What changed in Energy Services of America CORP's 2023 10-K compared to 2022?

Across the narrative sections we track, Energy Services of America CORP (ESOA) added 273 paragraphs, removed 255, and edited 182 between the 2022 and 2023 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+163/−154), Item 1A. Risk Factors (+64/−39), Item 1. Business (+34/−45).

Did Energy Services of America CORP add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 64 new/edited paragraphs and 39 removed paragraphs versus the 2022 10-K.

What changed in Energy Services of America CORP's MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 163 new/edited paragraphs and 154 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did Energy Services of America CORP's Legal Proceedings (Item 3) change in 2023?

Item 3 shows 8 added/edited paragraphs and 6 removed paragraphs — usually indicating new litigation disclosed or settled cases removed.

Where does this ESOA 10-K diff come from?

The source filings are Energy Services of America CORP's official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Energy Services of America CORP's 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of Energy Services of America CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+273 added−255 removedSource: 10-K (2024-01-16) vs 10-K (2022-12-22)

Top changes in Energy Services of America CORP's 2023 10-K

273 paragraphs added · 255 removed · 182 edited across 6 sections

Item 7. Management's Discussion & Analysis+163 / −154 · 113 edited
Item 1A. Risk Factors+64 / −39 · 31 edited
Item 1. Business+34 / −45 · 28 edited
Item 5. Market for Registrant's Common Equity+2 / −9 · 2 edited
Item 3. Legal Proceedings+8 / −6 · 6 edited

Item 1. Business

Business — how the company describes what it does

28 edited+6 added−17 removed44 unchanged

2022 filing

2023 filing

Biggest changeCOVID-19 Response For the fiscal year ended September 30, 2022, the Company did not have significant issues with COVID-19 exposure among its employees and most of the Company’s existing customers had resumed projects that were affected by COVID-19 shutdowns in fiscal 2021. 5 Table of Contents Seasonality: Fluctuation of Results Our revenues and results of operations can and usually are subject to seasonal variations.

Biggest changeThe Company’s website address is www.energyservicesofamerica.com. 4 Table of Contents COVID-19 Response For the fiscal year ended September 30, 2023, the Company did not have significant issues with COVID-19 exposure among its employees and did not experience any significant COVID-19 related impacts on construction projects.

(“TSP” or “Tri-State Paving”), a wholly owned subsidiary of Energy Services, completed the acquisition of substantially all of the assets of Tri-State Paving & Sealcoating, LLC (“Tri-State Paving, LLC”) on April 29, 2022. Tri-State Paving provides utility paving services to water distribution customers in the Charleston, West Virginia, Lexington, Kentucky, and Chattanooga, Tennessee markets.

(“TSP” or “Tri-State Paving”), a wholly owned subsidiary of Energy Services, completed the acquisition of substantially all the assets of Tri-State Paving & Sealcoating, LLC (“Tri-State Paving, LLC”) on April 29, 2022. Tri-State Paving provides utility paving services to water distribution customers in the Charleston, West Virginia, Lexington, Kentucky, and Chattanooga, Tennessee markets.

State and federal legislation also provide special protections to animal and marine life that could be affected by the Company’s activities. In general, under various applicable environmental programs, the Company may potentially be subject to regulatory enforcement action in the form of injunctions, cease and desist orders and administrative, civil and criminal penalties for violations of environmental laws.

State and federal legislation also provide special protections for animal and marine life that could be affected by the Company’s activities. In general, under various applicable environmental programs, the Company may potentially be subject to regulatory enforcement action in the form of injunctions, cease and desist orders and administrative, civil, and criminal penalties for violations of environmental laws.

SQP engages in the construction and renovation of buildings and other civil construction projects for state and local government agencies and commercial customers. As a general contractor, SQP manages the overall construction project and subcontracts most of the work. The employees of SQP are non-union and are managed independently from the Company’s union subsidiaries. Tri-State Paving & Sealcoating, Inc.

SQP engages in the construction and renovation of buildings and other civil construction projects for state and local government agencies and commercial customers. As a general contractor, SQP manages the overall construction project and subcontracts most of the work. The employees of SQP are non-union and are managed independently of the Company’s union subsidiaries. Tri-State Paving & Sealcoating, Inc.

The SBA could still revisit its forgiveness decision and determine that the Company does not qualify in whole or in part for loan forgiveness and demand repayment of the loans. In addition, it is unknown what type of penalties could be assessed against the Company if the SBA disagrees with the Company’s certification.

The SBA could revisit its forgiveness decision and determine that the Company does not qualify in whole or in part for loan forgiveness and demand repayment of the loans. In addition, it is unknown what type of penalties could be assessed against the Company if the SBA disagrees with the Company’s certification.

The employees of West Virginia Pipeline are non-union and are managed independently from the Company’s union subsidiaries. SQP Construction Group, Inc. (“SQP”), a wholly owned subsidiary of Energy Services, operates as a general contractor primarily in West Virginia.

The employees of West Virginia Pipeline are non-union and are managed independently of the Company’s union subsidiaries. SQP Construction Group, Inc. (“SQP”), a wholly owned subsidiary of Energy Services, operates as a general contractor primarily in West Virginia.

The Company’s largest competitors are Otis Eastern, Miller Pipeline, Brown Electric, Summit Electric and Apex Pipeline. 7 Table of Contents Operating Hazards and Insurance Energy Services’ operations are subject to many hazards inherent in the pipeline, electrical, and mechanical construction businesses, including, for example, operating equipment in mountainous terrain, people working in deep trenches, people working near large construction equipment, and people working near manufacturing equipment and power sources.

The Company’s largest competitors are Otis Eastern, Miller Pipeline, Brown Electric, Summit Electric and Apex Pipeline. 6 Table of Contents Operating Hazards and Insurance Energy Services’ operations are subject to many hazards inherent in the pipeline, electrical, and mechanical construction businesses, including, for example, operating equipment in mountainous terrain, people working in deep trenches, people working near large construction equipment, and people working near manufacturing equipment and power sources.

(“Ryan Construction” or “RCS”), a wholly owned subsidiary of Energy Services, formed in August 2022 in connection with the acquisition of substantially all of the assets of Ryan Environmental, LLC and Ryan Environmental Transport, LLC, provides directional drilling services for broadband service providers along with offering natural gas distribution services, cathodic protection and corrosion prevention services, and civil construction services.

(“Ryan Construction” or “RCS”), a wholly owned subsidiary of Energy Services, formed in August 2022 in connection with the acquisition of substantially all the assets of Ryan Environmental, LLC and Ryan Environmental Transport, LLC (collectively “Ryan Environmental”), provides directional drilling services for broadband service providers along with offering natural gas distribution services, cathodic protection and corrosion prevention services, and civil construction services.

Ryan Construction operates primarily in West Virginia and Pennsylvania. The employees of RCS are non-union and are managed independently from the Company’s union subsidiaries.

Ryan Construction operates primarily in West Virginia and Pennsylvania. The employees of RCS are non-union and are managed independently of the Company’s union subsidiaries.

Hughes”), a wholly owned subsidiary of the Company, is a general contractor primarily engaged in pipeline construction for utility companies. Contractors Rental Corporation (“Contractors Rental”), a wholly owned subsidiary of C.J. Hughes, provides union building trade employees for projects managed by C.J. Hughes. Nitro Construction Services, Inc. (“Nitro”), a wholly owned subsidiary of C.J.

The primary environmental statutory and regulatory programs that affect Energy Services’ operations include the following: Department of Transportation regulations, regulations set forth by agencies such as the Federal Energy Regulatory Commission and various environmental agencies including the Environmental Protection Agency, and state and local government agencies. 8 Table of Contents Health and Safety Matters.

In a special meeting held on April 27, 2020, the Board of Directors of the Company unanimously voted to return $3.3 million of the PPP Loan funds after discussing the financing needs of the Company and subsidiaries. That left the Company and subsidiaries with $9.8 million in PPP Loans to fund operations.

In a special meeting held on April 27, 2020, the Board of Directors of the Company unanimously voted to return $3.3 million of the PPP Loans after discussing the financing needs of the Company and subsidiaries. That left the Company and subsidiaries with $9.8 million in PPP Loans to fund operations.

Hughes, Contractors Rental and Nitro entered into separate PPP notes effective April 7, 2020, with United Bank as the lender (“Lender”) in an aggregate principal amount of $13.1 million pursuant to the PPP (collectively, the “PPP Loan”).

Hughes, Contractors Rental and Nitro, entered into separate PPP notes effective April 7, 2020, with United Bank as the lender (“Lender”) in an aggregate principal amount of $13.1 million pursuant to the PPP (collectively, the “PPP Loans”).

The employees of TSP are non-union and are managed independently from the Company’s union subsidiaries. Ryan Construction Services Inc.

The employees of TSP are non-union and are managed independently of the Company’s union subsidiaries. Ryan Construction Services Inc.

Paycheck Protection Program Loans Due to the economic uncertainties created by COVID-19 and limited operating funds available, the Company applied for loans under the Paycheck Protection Program (“PPP”). On April 15, 2020, Energy Services and subsidiaries, C.J.

Employees and Human Capital Resources Energy Services of America believes the Company’s greatest asset is its employees. The Company’s emphasis on the health and safety of its employees is an important factor in maintaining its experienced workforce and attracting new talent. As of September 30, 2022, the Company had 1,055 employees including 353 full-time non-union employees.

Employees and Human Capital Resources Energy Services of America believes the Company’s greatest asset is its employees. The Company’s emphasis on the health and safety of its employees is an important factor in maintaining its experienced workforce and attracting new talent. As of September 30, 2023, the Company had 1,282 employees including 339 full-time non-union employees.

During fiscal year 2021, the Company received notice that the SBA had granted forgiveness of the $9.8 million of PPP borrowings and the SBA repaid the lending institution in full. The forgiveness was recorded as other income for the fiscal year ended September 30, 2021.

During fiscal year 2021, the Company received notice that the SBA had granted forgiveness of the $9.8 million of PPP Loans and the SBA repaid the Lender in full. The forgiveness was recorded as other income for the fiscal year ended September 30, 2021.

Energy Services’ other services include liquid pipeline construction, pump station construction, production facility construction, water and sewer pipeline installations, various maintenance and repair services and other services related to pipeline construction. The Company has also added the ability to install residential, commercial, and industrial solar systems and perform civil and general contracting services.

Energy Services’ other pipeline services include corrosion protection services, horizontal drilling services, liquid pipeline construction, pump station construction, production facility construction, water and sewer pipeline installations, various maintenance and repair services and other services related to pipeline construction. The Company has also added the ability to install broadband and solar electric systems and perform civil and general contracting services.

Most of the Company’s projects can be completed in a short period of time, typically two to five months. Larger projects usually take seven to eighteen months to be completed. As a rule, work starts shortly after the signing of the contract. Types of Contracts Energy Services’ contracts are usually awarded on a competitive and negotiated basis.

Larger projects usually take seven to eighteen months to be completed. As a rule, work starts shortly after the signing of the contract. Types of Contracts Energy Services’ contracts are usually awarded on a competitive and negotiated basis.

