and fuel management out-sourced services. Its truck fleet delivers diesel, gasoline, and alternative fuels to customers’ locations on a scheduled or as needed basis refueling vehicles and equipment, and resupplying fixed-site storage facilities. The company’s customer base includes businesses that operate fleets of vehicles and equipment of various sizes, including governmental agencies, utilities, trucking companies, bus lines, hauling and delivery services, courier services, construction companies, and others. As of June 30, 2004, the company operated approximately 100 custom mobile fueling trucks from 26 service locations

World Fuel Services Corp. (NYSE: INT)

World Fuel Services Corporation markets marine and aviation fuel services. The company’s aviation fuel-related services include fuel management, price risk management, flight plans, weather reports, ground handling, and flight permits. It offers these services to passenger, cargo, and charter airlines, as well as corporate customers, and the United States’ and foreign militaries. The company also provides flight plans and weather reports to its corporate customers. The company’s marine fuel-related services include management services for the procurement of fuel, cost control through the use of hedging instruments, quality control, and claims management. As of August 5, 2004, World Fuel Services provided fuel and services at approximately 2,500 airports and seaports worldwide

The table below provides a summary of the selected Comparables and their relevant market multiples.

Appendix II Page 12

Cargo Handling / Fuel Services

(Dollars in Millions, Except Stock Price)	Stock		Market		Enterprise		Enterprise Value / LTM
	Price (a)		Cap.		Value (b)		Revenues			EBITDA			EBIT
Air T, Inc. (AIRT)	$	17.61	$	47.7	$	47.3		0.7	x		10.6	x		12.3	x
AirNet Systems, Inc. (ANS)		3.90		39.4		98.7		0.6			3.9			19.7
AutoInfo, Inc. (AUTO)		0.69		21.5		22.8		0.6			22.0			22.9	(c)
Streicher Mobile Fueling, Inc. (FUEL)		1.75		13.1		19.7		0.2			8.3			18.2
World Fuel Services Corp. (INT)		27.70		298.7		282.3		0.1			7.7			8.5
High		—	$	298.7	$	282.3		0.7	x		10.6	x		22.9	x
Median		—		39.4		47.3		0.6			8.0			18.2
Mean		—		84.1		94.2		0.4			7.6			16.3
Low		—		13.1		19.7		0.1			3.9			8.5
Mercury Air Centers, Inc. (MAX)	$	3.54	$	10.8	$	27.2		0.1	x		7.2	x		24.7	x

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a)	Stock price as of February 18, 2005.
(b)	Enterprise Value equals equity value plus debt, minority interest, preferred stock, and convertibles, less investments in unconsolidated affiliates and
(c)	AUTO excluded as an outlier with a TEV/LTM EBITDA multiple of 22.0x.

After identifying the Comparables, we then focused on the strengths and weaknesses of the Company relative to the Comparables. Therefore, a comparative analysis of the selected Comparables was undertaken.

Size. In comparison to the Comparables, the Company’s LTM, gross profit and EBITDA of approximately $15.4 million and $3.8 million, respectively, place it below the average of the Comparables as presented below.

Cargo Handling / Fuel Services

Operating Results	LTM		LTM Operating Results
(Dollars in Millions)	Ended		Revenues		Gross Profit		EBITDA		EBIT		FCF (a)
Air T, Inc. (AIRT)		12/31/04	$	68.1	$	12.4	$	4.5	$	3.8	$	3.0
AirNet Systems, Inc. (ANS)		9/30/04		164.1		59.1		25.1		5.0		(30.5	)
AutoInfo, Inc. (AUTO)		9/30/04		40.4		7.5		1.0		1.0		1.0
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		108.0		5.6		2.4		1.1		2.1
World Fuel Services Corp. (INT)		9/30/04		4,574.1		113.8		36.8		33.2		34.0
High		—	$	4,574.1	$	113.8	$	36.8	$	33.2	$	34.0
Median		—		108.0		12.4		4.5		3.8		2.1
Mean		—		991.0		39.7		13.9		8.8		1.9
Low		—		40.4		5.6		1.0		1.0		(30.5	)
Mercury Air Centers, Inc. (MAX)		12/31/04	$	493.3	$	15.4	$	3.8	$	1.1	$	2.3

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a) FCF = EBITDA — Capital Expenditures

Growth. While the Company’s three-year pro forma historical revenue growth rate is 23.9%, most of the growth in the Company’s revenues relates to the rise in fuel prices during the past 18 months. The Company’s gross profit has shown more modest growth at 3.2%, while EBITDA has grown 51.6% due to higher sales and fixed cost absorption.

Appendix II Page 13

Cargo Handling / Fuel Services

	3-Year Historical Growth Rates
Operating Growth Rates	Revenues			Gross Profit			EBITDA			EBIT
Air T, Inc. (AIRT)		5.0	%		4.1	%		4.6	%		5.9	%
AirNet Systems, Inc. (ANS)		7.3			2.7			(5.2	)		(30.9	)
AutoInfo, Inc. (AUTO)		80.0			76.4			185.7			203.9
Streicher Mobile Fueling, Inc. (FUEL)		25.8			8.6			14.9			93.0
World Fuel Services Corp. (INT)		48.9			18.3			33.9			36.4
High		80.0	%		76.4	%		185.7	%		203.9	%
Median		25.8			8.6			14.9			36.4
Mean		33.4			22.0			46.8			61.7
Low		5.0			2.7			(5.2	)		(30.9	)
Mercury Air Centers, Inc. (MAX)		23.9	%		3.2	%		51.6	%	NM

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a) FCF = EBITDA — Capital Expenditures

Leverage. The Company’s LTM net debt / EBITDA ratio of 4.2x is higher than the Comparables.

Cargo Handling / Fuel Services

	Total Debt /									Net Debt /			LTM Interest Coverage
Credit Ratios	Cap (Book)			Cap (Mkt)			EBITDA			EBITDA			EBITDA			FCF (a)
Air T, Inc. (AIRT)		12.0	%		3.5	%		0.4	x		NM			60.0			40.0
AirNet Systems, Inc. (ANS)		52.5			60.4			2.4			2.4			13.7		NA
AutoInfo, Inc. (AUTO)		34.6			8.2			1.9			1.3			11.6			11.3
Streicher Mobile Fueling, Inc. (FUEL)		66.3			45.8			4.7			2.8			1.6			1.4
World Fuel Services Corp. (INT)		18.7			12.1			1.1		NM			NA			NA
High		66.3	%		60.4	%		4.7	x		2.8	x		60.0	x		40.0	x
Median		34.6			12.1			1.9			2.4			12.7			11.3
Mean		36.8			26.0			2.1			2.1			21.7			17.5
Low		12.0			3.5			0.4			1.3			1.6			1.4
Mercury Air Centers, Inc. (MAX)		57.9	%		66.3	%		5.9	x		4.2	x		3.3	x		2.0	x

LTM: Latest Twelve Months.

Margins. The Company’s LTM gross profit and EBITDA margins of 3.1% and 0.8%, respectively, are both lower than the Comparables’ average margins of 16.1% and 5.5%, respectively.

Cargo Handling / Fuel Services

	LTM		LTM Margins
Operating Margins	Ended		Gross Profit			EBITDA			EBIT			FCF (a)
Air T, Inc. (AIRT)		12/31/04		18.3	%		6.6	%		5.6	%		4.4	%
AirNet Systems, Inc. (ANS)		9/30/04		36.0			15.3			3.1			(18.6	)
AutoInfo, Inc. (AUTO)		9/30/04		18.5			2.6			2.5			2.5
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		5.2			2.2			1.0			2.0
World Fuel Services Corp. (INT)		9/30/04		2.5			0.8			0.7			0.7
High		—		36.0	%		15.3	%		5.6	%		4.4	%
Median		—		18.3			2.6			2.5			2.0
Mean		—		16.1			5.5			2.6			(1.8	)
Low		—		2.5			0.8			0.7			(18.6	)
Mercury Air Centers, Inc. (MAX)		12/31/04		3.1	%		0.8	%		0.2	%		0.5	%

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a) FCF = EBITDA — Capital Expenditures

Appendix II Page 14

Market Multiple Method

Valuation Market Multiples for the Comparables were derived based on publicly available financial information. Market Multiples were a result of dividing the value of each of the Comparable’s TEV by the LTM Revenue, EBITDA, and EBIT. TEV is defined as the book value of the company’s net debt and preferred equity (where book value approximates fair market value) plus the market value of the company’s common equity. The market value of the common equity is computed by multiplying the number of shares outstanding by the current stock price.

As exhibited previously, IC believes that multiples derived from the operating data of the Comparables presented were given specific consideration in the selection of the appropriate Market Multiples for the Company. Furthermore, consideration was given to the range of multiples as well as the median and mean multiples. We considered the TEV/EBITDA multiple to be meaningful and appropriate because the Company’s margins are much lower than the Comparables, so therefore the TEV/Revenue multiple should not be considered.

Market Approach — Multiple Analysis
($ in thousands)
Industry Multiples	Low			Mean			High
EV/LTM EBITDA Range		3.9x			7.6x			10.6x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	14,799		$	28,664		$	39,724
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value		($1,127	)	$	12,738		$	23,798
Shares Outstanding		3,056			3,056			3,056
Implied Share Price		n/m		$	4.17		$	7.79
Premium to Current Share Price		n/m			17.7	%		120.0	%

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

There are several other factors which might reasonably be expected to reduce the implied TEV of the Company including the following: (i) the Company’s size as compared to the Comparables; (ii) the illiquidity of an investment in the Company due to its low trading volume; (iii) the longterm nature of the Company’s receivables; and (iv) customer concentration in the Company’s MercFuel business.

Appendix II Page 15

Precedent Transaction Method

Corporate mergers and acquisitions can also be used to indicate the FMV of a subject company. The Precedent Transaction method uses valuation multiples based on actual transactions that have occurred in the marketplace to arrive at an indication of value. Similar to the Market Multiple Approach, multiples are derived from precedent transactions by analyzing a target company’s purchase price relative to its historical financial performance. Multiples used in this approach are determined through an analysis of transactions involving controlling interests in companies in a similar industry or with operations similar to the principal business operations of the subject company. IC reviewed and compared the implied transaction multiples in certain announced control transactions deemed relevant based on similarity of business operations. In order for a transaction to be useful, it is necessary to have publicly available financial information about the purchase price and the operating results of the acquired company. Comparable transactions and corresponding transaction multiples were based on information obtained from the following primary sources:

•   Mergerstat

•   SEC filings

•   Public company disclosures

•   Press releases and news articles

•   Industry reports

•   Capital IQ

For the precedent transaction analysis, IC examined a number of transactions in the cargo handling and fuel services sectors which have occurred since 2000. However, there was limited useful information, other than the purchase price, available for most of these transactions, thereby complicating efforts to derive TEV/EBITDA multiples to apply to the Company. The table below illustrates the precedent transactions:

Appendix II Page 16

Transaction Details

Transaction Multiples

Date

Enterprise

Target

Target

EV/

EV/

Acquiror

Target

Announced

Value

Revenue

EBITDA

Revenues

EBITDA

Express One International, Inc.

Central Florida Air Maintenance

07/21/04

NA

NA

NA

NM

NM

Alimentation Couche-Tard, Inc.

Circle K Corporation

10/06/03

811.7

3,900.0

NA

0.2

NM

The Pantry, Inc.

Golden Gallon, Inc.

08/25/03

187.0

387.0

NA

0.5

NM

Transforce Income Fund

Canadian Freightways Limited

08/15/03

60.7

150.7

NA

0.4

NM

The Carlyle Group

Air Cargo, Inc.

08/11/03

NA

NA

NA

NM

NM

Chevy Chase Trust Co.

Williams Lynxs Alaska CargPort

05/31/03

NA

NA

NA

NM

NM

DHL Worldwide Express

Airborne, Inc.

03/25/03

1,410.0

3,343.7

253.1

0.4

5.6

Management of Landair Corp.

Landair Corp.

10/11/02

101.7

102.9

19.5

1.0

5.2

United Defense Industries, Inc.

United States Marine Repair, Inc.

05/28/02

417.6

431.8

45.4

1.0

9.2

Pacific CMA, Inc.

Airgate International Corp.

03/19/02

3.4

29.1

0.6

0.1

5.6

Union Pacific Corp.

Motor Cargo Industries

11/15/01

96.9

130.9

17.2

0.7

5.6

Vinci SA

Worldwide Flight Services, Inc.

09/10/01

285.0

348.0

NA

0.8

NM

Avfuel Corporation

Texaco General Aviation Business

09/07/01

NA

NA

NA

NM

NM

BBA Group / Signature

Aircraft Services International

07/11/01

137.9

162.0

NA

0.9

NM

United Parcel Service

Fritz Companies, Inc.

01/10/01

495.8

621.8

54.4

0.8

9.1

World Fuel Services Corp.

Page Avjet Fuel Co LLC

01/03/01

NA

NA

NA

NM

NM

EGL, Inc.

Circle Int'l Group, Inc.

07/03/00

518.1

832.3

49.2

0.6

10.5

High

1.0x

10.5x

Median

0.7

5.6

Mean

0.6

7.3

Low

0.1

5.2

There are numerous factors to consider when drawing comparisons, including: (i) record of growth and the opportunity for further improvement; (ii) dispersion of market share; (iii) competitive advantages; (iv) size and profitability of the target company; (v) stability of revenue and earnings; (vi) opportunity to realize cost savings, revenue enhancements, and operational synergies; and (vii) strategic and emotional factors employed by the acquirer. In consideration of such factors, below is a summary of the TEVs for the Company based on precedent transactions:

Market Approach — Precedent Transactions
($ in thousands)
Transaction Multiples	Low			Mean			High
EV/LTM EBITDA Range		5.2x			7.3x			10.5x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	19,592		$	27,317		$	39,552
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value	$	3,666		$	11,391		$	23,626
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	1.20		$	3.73		$	7.73
Premium to Current Share Price		-66.1	%		5.3	%		118.4	%

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

Appendix II Page 17

Discounted Cash Flow (“DCF”)

The fundamental premise of the DCF Approach is to estimate the available cash flows a prudent investor would expect a company to generate over its remaining life. IC relied on the Company’s cash flow projections for FYE June 30, 2005 through 2008, as provided by Mercury’s management (the “Projections”). The estimated available cash flows for each year are discounted to their present value equivalent using an appropriate rate of return to determine present value. The residual or terminal value of the business at the end of the projection period is estimated, discounted to its present value equivalent, and added to the present value equivalent of the discrete projection period estimated cash flows to estimate the TEV of a subject company. Subtracting the debt from the subject company’s TEV and adding the cash and non-operating asset values results in the value of its equity.

The following outlines the steps involved in applying the DCF analysis: (i) determination of future cash flows based upon the projections; (ii) selection of an appropriate discount rate for the subject company’s projections; (iii) determination of a residual or terminal value for the subject company; and (iv) determination of the TEV and resulting equity value for the company.

Determination of Future Cash Flows

IC relied on the following sources which were provided by Mercury’s management to determine the future cash flows of the Company: (i) the Company’s FYE 2005 through 2008 projections; (ii) management discussions; and (iii) other management estimates.

The table below presents the Company’s projected revenue, gross margin and EBITDA for the projected fiscal years ending 2005 through 2008.

Appendix II Page 18

Projections
($ in thousands)	FYE			LTM			Fiscal Year Ending June 30,
	6/30/2004			12/31/2004			2005			2006			2007			2008
MercFuel Revenues	$	322,631		$	428,512		$	289,996		$	298,484		$	307,246		$	316,292
Air Cargo Revenues		39,549			42,550			38,787			39,757			40,750			41,769
Maytag Revenues		23,281			22,213			21,745			22,351			22,686			23,026
Total Revenues	$	385,461		$	493,275		$	350,528		$	360,591		$	370,682		$	381,087
Sales Growth %		6.9	%		33.1	%		n/a			2.9	%		2.8	%		2.8	%
MercFuel Gross Profit	$	6,080		$	6,971		$	6,256		$	6,436		$	6,621		$	6,814
Air Cargo Gross Profit		2,100			3,563			3,202			3,282			2,736			2,804
Maytag Gross Profit		5,146			4,901			5,127			5,270			5,349			5,429
Total Gross Profit	$	13,326		$	15,435		$	14,585		$	14,987		$	14,706		$	15,047
Gross Profit Margin %		3.5	%		3.1	%		4.2	%		4.2	%		4.0	%		3.9	%
SG&A Expenses	$	10,894		$	10,783		$	8,238		$	8,054		$	8,470		$	8,486
Provision for Bad Debts		506			894			1,566			1,612			1,658			758
Total Operating Expenses		11,400			11,677			9,805			9,666			10,128			9,244
EBITDA	$	1,926		$	3,758		$	4,780		$	5,322		$	4,578		$	5,803
EBITDA Margin		0.5	%		0.8	%		1.4	%		1.5	%		1.2	%		1.5	%
Depreciation & Amortization		2,828			2,656			2,758			2,758			2,318			2,070
Operating Income		(902	)		1,102			2,022			2,564			2,260			3,733
Operating Income Margin		-0.2	%		0.2	%		0.6	%		0.7	%		0.6	%		1.0	%
Capital Expenditures	$	1,184		$	1,505		$	2,000		$	2,000		$	2,000		$	2,000

Revenue and Gross Profit:

Ø     IC relied on the Company’s projections to determine revenue for the FYE June 30, 2005 through 2008, as provided by Mercury’s management.

•   For the Company’s MercFuel division, revenues are expected to remain volatile due to changes in fuel prices. Gross Profit as a percentage of revenues is expected to increase slightly to 2.2% for Fiscal 2005, from 1.9% for Fiscal 2004. MercFuel’s Gross Margin is projected to remain constant at 2.2% of revenues through Fiscal 2008, while revenues are projected to grow 2.9% per year for Fiscal 2006-2008.

•   Air Cargo’s revenues are expected to decrease approximately 1.9% in Fiscal 2005, $39.5 million to $38.8 million. For Fiscal 2006-2008, Air Cargo’s revenues are expected to grow approximately 2.5% per year. Air Cargo’s Gross Profit as a percentage of revenues is expected to decrease slightly to 8.3% for Fiscal 2005, from its current level of 8.4% for the last twelve months ended December 31, 2004. Air Cargo’s Gross Margin is projected to remain constant in Fiscal 2006 at 8.3% and decline to 6.7% of revenues for Fiscal 2007-2008.

•   Maytag’s revenues are expected to decrease approximately 6.6% in Fiscal 2005 to $21.7 million. However, Maytag’s revenues are projected to increase 2.8% in 2006, followed by annual growth of 1.5% thereafter. Maytag’s Gross Profit is expected to increase slightly in Fiscal 2005 to 23.6% of revenues, and remain constant thereafter.

EBITDA:

Appendix II Page 19

Ø     The Company’s operating expenses are expected to decrease approximately $1.6 million in Fiscal 2005 to $9.8 million, due to ongoing cost reductions. Operating expenses as a percentage of revenues are expected to decrease slightly in Fiscal 2005 to 2.8%, from 3.0% in Fiscal 2004. Operating expenses are expected to remain at 2.7% of revenues for Fiscal 2006 through 2007, followed by a decrease to 2.4% in Fiscal 2008 due to lower bad debt expense at MercFuel.

Capital Expenditures:

Ø     The Company’s current working capital facility with Bank of America contains certain financial covenants limiting the amount the Company can expend annually for capital expenditures to $2.0 million. Management believes that this $2.0 million limit is a reasonable estimate for on-going maintenance capital expenditures.

Debt-Free Net Working Capital:
Ø	Debt-free net working capital is defined as current assets (excluding cash) less non-interest bearing liabilities. Based on the Company’s projections, management projects debt-free net working capital to be approximately 3.6% of sales in fiscal 2005 and estimates that it will decrease slightly to approximately 3.4% of sales in fiscal 2008.

Projected cash flows for the Company are summarized below. FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Projected Free Cash Flow
($ in thousands)
	Fiscal Year Ending June 30,
	2005 (a)			2006			2007			2008
Net Sales	$	175,264		$	360,591		$	370,682		$	381,087
Cost of Goods Sold		167,972			345,604			355,976			366,041
Gross Profit		7,292			14,987			14,706			15,047
SG&A		4,119			8,054			8,470			8,486
Depreciation & Amortization		1,379			2,758			2,318			2,070
Provision for Bad Debt		783			1,612			1,658			758
EBIT		1,011			2,564			2,260			3,733
Less: Estimated Taxes (@ 35%)		(354	)		(897	)		(791	)		(1,307	)
Plus: Depreciation & Amortization		1,379			2,758			2,318			2,070
Less: Capital Expenditures		(1,000	)		(2,000	)		(2,000	)		(2,000	)
Less: Changes in Debt Free Net Working Capital		708			(19	)		(127	)		(336	)
Free Cash Flow	$	1,744		$	2,405		$	1,660		$	2,160
Sales Growth %		n/a			2.9	%		2.8	%		2.8	%
Gross Margin		4.2	%		4.2	%		4.0	%		3.9	%
SG&A as percentage of sales		2.4	%		2.2	%		2.3	%		2.2	%
(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Appendix II Page 20

Selection of an Appropriate Discount Rate

To arrive at the present value of the cash flows available in the DCF, we used a range of discount rates between 9.0% and 11.0% (rounded), which were calculated using the Weighted Average Cost of Capital (“WACC”). WACC provides a fair return on total invested capital by weighting the expected yield rates indicated for the equity and debt components in proportion to their estimated percentages in an expected capital structure. The WACC represents the rate of return an investor would require to compensate them for the time value of their money and the risk inherent in the particular investment. The WACC is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows.

The following is a general discussion of the methods used in our derivation of the WACC:

WACC=[R_d(1-t)x(d%)]+[R_ex(e%)]

where:
WACC	=	Weighted average cost of capital;
Rd	=	Pretax rate of return on debt capital;
t	=	Effective federal and state income tax rate;
d%	=	Debt capital as a percentage of the sum of the debt plus common and preferred equity capital;
Re	=	Rate of return on common equity capital; and
e%	=	Common equity capital as a percentage of the total capital

See Appendix VI for additional detail on the calculation of the WACC.

Rates of Return on Debt

The cost of debt capital is typically defined as the yield-to-maturity on comparable debt instruments traded in the public market, as adjusted for specific risk factors related to the subject company. Consequently, for purposes of our analysis, we selected the average yield of Baa-rated corporate debt to approximate the Company’s pre-tax rate of return on debt capital. According to Moody’s, the yield-to-maturity for Baa-rated debt as of February 4, 2005 is 5.86%. Consequently, applying a tax rate of 35.0% results in an after-tax cost of debt of 3.81%.

Rates of Return on Equity

The required rate of return on equity capital is estimated using the Capital Asset Pricing Model (“CAPM”). CAPM estimates the rate of return on common equity as the current risk-free rate of return on United States Treasury bonds, plus a market risk premium expected over the risk-free rate of return, multiplied by the “beta” for the stock. Beta is a risk measure that reflects the sensitivity of a company’s stock price to the movements of the stock market as a whole.

The CAPM rate of return on equity capital is calculated using the formula:

Appendix II Page 21

R_e=R_f+[Bx(R_m-R_f)]+R_s+R_is

Where:
Re	=	Rate of return on equity capital;
Rf	=	Risk-free rate of return;
B	=	Beta or systematic risk for this type of equity investment;
Rm-Rf	=	Equity risk premium; the expected return on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf);
Rs	=	Small stock equity premium; and
Ris	=	Investment specific risk

Risk-Free Rate of Return

The 20-year United States Treasury Bond rate, as published by the Federal Reserve Statistical Release, of 4.54%, was used for our valuation³. The risk-free rate of return represents the return on an investment that is practically “riskless” due to the very low probability of default.

Beta

Beta is a function of the relationship between the return on an individual security and the return on the market. Beta represents the systematic risk common to all securities, which cannot be eliminated through diversification. The beta for the market as a whole, the average beta, is 1.0. Securities that have betas greater than 1.0 are viewed as more risky than the market. Conversely, securities that have betas less than 1.0 are deemed less risky than the market. We calculated the appropriate beta coefficient to apply in our calculation of the cost of equity based on those of the ten chosen Comparables. We delivered the Comparables’ equity betas to eliminate the effect of leverage on each company’s equity beta, and relevered them according to the average of the Comparables’ debt/equity ratio. This analysis resulted in a relevered beta of 0.80 (rounded).

Equity Risk Premium

The equity risk premium is the return investors require over and above the risk-free return, to compensate them for the additional risk involved in investing in non-Treasury bonds. This additional risk, in terms of the cost of capital, is the degree of uncertainty as to the realization of the expected future returns. We selected an equity risk premium of 7.2%, based on Ibbotson Associates’ (“Ibbotson”) historical average of large company stocks from 1926 to 2002⁴. The equity risk premium is multiplied by the beta (B) to estimate an investor’s expected equity return premium over risk free investments.

Small Stock Premium

3	Source: Federal Reserve Statistical Release, dated February 4, 2005.
4	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition 2004 Yearbook, Ibbotson Associates.

Appendix II Page 22

We then adjusted the CAPM rate of return by applying a premium that reflects the additional risk of investments in small companies. The determination of size is presented by Ibbotson, which uses the market value of equity of an investment to determine an applicable size premium. This premium is derived from historical differences in returns between small companies and large companies, using data published by Ibbotson. For the year ended 2003, the average premium for micro-cap companies with a market value of equity of between $0.3 million and $166.4 million is 4.01%.

Investment Specific Risk

We then further adjusted the CAPM rate of return by applying a premium that reflects the specific risk of the Company. Risks which we believe affect the valuation of the Company include, but are not limited to: (i) the small size of the Company relative to other aviation services companies; (ii) accounts receivables aging and concentration; (iii) the volatility of gas prices and resulting effect on the Company’s liquidity; and (vi) risks associated with the Company achieving its FYE 2004-2008 projections. As such, we applied a conservative company-specific risk premium of 0.0% to 5.0% to reflect any unique risk.

Applying the CAPM formula, we estimate the Company’s required rate of return on equity capital to be:

R_e=R_f+B(R_m - R_f)+R_s+R_is

Required rate on return on equity capital:

Assumption:
@ 0.00% Investment Specific Risk:	Re = 16.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 0.00%
@ 2.50% Investment Specific Risk:	Re = 19.17% = 4.54% + (0.80 x 7.20%) + 6.34% + 2.50%
@ 5.00% Investment Specific Risk:	Re = 21.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 5.00%

Based on the data presented above, we calculated a WACC of approximately 9.0% to 11.0% (rounded).

Determination of Terminal Year Growth Factor

The terminal value used in our DCF approach is essentially an estimate of the value of the enterprise as of the end of the final period for which cash flow projections have been made. It is necessary to compute this value because, although we are confident that the Company will remain a viable going-concern beyond the final period, we cannot project with enough certainty the cash flows to be generated in any given period.

For purposes of this analysis we used the “growing perpetuity method” using the projected free cash flow as its basis for terminal value. The free cash flows projected in the final period is adjusted to arrive at a level of cash flow for the first year beyond the projection period which is representative of the future cash-generating capability of the Company. This “normalized” cash flow figure incorporates expectations of the level of

Appendix II Page 23

investment required to maintain the business into the future, as well as the return on investment that the business can be expected to sustain. The normalized cash flow figure is then capitalized as a growing perpetuity by the previously determined discount rate, adjusted for some level of growth which can be expected into perpetuity. For purposes of our analysis and per management, we used estimated cash flows provided by Mercury’s management for the FYE 2008 as representative of the terminal year’s projected cash flows. The following as a representation of the growing perpetuity method formula:

T =	CFn
	r - g

Where:
T CFn R G	= = = =	Terminal value Normalized cash flow Discount rate Growth rate in perpetuity

The terminal value is then discounted back to the present using the previously selected discount rate. For the terminal year, we used a normalized free cash flow figure of approximately $2.2 million, a discount rate of 9.0% to 11.0% (rounded), and a perpetuity growth rate of 2.8%. The growth rate is based on the expected fiscal 2008 revenue growth rate as provided in the Company’s Projections. Outlined below are the values of this analysis:

Summary of Terminal Value Range
($ in thousands)
Discounted Terminal		Normalized		Discount		Growth Rate
Value		Cash Flow		Rate		in Perpetuity
$34,845	=	$2,160	/	( 9.0%	-	2.8%)
$30,005	=	$2,160	/	(10.0%	-	2.8%)
$26,346	=	$2,160	/	(11.0%	-	2.8%)

Midyear Discounting Convention

For purposes of our analysis, we have assumed that the Company’s projected cash flows are received at midyear, approximating the effect of receiving the cash flows more or less evenly throughout the year.

Determination of the Implied Equity Value

Appendix II Page 24

As shown below and in more detail in Appendix V, using a range of discount rates of 9.0% to 11.0% (rounded) in the discounted cash flow analysis results in implied TEVs ranging between $26.3 and $34.8 million.

Summary of Implied Equity Values — Discounted Cash Flow Method
($ in thousands)
Discount Rate		9.0	%		10.0	%		11.0	%
Implied Total Enterprise Value	$	31,566		$	27,190		$	23,890
Less: Total Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash on Balance Sheet		6,316			6,316			6,316
Implied Total Equity Value	$	15,640		$	11,264		$	7,964
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	5.12		$	3.69		$	2.61
Premium to Current Share Price		44.6	%		4.1	%		-26.4	%

Summary

The three different valuation methodologies applied by IC resulted in the following range of implied equity values for the Company using EBITDA multiples:

Implied Equity Values
	Low	Mean	High
Market Approach-Multiple Analysis	n/m	$12.7 million	$23.8 million
Market Approach-Precedent Transactions	$3.7 million	$11.4 million	$23.6 million
Discounted Cash Flow Analysis	$8.0 million	$11.3 million	$15.6 million
	Per Share Values
	Low	Mean	High
Market Approach-Multiple Analysis	n/m	$4.17 per share	$7.79 per share
Market Approach-Precedent Transactions	$1.20 per share	$3.73 per share	$7.73 per share
Discounted Cash Flow Analysis	$2.61 per share	$3.69 per share	$5.12 per share

As the table above illustrates, the Transaction Consideration of [$X.XX] per share in cash is within the range the values under the Market Approach-Multiple Analysis and the Market Approach-Precedent Transactions, and the DCF analysis. Based on the above analysis, we determined that the Transaction Consideration is within a reasonable range of values and is fair from a financial point of view.

Appendix II Page 25

EX-99.C9

Exhibit 99(c)(9)

Mercury Air Group
Distribution of Shares
Revised with 501 shares

Number of Shareholders

									Est		Est
Range	New		Old		Total		NOBO		OBO		IPM		Total
5000+		13		—		13		36		17		0		66
1500-4999		1		—		1		106		54		2		163
1000 - 1499		3		1		4		103		53		1		161
501-999		7		3		10		87		44		2		143
400-500		4		2		6		96		49		1		152
300 - 399		5		4		9		55		28		1		93
200 - 299		13		4		17		94		48		1		160
100 - 199		19		27		46		148		76		1		271
0 - 99		71		141		212		196		100		4		512
Total		136		182		318		921		469		13		1,721

Number of Shares

									Est		Est						Matrix of price and number of shares
Range	New		Old		Total		NOBO		OBO		IPM		Total		Cum Shares		3.75		3.90		4.00		4.15
5000+		1,174,714		—		1,174,714		753,493		247,809		—		2,176,016		3,056,355		11,461,332		11,919,785		12,225,421		12,683,874
1500-4999		3,025		—		3,025		267,449		136,520		5,046		412,040		880,339		3,301,273		3,433,324		3,521,358		3,653,408
1000 - 1499		3,138		1,261		4,399		109,764		56,029		1,066		171,258		468,299		1,756,121		1,826,366		1,873,196		1,943,441
501-999		5,674		2,310		7,984		62,894		32,104		1,446		104,428		297,041		1,113,904		1,158,461		1,188,165		1,232,721
400-500		1,880		957		2,837		45,718		23,337		476		72,368		192,613		722,298		751,190		770,451		799,343
300 - 399		1,662		1,370		3,032		17,929		9,152		326		30,439		120,245		450,919		468,955		480,980		499,017
200 - 299		3,081		940		4,021		21,115		10,778		225		36,139		89,806		336,773		350,244		359,224		372,695
100 - 199		2,489		3,639		6,128		18,824		9,609		127		34,687		53,667		201,252		209,302		214,669		222,719
0 - 99		2,589		3,611		6,200		8,324		4,249		207		18,980		18,980		71,174		74,021		75,919		78,766
Total		1,198,252		14,088		1,212,340		1,305,509		529,587		8,919		3,056,355
NOBO		350
		250

EX-99.C10

Exhibit 99.(c)(10)

February 23, 2005
REVISED DRAFT

Mercury Air Group, Inc.

STEPS TO BE TAKEN BY SPECIAL COMMITTEE of Mike Janowiak (Chair) and Angelo Pusateri, Independent Directors of Mercury Air Group, Inc. (“Mercury”), in considering and voting on a reverse/forward stock split in connection with Mercury delisting its common stock from the American Stock Exchange (“AMEX”) and deregistering its common stock under the Securities Exchange Act of 1934 (“Exchange Act”), including the following:

To be Provided by:
Board of Directors	*1.	Establish scope and responsibilities of Special Committee (i.e., should Mercury delist and deregister its common stock by implementing a reverse/forward stock split?)
Special Committee McKinzie	*2.	Confirm independence of Special Committee members and discuss business judgment rule (duties of loyalty and due care)
Czyzyk Kopko	3.	Obtain and review management’s summary of proposed transaction that will reduce the stockholders of record of Mercury’s common stock to less than 300
Special Committee	*4.	Confirm engagement of Bingham McCutchen as Special Committee’s independent counsel
McKinzie Imperial Capital	*5.	Confirm engagement and negotiate terms of engagement of Imperial Capital (“IC”) as independent financial adviser to Special Committee to opine as to the fairness, from a financial point of view, of the issuance of shares and/or cash paid to holders of fractional shares of Mercury’s common stock in connection with a reverse/forward stock split. In addition, IC (a) will identify public companies who have used a reverse stock split in order to reduce their holders of record to less than 300, and (b) will provide an analysis of trading volume and price fluctuations (i) for an appropriate historical period for the Company, and (ii) pre and post delisting for companies that have delisted from a major market exchange or NASDAQ and whose shares thereafter trade on the Pink Sheets.

1

To be Provided by:
Imperial Capital	6.	Review trading volume and price fluctuation on AMEX for Mercury’s common stock and consider the likely trading range for the post reverse/forward split shares on the Pink Sheets and determine whether this is an acceptable trading range
Imperial Capital Special Committee	7.	Review press releases and other desired data on companies who recently have delisted and/or deregistered and the stated reasons therefore
Czyzyk Kopko	8.	Enumerate and determinate relative importance of advantages and disadvantages of delisting/deregistering
Czyzyk Kopko Consultants	9.	Have management and Audit Committee consultants quantify in a written report anticipated cost savings resulting from delisting/deregistration
Audit Committee Management	10.	Have management verify that current or proposed outside audit firm will not require Sarbanes-Oxley standards (e.g., Section 404) as “best practice” in order to render clean opinion on audited financial statements
Czyzyk Kopko	11.	Ask management to submit for Special Committee consideration its proposed plan for corporate governance (e.g., majority of independent directors, independent director approval of related party transactions, continuance of compensation committee and audit committee, etc.) and communications with stockholders (quarterly financial reports, audited financial statements, etc.) after delisting/deregistration
Lovett	12.	Receive confirmation from management that any necessary approvals or modifications under the Credit Agreement with Bank of America or any other contracts with third parties have been obtained, including requirements to issue financial reports in accordance with the Exchange Act or to file reports with the SEC
Lovett	13.	Receive confirmation from management that no registration rights exist and ask management to set forth the manner in which outstanding stock options, warrants and convertible preferred stock will be adjusted and shares issued thereunder if exercised or converted

2

To be Provided by:
Special Committee:	14.	Negotiate with Mercury the price to be paid for fractional shares and verify that proposed transaction, if implemented, would result in fewer than 300 stockholders of record for Mercury’s common stock
McKinzie	15.	Consider and report on litigation risks
Management	16.	Consider any increase in the percentage ownership of Mercury by the significant owners of Mercury’s common stock resulting from the proposed transaction (e.g., Messrs. Czyzyk and Kopko)
Management	17.	Consider the amount and source of funding for payment of fractional shares
Lovett	18.	Have management confirm that employment agreements will not be affected by the proposed transaction (e.g., change of control provisions) or, if affected, set forth how affected
Special Committee Imperial Capital	19.	Review with Imperial Capital alternatives other than the proposed transaction
Czyzyk Management	20.	Confirmation from management that a market maker will gather, review and retain certain information about Mercury and file a Form 211 with the NASD OTC Compliance Unit in accordance with SEC Rules 15c2-11 so as to initiate a quotation on the Pink Sheets
Special Committee	21.	After thorough, deliberate and careful consideration of the foregoing and any other material information, the Special Committee should determine whether to recommend the proposed transaction to Mercury’s full Board of Directors as being in the best interests of Mercury and its stockholders

*completed at meeting of Special Committee on 2/16/05

3

EX-99.C11

Exhibit (c)(11)

Mercury Air Group

Summary Transfer Analysis — Companies Transferred to Pink Sheets Since July 1, 2004

	Company		Trimmed Average Change in Volume in %									Trimmed Average Change in Price in %
	Sample		Pre to Post Transfer									Pre to Post Transfer
	Size		1 Week			1 Month			Overall			1 Week			1 Month			Overall
All Companies
Overall positive price change		15		24.2	%		-4.6	%		-16.2	%		-3.1	%		-7.1	%		25.9	%
Overall negative price change		67		-40.7	%		-17.8	%		-5.7	%		-11.1	%		-25.5	%		-52.7	%
“Distressed” Companies (1)		60		-47.1	%		-24.1	%		-6.6	%		-11.7	%		-29.0	%		-58.5	%
“Non-Distressed” Companies (2)		22		28.9	%		13.2	%		-6.4	%		-6.1	%		-7.6	%		17.7	%
Illiquid Companies
Overall positive price change		6		160.1	%		127.7	%		37.3	%		0.9	%		1.7	%		15.9	%
Overall negative price change		30		-11.7	%		25.0	%		3.1	%		-7.8	%		-13.7	%		-28.1	%
“Distressed” Companies (1)		24		-42.2	%		8.6	%		-1.7	%		-7.5	%		-18.1	%		-36.3	%
“Non-Distressed” Companies (2)		12		99.2	%		87.2	%		49.6	%		-2.0	%		-4.6	%		2.7	%

(1)	Defined as companies whose stock prices have fallen 10% or more since transferring to the Pink Sheets.
(2)	Defined as companies whose stock prices have fallen less than 10% since transferring to the Pink Sheets.

Mercury Air Group

Summary Transfer Analysis — Companies Transferred to Pink Sheets Since July 1, 2004

	Company		Trimmed Average Change in Volume in %									Trimmed Average Change in Price in %
	Sample		Pre to Post Transfer									Pre to Post Transfer
	Size		1 Week			1 Month			Overall			1 Week			1 Month			Overall
From NASDAQ		64		-37.3	%		-23.0	%		-14.5	%		-8.3	%		-13.5	%		-36.2	%
From NYSE		9		94.4	%		54.3	%		70.3	%		-18.2	%		-35.2	%		-56.7	%
From AMEX		9		-18.2	%		-13.4	%		-9.4	%		-15.1	%		-31.2	%		-44.8	%
All Exchanges		82		-30.5	%		-14.4	%		-7.5	%		-9.7	%		-18.5	%		-40.2	%
Only Illiquid Securities (1)		36		-1.2	%		28.6	%		4.5	%		-5.0	%		-9.8	%		-20.4	%

(1) Securities trading in average volumes less than 15,000 per day in the year prior to transfer.

Mercury Air Group

Summary Pink Sheet Transfer Analysis

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/7/05	Vestin Group, Inc.	VSTN	NASDAQ	$	2.75	$	3.00		2,194		29,994		10,029		5,986		5,326	$	3.05	$	3.02	$	3.61		1,978		N/A		2,014	$	2.62		N/A	$	2.65		-80.3	%		N/A			-62.2	%		-14.0	%		N/A			-26.7	%
2/4/05	Avalon Correctional Services, Inc.	CITY	NASDAQ		2.00		1.97		12,700		117,957		27,061		49,456		16,309		2.24		2.41		2.25		28,388		N/A		20,779		2.01		N/A		2.01		4.9	%		N/A			27.4	%		-10.2	%		N/A			-10.7	%
2/4/05	Troy Group, Inc.	TROY	NASDAQ		2.25		2.88		662		100		3,197		5,818		13,382		2.80		2.87		3.14		2,878		N/A		2,878		2.34		N/A		2.34		-10.0	%		N/A			-78.5	%		-16.5	%		N/A			-25.4	%
2/3/05	Tower Automotive, Inc.	TWRAQ	NYSE		0.28		0.77		1,782,167		333,000		3,838,500		3,644,320		1,295,672		0.85		1.66		3.46		14,010,754		N/A		8,320,238		0.30		N/A		0.29		265.0	%		N/A			542.2	%		-64.9	%		N/A			-91.7	%
2/2/05	American Business Financial Services, Inc.	ABFIQ	NASDAQ		0.50		0.65		625		21,148		47,600		53,010		17,357		0.66		0.74		3.39		12,904		N/A		15,525		0.61		N/A		0.55		-72.9	%		N/A			-10.6	%		-7.6	%		N/A			-83.8	%
2/2/05	Hanover Direct, Inc.	HNVD	AMEX		0.80		1.44		18,790		6,400		9,260		13,970		42,928		1.40		1.48		1.94		7,816		N/A		9,469		1.16		N/A		1.05		-15.6	%		N/A			-77.9	%		-17.0	%		N/A			-45.8	%
1/31/05	Great American Bancorp, Inc.	GTPS	NASDAQ		29.00		28.50		559		750		5,570		2,481		1,955		28.66		27.16		30.94		7,880		N/A		6,394		28.65		N/A		28.75		41.5	%		N/A			227.1	%		0.0	%		N/A			-7.1	%
1/28/05	Arlington Hospitality, Inc.	HOST	NASDAQ		2.76		2.87		1,100		100		7,022		7,307		4,854		2.84		2.88		3.40		1,640		N/A		1,213		2.81		N/A		2.81		-76.6	%		N/A			-75.0	%		-1.3	%		N/A			-17.6	%
1/27/05	Data Systems & Software, Inc.	DSSI	NASDAQ		0.90		0.65		3,260		12,275		23,145		12,717		13,516		0.81		0.89		1.85		5,855		N/A		8,115		0.82		N/A		0.82		-74.7	%		N/A			-40.0	%		1.7	%		N/A			-55.4	%
1/25/05	ShoLodge, Inc.	LODG	NASDAQ		4.00		3.80		3,000		1,400		16,436		5,921		2,863		3.92		4.34		4.67		5,190		N/A		2,951		3.76		N/A		3.91		-68.4	%		N/A			3.1	%		-4.0	%		N/A			-16.3	%
1/21/05	TransTechnology Corp.	TTLG	NYSE		6.46		6.53		22,095		27,100		36,320		17,420		13,469		6.66		7.02		7.50		20,902		N/A		13,360		6.43		N/A		6.49		-42.5	%		N/A			-0.8	%		-3.4	%		N/A			-13.6	%
1/20/05	HealtheTech, Inc.	HETC	NASDAQ		0.78		1.15		10,000		423		14,467		23,055		18,066		1.16		1.24		2.00		30,856		N/A		26,275		0.85		N/A		0.79		113.3	%		N/A			45.4	%		-26.9	%		N/A			-60.7	%
1/10/05	Kirlin Holding Corp.	KILN	NASDAQ		1.55		2.68		1,000		3,600		5,238		5,420		4,607		2.72		2.94		6.40		12,611		N/A		5,814		1.87		N/A		1.79		140.8	%		N/A			26.2	%		-31.3	%		N/A			-72.1	%
1/7/05	Webco Industries, Inc.	WEBO	AMEX		8.60		9.45		24,180		79,800		150,360		250,850		38,585		10.27		10.54		5.02		151,144		73,771		60,422		7.11		6.88		7.30		0.5	%		-70.6	%		56.6	%		-30.8	%		-34.7	%		45.4	%
1/5/05	Mueller (PAUL) Co.	MUEL	NASDAQ		24.05		30.11		2,900		1,935		996		825		1,586		30.20		30.46		34.79		11,068		12,348		9,498		25.30		23.64		24.56		1011.0	%		1396.1	%		498.8	%		-16.2	%		-22.4	%		-29.4	%
1/3/05	AMB Financial Corp.	AMFC	NASDAQ		14.00		14.00		200		1,108		1,789		1,786		1,208		13.74		14.30		15.08		N/A		N/A		294		N/A		N/A		14.13		N/A			N/A			-75.7	%		N/A			N/A			-6.3	%
1/3/05	CKF Bancorp, Inc.	CKFB	NASDAQ		15.25		16.49		4,700		10,612		3,184		1,766		2,038		17.34		17.93		15.03		1,004		N/A		1,556		16.81		N/A		15.72		-68.5	%		N/A			-23.6	%		-3.1	%		N/A			4.6	%
1/3/05	Pioneer Railcorp	PRRR	NASDAQ		3.15		3.00		2,440		68,628		29,549		25,838		10,875		2.94		2.85		2.36		17,428		10,592		9,617		2.98		2.98		3.03		-41.0	%		-59.0	%		-11.6	%		1.4	%		4.7	%		28.7	%
1/3/05	Storage Computer Corp.	SOSO	AMEX		0.17		0.23		1,950		143,500		267,560		167,180		129,853		0.25		0.27		0.37		153,976		138,304		106,743		0.21		0.20		0.18		-42.5	%		-17.3	%		-17.8	%		-15.1	%		-27.7	%		-50.7	%
12/31/04	Tropical Sportswear International Corp.	TSICQ	NASDAQ		0.03		0.18		298,850		730,302		1,313,335		1,390,145		260,093		0.20		0.78		1.73		633,075		339,048		281,577		0.20		0.17		0.13		-51.8	%		-75.6	%		8.3	%		1.5	%		-78.4	%		-92.5	%
12/22/04	Merisel, Inc.	MSEL	NASDAQ		6.10		4.70		2,200		8,580		6,586		8,002		9,021		4.85		4.87		4.73		25,763		18,221		16,792		4.89		5.71		5.84		291.2	%		127.7	%		86.1	%		0.8	%		17.3	%		23.6	%
12/21/04	Bestway, Inc.	BSTW	NASDAQ		10.75		10.99		150		1,611		2,280		1,286		1,395		10.77		11.36		13.42		955		N/A		662		11.37		N/A		11.15		-58.1	%		N/A			-52.6	%		5.6	%		N/A			-16.9	%
12/20/04	DynTek, Inc.	DYTK	NASDAQ		0.54		0.62		118,774		10,570,024		2,851,595		2,304,482		1,717,912		0.61		0.63		0.78		941,733		621,324		436,207		0.58		0.59		0.58		-67.0	%		-73.0	%		-74.6	%		-5.2	%		-7.6	%		-26.1	%
12/17/04	Trico Marine Services, Inc.	TMARQ	NASDAQ		0.23		0.21		314,875		1,059,972		2,765,580		2,104,313		1,390,776		0.20		0.26		0.80		936,189		538,589		593,253		0.18		0.17		0.17		-66.1	%		-74.4	%		-57.3	%		-7.9	%		-35.9	%		-78.7	%
12/16/04	Andrea Electronics Corp.	ANDR	AMEX		0.06		0.08		283,406		1,628,600		1,750,960		2,038,980		662,578		0.09		0.12		0.22		855,405		591,461		390,990		0.07		0.07		0.06		-51.1	%		-71.0	%		-41.0	%		-22.3	%		-46.1	%		-71.5	%
12/16/04	Home Products International Inc.	HOMZ	NASDAQ		1.30		2.23		272		28,014		19,654		12,755		16,355		2.25		2.23		1.50		2,403		7,295		5,458		2.30		2.13		1.89		-87.8	%		-42.8	%		-66.6	%		2.2	%		-4.8	%		25.4	%
12/13/04	Canterbury Consulting Group, Inc.	CITI	NASDAQ		0.40		0.38		10,000		29,969		12,604		20,871		14,782		0.40		0.43		0.95		29,344		12,213		17,725		0.39		0.39		0.38		132.8	%		-41.5	%		19.9	%		-3.0	%		-9.2	%		-59.4	%
12/6/04	ACMAT Corp.	ACMTA	NASDAQ		12.55		12.45		199		8,000		2,280		1,484		1,998		12.61		12.60		11.35		15,812		15,295		14,576		13.12		12.82		12.80		593.5	%		930.6	%		629.4	%		4.0	%		1.7	%		12.8	%
12/1/04	First Investors Financial Services Group, Inc	FIFS	NASDAQ		4.75		4.21		1,200		200		3,639		5,571		3,163		4.48		4.46		4.69		4,340		N/A		13,988		4.07		N/A		4.46		19.3	%		N/A			342.2	%		-9.1	%		N/A			-4.9	%
11/26/04	Rexhall Industries, Inc.	REXL	NASDAQ		0.26		0.71		20,395		23,590		14,515		19,753		7,881		0.72		0.78		2.29		29,764		35,767		21,821		0.45		0.30		0.27		105.1	%		81.1	%		176.9	%		-38.1	%		-61.4	%		-88.1	%
11/23/04	Applied Extrusion Technologies, Inc.	AETCQ	NASDAQ		0.14		0.16		151,215		287,621		135,012		219,764		110,988		0.16		0.16		1.54		131,178		180,308		100,967		0.16		0.16		0.16		-2.8	%		-18.0	%		-9.0	%		-0.6	%		2.2	%		-89.7	%
11/15/04	Xcelera, Inc.	XLACF	AMEX		0.36		0.36		12,359		631,900		1,047,860		300,510		239,262		0.33		0.60		1.70		158,568		135,278		100,517		0.31		0.35		0.36		-84.9	%		-55.0	%		-58.0	%		-6.0	%		-41.8	%		-78.6	%
11/11/04	Travis Boats & Motors, Inc.	TRVS	NASDAQ		0.37		0.39		8,800		21,332		10,369		7,152		11,423		0.37		0.38		0.80		48,143		38,473		22,901		0.38		0.38		0.38		364.3	%		437.9	%		100.5	%		1.1	%		-0.1	%		-52.6	%
11/9/04	ELXSI Corp.	ELXS	NASDAQ		3.75		3.35		905		616		1,635		2,196		3,182		3.56		3.17		3.70		4,031		26,050		15,235		3.01		2.94		3.49		146.5	%		1086.1	%		378.8	%		-15.4	%		-7.3	%		-5.8	%
11/8/04	Major Automotive Companies, Inc. (The)	MAJR	NASDAQ		1.23		0.85		6,000		11,947		6,113		7,073		37,285		0.85		0.90		0.84		7,747		6,478		8,612		0.75		0.81		0.98		26.7	%		-8.4	%		-76.9	%		-12.2	%		-9.9	%		17.2	%
11/5/04	ATA Holdings Corp.	ATAHQ	NASDAQ		1.20		0.74		63,886		474,352		365,165		427,841		94,339		0.84		1.73		6.63		118,876		147,368		166,509		0.81		1.02		1.20		-67.4	%		-65.6	%		76.5	%		-2.6	%		-41.3	%		-81.9	%
11/2/04	Kennedy-Wilson, Inc.	KWIC	NASDAQ		8.10		7.17		5,638		6,400		4,276		13,879		8,742		7.21		7.51		6.76		5,520		7,427		7,568		7.28		7.21		7.58		29.1	%		-46.5	%		-13.4	%		1.0	%		-4.0	%		12.0	%
10/29/04	Crown Andersen Inc.	CRAN	NASDAQ		1.11		1.73		850		6,627		3,689		6,464		4,187		1.77		1.72		2.14		2,109		6,970		7,483		1.54		1.15		1.08		-42.8	%		7.8	%		78.7	%		-13.4	%		-33.2	%		-49.6	%
10/21/04	Intelligroup, Inc.	ITIG	NASDAQ		1.18		1.00		16,650		1,206,301		297,222		223,465		342,875		1.25		1.44		5.01		150,509		117,923		92,860		0.98		1.27		1.24		-49.4	%		-47.2	%		-72.9	%		-21.7	%		-12.2	%		-75.2	%
10/20/04	Falcon Products, Inc.	FCPR	NYSE		0.09		2.25		31,100		12,800		12,920		17,685		25,172		2.09		2.12		3.67		71,165		36,001		147,377		1.74		1.53		0.62		450.8	%		103.6	%		485.5	%		-16.8	%		-27.7	%		-83.1	%
10/20/04	Netopia, Inc.	NTPA	NASDAQ		3.47		2.09		69,469		612,960		193,524		183,825		183,825		2.84		2.64		2.64		264,573		292,165		199,506		2.38		2.38		3.20		36.7	%		58.9	%		8.5	%		-16.3	%		-9.9	%		21.2	%
10/19/04	Commerce One, Inc.	CMRCQ	NASDAQ		0.17		0.04		116,812		1,665,139		5,524,726		2,549,586		593,277		0.06		0.19		1.23		688,061		849,779		455,504		0.05		0.10		0.16		-87.5	%		-66.7	%		-23.2	%		-13.8	%		-47.0	%		-87.3	%
10/15/04	BAM! Entertainment, Inc.	BFUN	NASDAQ		0.14		0.14		23,450		5,110,401		1,117,284		467,903		661,827		0.28		0.35		0.84		388,960		238,385		141,730		0.13		0.15		0.15		-65.2	%		-49.1	%		-78.6	%		-52.5	%		-57.4	%		-82.3	%
10/14/04	eXegenics, Inc.	EXEG	NASDAQ		0.38		0.47		25,617		371,651		85,686		37,851		94,391		0.59		0.70		0.72		47,334		68,923		56,498		0.46		0.43		0.38		-44.8	%		82.1	%		-40.1	%		-23.2	%		-38.8	%		-47.4	%
10/14/04	Fog Cutter Capital Group, Inc.	FCCG	NASDAQ		3.70		3.97		1,200		114,922		28,948		13,138		14,487		3.98		3.98		5.00		43,264		18,224		11,616		3.23		3.29		3.28		49.5	%		38.7	%		-19.8	%		-18.9	%		-17.4	%		-34.4	%
10/12/04	INTERMET Corp.	INMTQ	NASDAQ		0.34		0.18		261,148		1,241,515		2,272,396		3,386,086		312,047		0.25		0.76		4.11		904,048		604,422		484,610		0.17		0.17		0.22		-60.2	%		-82.1	%		55.3	%		-33.1	%		-77.0	%		-94.6	%
10/5/04	Clarus Corp.	CLRS	NASDAQ		8.90		8.18		25,713		1,555,585		956,465		285,228		99,240		8.53		8.89		9.16		237,987		128,427		62,555		7.70		7.63		8.71		-75.1	%		-55.0	%		-37.0	%		-9.7	%		-14.2	%		-4.9	%
9/28/04	British Energy Plc	BGYNY	NYSE		14.75		19.40		1,610		93,300		131,180		52,940		24,656		22.39		28.26		13.63		64,296		23,256		9,117		19.51		18.69		18.54		-51.0	%		-56.1	%		-63.0	%		-12.8	%		-33.8	%		36.1	%
9/28/04	CVF Technologies Corp.	CNVT	AMEX		0.37		0.33		115,045		48,000		12,460		11,125		47,547		0.33		0.33		0.38		70,300		65,105		46,298		0.29		0.28		0.34		464.2	%		485.2	%		-2.6	%		-13.3	%		-16.5	%		-11.5	%
9/28/04	Webster City Federal Bancorp	WCFB	NASDAQ		12.75		13.89		727		400		1,082		1,524		2,204		13.60		13.57		13.01		2,268		2,235		2,788		12.12		12.44		12.88		109.7	%		46.7	%		26.5	%		-10.9	%		-8.3	%		-1.0	%
9/23/04	HyperFeed Technologies, Inc.	HYPR	NASDAQ		2.50		2.90		650		47,973		18,775		9,387		7,684		3.83		4.14		4.92		2,295		2,100		3,916		2.83		2.79		2.74		-87.8	%		-77.6	%		-49.0	%		-26.2	%		-32.5	%		-44.3	%
9/23/04	Interstate Bakeries Corp.	IBCIQ	NYSE		5.22		2.05		73,219		1,011,700		5,099,380		2,975,140		631,153		3.08		5.00		12.39		13,530,161		4,238,916		1,271,061		4.07		4.15		5.13		165.3	%		42.5	%		101.4	%		32.4	%		-17.0	%		-58.6	%
9/22/04	US Airways Group Inc.	UAIRQ	NASDAQ		1.16		0.65		39,613		1,168,858		2,037,803		2,860,160		502,056		0.73		1.58		4.61		990,091		1,165,594		529,959		0.74		1.00		1.07		-51.4	%		-59.2	%		5.6	%		0.5	%		-37.0	%		-76.8	%
9/20/04	RadView Software Ltd.	RDVWF	NASDAQ		0.17		0.20		29,000		250,620		247,048		100,784		271,425		0.25		0.28		0.64		13,667		29,168		62,683		0.23		0.20		0.19		-94.5	%		-71.1	%		-76.9	%		-8.9	%		-27.3	%		-70.1	%
9/10/04	JPS Industries, Inc.	JPST	NASDAQ		4.60		3.19		1,228		11,450		65,994		38,699		45,055		3.23		3.02		2.61		27,971		27,368		25,159		3.12		3.19		3.93		-57.6	%		-29.3	%		-44.2	%		-3.3	%		5.6	%		50.7	%
9/3/04	GB Holdings, Inc.	GBHD	AMEX		4.05		2.50		2,000		2,800		1,560		8,415		13,461		2.36		2.78		2.74		23,154		45,394		26,559		2.29		2.51		3.26		1384.2	%		439.4	%		97.3	%		-3.0	%		-9.8	%		19.1	%
9/2/04	Net Perceptions, Inc.	NETP	NASDAQ		0.74		0.88		650		263,034		206,474		147,589		621,098		0.90		0.84		0.55		342,414		244,995		144,886		0.82		0.80		0.80		65.8	%		66.0	%		-76.7	%		-8.3	%		-3.9	%		46.1	%
9/2/04	Universal Access Global Holdings, Inc.	UAXSQ	NASDAQ		0.16		0.17		240		102,855		45,826		39,935		29,072		0.13		0.13		2.77		20,771		118,302		41,132		0.11		0.09		0.13		-54.7	%		196.2	%		41.5	%		-13.8	%		-31.6	%		-95.5	%
8/30/04	Acclaim Entertainment, Inc.	AKLMQ	NASDAQ		0.01		0.10		427,043		20,458,299		6,601,482		3,480,245		4,418,607		0.13		0.16		0.54		11,418,639		4,793,439		1,689,250		0.04		0.02		0.01		73.0	%		37.7	%		-61.8	%		-67.9	%		-85.9	%		-97.9	%
8/25/04	First Virtual Communications, Inc.	FVCCQ	NASDAQ		0.03		0.37		4,800		1,034,503		286,844		123,866		402,769		0.61		0.73		1.91		78,079		79,767		121,252		0.46		0.45		0.25		-72.8	%		-35.6	%		-69.9	%		-24.6	%		-39.0	%		-86.9	%
8/23/04	Ohio Art Company (The)	OART	AMEX		7.10		9.20		1,500		100		600		1,195		2,557		9.47		9.50		11.45		1,249		3,302		2,354		9.85		8.62		7.10		108.2	%		176.3	%		-7.9	%		4.0	%		-9.2	%		-38.0	%
8/19/04	AESP, Inc.	AESP	NASDAQ		0.27		0.14		30,000		60,768		15,474		15,132		122,460		0.19		0.22		0.73		77,076		41,807		22,550		0.16		0.24		0.27		398.1	%		176.3	%		-81.6	%		-16.0	%		8.2	%		-62.5	%
8/19/04	Counsel Corp.	CXSNF	NASDAQ		0.30		0.56		1,500		20,000		12,050		12,973		36,842		0.55		0.55		0.95		8,000		15,652		15,446		0.55		0.50		0.47		-33.6	%		20.7	%		-58.1	%		-0.4	%		-9.2	%		-50.7	%
8/16/04	Huffy Corp.	HUFCQ	NYSE		0.10		0.58		93,824		37,900		98,720		103,880		120,019		0.70		0.94		4.17		257,045		181,463		240,832		0.38		0.32		0.21		160.4	%		74.7	%		100.7	%		-45.3	%		-65.9	%		-95.1	%
8/13/04	Sonus Networks, Inc.	SONS	NASDAQ		5.47		3.70		6,305,067		36,684,017		9,531,066		7,335,077		6,240,454		4.15		4.50		6.38		9,490,541		4,792,663		4,720,396		3.62		4.84		5.60		-0.4	%		-34.7	%		-24.4	%		-12.9	%		7.6	%		-12.2	%
8/12/04	Schlotzky's, Inc.	BUNZQ	NASDAQ		0.03		0.27		1,750		171,147		530,345		207,271		30,941		0.29		1.51		2.09		114,005		73,772		98,729		0.34		0.29		0.16		-78.5	%		-64.4	%		219.1	%		14.7	%		-80.8	%		-92.2	%
8/10/04	Trump Hotels & Casino Resorts, Inc.	DJTCQ	NYSE		1.43		1.85		199,949		102,600		82,200		71,220		130,833		1.94		2.06		2.05		2,490,108		1,269,847		762,782		0.45		0.33		1.05		2929.3	%		1683.0	%		483.0	%		-76.7	%		-84.0	%		-48.8	%
8/9/04	Sobieski Bancorp, Inc	SOBI	NASDAQ		6.35		6.52		100		100		2,539		2,030		4,028		6.56		6.42		9.90		2,340		2,444		2,543		6.55		6.46		6.43		-7.9	%		20.4	%		-36.9	%		-0.1	%		0.6	%		-35.0	%
8/9/04	VaxGen, Inc.	VXGN	NASDAQ		14.95		6.97		45,230		7,097,539		1,848,375		768,270		987,359		9.92		11.86		10.39		2,455,007		826,601		529,524		8.79		9.87		13.98		32.8	%		7.6	%		-46.4	%		-11.4	%		-16.8	%		34.7	%
8/6/04	Winmill & Co. Incorporated	WNMLA	NASDAQ		2.40		2.30		500		26,239		17,822		15,487		9,416		2.47		3.10		3.75		7,070		5,181		5,478		2.23		2.33		2.26		-60.3	%		-66.5	%		-41.8	%		-9.7	%		-24.7	%		-39.8	%
8/5/04	Granite Broadcasting Corp.	GBTVK	NASDAQ		0.39		0.67		56,000		69,605		58,375		59,912		32,809		0.62		0.58		1.77		28,265		38,550		97,704		0.62		0.52		0.38		-51.6	%		-35.7	%		197.8	%		0.6	%		-9.7	%		-78.6	%
7/30/04	Annuity & Life Re (Holdings), Ltd.	ANNRF	NYSE		0.78		0.70		4,700		113,100		90,480		45,090		79,807		0.75		0.83		1.18		34,615		65,758		75,192		0.57		0.46		0.44		-61.7	%		45.8	%		-5.8	%		-24.9	%		-44.2	%		-62.8	%
7/21/04	Fresh Choice, Inc.	SALDQ	NASDAQ		0.17		0.57		500		463,482		207,125		178,805		20,147		0.48		1.23		1.83		90,013		32,314		21,997		0.64		0.64		0.44		-56.5	%		-81.9	%		9.2	%		33.3	%		-48.1	%		-75.9	%
7/16/04	Logansport Financial Corp.	LOGN	NASDAQ		19.50		18.75		534		662		496		1,486		1,934		18.89		19.02		19.35		2,722		2,108		1,451		17.59		18.04		18.29		448.9	%		41.9	%		-25.0	%		-6.9	%		-5.2	%		-5.5	%
7/16/04	Liquidmetal Technologies, Inc.	LQMT	NASDAQ		1.80		0.77		94,068		2,338,201		559,006		308,443		360,547		1.32		1.31		3.03		315,559		149,545		164,905		1.04		1.18		1.87		-43.6	%		-51.5	%		-54.3	%		-21.4	%		-9.9	%		-38.4	%
7/15/04	EquiFin, Inc.	EQUI	AMEX		0.05		0.09		2,500		71,900		43,980		20,980		11,084		0.15		0.22		0.52		26,551		18,963		22,572		0.08		0.08		0.05		-39.6	%		-9.6	%		103.7	%		-48.1	%		-63.4	%		-90.5	%
7/14/04	Middleton Doll Company (The)	DOLL	NASDAQ		2.40		0.96		3,200		155,661		35,875		21,449		9,407		1.29		1.34		4.09		12,531		7,319		13,564		0.82		0.83		1.29		-65.1	%		-65.9	%		44.2	%		-36.9	%		-38.3	%		-68.5	%
7/13/04	Rural/Metro Corp.	RURL	NASDAQ		5.34		1.40		312,744		10,741		11,127		16,162		34,781		1.46		1.50		1.63		12,998		18,064		151,111		1.46		1.32		3.21		16.8	%		11.8	%		334.5	%		0.3	%		-11.8	%		96.6	%
7/9/04	Baran Group Ltd.	BRANF	NASDAQ		9.05		8.20		1,000		800		1,500		1,320		1,244		8.44		8.24		7.71		440		1,530		2,827		7.97		7.54		6.87		-70.7	%		15.9	%		127.3	%		-5.6	%		-8.6	%		-10.9	%
7/8/04	Renaissance Capital Growth & Income Fund	RENN	NASDAQ		13.40		13.25		1,596		7,091		8,762		8,818		14,661		13.17		14.41		13.59		20,402		14,390		13,357		12.54		11.67		12.01		132.9	%		63.2	%		-8.9	%		-4.8	%		-19.0	%		-11.7	%
7/1/04	Financial Industries Corp.	FNIN	NASDAQ		7.40		9.28		954		12,804		112,723		36,581		13,840		9.77		10.06		13.62		4,833		9,388		13,190		9.05		8.67		7.99		-95.7	%		-74.3	%		-4.7	%		-7.4	%		-13.8	%		-41.3	%
7/1/04	Orbital Corp., Ltd.	OBTLY	NYSE		3.15		3.90		4,480		11,400		11,900		8,945		5,729		3.93		3.99		4.56		1,456		2,930		6,239		4.02		4.16		3.78		-87.8	%		-67.2	%		8.9	%		2.4	%		4.1	%		-17.1	%
																																Trimmed Average:					-30.5	%		-14.4	%		-7.5	%		-9.7	%		-18.5	%		-40.2	%
																																Max:					2929.3	%		1683.0	%		629.4	%		33.3	%		17.3	%		96.6	%
																																Min:					-95.7	%		-82.1	%		-81.6	%		-76.7	%		-85.9	%		-97.9	%

