ACQUISITION

9 Months Ended

Sep. 30, 2012

NOTE 10. ACQUISITION

On September 11, 2012, but effective August 31, 2012, the Company acquired 100% of the outstanding equity interests of Vertex Acquisition Sub, LLC (“Acquisition Sub” and the "Acquisition"), a special purpose entity consisting of substantially all of the assets of Vertex LP and real-estate properties of B & S Cowart Family L.P. ("B&S LP") in consideration for $16,500,000 and 4,545,455 restricted shares of common stock. Prior to closing the acquisition, Vertex LP contributed to Acquisition Sub substantially all of its assets and liabilities relating to the business of transporting, storing, processing and re-refining petroleum products, crudes and used lubricants, including all of the outstanding equity interests in Vertex LP’s wholly-owned operating subsidiaries, Cedar Marine Terminals, L.P., Crossroad Carriers, L.P., Vertex Recovery L.P. and H&H Oil, L.P. and B&S LP contributed real estate associated with the operations of H&H Oil, L.P.

The acquisition was accounted for under the purchase method of accounting, with the Company identified as the acquirer, and the operating results of the Acquisition Sub have been included in the Company's consolidated financial statements as of the closing date of the acquisition. Under the purchase method of accounting, the aggregate amount of consideration paid by the Company was allocated to the Acquisition Sub’s net tangible assets and intangible assets based on their estimated fair values as of August 31, 2012. The excess purchase price over the value of the net tangible assets and intangible assets was recorded to goodwill. The goodwill has been allocated to the Refining and Marketing reporting segment. The Company retained an independent third-party appraiser to assist management in its valuation. The allocation of the purchase price is based on the best estimates of management.

The following information summarizes the allocation of the fair values assigned to the assets at the purchase date.

	(in thousands)
Cash and cash equivalents	$	663
Accounts receivable		1,853
Inventory		13
Prepaid insurance		31
Property, plant and equipment		8,659
Land		1,995
Other assets		32
Intangible assets		16,255
Total identifiable net assets		29,501
Goodwill		958
Total purchase price	$	30,459

Total liabilities assumed	$	2,698

The Company incurred approximately $1,154,612 in costs associated with the Acquisition. These included legal, accounting, environmental, investment banking, and related party transaction committee costs.

The following table summarizes the cost of amortizable intangible assets related to the acquisition of Vertex Holdings:

	Estimated Cost (in thousands)		Useful life (years)
Customer relations	$	343		5
Vendor relations		4,064		10
H&H Oil Trademark/Trade name		775		16
TCEP Technology/Patent		11,000		15
Non-competes		73		3
Total	$	16,255

The following unaudited pro-forma consolidated results of operations for the three and nine month periods ended September 30, 2012 and 2011 assume the acquisition occurred as of January 1, 2011. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2011 or of results that may occur in the future (amounts in thousands):

	Three Months Ended				Nine Months Ended
	September 30, 2012		September 30, 2012		September 30, 2012			September 30, 2011
Revenue	$	32,474	$	37,837	$	109,943		$	84,504
Cost of goods sold		27,395		33,097		96,491			69,756
Gross profit		5,079		4,741		13,452			14,748
Selling, general and administrative expenses		2,367		2,531		7,645			6,346
Income from operations		-		-		5,807			8,402
Other income and expense		-		-		(768	)		(727	)
Net income		2,711		2,209		5,039			7,675

Earnings per common share-Basic		0.30		0.18		0.50			0.88
Earnings per common share-Diluted		0.17		0.13		0.35			0.53