The Company had consolidated operating revenues of $122.5 million for the fiscal year ended September 30, 2021, of which 48.9% was attributable to electrical, mechanical, and general contract services, 33.0% to gas & water distributions services, and 18.1% to gas and petroleum transmission projects.

The Company had consolidated operating revenues of $304.1 million for the fiscal year ended September 30, 2023, of which 48.8% was attributable to electrical, mechanical, and general contract services, 30.3% to gas and petroleum transmission projects, and 20.9% to gas & water distributions services.

These variations are the result of weather, customer spending patterns, bidding seasons and holidays. The first quarter of the calendar year is typically the slowest in terms of revenues because inclement weather conditions cause delays in production and customers usually do not plan large projects during that time.

The first quarter of the calendar year is typically the slowest in terms of revenues because inclement weather conditions cause delays in production and customers usually do not plan large projects during that time.

For the most part, the largest portion of these materials are supplied by the customer. Purchases made by the Company are predominately those of a consumable nature, such as small tools, welding rod and environmental supplies . The COVID-19 pandemic has not had a significant impact on the Company’s ability to obtain materials and consumables for projects awarded.

The Company’s union construction workers are represented by various collective bargaining units that provide health and welfare and retirement plans to their members. The Company’s top priority is the safety of our construction employees. The Company’s experienced safety department ensures that employees have the Company and customer required safety training before starting a project.

The Company’s union construction workers are represented by various collective bargaining units, with contracts that expire at various times, that provide health and welfare and retirement plans to their members. The Company’s top priority is the safety of our construction employees.

At September 30, 2021, the Company had a backlog of $72.2 million. Due to the timing of Energy Services’ construction contracts and the long-term nature of some of our projects, portions of our backlog work may not be completed in the current fiscal year.

Due to the timing of Energy Services’ construction contracts and the long-term nature of some of our projects, portions of our backlog work may not be completed in the current fiscal year. Most of the Company’s projects can be completed in a short period of time, typically two to five months.

Daily and weekly safety meetings at project sites help employees remain aware of potential hazards. Periodic internal and third-party safety audits are performed to help ensure that the Company’s and customer’s safety procedures are followed. Early in the COVID-19 pandemic, the Company had customers that delayed or cancelled projects due to the uncertainty in the economy and health concerns.

The Company’s experienced safety department ensures that employees have the Company and customer required safety training before starting a project. Daily and weekly safety meetings at project sites help employees remain aware of potential hazards. Periodic internal and third-party safety audits are performed to help ensure that the Company’s and customer’s safety procedures are followed.

Hughes, provides electrical, mechanical, HVAC/R, solar installation, and fire protection services to customers primarily in the automotive, chemical, and power industries. Pinnacle Technical Solutions, Inc. (“Pinnacle”), a wholly owned subsidiary of Nitro, operates as a data storage facility within Nitro’s office building. Pinnacle is supported by Nitro and has no employees of its own. All C.J.

Pinnacle Technical Solutions, Inc. (“Pinnacle”), a wholly owned subsidiary of NCS, operates as a data storage facility within Nitro’s office building. Pinnacle is supported by NCS and has no employees of its own. NCS and its subsidiaries will collectively be referred to “Nitro”. All C.J.

The Company has received no other requests or questions. 6 Table of Contents Backlog/New Business The Company’s backlog represents contracts for services that have been entered into, but which have not yet been completed. At September 30, 2022, Energy Services had a backlog of $142.3 million of work to be completed on existing contracts.

At September 30, 2023, Energy Services had a backlog of $229.8 million of work to be completed on existing contracts. At September 30, 2022, the Company had a backlog of $142.3 million.

Any penalties in addition to the potential repayment of the PPP Loan could negatively impact the Company’s business, financial condition and results of operations and prospects . The Company has not received any notifications related to an audit; however, the Company has provided additional payroll costs information for two companies as requested by the SBA through the Company’s lender.

Any penalties in addition to the potential repayment of the PPP Loans could negatively impact the Company’s business, financial condition and results of operations and prospects. 5 Table of Contents Backlog/New Business The Company’s backlog represents contracts for services that have been entered into, but which have not yet been completed.

Removed

The Company’s website address is www.energyservicesofamerica.com. 4 Table of Contents Recent Events On October 6, 2021, the Company’s transfer agent completed the full redemption of all the Company’s 6.0% Convertible Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”), which resulted in the issuance of 2,626,492 new shares of the Company’s common stock, the issuance of 317,500 common shares that were included in Series A Preferred Stock units, and cash redemption payments of $1.3 million.

Added

Hughes, provides electrical, mechanical, HVAC/R, and fire protection services to customers primarily in the automotive, chemical, and power industries. Revolt Energy, LLC (“Revolt”), a wholly owned subsidiary of NCS, performs residential solar installation projects. Nitro Electric Company, LLC (“Nitro Electric”), a wholly owned subsidiary of NCS, performs industrial electrical work and has a satellite office registered in Michigan.

Removed

The Company’s total outstanding common shares after redemption was 16,247,898 as of October 6, 2021. On February 16, 2022, the stockholders of Energy Services approved the Company’s 2022 Equity Incentive Plan (the “Plan”), which provides for the grant of stock-based awards to officers and employees of the Company and its subsidiaries.

Added

Seasonality: Fluctuation of Results Our revenues and results of operations can and usually are subject to seasonal variations. These variations are the result of weather, customer spending patterns, bidding seasons and holidays.

Removed

The maximum number of shares of stock, in the aggregate, that may be granted under the Plan as stock options, restricted stock or restricted stock units is 1,500,000 shares.

Added

During April 2023, management received notification from the SBA that one of the Company’s forgiveness applications related to the PPP Loans was under review. As part of the review, the SBA requested additional payroll information. Additionally, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits.

Removed

A description of the material terms of the Plan is contained in the Company’s definitive proxy statement for the Annual Meeting of Stockholders filed with the Securities and Exchange Commission on January 11, 2022. No grants of stock-based awards were made during the fiscal year ended September 30, 2022.

Added

The requested information was subsequently provided to the SBA through the Lender. The Company recognizes that there is a possibility that the SBA could reverse its previous determination on the forgiveness of the PPP Loans. As a result of this uncertainty, the Company restated the previously issued audited financial statements of the Company for the fiscal years 2022 and 2021.

Removed

On March 23, 2022, the Company’s common stock began trading on the Nasdaq Capital Market operated by The Nasdaq Stock Market, LLC under the symbol “ESOA”.

Added

The Company has recorded a short-term borrowing due to the SBA inquiry for the full $9.8 million, plus accrued interest. During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review.

Removed

Pursuant to the Asset Purchase Agreement signed on April 6, 2022, and amended on April 29, 2022, the Company acquired substantially all the assets (including but not limited to customer contracts, employees, and equipment) of Tri-State Paving, LLC for $7.5 million in cash, a $1.0 million promissory note, and $1.0 million in Energy Services common stock.

Added

As part of the review, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits. The requested information was subsequently provided to the SBA through the Lender.

Removed

The $7.5 million in cash was funded through a loan with United Bank, Inc., Huntington, West Virginia (“United Bank”). The transaction resulted in the issuance of 419,287 common shares, bringing the total outstanding common shares to 16,667,185 as of April 29, 2022. David E.

Removed

Corns continued his role as President of the Company’s new subsidiary, Tri-State Paving, which earned revenues of $4.9 million for the fiscal year ended September 30, 2022.

Removed

On July 6, 2022, the Company’s Board of Directors authorized a new share repurchase program (the “Program”), pursuant to which the Company may, from time to time, purchase shares of its common stock for an aggregate repurchase amount not to exceed 1,000,000 shares, which was approximately 6.0% of its outstanding common stock as of the date of the announcement.

Removed

The Program does not obligate the Company to purchase any number of shares, and there is no guarantee as to the exact number of shares to be repurchased by the Company. No repurchases were made in connection with the Program during the fiscal year ended September 30, 2022.

Removed

On August 11, 2022, Ryan Construction Services Inc., a newly formed wholly owned subsidiary of Energy Services, completed the acquisition of Ryan Environmental, LLC (“Ryan Environmental”), located in Bridgeport, WV, pursuant to an order issued by the United States Bankruptcy Court for the Northern District of West Virginia (the “Court”) on August 9, 2022 and Ryan Environmental Transport, LLC (“Ryan Transport”), located in Bridgeport, West Virginia, under the terms of an Asset Purchase Agreement.

Removed

As part of the business combination, the Company acquired certain assets, including equipment, vehicles, and small tools, of Ryan Environmental for $3.0 million in cash and certain assets, including equipment and small tools, of Ryan Transport for $1.0 million in cash.

Removed

The Small Business Administration (“SBA”) has announced, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, following the lender’s submission of the borrower’s loan forgiveness application.

Removed

The SBA will be reviewing a borrower’s required certification that current economic uncertainty at the time of the loan made the PPP Loan request necessary to support the ongoing operations of the applicant.

Removed

Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.

Removed

The SBA has noted it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to the SBA, upon request, the basis for its certification.

Removed

During this time, the Company attempted to keep as many of its employees working as possible by moving crews to different projects or shifting work responsibilities. The Company also worked closely to accommodate employees’ request to use the Families First Coronavirus Relief Act and the Family Medical Leave Act.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

31 edited+33 added−8 removed31 unchanged

2022 filing

2023 filing

Biggest changeRisk Related to Law and Regulatory Compliance During the ordinary course of business, we may become subject to lawsuits or indemnity claims, which could materially and adversely affect our business and results of operations. From time to time, we may in the ordinary course of business be named as a defendant in lawsuits, claims and other legal proceedings.

Biggest changeWhile the Company believes estimates on project performance are materially correct at September 30, 2023, there can be no assurance that actual results will not differ from those estimates. 13 Table of Contents Risk Related to Law and Regulatory Compliance During the ordinary course of business, we may become subject to lawsuits or indemnity claims, which could materially and adversely affect our business and results of operations.

Acquisitions involve many risks, including the following: ● an acquisition may negatively affect the Company’s results of operations, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; ● the Company may encounter difficulties or unforeseen expenditures in integrating the operations of any company that it acquires, particularly if key personnel of the acquired company decide not to work for us; ● an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; ● an acquisition may involve the entry into geographic or business markets in which the Company has little or no prior experience or where competitors have stronger market positions; ● if the Company incurs debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; and ● to the extent that the Company issues a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.

Acquisitions involve many risks, including the following: ● an acquisition may negatively affect the Company’s results of operations, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; 9 Table of Contents ● the Company may encounter difficulties or unforeseen expenditures in integrating the operations of any company that it acquires, particularly if key personnel of the acquired company decide not to work for us; ● an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; ● an acquisition may involve the entry into geographic or business markets in which the Company has little or no prior experience or where competitors have stronger market positions; ● if the Company incurs debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; and ● to the extent that the Company issues a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease.