Mercury Air Group

Summary Pink Sheet Transfer Analysis — Only Prior NYSE

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/3/05	Tower Automotive, Inc.	TWRAQ	NYSE	$	0.28	$	0.77		1,782,167		333,000		3,838,500		3,644,320		1,295,672	$	0.85	$	1.66	$	3.46		14,010,754		N/A		8,320,238	$	0.30		N/A	$	0.29		265.0	%		N/A			542.2	%		-64.9	%		N/A			-91.7	%
1/21/05	TransTechnology Corp.	TTLG	NYSE		6.46		6.53		22,095		27,100		36,320		17,420		13,469		6.66		7.02		7.50		20,902		N/A		13,360		6.43		N/A		6.49		-42.5	%		N/A			-0.8	%		-3.4	%		N/A			-13.6	%
10/20/04	Falcon Products, Inc.	FCPR	NYSE		0.09		2.25		31,100		12,800		12,920		17,685		25,172		2.09		2.12		3.67		71,165		36,001		147,377		1.74		1.53		0.62		450.8	%		1			485.5	%		-16.8	%		-27.7	%		-83.1	%
9/28/04	British Energy Plc	BGYNY	NYSE		14.75		19.40		1,610		93,300		131,180		52,940		24,656		22.39		28.26		13.63		64,296		23,256		9,117		19.51		18.69		18.54		-51.0	%		(1	)		-63.0	%		-12.8	%		-33.8	%		36.1	%
9/23/04	Interstate Bakeries Corp.	IBCIQ	NYSE		5.22		2.05		73,219		1,011,700		5,099,380		2,975,140		631,153		3.08		5.00		12.39		13,530,161		4,238,916		1,271,061		4.07		4.15		5.13		165.3	%		0			101.4	%		32.4	%		-17.0	%		-58.6	%
8/16/04	Huffy Corp.	HUFCQ	NYSE		0.10		0.58		93,824		37,900		98,720		103,880		120,019		0.70		0.94		4.17		257,045		181,463		240,832		0.38		0.32		0.21		160.4	%		1			100.7	%		-45.3	%		-65.9	%		-95.1	%
8/10/04	Trump Hotels & Casino Resorts, Inc.	DJTCQ	NYSE		1.43		1.85		199,949		102,600		82,200		71,220		130,833		1.94		2.06		2.05		2,490,108		1,269,847		762,782		0.45		0.33		1.05		2929.3	%		17			483.0	%		-76.7	%		-84.0	%		-48.8	%
7/30/04	Annuity & Life Re (Holdings), Ltd.	ANNRF	NYSE		0.78		0.70		4,700		113,100		90,480		45,090		79,807		0.75		0.83		1.18		34,615		65,758		75,192		0.57		0.46		0.44		-61.7	%		0			-5.8	%		-24.9	%		-44.2	%		-62.8	%
7/1/04	Orbital Corp., Ltd.	OBTLY	NYSE		3.15		3.90		4,480		11,400		11,900		8,945		5,729		3.93		3.99		4.56		1,456		2,930		6,239		4.02		4.16		3.78		-87.8	%		(1	)		8.9	%		2.4	%		4.1	%		-17.1	%
																																Trimmed Average:					94.4	%		1			70.3	%		-18.2	%		-35.2	%		-56.7	%
																																Max:					2929.3	%		17			542.2	%		32.4	%		4.1	%		36.1	%
																																Min:					-87.8	%		-67.2	%		-63.0	%		-76.7	%		-84.0	%		-95.1	%

Mercury Air Group

Summary Pink Sheet Transfer Analysis — Only Prior AMEX

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/2/05	Hanover Direct, Inc.	HNVD	AMEX	$	0.80	$	1.44		18,790		6,400		9,260		13,970		42,928	$	1.40	$	1.48	$	1.94		7,816		N/A		9,469	$	1.16		N/A	$	1.05		-15.6	%		N/A			-77.9	%		-17.0	%		N/A			-45.8	%
1/7/05	Webco Industries, Inc.	WEBO	AMEX		8.60		9.45		24,180		79,800		150,360		250,850		38,585		10.27		10.54		5.02		151,144		73,771		60,422		7.11		6.88		7.30		0.5	%		-70.6	%		56.6	%		-30.8	%		-34.7	%		45.4	%
1/3/05	Storage Computer Corp.	SOSO	AMEX		0.17		0.23		1,950		143,500		267,560		167,180		129,853		0.25		0.27		0.37		153,976		138,304		106,743		0.21		0.20		0.18		-42.5	%		-17.3	%		-17.8	%		-15.1	%		-27.7	%		-50.7	%
12/16/04	Andrea Electronics Corp.	ANDR	AMEX		0.06		0.08		283,406		1,628,600		1,750,960		2,038,980		662,578		0.09		0.12		0.22		855,405		591,461		390,990		0.07		0.07		0.06		-51.1	%		-71.0	%		-41.0	%		-22.3	%		-46.1	%		-71.5	%
11/15/04	Xcelera, Inc.	XLACF	AMEX		0.36		0.36		12,359		631,900		1,047,860		300,510		239,262		0.33		0.60		1.70		158,568		135,278		100,517		0.31		0.35		0.36		-84.9	%		-55.0	%		-58.0	%		-6.0	%		-41.8	%		-78.6	%
9/28/04	CVF Technologies Corp.	CNVT	AMEX		0.37		0.33		115,045		48,000		12,460		11,125		47,547		0.33		0.33		0.38		70,300		65,105		46,298		0.29		0.28		0.34		464.2	%		485.2	%		-2.6	%		-13.3	%		-16.5	%		-11.5	%
9/3/04	GB Holdings, Inc.	GBHD	AMEX		4.05		2.50		2,000		2,800		1,560		8,415		13,461		2.36		2.78		2.74		23,154		45,394		26,559		2.29		2.51		3.26		1384.2	%		439.4	%		97.3	%		-3.0	%		-9.8	%		19.1	%
8/23/04	Ohio Art Company (The)	OART	AMEX		7.10		9.20		1,500		100		600		1,195		2,557		9.47		9.50		11.45		1,249		3,302		2,354		9.85		8.62		7.10		108.2	%		176.3	%		-7.9	%		4.0	%		-9.2	%		-38.0	%
7/15/04	EquiFin, Inc.	EQUI	AMEX		0.05		0.09		2,500		71,900		43,980		20,980		11,084		0.15		0.22		0.52		26,551		18,963		22,572		0.08		0.08		0.05		-39.6	%		-9.6	%		103.7	%		-48.1	%		-63.4	%		-90.5	%
																																Trimmed Average:					-18.2	%		-13.4	%		-9.4	%		-15.1	%		-31.2	%		-44.8	%
																																Max:					1384.2	%		485.2	%		103.7	%		4.0	%		-9.2	%		45.4	%
																																Min:					-84.9	%		-71.0	%		-77.9	%		-48.1	%		-63.4	%		-90.5	%

Mercury Air Group

Summary Pink Sheet Transfer Analysis — Only Prior NASDAQ

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/7/05	Vestin Group, Inc.	VSTN	NASDAQ	$	2.75	$	3.00		2,194		29,994		10,029		5,986		5,326	$	3.05	$	3.02	$	3.61		1,978		N/A		2,014	$	2.62		N/A	$	2.65		-80.3	%		N/A			-62.2	%		-14.0	%		N/A			-26.7	%
2/4/05	Avalon Correctional Services, Inc.	CITY	NASDAQ		2.00		1.97		12,700		117,957		27,061		49,456		16,309		2.24		2.41		2.25		28,388		N/A		20,779		2.01		N/A		2.01		4.9	%		N/A			27.4	%		-10.2	%		N/A			-10.7	%
2/4/05	Troy Group, Inc.	TROY	NASDAQ		2.25		2.88		662		100		3,197		5,818		13,382		2.80		2.87		3.14		2,878		N/A		2,878		2.34		N/A		2.34		-10.0	%		N/A			-78.5	%		-16.5	%		N/A			-25.4	%
2/2/05	American Business Financial Services, Inc.	ABFIQ	NASDAQ		0.50		0.65		625		21,148		47,600		53,010		17,357		0.66		0.74		3.39		12,904		N/A		15,525		0.61		N/A		0.55		-72.9	%		N/A			-10.6	%		-7.6	%		N/A			-83.8	%
1/31/05	Great American Bancorp, Inc.	GTPS	NASDAQ		29.00		28.50		559		750		5,570		2,481		1,955		28.66		27.16		30.94		7,880		N/A		6,394		28.65		N/A		28.75		41.5	%		N/A			227.1	%		0.0	%		N/A			-7.1	%
1/28/05	Arlington Hospitality, Inc.	HOST	NASDAQ		2.76		2.87		1,100		100		7,022		7,307		4,854		2.84		2.88		3.40		1,640		N/A		1,213		2.81		N/A		2.81		-76.6	%		N/A			-75.0	%		-1.3	%		N/A			-17.6	%
1/27/05	Data Systems & Software, Inc.	DSSI	NASDAQ		0.90		0.65		3,260		12,275		23,145		12,717		13,516		0.81		0.89		1.85		5,855		N/A		8,115		0.82		N/A		0.82		-74.7	%		N/A			-40.0	%		1.7	%		N/A			-55.4	%
1/25/05	ShoLodge, Inc.	LODG	NASDAQ		4.00		3.80		3,000		1,400		16,436		5,921		2,863		3.92		4.34		4.67		5,190		N/A		2,951		3.76		N/A		3.91		-68.4	%		N/A			3.1	%		-4.0	%		N/A			-16.3	%
1/20/05	HealtheTech, Inc.	HETC	NASDAQ		0.78		1.15		10,000		423		14,467		23,055		18,066		1.16		1.24		2.00		30,856		N/A		26,275		0.85		N/A		0.79		113.3	%		N/A			45.4	%		-26.9	%		N/A			-60.7	%
1/10/05	Kirlin Holding Corp.	KILN	NASDAQ		1.55		2.68		1,000		3,600		5,238		5,420		4,607		2.72		2.94		6.40		12,611		N/A		5,814		1.87		N/A		1.79		140.8	%		N/A			26.2	%		-31.3	%		N/A			-72.1	%
1/5/05	Mueller (PAUL) Co.	MUEL	NASDAQ		24.05		30.11		2,900		1,935		996		825		1,586		30.20		30.46		34.79		11,068		12,348		9,498		25.30		23.64		24.56		1011.0	%		1396.1	%		498.8	%		-16.2	%		-22.4	%		-29.4	%
1/3/05	AMB Financial Corp.	AMFC	NASDAQ		14.00		14.00		200		1,108		1,789		1,786		1,208		13.74		14.30		15.08		N/A		N/A		294		N/A		N/A		14.13		N/A			N/A			-75.7	%		N/A			N/A			-6.3	%
1/3/05	CKF Bancorp, Inc.	CKFB	NASDAQ		15.25		16.49		4,700		10,612		3,184		1,766		2,038		17.34		17.93		15.03		1,004		N/A		1,556		16.81		N/A		15.72		-68.5	%		N/A			-23.6	%		-3.1	%		N/A			4.6	%
1/3/05	Pioneer Railcorp	PRRR	NASDAQ		3.15		3.00		2,440		68,628		29,549		25,838		10,875		2.94		2.85		2.36		17,428		10,592		9,617		2.98		2.98		3.03		-41.0	%		-59.0	%		-11.6	%		1.4	%		4.7	%		28.7	%
12/31/04	Tropical Sportswear International Corp.	TSICQ	NASDAQ		0.03		0.18		298,850		730,302		1,313,335		1,390,145		260,093		0.20		0.78		1.73		633,075		339,048		281,577		0.20		0.17		0.13		-51.8	%		-75.6	%		8.3	%		1.5	%		-78.4	%		-92.5	%
12/22/04	Merisel, Inc.	MSEL	NASDAQ		6.10		4.70		2,200		8,580		6,586		8,002		9,021		4.85		4.87		4.73		25,763		18,221		16,792		4.89		5.71		5.84		291.2	%		127.7	%		86.1	%		0.8	%		17.3	%		23.6	%
12/21/04	Bestway, Inc.	BSTW	NASDAQ		10.75		10.99		150		1,611		2,280		1,286		1,395		10.77		11.36		13.42		955		N/A		662		11.37		N/A		11.15		-58.1	%		N/A			-52.6	%		5.6	%		N/A			-16.9	%
12/20/04	DynTek, Inc.	DYTK	NASDAQ		0.54		0.62		118,774		10,570,024		2,851,595		2,304,482		1,717,912		0.61		0.63		0.78		941,733		621,324		436,207		0.58		0.59		0.58		-67.0	%		-73.0	%		-74.6	%		-5.2	%		-7.6	%		-26.1	%
12/17/04	Trico Marine Services, Inc.	TMARQ	NASDAQ		0.23		0.21		314,875		1,059,972		2,765,580		2,104,313		1,390,776		0.20		0.26		0.80		936,189		538,589		593,253		0.18		0.17		0.17		-66.1	%		-74.4	%		-57.3	%		-7.9	%		-35.9	%		-78.7	%
12/16/04	Home Products International Inc.	HOMZ	NASDAQ		1.30		2.23		272		28,014		19,654		12,755		16,355		2.25		2.23		1.50		2,403		7,295		5,458		2.30		2.13		1.89		-87.8	%		-42.8	%		-66.6	%		2.2	%		-4.8	%		25.4	%
12/13/04	Canterbury Consulting Group, Inc.	CITI	NASDAQ		0.40		0.38		10,000		29,969		12,604		20,871		14,782		0.40		0.43		0.95		29,344		12,213		17,725		0.39		0.39		0.38		132.8	%		-41.5	%		19.9	%		-3.0	%		-9.2	%		-59.4	%
12/6/04	ACMAT Corp.	ACMTA	NASDAQ		12.55		12.45		199		8,000		2,280		1,484		1,998		12.61		12.60		11.35		15,812		15,295		14,576		13.12		12.82		12.80		593.5	%		930.6	%		629.4	%		4.0	%		1.7	%		12.8	%
12/1/04	First Investors Financial Services Group, Inc.	FIFS	NASDAQ		4.75		4.21		1,200		200		3,639		5,571		3,163		4.48		4.46		4.69		4,340		N/A		13,988		4.07		N/A		4.46		19.3	%		N/A			342.2	%		-9.1	%		N/A			-4.9	%
11/26/04	Rexhall Industries, Inc.	REXL	NASDAQ		0.26		0.71		20,395		23,590		14,515		19,753		7,881		0.72		0.78		2.29		29,764		35,767		21,821		0.45		0.30		0.27		105.1	%		81.1	%		176.9	%		-38.1	%		-61.4	%		-88.1	%
11/23/04	Applied Extrusion Technologies, Inc.	AETCQ	NASDAQ		0.14		0.16		151,215		287,621		135,012		219,764		110,988		0.16		0.16		1.54		131,178		180,308		100,967		0.16		0.16		0.16		-2.8	%		-18.0	%		-9.0	%		-0.6	%		2.2	%		-89.7	%
11/11/04	Travis Boats & Motors, Inc.	TRVS	NASDAQ		0.37		0.39		8,800		21,332		10,369		7,152		11,423		0.37		0.38		0.80		48,143		38,473		22,901		0.38		0.38		0.38		364.3	%		437.9	%		100.5	%		1.1	%		-0.1	%		-52.6	%
11/9/04	ELXSI Corp.	ELXS	NASDAQ		3.75		3.35		905		616		1,635		2,196		3,182		3.56		3.17		3.70		4,031		26,050		15,235		3.01		2.94		3.49		146.5	%		1086.1	%		378.8	%		-15.4	%		-7.3	%		-5.8	%
11/8/04	Major Automotive Companies, Inc. (The)	MAJR	NASDAQ		1.23		0.85		6,000		11,947		6,113		7,073		37,285		0.85		0.90		0.84		7,747		6,478		8,612		0.75		0.81		0.98		26.7	%		-8.4	%		-76.9	%		-12.2	%		-9.9	%		17.2	%
11/5/04	ATA Holdings Corp.	ATAHQ	NASDAQ		1.20		0.74		63,886		474,352		365,165		427,841		94,339		0.84		1.73		6.63		118,876		147,368		166,509		0.81		1.02		1.20		-67.4	%		-65.6	%		76.5	%		-2.6	%		-41.3	%		-81.9	%
11/2/04	Kennedy-Wilson, Inc.	KWIC	NASDAQ		8.10		7.17		5,638		6,400		4,276		13,879		8,742		7.21		7.51		6.76		5,520		7,427		7,568		7.28		7.21		7.58		29.1	%		-46.5	%		-13.4	%		1.0	%		-4.0	%		12.0	%
10/29/04	Crown Andersen Inc.	CRAN	NASDAQ		1.11		1.73		850		6,627		3,689		6,464		4,187		1.77		1.72		2.14		2,109		6,970		7,483		1.54		1.15		1.08		-42.8	%		7.8	%		78.7	%		-13.4	%		-33.2	%		-49.6	%
10/21/04	Intelligroup, Inc.	ITIG	NASDAQ		1.18		1.00		16,650		1,206,301		297,222		223,465		342,875		1.25		1.44		5.01		150,509		117,923		92,860		0.98		1.27		1.24		-49.4	%		-47.2	%		-72.9	%		-21.7	%		-12.2	%		-75.2	%
10/20/04	Netopia, Inc.	NTPA	NASDAQ		3.47		2.09		69,469		612,960		193,524		183,825		183,825		2.84		2.64		2.64		264,573		292,165		199,506		2.38		2.38		3.20		36.7	%		58.9	%		8.5	%		-16.3	%		-9.9	%		21.2	%
10/19/04	Commerce One, Inc.	CMRCQ	NASDAQ		0.17		0.04		116,812		1,665,139		5,524,726		2,549,586		593,277		0.06		0.19		1.23		688,061		849,779		455,504		0.05		0.10		0.16		-87.5	%		-66.7	%		-23.2	%		-13.8	%		-47.0	%		-87.3	%
10/15/04	BAM! Entertainment, Inc.	BFUN	NASDAQ		0.14		0.14		23,450		5,110,401		1,117,284		467,903		661,827		0.28		0.35		0.84		388,960		238,385		141,730		0.13		0.15		0.15		-65.2	%		-49.1	%		-78.6	%		-52.5	%		-57.4	%		-82.3	%
10/14/04	eXegenics, Inc.	EXEG	NASDAQ		0.38		0.47		25,617		371,651		85,686		37,851		94,391		0.59		0.70		0.72		47,334		68,923		56,498		0.46		0.43		0.38		-44.8	%		82.1	%		-40.1	%		-23.2	%		-38.8	%		-47.4	%
10/14/04	Fog Cutter Capital Group, Inc.	FCCG	NASDAQ		3.70		3.97		1,200		114,922		28,948		13,138		14,487		3.98		3.98		5.00		43,264		18,224		11,616		3.23		3.29		3.28		49.5	%		38.7	%		-19.8	%		-18.9	%		-17.4	%		-34.4	%
10/12/04	INTERMET Corp.	INMTQ	NASDAQ		0.34		0.18		261,148		1,241,515		2,272,396		3,386,086		312,047		0.25		0.76		4.11		904,048		604,422		484,610		0.17		0.17		0.22		-60.2	%		-82.1	%		55.3	%		-33.1	%		-77.0	%		-94.6	%
10/5/04	Clarus Corp.	CLRS	NASDAQ		8.90		8.18		25,713		1,555,585		956,465		285,228		99,240		8.53		8.89		9.16		237,987		128,427		62,555		7.70		7.63		8.71		-75.1	%		-55.0	%		-37.0	%		-9.7	%		-14.2	%		-4.9	%
9/28/04	Webster City Federal Bancorp	WCFB	NASDAQ		12.75		13.89		727		400		1,082		1,524		2,204		13.60		13.57		13.01		2,268		2,235		2,788		12.12		12.44		12.88		109.7	%		46.7	%		26.5	%		-10.9	%		-8.3	%		-1.0	%
9/23/04	HyperFeed Technologies, Inc.	HYPR	NASDAQ		2.50		2.90		650		47,973		18,775		9,387		7,684		3.83		4.14		4.92		2,295		2,100		3,916		2.83		2.79		2.74		-87.8	%		-77.6	%		-49.0	%		-26.2	%		-32.5	%		-44.3	%
9/22/04	US Airways Group Inc.	UAIRQ	NASDAQ		1.16		0.65		39,613		1,168,858		2,037,803		2,860,160		502,056		0.73		1.58		4.61		990,091		1,165,594		529,959		0.74		1.00		1.07		-51.4	%		-59.2	%		5.6	%		0.5	%		-37.0	%		-76.8	%
9/20/04	RadView Software Ltd.	RDVWF	NASDAQ		0.17		0.20		29,000		250,620		247,048		100,784		271,425		0.25		0.28		0.64		13,667		29,168		62,683		0.23		0.20		0.19		-94.5	%		-71.1	%		-76.9	%		-8.9	%		-27.3	%		-70.1	%
9/10/04	JPS Industries, Inc.	JPST	NASDAQ		4.60		3.19		1,228		11,450		65,994		38,699		45,055		3.23		3.02		2.61		27,971		27,368		25,159		3.12		3.19		3.93		-57.6	%		-29.3	%		-44.2	%		-3.3	%		5.6	%		50.7	%
9/2/04	Net Perceptions, Inc.	NETP	NASDAQ		0.74		0.88		650		263,034		206,474		147,589		621,098		0.90		0.84		0.55		342,414		244,995		144,886		0.82		0.80		0.80		65.8	%		66.0	%		-76.7	%		-8.3	%		-3.9	%		46.1	%
9/2/04	Universal Access Global Holdings, Inc.	UAXSQ	NASDAQ		0.16		0.17		240		102,855		45,826		39,935		29,072		0.13		0.13		2.77		20,771		118,302		41,132		0.11		0.09		0.13		-54.7	%		196.2	%		41.5	%		-13.8	%		-31.6	%		-95.5	%
8/30/04	Acclaim Entertainment, Inc.	AKLMQ	NASDAQ		0.01		0.10		427,043		20,458,299		6,601,482		3,480,245		4,418,607		0.13		0.16		0.54		11,418,639		4,793,439		1,689,250		0.04		0.02		0.01		73.0	%		37.7	%		-61.8	%		-67.9	%		-85.9	%		-97.9	%
8/25/04	First Virtual Communications, Inc.	FVCCQ	NASDAQ		0.03		0.37		4,800		1,034,503		286,844		123,866		402,769		0.61		0.73		1.91		78,079		79,767		121,252		0.46		0.45		0.25		-72.8	%		-35.6	%		-69.9	%		-24.6	%		-39.0	%		-86.9	%
8/19/04	AESP, Inc.	AESP	NASDAQ		0.27		0.14		30,000		60,768		15,474		15,132		122,460		0.19		0.22		0.73		77,076		41,807		22,550		0.16		0.24		0.27		398.1	%		176.3	%		-81.6	%		-16.0	%		8.2	%		-62.5	%
8/19/04	Counsel Corp.	CXSNF	NASDAQ		0.30		0.56		1,500		20,000		12,050		12,973		36,842		0.55		0.55		0.95		8,000		15,652		15,446		0.55		0.50		0.47		-33.6	%		20.7	%		-58.1	%		-0.4	%		-9.2	%		-50.7	%
8/13/04	Sonus Networks, Inc.	SONS	NASDAQ		5.47		3.70		6,305,067		36,684,017		9,531,066		7,335,077		6,240,454		4.15		4.50		6.38		9,490,541		4,792,663		4,720,396		3.62		4.84		5.60		-0.4	%		-34.7	%		-24.4	%		-12.9	%		7.6	%		-12.2	%
8/12/04	Schlotzky's, Inc.	BUNZQ	NASDAQ		0.03		0.27		1,750		171,147		530,345		207,271		30,941		0.29		1.51		2.09		114,005		73,772		98,729		0.34		0.29		0.16		-78.5	%		-64.4	%		219.1	%		14.7	%		-80.8	%		-92.2	%
8/9/04	Sobieski Bancorp, Inc	SOBI	NASDAQ		6.35		6.52		100		100		2,539		2,030		4,028		6.56		6.42		9.90		2,340		2,444		2,543		6.55		6.46		6.43		-7.9	%		20.4	%		-36.9	%		-0.1	%		0.6	%		-35.0	%
8/9/04	VaxGen, Inc.	VXGN	NASDAQ		14.95		6.97		45,230		7,097,539		1,848,375		768,270		987,359		9.92		11.86		10.39		2,455,007		826,601		529,524		8.79		9.87		13.98		32.8	%		7.6	%		-46.4	%		-11.4	%		-16.8	%		34.7	%
8/6/04	Winmill & Co. Incorporated	WNMLA	NASDAQ		2.40		2.30		500		26,239		17,822		15,487		9,416		2.47		3.10		3.75		7,070		5,181		5,478		2.23		2.33		2.26		-60.3	%		-66.5	%		-41.8	%		-9.7	%		-24.7	%		-39.8	%
8/5/04	Granite Broadcasting Corp.	GBTVK	NASDAQ		0.39		0.67		56,000		69,605		58,375		59,912		32,809		0.62		0.58		1.77		28,265		38,550		97,704		0.62		0.52		0.38		-51.6	%		-35.7	%		197.8	%		0.6	%		-9.7	%		-78.6	%
7/21/04	Fresh Choice, Inc.	SALDQ	NASDAQ		0.17		0.57		500		463,482		207,125		178,805		20,147		0.48		1.23		1.83		90,013		32,314		21,997		0.64		0.64		0.44		-56.5	%		-81.9	%		9.2	%		33.3	%		-48.1	%		-75.9	%
7/16/04	Logansport Financial Corp.	LOGN	NASDAQ		19.50		18.75		534		662		496		1,486		1,934		18.89		19.02		19.35		2,722		2,108		1,451		17.59		18.04		18.29		448.9	%		41.9	%		-25.0	%		-6.9	%		-5.2	%		-5.5	%
7/16/04	Liquidmetal Technologies, Inc.	LQMT	NASDAQ		1.80		0.77		94,068		2,338,201		559,006		308,443		360,547		1.32		1.31		3.03		315,559		149,545		164,905		1.04		1.18		1.87		-43.6	%		-51.5	%		-54.3	%		-21.4	%		-9.9	%		-38.4	%
7/14/04	Middleton Doll Company (The)	DOLL	NASDAQ		2.40		0.96		3,200		155,661		35,875		21,449		9,407		1.29		1.34		4.09		12,531		7,319		13,564		0.82		0.83		1.29		-65.1	%		-65.9	%		44.2	%		-36.9	%		-38.3	%		-68.5	%
7/13/04	Rural/Metro Corp.	RURL	NASDAQ		5.34		1.40		312,744		10,741		11,127		16,162		34,781		1.46		1.50		1.63		12,998		18,064		151,111		1.46		1.32		3.21		16.8	%		11.8	%		334.5	%		0.3	%		-11.8	%		96.6	%
7/9/04	Baran Group Ltd.	BRANF	NASDAQ		9.05		8.20		1,000		800		1,500		1,320		1,244		8.44		8.24		7.71		440		1,530		2,827		7.97		7.54		6.87		-70.7	%		15.9	%		127.3	%		-5.6	%		-8.6	%		-10.9	%
7/8/04	Renaissance Capital Growth & Income Fund II	RENN	NASDAQ		13.40		13.25		1,596		7,091		8,762		8,818		14,661		13.17		14.41		13.59		20,402		14,390		13,357		12.54		11.67		12.01		132.9	%		63.2	%		-8.9	%		-4.8	%		-19.0	%		-11.7	%
7/1/04	Financial Industries Corp.	FNIN	NASDAQ		7.40		9.28		954		12,804		112,723		36,581		13,840		9.77		10.06		13.62		4,833		9,388		13,190		9.05		8.67		7.99		-95.7	%		-74.3	%		-4.7	%		-7.4	%		-13.8	%		-41.3	%
																																Trimmed Average:					-37.3	%		-23.0	%		-14.5	%		-8.3	%		-13.5	%		-36.2	%
																																Max:					1011.0	%		1396.1	%		629.4	%		33.3	%		17.3	%		96.6	%
																																Min:					-95.7	%		-82.1	%		-81.6	%		-67.9	%		-85.9	%		-97.9	%

Mercury Air Group

Summary Pink Sheet Transfer Analysis — Only Illiquid (<15,000 shares day average)

		Current	Old	Last		Last Price		Last		Last Volume		Average Volume Prior to Transfer						Average Price Prior to Transfer						Average Volume Since Transfer						Average Price Since Transfer						Volume Change %									Price Change %
Date	Company	Ticker	Venue	Price		Pre-Transfer		Volume		Pre-Transfer		1 Week		1 Month		1 year		1 Week		1 Month		1 year		1 Week		1 Month		Overall		1 Week		1 Month		1 year		1 Week			1 Month			Overall			1 Week			1 Month			Overall
2/7/05	Vestin Group, Inc.	VSTN	NASDAQ	$	2.75	$	3.00		2,194		29,994		10,029		5,986		5,326	$	3.05	$	3.02	$	3.61		1,978		N/A		2,014	$	2.62		N/A	$	2.65		-80.3	%		N/A			-62.2	%		-14.0	%		N/A			-26.7	%
2/4/05	Troy Group, Inc.	TROY	NASDAQ		2.25		2.88		662		100		3,197		5,818		13,382		2.80		2.87		3.14		2,878		N/A		2,878		2.34		N/A		2.34		-10.0	%		N/A			-78.5	%		-16.5	%		N/A			-25.4	%
1/31/05	Great American Bancorp, Inc.	GTPS	NASDAQ		29.00		28.50		559		750		5,570		2,481		1,955		28.66		27.16		30.94		7,880		N/A		6,394		28.65		N/A		28.75		41.5	%		N/A			227.1	%		0.0	%		N/A			-7.1	%
1/28/05	Arlington Hospitality, Inc.	HOST	NASDAQ		2.76		2.87		1,100		100		7,022		7,307		4,854		2.84		2.88		3.40		1,640		N/A		1,213		2.81		N/A		2.81		-76.6	%		N/A			-75.0	%		-1.3	%		N/A			-17.6	%
1/27/05	Data Systems & Software, Inc.	DSSI	NASDAQ		0.90		0.65		3,260		12,275		23,145		12,717		13,516		0.81		0.89		1.85		5,855		N/A		8,115		0.82		N/A		0.82		-74.7	%		N/A			-40.0	%		1.7	%		N/A			-55.4	%
1/25/05	ShoLodge, Inc.	LODG	NASDAQ		4.00		3.80		3,000		1,400		16,436		5,921		2,863		3.92		4.34		4.67		5,190		N/A		2,951		3.76		N/A		3.91		-68.4	%		N/A			3.1	%		-4.0	%		N/A			-16.3	%
1/21/05	TransTechnology Corp.	TTLG	NYSE		6.46		6.53		22,095		27,100		36,320		17,420		13,469		6.66		7.02		7.50		20,902		N/A		13,360		6.43		N/A		6.49		-42.5	%		N/A			-0.8	%		-3.4	%		N/A			-13.6	%
1/10/05	Kirlin Holding Corp.	KILN	NASDAQ		1.55		2.68		1,000		3,600		5,238		5,420		4,607		2.72		2.94		6.40		12,611		N/A		5,814		1.87		N/A		1.79		140.8	%		N/A			26.2	%		-31.3	%		N/A			-72.1	%
1/5/05	Mueller (PAUL) Co.	MUEL	NASDAQ		24.05		30.11		2,900		1,935		996		825		1,586		30.20		30.46		34.79		11,068		12,348		9,498		25.30		23.64		24.56		1011.0	%		1396.1	%		498.8	%		-16.2	%		-22.4	%		-29.4	%
1/3/05	AMB Financial Corp.	AMFC	NASDAQ		14.00		14.00		200		1,108		1,789		1,786		1,208		13.74		14.30		15.08		N/A		N/A		294		N/A		N/A		14.13		N/A			N/A			-75.7	%		N/A			N/A			-6.3	%
1/3/05	CKF Bancorp, Inc.	CKFB	NASDAQ		15.25		16.49		4,700		10,612		3,184		1,766		2,038		17.34		17.93		15.03		1,004		N/A		1,556		16.81		N/A		15.72		-68.5	%		N/A			-23.6	%		-3.1	%		N/A			4.6	%
1/3/05	Pioneer Railcorp	PRRR	NASDAQ		3.15		3.00		2,440		68,628		29,549		25,838		10,875		2.94		2.85		2.36		17,428		10,592		9,617		2.98		2.98		3.03		-41.0	%		-59.0	%		-11.6	%		1.4	%		4.7	%		28.7	%
12/22/04	Merisel, Inc.	MSEL	NASDAQ		6.10		4.70		2,200		8,580		6,586		8,002		9,021		4.85		4.87		4.73		25,763		18,221		16,792		4.89		5.71		5.84		291.2	%		127.7	%		86.1	%		0.8	%		17.3	%		23.6	%
12/21/04	Bestway, Inc.	BSTW	NASDAQ		10.75		10.99		150		1,611		2,280		1,286		1,395		10.77		11.36		13.42		955		N/A		662		11.37		N/A		11.15		-58.1	%		N/A			-52.6	%		5.6	%		N/A			-16.9	%
12/13/04	Canterbury Consulting Group, Inc.	CITI	NASDAQ		0.40		0.38		10,000		29,969		12,604		20,871		14,782		0.40		0.43		0.95		29,344		12,213		17,725		0.39		0.39		0.38		132.8	%		-41.5	%		19.9	%		-3.0	%		-9.2	%		-59.4	%
12/6/04	ACMAT Corp.	ACMTA	NASDAQ		12.55		12.45		199		8,000		2,280		1,484		1,998		12.61		12.60		11.35		15,812		15,295		14,576		13.12		12.82		12.80		593.5	%		930.6	%		629.4	%		4.0	%		1.7	%		12.8	%
12/1/04	First Investors Financial Services Group, Inc.	FIFS	NASDAQ		4.75		4.21		1,200		200		3,639		5,571		3,163		4.48		4.46		4.69		4,340		N/A		13,988		4.07		N/A		4.46		19.3	%		N/A			342.2	%		-9.1	%		N/A			-4.9	%
11/26/04	Rexhall Industries, Inc.	REXL	NASDAQ		0.26		0.71		20,395		23,590		14,515		19,753		7,881		0.72		0.78		2.29		29,764		35,767		21,821		0.45		0.30		0.27		105.1	%		81.1	%		176.9	%		-38.1	%		-61.4	%		-88.1	%
11/11/04	Travis Boats & Motors, Inc.	TRVS	NASDAQ		0.37		0.39		8,800		21,332		10,369		7,152		11,423		0.37		0.38		0.80		48,143		38,473		22,901		0.38		0.38		0.38		364.3	%		437.9	%		100.5	%		1.1	%		-0.1	%		-52.6	%
11/9/04	ELXSI Corp.	ELXS	NASDAQ		3.75		3.35		905		616		1,635		2,196		3,182		3.56		3.17		3.70		4,031		26,050		15,235		3.01		2.94		3.49		146.5	%		1086.1	%		378.8	%		-15.4	%		-7.3	%		-5.8	%
11/2/04	Kennedy-Wilson, Inc.	KWIC	NASDAQ		8.10		7.17		5,638		6,400		4,276		13,879		8,742		7.21		7.51		6.76		5,520		7,427		7,568		7.28		7.21		7.58		29.1	%		-46.5	%		-13.4	%		1.0	%		-4.0	%		12.0	%
10/29/04	Crown Andersen Inc.	CRAN	NASDAQ		1.11		1.73		850		6,627		3,689		6,464		4,187		1.77		1.72		2.14		2,109		6,970		7,483		1.54		1.15		1.08		-42.8	%		7.8	%		78.7	%		-13.4	%		-33.2	%		-49.6	%
10/14/04	Fog Cutter Capital Group, Inc.	FCCG	NASDAQ		3.70		3.97		1,200		114,922		28,948		13,138		14,487		3.98		3.98		5.00		43,264		18,224		11,616		3.23		3.29		3.28		49.5	%		38.7	%		-19.8	%		-18.9	%		-17.4	%		-34.4	%
9/28/04	Webster City Federal Bancorp	WCFB	NASDAQ		12.75		13.89		727		400		1,082		1,524		2,204		13.60		13.57		13.01		2,268		2,235		2,788		12.12		12.44		12.88		109.7	%		46.7	%		26.5	%		-10.9	%		-8.3	%		-1.0	%
9/23/04	HyperFeed Technologies, Inc.	HYPR	NASDAQ		2.50		2.90		650		47,973		18,775		9,387		7,684		3.83		4.14		4.92		2,295		2,100		3,916		2.83		2.79		2.74		-87.8	%		-77.6	%		-49.0	%		-26.2	%		-32.5	%		-44.3	%
9/3/04	GB Holdings, Inc.	GBHD	AMEX		4.05		2.50		2,000		2,800		1,560		8,415		13,461		2.36		2.78		2.74		23,154		45,394		26,559		2.29		2.51		3.26		1384.2	%		439.4	%		97.3	%		-3.0	%		-9.8	%		19.1	%
8/23/04	Ohio Art Company (The)	OART	AMEX		7.10		9.20		1,500		100		600		1,195		2,557		9.47		9.50		11.45		1,249		3,302		2,354		9.85		8.62		7.10		108.2	%		176.3	%		-7.9	%		4.0	%		-9.2	%		-38.0	%
8/9/04	Sobieski Bancorp, Inc	SOBI	NASDAQ		6.35		6.52		100		100		2,539		2,030		4,028		6.56		6.42		9.90		2,340		2,444		2,543		6.55		6.46		6.43		-7.9	%		20.4	%		-36.9	%		-0.1	%		0.6	%		-35.0	%
8/6/04	Winmill & Co. Incorporated	WNMLA	NASDAQ		2.40		2.30		500		26,239		17,822		15,487		9,416		2.47		3.10		3.75		7,070		5,181		5,478		2.23		2.33		2.26		-60.3	%		-66.5	%		-41.8	%		-9.7	%		-24.7	%		-39.8	%
7/16/04	Logansport Financial Corp.	LOGN	NASDAQ		19.50		18.75		534		662		496		1,486		1,934		18.89		19.02		19.35		2,722		2,108		1,451		17.59		18.04		18.29		448.9	%		41.9	%		-25.0	%		-6.9	%		-5.2	%		-5.5	%
7/15/04	EquiFin, Inc.	EQUI	AMEX		0.05		0.09		2,500		71,900		43,980		20,980		11,084		0.15		0.22		0.52		26,551		18,963		22,572		0.08		0.08		0.05		-39.6	%		-9.6	%		103.7	%		-48.1	%		-63.4	%		-90.5	%
7/14/04	Middleton Doll Company (The)	DOLL	NASDAQ		2.40		0.96		3,200		155,661		35,875		21,449		9,407		1.29		1.34		4.09		12,531		7,319		13,564		0.82		0.83		1.29		-65.1	%		-65.9	%		44.2	%		-36.9	%		-38.3	%		-68.5	%
7/9/04	Baran Group Ltd.	BRANF	NASDAQ		9.05		8.20		1,000		800		1,500		1,320		1,244		8.44		8.24		7.71		440		1,530		2,827		7.97		7.54		6.87		-70.7	%		15.9	%		127.3	%		-5.6	%		-8.6	%		-10.9	%
7/8/04	Renaissance Capital Growth & Income Fund II	RENN	NASDAQ		13.40		13.25		1,596		7,091		8,762		8,818		14,661		13.17		14.41		13.59		20,402		14,390		13,357		12.54		11.67		12.01		132.9	%		63.2	%		-8.9	%		-4.8	%		-19.0	%		-11.7	%
7/1/04	Financial Industries Corp.	FNIN	NASDAQ		7.40		9.28		954		12,804		112,723		36,581		13,840		9.77		10.06		13.62		4,833		9,388		13,190		9.05		8.67		7.99		-95.7	%		-74.3	%		-4.7	%		-7.4	%		-13.8	%		-41.3	%
7/1/04	Orbital Corp., Ltd.	OBTLY	NYSE		3.15		3.90		4,480		11,400		11,900		8,945		5,729		3.93		3.99		4.56		1,456		2,930		6,239		4.02		4.16		3.78		-87.8	%		-67.2	%		8.9	%		2.4	%		4.1	%		-17.1	%
																																Trimmed Average:					-1.2	%		28.6	%		4.5	%		-5.0	%		-9.8	%		-20.4	%
																																Max:					1384.2	%		1396.1	%		629.4	%		5.6	%		17.3	%		28.7	%
																																Min:					-95.7	%		-77.6	%		-78.5	%		-48.1	%		-63.4	%		-90.5	%

EX-99.C12

Exhibit 99.(c)(12)

REVISED
February 28, 2005

Mercury Air Group, Inc.

STEPS TO BE TAKEN BY SPECIAL COMMITTEE of Mike Janowiak (Chair) and Angelo Pusateri, Independent Directors of Mercury Air Group, Inc. (“Mercury”), in considering and voting on a reverse/forward stock split in connection with Mercury delisting its common stock from the American Stock Exchange (“AMEX”) and deregistering its common stock under the Securities Exchange Act of 1934 (“Exchange Act”), including the following:

To be Provided by:
Board of Directors	*1.	Establish scope and responsibilities of Special Committee (i.e., should Mercury delist and deregister its common stock by implementing a reverse/forward stock split?)
Special Committee McKinzie	*2.	Confirm independence of Special Committee members and discuss business judgment rule (duties of loyalty and due care)
Preliminary Proxy Statement	3.	Obtain and review management’s summary of Transaction that will reduce the stockholders of record of Mercury’s common stock to less than 300
Special Committee	*4.	Confirm engagement of Bingham McCutchen as Special Committee’s independent counsel
McKinzie Imperial Capital	*5.	Confirm engagement and negotiate terms of engagement of Imperial Capital as financial adviser to Special Committee and Board of Directors to issue a fairness opinion. The opinion shall opine as to the fairness, from a financial point of view, of the amount of cash per share to be paid to holders of fractional shares of Mercury’s common stock (other than members of senior management, CFK Partners and their respective affiliates, as to whom Imperial Capital will no render an opinion). In addition, Imperial Capital (a) will identify public companies who have used a reverse stock split in order to reduce their holders of record to less than 300, and (b) will provide an analysis of trading volume and price fluctuations (i) for an appropriate historical period for Mercury, and (ii) pre and post delisting for companies that have delisted from a major market exchange or NASDAQ and whose shares trade on the Pink Sheets

1

To be Provided by:
Special Committee	6.	Review Imperial Capital’s studies of companies who have used a reverse stock split to deregister since beginning of 2004, companies who have moved to Pink Sheets since 07/01/04, and premium analysis paid to acquire interests of minority stockholders in small illiquid companies
Imperial Capital Special Committee Carl McKinzie	7.	Review press releases and other desired data on companies who recently have delisted and/or deregistered and the stated reasons therefore
Preliminary Proxy Statement	8.	Enumerate and determinate advantages and disadvantages of delisting/deregistering
Preliminary Proxy Statement	9.	Quantify anticipated cost savings resulting from delisting/deregistration and anticipated cost of engaging in the Transaction
Czyzyk (confirmed At 2/25/05 meeting)	10.	Management to verify that current or proposed outside audit firm will not require SEC or Sarbanes-Oxley standards (e.g., Section 404) as “best practice” in order to render clean opinion on audited financial statements
Preliminary Proxy Statement (also confirmed by Czyzyk at 2/25/05 meeting)	11.	Review proposed plan for corporate governance following the Transaction (e.g., majority of independent directors, independent director approval of related party transactions, continuance of compensation committee and audit committee, etc.) and communications with stockholders (quarterly financial information, audited financial statements, etc.)
Lovett	12.	Review Management’s determination as to whether any necessary approvals or modifications under the Credit Agreement with Bank of America or any other contracts with third parties have been, or need to be, obtained, including requirements to issue financial reports in accordance with SEC requirements
Lovett	13.	Receive confirmation from management that no registration rights exist and ask management to set forth the manner in which outstanding stock options, warrants and convertible preferred stock will be adjusted and shares issued thereunder if exercised or converted

2

To be Provided by:
Special Committee:	14.	Determine fairness of price to be paid for fractional shares and verify that Transaction, if implemented, would result in fewer than 300 stockholders of record for Mercury’s common stock
McKinzie	15.	Consider litigation risks
Preliminary Proxy Statement	16.	Consider any increase in the percentage ownership of Mercury by significant owners of Mercury’s common stock resulting from the Transaction (e.g., Czyzyk and Kopko)
Preliminary Proxy Statement	17.	Consider the amount and source of funding for payment of fractional shares
Lovett (confirmed At 2/25/05 meeting)	18.	Request management to confirm that employment agreements will not be affected by the Transaction (e.g., change of control provisions) or, if affected, set forth how affected
Special Committee Imperial Capital	19.	Review alternatives other than the proposed transaction
Czyzyk Management	20.	Confirmation from management that a market maker will gather, review and retain certain information about Mercury and file a Form 211 with the NASD OTC Compliance Unit in accordance with SEC Rules 15c2-11 so as to initiate a quotation on the Pink Sheets
Special Committee	21.	After thorough, deliberate and careful consideration of the foregoing and any other material information, the Special Committee should determine whether to recommend the Transaction to Mercury’s full Board of Directors as being in the best interests of Mercury and its stockholders

*completed at meeting of Special Committee on 2/16/05

3

EX-99.C13

Exhibit 99(c)(13)

D R A F T  F A I R N E S S  O P I N I O N
A N D  B A C K – U P

T A B L E   O F   C O N T E N T S

	APPENDIX
FAIRNESS OPINION	I
FAIRNESS OPINION BACKUP	II
INCOME STATEMENT AND BALANCE SHEET FOR THE FYE JUNE 30, 2002 THROUGH 2004 AND UNAUDITED RESULTS FOR DECEMBER 31, 2004	III
FYE JUNE 30, 2005 THROUGH 2008 PROJECTIONS	IV
DISCOUNTED CASH FLOW ANALYSIS	V
WEIGHTED AVERAGE COST OF CAPITAL CALCULATION	VI

DRAFT

150 SOUTH RODEO DRIVE, SUITE 100 BEVERLY HILLS, CA 90212
310-246-3700 800-929-2299 FAX 310-246-3794

[February 25, 2005]

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
5456 McConnell Avenue
Los Angeles, CA 90066

Members of the Board of Directors and the Special Committee:

We understand that Mercury Air Group, Inc. (“Mercury” or the “Company”) intends to effect a [1-for-501] reverse stock split followed by a [501-for-1] forward stock split of the Company’s common stock (the “Transaction”). As a result of the Transaction, (a) each shareholder owning fewer than [501] shares immediately before the Transaction will receive from the Company [$X.XX] in cash for each of such shareholder’s pre-split shares (the “Transaction Consideration”); and (b) each share of common stock held by a shareholder owning [501] or more shares will continue to represent one share of the Company after completion of the Transaction. [The purpose of the Transaction is to cash-out the equity interests in Mercury of shareholders who, as of the effective date, hold fewer than 501 shares of common stock in any discrete account at a price determined to be fair by the entire Board of Directors in order to enable Mercury to deregister its common stock under the Exchange Act and thus terminate its obligation to file Special and periodic reports and make other filings with the SEC.]

You have requested our opinion as to the fairness, from a financial point of view, of the Transaction Consideration to those shareholders receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom we express no view. We also express no view with respect to any aspect of the Transaction other than as described in the immediately preceding sentence.

In connection with this opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. We have, among other things:

(i)	[Reviewed the draft proxy statement and related documents outlining the Transaction];
(ii)	Analyzed certain publicly available information that we believe to be relevant to our analysis, including the Company’s annual report on Form 10-K for the fiscal year ended (“FYE”) June 30, 2004 and the Company’s quarterly report on Form 10-Q for the quarters ended September 30, 2004 and December 31, 2004;
(iii)	Reviewed certain information including financial forecasts relating to the business, earnings and cash flow of the Company, furnished to us by senior management of Mercury;
(iv)	Reviewed the Company’s projections for FYE June 30, 2004 through 2008 furnished to us by senior management of Mercury;
(v)	Reviewed certain publicly available business and financial information relating to Mercury that we deemed to be relevant;
(vi)	Conducted discussions with members of senior management of Mercury concerning the matters described in clauses (i) through (vi) above, as well as the prospects and strategic objectives of Mercury;
(vii)	Reviewed public information with respect to certain other companies with financial profiles which we deemed to be relevant; and

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
February 25, 2005 DRAFT

(viii)   Conducted such other financial studies, analyses and investigation and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions.