Many of our contracts can be cancelled or delayed or may not be renewed upon completion. If our customers should cancel or delay many projects, our revenues could be reduced if we are unable to replace these contracts with others. Also, we have contracts that expire and are renewed periodically.

Many of our contracts can be cancelled or delayed or may not be renewed upon completion. If our customers cancel or delay many projects, our revenues could be reduced if we are unable to replace these contracts with others. Also, we have contracts that expire and are renewed periodically.

The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. Among the impacts to us could be a drop in demand for our products and services, particularly in certain sectors.

The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. Among the impacts on us could be a drop in demand for our products and services, particularly in certain sectors.

Also, other items that can materially affect our quarterly results include: ● Adverse weather; ● Variations in the mix of our work in any quarter; ● Shortage of qualified labor; ● Unfavorable regional, national or global economic and market conditions; ● A reduction in the demand for our services; ● Changes in customer spending patterns and need for the services we provide; ● Unanticipated increases in construction and design costs; ● Timing and volume of work we perform; ● Termination of existing agreements; ● Losses experienced not covered by insurance; ● Payment risks associated with customer financial condition; ● Changes in bonding requirements of agreements; ● Supply chain constraints; ● Interest rate variations; and ● Changes in accounting and financial reporting standards.

Also, other items that can materially affect our quarterly results include: ● Adverse weather; ● Variations in the mix of our work in any quarter; ● Shortage of qualified labor; 8 Table of Contents ● Unfavorable regional, national or global economic and market conditions; ● A reduction in the demand for our services; ● Changes in customer spending patterns and need for the services we provide; ● Unanticipated increases in construction and design costs; ● Timing and volume of work we perform; ● Termination of existing agreements; ● Losses experienced not covered by insurance; ● Payment risks associated with customer financial condition; ● Changes in bonding requirements of agreements; ● Supply chain constraints; ● Interest rate variations; and ● Changes in accounting and financial reporting standards.

Inflation risk is the risk that the value of assets or income will be worth less in the future as inflation decreases the value of money. Recently, there have been market indicators of a pronounced rise in inflation and the Federal Reserve has raised certain benchmark interest rates in an effort to combat inflation.

Any limitation on the availability of materials or equipment or failure to complete work on a timely basis by subcontractors in a quality fashion could lead to added costs and therefore lower profitability for the Company. 11 Table of Contents We face cybersecurity risk including the breach of confidential personal information, Company or customer intellectual properties, and delays related to data loss.

Any limitation on the availability of materials or equipment or failure to complete work on a timely basis by subcontractors in a quality fashion could lead to added costs and therefore lower profitability for the Company. We face cybersecurity risk including breach of confidential personal information, Company or customer intellectual properties, and delays related to data loss.

Furthermore, our customers will also be affected by inflation and the rising costs of goods and services used in their businesses, which could have a negative impact on their ability to use our services and afford to pay our fees. Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.

Furthermore, our customers will also be affected by inflation and the rising costs of goods and services used in their businesses, which could have a negative impact on their ability to use our services and afford to pay our fees. 11 Table of Contents Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.

The occurrence of any of these risks could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. 10 Table of Contents Risk Related to our Business The type of contracts we obtain could adversely affect our profitability. We enter into various types of contracts, including fixed price and variable pricing contracts.

The occurrence of any of these risks could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. Risk Related to our Business The type of contracts we obtain could adversely affect our profitability. We enter into various types of contracts, including fixed price and variable pricing contracts.

Our ability to generate internal growth will be affected by our ability to: ● Attract new customers; ● Expand our relationships with existing customers; ● Hire and maintain qualified employees; ● Expand geographically; and ● Adjust quickly to changes in our industry. 13 Table of Contents Risk Related to Financing Credit facilities to fund our operations and growth might not be available.

Our ability to generate internal growth will be affected by our ability to: ● Attract new customers; ● Expand our relationships with existing customers; ● Hire and maintain qualified employees; ● Expand geographically; and ● Adjust quickly to changes in our industry. Risk Related to Financing Credit facilities to fund our operations and growth might not be available.

Our directors beneficially own a significant portion of our common stock and have substantial influence over us. Our directors, as a group, beneficially owned approximately 36.1% of our outstanding shares of common stock as of September 30, 2022.

Our directors beneficially own a significant portion of our common stock and have substantial influence over us. Our directors, as a group, beneficially owned approximately 33.1% of our outstanding shares of common stock as of September 30, 2023.

If any of the following risks actually occur, our business financial condition and results of operations could be impacted, and we may not be able to achieve our expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements” under Private Securities Litigation Reform Act of 1995 and should be read in conjunction with the section entitled “Forward looking statements”. 9 Table of Contents Risk Related to our Operations Our operating results may vary significantly from quarter to quarter.

This influence may also have the effect of delaying or preventing changes of control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our Company. ITEM 1B. Unresolved Staff Comments None.

Our operations are subject to various environmental laws and regulations, including those dealing with the handling and disposal of waste products, polychlorinated biphenyls (PCBs) and other hazardous materials, as well as fuel storage. We also work around and under bodies of water. We invest significantly in compliance with the appropriate laws and regulations.

Our failure to comply with environmental laws could result in significant liabilities. Our operations are subject to various environmental laws and regulations, including those dealing with the handling and disposal of waste products, polychlorinated biphenyls (PCBs) and other hazardous materials, as well as fuel storage. We also work around and under bodies of water.

The SBA could determine that the Company does not qualify in whole or in part for loan forgiveness. In addition, it is unknown what type of penalties could be assessed against the Company if the SBA disagrees with the Company’s certification. The Company could be required to repay its PPP Loans.

We typically experience lower volumes and lower margins during the winter months due to lower demand for our pipeline services and more difficult operating conditions.

Risk Related to our Operations Our operating results may vary significantly from quarter to quarter. We typically experience lower volumes and lower margins during the winter months due to lower demand for our pipeline services and more difficult operating conditions.

Because our services in certain instances may be integral to the operation and performance of our customers’ infrastructure, we may become subject to lawsuits or claims for any failure of the systems we work on.

Also, we often indemnify our customers for claims related to the services we provide and actions we take under our contracts with them. Because our services in certain instances may be integral to the operation and performance of our customers’ infrastructure, we may become subject to lawsuits or claims for any failure of the systems we work on.

Our business could be adversely affected by the effects of the widespread outbreak of Coronavirus and related variants (“COVID-19”). The outbreak of COVID-19 and other adverse public health developments may have a material and adverse effect on our business operations.

Our business could be adversely affected by the effects of a widespread outbreak of a global pandemic such as COVID-19 and other adverse public health developments that could have a material and adverse effect on our business operations.

If the government enacts legislation that has a serious impact on the industries we serve, it could lead to the curtailment of capital projects in those industries and therefore lead to lower sales volumes for our Company. 14 Table of Contents Our failure to comply with environmental laws could result in significant liabilities.

Changes by the government in laws regulating the industries we serve could reduce our sales volumes. If the government enacts legislation that has a serious impact on the industries we serve, it could lead to the curtailment of capital projects in those industries and therefore lead to lower sales volumes for our Company.

Our efforts to take these risks into account may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior. Risk Related to the COVID-19 Pandemic We have operations in multiple states and face risks related to the Coronavirus/COVID 19 global pandemic that could impact our results of operations.

Our efforts to take these risks into account may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.

Our backlog may not be realized. Our backlog could be reduced due to cancellation of projects by customers and/or reductions in scope of the projects. Should this occur, our anticipated revenues would be reduced unless we are able to replace those contracts.

Our backlog may not be realized. Our backlog could be reduced due to the cancellation of projects by customers and/or reductions in scope of the projects.

However, if we should inadvertently cause contamination of waters or soils, liabilities for our Company relating to cleanup and remediation could be substantial and could exceed any insurance coverage we might have and result in a negative impact to the Company’s ability to operate. Risks Relating to Ownership of Our Common Stock Our common stock is not heavily traded, and the stock price may fluctuate significantly.

However, if we should inadvertently cause contamination of waters or soils, liabilities for our Company relating to cleanup and remediation could be substantial and could exceed any insurance coverage we might have and result in a negative impact to the Company’s ability to operate. We have operations in multiple states and face risks related to pandemics such as the Coronavirus/COVID 19 global pandemic that could impact our results of operations.

We extend credit to customers for purchases of our services and therefore have risk that they may not be able to repay us.

Should this occur, our anticipated revenues would be reduced unless we are able to replace those contracts. 10 Table of Contents We extend credit to customers for purchases of our services and therefore have risk that they may not be able to repay us.

In addition, the continued outbreak of COVID-19 could continue to adversely affect the economies of the states that we operate in resulting in a long-term economic downturn that could impact our operating results. 12 Table of Contents The SBA may review the Company’s PPP Loan forgiveness application and if the SBA disagrees with the Company’s certification the Company could be subject to penalties and the repayment of the PPP Loans, which could negatively impact the Company’s business, financial condition and results of operations and prospects.

The SBA may review the Company’s PPP Loan forgiveness application and if the SBA disagrees with the Company’s certification the Company could be subject to penalties and the repayment of the PPP Loans, which could negatively impact the Company’s business, financial condition and results of operations and prospects.

Within that group there may be companies with lower overhead costs that may be able to price their services at lower levels than we can. Accordingly, if that occurs, our business opportunities could be severely limited. In addition, our industry competes for energy demand with suppliers of alternative energy sources such as solar and wind.

Our industry has been and remains competitive with competitors ranging from small owner operated companies to large public companies. Within that group there may be companies with lower overhead costs that may be able to price their services at lower levels than we can. Accordingly, if that occurs, our business opportunities could be severely limited.

These actions may seek, among other things, compensation for alleged personal injury, worker’s compensation, employment discrimination, breach of contract, property damages, civil penalties and other losses of injunctive or declaratory relief. Also, we often indemnify our customers for claims related to the services we provide and actions we take under our contracts with them.

From time to time, we may in the ordinary course of business be named as a defendant in lawsuits, claims and other legal proceedings. These actions may seek, among other things, compensation for alleged personal injury, worker’s compensation, employment discrimination, breach of contract, property damages, civil penalties, and other losses of injunctive or declaratory relief.

Project delays or cancellations may result in additional costs to us, reductions in revenues or the payment of liquidated damages. In certain circumstances, we guarantee project completion by a scheduled acceptance date or are paid only upon achievement of certain acceptance and performance testing levels.

In certain circumstances, we guarantee project completion by a scheduled acceptance date or are paid only upon achievement of certain acceptance and performance testing levels. Failure to meet any of these requirements could result in additional costs or penalties which could exceed the expected project profits. Our industry is highly competitive.

In addition to the effects of an economic recession, there could be reductions in the industries that the Company serves. If the demand for natural gas should drop dramatically, or the demand for electrical and mechanical services drops dramatically, these would in turn result in less demand for the Company’s services.

If the demand for natural gas should drop dramatically, or the demand for electrical and mechanical services drops dramatically, these would in turn result in less demand for the Company’s services. 12 Table of Contents Project delays or cancellations may result in additional costs to us, reductions in revenues or the payment of liquidated damages.