With your consent, we have relied upon the accuracy and completeness of the foregoing financial and other information and have not assumed responsibility for independent verification of such information or conducted or have been furnished with any independent valuation or appraisal of any assets of the Company or any appraisal or estimate of liabilities of the Company. With respect to the financial forecasts, we have assumed, with your consent, that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of senior management of Mercury as to the future financial performance of the Company. We have also relied upon the assurances of senior management of Mercury that they are unaware of any facts that would make the information or financial forecasts provided to us incomplete or misleading. We assume no responsibility for, and express no view as to, such financial forecasts or the assumptions on which they are based.

Our opinion is based upon economic, market and other conditions as they exist and can be evaluated on the date hereof and does not address the fairness of the Transaction Consideration as of any other date. The financial markets in general, and the markets for the securities of the Company in particular, are subject to volatility, and our opinion does not purport to address potential developments in the financial markets or in the markets for the securities of the Company after the date hereof.

Our opinion expressed herein has been prepared for the information of the Special Committee and the Board of Directors of the Company in connection with their consideration of the Transaction. Our opinion does not constitute a recommendation as to any action the Company or any shareholder of the Company should take in connection with the Transaction or any aspect thereof. Our opinion does not address the merits of the underlying decision by the Company to engage in the Transaction or the relative merits of any alternatives discussed by the Special Committee or the Board of Directors of the Company. No opinion is expressed herein, nor shall one be implied, as to the fair market value of Mercury’s equity or the prices at which it may trade at any time. This opinion may not be reproduced, disseminated, quoted or referred to at any time without our prior written consent, except that a copy of the Opinion may be reproduced in full and otherwise referred to in the Company’s proxy statement and related filings describing the Transaction.

In the ordinary course of its business and in accordance with applicable state and federal securities laws, Imperial Capital, LLC may actively trade the equity securities of Mercury for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. In the past, Imperial Capital has previously acted as financial advisor to Mercury and has received a fee in connection with its various engagements.

Based on and subject to the foregoing, we are of the opinion that, as of the date hereof, the Transaction Consideration to be received by the shareholders of the Company receiving the Transaction Consideration, other than the Management Holders (as to whom we express no view), is fair, from a financial point of view, to such shareholders.

Very truly yours,

Imperial Capital, LLC

Page 2

INTRODUCTION

The following is a summary of the analysis conducted by Imperial Capital (“IC”) with respect to the fairness, from a financial point of view, of the Transaction Consideration (as defined below) to be paid to those shareholders of Mercury Air Group, Inc. (“Mercury” or the “Company”) receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom IC expresses no view. Pursuant to the Transaction (as defined below), the Company will execute a [1-for-501] reverse stock split followed immediately by a [501-for-1] forward stock split of the Company’s common stock (the “Transaction”). As a result of the Transaction, (a) each shareholder owning fewer than [501] shares immediately before the Transaction will receive from the Company [$X.XX] in cash for each of such shareholder’s pre-split shares (the “Transaction Consideration”); and (b) each share of common stock held by a shareholder owning [501] or more shares will continue to represent one share of the Company after completion of the Transaction.

[The purpose of the Transaction is to cash-out the equity interests in Mercury of shareholders who, as of the effective date, hold fewer than 501 shares of common stock in any discrete account at a price determined to be fair by the entire Board of Directors in order to enable Mercury to deregister its common stock under the Exchange Act and thus terminate its obligation to file Special and periodic reports and make other filings with the SEC.] Following the de-listing, the Company will continue to publicly file audited balance sheets and income statements for its fiscal year end.

IC has been engaged to determine the fairness, from a financial point of view, of the Transaction Consideration to be paid to those shareholders of Mercury receiving the Transaction Consideration, other than Management Holders, as to whom IC expresses no view. In order to accomplish this, IC has used various valuation methodologies (described more fully below) to determine the fair market value (“FMV”) of Mercury’s common shares, and then compared the FMV to the Transaction Consideration.

Appendix II Page 1

BACKGROUND OF THE COMPANY

Overview of Mercury

Mercury, a Delaware corporation, was organized in 1956 and provides a broad range of services to the aviation industry. Mercury operates through the following three principal operating units: (i) fuel sales; (ii) cargo operations; and (iii) government contract services.

Divisions

Below is a more detailed summary of Mercury’s divisions:

Ø	Aircraft Refueling — Through its wholly owned subsidiary MercFuel, Inc. (“MercFuel”), Mercury provides aviation fuels domestically and internationally to consumers globally. MercFuel facilitates the management and distribution of aviation fuel as a reseller of aviation fuels for major oil companies, affording the oil companies access to certain customers without the credit risk or administrative costs associated with the management of these customer accounts.
Ø	Cargo Operation — Mercury’s cargo operations, conducted through its wholly-owned subsidiary Mercury Air Cargo, Inc. (“Air Cargo”), provides the following services: (i) domestic and international air cargo and airmail handling; (ii) cargo logistics services; and (iii) general cargo sales agent services. Cargo logistics involves the contracting, through its network of shipping agents of bulk cargo space on airlines which is sold to customers with shipping needs. Air Cargo also brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America.
Ø	Government Contract Services — Mercury, through its wholly owned subsidiary, Maytag Aircraft Corporation (“Maytag”), provides aircraft refueling, air terminal services, base operating support (“BOS”), facilities maintenance, weather observation, air traffic control and flight line management in 17 countries on four continents for all branches of the U.S. Military establishment.

On June 12, 2004, the Company sold its FBO Business, Mercury Air Centers, Inc. (the “FBO Business”), to Allied Capital Corporation. According to the Company’s public filings, the FBO Business contributed a significant portion of the Company’s gross margin (approximately 49.5% in 2003).

Appendix II Page 2

INDUSTRY OVERVIEW

MercFuel

Jet fuel resellers are generally independent third parties that purchase fuel from major oil companies and independent fuel suppliers and resell fuel to commercial airlines, business aircraft management companies and air freight companies. Jet fuel reselling is a byproduct of the United States oil embargo and ensuing energy crisis in 1979. At that time, the major oil companies initiated a fuel allocation program pursuant to which many smaller and regional domestic and international airlines were unable to access sufficient supplies of jet fuel. Resellers took the initiative to find additional sources of fuel for these carriers and have become the suppliers to many of those airlines which the oil companies no longer directly serve.

Commercial and general aviation jet fuel purchases and dispensement occurs at airports and fuel terminals throughout the world. Jet fuel resellers contract directly with the oil company or jet fuel supplier to purchase the fuel and with third party refueling companies handling large commercial aircraft at commercial airports and fuel terminals or with third parties known as fixed base operations, for the actual dispensing of the fuel to the customer. Fixed base operations are third parties that typically handle all other aircraft such as commuter, business and private jets.

Typical commercial or business jet fuel resale transactions are as follows:

- Deliveries from Reseller Inventory. In some cases, the jet fuel reseller has previously contracted with the fuel supplier for the delivery of fuel to a third party refueling company or fixed base operation. These third parties store the fuel for the jet fuel reseller as the reseller’s inventory. In these instances, the third party that delivers the fuel into the wing of the aircraft customer forwards a paper record of the transaction to the jet fuel reseller. The reseller then forwards an invoice to the aircraft customer.

- Into-Plane Deliveries. Into-plane deliveries are fuel sales where the sale of fuel is made from the fuel supplier’s inventory maintained at the airport or fuel terminal. In these instances, either the fuel supplier or a third party refueling company delivers the fuel into the wing of the aircraft customer and the sale of fuel is consummated at that point. The refueling company, if used, forwards the paper record of the transaction to the fuel supplier and in either case the fuel supplier forwards the paper record to the fuel reseller for payment. The fuel reseller then forwards an invoice to the air carrier.

Each of these methods is a labor intensive and time consuming process that is subject to delays, inefficiencies and mistakes. At times customers and resellers are inaccurately billed for the amount of fuel sold. In addition, the use of paper documents delays the payment by the jet fuel reseller to the supplier in the case of into-plane deliveries. Also, commercial and business customers typically do not receive bills from the jet fuel reseller until between 7 to 30 days after fuel is sold, which delays payments and affects the jet fuel reseller’s cash flow.

Appendix II Page 3

In recent months, rising fuel prices, combined with a reduction of credit terms by MercFuel’s fuel suppliers, has caused the spread between accounts payable and accounts receivable to grow to the point of significant risk to Mercury’s liquidity.

The market for jet fuel reselling is highly competitive. MercFuel is in direct competition with major oil companies, major airlines and other independent fuel suppliers, such as World Fuel Services Corporation (“World Fuel”), and with other aircraft support companies which maintain their own sources of aviation fuel. Many of MercFuel’s competitors have greater financial, technical and marketing resources than the Company.

Air Cargo

- Cargo Handling. Air Cargo provides domestic and international air cargo handling, air mail handling and bonded warehousing. Air Cargo handles cargo at Los Angeles International Airport (LAX), William B. Hartsfield International Airport (ATL — Atlanta, GA), Dorval International Airport (YUL — Montreal, Canada), Mirabel International Airport (YMX — Montreal, Canada) and Lester B. Pearson International Airport (YYZ — Toronto, Canada). Since February 2001, operations at ATL have been handled by Lufthansa Handling under the terms of a ten-year sub-lease of a 104,646 square foot warehouse and operations area. In fiscal 2004, the cargo handling operations comprised 65% of Air Cargo’s revenue.

- Cargo Logistics Services. Air Cargo brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America. Cargo logistics involves the contracting for bulk cargo space on airlines and selling that space to customers with shipping needs. Air Cargo has an established network of shipping agents who assist in obtaining cargo for shipment on space purchased from various airlines, and who facilitate the delivery and collection of freight charges for cargo shipped by Air Cargo. Unlike a cargo airline which operates its own aircraft, Air Cargo’s space logistics business arranges for the purchase of cargo space on scheduled flights or supplemental flights at negotiated rates. Air Cargo is thereby able to profit from the sale of air cargo space worldwide without the overhead cost of owning and operating an aircraft. In fiscal 2004, the space logistics revenue comprised 22% of Air Cargo revenue.

- General Sales Agent. Air Cargo also serves as a general sales agent (“GSA”) directly through its subsidiaries in the United States, Canada, Mexico, Central and South America, and the Far East. In this capacity, Air Cargo sells the transportation of cargo on its client’s airline flights, using our clients’ own airway bills. Air Cargo earns a commission from the airlines for selling their cargo space. As with its space logistics business, the growth for Air Cargo’s GSA business is not constricted by requirements for physical facilities or by large capital commitments. In fiscal 2004, the GSA business revenue comprised 12% of Air Cargo’s total revenue.

Appendix II Page 4

Air Cargo competes with numerous companies who provide air cargo handling services at the same airports where Air Cargo provides these services. At most airports there are at least 3-5 independent cargo handling companies, as well as certain airlines who operate their own warehouses and offer third-party cargo handling in order to reduce overhead costs. Over the last 15 years, a consolidation of independent cargo handling, ramp services providers and FBO’s has evolved into a handful of large operators with multiple airport facilities, such as BBA, Worldwide Aviation and Globe Ground Services. These larger companies have been able to leverage their relationships with airline customers by offering them multi-city pricing and discounts and lower handling rates for each additional airport where the airline’s cargo would be handled, with the intention of freezing out smaller competitors like Air Cargo. While Air Cargo’s warehouses operated profitably until the economic downturn beginning in 2000 and the 9/11 events, air cargo tonnage decreased through 2003 and thereby increased competition among cargo handlers. In an effort to maintain market share, Air Cargo lowered its pricing in order to retain the airline cargo handling business.

Maytag

- Aircraft Refueling. Maytag has been supplying aircraft refueling and base support services worldwide to the Department of Defense since 1950. Maytag’s aircraft refueling services include supplying all the necessary personnel and equipment to operate government-owned fuel storage facilities and providing 24-hour refueling services for a variety of aircraft for the military. Maytag currently provides refueling services at 12 U.S. military bases, 11 in the U.S. and one in Greece. Maytag’s refueling contracts generally have a term of four years, with expiration dates ranging from June 2004 to January 2008. All contracts are firm-fixed price for specified services. Fuel handled in these operations is government owned and only the fleet of refueling trucks and other support vehicles are owned by Maytag.

- Air Terminal and Ground Handling Services. Maytag has become a global player in air terminal services as the largest provider to the U.S. Air Force Air Mobility Command at 24 locations including Alaska, Japan, Korea, Kuwait and Latin America. Maytag’s air terminal and ground handling services consist of loading and unloading of passengers and cargo, transient alert, flight planning services, passenger processing and manifesting, baggage handling, travel eligibility, immigration facilitation and flight planning. Air terminal service contracts are generally for a base period of up to one year, with government options for multiple one-year extensions. All contracts provide firm-fixed price for specified services. In order to provide to provide a comprehensive, all-in-one solution to the U.S. military and other government agencies, Maytag provides BOS services and base housing maintenance at several locations where Maytag has contracts. Maytag’s BOS services include fuel management, traffic management, airfield management, vehicle operations and maintenance services, and meteorological services. The Company’s base housing maintenance consists of change of occupancy maintenance for government-provided quarters, such as basic interior upkeep, repairs, painting, and cleaning.

Appendix II Page 5

- Weather Data Services. Weather Data Services was founded in Clear Lake, Iowa in 1987 and was acquired by the Company to become a division of Maytag on August 1, 1998. This division currently provides weather observation and weather forecasting services at 11 locations within the U.S. pursuant to contracts with the prices for specified services and are generally for a base of one year, with multiple one-year options at the government’s election.

All of Maytag’s government contracts are subject to competitive bidding. Refueling, air terminal, and weather forecasting contracts are usually awarded on a “best value” basis, taking into account price, past performance history of the offeror, and the merit of the technical proposal. Weather observation contracts are generally awarded on the basis of the lowest priced, technically acceptable proposal. Maytag’s contracts are all subject to termination at the discretion of the U.S. Government, in whole or in part.

Maytag does not compete directly with any large government defense contractors. Since Maytag primarily targets government contracts with annual average revenues of approximately $1 million, most of Maytag’s competitors are smaller entities, and unlike Maytag, most of these companies have limited capabilities to operate abroad. According to Management, due to Maytag’s strong competitive position, the Company has been able to capture approximately 40% of the Defense Department’s Energy Support Command’s (DESC) aircraft refueling business and 50% of the Air Mobility Command’s (AMC) air terminals business in the U.S. and abroad.

Financial Summary

A summary of the Company’s historical operating performance is set forth below.

Appendix II Page 6

Summary of Operations
($ in thousands)	Fiscal Year Ended June 30,									LTM
	2002			2003			2004 (a)			12/31/2004
MercFuel Revenues	$	232,573		$	280,136		$	322,631		$	428,512
Air Cargo Revenues		28,124			32,691			39,549			42,550
Maytag Revenues		28,228			24,421			23,281			22,213
Total Revenues	$	288,925		$	337,248		$	385,461		$	493,275
Sales Growth %		n/a			16.7	%		14.3	%		28.0	%
MercFuel Gross Profit	$	6,581		$	5,926		$	6,080		$	6,971
Air Cargo Gross Profit		898			2,585			2,100			3,563
Maytag Gross Profit		6,789			4,598			5,146			4,901
Total Gross Profit	$	14,268		$	13,109		$	13,326		$	15,435
Gross Profit Margin %		4.9	%		3.9	%		3.5	%		3.1	%
SG&A Expenses	$	11,771		$	10,818		$	10,894		$	10,783	(b)
Provision for Bad Debts		1,170			1,192			506			894
Total Operating Expenses		12,941			12,010			11,400			11,677
EBITDA	$	1,327		$	1,099		$	1,926		$	3,758
EBITDA Margin		0.5	%		0.3	%		0.5	%		0.8	%
Depreciation & Amortization		3,478			2,782			2,828			2,656
Operating Income		(2,151	)		(1,683	)		(902	)		1,102
Operating Income Margin		-0.7	%		-0.5	%		-0.2	%		0.2	%
Capital Expenditures	$	546		$	390		$	1,184		$	1,505

Note: Divisional Gross Profit includes certain SG&A costs which are charged directly to the operating units.

(a)	Fiscal 2004 SG&A excludes $2.4 million in extraordinary settlement costs, $1.7 million for severance payments to the retiring Chairman, and $311,000 of unusual audit fees. Air Cargo’s 2004 gross profit has been adjusted to exclude $300,000 in severance payments to Air Cargo’s former COO.
(b)	LTM SG&A expenses excludes $2.1 million of one-time charges for legal fees regarding a lawsuit settlement, severance costs, write-off of insurance deposits related to a joint venture, an asset impairment on a plane that was sold, and a loss on a timeshare plane trade-in.

Balance Sheet
($ in thousands)	As of
	12/31/04
Assets
Cash and Cash Equivalents	$	6,316
Accounts Receivable, net		56,912
Inventories		1,619
Prepaid Expenses & Other		5,108
Total Current Assets		69,955
Property, Plant & Equipment, net		7,564
Goodwill & Intangibles		5,011
Restricted Cash		8,418	(a)
Other Assets		3,133
Total Assets	$	94,081
Liabilities and Shareholders’ Equity
Account Payable	$	36,390
Accrued Expenses & Other		8,559
Current Portion of Long-Term Debt		1,021
Total Current Liabilities		45,970
Long-Term Debt		21,221
Other Long- Term Liabilities		10,722
Total Liabilities		77,913
Mandatorily Redeemable Preferred Stock		468
Shareholders’ Equity		15,700
Total Liabilities and Shareholders’ Equity	$	94,081

(a)   Restricted cash consists of cash held for specific purposes and not available for general use by the Company and is comprised primarily of an escrow account associated with the Hartsfield FBO. The funds held in the escrow account are to be distributed to either one or both of the Company and Allied Capital dependent upon the award of a new lease at the Hartsfield International Airport in Atlanta for a new FBO.

Appendix II Page 7

VALUATION METHODOLOGIES

In order to evaluate the fairness of the proposed Transaction:

Ø	estimated a reasonable range of the fair market value (“FMV”) of the total enterprise value (“TEV”) of the Company;
Ø	estimated a reasonable range of the equity value of the Company, based on the Company’s balance sheet as of December 31, 2004; and

IC employed different valuation methodologies to approximate the FMV of the TEV of the Company. IC believes the most appropriate valuation methodologies are: (i) the Market Approach — Trading History; (ii) the Market Approach — Multiple Analysis; (iii) the Market Approach — Precedent Transactions; and (iv) the Discounted Cash Flow Approach (“DCF”).

Market Approach

The Market Approach is a valuation technique in which the FMV is estimated based on market prices in actual transactions and on asking prices for currently available assets. The valuation process is essentially that of comparison and correlation between the subject asset and other similar assets. Consideration such as similarity, exposure to macroeconomic and/or specific industry factors, location, and time of sale of similar assets are compared to the subject asset to indicate a current value of the subject asset. Additionally, for this approach to be reliable, there are two requisites: (i) an active public market; and (ii) an exchange of comparable assets.

Trading History

As a starting point for an understanding of the FMV of the equity, we reviewed the valuation implied by the current trading price of the common stock.

Appendix II Page 8

As of [February 23, 2005], the Company’s share price was [$3.54], resulting in a market capitalization of approximately $10.8 million, while the trading volume in Mercury’s stock over the previous 30 days was approximately [4,610] shares per day.

Trading History
	Average			Average
	Price			Volume
Previous 10 Trading Days	$	3.59			4,610
Previous 30 Trading Days	$	3.82			5,010
Previous 60 Trading Days	$	4.16			15,397
Previous 90 Trading Days	$	4.70			20,254
52-Week High	$	8.45	(a)		226,300
52-Week Low	$	3.08	(b)		100

(a)	Occurred on November 5, 2004, the day the special dividend was paid.
(b)	Occurred on November 8, 2004, the first trading day after the special dividend was paid.

On November 5, 2004, the Company paid a one-time special cash dividend totaling $17.5 million ($5.70 per share) to holders of its common stock. The one-time special dividend was approximately equal to the trading price of Mercury’s common stock prior to the announcement of the dividend on October 6, 2004. As shown in the chart above, the special dividend had a significant impact on the trading price and volume of Mercury’s stock.

Appendix II Page 9

Multiple Analysis

The Market Approach, utilizing market multiples, indicates the FMV of a business by comparing it to publicly-traded companies in similar lines of business, or with similar risk-return profiles (“Comparables”). The value of different businesses can often be stated in relative terms, such as a multiple of: (i) revenue; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings before interest and taxes (“EBIT”); (iv) free cash flow (“FCF”); or (v) net book value of assets (collectively, the “Market Multiples”). Market Multiples for companies operating in an industry are in part determined by the similar external market conditions that they face (the common opportunities and threats) and in part by each company’s internal factors (its own strengths and weaknesses).

This method is useful in determining the FMV of a company that is currently profitable and is expected to remain profitable in the future. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. Therefore, an analysis of the Market Multiples of companies engaged in similar businesses or in businesses that have similar risk-return profiles yields insight into investor perceptions regarding their return requirements and, therefore, the value of the subject.

Analysis

Outside investors, potential acquirers and stockholders in Mercury will look to public companies and recently acquired companies that are similar to the Company to provide guidance on valuation. In the case of the Company, there are several U.S. publicly traded aviation services companies that we deemed to be similar. In selecting the Comparables, we searched comprehensive lists and directories of public companies. The primary sources used to produce the list of Comparables included:

•   Capital IQ;

•   Dow Jones Interactive;

•   Bloomberg; and

•   Hoover’s.

Certain determinant factors are: (i) the company had to provide products or services for the aviation industry; (ii) the company had to make its financial information public; and (iii) the company was required to have an active trading market to measure public perception. The Comparables selected were:

Appendix II Page 10

•   Air T, Inc. (NasdaqSC: AIRT)

•   AirNet Systems, Inc. (NYSE: ANS)

•   AutoInfo (OTCBB: AUTO)

•   Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

•   World Fuel Services Corp. (NYSE: INT)

Due to the lack of public companies that provide the same range of services as Mercury, we chose to select Comparables with businesses focused on air cargo handling and fuel services. Our decision to select such companies is due in part to their exposure to similar macroeconomic and industry-specific risks as those faced by the Company including, but not limited to: (i) exposure to commercial and general aviation industry trends; (ii) macroeconomic risks (e.g., post-September 11 downturn in commercial aviation, oil prices, etc.); and (iii) similar customer bases. The following is a brief description of the business operations for the selected Comparables:

Air T, Inc. (NasdaqSC: AIRT)

Air T, Inc. operates small-aircraft air cargo in the United States. It provides overnight air cargo services, and aviation ground support and other equipment products. The company, through its wholly owned subsidiaries, provides small package overnight air freight delivery services on a contract basis to the air express delivery industry throughout the eastern half of the United States and Canada. The company also engages in the manufacture and sale of aircraft deicers and scissor lift trucks, as well as specialized service equipment to passenger and cargo airlines, the U.S. Government, airports, and commercial customers. As of June 24, 2004, the company operated a fleet of single and twin engine turbo-prop aircraft nightly in the eastern half of the United States and Canada, Puerto Rico, and the Virgin Islands.

AirNet Systems, Inc. (NYSE: ANS)

AirNet Systems, Inc. provides aviation services, including time-critical small package delivery and passenger charter services. It operates AirNet Express, an integrated national air transportation network that provides expedited air transportation services for banks and time-critical small package shippers in approximately 100 cities nationwide. The company transports cancelled checks and related information for the U.S. banking industry, as well as offers specialized delivery services to customers, primarily in the medical, critical parts, and entertainment industries. AirNet Systems also provides passenger charter services to individuals and businesses through its subsidiary, Jetride, Inc. In addition, it offers on-demand cargo charter delivery services, and provides ground pick-up and delivery services. As of May 17, 2004, the company operated 120 aircraft, including 40 Learjets, located throughout the United States.

Appendix II Page 11

AutoInfo, Inc. (OTCBB: AUTO)

AutoInfo, Inc., through its wholly owned subsidiary, Sunteck Transport Co., Inc., provides transportation capacity and related transportation services to shippers in the United States and Canada. The company’s non-asset based services include ground transportation coast-to-coast, local pick up and delivery, air freight, and ocean freight. It has strategic alliances with less than truckload, truckload, and air, rail, and ocean common carriers to serve its customers’ needs. Its brokerage services are provided through a network of independent sales agents. As of March 1, 2004, the company had six regional operating centers providing brokerage services and representatives in 15 states and Canada. Its services include arranging for the transport of customers’ freight from the shippers location to the designated destination.

Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

Streicher Mobile Fueling, Inc. provides mobile fueling and fuel management out-sourced services. Its truck fleet delivers diesel, gasoline, and alternative fuels to customers’ locations on a scheduled or as needed basis refueling vehicles and equipment, and resupplying fixed-site storage facilities. The company’s customer base includes businesses that operate fleets of vehicles and equipment of various sizes, including governmental agencies, utilities, trucking companies, bus lines, hauling and delivery services, courier services, construction companies, and others. As of June 30, 2004, the company operated approximately 100 custom mobile fueling trucks from 26 service locations.

World Fuel Services Corp. (NYSE: INT)

World Fuel Services Corporation markets marine and aviation fuel services. The company’s aviation fuel-related services include fuel management, price risk management, flight plans, weather reports, ground handling, and flight permits. It offers these services to passenger, cargo, and charter airlines, as well as corporate customers, and the United States’ and foreign militaries. The company also provides flight plans and weather reports to its corporate customers. The company’s marine fuel-related services include management services for the procurement of fuel, cost control through the use of hedging instruments, quality control, and claims management. As of August 5, 2004, World Fuel Services provided fuel and services at approximately 2,500 airports and seaports worldwide.

The table below provides a summary of the selected Comparables and their relevant market multiples.

Appendix II Page 12

Cargo Handling / Fuel Services

(Dollars in Millions, Except Stock Price)	Stock			Market		Enterprise			Enterprise Value / LTM
	Price		(a)	Cap.		Value		(b)	Revenues			EBITDA			EBIT
Air T, Inc. (AIRT)	$	17.61		$	47.7	$	47.3			0.7	x		10.6	x		12.3	x
AirNet Systems, Inc. (ANS)		3.90			39.4		98.7			0.6			3.9			19.7
AutoInfo, Inc. (AUTO)		0.69			21.5		22.8			0.6			22.0			22.9	(c)
Streicher Mobile Fueling, Inc. (FUEL)		1.75			13.1		19.7			0.2			8.3			18.2
World Fuel Services Corp. (INT)		27.70			298.7		282.3			0.1			7.7			8.5
High		—		$	298.7	$	282.3			0.7	x		10.6	x		22.9	x
Median		—			39.4		47.3			0.6			8.0			18.2
Mean		—			84.1		94.2			0.4			7.6			16.3
Low		—			13.1		19.7			0.1			3.9			8.5
Mercury Air Centers, Inc. (MAX)	$	3.54		$	10.8	$	27.2			0.1	x		7.2	x		24.7	x

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.
LTM: Latest Twelve Months.

(a)	Stock price as of February 18, 2005.
(b)	Enterprise Value equals equity value plus debt, minority interest, preferred stock, and convertibles, less investments in unconsolidated affiliates and cash.
(c)	AUTO excluded as an outlier with a TEV/LTM EBITDA multiple of 22.0x.

After identifying the Comparables, we then focused on the strengths and weaknesses of the Company relative to the Comparables. Therefore, a comparative analysis of the selected Comparables was undertaken.

Size. In comparison to the Comparables, the Company’s LTM gross profit and EBITDA of approximately $15.4 million and $3.8 million, respectively, place it below the average of the Comparables as presented below.

Cargo Handling / Fuel Services

Operating Results	LTM		LTM Operating Results
(Dollars in Millions)	Ended		Revenues		Gross Profit		EBITDA		EBIT		FCF (a)
Air T, Inc. (AIRT)		12/31/04	$	68.1	$	12.4	$	4.5	$	3.8	$	3.0
AirNet Systems, Inc. (ANS)		9/30/04		164.1		59.1		25.1		5.0		(30.5	)
AutoInfo, Inc. (AUTO)		9/30/04		40.4		7.5		1.0		1.0		1.0
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		108.0		5.6		2.4		1.1		2.1
World Fuel Services Corp. (INT)		9/30/04		4,574.1		113.8		36.8		33.2		34.0
High		—	$	4,574.1	$	113.8	$	36.8	$	33.2	$	34.0
Median		—		108.0		12.4		4.5		3.8		2.1
Mean		—		991.0		39.7		13.9		8.8		1.9
Low		—		40.4		5.6		1.0		1.0		(30.5	)
Mercury Air Centers, Inc. (MAX)		12/31/04	$	493.3	$	15.4	$	3.8	$	1.1	$	2.3

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.
LTM: Latest Twelve Months.

(a)   FCF = EBITDA — Capital Expenditures

Growth. While the Company’s three-year pro forma historical revenue growth rate is 23.9%, most of the growth in the Company’s revenues relates to the rise in fuel prices during the past 18 months. The Company’s gross profit has shown more modest growth at 3.2%, while EBITDA has grown 51.6% due to higher sales and fixed cost absorption.

Appendix II Page 13

Cargo Handling / Fuel Services

	3-Year Historical Growth Rates
Operating Growth Rates	Revenues			Gross Profit			EBITDA			EBIT
Air T, Inc. (AIRT)		5.0	%		4.1	%		4.6	%		5.9	%
AirNet Systems, Inc. (ANS)		7.3			2.7			(5.2	)		(30.9	)
AutoInfo, Inc. (AUTO)		80.0			76.4			185.7			203.9
Streicher Mobile Fueling, Inc. (FUEL)		25.8			8.6			14.9			93.0
World Fuel Services Corp. (INT)		48.9			18.3			33.9			36.4
High		80.0	%		76.4	%		185.7	%		203.9	%
Median		25.8			8.6			14.9			36.4
Mean		33.4			22.0			46.8			61.7
Low		5.0			2.7			(5.2	)		(30.9	)
Mercury Air Centers, Inc. (MAX)		23.9	%		3.2	%		51.6	%		NM

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.
LTM: Latest Twelve Months.

(a)   FCF = EBITDA – Capital Expenditures

Leverage. The Company’s LTM net debt / EBITDA ratio of 4.2x is higher than the Comparables.

Cargo Handling / Fuel Services

	Total Debt /									Net Debt /			LTM Interest Coverage
Credit Ratios	Cap (Book)			Cap (Mkt)			EBITDA			EBITDA			EBITDA			FCF (a)
Air T, Inc. (AIRT)		12.0	%		3.5	%		0.4	x		NM			60.0			40.0
AirNet Systems, Inc. (ANS)		52.5			60.4			2.4			2.4			13.7			NA
AutoInfo, Inc. (AUTO)		34.6			8.2			1.9			1.3			11.6			11.3
Streicher Mobile Fueling, Inc. (FUEL)		66.3			45.8			4.7			2.8			1.6			1.4
World Fuel Services Corp. (INT)		18.7			12.1			1.1			NM			NA			NA
High		66.3	%		60.4	%		4.7	x		2.8	x		60.0	x		40.0	x
Median		34.6			12.1			1.9			2.4			12.7			11.3
Mean		36.8			26.0			2.1			2.1			21.7			17.5
Low		12.0			3.5			0.4			1.3			1.6			1.4
Mercury Air Centers, Inc. (MAX)		57.9	%		66.3	%		5.9	x		4.2	x		3.3	x		2.0	x

LTM: Latest Twelve Months.

Margins. The Company’s LTM gross profit and EBITDA margins of 3.1% and 0.8%, respectively, are both lower than the Comparables’ average margins of 16.1% and 5.5%, respectively.

Cargo Handling / Fuel Services

	LTM		LTM Margins
Operating Margins	Ended		Gross Profit			EBITDA			EBIT			FCF(a)
Air T, Inc. (AIRT)		12/31/04		18.3	%		6.6	%		5.6	%		4.4	%
AirNet Systems, Inc. (ANS)		9/30/04		36.0			15.3			3.1			(18.6	)
AutoInfo, Inc. (AUTO)		9/30/04		18.5			2.6			2.5			2.5
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		5.2			2.2			1.0			2.0
World Fuel Services Corp. (INT)		9/30/04		2.5			0.8			0.7			0.7
High		—		36.0	%		15.3	%		5.6	%		4.4	%
Median		—		18.3			2.6			2.5			2.0
Mean		—		16.1			5.5			2.6			(1.8	)
Low		—		2.5			0.8			0.7			(18.6	)
Mercury Air Centers, Inc. (MAX)		12/31/04		3.1	%		0.8	%		0.2	%		0.5	%

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.
LTM: Latest Twelve Months.

(a)   FCF = EBITDA – Capital Expenditures

Appendix II Page 14

Market Multiple Method

Valuation Market Multiples for the Comparables were derived based on publicly available financial information. Market Multiples were a result of dividing the value of each of the Comparable’s TEV by the LTM Revenue, EBITDA, and EBIT. TEV is defined as the book value of the company’s net debt and preferred equity (where book value approximates fair market value) plus the market value of the company’s common equity. The market value of the common equity is computed by multiplying the number of shares outstanding by the current stock price.

As exhibited previously, IC believes that multiples derived from the operating data of the Comparables presented were given specific consideration in the selection of the appropriate Market Multiples for the Company. Furthermore, consideration was given to the range of multiples as well as the median and mean multiples. We considered the TEV/EBITDA multiple to be meaningful and appropriate because the Company’s margins are much lower than the Comparables, so therefore the TEV/Revenue multiple should not be considered.

Market Approach — Multiple Analysis

($ in thousands)

Industry Multiples	Low			Mean			High
EV/LTM EBITDA Range		3.9 x			7.6 x			10.6 x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	14,799		$	28,664		$	39,724
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value		($1,127	)	$	12,738		$	23,798
Shares Outstanding		3,056			3,056			3,056
Implied Share Price		n/m		$	4.17		$	7.79
Premium to Current Share Price (a)		n/m			17.7	%		120.0	%

(a)   Based on a price of $3.54 as of February, 23, 2005.

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

There are several other factors which might reasonably be expected to reduce the implied TEV of the Company including the following: (i) the Company’s size as compared to the Comparables; (ii) the illiquidity of an investment in the Company due to its low trading volume; (iii) the long-term nature of the Company’s receivables; and (iv) customer concentration in the Company’s MercFuel business.

Appendix II Page 15

Precedent Transaction Method

Corporate mergers and acquisitions can also be used to indicate the FMV of a subject company. The Precedent Transaction method uses valuation multiples based on actual transactions that have occurred in the marketplace to arrive at an indication of value. Similar to the Market Multiple Approach, multiples are derived from precedent transactions by analyzing a target company’s purchase price relative to its historical financial performance. Multiples used in this approach are determined through an analysis of transactions involving controlling interests in companies in a similar industry or with operations similar to the principal business operations of the subject company. IC reviewed and compared the implied transaction multiples in certain announced control transactions deemed relevant based on similarity of business operations. In order for a transaction to be useful, it is necessary to have publicly available financial information about the purchase price and the operating results of the acquired company. Comparable transactions and corresponding transaction multiples were based on information obtained from the following primary sources:

•   Mergerstat

•   SEC filings

•   Public company disclosures

•   Press releases and news articles

•   Industry reports

•   Capital IQ

For the precedent transaction analysis, IC examined a number of transactions in the cargo handling and fuel services sectors which have occurred since 2000. However, there was limited useful information, other than the purchase price, available for most of these transactions, thereby complicating efforts to derive TEV/EBITDA multiples to apply to the Company. The table below illustrates the precedent transactions:

Appendix II Page 16

Transaction Details

Transaction Multiples

Date

Enterprise

Target

Target

EV/

EV/

Acquiror

Target

Announced

Value

Revenue

EBITDA

Revenues

EBITDA

Express One International, Inc.

Central Florida Air Maintenance

07/21/04

NA

NA

NA

NM

NM

Alimentation Couche-Tard, Inc.

Circle K Corporation

10/06/03

811.7

3,900.0

NA

0.2

NM

The Pantry, Inc.

Golden Gallon, Inc.

08/25/03

187.0

387.0

NA

0.5

NM

Transforce Income Fund

Canadian Freightways Limited

08/15/03

60.7

150.7

NA

0.4

NM

The Carlyle Group

Air Cargo, Inc.

08/11/03

NA

NA

NA

NM

NM

Chevy Chase Trust Co.

Williams Lynxs Alaska CargPort

05/31/03

NA

NA

NA

NM

NM

DHL Worldwide Express

Airborne, Inc.

03/25/03

1,410.0

3,343.7

253.1

0.4

5.6

Management of Landair Corp.

Landair Corp.

10/11/02

101.7

102.9

19.5

1.0

5.2

United Defense Industries, Inc.

United States Marine Repair, Inc.

05/28/02

417.6

431.8

45.4

1.0

9.2

Pacific CMA, Inc.

Airgate International Corp.

03/19/02

3.4

29.1

0.6

0.1

5.6

Union Pacific Corp.

Motor Cargo Industries

11/15/01

96.9

130.9

17.2

0.7

5.6

Vinci SA

Worldwide Flight Services, Inc.

09/10/01

285.0

348.0

NA

0.8

NM

Avfuel Corporation

Texaco General Aviation Business

09/07/01

NA

NA

NA

NM

NM

BBA Group / Signature

Aircraft Services International

07/11/01

137.9

162.0

NA

0.9

NM

United Parcel Service

Fritz Companies, Inc.

01/10/01

495.8

621.8

54.4

0.8

9.1

World Fuel Services Corp.

Page Avjet Fuel Co LLC

01/03/01

NA

NA

NA

NM

NM

EGL, Inc.

Circle Int’l Group, Inc.

07/03/00

518.1

832.3

49.2

0.6

10.5

High

1.0

x

10.5

x

Median

0.7

5.6

Mean

0.6

7.3

Low

0.1

5.2

There are numerous factors to consider when drawing comparisons, including: (i) record of growth and the opportunity for further improvement; (ii) dispersion of market share; (iii) competitive advantages; (iv) size and profitability of the target company; (v) stability of revenue and earnings; (vi) opportunity to realize cost savings, revenue enhancements, and operational synergies; and (vii) strategic and emotional factors employed by the acquirer. In consideration of such factors, below is a summary of the TEVs for the Company based on precedent transactions:

Market Approach — Precedent Transactions

($ in thousands)

Transaction Multiples	Low			Mean			High
EV/LTM EBITDA Range		5.2 x			7.3 x			10.5 x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	19,592		$	27,317		$	39,552
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value	$	3,666		$	11,391		$	23,626
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	1.20		$	3.73		$	7.73
Premium to Current Share Price (a)		-66.1	%		5.3	%		118.4	%

(a)   Based on a price of $3.54 as of February, 23, 2005.

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

Appendix II Page 17

Discounted Cash Flow (“DCF”)

The fundamental premise of the DCF Approach is to estimate the available cash flows a prudent investor would expect a company to generate over its remaining life. IC relied on the Company’s cash flow projections for FYE June 30, 2005 through 2008, as provided by Mercury’s management (the “Projections”). The estimated available cash flows for each year are discounted to their present value equivalent using an appropriate rate of return to determine present value. The residual or terminal value of the business at the end of the projection period is estimated, discounted to its present value equivalent, and added to the present value equivalent of the discrete projection period estimated cash flows to estimate the TEV of a subject company. Subtracting the debt from the subject company’s TEV and adding the cash and non-operating asset values results in the value of its equity.

The following outlines the steps involved in applying the DCF analysis: (i) determination of future cash flows based upon the projections; (ii) selection of an appropriate discount rate for the subject company’s projections; (iii) determination of a residual or terminal value for the subject company; and (iv) determination of the TEV and resulting equity value for the company.

Determination of Future Cash Flows

IC relied on the following sources which were provided by Mercury’s management to determine the future cash flows of the Company: (i) the Company’s FYE 2005 through 2008 projections; (ii) management discussions; and (iii) other management estimates.

The table below presents the Company’s projected revenue, gross margin and EBITDA for the projected fiscal years ending 2005 through 2008.

Appendix II Page 18

Projections

($ in thousands)	FYE			LTM			Fiscal Year Ending June 30,
	6/30/2004			12/31/2004			2005			2006			2007			2008
MercFuel Revenues	$	322,631		$	428,512		$	289,996		$	298,484		$	307,246		$	316,292
Air Cargo Revenues		39,549			42,550			38,787			39,757			40,750			41,769
Maytag Revenues		23,281			22,213			21,745			22,351			22,686			23,026
Total Revenues	$	385,461		$	493,275		$	350,528		$	360,591		$	370,682		$	381,087
Sales Growth %		6.9	%		33.1	%		n/a			2.9	%		2.8	%		2.8	%
MercFuel Gross Profit	$	6,080		$	6,971		$	6,256		$	6,436		$	6,621		$	6,814
Air Cargo Gross Profit		2,100			3,563			3,202			3,282			2,736			2,804
Maytag Gross Profit		5,146			4,901			5,127			5,270			5,349			5,429
Total Gross Profit	$	13,326		$	15,435		$	14,585		$	14,987		$	14,706		$	15,047
Gross Profit Margin %		3.5	%		3.1	%		4.2	%		4.2	%		4.0	%		3.9	%
SG&A Expenses	$	10,894		$	10,783		$	8,238		$	8,054		$	8,470		$	8,486
Provision for Bad Debts		506			894			1,566			1,612			1,658			758
Total Operating Expenses		11,400			11,677			9,805			9,666			10,128			9,244
EBITDA	$	1,926		$	3,758		$	4,780		$	5,322		$	4,578		$	5,803
EBITDA Margin		0.5	%		0.8	%		1.4	%		1.5	%		1.2	%		1.5	%
Depreciation & Amortization		2,828			2,656			2,758			2,758			2,318			2,070
Operating Income		(902	)		1,102			2,022			2,564			2,260			3,733
Operating Income Margin		-0.2	%		0.2	%		0.6	%		0.7	%		0.6	%		1.0	%
Capital Expenditures	$	1,184		$	1,505		$	2,000		$	2,000		$	2,000		$	2,000

Revenue and Gross Profit:

Ø IC relied on the Company’s projections to determine revenue for the FYE June 30, 2005 through 2008, as provided by Mercury’s management.

•   For the Company’s MercFuel division, revenues are expected to remain volatile due to changes in fuel prices. Gross Profit as a percentage of revenues is expected to increase slightly to 2.2% for Fiscal 2005, from 1.9% for Fiscal 2004. MercFuel’s Gross Margin is projected to remain constant at 2.2% of revenues through Fiscal 2008, while revenues are projected to grow 2.9% per year for Fiscal 2006-2008.

•   Air Cargo’s revenues are expected to decrease approximately 1.9% in Fiscal 2005, $39.5 million to $38.8 million. For Fiscal 2006-2008, Air Cargo’s revenues are expected to grow approximately 2.5% per year. Air Cargo’s Gross Profit as a percentage of revenues is expected to decrease slightly to 8.3% for Fiscal 2005, from its current level of 8.4% for the last twelve months ended December 31, 2004. Air Cargo’s Gross Margin is projected to remain constant in Fiscal 2006 at 8.3% and decline to 6.7% of revenues for Fiscal 2007-2008.

•   Maytag’s revenues are expected to decrease approximately 6.6% in Fiscal 2005 to $21.7 million. However, Maytag’s revenues are projected to increase 2.8% in 2006, followed by annual growth of 1.5% thereafter. Maytag’s Gross Profit is expected to increase slightly in Fiscal 2005 to 23.6% of revenues, and remain constant thereafter.

Appendix II Page 19

EBITDA:

Ø The Company’s operating expenses are expected to decrease approximately $1.6 million in Fiscal 2005 to $9.8 million, due to ongoing cost reductions. Operating expenses as a percentage of revenues are expected to decrease slightly in Fiscal 2005 to 2.8%, from 3.0% in Fiscal 2004. Operating expenses are expected to remain at 2.7% of revenues for Fiscal 2006 through 2007, followed by a decrease to 2.4% in Fiscal 2008 due to lower bad debt expense at MercFuel.

Capital Expenditures:

Ø The Company’s current working capital facility with Bank of America contains certain financial covenants limiting the amount the Company can expend annually for capital expenditures to $2.0 million. Management believes that this $2.0 million limit is a reasonable estimate for on-going maintenance capital expenditures.

     Debt-Free Net Working Capital:

Ø Debt-free net working capital is defined as current assets (excluding cash) less non-interest bearing liabilities. Based on the Company’s projections, management projects debt-free net working capital to be approximately 3.6% of sales in fiscal 2005 and estimates that it will decrease slightly to approximately 3.4% of sales in fiscal 2008.

Projected cash flows for the Company are summarized below. FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Projected Free Cash Flow

($ in thousands)

	Fiscal Year Ending June 30,
	2005 (a)			2006			2007			2008
Net Sales	$	175,264		$	360,591		$	370,682		$	381,087
Cost of Goods Sold		167,972			345,604			355,976			366,041
Gross Profit		7,292			14,987			14,706			15,047
SG&A		4,119			8,054			8,470			8,486
Depreciation & Amortization		1,379			2,758			2,318			2,070
Provision for Bad Debt		783			1,612			1,658			758
EBIT		1,011			2,564			2,260			3,733
Less: Estimated Taxes (@ 35%)		(354	)		(897	)		(791	)		(1,307	)
Plus: Depreciation & Amortization		1,379			2,758			2,318			2,070
Less: Capital Expenditures		(1,000	)		(2,000	)		(2,000	)		(2,000	)
Less: Changes in Debt Free Net Working Capital		708			(19	)		(127	)		(336	)
Free Cash Flow	$	1,744		$	2,405		$	1,660		$	2,160
Sales Growth %		n/a			2.9	%		2.8	%		2.8	%
Gross Margin		4.2	%		4.2	%		4.0	%		3.9	%
SG&A as percentage of sales		2.4	%		2.2	%		2.3	%		2.2	%

(a)   FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Appendix II Page 20

Selection of an Appropriate Discount Rate

To arrive at the present value of the cash flows available in the DCF, we used a range of discount rates between 9.0% and 11.0% (rounded), which were calculated using the Weighted Average Cost of Capital (“WACC”). WACC provides a fair return on total invested capital by weighting the expected yield rates indicated for the equity and debt components in proportion to their estimated percentages in an expected capital structure. The WACC represents the rate of return an investor would require to compensate them for the time value of their money and the risk inherent in the particular investment. The WACC is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows.

The following is a general discussion of the methods used in our derivation of the WACC:

WACC = [R_d (1 - t) x (d%)] + [R_e x (e%)]

where:
WACC	=	Weighted average cost of capital;
Rd	=	Pre-tax rate of return on debt capital;
t	=	Effective federal and state income tax rate;
d%	=	Debt capital as a percentage of the sum of the debt plus common and preferred equity capital;
Re	=	Rate of return on common equity capital; and
e%	=	Common equity capital as a percentage of the total capital

See Appendix VI for additional detail on the calculation of the WACC.

Rates of Return on Debt

The cost of debt capital is typically defined as the yield-to-maturity on comparable debt instruments traded in the public market, as adjusted for specific risk factors related to the subject company. Consequently, for purposes of our analysis, we selected the average yield of Baa-rated corporate debt to approximate the Company’s pre-tax rate of return on debt capital. According to Moody’s, the yield-to-maturity for Baa-rated debt as of February 4, 2005 is 5.86%. Consequently, applying a tax rate of 35.0% results in an after-tax cost of debt of 3.81%.

Rates of Return on Equity

The required rate of return on equity capital is estimated using the Capital Asset Pricing Model (“CAPM”). CAPM estimates the rate of return on common equity as the current risk-free rate of return on United States Treasury bonds, plus a market risk premium expected over the risk-free rate of return, multiplied by the “beta” for the stock. Beta is a risk measure that reflects the sensitivity of a company’s stock price to the movements of the stock market as a whole.

The CAPM rate of return on equity capital is calculated using the formula:

Appendix II Page 21

R_e = R_f + [ β x (R_m - R_f)] + R_s + R_is

Where:
Re	=	Rate of return on equity capital;
Rf	=	Risk-free rate of return;
β	=	Beta or systematic risk for this type of equity investment;
Rm - Rf	=	Equity risk premium; the expected return on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf);
Rs	=	Small stock equity premium; and
Ris	=	Investment specific risk

Risk-Free Rate of Return

The 20-year United States Treasury Bond rate, as published by the Federal Reserve Statistical Release, of 4.54%, was used for our valuation³. The risk-free rate of return represents the return on an investment that is practically “riskless” due to the very low probability of default.

Beta

Beta is a function of the relationship between the return on an individual security and the return on the market. Beta represents the systematic risk common to all securities, which cannot be eliminated through diversification. The beta for the market as a whole, the average beta, is 1.0. Securities that have betas greater than 1.0 are viewed as more risky than the market. Conversely, securities that have betas less than 1.0 are deemed less risky than the market. We calculated the appropriate beta coefficient to apply in our calculation of the cost of equity based on those of the ten chosen Comparables. We delevered the Comparables’ equity betas to eliminate the effect of leverage on each company’s equity beta, and relevered them according to the average of the Comparables’ debt/equity ratio. This analysis resulted in a relevered beta of 0.80 (rounded).

Equity Risk Premium

The equity risk premium is the return investors require over and above the risk-free return, to compensate them for the additional risk involved in investing in non-Treasury bonds. This additional risk, in terms of the cost of capital, is the degree of uncertainty as to the realization of the expected future returns. We selected an equity risk premium of 7.2%, based on Ibbotson Associates’ (“Ibbotson”) historical average of large company stocks from 1926 to 2002⁴. The equity risk premium is multiplied by the beta (β) to estimate an investor’s expected equity return premium over risk free investments.

3	Source: Federal Reserve Statistical Release, dated February 4, 2005.
4	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition 2004Yearbook, Ibbotson Associates.

Appendix II Page 22

Small Stock Premium

We then adjusted the CAPM rate of return by applying a premium that reflects the additional risk of investments in small companies. The determination of size is presented by Ibbotson, which uses the market value of equity of an investment to determine an applicable size premium. This premium is derived from historical differences in returns between small companies and large companies, using data published by Ibbotson. For the year ended 2003, the average premium for micro-cap companies with a market value of equity of between $0.3 million and $166.4 million is 4.01%.

Investment Specific Risk

We then further adjusted the CAPM rate of return by applying a premium that reflects the specific risk of the Company. Risks which we believe affect the valuation of the Company include, but are not limited to: (i) the small size of the Company relative to other aviation services companies; (ii) accounts receivables aging and concentration; (iii) the volatility of gas prices and resulting effect on the Company’s liquidity; and (vi) risks associated with the Company achieving its FYE 2004 – 2008 projections. As such, we applied a conservative company-specific risk premium of 0.0% to 5.0% to reflect any unique risk.

Applying the CAPM formula, we estimate the Company’s required rate of return on equity capital to be:

R_e = R_f + β (R_m– R _f ) +R_s +R_is

Required rate on return on equity capital:

Assumption:

@ 0.00% Investment Specific Risk:      R_e = 16.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 0.00%
@ 2.50% Investment Specific Risk:      R_e = 19.17% = 4.54% + (0.80 x 7.20%) + 6.34% + 2.50%
@ 5.00% Investment Specific Risk:      R_e = 21.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 5.00%

Based on the data presented above, we calculated a WACC of approximately 9.0% to 11.0% (rounded).

Determination of Terminal Year Growth Factor

The terminal value used in our DCF approach is essentially an estimate of the value of the enterprise as of the end of the final period for which cash flow projections have been made. It is necessary to compute this value because, although we are confident that the Company will remain a viable going-concern beyond the final period, we cannot project with enough certainty the cash flows to be generated in any given period.

For purposes of this analysis we used the “growing perpetuity method” using the projected free cash flow as its basis for terminal value. The free cash flows projected in the final period is adjusted to arrive at a level of cash flow for the first year beyond the projection period which is representative of the future cash-generating

Appendix II Page 23

capability of the Company. This “normalized” cash flow figure incorporates expectations of the level of investment required to maintain the business into the future, as well as the return on investment that the business can be expected to sustain. The normalized cash flow figure is then capitalized as a growing perpetuity by the previously determined discount rate, adjusted for some level of growth which can be expected into perpetuity. For purposes of our analysis and per management, we used estimated cash flows provided by Mercury’s management for the FYE 2008 as representative of the terminal year’s projected cash flows. The following as a representation of the growing perpetuity method formula:

T =	CFn
	r – g

Where:
T	=	Terminal value
CFn	=	Normalized cash flow
R	=	Discount rate
G	=	Growth rate in perpetuity

The terminal value is then discounted back to the present using the previously selected discount rate. For the terminal year, we used a normalized free cash flow figure of approximately $2.2 million, a discount rate of 9.0% to 11.0% (rounded), and a perpetuity growth rate of 2.8%. The growth rate is based on the expected fiscal 2008 revenue growth rate as provided in the Company’s Projections. Outlined below are the values of this analysis:

Summary of Terminal Value Range

($ in thousands)

Discounted Terminal		Normalized			Discount			Growth Rate
Value		Cash Flow			Rate			in Perpetuity
$34,845	=		$2,160	/		(  9.0%	-		2.8%  )
$30,005	=		$2,160	/		(  10.0%	-		2.8%  )
$26,346	=		$2,160	/		(  11.0%	-		2.8%  )

Midyear Discounting Convention

For purposes of our analysis, we have assumed that the Company’s projected cash flows are received at midyear, approximating the effect of receiving the cash flows more or less evenly throughout the year.

Appendix II Page 24

Determination of the Implied Equity Value

As shown below and in more detail in Appendix V, using a range of discount rates of 9.0% to 11.0% (rounded) in the discounted cash flow analysis results in implied TEVs ranging between $26.3 and $34.8 million.

Summary of Implied Equity Values - Discounted Cash Flow Method

($ in thousands)

Discount Rate		9.0%			10.0%			11.0%
Implied Total Enterprise Value	$	33,943		$	29,397		$	25,961
Less: Total Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash on Balance Sheet		6,316			6,316			6,316
Implied Total Equity Value	$	18,017		$	13,471		$	10,035
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	5.89		$	4.41		$	3.28
Premium to Current Share Price (a)		66.5	%		24.5	%		-7.3	%

  (a)   Based on a price of $3.54 as of February, 23, 2005.

Summary

The three different valuation methodologies applied by IC resulted in the following range of implied equity values for the Company using EBITDA multiples:

Implied Equity Values

	Low		Mean	High
Market Approach - Multiple Analysis		n/m	$12.7 million	$23.8 million
Market Approach - Precedent Transactions	$3.7 million		$11.4 million	$23.6 million
Discounted Cash Flow Analysis	$8.0 million		$11.3 million	$15.6 million

	Per Share Values
	Low		Mean	High
Market Approach - Multiple Analysis		n/m	$4.17 per share	$7.79 per share
Market Approach - Precedent Transactions	$1.20 per share		$3.73 per share	$7.73 per share
Discounted Cash Flow Analysis	$2.61 per share		$3.69 per share	$5.12 per share

As the table above illustrates, the Transaction Consideration of [$X.XX] per share in cash is within the range the values under the Market Approach – Multiple Analysis and the Market Approach – Precedent Transactions, and the DCF analysis. Based on the above analysis, we determined that the Transaction Consideration is within a reasonable range of values and is fair from a financial point of view.

Appendix II Page 25

EX-99.C14

Exhibit 99(c)(14)

Mercury Air Group, Inc.

Comparable Stock-Split Transactions

Stock Split 1

Ticker

Pink Sheet

LTM

Market Cap

Transaction

Date

Company

Ratio

Pre

Post

Purpose of Stock Split

Quotation

Revenue

EBITDA

At Split

Premium to Fractional Shares

1.

2/1/2005

Fidelity Federal Bancorp

1:30,000

FFED

FFED

Termination of SEC Registration

N/A

$

1.5

N/M

$

19.9

N/A

2.

1/19/2005

Max & Ermas Restaurants, Inc.

1:200

MAXE

MAXE

Termination of SEC Registration

Possible

183.0

12.0

32.6

22.7% and 21.5% premium to 30 and 60-day averages

3.

1/10/2005

Trek Resources, Inc.

1:100

TREK

TREK.OB

Termination of SEC Registration

N/A

9.6

4.1

6.4

13.9%, 39.7% and 73.6% premiums over 1-day, 90-day, and 1-year

4.

12/22/2004

KS Bancorp, Ltd.

1:200

KSAV

KSAV.OB

Termination of SEC Registration

Possible

11.6

N/M

26.3

17.7% premium over 90-day average closing price

5.

12/8/2004

MAI Systems Corp.

1:150

MAIY

MAIY.OB

Termination of SEC Registration

Possible

19.6

1.5

6.4

11%, 10% and 7% premiums over 30, 60 and 90-day averages

6.

10/12/2004

Spectrum Laboratories, Inc.

1:25,000

SPTM

SPTM.PK

Termination of SEC Registration

N/A

13.3

1.9

12.4

22% premium over price of last trade before announcement

7.

9/30/2004

Giant Group, Ltd.

1:300

GGLT

GGLT.OB

Termination of SEC Registration

N/A

5.3

N/M

5.4

19.4%, 21.7% and 37% premiums to 1-day, 10-day and 5-years

8.

3/5/2004

Steel City Products, Inc.

1:300,000

SCTP

N/A

Termination of SEC Registration

N/A

N/A

N/A

N/A

20% premium to 12-month average

9.

2/26/2004

Big Buck Brewery & Steakhouse, Inc.

1:10

BBUCQ

BBUC.PK

Termination of SEC Registration

Possible

16.4

1.3

0.1

73.5% premium to average price during previous quarter

10.

2/20/2004

Pacific Aerospace & Electronics, Inc.

1:11,000

PARO

N/A

Going Private - GSC Partners

N/A

62.2

(5.0

)

3.1

Equal to average of last 10 trading days

11.

1/28/2004

Daleen Technologies, Inc.

1:500

DALN

DALN.OB

Termination of SEC Registration

Possible

18.2

0.2

5.5

37.6% and 87.5% premiums to last 6 months and year

12.

1/9/2004

Safeguard Health Enterprises, Inc.

1:1,500

SFGH

N/A

Termination of SEC Registration

N/A

126.5

7.2

11.7

57.3% premium over prior 12 months

EX-99.C15

Exhibit 99.(c)(15)

Mercury Air Group, Inc.
Cash to Buyout Fractional Shares at Various Premiums

Date:	Yesterday		3-day Avg.		5-day		10-day		20-day		30-day		60-day		90-day
Price:	$	3.55	$	3.43	$	3.47	$	3.47	$	3.60	$	3.69	$	4.07	$	4.46
5% Premium:	$	3.73	$	3.60	$	3.65	$	3.65	$	3.78	$	3.88	$	4.28	$	4.68
10% Premium:	$	3.91	$	3.77	$	3.82	$	3.82	$	3.96	$	4.06	$	4.48	$	4.91
12% Premium:	$	3.98	$	3.84	$	3.89	$	3.89	$	4.03	$	4.14	$	4.56	$	5.00
15% Premium:	$	4.08	$	3.94	$	4.00	$	3.99	$	4.14	$	4.25	$	4.68	$	5.13
20% Premium:	$	4.26	$	4.12	$	4.17	$	4.17	$	4.32	$	4.43	$	4.89	$	5.35
25% Premium:	$	4.44	$	4.29	$	4.34	$	4.34	$	4.50	$	4.62	$	5.09	$	5.58
Fractional Shares Estimate(1):		192,316
Cash to Buy Shares
5% Premium:	$	716,858	$	692,626	$	701,511	$	701,309	$	727,459	$	745,734	$	822,165	$	900,818
10% Premium:	$	750,994	$	725,608	$	734,916	$	734,705	$	762,100	$	781,245	$	861,316	$	943,714
12% Premium:	$	764,648	$	738,801	$	748,278	$	748,063	$	775,957	$	795,450	$	876,976	$	960,872
15% Premium:	$	785,130	$	758,590	$	768,322	$	768,100	$	796,741	$	816,756	$	900,467	$	986,610
20% Premium:	$	819,266	$	791,573	$	801,727	$	801,496	$	831,382	$	852,268	$	939,618	$	1,029,506
25% Premium:	$	853,402	$	824,555	$	835,132	$	834,892	$	866,023	$	887,779	$	978,768	$	1,072,402

(1) Source: Draft Proxy dated March 1, 2005.

EX-99.C16

Exhibit 99.(c)(16)

EX-99.C17

Exhibit 99.(c)(17)

Mercury Air Group, Inc.
Cash to Buyout Fractional Shares at Various Premiums

Date:	Yesterday		3-day Avg.		5-day		10-day		20-day		30-day		60-day		90-day(1)		120-day(1)		180-day(1)		52-Weeks(1)
Price:	$	3.66	$	3.61	$	3.55	$	3.53	$	3.59	$	3.63	$	3.98	$	3.81	$	3.81	$	4.25	$	4.78
5% Premium:	$	3.84	$	3.79	$	3.73	$	3.70	$	3.77	$	3.81	$	4.18	$	4.00	$	4.00	$	4.47	$	5.02
10% Premium:	$	4.03	$	3.97	$	3.91	$	3.88	$	3.95	$	4.00	$	4.38	$	4.19	$	4.19	$	4.68	$	5.26
12% Premium:	$	4.10	$	4.05	$	3.98	$	3.95	$	4.02	$	4.07	$	4.46	$	4.27	$	4.26	$	4.76	$	5.36
15% Premium:	$	4.21	$	4.16	$	4.08	$	4.05	$	4.13	$	4.18	$	4.57	$	4.38	$	4.38	$	4.89	$	5.50
20% Premium:	$	4.39	$	4.34	$	4.26	$	4.23	$	4.31	$	4.36	$	4.77	$	4.57	$	4.57	$	5.10	$	5.74
25% Premium:	$	4.58	$	4.52	$	4.44	$	4.41	$	4.49	$	4.54	$	4.97	$	4.77	$	4.76	$	5.32	$	5.98
Fractional Shares Estimate(2):		192,613
Cash to Buy Shares
5% Premium:	$	740,212	$	730,774	$	717,965	$	713,111	$	725,751	$	734,684	$	804,525	$	770,975	$	769,689	$	860,075	$	967,487
10% Premium:	$	775,460	$	765,572	$	752,154	$	747,069	$	760,311	$	769,669	$	842,836	$	807,688	$	806,341	$	901,031	$	1,013,558
12% Premium:	$	789,559	$	779,492	$	765,829	$	760,652	$	774,135	$	783,663	$	858,160	$	822,374	$	821,001	$	917,413	$	1,031,986
15% Premium:	$	810,708	$	800,371	$	786,343	$	781,026	$	794,871	$	804,654	$	881,147	$	844,401	$	842,992	$	941,987	$	1,059,629
20% Premium:	$	845,956	$	835,170	$	820,531	$	814,984	$	829,430	$	839,639	$	919,457	$	881,115	$	879,644	$	982,943	$	1,105,700
25% Premium:	$	881,204	$	869,969	$	854,720	$	848,942	$	863,990	$	874,624	$	957,768	$	917,828	$	916,296	$	1,023,899	$	1,151,770

(1)	Prices have been adjusted to remove the effect of a $5.70 dividend announced on 10/6/04 and paid on 11/5/04.
(2)	Source: Draft Proxy dated March 1, 2005.

EX-99.C18

Exhibit 99(c)(18)

Mercury Air Group, Inc.
Cash to Buyout Fractional Shares at Various Premiums

	Price As of:
			Previous 10		Previous 20		Previous 30
Date:	Today		Trading Days		Trading Days		Trading Days		1-Month
Price:	$	4.49	$	3.62	$	3.62	$	3.65	$	3.61
18% Premium:	$	5.30	$	4.28	$	4.28	$	4.31	$	4.26
20% Premium:	$	5.39	$	4.35	$	4.35	$	4.38	$	4.33
22% Premium:	$	5.48	$	4.42	$	4.42	$	4.46	$	4.40
24% Premium:	$	5.57	$	4.49	$	4.49	$	4.53	$	4.48
Fractional Shares Estimate:		192,613
Cash to Buy Shares
5% Premium:	$	1,020,502	$	823,675	$	823,675	$	830,115	$	820,373
10% Premium:	$	1,037,799	$	837,635	$	837,635	$	844,184	$	834,278
12% Premium:	$	1,055,095	$	851,596	$	851,596	$	858,254	$	848,182
15% Premium:	$	1,072,392	$	865,557	$	865,557	$	872,324	$	862,087

EX-99.C19

Exhibit 99(c)(19)

Mercury Air Group, Inc.
Cash to Buyout Fractional Shares at Various Premiums

	Price As of:
		Previous 10	Previous 20	Previous 30
Date:	Today	Trading Days	Trading Days	Trading Days	1-Month
Price:	$3.25	$3.59	$3.57	$3.62	$3.55
18% Premium:	$3.84	$4.23	$4.21	$4.27	$4.19
20% Premium:	$3.90	$4.30	$4.28	$4.35	$4.26
22% Premium:	$3.97	$4.38	$4.35	$4.42	$4.34
24% Premium:	$4.03	$4.45	$4.42	$4.49	$4.41
Fractional Shares Estimate:	192,613
Cash to Buy Shares
18% Premium:	$738,671	$815,265	$810,492	$823,144	$807,693
20% Premium:	$751,191	$829,083	$824,230	$837,096	$821,383
22% Premium:	$763,711	$842,901	$837,967	$851,048	$835,073
24% Premium:	$776,230	$856,720	$851,704	$864,999	$848,762

EX-99.C20

Exhibit 99(c)(20)

Mercury Air Group, Inc.
Comparable Stock-Split Transactions

			Stock Split		Pink Sheet	LTM					Market Cap		Premium to Fractional		20-Day Avg.
Transaction	Date	Company	Ratio	Purpose of Stock Split	Quotation	Revenue		EBITDA			At Split		Shares Announced in Proxy		Premuim
1.	2/1/2005	Fidelity Federal Bancorp	1:30,000	Termination of SEC Registration	N/A	$	1.5		N/M		$	19.9	None announced-last trade price was $1.81 vs. offer price of $1.85			0.0	%
2.	1/19/2005	Max & Ermas Restaurants, Inc.	1:200	Termination of SEC Registration	Possible		183.0		12.0			32.6	22.7% and 21.5% premium to 30 and 60-day averages			22.6	%
3.	1/10/2005	Trek Resources, Inc.	1:100	Termination of SEC Registration	N/A		9.6		4.1			6.4	13.9%, 39.7% and 73.6% premiums over 1-day, 90-day, and 1-year			17.6	%
4.	12/22/2004	KS Bancorp, Ltd.	1:200	Termination of SEC Registration	Possible		11.6		N/M			26.3	17.7% premium over 90-day average closing price			20.5	%
5.	12/8/2004	MAI Systems Corp.	1:150	Termination of SEC Registration	Possible		19.6		1.5			6.4	11%, 10% and 7% premiums over 30, 60 and 90-day averages			5.3	%
6.	11/4/2004	Webco Industries, Inc.	N/A	Termination of SEC Registration	N/A		235.2		31.5			41.9	No specific premium announced			22.2	%
7.	10/12/2004	Spectrum Laboratories, Inc.	1:25,000	Termination of SEC Registration	N/A		13.3		1.9			12.4	22% premium over price of last trade before announcement			21.9	%
8.	9/30/2004	Giant Group, Ltd.	1:300	Termination of SEC Registration	N/A		5.3		N/M			5.4	19.4%, 21.7% and 37% premiums to 1-day, 10-day and 5-years			21.8	%
9.	3/5/2004	Steel City Products, Inc.	1:300,000	Termination of SEC Registration	N/A		N/A		N/A			N/A	20% premium to 12-month average			12.0	%
10.	2/26/2004	Big Buck Brewery & Steakhouse, Inc.	1:10	Termination of SEC Registration	Possible		16.4		1.3			0.1	73.5% premium to average price during previous quarter			105.5	%
11.	2/20/2004	Pacific Aerospace & Electronics, Inc.	1:11,000	Going Private — GSC Partners	N/A		62.2		(5.0	)		3.1	Equal to average of last 10 trading days			12.3	%
12.	1/28/2004	Daleen Technologies, Inc.	1:500	Termination of SEC Registration	Possible		18.2		0.2			5.5	37.6% and 87.5% premiums to last 6 months and year			4.7	%
13.	1/9/2004	Safeguard Health Enterprises, Inc.	1:1,500	Termination of SEC Registration	N/A		126.5		7.2			11.7	57.3% premium over prior 12 months			18.5	%
														High		105.5	%
														Median		18.5	%
														Mean		21.9	%
														Low		0.0	%

EX-99.C21

Exhibit 99.(c)(21)

DRAFT DRAFT

DRAFT DRAFT

TABLE OF CONTENTS

	APPENDIX
FAIRNESS OPINION		I
FAIRNESS OPINION BACKUP	II
INCOME STATEMENT AND BALANCE SHEET FOR THE FYE JUNE 30, 2002 THROUGH 2004 AND UNAUDITED RESULTS FOR DECEMBER 31, 2004	III
FYE JUNE 30, 2005 THROUGH 2008 PROJECTIONS	IV
DISCOUNTED CASH FLOW ANALYSIS		V
WEIGHTED AVERAGE COST OF CAPITAL CALCULATION	VI

DRAFT

[March 10, 2005]
 
Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
5456 McConnell Avenue
Los Angeles, CA 90066
 
Members of the Board of Directors and the Special Committee:

We understand that Mercury Air Group, Inc. (“Mercury” or the “Company”) intends to effect a 1-for-501 reverse stock split followed by a 501-for-1 forward stock split of the Company’s common stock (the “Transaction”). As a result of the Transaction, (a) each shareholder owning fewer than 501 shares immediately before the Transaction will receive from the Company [$X.XX] in cash for each of such shareholder’s pre-split shares (the “Transaction Consideration”); and (b) each share of common stock held by a shareholder owning 501 or more shares will continue to represent one share of the Company after completion of the Transaction. You have advised us that the purpose of the Transaction is to cash-out the equity interests in Mercury of shareholders who, as of the effective date, hold fewer than 501 shares of common stock in any discrete account at a price determined to be fair by the entire Board of Directors in order to enable Mercury to deregister its common stock under the Exchange Act and thus terminate its obligation to file special and periodic reports and make other filings with the SEC.

You have requested our opinion as to the fairness, from a financial point of view, of the Transaction Consideration to those shareholders receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom we express no view. We also express no view with respect to any aspect of the Transaction other than as described in the immediately preceding sentence.

In connection with this opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. We have, among other things:

(i)	Reviewed the draft proxy statement and related documents outlining the Transaction;
(ii)	Analyzed certain publicly available information that we believe to be relevant to our analysis, including the Company’s annual report on Form 10-K for the fiscal year ended (“FYE”) June 30, 2004 and the Company’s quarterly report on Form 10-Q for the quarters ended September 30, 2004 and December 31, 2004;
(iii)	Reviewed certain information including financial forecasts relating to the business, earnings and cash flow of the Company, furnished to us by senior management of Mercury;
(iv)	Reviewed the Company’s projections for FYE June 30, 2004 through 2008 furnished to us by senior management of Mercury;
(v)	Reviewed certain publicly available business and financial information relating to Mercury that we deemed to be relevant;
(vi)	Conducted discussions with members of senior management of Mercury concerning the matters described in clauses (i) through (vi) above, as well as the prospects and strategic objectives of Mercury;
(vii)	Reviewed public information with respect to certain other companies with financial profiles which we deemed to be relevant; and

DRAFT

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
March 10, 2005

(viii) Conducted such other financial studies, analyses and investigation and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions.

With your consent, we have relied upon the accuracy and completeness of the foregoing financial and other information and have not assumed responsibility for independent verification of such information or conducted or have been furnished with any independent valuation or appraisal of any assets of the Company or any appraisal or estimate of liabilities of the Company. With respect to the financial forecasts, we have assumed, with your consent, that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of senior management of Mercury as to the future financial performance of the Company. We have also relied upon the assurances of senior management of Mercury that they are unaware of any facts that would make the information or financial forecasts provided to us incomplete or misleading. We assume no responsibility for, and express no view as to, such financial forecasts or the assumptions on which they are based.

Our opinion is based upon economic, market and other conditions as they exist and can be evaluated on the date hereof and does not address the fairness of the Transaction Consideration as of any other date. The financial markets in general, and the markets for the securities of the Company in particular, are subject to volatility, and our opinion does not purport to address potential developments in the financial markets or in the markets for the securities of the Company after the date hereof.

Our opinion expressed herein has been prepared for the information of the Special Committee and the Board of Directors of the Company in connection with their consideration of the Transaction. Our opinion does not constitute a recommendation as to any action the Company or any shareholder of the Company should take in connection with the Transaction or any aspect thereof. Our opinion does not address the merits of the underlying decision by the Company to engage in the Transaction or the relative merits of any alternatives discussed by the Special Committee or the Board of Directors of the Company. No opinion is expressed herein, nor shall one be implied, as to the fair market value of Mercury’s equity or the prices at which it may trade at any time. This opinion may not be reproduced, disseminated, quoted or referred to at any time without our prior written consent, except that a copy of the Opinion may be reproduced in full and otherwise referred to in the Company’s proxy statement and related filings describing the Transaction.

In the ordinary course of its business and in accordance with applicable state and federal securities laws, Imperial Capital, LLC may actively trade the equity securities of Mercury for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. In the past, Imperial Capital has previously acted as financial advisor to Mercury and has received a fee in connection with its various engagements.

Based on and subject to the foregoing, we are of the opinion that, as of the date hereof, the Transaction Consideration to be received by the shareholders of the Company receiving the Transaction Consideration, other than the Management Holders (as to whom we express no view), is fair, from a financial point of view, to such shareholders.

Very truly yours,

Imperial Capital, LLC

Page 2

INTRODUCTION

The following is a summary of the analysis conducted by Imperial Capital (“IC”) with respect to the fairness, from a financial point of view, of the Transaction Consideration (as defined below) to be paid to those shareholders of Mercury Air Group, Inc. (“Mercury” or the “Company”) receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom IC expresses no view. Pursuant to the Transaction (as defined below), the Company will execute a 1-for-501 reverse stock split followed immediately by a 501-for-1 forward stock split of the Company’s common stock (the “Transaction”). As a result of the Transaction, (a) each shareholder owning fewer than 501 shares immediately before the Transaction will receive from the Company [$X.XX] in cash for each of such shareholder’s pre-split shares (the “Transaction Consideration”); and (b) each share of common stock held by a shareholder owning 501 or more shares will continue to represent one share of the Company after completion of the Transaction.

The purpose of the Transaction is to cash-out the equity interests in Mercury of shareholders who, as of the effective date, hold fewer than 501 shares of common stock in any discrete account at a price determined to be fair by the entire Board of Directors in order to enable Mercury to deregister its common stock under the Exchange Act and thus terminate its obligation to file Special and periodic reports and make other filings with the SEC. Following the de-listing, the Company will continue to publicly file audited balance sheets and income statements for its fiscal year end.

IC has been engaged to determine the fairness, from a financial point of view, of the Transaction Consideration to be paid to those shareholders of Mercury receiving the Transaction Consideration, other than Management Holders, as to whom IC expresses no view. In order to accomplish this, IC has used various valuation methodologies (described more fully below) to determine the fair market value (“FMV”) of Mercury’s common shares, and then compared the FMV to the Transaction Consideration.

Appendix II Page 1

BACKGROUND OF THE COMPANY

Overview of Mercury

Mercury, a Delaware corporation, was organized in 1956 and provides a broad range of services to the aviation industry. Mercury operates through the following three principal operating units: (i) fuel sales; (ii) cargo operations; and (iii) government contract services.

Divisions

Below is a more detailed summary of Mercury’s divisions:

• Aircraft Refueling — Through its wholly owned subsidiary MercFuel, Inc. (“MercFuel”), Mercury provides aviation fuels domestically and internationally to consumers globally. MercFuel facilitates the management and distribution of aviation fuel as a reseller of aviation fuels for major oil companies, affording the oil companies access to certain customers without the credit risk or administrative costs associated with the management of these customer accounts.

• Cargo Operation — Mercury’s cargo operations, conducted through its wholly-owned subsidiary Mercury Air Cargo, Inc. (“Air Cargo”), provides the following services: (i) domestic and international air cargo and airmail handling; (ii) cargo logistics services; and (iii) general cargo sales agent services. Cargo logistics involves the contracting, through its network of shipping agents of bulk cargo space on airlines which is sold to customers with shipping needs. Air Cargo also brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America.

• Government Contract Services — Mercury, through its wholly owned subsidiary, Maytag Aircraft Corporation (“Maytag”), provides aircraft refueling, air terminal services, base operating support (“BOS”), facilities maintenance, weather observation, air traffic control and flight line management in 17 countries on four continents for all branches of the U.S. Military establishment.

On June 12, 2004, the Company sold its FBO Business, Mercury Air Centers, Inc. (the “FBO Business”), to Allied Capital Corporation. According to the Company’s public filings, the FBO Business contributed a significant portion of the Company’s gross margin (approximately 49.5% in 2003).

Appendix II Page 2

INDUSTRY OVERVIEW

MercFuel

Jet fuel resellers are generally independent third parties that purchase fuel from major oil companies and independent fuel suppliers and resell fuel to commercial airlines, business aircraft management companies and air freight companies. Jet fuel reselling is a byproduct of the United States oil embargo and ensuing energy crisis in 1979. At that time, the major oil companies initiated a fuel allocation program pursuant to which many smaller and regional domestic and international airlines were unable to access sufficient supplies of jet fuel. Resellers took the initiative to find additional sources of fuel for these carriers and have become the suppliers to many of those airlines which the oil companies no longer directly serve.

Commercial and general aviation jet fuel purchases and dispensement occurs at airports and fuel terminals throughout the world. Jet fuel resellers contract directly with the oil company or jet fuel supplier to purchase the fuel and with third party refueling companies handling large commercial aircraft at commercial airports and fuel terminals or with third parties known as fixed base operations, for the actual dispensing of the fuel to the customer. Fixed base operations are third parties that typically handle all other aircraft such as commuter, business and private jets.

Typical commercial or business jet fuel resale transactions are as follows:

• Deliveries from Reseller Inventory. In some cases, the jet fuel reseller has previously contracted with the fuel supplier for the delivery of fuel to a third party refueling company or fixed base operation. These third parties store the fuel for the jet fuel reseller as the reseller’s inventory. In these instances, the third party that delivers the fuel into the wing of the aircraft customer forwards a paper record of the transaction to the jet fuel reseller. The reseller then forwards an invoice to the aircraft customer.

• Into-Plane Deliveries. Into-plane deliveries are fuel sales where the sale of fuel is made from the fuel supplier’s inventory maintained at the airport or fuel terminal. In these instances, either the fuel supplier or a third party refueling company delivers the fuel into the wing of the aircraft customer and the sale of fuel is consummated at that point. The refueling company, if used, forwards the paper record of the transaction to the fuel supplier and in either case the fuel supplier forwards the paper record to the fuel reseller for payment. The fuel reseller then forwards an invoice to the air carrier.

Each of these methods is a labor intensive and time consuming process that is subject to delays, inefficiencies and mistakes. At times customers and resellers are inaccurately billed for the amount of fuel sold. In addition, the use of paper documents delays the payment by the jet fuel reseller to the supplier in the case of into-plane deliveries. Also, commercial and business customers typically do not receive bills from the jet fuel reseller until between 7 to 30 days after fuel is sold, which delays payments and affects the jet fuel reseller’s cash flow.

Appendix II Page 3

In recent months, rising fuel prices, combined with a reduction of credit terms by MercFuel’s fuel suppliers, has caused the spread between accounts payable and accounts receivable to grow to the point of significant risk to Mercury’s liquidity.

The market for jet fuel reselling is highly competitive. MercFuel is in direct competition with major oil companies, major airlines and other independent fuel suppliers, such as World Fuel Services Corporation (“World Fuel”), and with other aircraft support companies which maintain their own sources of aviation fuel. Many of MercFuel’s competitors have greater financial, technical and marketing resources than the Company.

Air Cargo

• Cargo Handling. Air Cargo provides domestic and international air cargo handling, air mail handling and bonded warehousing. Air Cargo handles cargo at Los Angeles International Airport (LAX), William B. Hartsfield International Airport (ATL — Atlanta, GA), Dorval International Airport (YUL — Montreal, Canada), Mirabel International Airport (YMX — Montreal, Canada) and Lester B. Pearson International Airport (YYZ — Toronto, Canada). Since February 2001, operations at ATL have been handled by Lufthansa Handling under the terms of a ten-year sub-lease of a 104,646 square foot warehouse and operations area. In fiscal 2004, the cargo handling operations comprised 65% of Air Cargo’s revenue.

• Cargo Logistics Services. Air Cargo brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America. Cargo logistics involves the contracting for bulk cargo space on airlines and selling that space to customers with shipping needs. Air Cargo has an established network of shipping agents who assist in obtaining cargo for shipment on space purchased from various airlines, and who facilitate the delivery and collection of freight charges for cargo shipped by Air Cargo. Unlike a cargo airline which operates its own aircraft, Air Cargo’s space logistics business arranges for the purchase of cargo space on scheduled flights or supplemental flights at negotiated rates. Air Cargo is thereby able to profit from the sale of air cargo space worldwide without the overhead cost of owning and operating an aircraft. In fiscal 2004, the space logistics revenue comprised 22% of Air Cargo revenue.

• General Sales Agent. Air Cargo also serves as a general sales agent (“GSA”) directly through its subsidiaries in the United States, Canada, Mexico, Central and South America, and the Far East. In this capacity, Air Cargo sells the transportation of cargo on its client’s airline flights, using our clients’ own airway bills. Air Cargo earns a commission from the airlines for selling their cargo space. As with its space logistics business, the growth for Air Cargo’s GSA business is not constricted by requirements for physical facilities or by large capital commitments. In fiscal 2004, the GSA business revenue comprised 12% of Air Cargo’s total revenue.

Appendix II Page 4

Air Cargo competes with numerous companies who provide air cargo handling services at the same airports where Air Cargo provides these services. At most airports there are at least 3-5 independent cargo handling companies, as well as certain airlines who operate their own warehouses and offer third-party cargo handling in order to reduce overhead costs. Over the last 15 years, a consolidation of independent cargo handling, ramp services providers and FBO’s has evolved into a handful of large operators with multiple airport facilities, such as BBA, Worldwide Aviation and Globe Ground Services. These larger companies have been able to leverage their relationships with airline customers by offering them multi-city pricing and discounts and lower handling rates for each additional airport where the airline’s cargo would be handled, with the intention of freezing out smaller competitors like Air Cargo. While Air Cargo’s warehouses operated profitably until the economic downturn beginning in 2000 and the 9/11 events, air cargo tonnage decreased through 2003 and thereby increased competition among cargo handlers. In an effort to maintain market share, Air Cargo lowered its pricing in order to retain the airline cargo handling business.

Maytag

• Aircraft Refueling. Maytag has been supplying aircraft refueling and base support services worldwide to the Department of Defense since 1950. Maytag’s aircraft refueling services include supplying all the necessary personnel and equipment to operate government-owned fuel storage facilities and providing 24-hour refueling services for a variety of aircraft for the military. Maytag currently provides refueling services at 12 U.S. military bases, 11 in the U.S. and one in Greece. Maytag’s refueling contracts generally have a term of four years, with expiration dates ranging from June 2004 to January 2008. All contracts are firm-fixed price for specified services. Fuel handled in these operations is government owned and only the fleet of refueling trucks and other support vehicles are owned by Maytag.

• Air Terminal and Ground Handling Services. Maytag has become a global player in air terminal services as the largest provider to the U.S. Air Force Air Mobility Command at 24 locations including Alaska, Japan, Korea, Kuwait and Latin America. Maytag’s air terminal and ground handling services consist of loading and unloading of passengers and cargo, transient alert, flight planning services, passenger processing and manifesting, baggage handling, travel eligibility, immigration facilitation and flight planning. Air terminal service contracts are generally for a base period of up to one year, with government options for multiple one-year extensions. All contracts provide firm-fixed price for specified services. In order to provide to provide a comprehensive, all-in-one solution to the U.S. military and other government agencies, Maytag provides BOS services and base housing maintenance at several locations where Maytag has contracts. Maytag’s BOS services include fuel management, traffic management, airfield management, vehicle operations and maintenance services, and meteorological services. The Company’s base housing maintenance consists of change of occupancy maintenance for government-provided quarters, such as basic interior upkeep, repairs, painting, and cleaning.

Appendix II Page 5

• Weather Data Services. Weather Data Services was founded in Clear Lake, Iowa in 1987 and was acquired by the Company to become a division of Maytag on August 1, 1998. This division currently provides weather observation and weather forecasting services at 11 locations within the U.S. pursuant to contracts with the prices for specified services and are generally for a base of one year, with multiple oneyear options at the government’s election.

All of Maytag’s government contracts are subject to competitive bidding. Refueling, air terminal, and weather forecasting contracts are usually awarded on a “best value” basis, taking into account price, past performance history of the offeror, and the merit of the technical proposal. Weather observation contracts are generally awarded on the basis of the lowest priced, technically acceptable proposal. Maytag’s contracts are all subject to termination at the discretion of the U.S. Government, in whole or in part.

Maytag does not compete directly with any large government defense contractors. Since Maytag primarily targets government contracts with annual average revenues of approximately $1 million, most of Maytag’s competitors are smaller entities, and unlike Maytag, most of these companies have limited capabilities to operate abroad. According to Management, due to Maytag’s strong competitive position, the Company has been able to capture approximately 40% of the Defense Department’s Energy Support Command’s (DESC) aircraft refueling business and 50% of the Air Mobility Command’s (AMC) air terminals business in the U.S. and abroad.

Financial Summary

A summary of the Company’s historical operating performance is set forth below.

Appendix II Page 6

Summary of Operations

($ in thousands)	Fiscal Year Ended June 30,									LTM
	2002			2003			2004(a)			12/31/2004
MercFuel Revenues	$	232,573		$	280,136		$	322,631		$	428,512
Air Cargo Revenues		28,124			32,691			39,549			42,550
Maytag Revenues		28,228			24,421			23,281			22,213
Total Revenues	$	288,925		$	337,248		$	385,461		$	493,275
Sales Growth %		n/a			16.7	%		14.3	%		28.0	%
MercFuel Gross Profit	$	6,581		$	5,926		$	6,080		$	6,971
Air Cargo Gross Profit		898			2,585			2,100			3,563
Maytag Gross Profit		6,789			4,598			5,146			4,901
Total Gross Profit	$	14,268		$	13,109		$	13,326		$	15,435
Gross Profit Margin %		4.9	%		3.9	%		3.5	%		3.1	%
SG&A Expenses	$	11,771		$	10,818		$	10,894		$	10,783	(b)
Provision for Bad Debts		1,170			1,192			506			894
Total Operating Expenses		12,941			12,010			11,400			11,677
EBITDA	$	1,327		$	1,099		$	1,926		$	3,758
EBITDA Margin		0.5	%		0.3	%		0.5	%		0.8	%
Depreciation & Amortization		3,478			2,782			2,828			2,656
Operating Income		(2,151	)		(1,683	)		(902	)		1,102
Operating Income Margin		-0.7	%		-0.5	%		-0.2	%		0.2	%
Capital Expenditures	$	546		$	390		$	1,184		$	1,505

Note: Divisional Gross Profit includes certain SG&A costs which are charged directly to the operating units.

(a)	Fiscal 2004 SG&A excludes $2.4 million in extraordinary settlement costs, $1.7 million for severance payments to the retiring Chairman, and $311,000 of unusual audit fees. Air Cargo’s 2004 gross profit has been adjusted to exclude $300,000 in severance payments to Air Cargo’s former COO.
(b)	LTM SG&A expenses excludes $2.1 million of one-time charges for legal fees regarding a lawsuit settlement, severance costs, write-off of insurance deposits related to a joint venture, an asset impairment on a plane that was sold, and a loss on a timeshare plane trade-in.

Balance Sheet

($ in thousands)		As of 12/31/04
Assets
Cash and Cash Equivalents	$	6,316
Accounts Receivable, net		56,912
Inventories		1,619
Prepaid Expenses & Other		5,108
Total Current Assets		69,955
Property, Plant & Equipment, net		7,564
Goodwill & Intangibles		5,011
Restricted Cash		8,418	(a)
Other Assets		3,133
Total Assets	$	94,081
Liabilities and Shareholders’ Equity
Account Payable	$	36,390
Accrued Expenses & Other		8,559
Current Portion of Long-Term Debt		1,021
Total Current Liabilities		45,970
Long-Term Debt		21,221
Other Long-Term Liabilities		10,722
Total Liabilities		77,913
Mandatorily Redeemable Preferred Stock		468
Shareholders’ Equity		15,700
Total Liabilities and Shareholders’ Equity	$	94,081

(a) Restricted cash consists of cash held for specific purposes and not available for general use by the Company and is comprised primarily of an escrow account associated with the Hartsfield FBO. The funds held in the escrow account are to be distributed to either one or both of the Company and Allied Capital dependent upon the award of a new lease at the Hartsfield International Airport in Atlanta for a new FBO.

Appendix II Page 7

VALUATION METHODOLOGIES

In order to evaluate the fairness of the proposed Transaction:

• estimated a reasonable range of the fair market value (“FMV”) of the total enterprise value (“TEV”) of the Company;

• estimated a reasonable range of the equity value of the Company, based on the Company’s balance sheet as of December 31, 2004; and

IC employed different valuation methodologies to approximate the FMV of the TEV of the Company. IC believes the most appropriate valuation methodologies are: (i) the Market Approach — Trading History; (ii) the Market Approach — Multiple Analysis; (iii) the Market Approach — Precedent Transactions; and (iv) the Discounted Cash Flow Approach (“DCF”).

Market Approach

The Market Approach is a valuation technique in which the FMV is estimated based on market prices in actual transactions and on asking prices for currently available assets. The valuation process is essentially that of comparison and correlation between the subject asset and other similar assets. Consideration such as similarity, exposure to macroeconomic and/or specific industry factors, location, and time of sale of similar assets are compared to the subject asset to indicate a current value of the subject asset. Additionally, for this approach to be reliable, there are two requisites: (i) an active public market; and (ii) an exchange of comparable assets.

Trading History

As a starting point for an understanding of the FMV of the equity, we reviewed the valuation implied by the current trading price of the common stock.

Appendix II Page 8

As of March 7, 2005, the Company’s share price was $3.66, resulting in a market capitalization of approximately $11.2 million, while the trading volume in Mercury’s stock over the previous 30 days was approximately 4,243 shares per day.

Trading History

	Average			Average
	Price			Volume
Previous 10 Trading Days	$	3.53			3,170
Previous 30 Trading Days	$	3.63			4,243
Previous 60 Trading Days	$	3.98			8,500
Previous 90 Trading Days	$	4.32			18,779
52-Week High	$	8.45	(a)		226,300
52-Week Low	$	3.08	(b)		0

(a)	Occurred on November 5, 2004, the day the special dividend was paid.
(b)	Occurred on November 8, 2004, the first trading day after the special dividend was paid.

On November 5, 2004, the Company paid a one-time special cash dividend totaling $17.5 million ($5.70 per share) to holders of its common stock. The one-time special dividend was approximately equal to the trading price of Mercury’s common stock prior to the announcement of the dividend on October 6, 2004. As shown in the chart above, the special dividend had a significant impact on the trading price and volume of Mercury’s stock.

Appendix II Page 9

Multiple Analysis

The Market Approach, utilizing market multiples, indicates the FMV of a business by comparing it to publicly-traded companies in similar lines of business, or with similar risk-return profiles (“Comparables”). The value of different businesses can often be stated in relative terms, such as a multiple of: (i) revenue; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings before interest and taxes (“EBIT”); (iv) free cash flow (“FCF”); or (v) net book value of assets (collectively, the “Market Multiples”). Market Multiples for companies operating in an industry are in part determined by the similar external market conditions that they face (the common opportunities and threats) and in part by each company’s internal factors (its own strengths and weaknesses).

This method is useful in determining the FMV of a company that is currently profitable and is expected to remain profitable in the future. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. Therefore, an analysis of the Market Multiples of companies engaged in similar businesses or in businesses that have similar risk-return profiles yields insight into investor perceptions regarding their return requirements and, therefore, the value of the subject.

Analysis

Outside investors, potential acquirers and stockholders in Mercury will look to public companies and recently acquired companies that are similar to the Company to provide guidance on valuation. In the case of the Company, there are several U.S. publicly traded aviation services companies that we deemed to be similar. In selecting the Comparables, we searched comprehensive lists and directories of public companies. The primary sources used to produce the list of Comparables included:

• Capital IQ;

• Dow Jones Interactive;

• Bloomberg; and

• Hoover’s.

Certain determinant factors are: (i) the company had to provide products or services for the aviation industry; (ii) the company had to make its financial information public; and (iii) the company was required to have an active trading market to measure public perception. The Comparables selected were:

Appendix II Page 10

• Air T, Inc. (NasdaqSC: AIRT)

• AirNet Systems, Inc. (NYSE: ANS)

• AutoInfo (OTCBB: AUTO)

• Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

• World Fuel Services Corp. (NYSE: INT)

Due to the lack of public companies that provide the same range of services as Mercury, we chose to select Comparables with businesses focused on air cargo handling and fuel services. Our decision to select such companies is due in part to their exposure to similar macroeconomic and industry-specific risks as those faced by the Company including, but not limited to: (i) exposure to commercial and general aviation industry trends; (ii) macroeconomic risks (e.g., post-September 11 downturn in commercial aviation, oil prices, etc.); and (iii) similar customer bases. The following is a brief description of the business operations for the selected Comparables:

Air T, Inc. (NasdaqSC: AIRT)

Air T, Inc. operates small-aircraft air cargo in the United States. It provides overnight air cargo services, and aviation ground support and other equipment products. The company, through its wholly owned subsidiaries, provides small package overnight air freight delivery services on a contract basis to the air express delivery industry throughout the eastern half of the United States and Canada. The company also engages in the manufacture and sale of aircraft deicers and scissor lift trucks, as well as specialized service equipment to passenger and cargo airlines, the U.S. Government, airports, and commercial customers. As of June 24, 2004, the company operated a fleet of single and twin engine turbo-prop aircraft nightly in the eastern half of the United States and Canada, Puerto Rico, and the Virgin Islands.

AirNet Systems, Inc. (NYSE: ANS)

AirNet Systems, Inc. provides aviation services, including time-critical small package delivery and passenger charter services. It operates AirNet Express, an integrated national air transportation network that provides expedited air transportation services for banks and time-critical small package shippers in approximately 100 cities nationwide. The company transports cancelled checks and related information for the U.S. banking industry, as well as offers specialized delivery services to customers, primarily in the medical, critical parts, and entertainment industries. AirNet Systems also provides passenger charter services to individuals and businesses through its subsidiary, Jetride, Inc. In addition, it offers on-demand cargo charter delivery services, and provides ground pick-up and delivery services. As of May 17, 2004, the company operated 120 aircraft, including 40 Learjets, located throughout the United States.

Appendix II Page 11

AutoInfo, Inc. (OTCBB: AUTO)

AutoInfo, Inc., through its wholly owned subsidiary, Sunteck Transport Co., Inc., provides transportation capacity and related transportation services to shippers in the United States and Canada. The company’s non-asset based services include ground transportation coast-to-coast, local pick up and delivery, air freight, and ocean freight. It has strategic alliances with less than truckload, truckload, and air, rail, and ocean common carriers to serve its customers’ needs. Its brokerage services are provided through a network of independent sales agents. As of March 1, 2004, the company had six regional operating centers providing brokerage services and representatives in 15 states and Canada. Its services include arranging for the transport of customers’ freight from the shippers location to the designated destination.

Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

Streicher Mobile Fueling, Inc. provides mobile fueling and fuel management out-sourced services. Its truck fleet delivers diesel, gasoline, and alternative fuels to customers’ locations on a scheduled or as needed basis refueling vehicles and equipment, and resupplying fixed-site storage facilities. The company’s customer base includes businesses that operate fleets of vehicles and equipment of various sizes, including governmental agencies, utilities, trucking companies, bus lines, hauling and delivery services, courier services, construction companies, and others. As of June 30, 2004, the company operated approximately 100 custom mobile fueling trucks from 26 service locations

World Fuel Services Corp. (NYSE: INT)

World Fuel Services Corporation markets marine and aviation fuel services. The company’s aviation fuel-related services include fuel management, price risk management, flight plans, weather reports, ground handling, and flight permits. It offers these services to passenger, cargo, and charter airlines, as well as corporate customers, and the United States’ and foreign militaries. The company also provides flight plans and weather reports to its corporate customers. The company’s marine fuel-related services include management services for the procurement of fuel, cost control through the use of hedging instruments, quality control, and claims management. As of August 5, 2004, World Fuel Services provided fuel and services at approximately 2,500 airports and seaports worldwide

The table below provides a summary of the selected Comparables and their relevant market multiples.

Appendix II Page 12

Cargo Handling / Fuel Services

(Dollars in Millions, Except Stock Price)	Stock		Market		Enterprise		Enterprise Value / LTM
	Price(a)		Cap.		Value(b)		Revenues		EBITDA		EBIT
Air T, Inc. (AIRT)	$	17.61	$	47.7	$	47.3		0.7x		10.6x		12.3x
AirNet Systems, Inc. (ANS)		3.90		39.4		98.7		0.6		3.9		19.7
AutoInfo, Inc. (AUTO)		0.69		21.5		22.8		0.6		22.0		22.9	(c)
Streicher Mobile Fueling, Inc. (FUEL)		1.75		13.1		19.7		0.2		8.3		18.2
World Fuel Services Corp. (INT)		27.70		298.7		282.3		0.1		7.7		8.5
High		—	$	298.7	$	282.3		0.7x		10.6x		22.9x
Median		—		39.4		47.3		0.6		8.0		18.2
Mean		—		84.1		94.2		0.4		7.6		16.3
Low		—		13.1		19.7		0.1		3.9		8.5
Mercury Air Centers, Inc. (MAX)	$	3.66	$	11.2	$	27.6		0.1x		7.3x		25.0x

Note:	EBITDA and EBIT adjusted for unusual and nonrecurring items.
LTM:	Latest Twelve Months.
(a)	Stock price as of February 18, 2005.
(b)	Enterprise Value equals equity value plus debt, minority interest, preferred stock, and convertibles, less investments in unconsolidated affiliates and cash.
(c)	AUTO excluded as an outlier with a TEV/LTM EBITDA multiple of 22.0x.

After identifying the Comparables, we then focused on the strengths and weaknesses of the Company relative to the Comparables. Therefore, a comparative analysis of the selected Comparables was undertaken.

Size. In comparison to the Comparables, the Company’s LTM gross profit and EBITDA of approximately $15.4 million and $3.8 million, respectively, place it below the average of the Comparables as presented below.

Cargo Handling / Fuel Services

Operating Results	LTM		LTM Operating Results
(Dollars in Millions)	Ended		Revenues		Gross Profit		EBITDA		EBIT		FCF (a)
Air T, Inc. (AIRT)		12/31/04	$	68.1	$	12.4	$	4.5	$	3.8	$	3.0
AirNet Systems, Inc. (ANS)		9/30/04		164.1		59.1		25.1		5.0		(30.5	)
AutoInfo, Inc. (AUTO)		9/30/04		40.4		7.5		1.0		1.0		1.0
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		108.0		5.6		2.4		1.1		2.1
World Fuel Services Corp. (INT)		9/30/04		4,574.1		113.8		36.8		33.2		34.0
High		—	$	4,574.1	$	113.8	$	36.8	$	33.2	$	34.0
Median		—		108.0		12.4		4.5		3.8		2.1
Mean		—		991.0		39.7		13.9		8.8		1.9
Low		—		40.4		5.6		1.0		1.0		(30.5	)
Mercury Air Centers, Inc. (MAX)		12/31/04	$	493.3	$	15.4	$	3.8	$	1.1	$	2.3

Note:	EBITDA and EBIT adjusted for unusual and nonrecurring items.
LTM:	Latest Twelve Months.
(a)	FCF = EBITDA - Capital Expenditures

Growth. While the Company’s three-year pro forma historical revenue growth rate is 23.9%, most of the growth in the Company’s revenues relates to the rise in fuel prices during the past 18 months. The Company’s gross profit has shown more modest growth at 3.2%, while EBITDA has grown 51.6% due to higher sales and fixed cost absorption.

Appendix II Page 13

Cargo Handling / Fuel Services

	3-Year Historical Growth Rates
Operating Growth Rates	Revenues			Gross Profit			EBITDA			EBIT
Air T, Inc. (AIRT)		5.0	%		4.1	%		4.6	%		5.9	%
AirNet Systems, Inc. (ANS)		7.3			2.7			(5.2	)		(30.9	)
AutoInfo, Inc. (AUTO)		80.0			76.4			185.7			203.9
Streicher Mobile Fueling, Inc. (FUEL)		25.8			8.6			14.9			93.0
World Fuel Services Corp. (INT)		48.9			18.3			33.9			36.4
High		80.0	%		76.4	%		185.7	%		203.9	%
Median		25.8			8.6			14.9			36.4
Mean		33.4			22.0			46.8			61.7
Low		5.0			2.7			(5.2	)		(30.9	)
Mercury Air Centers, Inc. (MAX)		23.9	%		3.2	%		51.6	%	NM

Note:	EBITDA and EBIT adjusted for unusual and nonrecurring items.
LTM:	Latest Twelve Months.
(a)	FCF = EBITDA - Capital Expenditures

Leverage. The Company’s LTM net debt / EBITDA ratio of 4.2x is higher than the Comparables.

Cargo Handling / Fuel Services

	Total Debt /									Net Debt /			LTM Interest Coverage
Credit Ratios	Cap (Book)			Cap (Mkt)			EBITDA			EBITDA			EBITDA			FCF(a)
Air T, Inc. (AIRT)		12.0	%		3.5	%		0.4	x		NM			60.0			40.0
AirNet Systems, Inc. (ANS)		52.5			60.4			2.4			2.4			13.7			NA
AutoInfo, Inc. (AUTO)		34.6			8.2			1.9			1.3			11.6			11.3
Streicher Mobile Fueling, Inc. (FUEL)		66.3			45.8			4.7			2.8			1.6			1.4
World Fuel Services Corp. (INT)		18.7			12.1			1.1			NM			NA			NA
High		66.3	%		60.4	%		4.7	x		2.8	x		60.0	x		40.0	x
Median		34.6			12.1			1.9			2.4			12.7			11.3
Mean		36.8			26.0			2.1			2.1			21.7			17.5
Low		12.0			3.5			0.4			1.3			1.6			1.4
Mercury Air Centers, Inc. (MAX)		57.9	%		66.3	%		5.9	x		4.2	x		3.3	x		2.0	x

LTM: Latest Twelve Months.

Margins. The Company’s LTM gross profit and EBITDA margins of 3.1% and 0.8%, respectively, are both lower than the Comparables’ average margins of 16.1% and 5.5%, respectively.

Cargo Handling / Fuel Services

	LTM		LTM Margins
Operating Margins	Ended		Gross Profit			EBITDA			EBIT			FCF(a)
Air T, Inc. (AIRT)		12/31/04		18.3	%		6.6	%		5.6	%		4.4	%
AirNet Systems, Inc. (ANS)		9/30/04		36.0			15.3			3.1			(18.6	)
AutoInfo, Inc. (AUTO)		9/30/04		18.5			2.6			2.5			2.5
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		5.2			2.2			1.0			2.0
World Fuel Services Corp. (INT)		9/30/04		2.5			0.8			0.7			0.7
High		—		36.0	%		15.3	%		5.6	%		4.4	%
Median		—		18.3			2.6			2.5			2.0
Mean		—		16.1			5.5			2.6			(1.8	)
Low		—		2.5			0.8			0.7			(18.6	)
Mercury Air Centers, Inc. (MAX)		12/31/04		3.1	%		0.8	%		0.2	%		0.5	%

Note:	EBITDA and EBIT adjusted for unusual and nonrecurring items.
LTM:	Latest Twelve Months.
(a)	FCF = EBITDA - Capital Expenditures

Appendix II Page 14

Market Multiple Method

Valuation Market Multiples for the Comparables were derived based on publicly available financial information. Market Multiples were a result of dividing the value of each of the Comparable’s TEV by the LTM Revenue, EBITDA, and EBIT. TEV is defined as the book value of the company’s net debt and preferred equity (where book value approximates fair market value) plus the market value of the company’s common equity. The market value of the common equity is computed by multiplying the number of shares outstanding by the current stock price.

As exhibited previously, IC believes that multiples derived from the operating data of the Comparables presented were given specific consideration in the selection of the appropriate Market Multiples for the Company. Furthermore, consideration was given to the range of multiples as well as the median and mean multiples. We considered the TEV/EBITDA multiple to be meaningful and appropriate because the Company’s margins are much lower than the Comparables, so therefore the TEV/Revenue multiple should not be considered.

Market Approach — Multiple Analysis

($ in thousands)
Industry Multiples	Low			Mean			High
EV/LTM EBITDA Range		3.9 x			7.6 x			10.6 x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	14,799		$	28,664		$	39,724
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value		($1,127	)	$	12,738		$	23,798
Shares Outstanding		3,056			3,056			3,056
Implied Share Price		n/m		$	4.17		$	7.79
Premium to Current Share Price (a)		n/m			13.9	%		112.7	%

(a) Based on a price of $3.66 as of March 7, 2005.

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

There are several other factors which might reasonably be expected to reduce the implied TEV of the Company including the following: (i) the Company’s size as compared to the Comparables; (ii) the illiquidity of an investment in the Company due to its low trading volume; (iii) the long-term nature of the Company’s receivables; and (iv) customer concentration in the Company’s MercFuel business.

Appendix II Page 15

Precedent Transaction Method

Corporate mergers and acquisitions can also be used to indicate the FMV of a subject company. The Precedent Transaction method uses valuation multiples based on actual transactions that have occurred in the marketplace to arrive at an indication of value. Similar to the Market Multiple Approach, multiples are derived from precedent transactions by analyzing a target company’s purchase price relative to its historical financial performance. Multiples used in this approach are determined through an analysis of transactions involving controlling interests in companies in a similar industry or with operations similar to the principal business operations of the subject company. IC reviewed and compared the implied transaction multiples in certain announced control transactions deemed relevant based on similarity of business operations. In order for a transaction to be useful, it is necessary to have publicly available financial information about the purchase price and the operating results of the acquired company. Comparable transactions and corresponding transaction multiples were based on information obtained from the following primary sources:

• Mergerstat

• SEC filings

• Public company disclosures

• Press releases and news articles

• Industry reports

• Capital IQ

For the precedent transaction analysis, IC examined a number of transactions in the cargo handling and fuel services sectors which have occurred since 2000. However, there was limited useful information, other than the purchase price, available for most of these transactions, thereby complicating efforts to derive TEV/EBITDA multiples to apply to the Company. The table below illustrates the precedent transactions:

Appendix II Page 16

Transaction Details

Transaction Multiples

Date

Enterprise

Target

Target

EV/

EV/

Acquiror

Target

Announced

Value

Revenue

EBITDA

Revenues

EBITDA

Express One International, Inc.

Central Florida Air Maintenance

07/21/04

NA

NA

NA

NM

NM

Alimentation Couche-Tard, Inc.

Circle K Corporation

10/06/03

811.7

3,900.0

NA

0.2

NM

The Pantry, Inc.

Golden Gallon, Inc.

08/25/03

187.0

387.0

NA

0.5

NM

Transforce Income Fund

Canadian Freightways Limited

08/15/03

60.7

150.7

NA

0.4

NM

The Carlyle Group

Air Cargo, Inc.

08/11/03

NA

NA

NA

NM

NM

Chevy Chase Trust Co.

Williams Lynxs Alaska CargPort

05/31/03

NA

NA

NA

NM

NM

DHL Worldwide Express

Airborne, Inc.

03/25/03

1,410.0

3,343.7

253.1

0.4

5.6

Management of Landair Corp.

Landair Corp.

10/11/02

101.7

102.9

19.5

1.0

5.2

United Defense Industries, Inc.

United States Marine Repair, Inc.

05/28/02

417.6

431.8

45.4

1.0

9.2

Pacific CMA, Inc.

Airgate International Corp.

03/19/02

3.4

29.1

0.6

0.1

5.6

Union Pacific Corp.

Motor Cargo Industries

11/15/01

96.9

130.9

17.2

0.7

5.6

Vinci SA

Worldwide Flight Services, Inc.

09/10/01

285.0

348.0

NA

0.8

NM

Avfuel Corporation

Texaco General Aviation Business

09/07/01

NA

NA

NA

NM

NM

BBA Group / Signature

Aircraft Services International

07/11/01

137.9

162.0

NA

0.9

NM

United Parcel Service

Fritz Companies, Inc.

01/10/01

495.8

621.8

54.4

0.8

9.1

World Fuel Services Corp.

Page Avjet Fuel Co LLC

01/03/01

NA

NA

NA

NM

NM

EGL, Inc.

Circle Int’l Group, Inc.

07/03/00

518.1

832.3

49.2

0.6

10.5

High

1.0

x

10.5

x

Median

0.7

5.6

Mean

0.6

7.3

Low

0.1

5.2

There are numerous factors to consider when drawing comparisons, including: (i) record of growth and the opportunity for further improvement; (ii) dispersion of market share; (iii) competitive advantages; (iv) size and profitability of the target company; (v) stability of revenue and earnings; (vi) opportunity to realize cost savings, revenue enhancements, and operational synergies; and (vii) strategic and emotional factors employed by the acquirer. In consideration of such factors, below is a summary of the TEVs for the Company based on precedent transactions:

Market Approach — Precedent Transactions

($ in thousands)
Transaction Multiples	Low			Mean			High
EV/LTM EBITDA Range		5.2 x			7.3 x			10.5 x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	19,592		$	27,317		$	39,552
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value	$	3,666		$	11,391		$	23,626
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	1.20		$	3.73		$	7.73
Premium to Current Share Price (a)		-67.2	%		1.8	%		111.2	%

(a) Based on a price of $3.66 as of March 7, 2005.

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

Appendix II Page 17

Discounted Cash Flow (“DCF”)

The fundamental premise of the DCF Approach is to estimate the available cash flows a prudent investor would expect a company to generate over its remaining life. IC relied on the Company’s cash flow projections for FYE June 30, 2005 through 2008, as provided by Mercury’s management (the “Projections”). The estimated available cash flows for each year are discounted to their present value equivalent using an appropriate rate of return to determine present value. The residual or terminal value of the business at the end of the projection period is estimated, discounted to its present value equivalent, and added to the present value equivalent of the discrete projection period estimated cash flows to estimate the TEV of a subject company. Subtracting the debt from the subject company’s TEV and adding the cash and non-operating asset values results in the value of its equity.

The following outlines the steps involved in applying the DCF analysis: (i) determination of future cash flows based upon the projections; (ii) selection of an appropriate discount rate for the subject company’s projections; (iii) determination of a residual or terminal value for the subject company; and (iv) determination of the TEV and resulting equity value for the company.

Determination of Future Cash Flows

IC relied on the following sources which were provided by Mercury’s management to determine the future cash flows of the Company: (i) the Company’s FYE 2005 through 2008 projections; (ii) management discussions; and (iii) other management estimates.

The table below presents the Company’s projected revenue, gross margin and EBITDA for the projected fiscal years ending 2005 through 2008.

Appendix II Page 18

Projections

($ in thousands)	FYE			LTM			Fiscal Year Ending June 30,
	6/30/2004			12/31/2004			2005			2006			2007			2008
MercFuel Revenues	$	322,631		$	428,512		$	537,474		$	628,383		$	628,383		$	628,383
Air Cargo Revenues		39,549			42,550			43,839			46,306			46,306			46,306
Maytag Revenues		23,281			22,213			20,999			21,980			21,980			21,980
Total Revenues	$	385,461		$	493,275		$	602,312		$	696,669		$	696,669		$	696,669
Sales Growth %		-44.7	%		-29.2	%		n/a			15.7	%		0.0	%		0.0	%
MercFuel Gross Profit	$	6,080		$	6,971		$	7,919		$	8,335		$	8,335		$	8,335
Air Cargo Gross Profit		2,100			3,563			4,398			4,734			4,734			4,734
Maytag Gross Profit		5,146			4,901			4,426			4,124			4,124			4,124
Total Gross Profit	$	13,326		$	15,435		$	16,743		$	17,193		$	17,193		$	17,193
Gross Profit Margin %		3.5	%		3.1	%		2.8	%		2.5	%		2.5	%		2.5	%
SG&A Expenses	$	10,894		$	10,783		$	10,366		$	10,729		$	10,729		$	10,729
Provision for Bad Debts		506			894			1,383			1,477			1,477			1,477
Total Operating Expenses		11,400			11,677			11,749			12,206			12,206			12,206
		3.0	%		2.4	%		2.0	%		1.8	%		1.8	%		1.8	%
EBITDA	$	1,926		$	3,758		$	4,994		$	4,988		$	4,988		$	4,988
EBITDA Margin		0.5	%		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,828			2,656			2,511			2,679			2,679			2,679
Operating Income		(902	)		1,102			2,483			2,308			2,308			2,308
Operating Income Margin		-0.2	%		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Capital Expenditures	$	1,184		$	1,505		$	2,000		$	1,956		$	2,000		$	2,000

Revenue and Gross Profit:

• IC relied on the Company’s projections to determine revenue for the FYE June 30, 2005 through 2008, as provided by Mercury’s management.

• Revenues are projected to increase 56.3% in Fiscal 2005, due primarily to fuel price increases at the Company’s MercFuel division. Revenues are expected increase an additional 15.7% in Fiscal 2006. Although the Company forecasted continued growth of 8.9% in Fiscal 2007 and 9.1% in Fiscal 2008, the inherently volatile nature of the Company’s revenues from fuel sales makes it difficult to project future revenues this far in advance. Therefore, to be conservative, for purposes of our analysis we have maintained revenues at the Fiscal 2006 level for the remainder of the projection period.

• The Company’s gross profit margin is expected to decline from 3.5% of revenues in Fiscal 2004 to 2.8% of revenues in Fiscal 2005 and 2.5% in Fiscal 2006, as the Company’s incremental gross margin on fuel sales doesn’t keep pace with price increases. Although the Company projected gross margin to continue to erode as fuel sales increased in Fiscal 2007-08, for purposes of our analysis we have maintained a flat gross margin in these years.

EBITDA:

• The Company’s SG&A expenses are expected to decrease approximately $0.3 million in Fiscal 2005 to $10.4 million. Operating expenses (including bad debt expense) as a percentage of revenues are expected to decrease in Fiscal 2005 to 2.0%, from 3.0% in Fiscal 2004. Operating expenses were

Appendix II Page 19

expected to continue to decrease as a percentage of revenue, to 1.6% in Fiscal 2008, as higher gas prices increase revenues at the Company’s MercFuel division. However, for purposes of our analysis we have maintained operating expenses at the Fiscal 2006 level of $12.2 million in Fiscal 2007-08.

Capital Expenditures:

• The Company’s current working capital facility with Bank of America contains certain financial covenants limiting the amount the Company can expend annually for capital expenditures to $2.0 million. Management believes that this $2.0 million limit is a reasonable estimate for on-going maintenance capital expenditures.