Risk Related to our Financial Performance Revenue and cost estimates on projects may differ from actual results. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

Energy Services maintains a banking relationship with two regional banks and has lines of credit and borrowing facilities with these institutions. On July 13, 2022, the Company renewed its $15.0 million operating line of credit with United Bank. Based on the borrowing base calculation, the Company could borrow up to $12.5 million as of September 30, 2022.

Energy Services maintains a banking relationship with two regional banks and has lines of credit and borrowing facilities with these institutions. On January 19, 2023, the Company agreed to an amendment to a loan agreement which increased its line of credit to $30.0 million with a maturity date of June 28, 2023.

The Company believes this line of credit will provide enough operating capital for future projects, but the Company and its lenders are working on a financing package that could expand the current operating line. The Company cannot guarantee it will always have access to this line of credit in the future depending on the Company’s financial performance.

The Company cannot guarantee it will always have access to this line of credit in the future depending on the Company’s financial performance. Risk Related to our Financial Performance Revenue and cost estimates on projects may differ from actual results.

Removed

In fiscal year 2021, the Company received notification of forgiveness on the $9.8 million in PPP loans received in calendar year 2020. The Company must retain PPP loan documentation in its files for six years after the date of forgiveness.

Added

The restatement of certain of our historical consolidated financial statements may have an adverse effect on us . As disclosed in Amendment No. 1 to the Annual Report on Form 10-K/A for the fiscal year ended September 30, 2022 filed with the SEC on May 31, 2023, the Company restated certain of its audited consolidated financial statements (the “Restatement”).

Removed

The Company believes it meets the SBA’s certification requirement based on its limited access to capital, weakened business operations during the pandemic and small market value. The Company’s shares of common stock did not trade on a national exchange at the time we applied for PPP loans and at the time such loans were forgiven by the SBA.

Added

Management has assessed the effect of the Restatement on the Company’s internal control over financial reporting and its disclosure controls and procedures, all as described in Part II, Item 9A, “Controls and Procedures” of the Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Removed

The Company has not received any notifications related to an audit; however, the Company has provided additional payroll costs information for two companies as requested by the SBA through the Company’s lender. The Company has received no other requests or questions. However, no assurance can be given as to the outcome if the SBA re-evaluates the Company’s loan certification.

Added

As of the date of the filing of the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, we had completed our remediation plan for the material weakness we identified in relation to the Restatement of our financial statements.

Removed

Failure to meet any of these requirements could result in additional costs or penalties which could exceed the expected project profits. Our industry is highly competitive. Our industry has been and remains competitive with competitors ranging from small owner operated companies to large public companies.

Added

While management believes that the remedial efforts have resolved the identified material weakness, there is no assurance that such remedial efforts will ultimately have the intended effects or that additional remedial actions will not be necessary.

Removed

We may be unsuccessful at generating internal growth.

Added

If we identify any new material weakness in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements.

Removed

The Company had borrowed $12.5 million on the line of credit as of September 30, 2022, leaving no borrowings available on the line of credit as of that date.

Added

In such case, we may be unable to maintain compliance with securities law requirements regarding accurate and timely filing of periodic reports and with applicable NASDAQ listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result.

Removed

We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. While the Company believes estimates on project performance are materially correct at September 30, 2022, there can be no assurance that actual results will not differ from those estimates.

Added

We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

Removed

Changes by the government in laws regulating the industries we serve could reduce our sales volumes.

Added

Additionally, as a result of the material weakness we have identified in our internal controls over financial reporting for the Restatement, as well as other matters raised or that may in the future be raised by the SEC, we may in the future be exposed to litigation or other disputes concerning, among others, claims invoking the federal and state securities laws, SBA claims or other claims arising from the Restatement and the material weakness in our internal control over financial reporting and the preparation of our financial statements.

Added

Any such litigation or dispute, regardless of its outcome, could have a material adverse effect on our business, operations, financial condition, results of operations and share price.

Added

As a result of the Restatement, we may become subject to a number of significant risks, which could have an adverse effect on our business, financial condition and results of operations, including: we may be subject to potential civil litigation, including shareholder class action lawsuits and derivative claims made on behalf of us, and regulatory proceedings or actions, the defense of which may require us to devote significant management attention and to incur significant legal expense and which litigation, proceedings or actions, if decided against us, could require us to pay substantial judgments, settlements or other penalties.

Added

Due to the economic uncertainties created by COVID-19 and limited operating funds available, the Company applied for loans under the PPP. On April 15, 2020, the Company and its subsidiaries, C.J.

Added

Hughes, Contractors Rental and Nitro, entered into separate PPP notes effective April 7, 2020, with the Lender in an aggregate principal amount of $13.1 million pursuant to the PPP Loans.

Added

As a result of this uncertainty, the Company restated the previously audited financial statements of the Company for the fiscal years ended September 30, 2022 and 2021. During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review.

Added

Borrowers must retain PPP documentation for at least six years after the date the loan is forgiven or paid in full, and the SBA and SBA Inspector General must be granted these files upon request.

Added

In addition to the effects of an economic recession, there could be reductions in the industries that the Company serves.

Added

In addition, our industry competes for energy demand with suppliers of alternative energy sources such as solar and wind. We may be unsuccessful at generating internal growth.

Added

On June 1, 2023, the agreement was renewed through June 28, 2024. The line of credit is limited to a borrowing base calculation, which was approximately $23.9 million at September 30, 2023. The outstanding balance on the line of credit was $8.7 million at September 30, 2023.

Added

The line of credit has a variable interest rate equal to the “Wall Street Journal” Prime Rate with a floor of 4.5%, which was 8.5% at September 30, 2023. The Company believes this line of credit will provide enough operating capital for future projects.

Added

We invest significantly in compliance with the appropriate laws and regulations.

Added

In addition, the continued outbreak of COVID-19 could continue to adversely affect the economies of the states that we operate in resulting in a long-term economic downturn that could impact our operating results. 14 Table of Contents Risks Relating to Ownership of Our Common Stock Our common stock is not heavily traded, and the stock price may fluctuate significantly.

Added

Our dividend policy may change without notice and any payment of dividends in the future is subject to the discretion of our board of directors. The holders of our common stock will receive cash dividends if and when declared by our board of directors out of legally available funds.

Added

Although we paid an annual cash dividend in calendar 2023, we have no obligation to continue paying dividends.

Added

Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements, financial condition, future prospects, and other factors that our board of directors may deem relevant.

Added

Our ability to pay dividends to our stockholders will continue to be subject to, and limited by, certain legal restrictions. Further, any lenders making loans to us may impose financial covenants that may be more restrictive with respect to dividend payments than our legal requirements.

Added

Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure.

Added

Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. Increased ESG related compliance costs could result in increases to our overall operational costs.

Added

Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price.

Added

New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. ITEM 1B. Unresolved Staff Comments None.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties The Company and its subsidiaries own the property where its subsidiaries, C.J. Hughes, Nitro, West Virginia Pipeline, SQP, Tri-State Paving and Ryan Construction and the Company’s headquarters are located. We maintain our executive offices at 75 West 3 rd Ave., Huntington, West Virginia 25701, which is also the offices of C.J. Hughes and Contractors Rental.

Biggest changeITEM 2. Properties The Company and its subsidiaries own the property where its subsidiaries, C.J. Hughes, Nitro, West Virginia Pipeline, and the Company’s headquarters are located. We maintain our executive offices at 75 West 3 rd Ave., Huntington, West Virginia 25701, which is also the offices of C.J. Hughes and Contractors Rental.

Ryan Construction leases its office space and is located at 5793 W. Veterans Memorial Highway, Bridgeport, WV 26330. The Company’s management believes that its properties are adequate for the business it conducts. Please see “Liquidity and Capital Resources” for a description of the mortgages and leases on these properties.

Ryan Construction leases its office space and is located at 5793 W. Veterans Memorial Highway, Bridgeport, WV 26330. The Company’s management 15 Table of Contents believes that its properties are adequate for the business it conducts. Please see “Liquidity and Capital Resources” for a description of the mortgages and leases on these properties.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company’s attorney’s fees have been expensed as incurred. On December 16, 2022, the Defendant filed a notice of appeal with the court. 15 Table of Contents On November 12, 2021, the Company received a withdrawal liability claim from a pension plan to which the Company made pension contributions for union construction employees performing covered work in a particular jurisdiction.

Biggest changeOn November 12, 2021, the Company received a withdrawal liability claim from a pension plan to which the Company made pension contributions for union construction employees performing covered work in a particular jurisdiction.

On November 21, 2022, a Judgment Order was issued, and the Company was awarded $13.1 million, of which $5.8 million was the jury award, $1.6 million was for attorney’s fees, and $5.7 million was for penalties and interest. The amounts awarded by the Judgment Order have not been recognized in the Company’s consolidated financial statements as of September 30, 2022.

ITEM 3. Legal Proceedings In February 2018, the Company filed a lawsuit against a former customer (“Defendant”) in the United States District Court for the Western District of Pennsylvania. The lawsuit is related to a dispute over work performed on a pipeline construction project.

ITEM 3. Legal Proceedings In February 2018, the Company filed a lawsuit against a former customer in the United States District Court for the Western District of Pennsylvania. The lawsuit is related to a dispute over work performed on a pipeline construction project.

At September 30, 2022, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows. ITEM 4. Mine Safety Disclosures None. PART II

At September 30, 2023, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows. ITEM 4. Mine Safety Disclosures None. PART II

The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract and/or property damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief.

These actions typically seek, among other things, compensation for alleged personal injury, breach of contract and/or property damages, punitive damages, civil penalties, or other losses, or injunctive or declaratory relief.

The Company has expensed all $164,000 in payments made through September 30, 2022 and does not expect any future liabilities related to this claim. Other than described above, at September 30, 2022, the Company was not involved in any legal proceedings other than in the ordinary course of business.

The Company has expensed all $164,000 in payments made through September 30, 2022 and does not expect any future liabilities related to this claim. The Company did not make any payments during the twelve months ended September 30, 2023.

Added

The Company’s attorney’s fees have been expensed as incurred. The case has been appealed to the United States Court of Appeals for the Third Circuit and is expected to be heard within the next 12 months.

Added

Other than described above, at September 30, 2023, the Company was not involved in any legal proceedings other than in the ordinary course of business. The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Program does not obligate the Company to purchase any number of shares, and there is no guarantee as to the exact number of shares to be repurchased by the Company. No repurchases were made in connection with the Program during the fiscal year ended September 30, 2022. ITEM 6. Reserved 17 Table of Contents

Biggest changeThe Program does not obligate the Company to purchase any number of shares, and there is no guarantee as to the exact number of shares to be repurchased by the Company. The Company did not repurchase any shares of its common stock during the three months ended September 30, 2023. 16 Table of Contents ITEM 6. Reserved

Certain shares of the Company’s common stock are held in “nominee” or “street” name and accordingly the number of beneficial owners of common stock is not included in the number of record holders.

As of January 16, 2024, there were 27 holders of record of our common stock. Certain shares of the Company’s common stock are held in “nominee” or “street” name and accordingly the number of beneficial owners of common stock is not included in the number of record holders.

Removed

The following table sets forth the range of high and low sales prices for common stock during each of the last two fiscal years.

Removed

The high and low “bid price”, as required to be disclosed by Regulation S-K, was not available for certain periods because either these were not two-sided quotes by market makers or there was only one market maker with a two-sided quote.

Removed

Over the counter market quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.

Removed

Common Stock Fiscal 2021 High Low Dividends Quarter ended December 31, 2020 $ 1.30 $ 0.81 $ — Quarter ended March 31, 2021 2.45 1.02 — Quarter ended June 30, 2021 2.40 1.96 — Quarter ended September 30, 2021 2.40 1.62 — Fiscal 2022 High Low Dividends Quarter ended December 31, 2021 $ 3.65 $ 1.32 $ — Quarter ended March 31, 2022 4.68 2.30 — Quarter ended June 30, 2022 3.25 1.90 — Quarter ended September 30, 2022 3.49 1.77 — As of December 21, 2022, there were 31 holders of record of our common stock.

Removed

The Company did not repurchase any stock during the twelve months ended September 30, 2022 and 2021. 16 Table of Contents On February 16, 2022, the stockholders of Energy Services approved the Company’s 2022 Equity Incentive Plan (the “Plan”), which provides for the grant of stock-based awards to officers and employees of the Company and its subsidiaries.

Removed

The maximum number of shares of stock, in the aggregate, that may be granted under the Plan as stock options, restricted stock or restricted stock units is 1,500,000 shares.

Removed

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

113 edited+50 added−41 removed40 unchanged

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2023 filing

Biggest changeMaterially incorrect estimates could cause an impairment to goodwill or intangible assets and result in a loss in profitability for the Company. 30 Table of Contents A table of the Company’s intangible assets subject to amortization is below: Accumulated Accumulated Amortization and Amortization and Amortization and Impairment Remaining Life at Impairment at Impairment at Twelve Months Ended September 30, Original September 30, September 30, September 30, Net Book Intangible assets: 2022 Cost 2022 2021 2022 Value West Virginia Pipeline: Customer Relationships 99 months $ 2,209,724 $ 386,693 $ 165,725 $ 220,968 $ 1,823,031 Tradename 99 months 263,584 46,136 19,772 26,364 217,448 Non-competes 3 months 83,203 72,806 31,202 41,604 10,397 Revolt Energy: Employment agreement/non-compete 19 months 100,000 77,779 13,889 63,890 22,221 Tri-State Paving: Customer Relationships 115 months 1,649,159 66,781 — 66,781 1,582,378 Tradename 115 months 203,213 8,368 — 8,368 194,845 Non-competes 7 months 39,960 16,590 — 16,590 23,370 Total intangible assets $ 4,548,843 $ 675,153 $ 230,588 $ 444,565 $ 3,873,690 Depreciation and Amortization The purpose of depreciation and amortization is to represent an accurate value of assets on the books.

Biggest changeA table of the Company’s intangible assets subject to amortization is below: Accumulated Accumulated Amortization and Amortization and Amortization and Amortization and Impairment Impairment Net Book Remaining Life at Impairment at Impairment at Twelve Months Ended Twelve Months Ended Value September 30, Original September 30, September 30, September 30, September 30, September 30, Intangible assets: 2023 Cost 2023 2022 2023 2022 2023 West Virginia Pipeline: Customer Relationships 87 months $ 2,209,724 $ 607,661 $ 386,693 $ 220,968 $ 220,968 $ 1,602,063 Tradename 87 months 263,584 72,500 46,136 26,364 26,364 191,084 Non-competes - months 83,203 83,203 72,806 10,397 41,604 — Revolt Energy: Employment agreement/non-compete - months 100,000 100,000 77,779 22,221 63,890 — Tri-State Paving: Customer Relationships 103 months 1,649,159 233,631 66,781 166,850 66,781 1,415,528 Tradename 103 months 203,213 28,789 8,368 20,421 8,368 174,424 Non-competes - months 39,960 39,960 16,590 23,370 16,590 — Total intangible assets $ 4,548,843 $ 1,165,744 $ 675,153 $ 490,591 $ 444,565 $ 3,383,099 Depreciation and Amortization The purpose of depreciation and amortization is to represent an accurate value of assets on the books.

There have been no other material events during the period, other than noted above, that would either impact the results reflected in the report or the Company’s results going forward. ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk Not required for smaller reporting companies. ITEM 8.

In February 2018, the Company filed a lawsuit against a former customer in the United States District Court for the Western District of Pennsylvania. The lawsuit is related to a dispute over work performed on a pipeline construction project.

Litigation In February 2018, the Company filed a lawsuit against a former customer in the United States District Court for the Western District of Pennsylvania. The lawsuit is related to a dispute over work performed on a pipeline construction project.

Financial Statements and Supplementary Data Financial Statements are included at page F-1 of this Annual Report on Form 10-K. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

ITEM 8. Financial Statements and Supplementary Data Financial Statements are included at page F-1 of this Annual Report on Form 10-K. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

On April 29, 2022, the Company entered into a $1.0 million promissory note agreement with Corns Enterprises, a related party, as partial consideration for the purchase of Tri-State Paving. This four-year agreement requires $250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning April 29, 2022.

On April 29, 2022, the Company entered into a $1.0 million promissory note agreement with Corns Enterprises as partial consideration for the purchase of Tri-State Paving. This four-year agreement requires $250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning April 29, 2022.

The most significant of these include: ● the completeness and accuracy of the original bid; ● costs associated with scope changes; 28 Table of Contents ● changes in costs of labor and/or materials; ● extended overhead and other costs due to owner, weather and other delays; ● subcontractor performance issues; ● changes in productivity expectations; ● site conditions that differ from those assumed in the original bid; ● changes from original design on design-build projects; ● the availability and skill level of workers in the geographic location of the project; ● a change in the availability and proximity of equipment and materials; ● our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; and ● the customer’s ability to properly administer the contract.

The most significant of these include: ● the completeness and accuracy of the original bid; ● costs associated with scope changes; ● changes in costs of labor and/or materials; ● extended overhead and other costs due to owner, weather and other delays; ● subcontractor performance issues; ● changes in productivity expectations; ● site conditions that differ from those assumed in the original bid; ● changes from original design on design-build projects; ● the availability and skill level of workers in the geographic location of the project; ● a change in the availability and proximity of equipment and materials; ● our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; and ● the customer’s ability to properly administer the contract.

Under the current guidance, companies can first choose to assess any impairment based on qualitative factors (Step 0). If a company fails this test or decides to bypass this step, it must proceed with a quantitative assessment of goodwill impairment. The Company did not have a goodwill impairment at September 30, 2022.

Materially incorrect estimates of bad debt reserves could result in an unexpected loss in profitability for the Company. Additionally, frequently changing reserves could be an indication of risky or unreliable customers. At September 30, 2022, the management review deemed that the allowance for doubtful accounts was adequate.

Materially incorrect estimates of bad debt reserves could result in an unexpected loss in profitability for the Company. Additionally, frequently changing reserves could be an indication of risky or unreliable customers. At September 30, 2023, management review deemed that the allowance for doubtful accounts was adequate.

The FASB recently issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance”, which aims to provide increased transparency by requiring business entities to disclose information about certain types of government assistance they receive in the notes to the financial statements.

The FASB recently issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance , which aims to provide increased transparency by requiring business entities to disclose information about certain types of government assistance they receive in the notes to the financial statements.

New Accounting Pronouncements On October 28, 2021, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update (“ASU”) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. The amendments of this ASU require entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

New Accounting Pronouncements On October 28, 2021, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . The amendments of this ASU require entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

Some projects will have greater margins while others that are extremely competitive in bidding may have narrower margins. Service and Maintenance versus Installation . In general, installation work has a higher gross margin than maintenance work. This is because installation work usually is of a fixed price nature and therefore has higher risks involved.

Some projects will have greater margins while others that are extremely competitive in bidding may have narrower margins. 17 Table of Contents Service and Maintenance versus Installation . In general, installation work has a higher gross margin than maintenance work. This is because installation work usually is of a fixed price nature and therefore has higher risks involved.

In general, amortization is included in “cost of revenues” on the Company’s consolidated statements of income. Materially incorrect estimates of depreciation and amortization and/or the useful lives of assets could significantly impact the value of long-lived assets on the Company’s consolidated financial statements. A material over valuation could result in impairment charges and reduced profitability for the Company .

In general, amortization is included in “cost of revenues” on the Company’s consolidated statements of income. Materially incorrect estimates of depreciation and amortization and/or the useful lives of assets could significantly impact the value of long-lived assets on the Company’s consolidated financial statements. A material overvaluation could result in impairment charges and reduced profitability for the Company .

Entities are required to provide the new disclosures prospectively for all transactions with a government entity that are accounted for under either a grant or a contribution accounting model and are reflected in the financial statements at the date of initially applying the new amendments, and to new transactions entered into after that date.

Entities are required to provide the new disclosures prospectively for all transactions with a government entity that are accounted for under either a grant or a contribution 31 Table of Contents accounting model and are reflected in the financial statements at the date of initially applying the new amendments, and to new transactions entered into after that date.

The Company also finances insurance policy premiums on a short-term basis through a financing company. These insurance policies include workers’ compensation, general liability, automobile, umbrella, and equipment policies. The Company makes a down payment in January and finances the remaining premium amount over ten monthly payments.

Insurance Premiums Financed The Company also finances insurance policy premiums on a short-term basis through a financing company. These insurance policies include workers’ compensation, general liability, automobile, umbrella, and equipment policies. The Company makes a down payment in January and finances the remaining premium amount over eleven monthly payments.

Acquired intangible assets subject to amortization are amortized on a straight-line basis, which approximates the pattern in which the economic benefit of the respective intangible assets is realized, over their respective estimated useful lives. The definite-lived identifiable intangible assets recognized as part of the Company’s business combinations are recorded at their estimated fair value.

Acquired intangible assets subject to amortization are amortized on a straight-line basis, which approximates the pattern in which the economic benefit of the respective intangible assets is realized, over their respective estimated useful lives. The definite-lived 30 Table of Contents identifiable intangible assets recognized as part of the Company’s business combinations are initially recorded at their estimated fair value.

The loan is collateralized by the Company’s equipment and receivables. As of September 30, 2022, the Company had made principal payments of $971,000. On April 29, 2022, the Company entered into a $7.5 million Non-Revolving Note agreement with United Bank.

The loan is collateralized by the Company’s equipment and receivables. As of September 30, 2023, the Company had made principal payments of $1.7 million. On April 29, 2022, the Company entered into a $7.5 million Non-Revolving Note agreement with United Bank.

Please see the allowance for doubtful accounts table below: Year Ended September 30, 2022 2021 Balance at beginning of year $ 70,310 $ 70,310 Charged to expense — — Deductions for uncollectible receivables written off, net of recoveries — — Balance at end of year $ 70,310 $ 70,310 Impairment of goodwill and intangible assets The Company follows the guidance of Accounting Standards Codification (“ASC”) 350-20-35-3 “Intangibles-Goodwill and Other (Topic 350)” which requires a company to record an impairment charge based on the excess of a reporting unit’s carrying amount of goodwill over its fair value.