Debt-Free Net Working Capital:

• Debt-free net working capital is defined as current assets (excluding cash) less non-interest bearing liabilities. Based on the Company’s projections, management projects debt-free net working capital to be approximately 3.3% of sales in fiscal 2005 and estimates that it will increase to approximately 3.5% of sales in Fiscal 2006. Although the Company originally projected large increases and revenues (and corresponding increases in working capital) for Fiscal 2007-08, for our analysis we have assumed that revenues and gross profit remain flat from their Fiscal 2006 levels. Therefore we have also held working capital balances constant from their Fiscal 2006 levels.

Projected cash flows for the Company are summarized below. FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Projected Free Cash Flow

($ in thousands)
	Fiscal Year Ending June 30,
	2005(a)			2006			2007			2008
Net Sales	$	301,156		$	696,669		$	696,669		$	696,669
Cost of Goods Sold		292,784			679,475			679,475			679,475
Gross Profit		8,372			17,193			17,193			17,193
SG&A		5,183			10,729			10,729			10,729
Depreciation & Amortization		1,256			2,679			2,679			2,679
Provision for Bad Debt		692			1,477			1,477			1,477
EBIT		1,242			2,308			2,308			2,308
Less: Estimated Taxes (@ 35%)		(435	)		(808	)		(808	)		(808	)
Plus: Depreciation & Amortization		1,256			2,679			2,679			2,679
Less: Capital Expenditures		(1,000	)		(1,956	)		(2,000	)		(2,000	)
Less: Changes in Debt Free Net Working Capital		(612	)		(4,141	)		—			—
Free Cash Flow	$	451		$	(1,918	)	$	2,180		$	2,180
Sales Growth %		n/a			15.7	%		0.0	%		0.0	%
Gross Margin		2.8	%		2.5	%		2.5	%		2.5	%
SG&A as percentage of sales		1.7	%		1.5	%		1.5	%		1.5	%

(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Appendix II Page 20

Selection of an Appropriate Discount Rate

To arrive at the present value of the cash flows available in the DCF, we used a range of discount rates between 9.0% and 11.0% (rounded), which were calculated using the Weighted Average Cost of Capital (“WACC”). WACC provides a fair return on total invested capital by weighting the expected yield rates indicated for the equity and debt components in proportion to their estimated percentages in an expected capital structure. The WACC represents the rate of return an investor would require to compensate them for the time value of their money and the risk inherent in the particular investment. The WACC is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows.

The following is a general discussion of the methods used in our derivation of the WACC:

WACC	=	[Rd (1 - - t) × (d%)] + [Re × (e%)]
where:
WACC	=	Weighted average cost of capital;
Rd	=	Pre-tax rate of return on debt capital;
t	=	Effective federal and state income tax rate;
d%	=	Debt capital as a percentage of the sum of the debt plus common and preferred equity capital;
Re	=	Rate of return on common equity capital; and
e%	=	Common equity capital as a percentage of the total capital

See Appendix VI for additional detail on the calculation of the WACC.

Rates of Return on Debt

The cost of debt capital is typically defined as the yield-to-maturity on comparable debt instruments traded in the public market, as adjusted for specific risk factors related to the subject company. Consequently, for purposes of our analysis, we selected the average yield of Baa-rated corporate debt to approximate the Company’s pre-tax rate of return on debt capital. According to Moody’s, the yield-to-maturity for Baa-rated debt as of February 4, 2005 is 5.86%. Consequently, applying a tax rate of 35.0% results in an after-tax cost of debt of 3.81%.

Rates of Return on Equity

The required rate of return on equity capital is estimated using the Capital Asset Pricing Model (“CAPM”). CAPM estimates the rate of return on common equity as the current risk-free rate of return on United States Treasury bonds, plus a market risk premium expected over the risk-free rate of return, multiplied by the “beta” for the stock. Beta is a risk measure that reflects the sensitivity of a company’s stock price to the movements of the stock market as a whole.

Appendix II Page 21

The CAPM rate of return on equity capital is calculated using the formula:

R_e = R_f + [b × (R_m - - R_f )] + R_s + R_is

where:
Re	=	Rate of return on equity capital;
Rf	=	Risk-free rate of return;
b	=	Beta or systematic risk for this type of equity investment;
Rm – Rf	=	Equity risk premium; the expected return on a broad portfolio of stocks in the market
		(Rm) less the risk free rate (Rf);
Rs	=	Small stock equity premium; and
Ris	=	Investment specific risk

Risk-Free Rate of Return

The 20-year United States Treasury Bond rate, as published by the Federal Reserve Statistical Release, of 4.54%, was used for our valuation³. The risk-free rate of return represents the return on an investment that is practically “riskless” due to the very low probability of default.

Beta

Beta is a function of the relationship between the return on an individual security and the return on the market. Beta represents the systematic risk common to all securities, which cannot be eliminated through diversification. The beta for the market as a whole, the average beta, is 1.0. Securities that have betas greater than 1.0 are viewed as more risky than the market. Conversely, securities that have betas less than 1.0 are deemed less risky than the market. We calculated the appropriate beta coefficient to apply in our calculation of the cost of equity based on those of the ten chosen Comparables. We delevered the Comparables’ equity betas to eliminate the effect of leverage on each company’s equity beta, and relevered them according to the average of the Comparables’ debt/equity ratio. This analysis resulted in a relevered beta of 0.80 (rounded).

Equity Risk Premium

The equity risk premium is the return investors require over and above the risk-free return, to compensate them for the additional risk involved in investing in non-Treasury bonds. This additional risk, in terms of the cost of capital, is the degree of uncertainty as to the realization of the expected future returns. We selected an equity risk premium of 7.2%, based on Ibbotson Associates’ (“Ibbotson”) historical average of large company stocks from 1926 to 2002⁴. The equity risk premium is multiplied by the beta (b) to estimate an investor’s expected equity return premium over risk free investments.

3	Source: Federal Reserve Statistical Release, dated February 4, 2005.
4	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition 2004 Yearbook, Ibbotson Associates.

Appendix II Page 22

Small Stock Premium

We then adjusted the CAPM rate of return by applying a premium that reflects the additional risk of investments in small companies. The determination of size is presented by Ibbotson, which uses the market value of equity of an investment to determine an applicable size premium. This premium is derived from historical differences in returns between small companies and large companies, using data published by Ibbotson. For the year ended 2003, the average premium for micro-cap companies with a market value of equity of between $0.3 million and $166.4 million is 4.01%.

Investment Specific Risk

We then further adjusted the CAPM rate of return by applying a premium that reflects the specific risk of the Company. Risks which we believe affect the valuation of the Company include, but are not limited to: (i) the small size of the Company relative to other aviation services companies; (ii) accounts receivables aging and concentration; (iii) the volatility of gas prices and resulting effect on the Company’s liquidity; and (vi) risks associated with the Company achieving its FYE 2004 – 2008 projections. As such, we applied a conservative company-specific risk premium of 0.0% to 5.0% to reflect any unique risk.

Applying the CAPM formula, we estimate the Company’s required rate of return on equity capital to be:

R_e = R_f + ß (R_m - R_f) + R_s + R_is

Required rate on return on equity capital:

Assumption:

@ 0.00% Investment Specific Risk:	Re	= 16.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 0.00%
@ 2.50% Investment Specific Risk:	Re	= 19.17% = 4.54% + (0.80 x 7.20%) + 6.34% + 2.50%
@ 5.00% Investment Specific Risk:	Re	= 21.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 5.00%

Based on the data presented above, we calculated a WACC of approximately 9.0% to 11.0% (rounded).

Determination of Terminal Year Growth Factor

The terminal value used in our DCF approach is essentially an estimate of the value of the enterprise as of the end of the final period for which cash flow projections have been made. It is necessary to compute this value because, although we are confident that the Company will remain a viable going-concern beyond the final period, we cannot project with enough certainty the cash flows to be generated in any given period.

For purposes of this analysis we used the “growing perpetuity method” using the projected free cash flow as its basis for terminal value. The free cash flows projected in the final period is adjusted to arrive at a level of cash flow for the first year beyond the projection period which is representative of the future cash-generating capability of the Company. This “normalized” cash flow figure incorporates expectations of the level of investment required to maintain the business into the future, as well as the return on investment that the

Appendix II Page 23

business can be expected to sustain. The normalized cash flow figure is then capitalized as a growing perpetuity by the previously determined discount rate, adjusted for some level of growth which can be expected into perpetuity. For purposes of our analysis and per management, we used estimated cash flows provided by Mercury’s management for the FYE 2008 as representative of the terminal year’s projected cash flows. The following as a representation of the growing perpetuity method formula:

         CF_n
T = —————
         r - g

Where:

T	=	Terminal value
CFn	=	Normalized cash flow
R	=	Discount rate
G	=	Growth rate in perpetuity

The terminal value is then discounted back to the present using the previously selected discount rate. For the terminal year, we used a normalized free cash flow figure of approximately $2.2 million, a discount rate of 9.0% to 11.0% (rounded), and a perpetuity growth rate of 2.8%. The growth rate is based on the expected fiscal 2008 revenue growth rate as provided in the Company’s Projections. Outlined below are the values of this analysis:

Summary of Terminal Value Range

($ in thousands)
Discounted Terminal		Normalized			Discount		Growth Rate
Value		Cash Flow			Rate		in Perpetuity
$35,157	=	$	2,180	/	(9.0%	-	2.8%)
$30,274	=	$	2,180	/	(10.0%	-	2.8%)
$26,582	=	$	2,180	/	(11.0%	-	2.8%)

Midyear Discounting Convention

For purposes of our analysis, we have assumed that the Company’s projected cash flows are received at midyear, approximating the effect of receiving the cash flows more or less evenly throughout the year.

Determination of the Implied Equity Value

As shown below and in more detail in Appendix V, using a range of discount rates of 9.0% to 11.0% (rounded) in the discounted cash flow analysis results in implied TEVs ranging between $21.5 and $29.5 million.

Appendix II Page 24

Summary of Implied Equity Values — Discounted Cash Flow Method

($ in thousands)
Discount Rate		9.0	%		10.0	%		11.0	%
Implied Total Enterprise Value	$	29,480		$	24,932		$	21,503
Less: Total Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash on Balance Sheet	6,316			6,316			6,316
Implied Total Equity Value	$	13,554		$	9,006		$	5,577
Shares Outstanding	3,056			3,056			3,056
Implied Share Price	$	4.43		$	2.95		$	1.82
Premium to Current Share Price(a)		21.2	%		-19.5	%		-50.1	%

(a) Based on a price of $3.66 as of March 7, 2005.

Summary

The three different valuation methodologies applied by IC resulted in the following range of implied equity values for the Company using EBITDA multiples:

Implied Equity Values

	Low		Mean	High
Market Approach — Multiple Analysis		n/m	$12.7 million	$23.8 million
Market Approach — Precedent Transactions	$3.7 million		$11.4 million	$23.6 million
Discounted Cash Flow Analysis	$5.6 million		$ 9.0 million	$13.6 million

	Per Share Values
	Low		Mean	High
Market Approach — Multiple Analysis		n/m	$4.17 per share	$7.79 per share
Market Approach — Precedent Transactions	$1.20 per share		$3.73 per share	$7.73 per share
Discounted Cash Flow Analysis	$1.82 per share		$2.95 per share	$4.43 per share

As the table above illustrates, the Transaction Consideration of [$X.XX] per share in cash is within the range the values under the Market Approach — Multiple Analysis and the Market Approach — Precedent Transactions, and the DCF analysis. Based on the above analysis, we determined that the Transaction Consideration is within a reasonable range of values and is fair from a financial point of view.

Appendix II Page 25

Appendix III:

Historical Income Statement and Balance Sheet

Fairness Opinion	Appendix III
Mercury Air Group, Inc.
Statement of Operations — Historical

($ in thousands)	Fiscal Year Ended June 30,									LTM
	2002			2003			2004(a)			12/31/2004
MercFuel Revenues	$	232,573		$	280,136		$	322,631		$	428,512
Air Cargo Revenues		28,124			32,691			39,549			42,550
Maytag Revenues		28,228			24,421			23,281			22,213
Total Revenues	$	288,925		$	337,248		$	385,461		$	493,275
Sales Growth %		n/a			16.7	%		14.3	%		28.0	%
MercFuel Gross Profit	$	6,581		$	5,926		$	6,080		$	6,971
Air Cargo Gross Profit		898			2,585			2,100			3,563
Maytag Gross Profit		6,789			4,598			5,146			4,901
Total Gross Profit	$	14,268		$	13,109		$	13,326		$	15,435
Gross Profit Margin %		4.9	%		3.9	%		3.5	%		3.1	%
SG&A Expenses	$	11,771		$	10,818		$	10,894		$	10,783	(b)
Provision for Bad Debts		1,170			1,192			506			894
Total Operating Expenses		12,941			12,010			11,400			11,677
EBITDA	$	1,327		$	1,099		$	1,926		$	3,758
EBITDA Margin		0.5	%		0.3	%		0.5	%		0.8	%
Depreciation & Amortization		3,478			2,782			2,828			2,656
Operating Income		(2,151	)		(1,683	)		(902	)		1,102
Operating Income Margin		-0.7	%		-0.5	%		-0.2	%		0.2	%
Capital Expenditures	$	546		$	390		$	1,184		$	1,505

Note: Divisional Gross Profit includes certain SG&A costs which are charged directly to the operating units.

(a)	Fiscal 2004 SG&A excludes $2.4 million in extraordinary settlement costs, $1.7 million for severance payments to the retiring Chairman, and $311,000 of unusual audit fees. Air Cargo’s 2004 gross profit has been adjusted to exclude $300,000 in severance payments to Air Cargo’s former COO.
(b)	LTM SG&A expenses excludes $2.1 million of one-time charges for legal fees regarding a lawsuit settlement, severance costs, write-off of insurance deposits related to a joint venture, an asset impairment on a plane that was sold, and a loss on a timeshare plane trade-in.

Fairness Opinion	Appendix III
Mercury Air Group, Inc.
Balance Sheet Data — Historical

($ in thousands)	As of		As of
	06/30/04		12/31/04
Assets
Cash and Cash Equivalents	$	4,690	$	6,316
Accounts Receivable, net		50,974		56,912
Inventories		1,165		1,619
Prepaid Expenses & Other		7,147		5,108
Total Current Assets		63,976		69,955
Property, Plant & Equipment, net		10,349		7,564
Goodwill & Intangibles		7,229		5,011
Restricted Cash		24,403		8,418	(a)
Other Assets		—		3,133
Total Assets	$	105,957	$	94,081
Liabilities and Shareholders’ Equity
Account Payable	$	33,552	$	36,390
Accrued Expenses & Other		11,825		8,559
Current Portion of Long-Term Debt		139		1,021
Total Current Liabilities		45,516		45,970
Long-Term Debt		17,790		21,221
Other Long-Term Liabilities		10,238		10,722
Total Liabilities		73,544		77,913
Mandatorily Redeemable Preferred Stock		518		468
Shareholders’ Equity		31,895		15,700
Total Liabilities and Shareholders’ Equity	$	105,957	$	94,081

(a) Restricted cash consists of cash held for specific purposes and not available for general use by the Company and is comprised primarily of an escrow account associated with the Hartsfield FBO. The funds held in the escrow account are to be distributed to either one or both of the Company and Allied Capital dependent upon the award of a new lease at the Hartsfield International Airport in Atlanta for a new FBO.

Appendix IV:

FYE June 30, 2005 through 2008 Projections

Fairness Opinion	Appendix IV
Mercury Air Group, Inc.
Statement of Operations — Projections

($ in thousands)	FYE			LTM			Fiscal Year Ending June 30,
	6/30/2004			12/31/2004			2005			2006			2007			2008
MercFuel Revenues	$	322,631		$	428,512		$	537,474		$	628,383		$	628,383		$	628,383
Air Cargo Revenues		39,549			42,550			43,839			46,306			46,306			46,306
Maytag Revenues		23,281			22,213			20,999			21,980			21,980			21,980
Total Revenues	$	385,461		$	493,275		$	602,312		$	696,669		$	696,669		$	696,669
Sales Growth %		-44.7	%		-29.2	%		n/a			15.7	%		0.0	%		0.0	%
MercFuel Gross Profit	$	6,080		$	6,971		$	7,919		$	8,335		$	8,335		$	8,335
Air Cargo Gross Profit		2,100			3,563			4,398			4,734			4,734			4,734
Maytag Gross Profit		5,146			4,901			4,426			4,124			4,124			4,124
Total Gross Profit	$	13,326		$	15,435		$	16,743		$	17,193		$	17,193		$	17,193
Gross Profit Margin %		3.5	%		3.1	%		2.8	%		2.5	%		2.5	%		2.5	%
SG&A Expenses	$	10,894		$	10,783		$	10,366		$	10,729		$	10,729		$	10,729
Provision for Bad Debts		506			894			1,383			1,477			1,477			1,477
Total Operating Expenses		11,400			11,677			11,749			12,206			12,206			12,206
		3.0	%		2.4	%		2.0	%		1.8	%		1.8	%		1.8	%
EBITDA	$	1,926		$	3,758		$	4,994		$	4,988		$	4,988		$	4,988
EBITDA Margin		0.5	%		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,828			2,656			2,511			2,679			2,679			2,679
Operating Income		(902	)		1,102			2,483			2,308			2,308			2,308
Operating Income Margin		-0.2	%		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Capital Expenditures	$	1,184		$	1,505		$	2,000		$	1,956		$	2,000		$	2,000
MercFuel Growth		n/a			32.8	%		66.6	%		16.9	%		0.0	%		0.0	%
Air Cargo Growth		n/a			7.6	%		10.8	%		5.6	%		0.0	%		0.0	%
Maytag Growth		n/a			-4.6	%		-9.8	%		4.7	%		0.0	%		0.0	%
MercFuel Gross Margin		1.9	%		1.6	%		1.5	%		1.3	%		1.3	%		1.3	%
Air Cargo Gross Margin		5.3	%		8.4	%		10.0	%		10.2	%		10.2	%		10.2	%
Maytag Gross Margin		22.1	%		22.1	%		21.1	%		18.8	%		18.8	%		18.8	%

Fairness Opinion	Appendix IV
Mercury Air Group, Inc.
Balance Sheet Data — Projected

($ in thousands)	As of			Fiscal Year Ending June 30,
	12/31/04			2005			2006			2007			2008
Assets
Cash and Cash Equivalents	$	6,316		$	1,270		$	1,000		$	1,000		$	1,000
Accounts Receivable, net		56,912			61,570			68,077			68,077			68,077
Inventories		1,619			1,334			1,427			1,427			1,427
Prepaid Expenses & Other		5,108			6,036			6,079			6,079			6,079
Total Current Assets		69,955			70,209			76,583			76,583			76,583
Property, Plant & Equipment, net		7,564			7,182			6,459			5,736			5,013
Restricted Cash		8,418			6,764			6,764			6,764			6,764
Goodwill & Other		8,144			8,144			8,130			7,730			7,578
Total Assets	$	94,081		$	92,299		$	97,936		$	96,813		$	95,938
Liabilities and Shareholders’ Equity
Account Payable	$	36,390		$	39,349		$	42,375		$	42,375		$	42,375
Accrued Expenses & Other		8,559			9,676			9,153			9,153			9,153
Current Portion of Long-Term Debt		1,021			1,137			1,137			1,137			1,137
Total Current Liabilities		45,970			50,163			52,664			52,664			52,664
Long-Term Debt		21,221			15,270			18,619			18,966			19,342
Other Long-Term Liabilities		10,722			8,574			7,557			7,557			7,557
Total Liabilities		77,913			74,006			78,840			79,187			79,563
Mandatorily Redeemable Preferred Stock		468			486			522			558			594
Shareholders’ Equity		15,700			17,807			18,573			17,068			15,781
Total Liabilities and Shareholders’ Equity	$	94,081		$	92,299		$	97,936		$	96,813		$	95,938
Debt Free Net Working Capital (“DFNWC”)
Current Assets (excl. cash)	$	63,639		$	68,939		$	75,583		$	75,583		$	75,583
Non-Interest Bearing Current Liabilities		(44,949	)		(49,025	)		(51,527	)		(51,527	)		(51,527	)
DFNWC		18,690			19,914			24,055			24,055			24,055
DFNWC % of sales		3.8	%		3.3	%		3.5	%		3.5	%		3.5	%
Changes in DFNWC		n/a			(1,224	)		(4,141	)		—			—

Appendix V:

Discounted Cash Flow Analysis

Mercury Air Group, Inc.	Appendix V
Fairness Opinion
Discounted Cash Flow @ 9% WACC

($ in thousands)
	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005(a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.98			0.90			0.82			0.82
Present Value — Free Cash Flow					441			(1,722	)		1,796			28,965
Net Present Value of Cash Flows	$	29,480
Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		9.0	%	Residual Debt Free Cash Flow										2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC — G)										6.2	%
Implied Equity Value Calculation				Equal Residual Value										35,157
Net Present Value of Cash Flows	$	29,480
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor										0.82
Implied Equity Value	$	13,554		Present Value of Residual Value										28,965
Shares Outstanding		3,056
Implied Share Price	$	4.43

(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Mercury Air Group, Inc.	Appendix V
Fairness Opinion
Discounted Cash Flow @ 10% WACC
($ in thousands)

	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005(a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.98			0.89			0.81			0.81
Present Value — Free Cash Flow					440			(1,703	)		1,759			24,436
Net Present Value of Cash Flows	$	24,932
Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		10.0	%	Residual Debt Free Cash Flow										2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC — G)										7.2	%
Implied Equity Value Calculation				Equal Residual Value										30,274
Net Present Value of Cash Flows	$	24,932
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor										0.81
Implied Equity Value	$	9,006		Present Value of Residual Value										24,436
Shares Outstanding		3,056
Implied Share Price	$	2.95

(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Mercury Air Group, Inc.	Appendix V
Fairness Opinion
Discounted Cash Flow @ 11% WACC

($ in thousands)
	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005 (a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.97			0.88			0.79			0.79
Present Value — Free Cash Flow					439			(1,684	)		1,724			21,024
Net Present Value of Cash Flows	$	21,503
Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		11.0	%	Residual Debt Free Cash Flow										2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC — G)										8.2	%
Implied Equity Value Calculation				Equal Residual Value										26,582
Net Present Value of Cash Flows	$	21,503
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor										0.79
Implied Equity Value	$	5,577		Present Value of Residual Value										21,024
Shares Outstanding		3,056
Implied Share Price	$	1.82

(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Appendix VI:

Weighted Average Cost of Capital Calculation

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 1

     The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f )) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta — a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm - Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm) less the risk-free rate (Rf)
	Rsm	=	Small stock premium

     We then calculated the WACC as follows:

Variable	Value			Source
Rd =		5.86	%	(1) Baa Bond Rate — February 4, 2005
t =		35.00	%	Marginal Tax Rate
Rf =		4.54	%	(2) 20-yr. Treasury Bond Rate — February 4, 2005
Rm - Rf =		7.20	%	Equity Risk Premium
ß =		0.80		Computed Beta, see Page 4 of WACC Calculation
D % =		58.6	%	Debt/Capital Ratio
E % =		41.0	%	Equity/Capital Ratio
Rsm =		6.34	%	(3) Decile 9-10 Premium (From Ibbotson’s — $0.3MM to $166.4MM market capitalization)
Ris =		0.00	%	Investment Specific Risk

[     Rd x (1 - t)

x

D

%

] + [

[ (Rf

+ (

ß

x

(Rm - Rf))

+

Rsm

+

Ris) x E% ]

[     6.82% (1-35

%)

x

58.62

%

] + [

4.54

%

+ (

0.80

x

7.20%

)

+

6.34

%

+

0.00% ) x

41.00% ]

WACC=

Rd (1-t)

x

D

%

+

Re

x

E

%

[          3.81%

x

58.62

%

] + [

16.67

%

x

41.00

%

]

WACC =

9.1

%

Estimated WACC (rounded)      9.0%

(1)	Source: Federal Reserve Statistical Release dated February 4, 2005.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 2

     The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f )) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta — a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm - Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm) less the risk-free rate (Rf)
	Rsm	=	Small stock premium

     We then calculated the WACC as follows:

Variable	Value			Source
Rd =		5.86	%	(1) Baa Bond Rate — February 4, 2005
t =		35.00	%	Marginal Tax Rate
Rf =		4.54	%	(2) 20-yr. Treasury Bond Rate — February 4, 2005
Rm - Rf =		7.20	%	Equity Risk Premium
ß =		0.80		Computed Beta, see Page 4 of WACC Calculation
D % =		58.6	%	Debt/Capital Ratio
E % =		41.0	%	Equity/Capital Ratio
Rsm =		6.34	%	(3) Decile 9-10 Premium (From Ibbotson’s — $0.3MM to $166.4MM market capitalization)
Ris =		2.50	%	Investment Specific Risk

[     Rd x (1 - t)

x

D

%

] + [

[ (Rf

+ (

ß

x

(Rm - Rf))

+

Rsm

+

Ris) x E% ]

[     6.82% (1-35

%)

x

58.62

%

] + [

4.54

%

+ (

0.80

x

7.20%

)

+

6.34

%

+

2.50% ) x

41.00% ]

WACC=

Rd (1-t)

x

D

%

+

Re

x

E

%

[          3.81

%

x

58.62

%

] + [

19.17

%

x

41.00

%

]

WACC =

10.1

%

Estimated WACC (rounded)      10.0%

(1)	Source: Federal Reserve Statistical Release dated October 10, 2003.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 3

     The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f )) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta — a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm - Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm) less the risk-free rate (Rf)
	Rsm	=	Small stock premium

     We then calculated the WACC as follows:

Variable	Value			Source
Rd =		5.86	%	(1) Baa Bond Rate — February 4, 2005
t =		35.00	%	Marginal Tax Rate
Rf =		4.54	%	(2) 20-yr. Treasury Bond Rate — February 4, 2005
Rm - Rf =		7.20	%	Equity Risk Premium
ß =		0.80		Computed Beta, see Page 4 of WACC Calculation
D % =		58.6	%	Debt/Capital Ratio
E % =		41.0	%	Equity/Capital Ratio
Rsm =		6.34	%	(3) Decile 9-10 Premium (From Ibbotson’s — $0.3MM to $166.4MM market capitalization)
Ris =		5.00	%	Investment Specific Risk

[     Rd x (1 - t)

x

D

%

] + [

[ (Rf

+ (

ß

x

(Rm - Rf))

+

Rsm

+

Ris) x E% ]

[     6.82% (1-35

%)

x

58.62

%

] + [

4.54

%

+ (

0.80

x

7.20%

)

+

6.34

%

+

5.00% ) x

41.00% ]

WACC=

Rd (1-t)

x

D

%

+

Re

x

E

%

[          3.81

%

x

58.62

%

] + [

21.67

%

x

41.00

%

]

WACC =

11.1

%

Estimated WACC (rounded)      11.0%

(1)	Source: Federal Reserve Statistical Release dated October 10, 2003.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 4

($ in millions)

Company Information
											Preferred /
		Symbol	Beta[1]		MV of Equity(2)			LT Debt			Minority Int.	Cash		TEV		Tax Rate		Debt/ TEV
Air T, Inc.	AIRT			0.25		$	47.7	$	1.7	$	0.0	$	2.2	$	47.3	35.0	%	3.7	%
AirNet Systems, Inc.	ANS			1.34			39.4		60.2		—		0.9		98.7	35.0	%	61.0	%
AutoInfo, Inc.	AUTO			0.50			21.5		1.9		—		0.6		22.8	35.0	%	8.5	%
Streicher Mobile Fueling, Inc.	FUEL			1.42			13.1		11.0		—		4.5		19.7	35.0	%	56.2	%
World Fuel Services Corporation	INT			0.96			298.7		41.1		—		57.5		282.3	35.0	%	14.6	%
Average				0.89			84.1		23.2		—		13.1		94.2	35.0	%	28.8	%

Implied D/E	=	D / (D + E)	*	1 / (E / (D + E))
40.4%	=	28.8%	*	1.4

Unlevered Beta Calculation

Bu = B/(1+((1-t)(D/E)))

     Using B, t, D, and E for each individual company. The reported betas are for the comparable companies are first unlevered below and then relevered in the calculation to the right.

Air T, Inc.	=	0.24
AirNet Systems, Inc.	=	0.67
AutoInfo, Inc.	=	0.47
Streicher Mobile Fueling, Inc.	=	0.92
World Fuel Services Corporation	=	0.88
Average	=	0.64

(1)	Source: Bloomberg.
(2)	Excludes any shares from exercisable options.

Relevered Beta Calculation

B	=	Bu(1+((1-t)(D/E)))
Bu	=		0.64
D/E	=		40.4	%
t	=		35.0	%
B	=		0.80

Industry Debt/Total Capital Calculations

Debt/Total Inv. Capital	29.0	%
Equity/Total Inv. Capital	71.0	%

Tax Rate Calculation

Combined State & Federal Tax Rate 35.0 %

EX-99.C22

Exhibit 99(c)(15)

Kent Rosenthal
Chief Financial Officer
Mercury Air Group, Inc.
5456 McConnell Avenue
Los Angeles, California 90066
March 8, 2005

Mr. Rosenthal:

In our recent discussions, you and your team highlighted the key, immediate challenges that Mercury Air Group now faces with respect to achieving Sarbanes-Oxley (SOX) compliance by year end 2005.

We are pleased to offer you our capabilities, and are well-prepared and uniquely qualified to address these needs as your service partner of choice. Our team feels strongly that we can drive your compliance initiative efficiently, quickly and cost-effectively. Our services will significantly deepen the limited resource base you currently have in place.

Additionally, we can help you realize significant benefits and maximize bottom-line results by further leveraging enterprise-wide business process improvements that begin with SOX compliance and continue to add value well after project completion—something you may not find when working with other partners.

Please review the enclosed Engagement Letter that defines our capabilities, plans and recommendations where your expressed needs are specifically concerned. In your interest, we address compliance with a focus on efficiency, productivity, positive integration with your internal teams and experts; and the best return on the effort. We feel this focus will help Mercury Air Group achieve compliance quickly in the coming months, while also increasing “big picture” clarity as you move beyond SOX.

We’re confident that partnering with Parson in this effort will allow you to achieve the outcome you are seeking and reap maximum long-term benefits. We look forward to discussing our proposal in greater detail with you on Tuesday, March 8, 2005 at 11:00 a.m.

Sincerely,

Mr. Michael Scanlon
Practice Director
Parson Consulting

mscanlon@parsonconsulting.com

1

Engagement letter
Sarbanes-Oxley – Section 404 compliance
This letter documents the terms on which we will provide the services set out below to you (“the Services”) and is in two parts. The main body of the letter deals with the specific engagement and the Appendix sets out our standard terms and conditions covering the legal and professional terms of our relationship.

The Engagement
Background
Mercury Air Group, Inc. seeks to achieve compliance with Sarbanes-Oxley Section 404 documentation and certification requirements, and to meet or exceed the minimum standards necessary to fulfill the requirements of the Sarbanes-Oxley Act of 2002 (“the Act”) by the end of the year 2005.

You have asked Parson Consulting to assist with certain elements of your Section 404 compliance program as described below.

Objectives and scope
The objective of the engagement is to assist you in preparing for your Section 404 compliance initiative. Parson Consulting’s role will be to:

•   Prepare a structured framework for Section 404 compliance, including scoping, documentation, testing and remediation activities (five distinct project phases)

•   Facilitate discussions with the external auditors regarding project structure and outputs

•   Conduct the documentation pilot for Accounts Payable at Mercury Air Group, Inc. locations in Los Angeles, CA, Colorado Springs, CO, and Mexico, including documentation and testing of key controls as identified by your management

The work is of a consultative nature. Accordingly, we will provide no opinion, attestation or other form of assurance with respect to our work or the information upon which our work is based. The procedures we will be performing will not constitute an examination or a review in accordance with generally accepted auditing standards or the attestation standards. We will not audit or otherwise verify the information supplied to us in connection with this engagement, from whatever source, except as may be specified in this Engagement Letter.

2

Client responsibilities
It is your responsibility to determine the procedures deemed necessary in connection with your compliance with the provisions of the Act and related SEC rules, to execute those procedures and to assess the results of your procedures and the adequacy thereof. We provide no opinion or other form of assurance with respect to your compliance with the Act, related SEC rules, or your procedures. We make no representation as to whether your procedures are sufficient for your purposes.

Our work should not be taken to supplant inquiries and procedures that you should undertake for the purposes of obtaining and using the information necessary in connection with your compliance with the provisions of the Act and the related SEC rules.

The overall definition and scope of the work to be performed as well as any related deliverables and documentation, and their adequacy in addressing your needs, is your responsibility. You are also responsible for the implementation of actions identified in the course of this engagement and results achieved from using any of Parson Consulting’s work or deliverables.

Survey
Our commitment to providing outstanding service and remaining at the forefront of expertise in a broad range of the critical business disciplines that our clients lead is directly supported by the information we receive about our own performance on every engagement. We value highly your input and your observations and act to incorporate your feedback.

To ensure we’re delivering the best service possible, we require that our clients commit to the completion of a review and performance survey at the end of a Parson engagement or project. Conducted by a reputable firm, Gantz Wiley Research, the survey process may include person-to-person interviews with Mercury executives and other internal project staff who were involved with our project.

References
We require that our clients commit to providing three (3) internal references who may be contacted directly regarding completed Parson engagements or projects at Mercury Air Group.

3

Remittance
In order for you to always be aware of fees incurred, we invoice weekly in arrears. All invoices are payable within 7 days of the invoice date.

4

Project Benefits
The benefits that you can expect to gain by engaging Parson Consulting to provide the services are:

•   Clear articulation of the tactics, priorities and expected outcomes of the compliance initiative

•   Organization of the initiative as a formalized project, increasing the probability of the project’s success

•   Significant experience of managing similar projects and our insights into best practice in other companies

•   Exclusive access to global thought leaders and compliance experts

•   Identification of opportunities for operational efficiency enhancements

Approach
To help clients meet their objectives with Section 404 compliance programs, Parson Consulting developed PROACT. This is a dynamic online tool developed by our expert Sarbanes-Oxley practitioners. It allows us to tailor our project approach to fit the specific needs of each client and to share knowledge and job aids. The engagement team will use the PROACT framework to conduct the engagement.

Parson Consulting expects to complete this project as depicted in the table that follows. There are a series of activities as documented in a detailed project plan to be completed during Phase 1 of the project.

The processes to be piloted will include the following sub-processes: vendor set up, vendor maintenance; invoice authentication; invoice approval; recording invoices; check processing; recording checks and Electronic Funds Transfer. Please note, tax reporting and other tax-related processes are set up separately from the pilot. The pilot process will include activities in proAct phases 3-5 for Accounts Payable including documentation, design gap analysis, initial remediation, testing, operating gap analysis and monitoring. Additional efficiencies in completing the pilot phase may be determined in the planning phase which may reduce the planned resources to complete the pilot.

5

Sarbanes-Oxley Section 404 Compliance			Core Resources:
Phase 1: Project Planning, Pilot Documentation			Practice Director: part time
	Scoping		Engagement Manager: part time
	Key Activities:		Consultants (varies: full time
	o	Draft project plan for Initial Phase
	o	Form joint project team and confirm roles, level of effort, and responsibilities as per project plan
	o	Kick-off project including introductory training on Sarbanes-Oxley
	o	Determine in-scope cycles, processes, and document scoping process
	o	Assemble and inventory relevant controls documentation for Pilot
	o	Finalize documentation format and methodology
	o	Construct Sarbanes Project Plan including events, timeline, and resources
	o	Determine need for Control Self-Assessment Questionnaire
	o	Draft a written narrative and create a flowchart, document and assess risks and controls, perform and document control testing plan for Pilot
	o	Complete gap analysis
		Kick-off meeting with external auditor to obtain acceptance on scope, data capture and content, templates, control activities, testing parameters
	Training Development
	Key Activities:
	o	Develop documentation training materials as pilot occurs
	o	Transfer training material to Mercury’s representative
Project Management
	Key Activities:
	o	Monitor project plan and facilitate project status/milestone meetings
	o	Finalize in-scope cycles, processes, locations, and accounts
	o	Complete high-level risk review
	o	Perform Project Management Office function for pilots
Phase 2: Documentation and Testing
			Practice Director: part time Engagement Manager: part time Consultants (varies: full time
	Key Activities:
	o	Launch documentation and testing effort utilizing Parson templates
		Consultants each complete all process with in a few weeks
	o	Conduct interviews involving process owners and control activity owners as defined
	o	Draft a written narrative and create a flowchart, document and assess risks and controls, perform and document control testing plan
	o	Complete gap analysis and conduct testing
	o	Complete contemporaneous remediation
	o	Construct documentation library
	o	Secure external auditor acceptance of pilot results

6

Phases 3 through 5 of the Section 404 Compliance Project will include the activities listed below; however, the resources and duration are only estimated at this time, and will need to be fully validated. A high level project plan will be presented to Mercury at the end of Phase 1 planning which will define the duration and resource needs to complete the project.

Phase 3: Launch Detailed Control Documentation, and Testing			Practice Director: part time
	Key Activities:		Engagement Manager: part time
	o	Monitor project plan and facilitate project status /milestone meetings	Consultants (varies: full time
	o	Coordinate documentation team of internal and external staff
	o	Lead routine Core Team meetings
	o	Launch documentation of control processes using agreed upon templates
	o	Compare controls to COSO or other standards
	o	Complete design gap analysis
	o	Prepare testing plans for controls that have no design gaps
	o	Review documentation results of control processes and recommend revisions or finalize, as required; address training needs
	o	Reinforce training and conduct training for new participants
	o	Provide guidance on Risk & Control Report
	o	Execute control testing
	o	Monitor and coordinate control testing efforts
	o	Classify control deficiencies as significant or material
	o	Construct documentation library and summarize results
Phase 4: Identify Gaps, Remediation Plan, and Design of On-Going Monitoring Approach			Practice Director: part time
	Key Activities:		Engagement Manager: part time
	o	Monitor project plan and facilitate project status/milestone meetings	Consultants (varies: full time
	o	Review documentation results of all processes / revise and finalize, as required
	o	Address control gaps and evaluate severity
	o	Identify and select methods for remediation in remediation plan
	o	Secure external auditor acceptance (PwC)
	o	Design on-going monitoring approach for continuous evaluation
	o	Report to Steering Committee

7

Project Deliverables

The Parson Consulting deliverables will include Weekly Status Reports and Recommendations for Improvements within each phase, as well as:

Phase 1:

•   Project charter

•   Project plan

•   Pilot work plan

•   Documentation templates

•   Control process listing

•   Inventory of existing documentation

•   Scoping analysis

•   Control self assessment questionnaire

•   Training plan

•   Training materials

•   Issues log

Phase 2

•   Pilot documentation materials

•   Finalized scope analysis

•   Risk analysis

Additional deliverables in subsequent phases would include:

Phase 3:

•   Control documentation including:

•   Process descriptions

•   Flowcharts, if necessary

•   Control matrices

•   Testing plans

•   Control framework

•   Testing results

Phase 4:

•   Gap analyses

•   Recommended remediation steps

•   Steering committee and audit committee presentations

8

Phase 5:

•   Finalized documentation

•   Process improvement opportunities listing

•   Issues log

Team
The engagement team will comprise the following:

Practice Director – Michael J. Scanlon, on a part-time basis, will provide technical guidance to the team and be responsible for overall quality assurance and oversight for the engagement. He will participate in specific aspects of the engagement and critical meetings as required. In addition, he will help ensure that lessons learned on similar projects are incorporated into the effort for Mercury.

Engagement Manager – Jo-Ellen Boon, part-time. The Engagement Manager will manage the team and be the day-to-day technical resource and contact for Mercury Air Group. She will manage project logistics, troubleshoot issues, ensure that the timetable is maintained and key milestones are met. In addition, she will attend key meetings/interviews, interface with the project sponsor at Mercury, and be responsible for review of all deliverables.

Engagement Manager, IT – John Mason, part-time. John brings to the Parson team a combined 20 years of internal audit, information security, regulatory compliance, and process reengineering experience. His extensive experience includes oversight of financial institution operations, I.T. audit/security, and compliance; and John has also provided both internal audit and information security consulting. His past consulting engagements include leading, managing, and providing services to the Financial, Pharmaceutical, Entertainment, Education, and Communications industries as well as many others.

Consultants – (7) full-time. Consultants are the Parson team members and process or subject matter experts who will carry out the detailed work on the engagement.

Duration of engagement (Phases 1-5)
The engagement will commence on or around June 13, 2005 and end on or around September 3, 2005 any extension to the engagement will be agreed in writing with you.

9

Fees
Our fees are invoiced on a time incurred basis. Please note, all fees and hourly estimates were developed in good faith using the project scoping results provided directly by your current consulting resource. While we do not foresee major discrepancies based on the information you have provided at this time, in the interest of honest and open dialogue, we feel it is important to emphasize our basis source.

Our professional fees for the Sarbanes-Oxley 404 core resources (Practice Director, Engagement Manager and five Consultants) would be fixed at a weekly rate of $53,697 exclusive of out-of-pocket expenses, billed weekly throughout the project. Based on the foregoing, the total estimated professional fees for core resources for Phases 1-5 is $698,064.00.

Please note, Phase 5-Remediation activities may incur additional costs as they will need to be revalidated upon completion of Phase 4 testing activities.

This fee estimate is not an agreement to perform the Services within a fixed time or for a fixed fee and is necessarily based on the assumption that the information and client personnel necessary for us to perform the Services are available within the agreed time frame.

In order for you to always be aware of fees incurred, we invoice weekly in arrears. All invoices are payable within 7 days of the invoice date.

Assumptions
The project schedule, staffing levels and fee estimates are based on information provided by you. Should this prove to be inaccurate we will assess the impact of the matter and discuss this with you.

You will provide the engagement team with any information pertinent to its financial reporting and audit activities. Such information will include (but is not limited to) the prior year’s audit report and management letter.

You will provide feedback on the project deliverables within three business days. If feedback is not received within this period, then you will be deemed to have accepted the deliverable. We will provide a review and approval form to evidence this acceptance. We will not be responsible for delays to the timetable caused by the unavailability of your staff.

10

•   Completion of work does not constitute a guarantee of favorable attestations by the external auditor or bank examiners.

•   We do not warrant that our work will ensure that material information relevant to your business is made known to management by others within your internal control environment.

Furthermore:

•   All direct travel expenses relating to the performance of this engagement including, but not limited to, airfare, meals, lodging, transportation, telephone and other incidentals, will be billed in addition to the professional fees quoted above. Parson Consulting will use its best efforts to locate local resources and limit the amount of travel required.

•   Parson consultants will have access to Mercury’s personnel for interviews, inquiries, issue resolution, review of documentation, and status meetings

•   All subsidiaries with revenue and assets below 3% of consolidated totals are excluded from the scope of the project

Our Differentiators
Parson is clearly differentiated from other consulting firms:

•   Sarbanes – Oxley Expertise — Parson is well positioned to help Mercury Air Group, Inc. achieve its SOX 404 goals. We have partnered with over 150 clients in delivering Sarbanes-Oxley compliance, and have a proven approach and comprehensive methodology that ensures results.

•   Non-conflict consulting—Parson does not undertake any external or internal audit work and it therefore provides consulting services free of any associated conflicts of interest. In addition, Parson is not tied through partnerships with any specific package vendor. We prefer to maintain minimal relationships with all technology vendors. Many professional advisors and consulting firms act as value added resellers (VARs) of solutions and therefore cannot demonstrate their independence.

•   Significant real-world finance experience—We employ experienced consultants who can demonstrate many years of professional finance and accounting. Our firm specializes only in financial management consulting.

11

•   Implementation experience—Diagnosis, design and implementation of financial processes and systems selection are core services offered by Parson. Our consultants have many years’ experience of advising, designing, running and managing group accounting departments in large corporations. We also have a successful history of collaborating with every major external audit firm.

•   Blended skills—The profiles of our consultants include both functional and operational management consulting experience. They possess industry and subject matter knowledge as well as accounting, reporting and technical expertise enabling them to identify opportunities for meaningful operational improvements. We feel it is extremely important for our consultants to have experienced first hand the daily challenges facing our clients.

Standard terms and conditions
The standard terms are set out in the Appendix to this letter. If there is a conflict between the terms contained in this letter and our standard terms in the Appendix, the latter shall prevail.

This letter and the Appendix together comprise the entire contract (the “Engagement Letter”) relating to the provision of the Services and supersede all previous contracts. There are no other express or implied terms, whether orally or in writing.

In order to confirm our involvement in this engagement and your acceptance of these terms please sign and return a copy of this Engagement Letter.

Yours sincerely,

Michael J. Scanlon
Practice Director

We agree to engage Parson Consulting LLC in accordance with the terms of the Engagement Letter.

Signed for and on behalf of
Mercury Air Group, Inc.

Position

Date

12

Appendix 1: Standard Terms and Conditions

Definitions
“Client” – The legal entity to which the Engagement Letter is addressed
“Parson” – Parson Consulting LLC
“Engagement Letter” – the Engagement Letter which incorporates these standard terms and conditions

1.	Engagement terms
	All work by Parson for Client will be in accordance with the Engagement Letter or any subsequent written variation agreed by Parson.
	Should Parson encounter issues or circumstances, which are beyond the scope set out in the Engagement Letter, we will notify Client of such circumstances as they arise and will not incur additional costs and expenses without Client’s prior consent.
2.	Fees
	The fees agreed in the Engagement Letter are based on the amount of time we will dedicate to the engagement. Fees will be for the value of services provided together with re-chargeable out-of-pocket expenses incurred in delivering the services and may be subject to sales, use and or consumption tax. Without limiting its rights or remedies, Parson shall have the right to halt or terminate entirely its services until payment is received on past due invoices. Parson reserves the right to charge interest on overdue amounts at an annual rate of 4 per cent over the highest prime rate in the domestic United States as reported in the money rate section of the Wall Street Journal, in the edition covering the mid West.
3.	Team
	It is our practice to maintain the composition of teams throughout an engagement. However, if you are ever not content with an individual member, please do not hesitate to contact us. We undertake to address your concerns and, if need be, change the member of the team. Occasionally, it is necessary for us to change members of our team due to illness, pre-planned vacations and other reasons. We will endeavor to manage such transitions in discussion with you to minimize any inconvenience.
4.	Quality control
	At the commencement of the engagement we will agree dates and times for regular brief review meetings to address the progress of our work and to allow you and us to raise any issues arising. Typically, we prefer weekly meetings so that the momentum of the engagement can be maintained throughout the project.

13

	If you are ever dissatisfied with the service you are receiving, then in the first instance immediately contact the senior member of the engagement team. If you remain dissatisfied please contact Rick Fumo – President on 312 578 1170.
5.	Confidentiality
	Parson acknowledges that it may receive or come into contact with client confidential information during the performance of the engagement. Save as required by law, regulation or regulatory authorities, Parson agrees to hold such confidential information in confidence provided that Client marks as confidential such information which is provided to Parson. To the extent practicable in the circumstances, Parson will give reasonable advance notice of any intended disclosure of confidential information providing an opportunity to Client (at its own cost) to challenge the same. Parson shall be entitled to retain a file copy of such confidential information provided that it will maintain the information in a confidential manner.
	Client agrees that Parson may quote Client’s name as a client unless Parson has been informed in writing that it wishes its name not to be used in this way.
6.	Access to records and Client staff
	Client shall cooperate with Parson in the performance of the engagement, including, without limitation, providing Parson with timely access to data, information, and personnel of client. Client shall remain responsible for the performance of its employees and agents and for the accuracy and completeness of data and information provided to Parson for the purposes of the engagement. If there are delays or other hindrances in obtaining information necessary for our engagement, we shall first inform client in our regular update meeting so that the problem can be overcome. Insofar as delays continue, Parson will incur extra time costs which are payable by Client at our standard rates.
7.	Limitation of Liability and Indemnity
	Parson’s maximum aggregate liability in respect of the engagement arising for any reason relating to services rendered under the Engagement Letter shall be limited to the fees paid for these services. In the event of a claim by a third party relating to services under the Engagement Letter, Client will indemnify Parson and its personnel from all such claims, liabilities, cost and expenses, except to the extent determined to have resulted from the intentional or deliberate misconduct of Parson personnel.
8.	Intellectual Property
	Parson may apply certain proprietary knowledge and tools in the course of carrying out the engagement. This may result in the integration of the proprietary knowledge and tools into the

14

	deliverable to Client. Parson agrees to provide a non-exclusive, non-transferable royalty free license to Client to enable Client to use such integrated deliverable. However the existing proprietary knowledge, tools and copyright, if any, shall remain the property of Parson.
9.	Hire of Parson staff
	Client agrees that it will neither hire nor solicit to hire nor induce to terminate their employment agreements any Parson employees for a period of 6 months post the completion of any engagement with Client. Breach of this condition will render Client liable to pay Parson a sum equal to 6 months salary of the person concerned as liquidated damages and not as a penalty.
	Termination
	Either party may terminate this engagement at any time by giving 30 business days written notice to the other party and the liability of each party to the other, will only be the fees and mutual time commitment associated with that 30 day period.
10.	Independent Contractor
	It is understood and agreed that each of the parties hereto is an independent contractor and that neither party is, nor shall be considered to be, an agent, partner, or joint venturer of the other. Neither party shall act or represent itself, directly or by implication, as an agent of the other or in any manner assume or create any obligation on behalf of, or in the name of, the other.
11.	Governing Law
	The Engagement Letter shall be governed and construed in accordance with the laws of the state of Illinois and each of the parties irrevocably submits to the exclusive jurisdiction of the state and federal courts located in Cook County, Illinois.
12.	Third Party Rights
	Except as expressly provided in the Engagement Letter, no person other than a party to this agreement may enforce any provision of this agreement.
	Parson is providing the services only to Client. No other party may rely on Parson’s services and Parson accepts no responsibility to any other person.
13.	Entire Agreement
	The terms of the Engagement Letter set out the entire agreement between Parson and Client in connection with the engagement and supersede all other oral and written representation, understandings, or agreements relating to the engagement. Any amendments to this Engagement Letter will not be valid unless agreed in writing by Parson and Client.

15

If any provision of this Engagement Letter or any portion thereof, is subsequently held to be invalid or unenforceable under any applicable statute or rule of law, then that provision or portion notwithstanding, this Engagement Letter shall remain in full force and effect and any such provision or portion will be deemed omitted and this Engagement Letter will be construed as if such invalid or unenforceable provision or portion had not been contained herein.

16

APPENDIX 1 — SAMPLE SOX 404 PROJECTS

Industry	Company	External Auditors	Scope		Compliance	Geographic
	Turnover				requirements	Coverage
Manufacturing	$10bn	Ernst & Young	•	Internal controls review and documentation	Mandatory	International
			•	Process mapping and documentation
			•	Gap analysis of controls and processes
Financial Services	$2bn	PwC	•	Project Management	Voluntary	North America
Insurance	$3bn	PwC	•	Process mapping and documentation	Mandatory	North America
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls and implementation of recommendations
			•	Liaising with external auditors regarding project structure and outputs
Energy	$2bn	PwC	•	Development of SOX 404 program	Mandatory	International
			•	Project management of internal controls review and documentation and process mapping and documentation
			•	Project managed use of Pro-Act, proprietary SOX 404 compliance software
			•	Training of core team members
Manufacturing	$3.8bn	PwC	•	Development of SOX 404 program	Mandatory	International
			•	Project management of internal controls review and documentation and process mapping and documentation
			•	Project managed use of Pro-Act, proprietary SOX 404 compliance software
			•	Training of core team members
Services	$1bn	PwC	•	Program management	Mandatory	North America
(non-financial)			•	Process mapping and documentation
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls and implementation of recommendations
High-Tech	$2bn	PwC	•	Process mapping and documentation and internal controls review and documentation	Mandatory	North America
			•	Gap analysis and comparison of processes and controls between business units
			•	Implementation of recommended improvements
			•	Established a financial disclosure committee
Energy	+$3bn	Deloitte	•	Internal controls review and documentation	Mandatory	North America
	(assets)		•	Process mapping and documentation
			•	Gap analysis of processes and controls
			•	Implementation of software application changes to overcome the gaps found

17

Industry	Company	External Auditors	Scope		Compliance	Geographic
	Turnover				requirements	Coverage
Hi-Tech	$300mn	D&T	•	Program management	Mandatory	North America
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls and identification of remediation actions
			•	Training of core team members
			•	Implementation of a Whistleblower program
Energy	$1bn	PwC	•	Development of SOX 404 implementation plan	Mandatory	North America
			•	Program management
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls and identification of remediation actions
Hi-Tech	$500mn	PwC	•	Internal controls review and documentation	Mandatory	North America
Retail	$1.5bn	PwC	•	Internal controls review and documentation	Mandatory	North America
			•	Gap analysis of processes and controls and identification of remediation actions
Retail	$300mn	PwC	•	Internal controls review and documentation	Mandatory	International
			•	Gap analysis of processes and controls and identification of remediation actions
Financial	$160mn	D&T	•	Internal controls review and documentation	Mandatory	North America
Services			•	Gap analysis of processes and controls and identification of remediation actions
			•	Liaising with external auditors regarding project structure and outputs
Biotech &	$700mn	PwC	•	Internal controls review and documentation	Mandatory	International
Pharmaceuticals			•	Gap analysis of processes and controls and implementation of recommendations
			•	Training and change implementation
Hi-Tech	$200mn	PwC	•	Internal controls review, documentation and testing	Mandatory	North America
			•	Gap analysis of processes and controls with identified recommendations
			•	Project management for implementation of remediation actions

18

Industry	Company	External Auditors	Scope		Compliance	Geographic
	Turnover				requirements	Coverage
Services (non-financial)	$2bn	E&Y	•	Process mapping and documentation	Mandatory	North America
Hi-Tech	$1.1bn	PwC	•	Program management	Mandatory	North America
			•	Process mapping and documentation
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls
Consumer	$900mn	KPMG	•	Development of SOX 404 program	Mandatory	North America
Products			•	Program management
			•	Review internal controls and identify gaps and remediation actions
			•	Assistance in the selection of automated software tool to facilitate compliance in future years
High-Tech	$250mn	E&Y	•	Development of SOX 404 program including ‘self-assessment’ surveys	Mandatory	International
			•	Project management of internal controls review and documentation and process mapping and documentation
			•	Project managed use of Pro-Act, proprietary SOX 404 compliance software
			•	Gap analysis of processes and controls with identified recommendations
Healthcare	$25bn	KPMG	•	Assistance in development of SOX 404 program	Voluntary	North America
			•	Process mapping and documentation
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls with identified recommendations
			•	Assistance with implementation of remediation actions
Energy	$200mn	PwC	•	Program management	Mandatory	North America
			•	Internal controls review and documentation
			•	Development of test plans and execution
			•	Gap analysis of processes and controls and identification of remediation actions
Media &	$7bn	E&Y	•	Development of SOX 404 implementation plan	Mandatory	North America
Communications			•	Program management
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls and identification of remediation actions

19

Industry	Company	External Auditors	Scope		Compliance	Geographic
	Turnover				requirements	Coverage
High-Tech	$60mn	PwC	•	Program management	Mandatory	North America
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls
Manufacturing	$250mn	D&T	•	Process mapping and documentation	Mandatory	North America
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls
Financial	$3bn	E&Y	•	Development of SOX 404 program	Mandatory	North America
Services			•	Internal controls review and documentation
Retail	$220mn	D&T	•	Program management	Mandatory	North America
			•	Assistance in development of SOX 404 program
			•	Process mapping and documentation
			•	Gap analysis of processes and controls with identified recommendations
Services	$250mn	D&T	•	Development of SOX 404 implementation plan	Mandatory	North America
(non-financial)			•	Internal controls review and documentation
			•	Gap analysis of processes and controls and identification of remediation actions
Hi-Tech	$460mn	KPMG	•	Development of detailed SOX 404 implementation plan	Mandatory	International
			•	Internal controls review and documentation
			•	Gap analysis of processes and controls and identification of remediation actions
Media &	$3bn	PwC	•	Program management	Mandatory	North America
Communications			•	Assistance in development of SOX 404 program
Consumer Products	$3.5bn	E&Y	•	Test plan development	Mandatory	North America

20

EX-99.C23

Exhibit 99(c)(23)

D R A F T   F A I R N E S S  O P I N I O N
A N D  B A C K - U P

TABLE OF CONTENTS

	APPENDIX
FAIRNESS OPINION		I
FAIRNESS OPINION BACKUP	II
INCOME STATEMENT AND BALANCE SHEET FOR THE FYE JUNE 30, 2002
THROUGH 2004 AND UNAUDITED RESULTS FOR DECEMBER 31, 2004	III
FYE JUNE 30, 2005 THROUGH 2008 PROJECTIONS	IV
DISCOUNTED CASH FLOW ANALYSIS		V
WEIGHTED AVERAGE COST OF CAPITAL CALCULATION	VI

150 SOUTH RODEO DRIVE, SUITE 100 BEVERLY HILLS, CA 90212
310-246-3700   800-929-2299   FAX 310-246-3794

[March 14, 2005]

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
5456 McConnell Avenue
Los Angeles, CA 90066

Members of the Board of Directors and the Special Committee:

We understand that Mercury Air Group, Inc. (“Mercury” or the “Company”) intends to effect a 1-for-501 reverse stock split followed by a 501-for-1 forward stock split of the Company’s common stock (the “Transaction”). As a result of the Transaction, (a) each shareholder owning fewer than 501 shares immediately before the Transaction will receive from the Company [$X.XX] in cash for each of such shareholder’s pre-split shares (the “Transaction Consideration”); and (b) each share of common stock held by a shareholder owning 501 or more shares will continue to represent one share of the Company after completion of the Transaction. You have advised us that the purpose of the Transaction is to cash-out the equity interests in Mercury of shareholders who, as of the effective date, hold fewer than 501 shares of common stock in any discrete account at a price determined to be fair by the entire Board of Directors in order to enable Mercury to deregister its common stock under the Exchange Act and thus terminate its obligation to file special and periodic reports and make other filings with the SEC.