Please see the allowance for doubtful accounts table below: Year Ended September 30, 2023 2022 Balance at beginning of year $ 70,310 $ 70,310 Charged to expense — — Deductions for uncollectible receivables written off, net of recoveries (19,247) — Balance at end of year $ 51,063 $ 70,310 29 Table of Contents Impairment of goodwill and intangible assets The Company follows the guidance of Accounting Standards Codification (“ASC”) 350-20-35-3 “Intangibles-Goodwill and Other (Topic 350)” which requires a company to record an impairment charge based on the excess of a reporting unit’s carrying amount of goodwill over its fair value.

On December 16, 2014, the Company’s Nitro subsidiary entered into a 20-year $1.2 million loan agreement with First Bank of Charleston, Inc. (West Virginia) to purchase the office building and property it had previously been leasing for $6,300 each month. The interest rate on the loan agreement is 4.82% with monthly payments of $7,800.

On December 16, 2014, the Company’s Nitro subsidiary entered into a 20-year $1.2 million loan agreement with First Bank of Charleston, Inc. (West Virginia) to purchase the office building and property it had previously been leasing. The interest rate on the loan agreement is 4.82% with monthly payments of $7,800. Mr.

The aggregate balance of accounts receivable, retainages receivable, allowance for doubtful accounts and other receivables totaled $42.9 million at September 30, 2022, an increase of $20.4 million from the combined prior the fiscal year-end balance of $22.5 million. The increase was primarily due to increased work in the fiscal year 2022 as compared to 2021.

The aggregate balance of accounts receivable, retainages receivable, allowance for doubtful accounts and other receivables totaled $59.3 million at September 30, 2023, an increase of $16.4 million from the combined prior fiscal year-end balance of $42.9 million. The increase was primarily due to increased work in the fiscal year 2023 as compared to 2022.

Accrued expenses and other current liabilities totaled $11.3 million at September 30, 2022, an increase of $5.7 million from the prior the fiscal year-end balance of $5.6 million. The increase was primarily due to increased labor and burden expenses incurred towards the end of the fiscal year 2022, as compared to the same period in fiscal 2021.

Accrued expenses and other current liabilities totaled $13.1 million at September 30, 2023, an increase of $1.8 million from the prior fiscal year-end balance of $11.3 million. The increase was primarily due to increased labor and burden expenses incurred towards the end of the fiscal year 2023, as compared to the same period in fiscal 2022.

Prepaid expenses and other totaled $3.9 million at September 30, 2022, an increase of $401,000 from the prior the fiscal year-end balance of $3.5 million. The increase was primarily due to the increase of various prepaid insurance accounts based on labor cost expensed or standard monthly charges.

Prepaid expenses and other totaled $3.5 million at September 30, 2023, a decrease of $426,000 from the prior fiscal year-end balance of $3.9 million. The decrease was primarily due to the decrease of various prepaid insurance accounts based on labor cost expensed or standard monthly charges.

Gas & Water Distribution cost of revenues totaled $41.7 million for the fiscal year ended September 30, 2022, a $9.2 million increase from $32.5 million for the fiscal year ended September 30, 2021.

Gas & Water Distribution cost of revenues totaled $48.9 million for the fiscal year ended September 30, 2023, a $7.2 million increase from $41.7 million for the fiscal year ended September 30, 2022.

Please see the tables below for customers that represent 10.0% or more of the Company’s revenue or accounts receivable, net of retention for the fiscal years ended September 30, 2022, and 2021: Revenue FY 2022 FY 2021 TransCanada Corporation 16.6 % 11.0 % All other 83.4 % 89.0 % Total 100.0 % 100.0 % * Less than 10.0% and included in “All other” if applicable Accounts receivable, net of retention FY 2022 FY 2021 TransCanada Corporation 11.6 % 13.2 % Kentucky American Water * 16.3 % All other 88.4 % 70.5 % Total 100.0 % 100.0 % * Less than 10.0% and included in “All other” if applicable Virtually all work performed for major customers was awarded under competitive bid fixed price or unit price arrangements.

Please see the tables below for customers that represent 10.0% or more of the Company’s revenue or accounts receivable, net of retention as of or for the fiscal years ended September 30, 2023, and 2022: Revenue FY 2023 FY 2022 TransCanada Corporation 13.9 % 16.6 % NiSource and subsidiaries 17.5 % * % All other 68.6 % 83.4 % Total 100.0 % 100.0 % * Less than 10.0% and included in “All other” if applicable Accounts receivable, net of retention FY 2023 FY 2022 NiSource and subsidiaries 11.8 % * % TransCanada Corporation * % 11.6 % All other 88.2 % 88.4 % Total 100.0 % 100.0 % * Less than 10.0% and included in “All other” if applicable Virtually all work performed for major customers was awarded under competitive bid fixed price or unit price arrangements.

As of September 30, 2022, the Company borrowed $3.0 million against this line of credit with monthly payments of $68,150 that started in February 2022. The interest rate at September 30, 2022 was 7.25%. The Company has made principal payments of $451,000 on this note as of September 30, 2022.

As of September 30, 2023, the Company borrowed $3.0 million against this line of credit with monthly payments of $68,150 that started in February 2022. The interest rate at September 30, 2023 was 9.5%. The Company has made principal payments of $1.1 million on this note as of September 30, 2023.

This four-year agreement requires $250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning April 29, 2022. Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year.

Corns continued his role as President of the Company’s Tri-State Paving Subsidiary. This four-year agreement requires $250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning April 29, 2022. Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year.

Gas & Water Distribution gross profit totaled $11.6 million for the fiscal year ended September 30, 2022, a $3.6 million increase from $8.0 million for the fiscal year ended September 30, 2021.

Gas & Water Distribution gross profit totaled $14.6 million for the fiscal year ended September 30, 2023, a $3.1 million increase from $11.6 million for the fiscal year ended September 30, 2022.

Electrical, Mechanical, & General services and construction gross profit totaled $6.9 million for the fiscal year ended September 30, 2022, a $2.6 million increase from $4.3 million for the fiscal year ended September 30, 2021.

Electrical, Mechanical, & General services and construction gross profit totaled $10.7 million for the fiscal year ended September 30, 2023, a $3.8 million increase from $6.9 million for the fiscal year ended September 30, 2022.

At September 30, 2022, the Company had $82.8 million in performance bonds outstanding. Concentration of Credit Risk In the ordinary course of business, the Company grants credit under normal payment terms, generally without collateral, to our customers, which include natural gas and oil companies, general contractors, and various commercial and industrial customers located within the United States.

Concentration of Credit Risk In the ordinary course of business, the Company grants credit under normal payment terms, generally without collateral, to our customers, which include natural gas and oil companies, general contractors, and various commercial and industrial customers located within the United States.

On November 16, 2022, a Judgement Order was issued, and the Company was awarded $13.1 million, of which $5.8 million was the jury award, $1.6 million was for attorney’s fees, and $5.7 million was for penalties and interest. None of the award had been recognized in the Company’s consolidated financial statements as of September 30, 2022.

During fiscal year ended September 30, 2022, the Company entered into two lease agreements for construction equipment for a combined $160,000. The leases have a term of twenty-two months with a stated interest rate of 0%, combined monthly installment payments of $6,645 and are cancellable at any time without penalty.

The Company has two lease agreements for construction equipment with a combined amount of $160,000. The leases have a term of twenty-two months with a stated interest rate of 0%, combined monthly installment payments of $6,645 and are cancellable at any time without penalty.

Electrical, Mechanical, & General services and construction cost of revenues totaled $79.1 million for the fiscal year ended September 30, 2022, a $23.5 million increase from $55.6 million for the fiscal year ended September 30, 2021.

Electrical, Mechanical, & General services and construction cost of revenues totaled $137.8 million for the fiscal year ended September 30, 2023, a $58.6 million increase from $79.1 million for the fiscal year ended September 30, 2022.

The aggregate balance of current maturities of long-term debt and long-term debt totaled $17.6 million at September 30, 2022, an increase of $5.2 million from the prior the fiscal year-end balance of $12.4 million.

The aggregate balance of current maturities of long-term debt and long-term debt totaled $25.0 million at September 30, 2023, an increase of $7.4 million from the prior fiscal year-end balance of $17.6 million.

Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year. The Company recorded $7,800 in accreted interest and has not made any principal payments on this note as of September 30, 2022.

Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year. The Company has made $500,000 in principal payments on this note as of September 30, 2023.

Our contract assets include cost and estimated earnings in excess of billings that represent amounts earned and reimbursable under contracts, including claim recovery estimates, but have a conditional right for billing and payment such as achievement of milestones or completion of the project.

Significant changes in cost estimates, particularly in our larger, more complex projects could have a significant effect on our profitability. 28 Table of Contents Our contract assets include cost and estimated earnings in excess of billings that represent amounts earned and reimbursable under contracts, including claim recovery estimates, but have a conditional right for billing and payment such as achievement of milestones or completion of the project.

The income tax expense for fiscal year ended September 30, 2022 was $2.3 million compared to an income tax benefit of ($29,000) for the fiscal year ended September 30, 2021. The increase was due to an increase in taxable income.

The income tax expense for the fiscal year ended September 30, 2023 was $3.0 million as compared to $2.3 million for the fiscal year ended September 30, 2022. The increase was due to an increase in taxable income for the fiscal year ended September 30, 2023, as compared to the fiscal year ended September 30, 2022.

If the Company fails to perform under a contract or to pay subcontractors and vendors, the customer may demand that the insurer make payments or provide services under the bond. The Company must reimburse the insurer for any expenses or outlays it is required to make.

If the Company fails to perform under a contract or to pay subcontractors and vendors, the customer may demand that the insurer make payments or provide services under the bond.

Upon the completion of development, the Property will be used to generate rental income. SQP has been awarded the construction contract for the Project. United Bank provided $5.0 million in loans to fund the Project. SQP and Ventures has jointly provided an unconditional guarantee for the $5.0 million of obligations associated with the Project.

SQP has been awarded the construction contract for the Project. United Bank provided $5.0 million in loans to fund the Project. SQP and Ventures have jointly provided an unconditional guarantee for the $5.0 million of obligations associated with the Project.

The Company’s depreciation expense for the twelve months ended September 30, 2022, and 2021 was $5.6 million and $4.7 million, respectively. In general, depreciation is included in “cost of revenues” on the Company’s consolidated statements of income. The Company’s amortization expense for the twelve months ended September 30, 2022, and 2021 was $445,000 and $231,000, respectively.

The Company’s depreciation expense for the twelve months ended September 30, 2023 and 2022 was $7.3 million and $5.6 million, respectively. In general, depreciation is included in “cost of revenues” on the Company’s consolidated statements of income. The Company’s amortization expense for the twelve months ended September 30, 2023 and 2022 were $490,591 and $444,565, respectively.