You have requested our opinion as to the fairness, from a financial point of view, of the Transaction Consideration to those shareholders receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom we express no view. We also express no view with respect to any aspect of the Transaction other than as described in the immediately preceding sentence.

In connection with this opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. We have, among other things:

(i)	Reviewed the draft proxy statement and related documents outlining the Transaction;
(ii)	Analyzed certain publicly available information that we believe to be relevant to our analysis, including the Company’s annual report on Form 10-K for the fiscal year ended (“FYE”) June 30, 2004 and the Company’s quarterly report on Form 10-Q for the quarters ended September 30, 2004 and December 31, 2004;
(iii)	Reviewed certain information including financial forecasts relating to the business, earnings and cash flow of the Company, furnished to us by senior management of Mercury;
(iv)	Reviewed the Company’s projections for FYE June 30, 2004 through 2008 furnished to us by senior management of Mercury;
(v)	Reviewed certain publicly available business and financial information relating to Mercury that we deemed to be relevant;
(v)	Conducted discussions with members of senior management of Mercury concerning the matters described in clauses (i) through (vi) above, as well as the prospects and strategic objectives of Mercury;
(vii)	Reviewed public information with respect to certain other companies with financial profiles which we deemed to be relevant; and

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
March 14, 2005

(viii)   Conducted such other financial studies, analyses and investigation and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions.

With your consent, we have relied upon the accuracy and completeness of the foregoing financial and other information and have not assumed responsibility for independent verification of such information or conducted or have been furnished with any independent valuation or appraisal of any assets of the Company or any appraisal or estimate of liabilities of the Company. With respect to the financial forecasts, we have assumed, with your consent, that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of senior management of Mercury as to the future financial performance of the Company. We have also relied upon the assurances of senior management of Mercury that they are unaware of any facts that would make the information or financial forecasts provided to us incomplete or misleading. We assume no responsibility for, and express no view as to, such financial forecasts or the assumptions on which they are based.

Our opinion is based upon economic, market and other conditions as they exist and can be evaluated on the date hereof and does not address the fairness of the Transaction Consideration as of any other date. The financial markets in general, and the markets for the securities of the Company in particular, are subject to volatility, and our opinion does not purport to address potential developments in the financial markets or in the markets for the securities of the Company after the date hereof.

Our opinion expressed herein has been prepared for the information of the Special Committee and the Board of Directors of the Company in connection with their consideration of the Transaction. Our opinion does not constitute a recommendation as to any action the Company or any shareholder of the Company should take in connection with the Transaction or any aspect thereof. Our opinion does not address the merits of the underlying decision by the Company to engage in the Transaction or the relative merits of any alternatives discussed by the Special Committee or the Board of Directors of the Company. No opinion is expressed herein, nor shall one be implied, as to the fair market value of Mercury’s equity or the prices at which it may trade at any time. This opinion may not be reproduced, disseminated, quoted or referred to at any time without our prior written consent, except that a copy of the Opinion may be reproduced in full and otherwise referred to in the Company’s proxy statement and related filings describing the Transaction.

In the ordinary course of its business and in accordance with applicable state and federal securities laws, Imperial Capital, LLC may actively trade the equity securities of Mercury for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. In the past, Imperial Capital has previously acted as financial advisor to Mercury and has received a fee in connection with its various engagements.

Based on and subject to the foregoing, we are of the opinion that, as of the date hereof, the Transaction Consideration to be received by the shareholders of the Company receiving the Transaction Consideration, other than the Management Holders (as to whom we express no view), is fair, from a financial point of view, to such shareholders.

Very truly yours,

Imperial Capital, LLC

Page 2

INTRODUCTION

The following is a summary of the analysis conducted by Imperial Capital (“IC”) with respect to the fairness, from a financial point of view, of the Transaction Consideration (as defined below) to be paid to those shareholders of Mercury Air Group, Inc. (“Mercury” or the “Company”) receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom IC expresses no view. Pursuant to the Transaction (as defined below), the Company will execute a 1-for-501 reverse stock split followed immediately by a 501-for-1 forward stock split of the Company’s common stock (the “Transaction”). As a result of the Transaction, (a) each shareholder owning fewer than 501 shares immediately before the Transaction will receive from the Company [$X.XX] in cash for each of such shareholder’s pre-split shares (the “Transaction Consideration”); and (b) each share of common stock held by a shareholder owning 501 or more shares will continue to represent one share of the Company after completion of the Transaction.

The purpose of the Transaction is to cash-out the equity interests in Mercury of shareholders who, as of the effective date, hold fewer than 501 shares of common stock in any discrete account at a price determined to be fair by the entire Board of Directors in order to enable Mercury to deregister its common stock under the Exchange Act and thus terminate its obligation to file Special and periodic reports and make other filings with the SEC. Following the de-listing, the Company will continue to publicly file audited balance sheets and income statements for its fiscal year end.

IC has been engaged to determine the fairness, from a financial point of view, of the Transaction Consideration to be paid to those shareholders of Mercury receiving the Transaction Consideration, other than Management Holders, as to whom IC expresses no view. In order to accomplish this, IC has used various valuation methodologies (described more fully below) to determine the fair market value (“FMV”) of Mercury’s common shares, and then compared the FMV to the Transaction Consideration.

 Appendix II Page 1

BACKGROUND OF THE COMPANY

Overview of Mercury

Mercury, a Delaware corporation, was organized in 1956 and provides a broad range of services to the aviation industry. Mercury operates through the following three principal operating units: (i) fuel sales; (ii) cargo operations; and (iii) government contract services.

Divisions

Below is a more detailed summary of Mercury’s divisions:

Ø	Aircraft Refueling — Through its wholly owned subsidiary MercFuel, Inc. (“MercFuel”), Mercury provides aviation fuels domestically and internationally to consumers globally. MercFuel facilitates the management and distribution of aviation fuel as a reseller of aviation fuels for major oil companies, affording the oil companies access to certain customers without the credit risk or administrative costs associated with the management of these customer accounts.
Ø	Cargo Operation — Mercury’s cargo operations, conducted through its wholly-owned subsidiary Mercury Air Cargo, Inc. (“Air Cargo”), provides the following services: (i) domestic and international air cargo and airmail handling; (ii) cargo logistics services; and (iii) general cargo sales agent services. Cargo logistics involves the contracting, through its network of shipping agents of bulk cargo space on airlines which is sold to customers with shipping needs. Air Cargo also brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America.
Ø	Government Contract Services — Mercury, through its wholly owned subsidiary, Maytag Aircraft Corporation (“Maytag”), provides aircraft refueling, air terminal services, base operating support (“BOS”), facilities maintenance, weather observation, air traffic control and flight line management in 17 countries on four continents for all branches of the U.S. Military establishment.

On June 12, 2004, the Company sold its FBO Business, Mercury Air Centers, Inc. (the “FBO Business”), to Allied Capital Corporation. According to the Company’s public filings, the FBO Business contributed a significant portion of the Company’s gross margin (approximately 49.5% in 2003).

 Appendix II Page 2

INDUSTRY OVERVIEW

MercFuel

Jet fuel resellers are generally independent third parties that purchase fuel from major oil companies and independent fuel suppliers and resell fuel to commercial airlines, business aircraft management companies and air freight companies. Jet fuel reselling is a byproduct of the United States oil embargo and ensuing energy crisis in 1979. At that time, the major oil companies initiated a fuel allocation program pursuant to which many smaller and regional domestic and international airlines were unable to access sufficient supplies of jet fuel. Resellers took the initiative to find additional sources of fuel for these carriers and have become the suppliers to many of those airlines which the oil companies no longer directly serve.

Commercial and general aviation jet fuel purchases and dispensement occurs at airports and fuel terminals throughout the world. Jet fuel resellers contract directly with the oil company or jet fuel supplier to purchase the fuel and with third party refueling companies handling large commercial aircraft at commercial airports and fuel terminals or with third parties known as fixed base operations, for the actual dispensing of the fuel to the customer. Fixed base operations are third parties that typically handle all other aircraft such as commuter, business and private jets.

Typical commercial or business jet fuel resale transactions are as follows:

- Deliveries from Reseller Inventory. In some cases, the jet fuel reseller has previously contracted with the fuel supplier for the delivery of fuel to a third party refueling company or fixed base operation. These third parties store the fuel for the jet fuel reseller as the reseller’s inventory. In these instances, the third party that delivers the fuel into the wing of the aircraft customer forwards a paper record of the transaction to the jet fuel reseller. The reseller then forwards an invoice to the aircraft customer.

- Into-Plane Deliveries. Into-plane deliveries are fuel sales where the sale of fuel is made from the fuel supplier’s inventory maintained at the airport or fuel terminal. In these instances, either the fuel supplier or a third party refueling company delivers the fuel into the wing of the aircraft customer and the sale of fuel is consummated at that point. The refueling company, if used, forwards the paper record of the transaction to the fuel supplier and in either case the fuel supplier forwards the paper record to the fuel reseller for payment. The fuel reseller then forwards an invoice to the air carrier.

Each of these methods is a labor intensive and time consuming process that is subject to delays, inefficiencies and mistakes. At times customers and resellers are inaccurately billed for the amount of fuel sold. In addition, the use of paper documents delays the payment by the jet fuel reseller to the supplier in the case of into-plane deliveries. Also, commercial and business customers typically do not receive bills from the jet fuel reseller until between 7 to 30 days after fuel is sold, which delays payments and affects the jet fuel reseller’s cash flow.

 Appendix II Page 3

In recent months, rising fuel prices, combined with a reduction of credit terms by MercFuel’s fuel suppliers, has caused the spread between accounts payable and accounts receivable to grow to the point of significant risk to Mercury’s liquidity.

The market for jet fuel reselling is highly competitive. MercFuel is in direct competition with major oil companies, major airlines and other independent fuel suppliers, such as World Fuel Services Corporation (“World Fuel”), and with other aircraft support companies which maintain their own sources of aviation fuel. Many of MercFuel’s competitors have greater financial, technical and marketing resources than the Company.

Air Cargo

- Cargo Handling. Air Cargo provides domestic and international air cargo handling, air mail handling and bonded warehousing. Air Cargo handles cargo at Los Angeles International Airport (LAX), William B. Hartsfield International Airport (ATL — Atlanta, GA), Dorval International Airport (YUL — Montreal, Canada), Mirabel International Airport (YMX — Montreal, Canada) and Lester B. Pearson International Airport (YYZ — Toronto, Canada). Since February 2001, operations at ATL have been handled by Lufthansa Handling under the terms of a ten-year sub-lease of a 104,646 square foot warehouse and operations area. In fiscal 2004, the cargo handling operations comprised 65% of Air Cargo’s revenue.

- Cargo Logistics Services. Air Cargo brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America. Cargo logistics involves the contracting for bulk cargo space on airlines and selling that space to customers with shipping needs. Air Cargo has an established network of shipping agents who assist in obtaining cargo for shipment on space purchased from various airlines, and who facilitate the delivery and collection of freight charges for cargo shipped by Air Cargo. Unlike a cargo airline which operates its own aircraft, Air Cargo’s space logistics business arranges for the purchase of cargo space on scheduled flights or supplemental flights at negotiated rates. Air Cargo is thereby able to profit from the sale of air cargo space worldwide without the overhead cost of owning and operating an aircraft. In fiscal 2004, the space logistics revenue comprised 22% of Air Cargo revenue.

- General Sales Agent. Air Cargo also serves as a general sales agent (“GSA”) directly through its subsidiaries in the United States, Canada, Mexico, Central and South America, and the Far East. In this capacity, Air Cargo sells the transportation of cargo on its client’s airline flights, using our clients’ own airway bills. Air Cargo earns a commission from the airlines for selling their cargo space. As with its space logistics business, the growth for Air Cargo’s GSA business is not constricted by requirements for physical facilities or by large capital commitments. In fiscal 2004, the GSA business revenue comprised 12% of Air Cargo’s total revenue.

 Appendix II Page 4

Air Cargo competes with numerous companies who provide air cargo handling services at the same airports where Air Cargo provides these services. At most airports there are at least 3-5 independent cargo handling companies, as well as certain airlines who operate their own warehouses and offer third-party cargo handling in order to reduce overhead costs. Over the last 15 years, a consolidation of independent cargo handling, ramp services providers and FBO’s has evolved into a handful of large operators with multiple airport facilities, such as BBA, Worldwide Aviation and Globe Ground Services. These larger companies have been able to leverage their relationships with airline customers by offering them multi-city pricing and discounts and lower handling rates for each additional airport where the airline’s cargo would be handled, with the intention of freezing out smaller competitors like Air Cargo. While Air Cargo’s warehouses operated profitably until the economic downturn beginning in 2000 and the 9/11 events, air cargo tonnage decreased through 2003 and thereby increased competition among cargo handlers. In an effort to maintain market share, Air Cargo lowered its pricing in order to retain the airline cargo handling business.

Maytag

- Aircraft Refueling. Maytag has been supplying aircraft refueling and base support services worldwide to the Department of Defense since 1950. Maytag’s aircraft refueling services include supplying all the necessary personnel and equipment to operate government-owned fuel storage facilities and providing 24-hour refueling services for a variety of aircraft for the military. Maytag currently provides refueling services at 12 U.S. military bases, 11 in the U.S. and one in Greece. Maytag’s refueling contracts generally have a term of four years, with expiration dates ranging from June 2004 to January 2008. All contracts are firm-fixed price for specified services. Fuel handled in these operations is government owned and only the fleet of refueling trucks and other support vehicles are owned by Maytag.

- Air Terminal and Ground Handling Services. Maytag has become a global player in air terminal services as the largest provider to the U.S. Air Force Air Mobility Command at 24 locations including Alaska, Japan, Korea, Kuwait and Latin America. Maytag’s air terminal and ground handling services consist of loading and unloading of passengers and cargo, transient alert, flight planning services, passenger processing and manifesting, baggage handling, travel eligibility, immigration facilitation and flight planning. Air terminal service contracts are generally for a base period of up to one year, with government options for multiple one-year extensions. All contracts provide firm-fixed price for specified services. In order to provide to provide a comprehensive, all-in-one solution to the U.S. military and other government agencies, Maytag provides BOS services and base housing maintenance at several locations where Maytag has contracts. Maytag’s BOS services include fuel management, traffic management, airfield management, vehicle operations and maintenance services, and meteorological services. The Company’s base housing maintenance consists of change of occupancy maintenance for government-provided quarters, such as basic interior upkeep, repairs, painting, and cleaning.

 Appendix II Page 5

- Weather Data Services. Weather Data Services was founded in Clear Lake, Iowa in 1987 and was acquired by the Company to become a division of Maytag on August 1, 1998. This division currently provides weather observation and weather forecasting services at 11 locations within the U.S. pursuant to contracts with the prices for specified services and are generally for a base of one year, with multiple one-year options at the government’s election.

All of Maytag’s government contracts are subject to competitive bidding. Refueling, air terminal, and weather forecasting contracts are usually awarded on a “best value” basis, taking into account price, past performance history of the offeror, and the merit of the technical proposal. Weather observation contracts are generally awarded on the basis of the lowest priced, technically acceptable proposal. Maytag’s contracts are all subject to termination at the discretion of the U.S. Government, in whole or in part.

Maytag does not compete directly with any large government defense contractors. Since Maytag primarily targets government contracts with annual average revenues of approximately $1 million, most of Maytag’s competitors are smaller entities, and unlike Maytag, most of these companies have limited capabilities to operate abroad. According to Management, due to Maytag’s strong competitive position, the Company has been able to capture approximately 40% of the Defense Department’s Energy Support Command’s (DESC) aircraft refueling business and 50% of the Air Mobility Command’s (AMC) air terminals business in the U.S. and abroad.

Financial Summary

A summary of the Company’s historical operating performance is set forth below.

 Appendix II Page 6

Summary of Operations
($ in thousands)	Fiscal Year Ended June 30,									LTM
	2002			2003			2004 (a)			12/31/2004
MercFuel Revenues	$	232,573		$	280,136		$	322,631		$	428,512
Air Cargo Revenues		28,124			32,691			39,549			42,550
Maytag Revenues		28,228			24,421			23,281			22,213
Total Revenues	$	288,925		$	337,248		$	385,461		$	493,275
Sales Growth %		n/a			16.7	%		14.3	%		28.0	%
MercFuel Gross Profit	$	6,581		$	5,926		$	6,080		$	6,971
Air Cargo Gross Profit		898			2,585			2,100			3,563
Maytag Gross Profit		6,789			4,598			5,146			4,901
Total Gross Profit	$	14,268		$	13,109		$	13,326		$	15,435
Gross Profit Margin %		4.9	%		3.9	%		3.5	%		3.1	%
SG&A Expenses	$	11,771		$	10,818		$	10,894		$	10,783	(b)
Provision for Bad Debts		1,170			1,192			506			894
Total Operating Expenses		12,941			12,010			11,400			11,677
EBITDA	$	1,327		$	1,099		$	1,926		$	3,758
EBITDA Margin		0.5	%		0.3	%		0.5	%		0.8	%
Depreciation & Amortization		3,478			2,782			2,828			2,656
Operating Income		(2,151	)		(1,683	)		(902	)		1,102
Operating Income Margin		-0.7	%		-0.5	%		-0.2	%		0.2	%
Capital Expenditures	$	546		$	390		$	1,184		$	1,505

Note: Divisional Gross Profit includes certain SG&A costs which are charged directly to the operating units.

(a)	Fiscal 2004 SG&A excludes $2.4 million in extraordinary settlement costs, $1.7 million for severance payments to the retiring Chairman, and $311,000 of unusual audit fees. Air Cargo’s 2004 gross profit has been adjusted to exclude $300,000 in severance payments to Air Cargo’s former COO.
(b)	LTM SG&A expenses excludes $2.1 million of one-time charges for legal fees regarding a lawsuit settlement, severance costs, write-off of insurance deposits related to a joint venture, an asset impairment on a plane that was sold, and a loss on a timeshare plane trade-in.

Balance Sheet
($ in thousands)	As of
	12/31/04
Assets
Cash and Cash Equivalents	$	6,316
Accounts Receivable, net		56,912
Inventories		1,619
Prepaid Expenses & Other		5,108
Total Current Assets		69,955
Property, Plant & Equipment, net		7,564
Goodwill & Intangibles		5,011
Restricted Cash		8,418	(a)
Other Assets		3,133
Total Assets	$	94,081
Liabilities and Shareholders’ Equity
Account Payable	$	36,390
Accrued Expenses & Other		8,559
Current Portion of Long-Term Debt		1,021
Total Current Liabilities		45,970
Long-Term Debt		21,221
Other Long-Term Liabilities		10,722
Total Liabilities		77,913
Mandatorily Redeemable Preferred Stock		468
Shareholders’ Equity		15,700
Total Liabilities and Shareholders’ Equity	$	94,081

(a) Restricted cash consists of cash held for specific purposes and not available for general use by the Company and is comprised primarily of an escrow account associated with the Hartsfield FBO. The funds held in the escrow account are to be distributed to either one or both of the Company and Allied Capital dependent upon the award of a new lease at the Hartsfield International Airport in Atlanta for a new FBO.

 Appendix II Page 7

VALUATION METHODOLOGIES

In order to evaluate the fairness of the proposed Transaction:

Ø	estimated a reasonable range of the fair market value (“FMV”) of the total enterprise value (“TEV”) of the Company;
Ø	estimated a reasonable range of the equity value of the Company, based on the Company’s balance sheet as of December 31, 2004; and

IC employed different valuation methodologies to approximate the FMV of the TEV of the Company. IC believes the most appropriate valuation methodologies are: (i) the Market Approach — Trading History; (ii) the Market Approach — Multiple Analysis; (iii) the Market Approach — Precedent Transactions; and (iv) the Discounted Cash Flow Approach (“DCF”).

Market Approach

The Market Approach is a valuation technique in which the FMV is estimated based on market prices in actual transactions and on asking prices for currently available assets. The valuation process is essentially that of comparison and correlation between the subject asset and other similar assets. Consideration such as similarity, exposure to macroeconomic and/or specific industry factors, location, and time of sale of similar assets are compared to the subject asset to indicate a current value of the subject asset. Additionally, for this approach to be reliable, there are two requisites: (i) an active public market; and (ii) an exchange of comparable assets.

Trading History

As a starting point for an understanding of the FMV of the equity, we reviewed the valuation implied by the current trading price of the common stock.

 Appendix II Page 8

As of March 9, 2005, the Company’s share price was $3.46, resulting in a market capitalization of approximately $10.6 million, while the trading volume in Mercury’s stock over the previous 30 days was approximately 7,863 shares per day.

Trading History
	Average			Average
	Price			Volume
Previous 10 Trading Days	$	3.62			14,330
Previous 30 Trading Days	$	3.64			7,863
Previous 60 Trading Days	$	3.95			10,067
Previous 90 Trading Days (a)	$	3.85			19,594
Previous 120 Trading Days (a)	$	3.79			20,579
Previous 150 Trading Days (a)	$	4.05			17,974
Previous 180 Trading Days (a)	$	4.24			15,938
Previous 52-Weeks (a)	$	4.77			12,624
Previous 2 Years (a)	$	5.56			8,637
52-Week High	$	8.45	(b)		226,300
52-Week Low	$	3.08	(c)		0

(a)	Average prices have been adjusted to exclude the Special Dividend.
(b)	Occurred on November 5, 2004, the day the special dividend was paid.
(c)	Occurred on November 8, 2004, the first trading day after the special dividend was paid.

On November 5, 2004, the Company paid a one-time special cash dividend totaling $17.5 million ($5.70 per share) to holders of its common stock. The one-time special dividend was approximately equal to the trading price of Mercury’s common stock prior to the announcement of the dividend on October 6, 2004. As shown in the chart above, the special dividend had a significant impact on the trading price and volume of Mercury’s stock.

 Appendix II Page 9

Multiple Analysis

The Market Approach, utilizing market multiples, indicates the FMV of a business by comparing it to publicly-traded companies in similar lines of business, or with similar risk-return profiles (“Comparables”). The value of different businesses can often be stated in relative terms, such as a multiple of: (i) revenue; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings before interest and taxes (“EBIT”); (iv) free cash flow (“FCF”); or (v) net book value of assets (collectively, the “Market Multiples”). Market Multiples for companies operating in an industry are in part determined by the similar external market conditions that they face (the common opportunities and threats) and in part by each company’s internal factors (its own strengths and weaknesses).

This method is useful in determining the FMV of a company that is currently profitable and is expected to remain profitable in the future. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. Therefore, an analysis of the Market Multiples of companies engaged in similar businesses or in businesses that have similar risk-return profiles yields insight into investor perceptions regarding their return requirements and, therefore, the value of the subject.

Analysis

Outside investors, potential acquirers and stockholders in Mercury will look to public companies and recently acquired companies that are similar to the Company to provide guidance on valuation. In the case of the Company, there are several U.S. publicly traded aviation services companies that we deemed to be similar. In selecting the Comparables, we searched comprehensive lists and directories of public companies. The primary sources used to produce the list of Comparables included:

•   Capital IQ;

•   Dow Jones Interactive;

•   Bloomberg; and

•   Hoover’s.

Certain determinant factors are: (i) the company had to provide products or services for the aviation industry; (ii) the company had to make its financial information public; and (iii) the company was required to have an active trading market to measure public perception. The Comparables selected were:

 Appendix II Page 10

•   Air T, Inc. (NasdaqSC: AIRT)

•   AirNet Systems, Inc. (NYSE: ANS)

•   AutoInfo (OTCBB: AUTO)

•   Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

•   World Fuel Services Corp. (NYSE: INT)

Due to the lack of public companies that provide the same range of services as Mercury, we chose to select Comparables with businesses focused on air cargo handling and fuel services. Our decision to select such companies is due in part to their exposure to similar macroeconomic and industry-specific risks as those faced by the Company including, but not limited to: (i) exposure to commercial and general aviation industry trends; (ii) macroeconomic risks (e.g., post-September 11 downturn in commercial aviation, oil prices, etc.); and (iii) similar customer bases. The following is a brief description of the business operations for the selected Comparables:

Air T, Inc. (NasdaqSC: AIRT)

Air T, Inc. operates small-aircraft air cargo in the United States. It provides overnight air cargo services, and aviation ground support and other equipment products. The company, through its wholly owned subsidiaries, provides small package overnight air freight delivery services on a contract basis to the air express delivery industry throughout the eastern half of the United States and Canada. The company also engages in the manufacture and sale of aircraft deicers and scissor lift trucks, as well as specialized service equipment to passenger and cargo airlines, the U.S. Government, airports, and commercial customers. As of June 24, 2004, the company operated a fleet of single and twin engine turbo-prop aircraft nightly in the eastern half of the United States and Canada, Puerto Rico, and the Virgin Islands.

AirNet Systems, Inc. (NYSE: ANS)

AirNet Systems, Inc. provides aviation services, including time-critical small package delivery and passenger charter services. It operates AirNet Express, an integrated national air transportation network that provides expedited air transportation services for banks and time-critical small package shippers in approximately 100 cities nationwide. The company transports cancelled checks and related information for the U.S. banking industry, as well as offers specialized delivery services to customers, primarily in the medical, critical parts, and entertainment industries. AirNet Systems also provides passenger charter services to individuals and businesses through its subsidiary, Jetride, Inc. In addition, it offers on-demand cargo charter delivery services, and provides ground pick-up and delivery services. As of May 17, 2004, the company operated 120 aircraft, including 40 Learjets, located throughout the United States.

 Appendix II Page 11

AutoInfo, Inc. (OTCBB: AUTO)

AutoInfo, Inc., through its wholly owned subsidiary, Sunteck Transport Co., Inc., provides transportation capacity and related transportation services to shippers in the United States and Canada. The company’s non-asset based services include ground transportation coast-to-coast, local pick up and delivery, air freight, and ocean freight. It has strategic alliances with less than truckload, truckload, and air, rail, and ocean common carriers to serve its customers’ needs. Its brokerage services are provided through a network of independent sales agents. As of March 1, 2004, the company had six regional operating centers providing brokerage services and representatives in 15 states and Canada. Its services include arranging for the transport of customers’ freight from the shippers location to the designated destination.

Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

Streicher Mobile Fueling, Inc. provides mobile fueling and fuel management out-sourced services. Its truck fleet delivers diesel, gasoline, and alternative fuels to customers’ locations on a scheduled or as needed basis refueling vehicles and equipment, and resupplying fixed-site storage facilities. The company’s customer base includes businesses that operate fleets of vehicles and equipment of various sizes, including governmental agencies, utilities, trucking companies, bus lines, hauling and delivery services, courier services, construction companies, and others. As of June 30, 2004, the company operated approximately 100 custom mobile fueling trucks from 26 service locations.

World Fuel Services Corp. (NYSE: INT)

World Fuel Services Corporation markets marine and aviation fuel services. The company’s aviation fuel-related services include fuel management, price risk management, flight plans, weather reports, ground handling, and flight permits. It offers these services to passenger, cargo, and charter airlines, as well as corporate customers, and the United States’ and foreign militaries. The company also provides flight plans and weather reports to its corporate customers. The company’s marine fuel-related services include management services for the procurement of fuel, cost control through the use of hedging instruments, quality control, and claims management. As of August 5, 2004, World Fuel Services provided fuel and services at approximately 2,500 airports and seaports worldwide.

The table below provides a summary of the selected Comparables and their relevant market multiples.

 Appendix II Page 12

Cargo Handling / Fuel Services
(Dollars in Millions, Except Stock Price)	Stock		Market		Enterprise		Enterprise Value / LTM
	Price (a)		Cap.		Value (b)		Revenues			EBITDA			EBIT
Air T, Inc. (AIRT)	$	17.61	$	47.7	$	47.3		0.7	x		10.6	x		12.3	x
AirNet Systems, Inc. (ANS)		3.90		39.4		98.7		0.6			3.9			19.7
AutoInfo, Inc. (AUTO)		0.69		21.5		22.8		0.6			22.0			22.9	(c)
Streicher Mobile Fueling, Inc. (FUEL)		1.75		13.1		19.7		0.2			8.3			18.2
World Fuel Services Corp. (INT)		27.70		298.7		282.3		0.1			7.7			8.5
High		—	$	298.7	$	282.3		0.7	x		10.6	x		22.9	x
Median		—		39.4		47.3		0.6			8.0			18.2
Mean		—		84.1		94.2		0.4			7.6			16.3
Low		—		13.1		19.7		0.1			3.9			8.5
Mercury Air Centers, Inc. (MAX)	$	3.46	$	10.6	$	27.0		0.1	x		7.2	x		24.5	x

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a)	Stock price as of February 18, 2005.
(b)	Enterprise Value equals equity value plus debt, minority interest, preferred stock, and convertibles, less investments in unconsolidated affiliates and cash.
(c)	AUTO excluded as an outlier with a TEV/LTM EBITDA multiple of 22.0x.

After identifying the Comparables, we then focused on the strengths and weaknesses of the Company relative to the Comparables. Therefore, a comparative analysis of the selected Comparables was undertaken.

Size. In comparison to the Comparables, the Company’s LTM gross profit and EBITDA of approximately $15.4 million and $3.8 million, respectively, place it below the average of the Comparables as presented below.

Cargo Handling / Fuel Services
Operating Results	LTM		LTM Operating Results
(Dollars in Millions)	Ended		Revenues		Gross Profit		EBITDA		EBIT		FCF(a)
Air T, Inc. (AIRT)		12/31/04	$	68.1	$	12.4	$	4.5	$	3.8	$	3.0
AirNet Systems, Inc. (ANS)		9/30/04		164.1		59.1		25.1		5.0		(30.5	)
AutoInfo, Inc. (AUTO)		9/30/04		40.4		7.5		1.0		1.0		1.0
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		108.0		5.6		2.4		1.1		2.1
World Fuel Services Corp. (INT)		9/30/04		4,574.1		113.8		36.8		33.2		34.0
High		—	$	4,574.1	$	113.8	$	36.8	$	33.2	$	34.0
Median		—		108.0		12.4		4.5		3.8		2.1
Mean		—		991.0		39.7		13.9		8.8		1.9
Low		—		40.4		5.6		1.0		1.0		(30.5	)
Mercury Air Centers, Inc. (MAX)		12/31/04	$	493.3	$	15.4	$	3.8	$	1.1	$	2.3

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a)   FCF = EBITDA - Capital Expenditures

Growth. While the Company’s three-year pro forma historical revenue growth rate is 23.9%, most of the growth in the Company’s revenues relates to the rise in fuel prices during the past 18 months. The Company’s gross profit has shown more modest growth at 3.2%, while EBITDA has grown 51.6% due to higher sales and fixed cost absorption.

Appendix II Page 13

Cargo Handling / Fuel Services
	3-Year Historical Growth Rates
Operating Growth Rates	Revenues			Gross Profit			EBITDA			EBIT
Air T, Inc. (AIRT)		5.0	%		4.1	%		4.6	%		5.9	%
AirNet Systems, Inc. (ANS)		7.3			2.7			(5.2	)		(30.9	)
AutoInfo, Inc. (AUTO)		80.0			76.4			185.7			203.9
Streicher Mobile Fueling, Inc. (FUEL)		25.8			8.6			14.9			93.0
World Fuel Services Corp. (INT)		48.9			18.3			33.9			36.4
High		80.0	%		76.4	%		185.7	%		203.9	%
Median		25.8			8.6			14.9			36.4
Mean		33.4			22.0			46.8			61.7
Low		5.0			2.7			(5.2	)		(30.9	)
Mercury Air Centers, Inc. (MAX)		23.9	%		3.2	%		51.6	%	NM

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a) FCF = EBITDA — Capital Expenditures

Leverage. The Company’s LTM net debt / EBITDA ratio of 4.2x is higher than the Comparables.

Cargo Handling / Fuel Services
	Total Debt /									Net Debt /			LTM Interest Coverage
Credit Ratios	Cap (Book)			Cap (Mkt)			EBITDA			EBITDA			EBITDA			FCF(a)
Air T, Inc. (AIRT)		12.0	%		3.5	%		0.4	x		NM			60.0			40.0
AirNet Systems, Inc. (ANS)		52.5			60.4			2.4			2.4			13.7			NA
AutoInfo, Inc. (AUTO)		34.6			8.2			1.9			1.3			11.6			11.3
Streicher Mobile Fueling, Inc. (FUEL)		66.3			45.8			4.7			2.8			1.6			1.4
World Fuel Services Corp. (INT)		18.7			12.1			1.1			NM			NA			NA
High		66.3	%		60.4	%		4.7	x		2.8	x		60.0	x		40.0	x
Median		34.6			12.1			1.9			2.4			12.7			11.3
Mean		36.8			26.0			2.1			2.1			21.7			17.5
Low		12.0			3.5			0.4			1.3			1.6			1.4
Mercury Air Centers, Inc. (MAX)		57.9	%		66.3	%		5.9	x		4.2	x		3.3	x		2.0	x

LTM: Latest Twelve Months.

Margins. The Company’s LTM gross profit and EBITDA margins of 3.1% and 0.8%, respectively, are both lower than the Comparables’ average margins of 16.1% and 5.5%, respectively.

Cargo Handling / Fuel Services
	LTM		LTM Margins
Operating Margins	Ended		Gross Profit			EBITDA			EBIT			FCF (a)
Air T, Inc. (AIRT)		12/31/04		18.3	%		6.6	%		5.6	%		4.4	%
AirNet Systems, Inc. (ANS)		9/30/04		36.0			15.3			3.1			(18.6	)
AutoInfo, Inc. (AUTO)		9/30/04		18.5			2.6			2.5			2.5
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		5.2			2.2			1.0			2.0
World Fuel Services Corp. (INT)		9/30/04		2.5			0.8			0.7			0.7
High		—		36.0	%		15.3	%		5.6	%		4.4	%
Median		—		18.3			2.6			2.5			2.0
Mean		—		16.1			5.5			2.6			(1.8	)
Low		—		2.5			0.8			0.7			(18.6	)
Mercury Air Centers, Inc. (MAX)		12/31/04		3.1	%		0.8	%		0.2	%		0.5	%

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a)   FCF = EBITDA - Capital Expenditures

Appendix II Page 14

Market Multiple Method

Valuation Market Multiples for the Comparables were derived based on publicly available financial information. Market Multiples were a result of dividing the value of each of the Comparable’s TEV by the LTM Revenue, EBITDA, and EBIT. TEV is defined as the book value of the company’s net debt and preferred equity (where book value approximates fair market value) plus the market value of the company’s common equity. The market value of the common equity is computed by multiplying the number of shares outstanding by the current stock price.

As exhibited previously, IC believes that multiples derived from the operating data of the Comparables presented were given specific consideration in the selection of the appropriate Market Multiples for the Company. Furthermore, consideration was given to the range of multiples as well as the median and mean multiples. We considered the TEV/EBITDA multiple to be meaningful and appropriate because the Company’s margins are much lower than the Comparables, so therefore the TEV/Revenue multiple should not be considered.

Market Approach - Multiple Analysis
($ in thousands)
Industry Multiples	Low			Mean			High
EV/LTM EBITDA Range		3.9	x		7.6	x		10.6	x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	14,799		$	28,664		$	39,724
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value		($1,127	)	$	12,738		$	23,798
Shares Outstanding		3,056			3,056			3,056
Implied Share Price		n/m		$	4.17		$	7.79
Premium to Current Share Price (a)		n/m			20.5	%		125.0	%

(a)   Based on a price of $3.46 as of March 9, 2005.

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

There are several other factors which might reasonably be expected to reduce the implied TEV of the Company including the following: (i) the Company’s size as compared to the Comparables; (ii) the illiquidity of an investment in the Company due to its low trading volume; (iii) the long-term nature of the Company’s receivables; and (iv) customer concentration in the Company’s MercFuel business.

Appendix II Page 15

Precedent Transaction Method

Corporate mergers and acquisitions can also be used to indicate the FMV of a subject company. The Precedent Transaction method uses valuation multiples based on actual transactions that have occurred in the marketplace to arrive at an indication of value. Similar to the Market Multiple Approach, multiples are derived from precedent transactions by analyzing a target company’s purchase price relative to its historical financial performance. Multiples used in this approach are determined through an analysis of transactions involving controlling interests in companies in a similar industry or with operations similar to the principal business operations of the subject company. IC reviewed and compared the implied transaction multiples in certain announced control transactions deemed relevant based on similarity of business operations. In order for a transaction to be useful, it is necessary to have publicly available financial information about the purchase price and the operating results of the acquired company. Comparable transactions and corresponding transaction multiples were based on information obtained from the following primary sources:

•   Mergerstat

•   SEC filings

•   Public company disclosures

•   Press releases and news articles

•   Industry reports

•   Capital IQ

For the precedent transaction analysis, IC examined a number of transactions in the cargo handling and fuel services sectors which have occurred since 2000. However, there was limited useful information, other than the purchase price, available for most of these transactions, thereby complicating efforts to derive TEV/EBITDA multiples to apply to the Company. The table below illustrates the precedent transactions:

Appendix II Page 16

		Transaction Details								Transaction Multiples
			Date	Enterprise		Target		Target		EV/	EV/
Acquiror	Target		Announced	Value		Revenue		EBITDA		Revenues	EBITDA
Express One International, Inc.	Central Florida Air Maintenance		07/21/04		NA		NA		NA	NM	NM
Alimentation Couche-Tard, Inc.	Circle K Corporation		10/06/03		811.7		3,900.0		NA	0.2	NM
The Pantry, Inc.	Golden Gallon, Inc.		08/25/03		187.0		387.0		NA	0.5	NM
Transforce Income Fund	Canadian Freightways Limited		08/15/03		60.7		150.7		NA	0.4	NM
The Carlyle Group	Air Cargo, Inc.		08/11/03		NA		NA		NA	NM	NM
Chevy Chase Trust Co.	Williams Lynxs Alaska CargPort		05/31/03		NA		NA		NA	NM	NM
DHL Worldwide Express	Airborne, Inc.		03/25/03		1,410.0		3,343.7		253.1	0.4	5.6
Management of Landair Corp.	Landair Corp.		10/11/02		101.7		102.9		19.5	1.0	5.2
United Defense Industries, Inc.	United States Marine Repair, Inc.		05/28/02		417.6		431.8		45.4	1.0	9.2
Pacific CMA, Inc.	Airgate International Corp.		03/19/02		3.4		29.1		0.6	0.1	5.6
Union Pacific Corp.	Motor Cargo Industries		11/15/01		96.9		130.9		17.2	0.7	5.6
Vinci SA	Worldwide Flight Services, Inc.		09/10/01		285.0		348.0		NA	0.8	NM
Avfuel Corporation	Texaco General Aviation Business		09/07/01		NA		NA		NA	NM	NM
BBA Group / Signature	Aircraft Services International		07/11/01		137.9		162.0		NA	0.9	NM
United Parcel Service	Fritz Companies, Inc.		01/10/01		495.8		621.8		54.4	0.8	9.1
World Fuel Services Corp.	Page Avjet Fuel Co LLC		01/03/01		NA		NA		NA	NM	NM
EGL, Inc.	Circle Int’l Group, Inc.		07/03/00		518.1		832.3		49.2	0.6	10.5
									High	1.0x	10.5x
									Median	0.7	5.6
									Mean	0.6	7.3
								Low		0.1	5.2

There are numerous factors to consider when drawing comparisons, including: (i) record of growth and the opportunity for further improvement; (ii) dispersion of market share; (iii) competitive advantages; (iv) size and profitability of the target company; (v) stability of revenue and earnings; (vi) opportunity to realize cost savings, revenue enhancements, and operational synergies; and (vii) strategic and emotional factors employed by the acquirer. In consideration of such factors, below is a summary of the TEVs for the Company based on precedent transactions:

Market Approach - Precedent Transactions
($ in thousands)
Transaction Multiples	Low			Mean			High
EV/LTM EBITDA Range		5.2	x		7.3	x		10.5	x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	19,592		$	27,317		$	39,552
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value	$	3,666		$	11,391		$	23,626
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	1.20		$	3.73		$	7.73
Premium to Current Share Price (a)		-65.3	%		7.7	%		123.4	%

(a)   Based on a price of $3.46 as of March 9, 2005.

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

Appendix II Page 17

Discounted Cash Flow (“DCF”)

The fundamental premise of the DCF Approach is to estimate the available cash flows a prudent investor would expect a company to generate over its remaining life. IC relied on the Company’s cash flow projections for FYE June 30, 2005 through 2008, as provided by Mercury’s management (the “Projections”). The estimated available cash flows for each year are discounted to their present value equivalent using an appropriate rate of return to determine present value. The residual or terminal value of the business at the end of the projection period is estimated, discounted to its present value equivalent, and added to the present value equivalent of the discrete projection period estimated cash flows to estimate the TEV of a subject company. Subtracting the debt from the subject company’s TEV and adding the cash and non-operating asset values results in the value of its equity.

The following outlines the steps involved in applying the DCF analysis: (i) determination of future cash flows based upon the projections; (ii) selection of an appropriate discount rate for the subject company’s projections; (iii) determination of a residual or terminal value for the subject company; and (iv) determination of the TEV and resulting equity value for the company.

Determination of Future Cash Flows

IC relied on the following sources which were provided by Mercury’s management to determine the future cash flows of the Company: (i) the Company’s FYE 2005 through 2008 projections; (ii) management discussions; and (iii) other management estimates.

The table below presents the Company’s projected revenue, gross margin and EBITDA for the projected fiscal years ending 2005 through 2008.

Appendix II Page 18

Projections

($ in thousands)	FYE			LTM			Fiscal Year Ending June 30,
	6/30/2004			12/31/2004			2005			2006			2007			2008
MercFuel Revenues	$	322,631		$	428,512		$	537,474		$	628,383		$	628,383		$	628,383
Air Cargo Revenues		39,549			42,550			43,839			46,306			46,306			46,306
Maytag Revenues		23,281			22,213			20,999			21,980			21,980			21,980
Total Revenues	$	385,461		$	493,275		$	602,312		$	696,669		$	696,669		$	696,669
Sales Growth %		-44.7	%		-29.2	%		n/a			15.7	%		0.0	%		0.0	%
MercFuel Gross Profit	$	6,080		$	6,971		$	7,919		$	8,335		$	8,335		$	8,335
Air Cargo Gross Profit		2,100			3,563			4,398			4,734			4,734			4,734
Maytag Gross Profit		5,146			4,901			4,426			4,124			4,124			4,124
Total Gross Profit	$	13,326		$	15,435		$	16,743		$	17,193		$	17,193		$	17,193
Gross Profit Margin %		3.5	%		3.1	%		2.8	%		2.5	%		2.5	%		2.5	%
SG&A Expenses	$	10,894		$	10,783		$	10,366		$	10,729		$	10,729		$	10,729
Provision for Bad Debts		506			894			1,383			1,477			1,477			1,477
Total Operating Expenses		11,400			11,677			11,749			12,206			12,206			12,206
		3.0	%		2.4	%		2.0	%		1.8	%		1.8	%		1.8	%
EBITDA	$	1,926		$	3,758		$	4,994		$	4,988		$	4,988		$	4,988
EBITDA Margin		0.5	%		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,828			2,656			2,511			2,679			2,679			2,679
Operating Income		(902	)		1,102			2,483			2,308			2,308			2,308
Operating Income Margin		-0.2	%		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Capital Expenditures	$	1,184		$	1,505		$	2,000		$	1,956		$	2,000		$	2,000

Revenue and Gross Profit:

Ø IC relied on the Company’s projections to determine revenue for the FYE June 30, 2005 through 2008, as provided by Mercury’s management.

•   Revenues are projected to increase 56.3% in Fiscal 2005, due primarily to fuel price increases at the Company’s MercFuel division. Revenues are expected increase an additional 15.7% in Fiscal 2006. Although the Company forecasted continued growth of 8.9% in Fiscal 2007 and 9.1% in Fiscal 2008, the inherently volatile nature of the Company’s revenues from fuel sales makes it difficult to project future revenues this far in advance. Therefore, to be conservative, for purposes of our analysis we have maintained revenues at the Fiscal 2006 level for the remainder of the projection period.

•   The Company’s gross profit margin is expected to decline from 3.5% of revenues in Fiscal 2004 to 2.8% of revenues in Fiscal 2005 and 2.5% in Fiscal 2006, as the Company’s incremental gross margin on fuel sales doesn’t keep pace with price increases. Although the Company projected gross margin to continue to erode as fuel sales increased in Fiscal 2007-08, for purposes of our analysis we have maintained a flat gross margin in these years.

EBITDA:

Ø The Company’s SG&A expenses are expected to decrease approximately $0.3 million in Fiscal 2005 to $10.4 million. Operating expenses (including bad debt expense) as a percentage of revenues are expected to decrease in Fiscal 2005 to 2.0%, from 3.0% in Fiscal 2004. Operating expenses were

Appendix II Page 19

expected to continue to decrease as a percentage of revenue, to 1.6% in Fiscal 2008, as higher gas prices increase revenues at the Company’s MercFuel division. However, for purposes of our analysis we have maintained operating expenses at the Fiscal 2006 level of $12.2 million in Fiscal 2007-08.

Capital Expenditures:

Ø The Company’s current working capital facility with Bank of America contains certain financial covenants limiting the amount the Company can expend annually for capital expenditures to $2.0 million. Management believes that this $2.0 million limit is a reasonable estimate for on-going maintenance capital expenditures.

Debt-Free Net Working Capital:

Ø Debt-free net working capital is defined as current assets (excluding cash) less non-interest bearing liabilities. Based on the Company’s projections, management projects debt-free net working capital to be approximately 3.3% of sales in fiscal 2005 and estimates that it will increase to approximately 3.5% of sales in Fiscal 2006. Although the Company originally projected large increases and revenues (and corresponding increases in working capital) for Fiscal 2007-08, for our analysis we have assumed that revenues and gross profit remain flat from their Fiscal 2006 levels. Therefore we have also held working capital balances constant from their Fiscal 2006 levels.

Projected cash flows for the Company are summarized below. FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Projected Free Cash Flow

($ in thousands)

	Fiscal Year Ending June 30,
	2005 (a)			2006			2007			2008
Net Sales	$	301,156		$	696,669		$	696,669		$	696,669
Cost of Goods Sold		292,784			679,475			679,475			679,475
Gross Profit		8,372			17,193			17,193			17,193
SG&A		5,183			10,729			10,729			10,729
Depreciation & Amortization		1,256			2,679			2,679			2,679
Provision for Bad Debt		692			1,477			1,477			1,477
EBIT		1,242			2,308			2,308			2,308
Less: Estimated Taxes (@ 35%)		(435	)		(808	)		(808	)		(808	)
Plus: Depreciation & Amortization		1,256			2,679			2,679			2,679
Less: Capital Expenditures		(1,000	)		(1,956	)		(2,000	)		(2,000	)
Less: Changes in Debt Free Net Working Capital		(612	)		(4,141	)		—			—
Free Cash Flow	$	451		$	(1,918	)	$	2,180		$	2,180
Sales Growth %		n/a			15.7	%		0.0	%		0.0	%
Gross Margin		2.8	%		2.5	%		2.5	%		2.5	%
SG&A as percentage of sales		1.7	%		1.5	%		1.5	%		1.5	%

(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Appendix II Page 20

Selection of an Appropriate Discount Rate

To arrive at the present value of the cash flows available in the DCF, we used a range of discount rates between 9.0% and 11.0% (rounded), which were calculated using the Weighted Average Cost of Capital (“WACC”). WACC provides a fair return on total invested capital by weighting the expected yield rates indicated for the equity and debt components in proportion to their estimated percentages in an expected capital structure. The WACC represents the rate of return an investor would require to compensate them for the time value of their money and the risk inherent in the particular investment. The WACC is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows.

The following is a general discussion of the methods used in our derivation of the WACC:

WACC =[R_d (1 – t) x (d%)] + [R_e x (e%)]

where:
WACC	=	Weighted average cost of capital;
Rd	=	Pre-tax rate of return on debt capital;
t	=	Effective federal and state income tax rate;
d%	=	Debt capital as a percentage of the sum of the debt plus common and preferred equity capital;
Re	=	Rate of return on common equity capital; and
e%	=	Common equity capital as a percentage of the total capital

See Appendix VI for additional detail on the calculation of the WACC.

Rates of Return on Debt

The cost of debt capital is typically defined as the yield-to-maturity on comparable debt instruments traded in the public market, as adjusted for specific risk factors related to the subject company. Consequently, for purposes of our analysis, we selected the average yield of Baa-rated corporate debt to approximate the Company’s pre-tax rate of return on debt capital. According to Moody’s, the yield-to-maturity for Baa-rated debt as of February 4, 2005 is 5.86%. Consequently, applying a tax rate of 35.0% results in an after-tax cost of debt of 3.81%.

Rates of Return on Equity

The required rate of return on equity capital is estimated using the Capital Asset Pricing Model (“CAPM”). CAPM estimates the rate of return on common equity as the current risk-free rate of return on United States Treasury bonds, plus a market risk premium expected over the risk-free rate of return, multiplied by the “beta” for the stock. Beta is a risk measure that reflects the sensitivity of a company’s stock price to the movements of the stock market as a whole.

Appendix II Page 21

The CAPM rate of return on equity capital is calculated using the formula:

R_e = R_f + [ β x (R_m – R_f)] + R_s + R_is

Where:
Re	=	Rate of return on equity capital;
Rf	=	Risk-free rate of return;
β	=	Beta or systematic risk for this type of equity investment;
Rm – Rf	=	Equity risk premium; the expected return on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf);
Rs	=	Small stock equity premium; and
Ris	=	Investment specific risk

Risk-Free Rate of Return

The 20-year United States Treasury Bond rate, as published by the Federal Reserve Statistical Release, of 4.54%, was used for our valuation³. The risk-free rate of return represents the return on an investment that is practically “riskless” due to the very low probability of default.

Beta

Beta is a function of the relationship between the return on an individual security and the return on the market. Beta represents the systematic risk common to all securities, which cannot be eliminated through diversification. The beta for the market as a whole, the average beta, is 1.0. Securities that have betas greater than 1.0 are viewed as more risky than the market. Conversely, securities that have betas less than 1.0 are deemed less risky than the market. We calculated the appropriate beta coefficient to apply in our calculation of the cost of equity based on those of the ten chosen Comparables. We delevered the Comparables’ equity betas to eliminate the effect of leverage on each company’s equity beta, and relevered them according to the average of the Comparables’ debt/equity ratio. This analysis resulted in a relevered beta of 0.80 (rounded).

Equity Risk Premium

The equity risk premium is the return investors require over and above the risk-free return, to compensate them for the additional risk involved in investing in non-Treasury bonds. This additional risk, in terms of the cost of capital, is the degree of uncertainty as to the realization of the expected future returns. We selected an equity risk premium of 7.2%, based on Ibbotson Associates’ (“Ibbotson”) historical average of large company stocks from 1926 to 2002⁴. The equity risk premium is multiplied by the beta (β) to estimate an investor’s expected equity return premium over risk free investments.

3	Source: Federal Reserve Statistical Release, dated February 4, 2005.
4	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition 2004Yearbook, Ibbotson Associates.

Appendix II Page 22

Small Stock Premium

We then adjusted the CAPM rate of return by applying a premium that reflects the additional risk of investments in small companies. The determination of size is presented by Ibbotson, which uses the market value of equity of an investment to determine an applicable size premium. This premium is derived from historical differences in returns between small companies and large companies, using data published by Ibbotson. For the year ended 2003, the average premium for micro-cap companies with a market value of equity of between $0.3 million and $166.4 million is 4.01%.

Investment Specific Risk

We then further adjusted the CAPM rate of return by applying a premium that reflects the specific risk of the Company. Risks which we believe affect the valuation of the Company include, but are not limited to: (i) the small size of the Company relative to other aviation services companies; (ii) accounts receivables aging and concentration; (iii) the volatility of gas prices and resulting effect on the Company’s liquidity; and (vi) risks associated with the Company achieving its FYE 2004 – 2008 projections. As such, we applied a conservative company-specific risk premium of 0.0% to 5.0% to reflect any unique risk.

Applying the CAPM formula, we estimate the Company’s required rate of return on equity capital to be:

R_e = R_f + β (R_m - R _f ) +R_s +R_is

Required rate on return on equity capital:

Assumption:

@ 0.00% Investment Specific Risk:      R_e = 16.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 0.00%
@ 2.50% Investment Specific Risk:      R_e = 19.17% = 4.54% + (0.80 x 7.20%) + 6.34% + 2.50%
@ 5.00% Investment Specific Risk:      R_e = 21.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 5.00%

Based on the data presented above, we calculated a WACC of approximately 9.0% to 11.0% (rounded).

Determination of Terminal Year Growth Factor

The terminal value used in our DCF approach is essentially an estimate of the value of the enterprise as of the end of the final period for which cash flow projections have been made. It is necessary to compute this value because, although we are confident that the Company will remain a viable going-concern beyond the final period, we cannot project with enough certainty the cash flows to be generated in any given period.

For purposes of this analysis we used the “growing perpetuity method” using the projected free cash flow as its basis for terminal value. The free cash flows projected in the final period is adjusted to arrive at a level of cash flow for the first year beyond the projection period which is representative of the future cash-generating capability of the Company. This “normalized” cash flow figure incorporates expectations of the level of investment required to maintain the business into the future, as well as the return on investment that the

Appendix II Page 23

business can be expected to sustain. The normalized cash flow figure is then capitalized as a growing perpetuity by the previously determined discount rate, adjusted for some level of growth which can be expected into perpetuity. For purposes of our analysis and per management, we used estimated cash flows provided by Mercury’s management for the FYE 2008 as representative of the terminal year’s projected cash flows. The following as a representation of the growing perpetuity method formula:

T =	CFn
	r – g

Where:
T	=	Terminal value
CFn	=	Normalized cash flow
R	=	Discount rate
G	=	Growth rate in perpetuity

The terminal value is then discounted back to the present using the previously selected discount rate. For the terminal year, we used a normalized free cash flow figure of approximately $2.2 million, a discount rate of 9.0% to 11.0% (rounded), and a perpetuity growth rate of 2.8%. The growth rate is based on the expected fiscal 2008 revenue growth rate as provided in the Company’s Projections. Outlined below are the values of this analysis:

Summary of Terminal Value Range

($ in thousands)

Discounted Terminal		Normalized			Discount			Growth Rate
Value		Cash Flow			Rate			in Perpetuity
$35,157	=		$2,180	/		(  9.0%	-		2.8%  )
$30,274	=		$2,180	/		(  10.0%	-		2.8%  )
$26,582	=		$2,180	/		(  11.0%	-		2.8%  )

Midyear Discounting Convention

For purposes of our analysis, we have assumed that the Company’s projected cash flows are received at midyear, approximating the effect of receiving the cash flows more or less evenly throughout the year.

Determination of the Implied Equity Value

As shown below and in more detail in Appendix V, using a range of discount rates of 9.0% to 11.0% (rounded) in the discounted cash flow analysis results in implied TEVs ranging between $21.5 and $29.5 million.

Appendix II Page 24

Summary of Implied Equity Values - Discounted Cash Flow Method

($ in thousands)

Discount Rate		9.0	%		10.0	%		11.0	%
Implied Total Enterprise Value	$	29,480		$	24,932		$	21,503
Less: Total Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash on Balance Sheet		6,316			6,316			6,316
Implied Total Equity Value	$	13,554		$	9,006		$	5,577
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	4.43		$	2.95		$	1.82
Premium to Current Share Price (a)		28.2	%		-14.8	%		-47.3	%

(a) Based on a price of $3.46 as of March 9, 2005.

Summary

The three different valuation methodologies applied by IC resulted in the following range of implied equity values for the Company using EBITDA multiples:

Implied Equity Values

	Low		Mean	High
Market Approach - Multiple Analysis		n/m	$12.7 million	$23.8 million
Market Approach - Precedent Transactions	$3.7 million		$11.4 million	$23.6 million
Discounted Cash Flow Analysis	$5.6 million		$9.0 million	$13.6 million

	Per Share Values
	Low		Mean	High
Market Approach - Multiple Analysis		n/m	$4.17 per share	$7.79 per share
Market Approach - Precedent Transactions	$1.20 per share		$3.73 per share	$7.73 per share
Discounted Cash Flow Analysis	$1.82 per share		$2.95 per share	$4.43 per share

As the table above illustrates, the Transaction Consideration of [$X.XX] per share in cash is within the range the values under the Market Approach – Multiple Analysis and the Market Approach – Precedent Transactions, and the DCF analysis. Based on the above analysis, we determined that the Transaction Consideration is within a reasonable range of values and is fair from a financial point of view.

Appendix II Page 25

Appendix III:
Historical Income Statement and Balance Sheet

Fairness Opinion	Appendix III
Mercury Air Group, Inc.
Statement of Operations — Historical

($ in thousands)	Fiscal Year Ended June 30,									LTM
	2002			2003			2004 (a)			12/31/2004
MercFuel Revenues	$	232,573		$	280,136		$	322,631		$	428,512
Air Cargo Revenues		28,124			32,691			39,549			42,550
Maytag Revenues		28,228			24,421			23,281			22,213
Total Revenues	$	288,925		$	337,248		$	385,461		$	493,275
Sales Growth %		n/a			16.7	%		14.3	%		28.0	%
MercFuel Gross Profit	$	6,581		$	5,926		$	6,080		$	6,971
Air Cargo Gross Profit		898			2,585			2,100			3,563
Maytag Gross Profit		6,789			4,598			5,146			4,901
Total Gross Profit	$	14,268		$	13,109		$	13,326		$	15,435
Gross Profit Margin %		4.9	%		3.9	%		3.5	%		3.1	%
SG&A Expenses	$	11,771		$	10,818		$	10,894		$	10,783	(b)
Provision for Bad Debts		1,170			1,192			506			894
Total Operating Expenses		12,941			12,010			11,400			11,677
EBITDA	$	1,327		$	1,099		$	1,926		$	3,758
EBITDA Margin		0.5	%		0.3	%		0.5	%		0.8	%
Depreciation & Amortization		3,478			2,782			2,828			2,656
Operating Income		(2,151	)		(1,683	)		(902	)		1,102
Operating Income Margin		-0.7	%		-0.5	%		-0.2	%		0.2	%
Capital Expenditures	$	546		$	390		$	1,184		$	1,505

Note: Divisional Gross Profit includes certain SG&A costs which are charged directly to the operating units.

(a)	Fiscal 2004 SG&A excludes $2.4 million in extraordinary settlement costs, $1.7 million for severance payments to the retiring Chairman, and $311,000 of unusual audit fees. Air Cargo’s 2004 gross profit has been adjusted to exclude $300,000 in severance payments to Air Cargo’s former COO.
(b)	LTM SG&A expenses excludes $2.1 million of one-time charges for legal fees regarding a lawsuit settlement, severance costs, write-off of insurance deposits related to a joint venture, an asset impairment on a plane that was sold, and a loss on a timeshare plane trade-in.

Fairness Opinion
Mercury Air Group, Inc.
Balance Sheet Data — Historical Appendix III

($ in thousands)	As of		As of
	06/30/04		12/31/04
Assets
Cash and Cash Equivalents	$	4,690	$	6,316
Accounts Receivable, net		50,974		56,912
Inventories		1,165		1,619
Prepaid Expenses & Other		7,147		5,108
Total Current Assets		63,976		69,955
Property, Plant & Equipment, net		10,349		7,564
Goodwill & Intangibles		7,229		5,011
Restricted Cash		24,403		8,418	(a)
Other Assets		—		3,133
Total Assets	$	105,957	$	94,081
Liabilities and Shareholders’ Equity
Account Payable	$	33,552	$	36,390
Accrued Expenses & Other		11,825		8,559
Current Portion of Long-Term Debt		139		1,021
Total Current Liabilities		45,516		45,970
Long-Term Debt		17,790		21,221
Other Long-Term Liabilities		10,238		10,722
Total Liabilities		73,544		77,913
Mandatorily Redeemable Preferred Stock		518		468
Shareholders’ Equity		31,895		15,700
Total Liabilities and Shareholders’ Equity	$	105,957	$	94,081

(a)   Restricted cash consists of cash held for specific purposes and not available for general use by the Company and is comprised primarily of an escrow account associated with the Hartsfield FBO. The funds held in the escrow account are to be distributed to either one or both of the Company and Allied Capital dependent upon the award of a new lease at the Hartsfield International Airport in Atlanta for a new FBO.

Appendix IV:
FYE June 30, 2005 through 2008 Projections

Fairness Opinion
Mercury Air Group, Inc.
Statement of Operations — Projections Appendix IV

($ in thousands)	FYE			LTM			Fiscal Year Ending June 30,
	6/30/2004			12/31/2004			2005			2006			2007			2008
MercFuel Revenues	$	322,631		$	428,512		$	537,474		$	628,383		$	628,383		$	628,383
Air Cargo Revenues		39,549			42,550			43,839			46,306			46,306			46,306
Maytag Revenues		23,281			22,213			20,999			21,980			21,980			21,980
Total Revenues	$	385,461		$	493,275		$	602,312		$	696,669		$	696,669		$	696,669
Sales Growth %		-44.7	%		-29.2	%		n/a			15.7	%		0.0	%		0.0	%
MercFuel Gross Profit	$	6,080		$	6,971		$	7,919		$	8,335		$	8,335		$	8,335
Air Cargo Gross Profit		2,100			3,563			4,398			4,734			4,734			4,734
Maytag Gross Profit		5,146			4,901			4,426			4,124			4,124			4,124
Total Gross Profit	$	13,326		$	15,435		$	16,743		$	17,193		$	17,193		$	17,193
Gross Profit Margin %		3.5	%		3.1	%		2.8	%		2.5	%		2.5	%		2.5	%
SG&A Expenses	$	10,894		$	10,783		$	10,366		$	10,729		$	10,729		$	10,729
Provision for Bad Debts		506			894			1,383			1,477			1,477			1,477
Total Operating Expenses		11,400			11,677			11,749			12,206			12,206			12,206
		3.0	%		2.4	%		2.0	%		1.8	%		1.8	%		1.8	%
EBITDA	$	1,926		$	3,758		$	4,994		$	4,988		$	4,988		$	4,988
EBITDA Margin		0.5	%		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,828			2,656			2,511			2,679			2,679			2,679
Operating Income		(902	)		1,102			2,483			2,308			2,308			2,308
Operating Income Margin		-0.2	%		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Capital Expenditures	$	1,184		$	1,505		$	2,000		$	1,956		$	2,000		$	2,000
MercFuel Growth		n/a			32.8	%		66.6	%		16.9	%		0.0	%		0.0	%
Air Cargo Growth		n/a			7.6	%		10.8	%		5.6	%		0.0	%		0.0	%
Maytag Growth		n/a			-4.6	%		-9.8	%		4.7	%		0.0	%		0.0	%
MercFuel Gross Margin		1.9	%		1.6	%		1.5	%		1.3	%		1.3	%		1.3	%
Air Cargo Gross Margin		5.3	%		8.4	%		10.0	%		10.2	%		10.2	%		10.2	%
Maytag Gross Margin		22.1	%		22.1	%		21.1	%		18.8	%		18.8	%		18.8	%

Fairness Opinion
Mercury Air Group, Inc.
Balance Sheet Data — Projected Appendix IV

($ in thousands)	As of			Fiscal Year Ending June 30,
	12/31/04			2005			2006			2007			2008
Assets
Cash and Cash Equivalents	$	6,316		$	1,270		$	1,000		$	1,000		$	1,000
Accounts Receivable, net		56,912			61,570			68,077			68,077			68,077
Inventories		1,619			1,334			1,427			1,427			1,427
Prepaid Expenses & Other		5,108			6,036			6,079			6,079			6,079
Total Current Assets		69,955			70,209			76,583			76,583			76,583
Property, Plant & Equipment, net		7,564			7,182			6,459			5,736			5,013
Restricted Cash		8,418			6,764			6,764			6,764			6,764
Goodwill & Other		8,144			8,144			8,130			7,730			7,578
Total Assets	$	94,081		$	92,299		$	97,936		$	96,813		$	95,938
Liabilities and Shareholders’ Equity
Account Payable	$	36,390		$	39,349		$	42,375		$	42,375		$	42,375
Accrued Expenses & Other		8,559			9,676			9,153			9,153			9,153
Current Portion of Long-Term Debt		1,021			1,137			1,137			1,137			1,137
Total Current Liabilities		45,970			50,163			52,664			52,664			52,664
Long-Term Debt		21,221			15,270			18,619			18,966			19,342
Other Long-Term Liabilities		10,722			8,574			7,557			7,557			7,557
Total Liabilities		77,913			74,006			78,840			79,187			79,563
Mandatorily Redeemable Preferred Stock		468			486			522			558			594
Shareholders’ Equity		15,700			17,807			18,573			17,068			15,781
Total Liabilities and Shareholders’ Equity	$	94,081		$	92,299		$	97,936		$	96,813		$	95,938
Debt Free Net Working Capital (“DFNWC”)
Current Assets (excl. cash)	$	63,639		$	68,939		$	75,583		$	75,583		$	75,583
Non-Interest Bearing Current Liabilities		(44,949	)		(49,025	)		(51,527	)		(51,527	)		(51,527	)
DFNWC		18,690			19,914			24,055			24,055			24,055
DFNWC % of sales		3.8	%		3.3	%		3.5	%		3.5	%		3.5	%
Changes in DFNWC		n/a			(1,224	)		(4,141	)		—			—

Appendix V:

Discounted Cash Flow Analysis

Mercury Air Group, Inc.	Appendix V
Fairness Opinion
Discounted Cash Flow @ 9% WACC

($ in thousands)
	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005 (a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.98			0.90			0.82			0.82
Present Value — Free Cash Flow					441			(1,722	)		1,796			28,965
Net Present Value of Cash Flows	$	29,480
Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		9.0	%	Residual Debt Free Cash Flow										2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC — G)										6.2	%
Implied Equity Value Calculation				Equal Residual Value										35,157
Net Present Value of Cash Flows	$	29,480
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor										0.82
Implied Equity Value	$	13,554		Present Value of Residual Value										28,965
Shares Outstanding		3,056
Implied Share Price	$	4.43

(a)   FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Mercury Air Group, Inc.	Appendix V
Fairness Opinion
Discounted Cash Flow @ 10% WACC

($ in thousands)
	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005 (a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.98			0.89			0.81			0.81
Present Value — Free Cash Flow					440			(1,703	)		1,759			24,436
Net Present Value of Cash Flows	$	24,932
Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		10.0	%	Residual Debt Free Cash Flow										2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC — G)										7.2	%
Implied Equity Value Calculation				Equal Residual Value										30,274
Net Present Value of Cash Flows	$	24,932
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor										0.81
Implied Equity Value	$	9,006		Present Value of Residual Value										24,436
Shares Outstanding		3,056
Implied Share Price	$	2.95

(a)   FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Mercury Air Group, Inc.
Fairness Opinion
Discounted Cash Flow @ 11% WACC Appendix V

($ in thousands)
	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005 (a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.97			0.88			0.79			0.79
Present Value — Free Cash Flow					439			(1,684	)		1,724			21,024
Net Present Value of Cash Flows	$	21,503
Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		11.0	%	Residual Debt Free Cash Flow										2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC — G)										8.2	%
Implied Equity Value Calculation				Equal Residual Value										26,582
Net Present Value of Cash Flows	$	21,503
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor										0.79
Implied Equity Value	$	5,577		Present Value of Residual Value										21,024
Shares Outstanding		3,056
Implied Share Price	$	1.82

(a)   FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Appendix VI:

Weighted Average Cost of Capital Calculation

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 1

The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f )) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta — a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm - Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm ) less the risk-free rate (Rf )
	Rsm	=	Small stock premium

     We then calculated the WACC as follows:

Variable	Value				Source
Rd =		5.86	%	(1)	Baa Bond Rate — February 4, 2005
t =		35.00	%		Marginal Tax Rate
Rf =		4.54	%	(2)	20-yr. Treasury Bond Rate — February 4, 2005
Rm - Rf =		7.20	%		Equity Risk Premium
ß =		0.80			Computed Beta, see Page 4 of WACC Calculation
D % =		58.6	%		Debt/Capital Ratio
E % =		41.0	%		Equity/Capital Ratio
Rsm =		6.34	%	(3)	Decile 9-10 Premium (From Ibbotson’s — $0.3MM to $166.4MM market capitalization)
Ris =		0.00	%		Investment Specific Risk

[       R_d  x  (1 - t)       x       D%       ] + [       [ (R_f       + (       ß        x   (R_m  -  R_f)) +        R_sm       +       R_is )  x  E% ]

[       6.82% (1-35%)       x       58.62%       ] + [       4.54%       + (       0.80 x       7.20%) +       6.34% +       0.00% ) x       41.00% ]

WACC=       R_d(1-t)       x       D%       +       R_e       x      E%

      [       3.81%       x       58.62%       ] + [       16.67% x       41.00% ]

WACC =            9.1%

Estimated WACC (rounded) 9.0%

(1)	Source: Federal Reserve Statistical Release dated February 4, 2005.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 2

The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f )) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta — a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm - Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm ) less the risk-free rate (Rf )
	Rsm	=	Small stock premium

     We then calculated the WACC as follows:

Variable	Value				Source
Rd =		5.86	%	(1)	Baa Bond Rate — February 4, 2005
t =		35.00	%		Marginal Tax Rate
Rf =		4.54	%	(2)	20-yr. Treasury Bond Rate — February 4, 2005
Rm - Rf =		7.20	%		Equity Risk Premium
ß =		0.80			Computed Beta, see Page 4 of WACC Calculation
D % =		58.6	%		Debt/Capital Ratio
E % =		41.0	%		Equity/Capital Ratio
Rsm =		6.34	%	(3)	Decile 9-10 Premium (From Ibbotson’s — $0.3MM to $166.4MM market capitalization)
Ris =		2.50	%		Investment Specific Risk

[       R_d  x  (1 - t)       x       D%       ] + [       [ (R_f  +   (       ß       x       (R_m  -  R_f)) +       R_sm       +       R_is  ) x E% ]

[       6.82% (1-35%)       x       58.62%       ] + [       4.54%       + (       0.80 x       7.20% ) +       6.34% +       2.50% ) x       41.00% ]

WACC=       R_d  (1-t)       x       D%       +       R_e       x       E%

      [       3.81%       x       58.62%       ] + [       19.17%       x       41.00% ]

WACC =             10.1%

Estimated WACC (rounded) 10.0%

(1)	Source: Federal Reserve Statistical Release dated October 10, 2003.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.
Fairness Opinion
WACC Calculation Appendix VI
Page 3

The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f )) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta — a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm - Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm ) less the risk-free rate (Rf )
	Rsm	=	Small stock premium

We then calculated the WACC as follows:

Variable	Value				Source
Rd =		5.86	%	(1)	Baa Bond Rate — February 4, 2005
t =		35.00	%		Marginal Tax Rate
Rd =		4.54	%	(2)	20-yr. Treasury Bond Rate — February 4, 2005
Rm - Rf =		7.20	%		Equity Risk Premium
ß =		0.80			Computed Beta, see Page 4 of WACC Calculation
D % =		58.6	%		Debt/Capital Ratio
E % =		41.0	%		Equity/Capital Ratio
Rsm =		6.34	%	(3)	Decile 9-10 Premium (From Ibbotson’s — $0.3MM to $166.4MM market capitalization)
Ris =		5.00	%		Investment Specific Risk

[       R_dx  (1 - t)       x       D%       ] + [       [ (R_f       + (       ß       x       (R_m-R_f)) +       R_sm+       R_is  ) x E% ]

[       6.82%(1-35%)       x       58.62%       ] + [       4.54%       + (       0.80 x       7.20% ) +       6.34% +       5.00% ) x       41.00% ]

WACC=       R_d(1-t)       x       D%       +       R_e       x       E%

     [       3.81%       x 58.62%       ] + [       21.67%       x       41.00% ]

WACC =            11.1%

Estimated WACC (rounded) 11.0%

(1)	Source: Federal Reserve Statistical Release dated October 10, 2003.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 4

($ in millions)
	Company Information
								Preferred /
	Symbol	Beta[1]		MV of Equity(2)		LT Debt		Minority Int.		Cash		TEV		Tax Rate			Debt/ TEV
Air T, Inc.	AIRT		0.25	$	47.7	$	1.7	$	0.0	$	2.2	$	47.3		35.0	%		3.7	%
AirNet Systems, Inc.	ANS		1.34		39.4		60.2		—		0.9		98.7		35.0	%		61.0	%
AutoInfo, Inc.	AUTO		0.50		21.5		1.9		—		0.6		22.8		35.0	%		8.5	%
Streicher Mobile Fueling, Inc.	FUEL		1.42		13.1		11.0		—		4.5		19.7		35.0	%		56.2	%
World Fuel Services Corporation	INT		0.96		298.7		41.1		—		57.5		282.3		35.0	%		14.6	%
Average			0.89		84.1		23.2		—		13.1		94.2		35.0	%		28.8	%

Implied D/E	=	D / (D + E)	*	1 / (E / (D + E))
40.4%	=	28.8%	*	1.4

Unlevered Beta Calculation
Bu	=	B/(1+((1-t)(D/E)))
Using B, t, D, and E for each individual company. The reported betas are for the comparable companies are first unlevered below and then relevered in the calculation to the right.
Air T, Inc.	=		0.24
AirNet Systems, Inc.	=		0.67
AutoInfo, Inc.	=		0.47
Streicher Mobile Fueling, Inc.	=		0.92
World Fuel Services
Corporation	=		0.88
Average	=		0.64

Relevered Beta Calculation
B	=	Bu(1+((1-t)(D/E)))
Bu	=	0.64
D/E	=	40.4%
t	=	35.0%
B	=	0.80

Industry Debt/Total Capital Calculations
Debt/Total Inv. Capital	29.0	%
Equity/Total Inv. Capital	71.0	%

Tax Rate Calculation
Combined State & Federal
Tax Rate	35.0	%

(1)	Source: Bloomberg.
(2)	Excludes any shares from exercisable options.

EX-99.C24

Exhibit 99(c)(24)

Mercury Air Group, Inc.
Cash to Buyout Fractional Shares at Various Premiums

	Price As of:
			Previous 10		Previous 20		Previous 30
Date:	Today		Trading Days		Trading Days		Trading Days		1-Month
Price:	$	3.41	$	3.59	$	3.54	$	3.61	$	3.53
18% Premium:	$	4.02	$	4.24	$	4.18	$	4.26	$	4.17
20% Premium:	$	4.09	$	4.31	$	4.25	$	4.33	$	4.24
22% Premium:	$	4.16	$	4.38	$	4.32	$	4.40	$	4.31
24% Premium:	$	4.23	$	4.46	$	4.39	$	4.47	$	4.38
Fractional Shares Estimate:	192,613
Cash to Buy Shares
18% Premium:	$	775,036	$	816,856	$	804,697	$	819,584	$	803,028
20% Premium:	$	788,172	$	830,701	$	818,336	$	833,475	$	816,639
22% Premium:	$	801,309	$	844,546	$	831,975	$	847,366	$	830,249
24% Premium:	$	814,445	$	858,391	$	845,613	$	861,257	$	843,860

EX-99.C25

Exhibit 99. (c) (25)

Mercury Air Group
Projected SOX Compliance Costs

	External				Internal
	Range
	Low		High		Est Hrs		Rate		Est $
Project Scope (6)		75		100		100		65		7
Documentation/Testing/Remediation (1)
Hrs.     Rate
4,199     150		630		945		3,149		65		205
Increased Audit Fees (2)		125		500		200		65		13
System Enhancements (3)
Larkspur Document Control		30		40
System Enhancements		100		400		200		65		13
Personnel (4)
Internal Auditor		150		300
Systems/Consultant		100		150
Policies & Procedures Documentation		10		100		2,000		65		130
Total	$	1,220	$	2,535		5,649			$	367

Notes:

(1)	External based on project scope from Casey Group. Internal hours estimated at 75% for interviews, assisting on tests, review, remediation and training. Update, have estimate from Parsons consulting for Documentation and remediation for $700K plus costs on a time and materials contract. Does not include writing test scripts nor does it include testing.
(2)	Estimated based on PWC’s experience with accelerated clients. Range from 50% to 200% of audit fees depending on complexity, centralization, etc.
(3)	Document tracking system.
(4)	Hire/contract IA function. Sofware systems consultant/full-time.
(5)	Policies and procedures template.
(6)	Actual cost for Casey Group was $98K.

Mercury Air Group
Projected Ongoing SOX Compliance Costs

	External				Internal
	Range
	Low		High		Est Hrs		Rate		Est $
Project Scope
Documentation/Testing/Remediation (1)
Hrs. Rate
640 125		80		120		1,000		65		65
Increased Audit Fees (2)		100		400		160		65		10
System Enhancements
Larkspur Document Control		—		—
System Enhancements		—		—						—
Personnel (3)
Internal Auditor		150		300
Systems/Consultant		100		150
Increased Legal Fees (4)		50		200		300		125		38
Policies & Procedures Documentation		—		—						-
Total	$	480	$	1,170		1,460			$	113

Notes:

(1)	Will still need outside consultants to assist in the continued testing that needs to be performed.
(2)	Based on memo from BDO, they are estimating a 10 to 20% reduction from the initial year fees.
(3)	Hire/contract IA function. Sofware systems consultant/full-time.
(4)	Increased legal fees based on discussion with Wayne Lovett at 50% of increased audit fees.

EX-99.C26

Exhibit 99(c)(26)

Mercury Air Group, Inc.
Cash to Buyout Fractional Shares at Various Premiums

	Price As of:
			Previous 10		Previous 20		Previous 30
Date:	Last Close		Trading Days		Trading Days		Trading Days		1-Month
Price:		$3.46		$3.55		$3.53		$3.58		$3.53
18% Premium:		$4.08		$4.19		$4.16		$4.22		$4.17
20% Premium:		$4.15		$4.26		$4.23		$4.29		$4.24
22% Premium:		$4.22		$4.33		$4.30		$4.36		$4.31
24% Premium:		$4.29		$4.40		$4.37		$4.43		$4.38
Fractional Shares Estimate:	192,613
Cash to Buy Shares
18% Premium:		$786,400		$806,174		$801,515		$812,765		$802,310
20% Premium:		$799,729		$819,838		$815,100		$826,541		$815,909
22% Premium:		$813,058		$833,502		$828,685		$840,317		$829,507
24% Premium:		$826,387		$847,166		$842,270		$854,092		$843,106

EX-99.C27

Exhibit 99(c)(27)

Mercury Air Group, Inc.
Cash to Buyout Fractional Shares at Various Premiums

	Price As of:
			Previous 10		Previous 20		Previous 30
Date:	Last Close		Trading Days		Trading Days		Trading Days		1-Month
Price:	$	3.36	$	3.52	$	3.52	$	3.56	$	3.52
10% Premium:	$	3.70	$	3.87	$	3.87	$	3.92	$	3.87
12% Premium:	$	3.76	$	3.94	$	3.94	$	3.99	$	3.94
14% Premium:	$	3.83	$	4.01	$	4.01	$	4.06	$	4.02
16% Premium:	$	3.90	$	4.08	$	4.08	$	4.14	$	4.09
18% Premium:	$	3.96	$	4.15	$	4.16	$	4.21	$	4.16
20% Premium:	$	4.03	$	4.22	$	4.23	$	4.28	$	4.23
22% Premium:	$	4.10	$	4.29	$	4.30	$	4.35	$	4.30
24% Premium:	$	4.17	$	4.36	$	4.37	$	4.42	$	4.37
Fractional Shares Estimate:		192,613
Cash to Buy Shares
10% Premium:	$	711,898	$	745,162	$	746,115	$	755,261	$	746,244
12% Premium:	$	724,841	$	758,710	$	759,681	$	768,993	$	759,812
14% Premium:	$	737,785	$	772,259	$	773,247	$	782,725	$	773,380
16% Premium:	$	750,728	$	785,807	$	786,813	$	796,457	$	786,948
18% Premium:	$	763,672	$	799,356	$	800,378	$	810,189	$	800,516
20% Premium:	$	776,616	$	812,904	$	813,944	$	823,921	$	814,084
22% Premium:	$	789,559	$	826,452	$	827,510	$	837,653	$	827,652
24% Premium:	$	802,503	$	840,001	$	841,075	$	851,385	$	841,220

EX-99.C28

Exhibit 99(c)(28)

DRAFT FAIRNESS OPINION
AND BACK - UP

TABLE OF CONTENTS

	APPENDIX
FAIRNESS OPINION	I
FAIRNESS OPINION BACKUP	II
INCOME STATEMENT AND BALANCE SHEET FOR THE FYE JUNE 30, 2002 THROUGH 2004 AND UNAUDITED RESULTS FOR DECEMBER 31, 2004	III
FYE JUNE 30, 2005 THROUGH 2008 PROJECTIONS	IV
DISCOUNTED CASH FLOW ANALYSIS	V
WEIGHTED AVERAGE COST OF CAPITAL CALCULATION	VI

150 SOUTH RODEO DRIVE, SUITE 100 BEVERLY HILLS, CA 90212
310-246-3700 800-929-2299 FAX 310-246-3794

[March 21, 2005]

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
5456 McConnell Avenue
Los Angeles, CA 90066

Members of the Board of Directors and the Special Committee:

We understand that Mercury Air Group, Inc. (“Mercury” or the “Company”) intends to effect a 1-for-501 reverse stock split followed by a 501-for-1 forward stock split of the Company’s common stock (the “Transaction”). As a result of the Transaction, (a) each shareholder owning fewer than 501 shares immediately before the Transaction will receive from the Company [$X.XX] in cash for each of such shareholder’s pre-split shares (the “Transaction Consideration”); and (b) each share of common stock held by a shareholder owning 501 or more shares will continue to represent one share of the Company after completion of the Transaction. You have advised us that the purpose of the Transaction is to cash-out the equity interests in Mercury of shareholders who, as of the effective date, hold fewer than 501 shares of common stock in any discrete account at a price determined to be fair by the entire Board of Directors in order to enable Mercury to deregister its common stock under the Exchange Act and thus terminate its obligation to file special and periodic reports and make other filings with the SEC.

You have requested our opinion as to the fairness, from a financial point of view, of the Transaction Consideration to those shareholders receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom we express no view. We also express no view with respect to any aspect of the Transaction other than as described in the immediately preceding sentence.

In connection with this opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. We have, among other things:

(i)	Reviewed the draft proxy statement and related documents outlining the Transaction;
(ii)	Analyzed certain publicly available information that we believe to be relevant to our analysis, including the Company’s annual report on Form 10-K for the fiscal year ended (“FYE”) June 30, 2004 and the Company’s quarterly report on Form 10-Q for the quarters ended September 30, 2004 and December 31, 2004;
(iii)	Reviewed certain information including financial forecasts relating to the business, earnings and cash flow of the Company, furnished to us by senior management of Mercury;
(iv)	Reviewed the Company’s projections for FYE June 30, 2004 through 2008 furnished to us by senior management of Mercury;
(v)	Reviewed certain publicly available business and financial information relating to Mercury that we deemed to be relevant;
(v)	Conducted discussions with members of senior management of Mercury concerning the matters described in clauses (i) through (vi) above, as well as the prospects and strategic objectives of Mercury;
(vii)	Reviewed public information with respect to certain other companies with financial profiles which we deemed to be relevant; and

Mercury Air Group, Inc.
Board of Directors
Special Committee of the Board of Directors
March 21, 2005

(viii)   Conducted such other financial studies, analyses and investigation and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions.

With your consent, we have relied upon the accuracy and completeness of the foregoing financial and other information and have not assumed responsibility for independent verification of such information or conducted or have been furnished with any independent valuation or appraisal of any assets of the Company or any appraisal or estimate of liabilities of the Company. With respect to the financial forecasts, we have assumed, with your consent, that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of senior management of Mercury as to the future financial performance of the Company. We have also relied upon the assurances of senior management of Mercury that they are unaware of any facts that would make the information or financial forecasts provided to us incomplete or misleading. We assume no responsibility for, and express no view as to, such financial forecasts or the assumptions on which they are based.

Our opinion is based upon economic, market and other conditions as they exist and can be evaluated on the date hereof and does not address the fairness of the Transaction Consideration as of any other date. The financial markets in general, and the markets for the securities of the Company in particular, are subject to volatility, and our opinion does not purport to address potential developments in the financial markets or in the markets for the securities of the Company after the date hereof.

Our opinion expressed herein has been prepared for the information of the Special Committee and the Board of Directors of the Company in connection with their consideration of the Transaction. Our opinion does not constitute a recommendation as to any action the Company or any shareholder of the Company should take in connection with the Transaction or any aspect thereof. Our opinion does not address the merits of the underlying decision by the Company to engage in the Transaction or the relative merits of any alternatives discussed by the Special Committee or the Board of Directors of the Company. No opinion is expressed herein, nor shall one be implied, as to the fair market value of Mercury’s equity or the prices at which it may trade at any time. This opinion may not be reproduced, disseminated, quoted or referred to at any time without our prior written consent, except that a copy of the Opinion may be reproduced in full and otherwise referred to in the Company’s proxy statement and related filings describing the Transaction.

In the ordinary course of its business and in accordance with applicable state and federal securities laws, Imperial Capital, LLC may actively trade the equity securities of Mercury for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. In the past, Imperial Capital has previously acted as financial advisor to Mercury and has received a fee in connection with its various engagements.

Based on and subject to the foregoing, we are of the opinion that, as of the date hereof, the Transaction Consideration to be received by the shareholders of the Company receiving the Transaction Consideration, other than the Management Holders (as to whom we express no view), is fair, from a financial point of view, to such shareholders.

Very truly yours,

Imperial Capital, LLC

Page 2

INTRODUCTION

The following is a summary of the analysis conducted by Imperial Capital (“IC”) with respect to the fairness, from a financial point of view, of the Transaction Consideration (as defined below) to be paid to those shareholders of Mercury Air Group, Inc. (“Mercury” or the “Company”) receiving the Transaction Consideration, other than members of senior management, CPK Partners and their respective affiliates (collectively, the “Management Holders”), as to whom IC expresses no view. Pursuant to the Transaction (as defined below), the Company will execute a 1-for-501 reverse stock split followed immediately by a 501-for-1 forward stock split of the Company’s common stock (the “Transaction”). As a result of the Transaction, (a) each shareholder owning fewer than 501 shares immediately before the Transaction will receive from the Company [$X.XX] in cash for each of such shareholder’s pre-split shares (the “Transaction Consideration”); and (b) each share of common stock held by a shareholder owning 501 or more shares will continue to represent one share of the Company after completion of the Transaction.

The purpose of the Transaction is to cash-out the equity interests in Mercury of shareholders who, as of the effective date, hold fewer than 501 shares of common stock in any discrete account at a price determined to be fair by the entire Board of Directors in order to enable Mercury to deregister its common stock under the Exchange Act and thus terminate its obligation to file Special and periodic reports and make other filings with the SEC. Following the de-listing, the Company will continue to publicly file audited balance sheets and income statements for its fiscal year end.

IC has been engaged to determine the fairness, from a financial point of view, of the Transaction Consideration to be paid to those shareholders of Mercury receiving the Transaction Consideration, other than Management Holders, as to whom IC expresses no view. In order to accomplish this, IC has used various valuation methodologies (described more fully below) to determine the fair market value (“FMV”) of Mercury’s common shares, and then compared the FMV to the Transaction Consideration.

Appendix II Page 1

BACKGROUND OF THE COMPANY

Overview of Mercury

Mercury, a Delaware corporation, was organized in 1956 and provides a broad range of services to the aviation industry. Mercury operates through the following three principal operating units: (i) fuel sales; (ii) cargo operations; and (iii) government contract services.

Divisions

Below is a more detailed summary of Mercury’s divisions:

Ø	Aircraft Refueling – Through its wholly owned subsidiary MercFuel, Inc. (“MercFuel”), Mercury provides aviation fuels domestically and internationally to consumers globally. MercFuel facilitates the management and distribution of aviation fuel as a reseller of aviation fuels for major oil companies, affording the oil companies access to certain customers without the credit risk or administrative costs associated with the management of these customer accounts.
Ø	Cargo Operation – Mercury’s cargo operations, conducted through its wholly-owned subsidiary Mercury Air Cargo, Inc. (“Air Cargo”), provides the following services: (i) domestic and international air cargo and airmail handling; (ii) cargo logistics services; and (iii) general cargo sales agent services. Cargo logistics involves the contracting, through its network of shipping agents of bulk cargo space on airlines which is sold to customers with shipping needs. Air Cargo also brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America.
Ø	Government Contract Services – Mercury, through its wholly owned subsidiary, Maytag Aircraft Corporation (“Maytag”), provides aircraft refueling, air terminal services, base operating support (“BOS”), facilities maintenance, weather observation, air traffic control and flight line management in 17 countries on four continents for all branches of the U.S. Military establishment.

On June 12, 2004, the Company sold its FBO Business, Mercury Air Centers, Inc. (the “FBO Business”), to Allied Capital Corporation. According to the Company’s public filings, the FBO Business contributed a significant portion of the Company’s gross margin (approximately 49.5% in 2003).

Appendix II Page 2

INDUSTRY OVERVIEW

MercFuel

Jet fuel resellers are generally independent third parties that purchase fuel from major oil companies and independent fuel suppliers and resell fuel to commercial airlines, business aircraft management companies and air freight companies. Jet fuel reselling is a byproduct of the United States oil embargo and ensuing energy crisis in 1979. At that time, the major oil companies initiated a fuel allocation program pursuant to which many smaller and regional domestic and international airlines were unable to access sufficient supplies of jet fuel. Resellers took the initiative to find additional sources of fuel for these carriers and have become the suppliers to many of those airlines which the oil companies no longer directly serve.

Commercial and general aviation jet fuel purchases and dispensement occurs at airports and fuel terminals throughout the world. Jet fuel resellers contract directly with the oil company or jet fuel supplier to purchase the fuel and with third party refueling companies handling large commercial aircraft at commercial airports and fuel terminals or with third parties known as fixed base operations, for the actual dispensing of the fuel to the customer. Fixed base operations are third parties that typically handle all other aircraft such as commuter, business and private jets.

Typical commercial or business jet fuel resale transactions are as follows:

•   Deliveries from Reseller Inventory. In some cases, the jet fuel reseller has previously contracted with the fuel supplier for the delivery of fuel to a third party refueling company or fixed base operation. These third parties store the fuel for the jet fuel reseller as the reseller’s inventory. In these instances, the third party that delivers the fuel into the wing of the aircraft customer forwards a paper record of the transaction to the jet fuel reseller. The reseller then forwards an invoice to the aircraft customer.

•   Into-Plane Deliveries. Into-plane deliveries are fuel sales where the sale of fuel is made from the fuel supplier’s inventory maintained at the airport or fuel terminal. In these instances, either the fuel supplier or a third party refueling company delivers the fuel into the wing of the aircraft customer and the sale of fuel is consummated at that point. The refueling company, if used, forwards the paper record of the transaction to the fuel supplier and in either case the fuel supplier forwards the paper record to the fuel reseller for payment. The fuel reseller then forwards an invoice to the air carrier.

Each of these methods is a labor intensive and time consuming process that is subject to delays, inefficiencies and mistakes. At times customers and resellers are inaccurately billed for the amount of fuel sold. In addition, the use of paper documents delays the payment by the jet fuel reseller to the supplier in the case of into-plane deliveries. Also, commercial and business customers typically do not receive bills from the jet fuel reseller until between 7 to 30 days after fuel is sold, which delays payments and affects the jet fuel reseller’s cash flow.

Appendix II Page 3

In recent months, rising fuel prices, combined with a reduction of credit terms by MercFuel’s fuel suppliers, has caused the spread between accounts payable and accounts receivable to grow to the point of significant risk to Mercury’s liquidity.

The market for jet fuel reselling is highly competitive. MercFuel is in direct competition with major oil companies, major airlines and other independent fuel suppliers, such as World Fuel Services Corporation (“World Fuel”), and with other aircraft support companies which maintain their own sources of aviation fuel. Many of MercFuel’s competitors have greater financial, technical and marketing resources than the Company.

Air Cargo

-   Cargo Handling. Air Cargo provides domestic and international air cargo handling, air mail handling and bonded warehousing. Air Cargo handles cargo at Los Angeles International Airport (LAX), William B. Hartsfield International Airport (ATL — Atlanta, GA), Dorval International Airport (YUL — Montreal, Canada), Mirabel International Airport (YMX — Montreal, Canada) and Lester B. Pearson International Airport (YYZ — Toronto, Canada). Since February 2001, operations at ATL have been handled by Lufthansa Handling under the terms of a ten-year sub-lease of a 104,646 square foot warehouse and operations area. In fiscal 2004, the cargo handling operations comprised 65% of Air Cargo’s revenue.

-   Cargo Logistics Services. Air Cargo brokers cargo space on flights within the United States and on international flights to Europe, Asia, the Middle East, Australia, Mexico and Central and South America. Cargo logistics involves the contracting for bulk cargo space on airlines and selling that space to customers with shipping needs. Air Cargo has an established network of shipping agents who assist in obtaining cargo for shipment on space purchased from various airlines, and who facilitate the delivery and collection of freight charges for cargo shipped by Air Cargo. Unlike a cargo airline which operates its own aircraft, Air Cargo’s space logistics business arranges for the purchase of cargo space on scheduled flights or supplemental flights at negotiated rates. Air Cargo is thereby able to profit from the sale of air cargo space worldwide without the overhead cost of owning and operating an aircraft. In fiscal 2004, the space logistics revenue comprised 22% of Air Cargo revenue.

-   General Sales Agent. Air Cargo also serves as a general sales agent (“GSA”) directly through its subsidiaries in the United States, Canada, Mexico, Central and South America, and the Far East. In this capacity, Air Cargo sells the transportation of cargo on its client’s airline flights, using our clients’ own airway bills. Air Cargo earns a commission from the airlines for selling their cargo space. As with its space logistics business, the growth for Air Cargo’s GSA business is not constricted by requirements for physical facilities or by large capital commitments. In fiscal 2004, the GSA business revenue comprised 12% of Air Cargo’s total revenue.

Appendix II Page 4

Air Cargo competes with numerous companies who provide air cargo handling services at the same airports where Air Cargo provides these services. At most airports there are at least 3-5 independent cargo handling companies, as well as certain airlines who operate their own warehouses and offer third-party cargo handling in order to reduce overhead costs. Over the last 15 years, a consolidation of independent cargo handling, ramp services providers and FBO’s has evolved into a handful of large operators with multiple airport facilities, such as BBA, Worldwide Aviation and Globe Ground Services. These larger companies have been able to leverage their relationships with airline customers by offering them multi-city pricing and discounts and lower handling rates for each additional airport where the airline’s cargo would be handled, with the intention of freezing out smaller competitors like Air Cargo. While Air Cargo’s warehouses operated profitably until the economic downturn beginning in 2000 and the 9/11 events, air cargo tonnage decreased through 2003 and thereby increased competition among cargo handlers. In an effort to maintain market share, Air Cargo lowered its pricing in order to retain the airline cargo handling business.

Maytag

-   Aircraft Refueling. Maytag has been supplying aircraft refueling and base support services worldwide to the Department of Defense since 1950. Maytag’s aircraft refueling services include supplying all the necessary personnel and equipment to operate government-owned fuel storage facilities and providing 24-hour refueling services for a variety of aircraft for the military. Maytag currently provides refueling services at 12 U.S. military bases, 11 in the U.S. and one in Greece. Maytag’s refueling contracts generally have a term of four years, with expiration dates ranging from June 2004 to January 2008. All contracts are firm-fixed price for specified services. Fuel handled in these operations is government owned and only the fleet of refueling trucks and other support vehicles are owned by Maytag.

-   Air Terminal and Ground Handling Services. Maytag has become a global player in air terminal services as the largest provider to the U.S. Air Force Air Mobility Command at 24 locations including Alaska, Japan, Korea, Kuwait and Latin America. Maytag’s air terminal and ground handling services consist of loading and unloading of passengers and cargo, transient alert, flight planning services, passenger processing and manifesting, baggage handling, travel eligibility, immigration facilitation and flight planning. Air terminal service contracts are generally for a base period of up to one year, with government options for multiple one-year extensions. All contracts provide firm-fixed price for specified services. In order to provide to provide a comprehensive, all-in-one solution to the U.S. military and other government agencies, Maytag provides BOS services and base housing maintenance at several locations where Maytag has contracts. Maytag’s BOS services include fuel management, traffic management, airfield management, vehicle operations and maintenance services, and meteorological services. The Company’s base housing maintenance consists of change of occupancy maintenance for government-provided quarters, such as basic interior upkeep, repairs, painting, and cleaning.

Appendix II Page 5

-   Weather Data Services. Weather Data Services was founded in Clear Lake, Iowa in 1987 and was acquired by the Company to become a division of Maytag on August 1, 1998. This division currently provides weather observation and weather forecasting services at 11 locations within the U.S. pursuant to contracts with the prices for specified services and are generally for a base of one year, with multiple one-year options at the government’s election.

All of Maytag’s government contracts are subject to competitive bidding. Refueling, air terminal, and weather forecasting contracts are usually awarded on a “best value” basis, taking into account price, past performance history of the offeror, and the merit of the technical proposal. Weather observation contracts are generally awarded on the basis of the lowest priced, technically acceptable proposal. Maytag’s contracts are all subject to termination at the discretion of the U.S. Government, in whole or in part.

Maytag does not compete directly with any large government defense contractors. Since Maytag primarily targets government contracts with annual average revenues of approximately $1 million, most of Maytag’s competitors are smaller entities, and unlike Maytag, most of these companies have limited capabilities to operate abroad. According to Management, due to Maytag’s strong competitive position, the Company has been able to capture approximately 40% of the Defense Department’s Energy Support Command’s (DESC) aircraft refueling business and 50% of the Air Mobility Command’s (AMC) air terminals business in the U.S. and abroad.

Financial Summary

A summary of the Company’s historical operating performance is set forth below.

Appendix II Page 6

Summary of Operations

($ in thousands)	Fiscal Year Ended June 30,									LTM
	2002			2003			2004(a)			12/31/2004
MercFuel Revenues	$	232,573		$	280,136		$	322,631		$	428,512
Air Cargo Revenues		28,124			32,691			39,549			42,550
Maytag Revenues		28,228			24,421			23,281			22,213
Total Revenues	$	288,925		$	337,248		$	385,461		$	493,275
Sales Growth %		n/a			16.7	%		14.3	%		28.0	%
MercFuel Gross Profit	$	6,581		$	5,926		$	6,080		$	6,971
Air Cargo Gross Profit		898			2,585			2,100			3,563
Maytag Gross Profit		6,789			4,598			5,146			4,901
Total Gross Profit	$	14,268		$	13,109		$	13,326		$	15,435
Gross Profit Margin %		4.9	%		3.9	%		3.5	%		3.1	%
SG&A Expenses	$	11,771		$	10,818		$	10,894		$	10,783	(b)
Provision for Bad Debts		1,170			1,192			506			894
Total Operating Expenses		12,941			12,010			11,400			11,677
EBITDA	$	1,327		$	1,099		$	1,926		$	3,758
EBITDA Margin		0.5	%		0.3	%		0.5	%		0.8	%
Depreciation & Amortization		3,478			2,782			2,828			2,656
Operating Income		(2,151	)		(1,683	)		(902	)		1,102
Operating Income Margin		-0.7	%		-0.5	%		-0.2	%		0.2	%
Capital Expenditures	$	546		$	390		$	1,184		$	1,505

Note: Divisional Gross Profit includes certain SG&A costs which are charged directly to the operating units.

(a)	Fiscal 2004 SG&A excludes $2.4 million in extraordinary settlement costs, $1.7 million for severance payments to the retiring Chairman, and $311,000 of unusual audit fees. Air Cargo’s 2004 gross profit has been adjusted to exclude $300,000 in severance payments to Air Cargo’s former COO.
(b)	LTM SG&A expenses excludes $2.1 million of one-time charges for legal fees regarding a lawsuit settlement, severance costs, write-off of insurance deposits related to a joint venture, an asset impairment on a plane that was sold, and a loss on a timeshare plane trade-in.

Balance Sheet

($ in thousands)	As of
	12/31/04
Assets
Cash and Cash Equivalents	$	6,316
Accounts Receivable, net		56,912
Inventories		1,619
Prepaid Expenses & Other		5,108
Total Current Assets		69,955
Property, Plant & Equipment, net		7,564
Goodwill & Intangibles		5,011
Restricted Cash		8,418	(a)
Other Assets		3,133
Total Assets	$	94,081
Liabilities and Shareholders’ Equity
Account Payable	$	36,390
Accrued Expenses & Other		8,559
Current Portion of Long-Term Debt		1,021
Total Current Liabilities		45,970
Long-Term Debt		21,221
Other Long- Term Liabilities		10,722
Total Liabilities		77,913
Mandatorily Redeemable Preferred Stock		468
Shareholders’ Equity		15,700
Total Liabilities and Shareholders’ Equity	$	94,081

(a)   Restricted cash consists of cash held for specific purposes and not available for general use by the Company and is comprised primarily of an escrow account associated with the Hartsfield FBO. The funds held in the escrow account are to be distributed to either one or both of the Company and Allied Capital dependent upon the award of a new lease at the Hartsfield International Airport in Atlanta for a new FBO.

Appendix II Page 7

VALUATION METHODOLOGIES

In order to evaluate the fairness of the proposed Transaction:

Ø	estimated a reasonable range of the fair market value (“FMV”) of the total enterprise value (“TEV”) of the Company;
Ø	estimated a reasonable range of the equity value of the Company, based on the Company’s balance sheet as of December 31, 2004; and

IC employed different valuation methodologies to approximate the FMV of the TEV of the Company. IC believes the most appropriate valuation methodologies are: (i) the Market Approach – Trading History; (ii) the Market Approach – Multiple Analysis; (iii) the Market Approach – Precedent Transactions; and (iv) the Discounted Cash Flow Approach (“DCF”).

Market Approach

The Market Approach is a valuation technique in which the FMV is estimated based on market prices in actual transactions and on asking prices for currently available assets. The valuation process is essentially that of comparison and correlation between the subject asset and other similar assets. Consideration such as similarity, exposure to macroeconomic and/or specific industry factors, location, and time of sale of similar assets are compared to the subject asset to indicate a current value of the subject asset. Additionally, for this approach to be reliable, there are two requisites: (i) an active public market; and (ii) an exchange of comparable assets.

Trading History

As a starting point for an understanding of the FMV of the equity, we reviewed the valuation implied by the current trading price of the common stock.

Appendix II Page 8

(a)   On October 6, 2004, the Company announced a special dividend of $5.70 per share, at which point the Company’s shares were trading at $5.39 per share.

(b)   On November 5, 2004, the Company paid the special dividend.

As of March 18, 2005, the Company’s share price was $3.46, resulting in a market capitalization of approximately $10.6 million, while the trading volume in Mercury’s stock over the previous 30 trading days was approximately 9,093 shares per day.

Trading History

	Average			Average
	Price			Volume
Previous 10 Trading Days	$	3.56			19,830
Previous 30 Trading Days	$	3.58			9,093
Previous 60 Trading Days	$	3.81			9,350
Previous 90 Trading Days	$	3.91			18,089
Previous 120 Trading Days (a)	$	3.70			20,630
Previous 150 Trading Days (a)	$	3.97			17,896
Previous 180 Trading Days (a)	$	4.20			15,944
Previous 52-Weeks (a)	$	4.69			12,881
Previous 2 Years (a)	$	5.52			8,765
52-Week High	$	8.45	(b)		226,300
52-Week Low	$	3.08	(c)		0

(a)	Average prices have been adjusted to exclude the Special Dividend.
(b)	Occurred on November 5, 2004, the day the special dividend was paid.
(c)	Occurred on November 8, 2004, the first trading day after the special dividend was paid.

On November 5, 2004, the Company paid a one-time special cash dividend totaling $17.5 million ($5.70 per share) to holders of its common stock. The one-time special dividend was approximately equal to the trading price of Mercury’s common stock prior to the announcement of the dividend on October 6, 2004. As shown in the chart above, the special dividend had a significant impact on the trading price and volume of Mercury’s stock.

Appendix II Page 9

Multiple Analysis

The Market Approach, utilizing market multiples, indicates the FMV of a business by comparing it to publicly-traded companies in similar lines of business, or with similar risk-return profiles (“Comparables”). The value of different businesses can often be stated in relative terms, such as a multiple of: (i) revenue; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings before interest and taxes (“EBIT”); (iv) free cash flow (“FCF”); or (v) net book value of assets (collectively, the “Market Multiples”). Market Multiples for companies operating in an industry are in part determined by the similar external market conditions that they face (the common opportunities and threats) and in part by each company’s internal factors (its own strengths and weaknesses).

This method is useful in determining the FMV of a company that is currently profitable and is expected to remain profitable in the future. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. Therefore, an analysis of the Market Multiples of companies engaged in similar businesses or in businesses that have similar risk-return profiles yields insight into investor perceptions regarding their return requirements and, therefore, the value of the subject.

Analysis

Outside investors, potential acquirers and stockholders in Mercury will look to public companies and recently acquired companies that are similar to the Company to provide guidance on valuation. In the case of the Company, there are several U.S. publicly traded aviation services companies that we deemed to be similar. In selecting the Comparables, we searched comprehensive lists and directories of public companies. The primary sources used to produce the list of Comparables included:

•   Capital IQ;

•   Dow Jones Interactive;

•   Bloomberg; and

•   Hoover’s.

Certain determinant factors are: (i) the company had to provide products or services for the aviation industry; (ii) the company had to make its financial information public; and (iii) the company was required to have an active trading market to measure public perception. The Comparables selected were:

Appendix II Page 10

•   Air T, Inc. (NasdaqSC: AIRT)

•   AirNet Systems, Inc. (NYSE: ANS)

•   AutoInfo (OTCBB: AUTO)

•   Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

•   World Fuel Services Corp. (NYSE: INT)

Due to the lack of public companies that provide the same range of services as Mercury, we chose to select Comparables with businesses focused on air cargo handling and fuel services. Our decision to select such companies is due in part to their exposure to similar macroeconomic and industry-specific risks as those faced by the Company including, but not limited to: (i) exposure to commercial and general aviation industry trends; (ii) macroeconomic risks (e.g., post-September 11 downturn in commercial aviation, oil prices, etc.); and (iii) similar customer bases. The following is a brief description of the business operations for the selected Comparables:

Air T, Inc. (NasdaqSC: AIRT)

Air T, Inc. operates small-aircraft air cargo in the United States. It provides overnight air cargo services, and aviation ground support and other equipment products. The company, through its wholly owned subsidiaries, provides small package overnight air freight delivery services on a contract basis to the air express delivery industry throughout the eastern half of the United States and Canada. The company also engages in the manufacture and sale of aircraft deicers and scissor lift trucks, as well as specialized service equipment to passenger and cargo airlines, the U.S. Government, airports, and commercial customers. As of June 24, 2004, the company operated a fleet of single and twin engine turbo-prop aircraft nightly in the eastern half of the United States and Canada, Puerto Rico, and the Virgin Islands.

AirNet Systems, Inc. (NYSE: ANS)

AirNet Systems, Inc. provides aviation services, including time-critical small package delivery and passenger charter services. It operates AirNet Express, an integrated national air transportation network that provides expedited air transportation services for banks and time-critical small package shippers in approximately 100 cities nationwide. The company transports cancelled checks and related information for the U.S. banking industry, as well as offers specialized delivery services to customers, primarily in the medical, critical parts, and entertainment industries. AirNet Systems also provides passenger charter services to individuals and businesses through its subsidiary, Jetride, Inc. In addition, it offers on-demand cargo charter delivery services, and provides ground pick-up and delivery services. As of May 17, 2004, the company operated 120 aircraft, including 40 Learjets, located throughout the United States.

Appendix II Page 11

AutoInfo, Inc. (OTCBB: AUTO)

AutoInfo, Inc., through its wholly owned subsidiary, Sunteck Transport Co., Inc., provides transportation capacity and related transportation services to shippers in the United States and Canada. The company’s non-asset based services include ground transportation coast-to-coast, local pick up and delivery, air freight, and ocean freight. It has strategic alliances with less than truckload, truckload, and air, rail, and ocean common carriers to serve its customers’ needs. Its brokerage services are provided through a network of independent sales agents. As of March 1, 2004, the company had six regional operating centers providing brokerage services and representatives in 15 states and Canada. Its services include arranging for the transport of customers’ freight from the shippers location to the designated destination.

Streicher Mobile Fueling, Inc. (NASDAQ: FUEL)

Streicher Mobile Fueling, Inc. provides mobile fueling and fuel management out-sourced services. Its truck fleet delivers diesel, gasoline, and alternative fuels to customers’ locations on a scheduled or as needed basis refueling vehicles and equipment, and resupplying fixed-site storage facilities. The company’s customer base includes businesses that operate fleets of vehicles and equipment of various sizes, including governmental agencies, utilities, trucking companies, bus lines, hauling and delivery services, courier services, construction companies, and others. As of June 30, 2004, the company operated approximately 100 custom mobile fueling trucks from 26 service locations.

World Fuel Services Corp. (NYSE: INT)

World Fuel Services Corporation markets marine and aviation fuel services. The company’s aviation fuel-related services include fuel management, price risk management, flight plans, weather reports, ground handling, and flight permits. It offers these services to passenger, cargo, and charter airlines, as well as corporate customers, and the United States’ and foreign militaries. The company also provides flight plans and weather reports to its corporate customers. The company’s marine fuel-related services include management services for the procurement of fuel, cost control through the use of hedging instruments, quality control, and claims management. As of August 5, 2004, World Fuel Services provided fuel and services at approximately 2,500 airports and seaports worldwide.

The table below provides a summary of the selected Comparables and their relevant market multiples.

Appendix II Page 12

Cargo Handling / Fuel Services

(Dollars in Millions, Except Stock Price)	Stock		Market		Enterprise		Enterprise Value / LTM
	Price (a)		Cap.		Value (b)		Revenues			EBITDA			EBIT
Air T, Inc. (AIRT)	$	17.61	$	47.7	$	47.3		0.7	x		10.6	x		12.3	x
AirNet Systems, Inc. (ANS)		3.90		39.4		98.7		0.6			3.9			19.7
AutoInfo, Inc. (AUTO)		0.69		21.5		22.8		0.6			22.0			22.9	(c)
Streicher Mobile Fueling, Inc. (FUEL)		1.75		13.1		19.7		0.2			8.3			18.2
World Fuel Services Corp. (INT)		27.70		298.7		282.3		0.1			7.7			8.5
High		—	$	298.7	$	282.3		0.7	x		10.6	x		22.9	x
Median		—		39.4		47.3		0.6			8.0			18.2
Mean		—		84.1		94.2		0.4			7.6			16.3
Low		—		13.1		19.7		0.1			3.9			8.5
Mercury Air Centers, Inc. (MAX)	$	3.46	$	10.6	$	27.0		0.1	x		7.2	x		24.5	x

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a)	Stock price as of February 18, 2005.
(b)	Enterprise Value equals equity value plus debt, minority interest, preferred stock, and convertibles, less investments in unconsolidated affiliates and cash.
(c)	AUTO excluded as an outlier with a TEV/LTM EBITDA multiple of 22.0x.

After identifying the Comparables, we then focused on the strengths and weaknesses of the Company relative to the Comparables. Therefore, a comparative analysis of the selected Comparables was undertaken.

Size. In comparison to the Comparables, the Company’s LTM gross profit and EBITDA of approximately $15.4 million and $3.8 million, respectively, place it below the average of the Comparables as presented below.

Cargo Handling / Fuel Services

Operating Results	LTM		LTM Operating Results
(Dollars in Millions)	Ended		Revenues		Gross Profit		EBITDA		EBIT		FCF (a)
Air T, Inc. (AIRT)		12/31/04	$	68.1	$	12.4	$	4.5	$	3.8	$	3.0
AirNet Systems, Inc. (ANS)		9/30/04		164.1		59.1		25.1		5.0		(30.5	)
AutoInfo, Inc. (AUTO)		9/30/04		40.4		7.5		1.0		1.0		1.0
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		108.0		5.6		2.4		1.1		2.1
World Fuel Services Corp. (INT)		9/30/04		4,574.1		113.8		36.8		33.2		34.0
High		—	$	4,574.1	$	113.8	$	36.8	$	33.2	$	34.0
Median		—		108.0		12.4		4.5		3.8		2.1
Mean		—		991.0		39.7		13.9		8.8		1.9
Low		—		40.4		5.6		1.0		1.0		(30.5	)
Mercury Air Centers, Inc. (MAX)		12/31/04	$	493.3	$	15.4	$	3.8	$	1.1	$	2.3

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a)   FCF = EBITDA — Capital Expenditures

Growth. While the Company’s three-year pro forma historical revenue growth rate is 23.9%, most of the growth in the Company’s revenues relates to the rise in fuel prices during the past 18 months. The Company’s gross profit has shown more modest growth at 3.2%, while EBITDA has grown 51.6% due to higher sales and fixed cost absorption.

Appendix II Page 13

Cargo Handling / Fuel Services

	3-Year Historical Growth Rates
Operating Growth Rates	Revenues			Gross Profit			EBITDA			EBIT
Air T, Inc. (AIRT)		5.0	%		4.1	%		4.6	%		5.9	%
AirNet Systems, Inc. (ANS)		7.3			2.7			(5.2	)		(30.9	)
AutoInfo, Inc. (AUTO)		80.0			76.4			185.7			203.9
Streicher Mobile Fueling, Inc. (FUEL)		25.8			8.6			14.9			93.0
World Fuel Services Corp. (INT)		48.9			18.3			33.9			36.4
High		80.0	%		76.4	%		185.7	%		203.9	%
Median		25.8			8.6			14.9			36.4
Mean		33.4			22.0			46.8			61.7
Low		5.0			2.7			(5.2	)		(30.9	)
Mercury Air Centers, Inc. (MAX)		23.9	%		3.2	%		51.6	%	NM

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a)   FCF = EBITDA — Capital Expenditures

Leverage. The Company’s LTM net debt / EBITDA ratio of 4.2x is higher than the Comparables.

Cargo Handling / Fuel Services

	Total Debt /									Net Debt /			LTM Interest Coverage
Credit Ratios	Cap (Book)			Cap (Mkt)			EBITDA			EBITDA			EBITDA			FCF (a)
Air T, Inc. (AIRT)		12.0	%		3.5	%		0.4	x	NM				60.0			40.0
AirNet Systems, Inc. (ANS)		52.5			60.4			2.4			2.4			13.7		NA
AutoInfo, Inc. (AUTO)		34.6			8.2			1.9			1.3			11.6			11.3
Streicher Mobile Fueling, Inc. (FUEL)		66.3			45.8			4.7			2.8			1.6			1.4
World Fuel Services Corp. (INT)		18.7			12.1			1.1		NM			NA			NA
High		66.3	%		60.4	%		4.7	x		2.8	x		60.0	x		40.0	x
Median		34.6			12.1			1.9			2.4			12.7			11.3
Mean		36.8			26.0			2.1			2.1			21.7			17.5
Low		12.0			3.5			0.4			1.3			1.6			1.4
Mercury Air Centers, Inc. (MAX)		57.9	%		66.3	%		5.9	x		4.2	x		3.3	x		2.0	x

LTM: Latest Twelve Months.