Significant inflation or supply chain issues could cause customers to delay or cancel planned projects; however, inflation did not have a significant effect on our results for the twelve months ended September 30, 2022, and 2021.

Where allowed by contract, the Company will address fuel cost increases with customers. Significant inflation or supply chain issues could cause customers to delay or cancel planned projects; however, inflation did not have a significant effect on our results for the twelve months ended September 30, 2023, and 2022.

This five-year agreement was used to finance the purchase of Tri-State Paving and has monthly payments of $129,910 with a fixed interest rate of 4.25%. The Company has made principal payments of $518,000 on this note as of September 30, 2022.

This five-year agreement was used to finance the purchase of Tri-State Paving and has monthly payments of $129,910 with a fixed interest rate of 4.25%.

Leases The Company leases office space for SQP for $1,500 per month. The lease, signed on March 25, 2021, is for a period of two years with five one-year renewals available immediately following the end of the base term.

Leases The Company leases office space for SQP for $1,500 per month. The lease, which was originally signed on March 25, 2021, is for a period of two years with five one-year renewals available immediately following the end of the base term. The Company has only committed to a one-year renewal and is evaluating whether to renew for additional periods.

As of September 30, 2022, the Company had made annual installment payments of $500,000, interest payments of $152,000 and expensed $53,000 in accreted interest. On January 4, 2021, the Company entered into a $3.0 million Non-Revolving Note agreement with United Bank.

As of September 30, 2023, the Company had made annual installment payments of $1,250,000. On January 4, 2021, the Company entered into a $3.0 million Non-Revolving Note agreement with United Bank.

(West Virginia). 23 Table of Contents On November 13, 2015, the Company entered into a 10-year $1.1 million loan agreement with United Bank to purchase the fabrication shop and property Nitro had previously been leasing for $12,900 each month. The variable interest rate on the loan agreement is 7.25% at September 30, 2022 with monthly payments of $12,193.

On November 13, 2015, the Company entered into a 10-year $1.1 million loan agreement with United Bank to purchase the fabrication shop and property Nitro had previously been leasing. The variable interest rate on the loan agreement is 9.5% at September 30, 2023 with monthly payments of $12,580.

Douglas Reynolds is the president and a director of Energy Services and was a director of Premier Financial Bancorp, Inc. On September 17, 2021, Peoples Bancorp, Inc., parent company of Peoples Bank, completed an acquisition of Premier Financial Bancorp, Inc. and its wholly owned subsidiaries, Premier Bank and Citizens Deposit Bank & Trust. On October 26, 2021, Mr.

On September 17, 2021, Peoples Bancorp, Inc., parent company of Peoples Bank, completed an acquisition of Premier Financial Bancorp, Inc. and its wholly owned subsidiaries, Premier Bank and Citizens Deposit Bank & Trust. On October 26, 2021, Mr. Douglas Reynolds was elected director of Peoples Bancorp, Inc., and its subsidiary Peoples Bank (collectively “Peoples Bank”). On February 21, 2023, Mr.

This lease, for the Bridgeport, WV facility, had a net present value of $140,000 at inception and a carrying value of $113,000 at September 30, 2022. The 4.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.

The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $144,000 at inception, and a carrying value of $57,000 at September 30, 2023. The 4.5% interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception.

Development, a 1% owner, and United Bank, a 99% owner, formed 1030 Quarrier Landlord, LLC (“Landlord”). Landlord decided to pursue the following development project (the “Project”): a historical building at 1030 Quarrier Street, Charleston, West Virginia as well as associated land (the “Property”) was purchased to be developed/rehabilitated into a commercial project including apartments and commercial space.

Landlord decided to pursue the following development project (the “Project”): a historical building at 1030 Quarrier Street, Charleston, West Virginia as well as associated land (the “Property”) was purchased to be developed/rehabilitated into a commercial project including apartments and commercial space. Upon the completion of development, the Property will be used to generate rental income.

Selling and Administrative Expenses Selling and administrative expenses consist primarily of compensation and related benefits to management, administrative salaries and benefits, marketing, communications, office and utility costs, professional fees, bad debt expense, letter of credit fees, general liability insurance and miscellaneous other expenses. 18 Table of Contents Results of Operations for the Fiscal Year Ended September 30, 2022, Compared to the Fiscal Year Ended September 30, 2021.

All revenue and related expense transactions, as well as the related accounts payable and accounts receivable have been eliminated in consolidation. Inflation Most significant project materials, such as pipe or electrical wire, are provided by the Company’s customers. When possible, the Company attempts to lock in pricing with vendors and include qualifications regarding material cost increases in bids.

The interest rate on this note is subject to change from time to time based on changes in the U.S. Treasury yield, adjusted to a constant maturity of three years as published by the Federal Reserve weekly. As of September 30, 2022, the Company had made principal payments of $333,000.

The interest rate on this loan agreement is 4.82% with monthly payments of $7,800. The interest rate on this note is subject to change from time to time based on changes in the U.S. Treasury yield, adjusted to a constant maturity of three years as published by the Federal Reserve weekly.

The gross profit increase was primarily due to increased internal equipment charges to projects and better project costs tracking for the fiscal year ended September 30, 2022, as compared to 2021. Selling and administrative expenses .

The gross profit decrease was primarily due to decreased internal equipment charges to projects for the fiscal year ended September 30, 2023, as compared to the prior fiscal year. Selling and administrative expenses .

Specifically, $69.4 million in revenue was generated in the fourth quarter of fiscal year 2022 as compared to $39.6 million for the same period in 2021. Net property, plant and equipment totaled $32.7 million at September 30, 2022, an increase of $9.7 million from the prior the fiscal year-end balance of $23.0 million.

Specifically, $104.9 million in revenue was generated in the fourth quarter of fiscal year 2023 as compared to $68.4 million for the same period in 2022. 20 Table of Contents Cash and cash equivalents totaled $16.4 million at September 30, 2023, an increase of $9.0 million from the prior fiscal year-end balance of $7.4 million.

These performance bonds are obtained through insurance carriers and guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors.

Performance Bonds Some customers, particularly new ones or governmental agencies require the Company to post bid bonds, performance bonds and payment bonds (collectively, performance bonds). These performance bonds are obtained through insurance carriers and guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors.

This five-year agreement gave the Company access to a $5.0 million line of credit (“Equipment Line of Credit 2017”), specifically for the purchase of equipment, for a period of three months with an interest rate of 4.99%.

This five-year agreement gave the Company access to a $9.3 million line of credit (“Equipment Line of Credit 2023”), specifically for the purchase of equipment, for a period of six months with a fixed interest rate of 7.25%.

Development is a variable interest entity (“VIE”) that is 75% owned by 1030 Quarrier Ventures, LLC (“Ventures”) and 25% owned by SQP. SQP is not the primary beneficiary of the VIE and therefore, will not consolidate Development into its consolidated financial statements. Instead, SQP will apply the equity method of accounting for its investment in Development.

SQP is not the primary beneficiary of the VIE and therefore will not consolidate Development into its consolidated financial statements. Instead, SQP will apply the equity method of accounting for its investment in Development. Development, a 1% owner, and United Bank, a 99% owner, formed 1030 Quarrier Landlord, LLC (“Landlord”).

This increase was primarily due to increased work and the timing of project billings and related increase in costs and estimated earnings in excess of billings at September 30, 2022 as compared to at September 30, 2021. 21 Table of Contents Goodwill and acquired intangible assets totaled $8.0 million at September 30, 2022, a $3.7 million increase from the prior fiscal year end balance of $4.2 million.

Contract assets totaled $16.0 million at September 30, 2023, a decrease of $154,000 from the prior fiscal year-end balance of $16.1 million. This decrease was primarily due to the timing of project billings and related costs and estimated earnings in excess of billings at September 30, 2023 as compared to at September 30, 2022.

This increase was due to increased billings in excess of costs and earnings when computing earned revenue on construction projects at September 30, 2022, as compared to at September 30, 2021. Operating lease liabilities totaled $1.6 million at September 30, 2022, an increase of $1.6 million from the prior fiscal year end balance.

This increase was due to increased billings in excess of costs and earnings when computing earned revenue on construction projects at September 30, 2023, as compared to at September 30, 2022.

The foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins may cause fluctuations in gross profit from period to period. Significant changes in cost estimates, particularly in our larger, more complex projects could have, a significant effect on our profitability.

The foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins may cause fluctuations in gross profit from period to period.

Certain Energy Services subsidiaries routinely engage in transactions in the normal course of business with each other, including sharing employee benefit plan coverage, payment for insurance and other expenses on behalf of other affiliates, and other services incidental to business of each of the affiliates.

Other than mentioned above, there were no new material related party transactions entered into during the fiscal year ended September 30, 2023. 27 Table of Contents Certain Energy Services subsidiaries routinely engage in transactions in the normal course of business with each other, including sharing employee benefit plan coverage, payment for insurance and other expenses on behalf of other affiliates, and other services incidental to business of each of the affiliates.

The following table presents our costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings at September 30, 2022 and 2021: September 30, 2022 September 30, 2021 Costs incurred on contracts in progress $ 192,957,145 $ 64,903,618 Estimated earnings, net of estimated losses 28,150,060 13,280,334 221,107,205 78,183,952 Less billings to date 211,025,190 72,606,840 $ 10,082,015 $ 5,577,112 Costs and estimated earnings in excess of billed on uncompleted contracts $ 16,109,593 $ 8,730,402 Less billings in excess of costs and estimated earnings on uncompleted contracts 6,027,578 3,153,290 $ 10,082,015 $ 5,577,112 29 Table of Contents Allowance for doubtful accounts The Company provides an allowance for doubtful accounts when collection of an account is considered doubtful.

The following table presents our costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings at September 30, 2023 and 2022: September 30, 2023 September 30, 2022 Costs incurred on contracts in progress $ 287,347,650 $ 192,957,145 Estimated earnings, net of estimated losses 38,976,895 28,150,060 326,324,545 221,107,205 Less billings to date 328,112,326 211,025,190 $ (1,787,781) $ 10,082,015 Costs and estimated earnings in excess of billed on uncompleted contracts $ 15,955,220 $ 16,109,593 Less billings in excess of costs and estimated earnings on uncompleted contracts 17,743,001 6,027,578 $ (1,787,781) $ 10,082,015 Allowance for doubtful accounts The Company provides an allowance for doubtful accounts when collection of an account is considered doubtful.

On October 15, 2018, First Bank of Charleston was merged into Premier Bank, Inc., a wholly owned subsidiary of Premier Financial Bancorp, Inc. Mr. Marshall Reynolds, Chairman of the Board of Energy Services, held the same position with Premier Financial Bancorp, Inc. Mr.

Douglas Reynolds, President of Energy Services, was a director and secretary of First Bank of Charleston. Mr. Samuel Kapourales, a director of Energy Services, was also a director of First Bank of Charleston. On October 15, 2018, First Bank of Charleston was merged into Premier Bank, Inc., a wholly owned subsidiary of Premier Financial Bancorp, Inc. Mr.

The maturities of the Company’s operating lease liabilities were as follows: 2023 $ 588,653 2024 465,428 2025 373,397 2026 296,606 1,724,084 Less amounts representing interest (119,807) Present value of operating lease liabilities $ 1,604,277 Off-Balance Sheet Transactions Due to the nature of our industry, we often enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected on our balance sheets.

The maturities of the Company’s operating lease liabilities are as follows: 2024 $ 1,205,658 2025 1,097,808 2026 969,003 2027 326,022 3,598,491 Less amounts representing interest (247,701) Present value of operating lease liabilities $ 3,350,790 Off-Balance Sheet Transactions Due to the nature of our industry, we often enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected on our balance sheets.

The Company recorded $7,800 in accreted interest and has not made any principal payments on this note as of September 30, 2022. Subsequent to the April 29, 2022 acquisition of Tri-State Paving, the Company entered into an operating lease for facilities in Hurricane, West Virginia with Corns Enterprises.

Subsequent to the April 29, 2022 acquisition of Tri-State Paving, the Company entered into an operating lease for facilities in Hurricane, West Virginia with Corns Enterprises. This thirty-six-month lease is treated as a right to use asset and has payments of $7,000 per month.

Gas & Water Distribution revenues totaled $53.3 million for the fiscal year ended September 30, 2022, a $12.9 million increase from $40.4 million for the fiscal year ended September 30, 2021.

Gas & Petroleum Transmission gross profit totaled $12.7 million for the fiscal year ended September 30, 2023, a $9.2 million increase from $3.4 million for the fiscal year ended September 30, 2022.

The increase was due to more work in progress at the end of the fiscal year 2022, as compared to the same period in fiscal 2021. Lines of credit and short-term borrowings totaled $13.1 million at September 30, 2022, an increase of $8.1 million from the prior the fiscal year-end balance of $5.0 million.

Accounts payable totaled $22.0 million as of September 30, 2023, an increase of $1.7 million from the prior fiscal year-end balance of $20.3 million. The increase was due to more work in progress at the end of the fiscal year 2023, as compared to the prior fiscal year-end.

A table comparing the components of the Company’s gross profit for fiscal years ended September 30, 2022, and 2021, is below: Fiscal Year Ended September 30, 2022 % of revenue September 30, 2021 % of revenue Change % Change Gas & Water Distribution $ 11,584,635 51.8 % $ 7,972,401 61.7 % $ 3,612,234 45.3 % Gas & Petroleum Transmission 3,412,180 15.3 % 4,896,238 37.9 % (1,484,058) (30.3) % Electrical, Mechanical, and General 6,868,217 30.7 % 4,317,620 33.4 % 2,550,597 59.1 % Unallocated Shop Profit (Expense) 505,716 2.3 % (4,265,237) (33.0) % 4,770,953 (111.9) % Total $ 22,370,748 100.0 % $ 12,921,022 100.0 % $ 9,449,726 73.1 % Gross profit percentage 11.3 % 10.6 % Total gross profit increased by $9.5 million or 73.1% to $22.4 million for the fiscal year ended September 30, 2022, from $12.9 million for the fiscal year ended September 30, 2021.

A table comparing the components of the Company’s gross profit for fiscal years ended September 30, 2023, and 2022, is below: Fiscal Year Ended September 30, 2023 % of revenue September 30, 2022 % of revenue Change % Change Gas & Water Distribution $ 14,635,833 39.8 % $ 11,584,635 51.8 % $ 3,051,198 26.3 % Gas & Petroleum Transmission 12,650,943 34.3 % 3,412,180 15.2 % 9,238,763 270.8 % Electrical, Mechanical, & General 10,681,469 29.0 % 6,868,217 30.7 % 3,813,252 55.5 % Unallocated Shop Profit (Expense) (1,154,910) (3.1) % 505,716 2.3 % (1,660,626) (328.4) % Total $ 36,813,335 100.0 % $ 22,370,748 100.0 % $ 14,442,587 64.6 % Gross profit percentage 12.1 % 11.3 % Total gross profit increased by $14.4 million or 64.6% to $36.8 million for the fiscal year ended September 30, 2023, from $22.4 million for the fiscal year ended September 30, 2022.

Gross profit attributed to unallocated shop operations totaled $506,000 for the fiscal year ended September 30, 2022, a $4.8 million increase from $4.3 million in unallocated shop expenses for the fiscal year ended September 30, 2021.

Gross loss attributed to unallocated shop operations totaled $1.2 million for the fiscal year ended September 30, 2023, a $1.7 million decrease from a gross profit of $505,000 for the fiscal year ended September 30, 2022.

Comparison of Financial Condition at September 30, 2022 Compared to September 30, 2021. The Company had total assets of $112.6 million at September 30, 2022, an increase of $42.4 million from the prior the fiscal year-end balance of $70.2 million.

The Company had total assets of $142.5 million at September 30, 2023, an increase of $29.9 million from the prior fiscal year-end balance of $112.6 million.

As of September 30, 2022, the Company had made principal payments of $687,000. The loan is collateralized by the building and property purchased under this agreement. On June 28, 2017, the Company entered into a $5.0 million Non-Revolving Note agreement with United Bank.

This loan has monthly installment payments of $60,000 and has a fixed interest rate of 6.0%. The loan is collateralized by the Company’s equipment and receivables. As of September 30, 2023, the Company had made principal payments of $499,000. On June 1, 2023, the Company entered into a $9.3 million Non-Revolving Note agreement with United Bank.

The loan is collateralized by the building purchased under this agreement. The note is currently held by Peoples Bank, Inc., formerly First Bank of Charleston, Inc.

As of September 30, 2023, the Company had made principal payments of $387,000. The loan is collateralized by the building purchased under this agreement. The note is currently held by Peoples Bank, Inc.

The Company has expensed all $164,000 in payments made through September 30, 2022 and 26 Table of Contents does not expect any future liabilities related to this claim. The Company did not make any payments during the twelve months ended September 30, 2023.

Income from operations was $6.5 million for the fiscal year ended September 30, 2022, a $7.6 million increase from a $1.1 million loss from operations for the fiscal year ended September 30, 2021. The increase was due to the items described above. Interest Expense .

The increase was due to the items described above. Interest Expense . Interest expense increased by $1.4 million or 171.1% to $2.4 million for the fiscal year ended September 30, 2023, from $988,000 for the fiscal year ended September 30, 2022.

Long-Term Debt On December 16, 2014, the Company’s Nitro subsidiary entered into a 20-year $1.2 million loan agreement with a bank to purchase the office building and property it had previously been leasing for $6,300 monthly. The interest rate on this loan agreement is 4.82% with monthly payments of $7,800.

Any penalties in addition to the potential repayment of the PPP Loans could negatively impact the Company’s business, financial condition and results of operations and prospects. Long-Term Debt On December 16, 2014, the Company’s Nitro subsidiary entered into a 20-year $1.2 million loan agreement with a bank to purchase the office building and property it had previously been leasing.

Contract assets totaled $16.1 million at September 30, 2022, an increase of $7.4 million from the prior the fiscal year-end balance of $8.7 million.

Liabilities totaled $107.9 million at September 30, 2023, an increase of $23.5 million from the prior fiscal year-end balance of $84.4 million. Contract liabilities totaled $17.7 million at September 30, 2023, an increase of $11.7 million from the prior fiscal year-end balance of $6.0 million.

Cash and cash equivalents totaled $7.4 million at September 30, 2022, a decrease of $799,000 from the prior the fiscal year-end balance of $8.2 million.

Lines of credit and short-term borrowings totaled $19.8 million at September 30, 2023, a decrease of $3.3 million from the prior fiscal year-end balance of $23.2 million.

See “Leases” on page 29 for a discussion of operating leases added in the fiscal year 2022. Net deferred income tax payable totaled 4.5 million at September 30, 2022, an increase of $2.5 million from the prior the fiscal year-end balance of $2.0 million.

Net deferred income tax payable totaled $6.9 million at September 30, 2023, an increase of $2.4 million from the prior fiscal year-end balance of $4.5 million. The increase was primarily related to a decrease in net operating loss carry forwards resulting from the taxable income for the fiscal year ended September 30, 2023.

A table comparing the components of the Company’s costs of revenues for fiscal years ended September 30, 2022 and 2021, is below: Fiscal Year Ended September 30, 2022 % of total September 30, 2021 % of total Change % Change Gas & Water Distribution $ 41,726,934 23.8 % $ 32,467,794 29.6 % $ 9,259,140 28.5 % Gas & Petroleum Transmission 54,856,321 31.3 % 17,237,245 15.7 % 37,619,076 218.2 % Electrical, Mechanical, and General 79,141,713 45.2 % 55,574,528 50.7 % 23,567,185 42.4 % Unallocated Shop (Profit) Expense (505,716) (0.3) % 4,265,237 3.9 % (4,770,953) (111.9) % Total $ 175,219,252 100.0 % $ 109,544,804 100.0 % $ 65,674,448 60.0 % Total cost of revenues increased by $65.7 million or 60.0% to $175.2 million for the fiscal year ended September 30, 2022, from $109.5 million for the fiscal year ended September 30, 2021.

A table comparing the components of the Company’s costs of revenues for fiscal years ended September 30, 2023 and 2022, is below: Fiscal Year Ended September 30, 2023 % of total September 30, 2022 % of total Change % Change Gas & Water Distribution $ 48,891,624 18.3 % $ 41,726,934 23.8 % $ 7,164,690 17.2 % Gas & Petroleum Transmission 79,481,106 29.7 % 54,856,321 31.3 % 24,624,785 44.9 % Electrical, Mechanical, & General 137,763,517 51.5 % 79,141,713 45.2 % 58,621,804 74.1 % Unallocated Shop (Profit) Expense 1,154,910 0.4 % (505,716) (0.3) % 1,660,626 (328.4) % Total $ 267,291,157 100.0 % $ 175,219,252 100.0 % $ 92,071,905 52.5 % Total cost of revenues increased by $92.1 million or 52.5% to $267.3 million for the fiscal year ended September 30, 2023, from $175.2 million for the fiscal year ended September 30, 2022.

Effective income tax rates are estimates and may vary from period to period due to changes in the amount of taxable income or loss, non-taxable items and nondeductible expenses. Dividends on preferred stock for the fiscal years ended September 30, 2022, and 2021 were $0 and $284,000, respectively.

The effective income tax rate for the fiscal year ended September 30, 2023 was 28.7%, as compared to 37.6% for the prior fiscal year. Effective income tax rates are estimates and may vary from period to period due to changes in the amount of taxable income or loss, non-taxable and non-deductible expenses.

The loss of a major customer could have a severe impact on the profitability of operations of the Company.

The loss of a major customer could have a severe impact on the profitability of the Company. However, due to the nature of the Company’s operations, the major customers and sources of revenues may change from year to year.

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Top changes in Energy Services of America CORP's 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 3. Legal Proceedings

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other ESOA 10-K year-over-year comparisons