Margins. The Company’s LTM gross profit and EBITDA margins of 3.1% and 0.8%, respectively, are both lower than the Comparables’ average margins of 16.1% and 5.5%, respectively.

Cargo Handling / Fuel Services

	LTM		LTM Margins
Operating Margins	Ended		Gross Profit				EBITDA	EBIT		FCF (a)
Air T, Inc. (AIRT)		12/31/04		18.3	%	6.6	%	5.6	%		4.4	%
AirNet Systems, Inc. (ANS)		9/30/04		36.0		15.3		3.1			(18.6	)
AutoInfo, Inc. (AUTO)		9/30/04		18.5		2.6		2.5			2.5
Streicher Mobile Fueling, Inc. (FUEL)		12/31/04		5.2		2.2		1.0			2.0
World Fuel Services Corp. (INT)		9/30/04		2.5		0.8		0.7			0.7
High		—		36.0	%	15.3	%	5.6	%		4.4	%
Median		—		18.3		2.6		2.5			2.0
Mean		—		16.1		5.5		2.6			(1.8	)
Low		—		2.5		0.8		0.7			(18.6	)
Mercury Air Centers, Inc. (MAX)		12/31/04		3.1	%	0.8	%	0.2	%		0.5	%

Note: EBITDA and EBIT adjusted for unusual and nonrecurring items.

LTM: Latest Twelve Months.

(a)   FCF = EBITDA — Capital Expenditures

Appendix II Page 14

Market Multiple Method

Valuation Market Multiples for the Comparables were derived based on publicly available financial information. Market Multiples were a result of dividing the value of each of the Comparable’s TEV by the LTM Revenue, EBITDA, and EBIT. TEV is defined as the book value of the company’s net debt and preferred equity (where book value approximates fair market value) plus the market value of the company’s common equity. The market value of the common equity is computed by multiplying the number of shares outstanding by the current stock price.

As exhibited previously, IC believes that multiples derived from the operating data of the Comparables presented were given specific consideration in the selection of the appropriate Market Multiples for the Company. Furthermore, consideration was given to the range of multiples as well as the median and mean multiples. We considered the TEV/EBITDA multiple to be meaningful and appropriate because the Company’s margins are much lower than the Comparables, so therefore the TEV/Revenue multiple should not be considered.

Because Mercury’s EBITDA is projected to increase from approximately $3.8 million as of the LTM period ended December 31, 2004 to approximately $5.0 million as of the FYE June 30, 2005, IC considered the merits of applying the Market Multiple to Mercury’s projected EBITDA. Ultimately, however, IC believes it is not appropriate to apply a historical Market Multiple to projected EBITDA. Because projected EBITDA was not available for the Comparables, a Market Multiple based on projected EBITDA could not be determined, and therefore could not be applied to Mercury’s projected EBITDA.

Market Approach — Multiple Analysis

($ in thousands)

Industry Multiples
		Low			Mean			High
EV/LTM EBITDA Range		3.9x			7.6x			10.6x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	14,799		$	28,664		$	39,724
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value	$	(1,127	)	$	12,738		$	23,798
Shares Outstanding		3,056			3,056			3,056
Implied Share Price		n/m		$	4.17		$	7.79
Premium to Current Share Price(a)		n/m			20.5	%		125.0	%

(a)   Based on a price of $3.46 as of March 18, 2005.

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

Appendix II Page 15

There are several other factors which might reasonably be expected to reduce the implied TEV of the Company including the following: (i) the Company’s size as compared to the Comparables; (ii) the illiquidity of an investment in the Company due to its low trading volume; (iii) the long-term nature of the Company’s receivables; and (iv) customer concentration in the Company’s MercFuel business.

Precedent Transaction Method

Corporate mergers and acquisitions can also be used to indicate the FMV of a subject company. The Precedent Transaction method uses valuation multiples based on actual transactions that have occurred in the marketplace to arrive at an indication of value. Similar to the Market Multiple Approach, multiples are derived from precedent transactions by analyzing a target company’s purchase price relative to its historical financial performance. Multiples used in this approach are determined through an analysis of transactions involving controlling interests in companies in a similar industry or with operations similar to the principal business operations of the subject company. IC reviewed and compared the implied transaction multiples in certain announced control transactions deemed relevant based on similarity of business operations. In order for a transaction to be useful, it is necessary to have publicly available financial information about the purchase price and the operating results of the acquired company. Comparable transactions and corresponding transaction multiples were based on information obtained from the following primary sources:

•   Mergerstat

•   SEC filings

•   Public company disclosures

•   Press releases and news articles

•   Industry reports

•   Capital IQ

For the precedent transaction analysis, IC examined a number of transactions in the cargo handling and fuel services sectors which have occurred since 2000. However, there was limited useful information, other than the purchase price, available for most of these transactions, thereby complicating efforts to derive TEV/EBITDA multiples to apply to the Company. The table below illustrates the precedent transactions:

Appendix II Page 16

Transaction Details

Transaction Multiples

Date

Enterprise

Target

Target

EV/

EV/

Acquiror

Target

Announced

Value

Revenue

EBITDA

Revenues

EBITDA

Express One International, Inc.

Central Florida Air Maintenance

07/21/04

NA

NA

NA

NM

NM

Alimentation Couche-Tard, Inc.

Circle K Corporation

10/06/03

811.7

3,900.0

NA

0.2

NM

The Pantry, Inc.

Golden Gallon, Inc.

08/25/03

187.0

387.0

NA

0.5

NM

Transforce Income Fund

Canadian Freightways Limited

08/15/03

60.7

150.7

NA

0.4

NM

The Carlyle Group

Air Cargo, Inc.

08/11/03

NA

NA

NA

NM

NM

Chevy Chase Trust Co.

Williams Lynxs Alaska CargPort

05/31/03

NA

NA

NA

NM

NM

DHL Worldwide Express

Airborne, Inc.

03/25/03

1,410.0

3,343.7

253.1

0.4

5.6

Management of Landair Corp.

Landair Corp.

10/11/02

101.7

102.9

19.5

1.0

5.2

United Defense Industries, Inc.

United States Marine Repair, Inc.

05/28/02

417.6

431.8

45.4

1.0

9.2

Pacific CMA, Inc.

Airgate International Corp.

03/19/02

3.4

29.1

0.6

0.1

5.6

Union Pacific Corp.

Motor Cargo Industries

11/15/01

96.9

130.9

17.2

0.7

5.6

Vinci SA

Worldwide Flight Services, Inc.

09/10/01

285.0

348.0

NA

0.8

NM

Avfuel Corporation

Texaco General Aviation Business

09/07/01

NA

NA

NA

NM

NM

BBA Group / Signature

Aircraft Services International

07/11/01

137.9

162.0

NA

0.9

NM

United Parcel Service

Fritz Companies, Inc.

01/10/01

495.8

621.8

54.4

0.8

9.1

World Fuel Services Corp.

Page Avjet Fuel Co LLC

01/03/01

NA

NA

NA

NM

NM

EGL, Inc.

Circle Int’l Group, Inc.

07/03/00

518.1

832.3

49.2

0.6

10.5

High

1.0

x

10.5

x

Median

0.7

5.6

Mean

0.6

7.3

Low

0.1

5.2

There are numerous factors to consider when drawing comparisons, including: (i) record of growth and the opportunity for further improvement; (ii) dispersion of market share; (iii) competitive advantages; (iv) size and profitability of the target company; (v) stability of revenue and earnings; (vi) opportunity to realize cost savings, revenue enhancements, and operational synergies; and (vii) strategic and emotional factors employed by the acquirer. In consideration of such factors, below is a summary of the TEVs for the Company based on precedent transactions:

Market Approach — Precedent Transactions

($ in thousands)

Transaction Multiples
		Low			Mean			High
EV/LTM EBITDA Range		5.2 x			7.3x			10.5x
Mercury LTM EBITDA	$	3,758		$	3,758		$	3,758
Valuation Range	$	19,592		$	27,317		$	39,552
Less: Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash		6,316			6,316			6,316
Implied Equity Value	$	3,666		$	11,391		$	23,626
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	1.20		$	3.73		$	7.73
Premium to Current Share Price(a)		-65.3	%		7.7	%		123.4	%

      (a) Based on a price of $3.46 as of March 18, 2005.

As set forth above, applying the range of selected multiples to the Company’s LTM EBITDA implies a range of estimated TEVs. From the estimated TEV, the implied range of share prices can be determined by deducting Mercury’s outstanding net debt and dividing by the number of shares outstanding.

Appendix II Page 17

Discounted Cash Flow (“DCF”)

The fundamental premise of the DCF Approach is to estimate the available cash flows a prudent investor would expect a company to generate over its remaining life. IC relied on the Company’s cash flow projections for FYE June 30, 2005 through 2008, as provided by Mercury’s management (the “Projections”). The estimated available cash flows for each year are discounted to their present value equivalent using an appropriate rate of return to determine present value. The residual or terminal value of the business at the end of the projection period is estimated, discounted to its present value equivalent, and added to the present value equivalent of the discrete projection period estimated cash flows to estimate the TEV of a subject company. Subtracting the debt from the subject company’s TEV and adding the cash and non-operating asset values results in the value of its equity.

The following outlines the steps involved in applying the DCF analysis: (i) determination of future cash flows based upon the projections; (ii) selection of an appropriate discount rate for the subject company’s projections; (iii) determination of a residual or terminal value for the subject company; and (iv) determination of the TEV and resulting equity value for the company.

Determination of Future Cash Flows

IC relied on the following sources which were provided by Mercury’s management to determine the future cash flows of the Company: (i) the Company’s FYE 2005 through 2008 projections; (ii) management discussions; and (iii) other management estimates.

The table below presents the Company’s projected revenue, gross margin and EBITDA for the projected fiscal years ending 2005 through 2008.

Appendix II Page 18

Projections

($ in thousands)	FYE			LTM			Fiscal Year Ending June 30,
	6/30/2004			12/31/2004			2005			2006			2007			2008
MercFuel Revenues	$	322,631		$	428,512		$	537,474		$	628,383		$	628,383		$	628,383
Air Cargo Revenues		39,549			42,550			43,839			46,306			46,306			46,306
Maytag Revenues		23,281			22,213			20,999			21,980			21,980			21,980
Total Revenues	$	385,461		$	493,275		$	602,312		$	696,669		$	696,669		$	696,669
Sales Growth %		n/a			28.0	%		56.3	%		15.7	%		0.0	%		0.0	%
MercFuel Gross Profit	$	6,080		$	6,971		$	7,919		$	8,335		$	8,335		$	8,335
Air Cargo Gross Profit		2,100			3,563			4,398			4,734			4,734			4,734
Maytag Gross Profit		5,146			4,901			4,426			4,124			4,124			4,124
Total Gross Profit	$	13,326		$	15,435		$	16,743		$	17,193		$	17,193		$	17,193
Gross Profit Margin %		3.5	%		3.1	%		2.8	%		2.5	%		2.5	%		2.5	%
SG&A Expenses	$	10,894		$	10,783		$	10,366		$	10,729		$	10,729		$	10,729
Provision for Bad Debts		506			894			1,383			1,477			1,477			1,477
Total Operating Expenses		11,400			11,677			11,749			12,206			12,206			12,206
		3.0	%		2.4	%		2.0	%		1.8	%		1.8	%		1.8	%
EBITDA	$	1,926		$	3,758		$	4,994		$	4,988		$	4,988		$	4,988
EBITDA Margin		0.5	%		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,828			2,656			2,511			2,679			2,679			2,679
Operating Income		(902	)		1,102			2,483			2,308			2,308			2,308
Operating Income Margin		-0.2	%		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Capital Expenditures	$	1,184		$	1,505		$	2,000		$	1,956		$	2,000		$	2,000

Revenue and Gross Profit:

Ø IC relied on the Company’s projections to determine revenue for the FYE June 30, 2005 through 2008, as provided by Mercury’s management.

•   Revenues are projected to increase 56.3% in Fiscal 2005, due primarily to fuel price increases at the Company’s MercFuel division. Revenues are expected increase an additional 15.7% in Fiscal 2006. Although the Company forecasted continued growth of 8.9% in Fiscal 2007 and 9.1% in Fiscal 2008, the inherently volatile nature of the Company’s revenues from fuel sales makes it difficult to project future revenues this far in advance. Therefore, to be conservative, for purposes of our analysis we have maintained revenues at the Fiscal 2006 level for the remainder of the projection period.

•   The Company’s gross profit margin is expected to decline from 3.5% of revenues in Fiscal 2004 to 2.8% of revenues in Fiscal 2005 and 2.5% in Fiscal 2006, as the Company’s incremental gross margin on fuel sales doesn’t keep pace with price increases. Although the Company projected gross margin to continue to erode as fuel sales increased in Fiscal 2007- 08, for purposes of our analysis we have maintained a flat gross margin in these years.

EBITDA:

Ø The Company’s SG&A expenses are expected to decrease approximately $0.3 million in Fiscal 2005 to $10.4 million. Operating expenses (including bad debt expense) as a percentage of revenues are expected to decrease in Fiscal 2005 to 2.0%, from 3.0% in Fiscal 2004. Operating expenses were

Appendix II Page 19

expected to continue to decrease as a percentage of revenue, to 1.6% in Fiscal 2008, as higher gas prices increase revenues at the Company’s MercFuel division. However, for purposes of our analysis we have maintained operating expenses at the Fiscal 2006 level of $12.2 million in Fiscal 2007-08.

Capital Expenditures:

Ø The Company’s current working capital facility with Bank of America contains certain financial covenants limiting the amount the Company can expend annually for capital expenditures to $2.0 million. Management believes that this $2.0 million limit is a reasonable estimate for on-going maintenance capital expenditures.

Debt-Free Net Working Capital:

Ø Debt-free net working capital is defined as current assets (excluding cash) less non-interest bearing liabilities. Based on the Company’s projections, management projects debt-free net working capital to be approximately 3.3% of sales in fiscal 2005 and estimates that it will increase to approximately 3.5% of sales in Fiscal 2006. Although the Company originally projected large increases and revenues (and corresponding increases in working capital) for Fiscal 2007-08, for our analysis we have assumed that revenues and gross profit remain flat from their Fiscal 2006 levels. Therefore we have also held working capital balances constant from their Fiscal 2006 levels.

Projected cash flows for the Company are summarized below. FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Projected Free Cash Flow

($ in thousands)
	Fiscal Year Ending June 30,
	2005(a)			2006			2007			2008
Net Sales	$	301,156		$	696,669		$	696,669		$	696,669
Cost of Goods Sold		292,784			679,475			679,475			679,475
Gross Profit		8,372			17,193			17,193			17,193
SG&A		5,183			10,729			10,729			10,729
Depreciation & Amortization		1,256			2,679			2,679			2,679
Provision for Bad Debt		692			1,477			1,477			1,477
EBIT		1,242			2,308			2,308			2,308
Less: Estimated Taxes (@ 35%)		(435	)		(808	)		(808	)		(808	)
Plus: Depreciation & Amortization		1,256			2,679			2,679			2,679
Less: Capital Expenditures		(1,000	)		(1,956	)		(2,000	)		(2,000	)
Less: Changes in Debt Free Net
Working Capital		(612	)		(4,141	)		—			—
Free Cash Flow	$	451		$	(1,918	)	$	2,180		$	2,180
Sales Growth %		n/a			15.7	%		0.0	%		0.0	%
Gross Margin		2.8	%		2.5	%		2.5	%		2.5	%
SG&A as percentage of sales		1.7	%		1.5	%		1.5	%		1.5	%

(a)   FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Appendix II Page 20

Selection of an Appropriate Discount Rate

To arrive at the present value of the cash flows available in the DCF, we used a range of discount rates between 9.0% and 11.0% (rounded), which were calculated using the Weighted Average Cost of Capital (“WACC”). WACC provides a fair return on total invested capital by weighting the expected yield rates indicated for the equity and debt components in proportion to their estimated percentages in an expected capital structure. The WACC represents the rate of return an investor would require to compensate them for the time value of their money and the risk inherent in the particular investment. The WACC is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows.

The following is a general discussion of the methods used in our derivation of the WACC:

WACC =[R_d (1-t)×(d%)] +[R_e × (e%)]

where:
WACC	=	Weighted average cost of capital;
Rd	=	Pre-tax rate of return on debt capital;
t	=	Effective federal and state income tax rate;
d%	=	Debt capital as a percentage of the sum of the debt plus common and preferred equity capital;
Re	=	Rate of return on common equity capital; and
e%	=	Common equity capital as a percentage of the total capital

See Appendix VI for additional detail on the calculation of the WACC.

Rates of Return on Debt

The cost of debt capital is typically defined as the yield-to-maturity on comparable debt instruments traded in the public market, as adjusted for specific risk factors related to the subject company. Consequently, for purposes of our analysis, we selected the average yield of Baa-rated corporate debt to approximate the Company’s pre-tax rate of return on debt capital. According to Moody’s, the yield-to-maturity for Baa-rated debt as of February 4, 2005 is 5.86%. Consequently, applying a tax rate of 35.0% results in an after-tax cost of debt of 3.81%.

Rates of Return on Equity

The required rate of return on equity capital is estimated using the Capital Asset Pricing Model (“CAPM”). CAPM estimates the rate of return on common equity as the current risk-free rate of return on United States Treasury bonds, plus a market risk premium expected over the risk-free rate of return, multiplied by the “beta” for the stock. Beta is a risk measure that reflects the sensitivity of a company’s stock price to the movements of the stock market as a whole.

Appendix II Page 21

The CAPM rate of return on equity capital is calculated using the formula:

R_e = R_f + [β × (R_m - R_f)] + R_s + R_is

Where:
Re	=	Rate of return on equity capital;
Rf	=	Risk-free rate of return;
β	=	Beta or systematic risk for this type of equity investment;
Rm - Rf	=	Equity risk premium; the expected return on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf);
Rs	=	Small stock equity premium; and
Ris	=	Investment specific risk

Risk-Free Rate of Return

The 20-year United States Treasury Bond rate, as published by the Federal Reserve Statistical Release, of 4.54%, was used for our valuation³. The risk-free rate of return represents the return on an investment that is practically “riskless” due to the very low probability of default.

Beta

Beta is a function of the relationship between the return on an individual security and the return on the market. Beta represents the systematic risk common to all securities, which cannot be eliminated through diversification. The beta for the market as a whole, the average beta, is 1.0. Securities that have betas greater than 1.0 are viewed as more risky than the market. Conversely, securities that have betas less than 1.0 are deemed less risky than the market. We calculated the appropriate beta coefficient to apply in our calculation of the cost of equity based on those of the ten chosen Comparables. We delevered the Comparables’ equity betas to eliminate the effect of leverage on each company’s equity beta, and relevered them according to the average of the Comparables’ debt/equity ratio. This analysis resulted in a relevered beta of 0.80 (rounded).

Equity Risk Premium

The equity risk premium is the return investors require over and above the risk-free return, to compensate them for the additional risk involved in investing in non-Treasury bonds. This additional risk, in terms of the cost of capital, is the degree of uncertainty as to the realization of the expected future returns. We selected an equity risk premium of 7.2%, based on Ibbotson Associates’ (“Ibbotson”) historical average of large company stocks from 1926 to 2002⁴. The equity risk premium is multiplied by the beta (β) to estimate an investor’s expected equity return premium over risk free investments.

3	Source: Federal Reserve Statistical Release, dated February 4, 2005.
4	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition 2004 Yearbook, Ibbotson Associates.

Appendix II Page 22

Small Stock Premium

We then adjusted the CAPM rate of return by applying a premium that reflects the additional risk of investments in small companies. The determination of size is presented by Ibbotson, which uses the market value of equity of an investment to determine an applicable size premium. This premium is derived from historical differences in returns between small companies and large companies, using data published by Ibbotson. For the year ended 2003, the average premium for micro-cap companies with a market value of equity of between $0.3 million and $166.4 million is 4.01%.

Investment Specific Risk

We then further adjusted the CAPM rate of return by applying a premium that reflects the specific risk of the Company. Risks which we believe affect the valuation of the Company include, but are not limited to: (i) the small size of the Company relative to other aviation services companies; (ii) accounts receivables aging and concentration; (iii) the volatility of gas prices and resulting effect on the Company’s liquidity; and (vi) risks associated with the Company achieving its FYE 2004 – 2008 projections. As such, we applied a conservative company-specific risk premium of 0.0% to 5.0% to reflect any unique risk.

Applying the CAPM formula, we estimate the Company’s required rate of return on equity capital to be:

R_e = R_f + β(R_m - R_f) + R_s + R_is

Required rate on return on equity capital:

Assumption:
@ 0.00% Investment Specific Risk:	Re = 16.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 0.00%
@ 2.50% Investment Specific Risk:	Re = 19.17% = 4.54% + (0.80 x 7.20%) + 6.34% + 2.50%
@ 5.00% Investment Specific Risk:	Re = 21.67% = 4.54% + (0.80 x 7.20%) + 6.34% + 5.00%

Based on the data presented above, we calculated a WACC of approximately 9.0% to 11.0% (rounded).

Determination of Terminal Year Growth Factor

The terminal value used in our DCF approach is essentially an estimate of the value of the enterprise as of the end of the final period for which cash flow projections have been made. It is necessary to compute this value because, although we are confident that the Company will remain a viable going-concern beyond the final period, we cannot project with enough certainty the cash flows to be generated in any given period.

For purposes of this analysis we used the “growing perpetuity method” using the projected free cash flow as its basis for terminal value. The free cash flows projected in the final period is adjusted to arrive at a level of cash flow for the first year beyond the projection period which is representative of the future cash-generating capability of the Company. This “normalized” cash flow figure incorporates expectations of the level of investment required to maintain the business into the future, as well as the return on investment that the

Appendix II Page 23

business can be expected to sustain. The normalized cash flow figure is then capitalized as a growing perpetuity by the previously determined discount rate, adjusted for some level of growth which can be expected into perpetuity. For purposes of our analysis and per management, we used estimated cash flows provided by Mercury’s management for the FYE 2008 as representative of the terminal year’s projected cash flows. The following as a representation of the growing perpetuity method formula:

T =	CFn
	r - g

Where:
T	=	Terminal value
CFn	=	Normalized cash flow
R	=	Discount rate
G	=	Growth rate in perpetuity

The terminal value is then discounted back to the present using the previously selected discount rate. For the terminal year, we used a normalized free cash flow figure of approximately $2.2 million, a discount rate of 9.0% to 11.0% (rounded), and a perpetuity growth rate of 2.8%. The growth rate is based on the expected fiscal 2008 revenue growth rate as provided in the Company’s Projections. Outlined below are the values of this analysis:

Summary of Terminal Value Range

($ in thousands)

Discounted Terminal		Normalized		Discount		Growth Rate
Value		Cash Flow		Rate		in Perpetuity
$35,157	=	$2,180	/	(9.0%	—	2.8%)
$30,274	=	$2,180	/	(10.0%	—	2.8%)
$26,582	=	$2,180	/	(11.0%	—	2.8%)

Midyear Discounting Convention

For purposes of our analysis, we have assumed that the Company’s projected cash flows are received at midyear, approximating the effect of receiving the cash flows more or less evenly throughout the year.

Determination of the Implied Equity Value

As shown below and in more detail in Appendix V, using a range of discount rates of 9.0% to 11.0% (rounded) in the discounted cash flow analysis results in implied TEVs ranging between $21.5 and $29.5 million.

Appendix II Page 24

Summary of Implied Equity Values — Discounted Cash Flow Method

($ in thousands)

Discount Rate		9.0	%		10.0	%		11.0	%
Implied Total Enterprise Value	$	29,480		$	24,932		$	21,503
Less: Total Debt		(22,242	)		(22,242	)		(22,242	)
Plus: Cash on Balance Sheet		6,316			6,316			6,316
Implied Total Equity Value	$	13,554		$	9,006		$	5,577
Shares Outstanding		3,056			3,056			3,056
Implied Share Price	$	4.43		$	2.95		$	1.82
Premium to Current Share Price(a)		28.2	%		-14.8	%		-47.3	%

(a) Based on a price of $3.46 as of March 18, 2005.

Sensitivities

IC considered various sensitivities to the projections, including the potential that revenues and EBITDA will continue to increase beyond 2006. However, according to Mercury’s management, any increase in revenues and EBITDA would likely result in a corresponding increase in the Company’s working capital needs (thus eliminating the benefit to cash flow), and would not result in a significant change to the implied share price. Therefore it was determined that under this scenario the DCF Approach would most likely continue to result in a lower per share mean equity value than the other two valuation methods.

Summary

The three different valuation methodologies applied by IC resulted in the following range of implied equity values for the Company using EBITDA multiples:

Implied Equity Values

	Low	Mean	High
Market Approach — Multiple Analysis	n/m	$12.7 million	$23.8 million
Market Approach — Precedent Transactions	$3.7 million	$11.4 million	$23.6 million
Discounted Cash Flow Analysis	$5.6 million	$9.0 million	$13.6 million

	Per Share Values
	Low	Mean	High
Market Approach — Multiple Analysis	n/m	$4.17 per share	$7.79 per share
Market Approach — Precedent Transactions	$1.20 per share	$3.73 per share	$7.73 per share
Discounted Cash Flow Analysis	$1.82 per share	$2.95 per share	$4.43 per share

Appendix II Page 25

As the table above illustrates, the Transaction Consideration of [$X.XX] per share in cash is within the range the values under the Market Approach – Multiple Analysis and the Market Approach – Precedent Transactions, and the DCF analysis. Based on the above analysis, we determined that the Transaction Consideration is within a reasonable range of values and is fair from a financial point of view.

Appendix II Page 26

Appendix III:

Historical Income Statement and Balance Sheet

Fairness Opinion	Appendix III
Mercury Air Group, Inc.
Statement of Operations — Historical

($ in thousands)	Fiscal Year Ended June 30,									LTM
	2002			2003			2004(a)			12/31/2004
MercFuel Revenues	$	232,573		$	280,136		$	322,631		$	428,512
Air Cargo Revenues		28,124			32,691			39,549			42,550
Maytag Revenues		28,228			24,421			23,281			22,213
Total Revenues	$	288,925		$	337,248		$	385,461		$	493,275
Sales Growth %		n/a			16.7	%		14.3	%		28.0	%
MercFuel Gross Profit	$	6,581		$	5,926		$	6,080		$	6,971
Air Cargo Gross Profit		898			2,585			2,100			3,563
Maytag Gross Profit		6,789			4,598			5,146			4,901
Total Gross Profit	$	14,268		$	13,109		$	13,326		$	15,435
Gross Profit Margin %		4.9	%		3.9	%		3.5	%		3.1	%
SG&A Expenses	$	11,771		$	10,818		$	10,894		$	10,783	(b)
Provision for Bad Debts		1,170			1,192			506			894
Total Operating Expenses		12,941			12,010			11,400			11,677
EBITDA	$	1,327		$	1,099		$	1,926		$	3,758
EBITDA Margin		0.5	%		0.3	%		0.5	%		0.8	%
Depreciation & Amortization		3,478			2,782			2,828			2,656
Operating Income		(2,151	)		(1,683	)		(902	)		1,102
Operating Income Margin		-0.7	%		-0.5	%		-0.2	%		0.2	%
Capital Expenditures	$	546		$	390		$	1,184		$	1,505

Note: Divisional Gross Profit includes certain SG&A costs which are charged directly to the operating units.

(a)	Fiscal 2004 SG&A excludes $2.4 million in extraordinary settlement costs, $1.7 million for severance payments to the retiring Chairman, and $311,000 of unusual audit fees. Air Cargo’s 2004 gross profit has been adjusted to exclude $300,000 in severance payments to Air Cargo’s former COO.
(b)	LTM SG&A expenses excludes $2.1 million of one-time charges for legal fees regarding a lawsuit settlement, severance costs, write-off of insurance deposits related to a joint venture, an asset impairment on a plane that was sold, and a loss on a timeshare plane trade-in.

Fairness Opinion	Appendix III
Mercury Air Group, Inc.
Balance Sheet Data — Historical

($ in thousands)	As of		As of
	06/30/04		12/31/04
Assets
Cash and Cash Equivalents	$	4,690	$	6,316
Accounts Receivable, net		50,974		56,912
Inventories		1,165		1,619
Prepaid Expenses & Other		7,147		5,108
Total Current Assets		63,976		69,955
Property, Plant & Equipment, net		10,349		7,564
Goodwill & Intangibles		7,229		5,011
Restricted Cash		24,403		8,418	(a)
Other Assets		—		3,133
Total Assets	$	105,957	$	94,081
Liabilities and Shareholders’ Equity
Account Payable	$	33,552	$	36,390
Accrued Expenses & Other		11,825		8,559
Current Portion of Long-Term Debt		139		1,021
Total Current Liabilities		45,516		45,970
Long-Term Debt		17,790		21,221
Other Long-Term Liabilities		10,238		10,722
Total Liabilities		73,544		77,913
Mandatorily Redeemable Preferred Stock		518		468
Shareholders’ Equity		31,895		15,700
Total Liabilities and Shareholders’ Equity	$	105,957	$	94,081

(a)   Restricted cash consists of cash held for specific purposes and not available for general use by the Company and is comprised primarily of an escrow account associated with the Hartsfield FBO. The funds held in the escrow account are to be distributed to either one or both of the Company and Allied Capital dependent upon the award of a new lease at the Hartsfield International Airport in Atlanta for a new FBO.

Appendix IV:

FYE June 30, 2005 through 2008 Projections

Fairness Opinion	Appendix IV
Mercury Air Group, Inc.
Statement of Operations — Projections

($ in thousands)	FYE			LTM			Fiscal Year Ending June 30,
	6/30/2004			12/31/2004			2005			2006			2007			2008
MercFuel Revenues	$	322,631		$	428,512		$	537,474		$	628,383		$	628,383		$	628,383
Air Cargo Revenues		39,549			42,550			43,839			46,306			46,306			46,306
Maytag Revenues		23,281			22,213			20,999			21,980			21,980			21,980
Total Revenues	$	385,461		$	493,275		$	602,312		$	696,669		$	696,669		$	696,669
Sales Growth %		n/a			28.0	%		56.3	%		15.7	%		0.0	%		0.0	%
MercFuel Gross Profit	$	6,080		$	6,971		$	7,919		$	8,335		$	8,335		$	8,335
Air Cargo Gross Profit		2,100			3,563			4,398			4,734			4,734			4,734
Maytag Gross Profit		5,146			4,901			4,426			4,124			4,124			4,124
Total Gross Profit	$	13,326		$	15,435		$	16,743		$	17,193		$	17,193		$	17,193
Gross Profit Margin %		3.5	%		3.1	%		2.8	%		2.5	%		2.5	%		2.5	%
SG&A Expenses	$	10,894		$	10,783		$	10,366		$	10,729		$	10,729		$	10,729
Provision for Bad Debts		506			894			1,383			1,477			1,477			1,477
Total Operating Expenses		11,400			11,677			11,749			12,206			12,206			12,206
		3.0	%		2.4	%		2.0	%		1.8	%		1.8	%		1.8	%
EBITDA	$	1,926		$	3,758		$	4,994		$	4,988		$	4,988		$	4,988
EBITDA Margin		0.5	%		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,828			2,656			2,511			2,679			2,679			2,679
Operating Income		(902	)		1,102			2,483			2,308			2,308			2,308
Operating Income Margin		-0.2	%		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Capital Expenditures	$	1,184		$	1,505		$	2,000		$	1,956		$	2,000		$	2,000
MercFuel Growth		n/a			32.8	%		66.6	%		16.9	%		0.0	%		0.0	%
Air Cargo Growth		n/a			7.6	%		10.8	%		5.6	%		0.0	%		0.0	%
Maytag Growth		n/a			-4.6	%		-9.8	%		4.7	%		0.0	%		0.0	%
MercFuel Gross Margin		1.9	%		1.6	%		1.5	%		1.3	%		1.3	%		1.3	%
Air Cargo Gross Margin		5.3	%		8.4	%		10.0	%		10.2	%		10.2	%		10.2	%
Maytag Gross Margin		22.1	%		22.1	%		21.1	%		18.8	%		18.8	%		18.8	%

Fairness Opinion	Appendix IV
Mercury Air Group, Inc.
Balance Sheet Data — Projected

($ in thousands)	As of			Fiscal Year Ending June 30,
	12/31/04			2005			2006			2007			2008
Assets
Cash and Cash Equivalents	$	6,316		$	1,270		$	1,000		$	1,000		$	1,000
Accounts Receivable, net		56,912			61,570			68,077			68,077			68,077
Inventories		1,619			1,334			1,427			1,427			1,427
Prepaid Expenses & Other		5,108			6,036			6,079			6,079			6,079
Total Current Assets		69,955			70,209			76,583			76,583			76,583
Property, Plant & Equipment, net		7,564			7,182			6,459			5,736			5,013
Restricted Cash		8,418			6,764			6,764			6,764			6,764
Goodwill & Other		8,144			8,144			8,130			7,730			7,578
Total Assets	$	94,081		$	92,299		$	97,936		$	96,813		$	95,938
Liabilities and Shareholders’ Equity
Account Payable	$	36,390		$	39,349		$	42,375		$	42,375		$	42,375
Accrued Expenses & Other		8,559			9,676			9,153			9,153			9,153
Current Portion of Long-Term Debt		1,021			1,137			1,137			1,137			1,137
Total Current Liabilities		45,970			50,163			52,664			52,664			52,664
Long-Term Debt		21,221			15,270			18,619			18,966			19,342
Other Long-Term Liabilities		10,722			8,574			7,557			7,557			7,557
Total Liabilities		77,913			74,006			78,840			79,187			79,563
Mandatorily Redeemable Preferred Stock		468			486			522			558			594
Shareholders’ Equity		15,700			17,807			18,573			17,068			15,781
Total Liabilities and Shareholders’ Equity	$	94,081		$	92,299		$	97,936		$	96,813		$	95,938
Debt Free Net Working Capital (“DFNWC”)
Current Assets (excl. cash)	$	63,639		$	68,939		$	75,583		$	75,583		$	75,583
Non-Interest Bearing Current Liabilities		(44,949	)		(49,025	)		(51,527	)		(51,527	)		(51,527	)
DFNWC		18,690			19,914			24,055			24,055			24,055
DFNWC % of sales		3.8	%		3.3	%		3.5	%		3.5	%		3.5	%
Changes in DFNWC		n/a			(1,224	)		(4,141	)		—			—

Appendix V:

Discounted Cash Flow Analysis

Mercury Air Group, Inc.	Appendix V
Fairness Opinion
Discounted Cash Flow @ 9% WACC

($ in thousands)

	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005(a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.98			0.90			0.82			0.82
Present Value — Free Cash Flow					441			(1,722	)		1,796			28,965
Net Present Value of Cash Flows	$	29,480

Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		9.0	%	Residual Debt Free Cash Flow	2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC - G)	6.2	%
Implied Equity Value Calculation				Equal Residual Value	35,157
Net Present Value of Cash Flows	$	29,480
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor	0.82
Implied Equity Value	$	13,554		Present Value of Residual Value	28,965
Shares Outstanding		3,056
Implied Share Price	$	4.43

(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Mercury Air Group, Inc.	Appendix V
Fairness Opinion
Discounted Cash Flow @ 10% WACC

($ in thousands)

	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005(a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.98			0.89			0.81			0.81
Present Value — Free Cash Flow					440			(1,703	)		1,759			24,436
Net Present Value of Cash Flows	$	24,932

Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		10.0	%	Residual Debt Free Cash Flow	2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC - G)	7.2	%
Implied Equity Value Calculation				Equal Residual Value	30,274
Net Present Value of Cash Flows	$	24,932
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor	0.81
Implied Equity Value	$	9,006		Present Value of Residual Value	24,436
Shares Outstanding		3,056
Implied Share Price	$	2.95

(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Mercury Air Group, Inc.	Appendix V
Fairness Opinion
Discounted Cash Flow @ 11% WACC

($ in thousands)

	Actual LTM			FYE June 30,						Terminal Year
	12/31/04			2005(a)			2006			2007			2008
Revenue	$	493,275		$	301,156		$	696,669		$	696,669		$	696,669
Revenue Growth		n/a			n/a			15.7	%		0.0	%		0.0	%
EBITDA		3,758			2,497			4,988			4,988			4,988
EBITDA Margin		0.8	%		0.8	%		0.7	%		0.7	%		0.7	%
Depreciation & Amortization		2,656			1,256			2,679			2,679			2,679
Other (Income)/Expense, net		—			—			—			—			—
EBIT		1,102			1,242			2,308			2,308			2,308
EBIT Margin		0.2	%		0.4	%		0.3	%		0.3	%		0.3	%
Less: Estimated Taxes (@ 35%)					(435	)		(808	)		(808	)		(808	)
Add: Depreciation & Amortization					1,256			2,679			2,679			2,679
Less: Capital Expenditures					(1,000	)		(1,956	)		(2,000	)		(2,000	)
Add/Less: Changes in Debt Free Net Working Capital					(612	)		(4,141	)		—			—
Free Cash Flow					451			(1,918	)		2,180			2,180
Present Value Factor					0.97			0.88			0.79			0.79
Present Value — Free Cash Flow					439			(1,684	)		1,724			21,024
Net Present Value of Cash Flows	$	21,503

Enterprise Value Calculation				Residual Value Calculation
Discount Rate (WACC)		11.0	%	Residual Debt Free Cash Flow	2,180
Growth Rate (G)		2.8	%	Divided by Cap. Rate (WACC - G)	8.2	%
Implied Equity Value Calculation				Equal Residual Value	26,582
Net Present Value of Cash Flows	$	21,503
Less: Debt		(22,242	)
Plus: Cash		6,316		Times Present Value Factor	0.79
Implied Equity Value	$	5,577		Present Value of Residual Value	21,024
Shares Outstanding		3,056
Implied Share Price	$	1.82

(a) FYE June 30, 2005 cash flows represent a half-year projection due to the valuation date of December 31, 2004.

Appendix VI:
Weighted Average Cost of Capital Calculation

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 1

      The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f)) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta - a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm- Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm) less the risk-free rate (Rf)
	Rsm	=	Small stock premium

      We then calculated the WACC as follows:

Variable	Value			Source
Rd =		5.86	%	(1)  Baa Bond Rate - February 4, 2005
t =		35.00	%	Marginal Tax Rate
Rf =		4.54	%	(2)  20-yr. Treasury Bond Rate - February 4, 2005
Rm - Rf =		7.20	%	Equity Risk Premium
ß =		0.80		Computed Beta, see Page 4 of WACC Calculation
D% =		58.6	%	Debt/Capital Ratio
E% =		41.0	%	Equity/Capital Ratio
Rsm =		6.34	%	(3)  Decile 9-10 Premium (From Ibbotson’s - $0.3MM to $166.4MM market capitalization)
Ris =		0.00	%	Investment Specific Risk

[

Rd x (1 - t)

x

D

%

] + [

[ (Rf

+ (

ß

x

(Rm - Rf)) +

Rsm

+

Ris) x E% ]

[

6.82%

(1-35%)

x

58.62

%

] + [

4.54

%

+ (

0.80

x

7.20% ) +

6.34

%

+

0.00% ) x

41.00% ]

WACC=

Rd (1-t)

x

D

%

+

Re

x

E

%

[

3.81

%

x

58.62

%

] + [

16.67

%

x

41.00

%

]

WACC =

9.1

%

Estimated WACC (rounded) 9.0 %

(1)	Source: Federal Reserve Statistical Release dated February 4, 2005.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 2

      The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f)) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta - a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm- Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm) less the risk-free rate (Rf)
	Rsm	=	Small stock premium

      We then calculated the WACC as follows:

Variable	Value			Source
Rd =		5.86	%	(1)  Baa Bond Rate - February 4, 2005
t =		35.00	%	Marginal Tax Rate
Rf =		4.54	%	(2)   20-yr. Treasury Bond Rate - February 4, 2005
Rm - Rf =		7.20	%	Equity Risk Premium
ß =		0.80		Computed Beta, see Page 4 of WACC Calculation
D% =		58.6	%	Debt/Capital Ratio
E% =		41.0	%	Equity/Capital Ratio
Rsm =		6.34	%	(3)  Decile 9-10 Premium (From Ibbotson’s - $0.3MM to $166.4MM market capitalization)
Ris =		2.50	%	Investment Specific Risk

[

Rd x (1 - t)

x

D

%

] + [

[ (Rf

+ (

ß

x

(Rm - Rf)) +

Rsm

+

Ris) x E% ]

[

6.82%

(1-35%)

x

58.62

%

] + [

4.54

%

+ (

0.80

x

7.20% ) +

6.34

%

+

2.50% ) x

41.00% ]

WACC=

Rd (1-t)

x

D

%

+

Re

x

E

%

[

3.81

%

x

58.62

%

] + [

19.17

%

x

41.00

%

]

WACC =

10.1

%

Estimated WACC (rounded) 10.0 %

(1)	Source: Federal Reserve Statistical Release dated October 10, 2003.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 3

      The calculation of the cost of equity capital using the Capital Asset Pricing Model (CAPM) is as follows:

Re = R_f + (ß x ( R_m - R_f)) + R_sm + R_is

Where:	Rf	=	Return on a risk-free investment
	ß	=	Beta - a measure of the systematic risk of the firm compared to the risk of an investment in a fully diversified stock market portfolio
	Rm- Rf	=	The market risk premium defined as the expected return investors require for investing in a fully diversified portfolio (Rm) less the risk-free rate (Rf)
	Rsm	=	Small stock premium

      We then calculated the WACC as follows:

Variable	Value			Source
Rd =		5.86	%	(1)   Baa Bond Rate - February 4, 2005
t =		35.00	%	Marginal Tax Rate
Rf =		4.54	%	(2)  20-yr. Treasury Bond Rate - February 4, 2005
Rm - Rf =		7.20	%	Equity Risk Premium
ß =		0.80		Computed Beta, see Page 4 of WACC Calculation
D% =		58.6	%	Debt/Capital Ratio
E% =		41.0	%	Equity/Capital Ratio
Rsm =		6.34	%	(3)  Decile 9-10 Premium (From Ibbotson’s - $0.3MM to $166.4MM market capitalization)
Ris =		5.00	%	Investment Specific Risk

[

Rd x (1 - t)

x

D

%

] + [

[ (Rf

+ (

ß

x

(Rm - Rf)) +

Rsm

+

Ris) x E% ]

[

6.82%

(1-35%)

x

58.62

%

] + [

4.54

%

+ (

0.80

x

7.20% ) +

6.34

%

+

5.00% ) x

41.00% ]

WACC=

Rd (1-t)

x

D

%

+

Re

x

E

%

[

3.81

%

x

58.62

%

] + [

21.67

%

x

41.00

%

]

WACC =

11.1

%

Estimated WACC (rounded) 11.0 %

(1)	Source: Federal Reserve Statistical Release dated October 10, 2003.
(2)	Source: Bloomberg.
(3)	Source: Stocks, Bonds, Bills, and Inflation Valuation Edition Yearbook, Ibbotson Associates.

Mercury Air Group, Inc.	Appendix VI
Fairness Opinion
WACC Calculation	Page 4

($ in millions)

	Company Information
									Preferred /
	Symbol	Beta[1]		MV of Equity(2)			LT Debt		Minority Int.		Cash		TEV		Tax Rate			Debt/ TEV
Air T, Inc.	AIRT		0.25		$	47.7	$	1.7	$	0.0	$	2.2	$	47.3		35.0	%		3.7	%
AirNet Systems, Inc.	ANS		1.34			39.4		60.2		—		0.9		98.7		35.0	%		61.0	%
AutoInfo, Inc.	AUTO		0.50			21.5		1.9		—		0.6		22.8		35.0	%		8.5	%
Streicher Mobile Fueling, Inc.	FUEL		1.42			13.1		11.0		—		4.5		19.7		35.0	%		56.2	%
World Fuel Services Corporation	INT		0.96			298.7		41.1		—		57.5		282.3		35.0	%		14.6	%
Average			0.89			84.1		23.2		—		13.1		94.2		35.0	%		28.8	%

Implied D/E	=	D / (D + E)			*	1 / (E / (D + E))
40.4%	=		28.8	%	*		1.4

Unlevered Beta Calculation
Bu	=	B/(1+((1-t)(D/E)))
Using B, t, D, and E for each individual company. The reported betas are for the comparable companies are first unlevered below and then relevered in the calculation to the right.
Air T, Inc.	=		0.24
AirNet Systems, Inc.	=		0.67
AutoInfo, Inc.	=		0.47
Streicher Mobile Fueling, Inc.	=		0.92
World Fuel Services Corporation	=		0.88
Average	=		0.64

Relevered Beta Calculation
B	=	Bu(1+((1-t)(D/E)))
Bu	=	0.64
D/E	=	40.4%
t	=	35.0%
B	=	0.80

Industry Debt/Total Capital Calculations
Debt/Total Inv. Capital	29.0	%
Equity/Total Inv. Capital	71.0	%

Tax Rate Calculation
Combined State & Federal
Tax Rate	35.0	%

(1)	Source: Bloomberg.
(2)	Excludes any shares from exercisable options.

EX-99.C29

Exhibit 99.(c)(29)

MERCURY FINANCIAL PROJECTIONS
DATED MARCH 1, 2005

THESE FINANCIAL PROJECTIONS WERE SUBMITTED TO IMPERIAL CAPITAL IN CONNECTION WITH IMPERIAL CAPITAL’S OPINION. PLEASE BE ADVISED THAT THE PROJECTIONS WERE PREPARED ONLY FOR THE USE OF IMPERIAL CAPITAL, AND ARE NOT TO BE USED BY ANY OTHER PERSON OR ENTITY. IN ADDITION, THE PROJECTIONS SPEAK AS OF THE DATE THEREOF, AND MERCURY DOES NOT INTEND TO UPDATE SUCH PROJECTIONS.

Mercury Air Group
Financial Assumptions

MercFuel:		Assumptions
	Commercial volume growth	Assumes no major additions or losses of any major accounts. The projections assume organic growth with existing customers at 6.0% per year.
	Corporate volume growth	Assumes Corporate volume growth at 16% annually over the period as MercFuel focuses on the time share market.
	Annual fuel price increase	The inherently volatile nature of fuel prices makes it difficult to project future revenues. These projections are being generated at a time when fuel prices are increasing dramatically. Given that no forward fuel pricing projections are available, the Company assumes prices remain constant.
	Margin per gallon	Assumes historical gross margin per gallon. There is no mathematical relationship/ratio of fuel prices to margin.
	DSO held flat at 29 days	Customers continue to want increased terms and credit lines putting pressure on the receivables days outstanding.
	DPO held flat	Assumes that the amount of credit and days to pay our suppliers remains constant. The current trend from suppliers is to reduce MercFuel's credit limits and terms.
AirCargo
	Sales Growth	Higher volumes projected as imports continue to increase.
	Cost of Sales Increase	Higher costs associated with the volume growth.
	Operating Expense Increase	Operating expenses are projected to grow at the same or higher rate as the sales growth due to labor and arriving flight inefficiencies.
	DSO held flat at 75 days	Assumes no changes to the existing process for billing and collections.
Maytag
	Sales Growth	Assumes retention of existing contracts. Increase based on cost of living adjustments and addition of small contracts.
	Cost of Sales	Assumes new contracts are won at a lower margin.
	SG&A	Assumes increases based on inflation and insurance costs.
Corporate
	SG&A	Fiscal year 2005 SG&A expenses do not include extraordinary expenditures associated with a lawsuit, severance costs, increased insurance premiums and Sarbanes Oxley 404 costs. The factors for the outyears were based on projected increases in insurance and personnel costs.

Mercury Air Group, Inc.
Comparative Statement of Financial Position
For the Periods ending :
(all amounts in thousands of US Dollars)

				Actual
	FY2004			As of			FY2005			FY2006			FY2007			FY2008
	Actual			31-Dec-04			Projection			Projection			Projection			Projection
Assets
Current Assets
Cash	$	4,690		$	6,316		$	1,270		$	1,000		$	1,000		$	1,000
Accounts Receivable		50,974			56,912			61,570			68,077			73,132			78,453
Inventories		1,165			1,619			1,334			1,427			1,500			1,500
Prepaid Expenses and Other		5,696			3,657			4,585			4,628			4,450			4,450
Deferred Income Tax		1,451			1,451			1,451			1,451			1,451			1,451
Total Current Assets		63,976			69,955			70,210			76,583			81,533			86,854
Non Current Assets
Prop Plnt & equip, net		10,349			7,564			7,182			6,459			5,736			5,013
Restricted Cash		24,403			8,418			6,764			6,764			6,764			6,764
Other		7,229			8,144			8,144			8,130			7,730			7,578
Total Non-Current Assets		41,981			24,126			22,090			21,353			20,230			19,355
Total Assets	$	105,958		$	94,081		$	92,300		$	97,936		$	101,763		$	106,209
Liabilities & Shareowners Equity
Current Liabilities
Accts Payable		32,784			36,390			39,349			42,375			45,018			47,557
Accrued Exp		11,825			8,558			8,457			8,763			8,473			8,473
Income Tax Payable		769			0			1,219			390			424			595
Current Portion of LTD		139			1,021			1,137			1,137			1,137			1,137
Total Current Liabilities		45,516			45,969			50,163			52,665			55,052			57,762
Non-Current Liabilities
Long Term Debt		18,459			21,221			15,270			18,619			18,966			19,342
Senior Subordinated Note		0			0			0			0			0			0
Deferred Income Taxes		0			0			(38	)		(38	)		(38	)		(38	)
Other		9,569			10,722			8,612			7,595			7,595			7,595
Total Non-Current Liabilities	$	28,028		$	31,943		$	23,844		$	26,176		$	26,523		$	26,899
Total Liabilities	$	73,545		$	77,912		$	74,006		$	78,841		$	81,575		$	84,661
Shareowner’s Equity
Pref Stock		518			468			486			522			558			594
Common Stock		30			31			31			31			31			31
APIC		20,737			21,473			21,473			21,473			21,473			21,473
Translation Adj		(46	)		194			194			(42	)		(42	)		(42	)
Notes Rec		(3,302	)		(2,983	)		(2,783	)		(2,390	)		(1,997	)		(1,604	)
Treasury Stock		(120	)		(43	)		(43	)		(43	)		(43	)		(43	)
Retained Earnings		14,596			(2,971	)		(1,065	)		(455	)		208			1,139
Dividends Declared					0			0			0			0			0
Total Shareowners Equity		32,413			16,169			18,294			19,096			20,188			21,548
Total Liabilities & Shareowners Equity	$	105,958		$	94,081		$	92,300		$	97,936		$	101,763		$	106,209

Mercury Air Group, Inc.
Comparative Statement of Earnings
For the 12 Month Periods Ending:
(all amounts in thousands of US Dollars)

	FY 2005			FY 2006			FY 2007			FY 2008
	Projection			Projection			Projection			Projection
Revenue
Maytag		20,999			21,980			22,639			23,318
MercFuels		537,474			628,383			684,142			746,243
Cargo		43,839			46,306			48,913			51,668
Total Rev		602,312			696,669			755,694			821,229
Cost of Sales
Maytag		16,573			17,856			18,677			19,229
MercFuels		529,555			620,048			675,343			736,779
Cargo		39,441			41,572			43,955			46,353
Cost of Sales		585,569			679,475			737,975			802,361
Gross Margin
Maytag		4,426			4,124			3,962			4,089
MercFuels		7,919			8,335			8,799			9,464
Cargo		4,398			4,734			4,958			5,314
Gross Margin	$	16,743		$	17,193		$	17,719		$	18,867
Gross Margin %		2.78	%		2.47	%		2.34	%		2.30	%
Provision for Bad Debt		1,383			1,477			1,560			1,772
SG&A		10,366			10,729			11,051			11,493
Gain(Loss) on Investment		0			0			0			0
Other Income		0			0			0			0
EBITDA	$	4,994		$	4,988		$	5,108		$	5,602
Depreciation		2,511			2,679			2,723			2,723
Interest and Other		1,143			1,310			1,298			1,353
Pre-Tax Oper Earnings	$	1,340		$	999		$	1,087		$	1,527
Income Tax Expense		523			390			424			595
effect tax rate		39.00	%		39.00	%		39.00	%		39.00	%
Net Income Before Extraordinary Items	$	818		$	609		$	663		$	931
Extraord Items/FBO Sale		958			0			0			0
Net Income	$	1,775		$	609		$	663		$	931

Mercury Air Group, Inc.
Comparative Statement of Cash Flow
For the Quarterly Periods:
(all amounts in thousands of US Dollars)

	FY2005			FY2006			FY2007			FY2008
	Projection			Projection			Projection			Projection
CASH FLOW FROM OPERATING ACTIVITIES
Net Income	$	818		$	609		$	663		$	931
Less: Income(loss) from Disc Op		958			0			0			0
Income from Continuing Operations		1,775			609			663			931
Adj to derive cash flow from operating activities		0			0			0			0
(Gain)loss on asset sale		0			0			0			0
Bad debt expense		0			0			0			0
Depreciation and amort		2,511			2,679			2,723			2,723
Deferred Income Tax		0			0			0			0
Deferred Rent		0			0			0			0
Exp Related to Remeasurement of Stock options		0			0			0			0
Exp Related to Amort. Of Executive Stock Plan		0			0			0			0
Asset Impairment loss		0			0			0			0
Amort of Deferred Gain		(1,654	)		(1,017	)		0			0
CFK Realty		2,656			0			0			0
Changes in operating assets and liab		0			0			0
Accts Rec		(10,596	)		(6,507	)		(5,055	)		(5,321	)
Inventories		(169	)		(93	)		(73	)		0
Prepaid Expenses & oth current assets		1,111			(43	)		178			0
Accounts Payable		6,566			3,025			2,643			2,539
Income Taxes Payable		372			(840	)		34			171
Accrued exp and other liab		(3,289	)		316			(288	)		(1	)
Net Cash provided(used) by operations		($717	)		($1,870	)	$	826		$	1,042
CASH FLOW FROM INVESTING ACTIVITIES
(Increase)decrease to other assets		(915	)		14			400			152
(Increase)decrease to restricted cash		17,639			0			0			0
(Increase)decrease in notes receivable		519			393			393			393
Acquisition of business, net		0			0			0			0
Proceeds from sale of assets		0			0			0			0
Additions to prop, equip and leaseholds		(2,000	)		(1,956	)		(2,000	)		(2,000	)
Net cash provided by (used in) investing	$	15,243			($1,549	)		($1,207	)		($1,455	)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from LTD		1,976			4,350			1,347			1,376
Reduction LTD		(3,423	)		(1,000	)		(1,000	)		(1,000	)
Capitalized loan fee		0			0			0			0
Proceeds from issuance of Common Stk		814			0			0			0
Other		(17,313	)		(200	)		35			36
Net cash provided by (used for) financing act		($17,947	)	$	3,150		$	382		$	412
Net cash provided by (used for) Disc Oper		0			0			0			0
NET INCREASE(DECREASE) IN CASH AND CASH EQUIV		($3,420	)		($269	)	$	0			($1	)

Mercury Air Group, Inc.
Summary of Long-Term Debt
As of June 30, 2002 through 2008
(all amounts in thousands of Dollars

	As of June 30, 2004				As of June 30, 2005						As of June 30, 2006						As of June 30, 2007						As of June 30, 2008
	Current		Non-Current		Current			Non-Current			Current			Non-Current			Current			Non-Current			Current			Non-Current
Debt before BofA Revolver
CFK Realty		86		2,923
Salem 5		32		634		32			602			32			570			32			538			32			506
CEDFA IRB		0		14,000		1,000			12,500			1,000			11,500			1,000			10,500			1,000			9,500
Col. National		19		232		19			192			19			152			19			112			19			72
Total	$	137	$	17,789	$	1,051		$	13,294		$	1,051		$	12,222		$	1,051		$	11,150		$	1,051		$	10,078
B of A Revolver		0		0		0			1,976			—			6,397			—			7,816			—			9,264
Total Debt	$	137	$	17,789	$	1,051		$	15,270		$	1,051		$	18,619		$	1,051		$	18,966		$	1,051		$	19,342
LOC’s									15,500						14,500						13,500						12,500		$1M reduction for CEDFA
Interest Rates
Salem 5						5.60	%		5.60	%		5.60	%		5.60	%		5.60	%		5.60	%		5.60	%		5.60	%
CEDFA IRB						1.80	%		1.80	%		1.80	%		1.80	%		1.80	%		1.80	%		1.80	%		1.80	%
Col. National						9.14	%		9.14	%		9.14	%		9.14	%		9.14	%		9.14	%		9.14	%		9.14	%
BofA Revolver						5.00	%		5.00	%		6.00	%		6.00	%		6.50	%		6.50	%		6.50	%		6.50	%
LOC’s						1.50	%		1.50	%		1.50	%		1.50	%		1.50	%		1.50	%		1.50	%		1.50	%
Interest Expense Calculation
Salem 5						1.8			34.6			1.8			32.8			1.8			31.0			1.8			29.2
CEDFA IRB						9.0			238.5			18.0			216.0			18.0			198.0			18.0			180.0
Col. National						1.7			19.4			1.7			15.7			1.7			12.1			1.7			8.4
BofA Revolver									49.4						251.2						461.9						555.1
LOC’s									232.5						217.5						202.5						187.5
Total						12.5			574.4			21.5			733.2			21.5			905.5			21.5			960.2
Note: Used Average for year									586.9						754.7						927.0						981.8